Earnings Presentation for the six months ended 30 June 2016€¦ · Earnings Presentation for the...
Transcript of Earnings Presentation for the six months ended 30 June 2016€¦ · Earnings Presentation for the...
Earnings Presentation for the six months ended 30 June 2016
30 August, 2016
This presentation has been prepared by Synergy, Co. (the “Company“, or “Synergy”) and together with its subsidiaries. By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following limitations and notifications. This presentation is strictly confidential to the recipient, may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part. Failure to comply with this restriction may constitute a violation of applicable securities laws. This presentation does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire shares of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation may contain statements that are, or may be deemed to be, forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. Examples of such forward-looking statements include, but are not limited to statements of the Company’s predictions, forecasts, projections, strategies, plans, targets, objectives, expectations, estimates, intentions, beliefs or goals, including those related to acquisitions, sales, products or services, results of operations, financial condition, liquidity, prospects or dividend policy; statements concerning future business or industry performance; other statements that do not relate strictly to historical or current facts; and assumptions underlying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the forward-looking statements will not be achieved. Among other things, forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. Readers should be aware that several important factors could cause the Company’s assumptions to be incorrect, and could cause actual results to differ materially from the predictions, forecasts, projections, strategies, plans, targets, objectives, expectations, estimates, intentions, beliefs or goals expressed in such forward-looking statements. These factors include:
• changes in political, social, legal or economic conditions in Russia generally, or in the regions of Russia in which the Company operates, including changes in levels of consumer spending and demand for some or all of its products;
• changes in consumer preferences and tastes, demographic trends or perceptions about health related issues; • increased competitive product and pricing pressures and unanticipated actions by competitors that could impact the Company’s market share, increase expenses and hinder growth potential; • the ability to complete business combinations, partnerships, acquisitions or disposals, existing or future, and to achieve integration, expected synergies and/or costs savings; • levels of marketing, promotional and innovation expenditure by the Company and its competitors; • the Company’s ability to protect its intellectual property rights; • increasing recognition in Russia of product liability and personal injury torts; • legal and regulatory developments and changes in the policies of the government of the Russian Federation, including regional authorities, including regulatory developments or policy
changes regarding consumption of or advertising for spirits, or taxation; • changes in the cost of raw materials and labor costs; • renewal of distribution rights and contracts on favorable terms when they expire; • technological developments that may affect the distribution of products; • changes in financial and equity markets, including significant interest rate and foreign currency exchange rate fluctuations, which may affect the Company’s access to or increase the cost of financing or which may affect the Company’s financial results; • changes in accounting standards, policies or practices; • availability of qualified personnel, including accounting personnel; and • ability to identify other risks relating to the Company’s business and manage the risks associated with the aforementioned factors.
This list of important factors is not exhaustive. Readers should carefully consider such factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Company operates. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update or revise any of them. Readers should not place undue reliance on forward-looking statements. The Company does not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.
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Synergy, a leading alcohol company in Russia reports 1H2015 financial results
1H2016 vs 1H2015
• Sales grew 22% and reached 24.7 bln. rubles • Net Revenue increased by 24% to 16.1 bln. Rubles • Gross Profit raised by 25% to 6.9 bln. rubles • EBITDA grew 11% to 1.6 bln. rubles • EBITDA margin decreased by 1.2 pp. from 10.9% to 9,7% • 31% growth of Net Income • Net Debt to EBITDA – 3.1X • 16% volume increase
Key operational
developments
• Synergy concluded several exclusive, long-term distribution agreements with
Allied Brands S.R.L. (for Xentia - #1 Absinthe in Russia) and Sazerac (for
bourbons Benchmark and Buffalo Trace).
• Synergy concluded partnership with Bacardi for local bottling and packaging of
William Lawson’s (#1 whisky in Russia).
• We extended Beluga line with Beluga Celebration, bitters Beluga Hunting
Herbal and Beluga Hunting Berry.
• New product development and launches: Captain’s family extended, Snow
Crab and Georgievskaya vodkas, The Treasure of Tiflis Georgian brandy,
whysky-based liquor Trinity.
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Consolidated Revenue for 1H2016
13 022
16 106
0
6 000
12 000
18 000
1H2015 1H2016
Consolidated Revenue, million RUB
+24% Y-o-Y
Revenue breakdown by segments, million RUB (1)
Alc
oh
ol
(1)
Fo
od
(1) 3 238 3 273
0
1 200
2 400
3 600
1H2015 1H2016
+1% Y-o-Y
25%
75%
Alcohol
Food
Consolidated Revenue split, %
1H2015: 13 022 million RUB(1) 1H2016: 16 106 million RUB(1)
20%
80%
Alcohol
Food
o 24% Y-o-Y increase in revenue on the back of 16% volume growth
o Ongoing diversification – growth of export-import operations
o Food segment was stable
Source: IFRS financial statement for 1H2016
Note (1): Net of intersegment operations
9 768 12 806
0
7 000
14 000
1H2015 1H2016
+31% Y-o-Y
11%
89%
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Consolidated Gross Profit for 1H2016
Consolidated Gross Profit, million RUB
5 483 6 854
0
4 000
8 000
1H2015 1H2016
42.6%
Gross Profit
Gross Margin
Gross Profit breakdown by segments, million RUB (1)
4 691 6 067
0
3 500
7 000
1H2015 1H2016
47%
Alc
oh
ol
(1)
Fo
od
(1)
763 764
0
300
600
900
1H2015 1H2016
Consolidated Gross Profit split, %
1H2015: 5 483 million RUB(1) 1H2016: 6 854 million RUB(1)
14%
86%
Alcohol
Food
Alcohol
Food
oMain drivers for the Consolidated Gross Profit and for the
Alcohol segment Gross Profit were volume growth, diversification of the operations and price indexation.
oDouble digit growth of premium import and export operations.
Source: IFRS financial statement for 1H2016
Note (1): Net of intersegment operations
+0% Y-o-Y
+30% Y-o-Y
42.1%
+25 % Y-o-Y
48%
23% 24%
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Alcohol segment breakdown(1)
7 894
1 875
10 495
2 311
0
4 000
8 000
12 000
Spirits Production Distribution
Alcohol segment revenue breakdown, million RUB
1H2015
1H2016
4 091
600
5 201
866
0
3 000
6 000
Spirits Production Distribution
Alcohol segment gross profit breakdown, million RUB
+27% 1H2015
1H2016
82%
18%
Spirits production
Distribution
Alcohol segment consolidated revenue split, %
1H2016: 12 806 million RUB 1H2015: 9 768 million RUB
81%
19%
Spirits production
Distribution
Key Alcohol segment drivers in 1H2016
oSpirits production: 33% Y-o-Y increase in revenue on the back of 16% volume growth. Additional driver: prices were increased in the beginning of 2016.
oGross margin of the Spirits production slightly decreased (from 51.8% to 49.6%) mainly due to increase of the retail chains share in sales
oMain drivers of Distribution revenue growth: growth of premium imported brands such as William Grant & Sons along with wine distribution expanding
Note (1): Anaudited
+33%
+23% +44%
49.6% 51.%
37.5% 32.0%
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Consolidated EBITDA and Net Profit for 1H2016
1 418
1 569
0
800
1 600
1H2015 1H2016
EBITDA, million RUB
+11 Y-o-Y
EBITDA
EBITDA Margin
1238 1152
3 551 4 552
0
3 000
6 000
1H2015 1H2016
+28% Y-o-Y
-7% Y-o-Y
G&A and distribution expenses , million RUB
General & Administrative expenses
Distribution expenses
4 789
5 704
1 031
1 170
98 128
0
650
1 300
1H2015 1H2016
+13% Y-o-Y
Operating profit and Net Income, million RUB
+31% Y-o-Y
o 7% year-on-year decrease in G&A as a result of cost-cutting program implementation
o 28% year-on year increase in distribution expenses due to marketing support of our growing sales including trade-marketing activities in retail chains.
o Net income grew by 31%
Source: IFRS financial statement for 1H2016
Note (1): Net of intersegment operations
9.7% 10.9%
Opertating profit
Net income
12%
19%
48%
33%
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Company’s debt
3 164
1 493
2 802 3 841
5 544
6 670
5 647
6 333
YE2014 1H2015 YE2015 1H2016
10 174
Debt breakdown, million RUB Long-term debt
Short-term debt
6 212
8 226 7 288
9 344
YE2013 YE2014 YE2015 1H2016
Net debt (1) evolution, million RUB
As of 31 December, 2015
32%
30%
38%
Less than 1 year
1-2 years
2-5 years
Total = 10 174 mln RUB
o The cost of borrowing decreased (13.24% p.a. in 1H2016 vs 14.8% p.a. in 1H2015)
o Share of the unsecured loans reached 71%. o The Company’s debt grew mainly due to
double digit growth of our sales and inventories
Source: IFRS financial statement 2011-1H2016
Note (1): Net debt = Total debt – Cash & Cash equivalents
8 449
8 708 8 163
Less than 1 year
1-2 years
2-5 years
Total = 8 449 mln RUB
As of 30 June, 2016
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Address: 30/1 Obrucheva Str., bldg. 1 Moscow 117485 Russia Phone: +7 495 510 2695 +7 495 775 3050 Fax: +7 495 510 2697 +7 495 775 3052 E-mail: [email protected] Contacts: Sergey Kuptsov, Head of Corporate finance Prokhor Malutin, PR director www.sygroup.ru
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