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ATLANTIC GRUPA FY11 Financial results (audited)

ATLANTIC GRUPA FY11 Financial results (audited) Performance in line with guidance alongside successful execution of integration processes February 23 th , 2012. CONTENT. KEY BUSINESS DEVELOPMENTS in 2011. Guidance delivered despite challenging macroeconomic environment.

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ATLANTIC GRUPA FY11 Financial results (audited)

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  1. ATLANTIC GRUPAFY11 Financial results (audited) Performance in line with guidance alongside successful execution of integration processes February 23th, 2012

  2. CONTENT

  3. KEY BUSINESS DEVELOPMENTS in 2011 • Guidance delivered despite challenging macroeconomic environment • Successful execution of integration of Droga Kolinska and Atlantic Grupa • Divestment of non-core assets: 13% share in RTL Hrvatska television channel • Bond refinancing: new corporate bond ATGR-O-169A • Regular fulfilment of all financial obligations • Surging prices of all key raw and packaging materials • PPA – Purchase Price Allocation for Droga Kolinska • Achievement of synergy effects

  4. KEY INTEGRATION ACTIVITIES: Phase I • First phase of integration activities carried out in the 1H11

  5. KEY INTEGRATION ACTIVITIES: Phase II • Second phase of integration activities started in the 2H11

  6. SUMMARY OF INTEGRATION ACTIVITIES and OTHER • CORE program • In November 2011, Atlantic Grupa launched cost reduction program – CORE program • The key goal is to optimize the company’s primarily external expenses in the period from 2011 to 2013 • Emphasis is on the group of expenses that are encountered as result of purchase of goods and services from suppliers

  7. NEW BUSINESS MODEL OF ATLANTIC GRUPA from 2012 SBU COFFEE Turkish, Espresso, Instant SBU BEVERAGES Vitamin instant drinks and teas Carbonated soft drinks Functional water and Water SBU SPORTS AND FUNCTIONAL FOOD Sports and functional food SBU PHARMA AND PERSONAL CARE VMS and OTC Pharmacy chain Cosmetics and personal care SBU SAVOURY SPREADS Savoury spreads Sandwiches of extended freshness SBU SNACKS Sweet and salted snacks SMU Croatia SMU Slovenia, Serbia and Macedonia SMU HoReCa Hotels, restaurants and cafes SMU International markets All markets outside ex.-YU region and Russia MU Russia Baby food All products sold in CIS region • Reorganization in 2012 with an aim to manage business segments and distribution markets more efficiently • Operational business also includes Central procurement, Central marketing and Corporative quality management functions

  8. ATLANTIC GRUPA ON CROATIAN CAPITAL MARKET in 2011 Ownership structure on 30/12/2011 • From the end of March, ATGR-R-A has been included in domestic blue-chip index Crobex10 • On 20 September 2011, Atlantic Grupa issued Notes amidst restructuring of its maturity debt structure • Atlantic Grupa’s average market capitalization in 2011: HRK 2.2m – second place based on average Mcap among components of local blue-chip index Crobex10 • Atlantic Grupa’s share retained total turnover and average daily turnover on the 2010 levels

  9. CONTENT

  10. OWERVIEW of FY11 RESULTS • Sales at 4,727.8 million kuna + 108.4% yoy based on reported figures + 1.2% yoy organic growth + 4.8% yoy growth compared to pro-forma consolidated level in the same period last year • Normalized earnings before interests, taxes and depreciation (EBITDA) at 517.3 million kuna + 156.5% yoy based on reported figures - 1.7yoy growth compared to pro-forma consolidated level in the same period last year • Normalized earnings before interests and taxes (EBIT) at 309.2 million kuna + 110.9% yoy based on reported figures + 12.1% yoy growth compared to pro-forma consolidated level in the same period last year • Net profit after minorities at 46.6 million kuna * Normalised net profit after minorities at 19.7 million kuna

  11. RESULTS IN LINE WITH GUIDANCE HRKm 101.7% 98.2% 96.9% • 2011 result normalized

  12. OVERVIEW OF ONE-OFF ITEMS in 2010/2011 2010 • Sale of Neva’s former location in Tuškanova * One of gain in the amount of 48.6 million kuna • Acquisition of Droga Kolinska * Transaction costs in the amount of 52.2 million kuna * Positive financial impact of 16.9 million kuna (income on deposits from capital increase funds and positive exchange rate differences) • Acquisition of the company Kalničke vode Bio Natura * Badwill in the amount of 5.1 million kuna 2011 • Sale of non-core assets – 13% stake in the company RTL Hrvatska • * One-off gain in the amount of 12.0 million kuna • Acquisition of Droga Kolinska • Transaction costs in the amount of 5.8 million kuna • Purchase price allocation • * One-off impact on increase in inventories in the amount of 22.8 million kuna • * One-off impact on depreciation of tangible assets and amortization of intangible assets in the amount of 42.3 million kuna. Depreciation and amortization effect is one-off compared to 2010, but, lower depreciation and amortization will remain in 2012 and onwards • * One-off impact on increase in financial borrowings in the amount of 1.2million kuna

  13. SALES in 2011 HRKm * Sales growth: +108.4% • Growth generators: • (i) Acquisition of Droga Kolinska • (ii) Organic growth of Atlantic Grupa • * Sales growth: + 4.8% comparing to pro-forma consolidated sales in 2010 • Growth generators: • (i) Growth on regional markets after acquisition of Droga Kolinska • (ii) Growth in coffee, sweet and salted snacks and baby food segments • (iii) Growth in Sports and Functional Food and Pharma divisions • * Sales growth : +1.2% without DrogaKolinska effect • Growth generators: • (i) Growth of own brands within Sports and Functional Food division • (ii) Sales growth of private label • (iii) Newly opened pharmacies and specialized stores • (iv) Final consolidation of acquired pharmacy chain Dvoržak

  14. GEOGRAPHIC SALES PROFILE • Croatian market remained the largest selling market after acquisition of Droga Kolinska with 28.2% share of total sales, however the acquisition itself significantly reduced exposure to domestic market from 55.1% in 2010 • Regional markets (without Croatia) have 52.0% share of total sales compared to 18.9% in 2010 • Share of West European markets fell to 7.5% from 14.9% in 2010, as sales of acquired Droga Kolinska are mostly focused on regional markets and to smaller extent on Russian market • East European markets have 3.0% share of sales compared to 1.8% in 2010, due to Droga Kolinska’s presences on those markets *Other ex. YU: Macedonia, Monte Negro, Kosovo **KeyWEU: Germany, Italy, UK

  15. SALES on KEY MARKETS – CROATIA • -3,3% compared to 2010 pro-forma consolidated results • -3,9% on organic level (without Droga Kolinska) • Two key factors affected sales on Croatian market: • Renewal of contracts with key customers due to integration of Droga Kolinska’s product portfolio during 2011 • Continuation of negative trends in Croatian economy • Sales decline on the pro-forma consolidated level was partially cushioned by following: • Increase in coffee and salted snacks category as well as mild increase in savoury spreads and beverages categories of Droga Kolinska • Growth of some principal brands • Growth in Pharma division

  16. SALESon KEY MARKETS – SERBIA, SLOVENIA AND BOSNIA AND HERZEGOVINA • Serbian Market • + 12.7% growth compared to pro-forma consolidated sales in 2010 • -10.7% on organic level (without Droga Kolinska) • The second largest market in Atlantic Grupa with 25.5% share of total sales • Slovenian market • +3.5% growth compared to pro-forma consolidated sales in 2010 • +2.5% on organic level (without Droga Kolinska) • The third largest market in Atlantic Grupa with 12.7% share of total sales • Growth: coffee, salted snacks, Cedevita and some principal brands • B&H market • -9.3% drop compared to pro-forma consolidated sales in 2010 • -2.5% on organic level (without Droga Kolinska) • The third largest market in Atlantic Grupa with 7.6% share of total sales

  17. SALESon KEY MARKETS – WEST EUROPEAN MARKETS AND RUSSIA West European markets +1.1% growth compared to pro-forma consolidated sales in 2010 +5.2% on organic level (without Droga Kolinska) Three key factors buoyed sales growth in this geographic region Double-digit growth in thesports food brand Champ and thefunctional food brand Multaben Double-digit growth in private label sales Further expansion of mass market outside the specialized sports channel. • Russian and East European markets • -20.0% compared to pro-forma consolidated sales in 2010 • Decline mainly reflected lower sales of Multivita assortment, whereby growth in baby food assortment with brand Bebi was insufficient to annul decline in the former

  18. SALES by PRODUCT TYPE • Own brands • +6.4% compared to pro-forma consolidated sales in 2010 • +1.8% on organic level (without Droga Kolinska) • Principal brands • -9.7% yoy • Share decrease due to conolidation of Droga Kolinske • Private label • +31.8% yoy • Farmacia • +15.6% yoy • +9.8% on organic level (excluding acquired chain Dvoržak)

  19. KEY BRANDS in 2011 The following brands achieved growth: Coffee – Grand Kafa 12.3% i Barcaffe 9.7% Sweet and salted snack – Najlepše želje 11.6% andSmoki 5.5% Baby food – Bebi 11.7% Sports and functional food – Champ and Multaben Following brands posted yoy lower sales: Beverages – Cedevita and Cockta Savoury spreads - Argeta

  20. GROSS SALES by DIVISION HRKm • + 1.2% yoy organic growth • + 4.8% compared to pro-forma consolidated sales in 2010 • Distribution : +114.3% , -6.4% organic • Consolidated distribution of Atlantic Grupa and Droga Kolinska, renewed contracts with key customers • Unfavourable macroeconomic environment decreased consumption • Portfolio rationalization • Consumer HealthCare: -6.4% • Unfavourable macroeconomic situation • Consolidation of distribution activities of Atlantic Grupa and Droga Kolinska affected this division’s sales • Sports and Functional Food: +16.3% • Growth of brands Champ and Multaben as well as private label • Upward trend in mass market and online sales • Pharma: +12.5% • Pharmacy chain sales growth, opening of 4 new sales locations, consolidation of Dvoržak pharmacy chain • Fidifarm sales growth • Droga Kolinska: +0.2% • Growth of product categories: coffee, sweet and salted snacks and baby food

  21. SALES by CATEGORIES • Indicative overview of sales by categories (according to the new business model) in 2011 reflect the following: • Product category – coffee – with brands Grand KafaiBarcaffe is the largest individual product category with 21% share in total sales • Product category – beverages – with key brands Cedevita, Cockta, Donat Mg is the second largest product category with 14% share in total sales • Product category – sports and functional foods – with key brands Multipower and Champ is the third largest product category with 14% share in total sales • Distribution which includes principal brands has 17% share in total sales

  22. PROFITABILITY DYNAMICS HRKm • Two-fold higher profitability on EBITDA and EBIT levels compared to 2010 primarily reflected consolidation of Droga Kolinska • Decline in EBITDA compared to pro-forma consolidated 2010 largely reflected 20.7% yoy higher production materials costs • Normalised EBIT reflected the impact of finalised PPA process for Droga Kolinska on tangible assets depreciation and intangible assets amortization 2011 vs. 2010 2011 vs. 2010 pro-forma Normalised EBITDA +156.5% -1.7% Normalised EBIT+110.9% +12.1% Normalised Net profit -67.5% -77.7%

  23. PROFITABILITY DYNAMICS – Impact of surging prices on global commodity markets • On the pro-forma consolidated level, production materials costs surged 21% yoy • Soaring production materials costs came on the back of: • * Growth in coffee, sugar, milk powder and others largely on the back of surging prices on the global commodity markets as well as packaging materials costs • * Coffee rocketed 55% on average on global commodity markets (expressed through coffee “C” futures contract as the world benchmark for Arabica coffee) compared to 2010 • Left graph - coffee price movements during 2010 and 2011– maximum at the beginning of May 2011 • Right graph: beginning of May 2011 the highest coffee price since the end of 1997 • In the following period: • *The fundamentals indicate upward pressure on global coffee prices largely amidst historically low global coffee inventories and downtrend in inventories in weeks of consumption • * But, excess of global supply should cushion uptrend in 2012

  24. PURCHASE PRICE ALLOCATION for DROGA KOLINSKA

  25. DIVISIONAL OPERATING PROFITABILITY HRKm Distribution +114.3% amidst • Integration of Droga Kolinska and Atlantic Grupa’s portfolio Consumer HealthCare -32.0% amidst: • Lower sales • Higher production materials costs Sports and Functional Food -52.3% amidst • Front-loaded investments in new company in Spain • Higher production materials and marketing and selling costs • Higher service costs Pharma -5.2% amidst: • Stronger growth in operating costs base, primarily service costs, staff costs and costs of goods sold

  26. FINANCIAL INDICATORS Leverage indicators: • Net debt-to-normalized EBITDA at 4.8 times • Interest covered with normalized EBITDA at 2.3 times • Gearing ratio (net debt-to-net debt and total equity) at 62.3% • In accordance with the Policy of active financial debt management, Atlantic Grupa fixed substantial portion of its long-term financial liabilities with interest rate swaps in the 1Q11 • In 2011, Atlantic Grupa refinanced corporate bond in the nominal amount of HRK 115m maturing in 2016 Require: prudent debt management and delivery of synergies

  27. CONTENT

  28. FY12 GUIDANCE (I) Strategic management guidance • Further delivery of planned synergy potentials both on sales and costs side following finalisation of the first integration phase of Atlantic Grupa and Droga Kolinska; • Focus on execution of the second integration phase (consolidation of production facilities, information technology consolidation, real estate portfolio management) as the basis for further improvement of operating efficiency; • Further focus on organic growth through innovations in product categories and active brand management (new flavours, modernized packaging, product line extensions), strengthening the regional character of distribution business and further development of certain distribution channels as HoReCa segment; • Meeting financial commitments on regularly basis coupled with active debt and financial cost management; • Cost management through the CORE program and optimisation of operating processes on both centralised and lower levels, aiming to improve operating efficiency; • Prudent liquidity management; • Continuous analysis of global commodity markets with particular focus on coffee, sugar, cocoa and milk powder as well as more active application of hedging instruments; • More focused development of risk management on all levels in the company.

  29. FY12 GUIDANCE (II) * In 2011, EBIT was calculated on normalised EBITDA level, however depreciation and amortization expenses have not been normalized for the PPA impact in order to make it more comparable to 2012 guidance.

  30. Appendix

  31. FY11 CONSOLIDATED INCOME STATEMENT (AUDITED)

  32. FY11 NORMALIZED CONSOLIDATED INCOME STATEMENT (AUDITED)

  33. BUSINESS SEGMENTS

  34. BALANCE SHEET as of 31 December 2011 (AUDITED)

  35. FY11 CONSOLIDATED CASH FLOW STATEMENT (AUDITED) • Net cash from operating activities amounted to HRK 165.1m in FY11 and HRK 101.5m in FY10, once transaction costs excluded

  36. Q & A Thank you for your attention!

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