United Breweries Limited quarterly briefing – Apr 06

Report
United Breweries Limited
Presentation November 2007
India and the Beer Industry
Indian Economy
• The current year growth rate is 9%
• The growth is largely propelled by local
consumption hence lesser prone to global
changes.
• Inflation currently at (5.7- 7.9)% (CPI)
giving impetus to growth – Source RBI Oct 13, 2007
• Substantial increase in the disposable
income in the age group of 20 to 30 years
Increase in disposal Income
1989-90
Low (< Rs.45 K)
Middle (Rs. 45K -Rs.
90K)
2001-02
High (> Rs. 90K)
2009-10
0%
50%
100%
Source: Motilal Oswal Securities
Indian Demographics –
favorable to growth in beer consumption
• Current population 1.1 billion
• Over 50% of the population is below the age of
20 years
• The demographics to remain almost
unchanged till the year 2020
•Core target market is 18-30 year olds
• As initiation to alcohol consumption is through
low alcohol beverages like beer – excellent
opportunity for growth in beer consumption over
the next decade and half.
Population demographics
2001 70.8
485
455
> 60 years
20-59
0-19
2011 94.2
0%
636
20%
Figures million
40%
447
60%
80%
100%
Source: Motilal Oswal Securities
Beer Industry in India
• Policies & Regulations are driven by State
Government
• Highly regulated with restriction in
movement between states
• 65% of the Indian market is state controlled
– Distribution by Govt. Corporations,
implications upon pricing
• Advertising strictly prohibited, advantage for
existing players, major barrier to entry
Beer Industry in India contd.
• Government corporations are now
approachable and not averse to make
changes
• There have been recent recommendations
by some governing bodies to de link beer
from spirit and have a common national
duty structure much lower than the current
duty levels
Beer Industry in India contd
AFFORDABILITY
• Duty not set
according to alcohol
content
• Highest duty in the
world
• Expensive alcoholic
beverage
AVAILABILITY
• 55,000 licensed
outlets across the
country
• 1 per 20,000 people
• In UK 1 per 350
people
Beer is not the alcoholic beverage
of the common man
Alcohol Consumption
<0.5%
Wine
5%
78%
Spirits/
Liquor
8%
21.5%
India
Beer
87%
Emerging
Markets
Per Capita Beer Consumption
140
125
120
100
82
80
59
60
40
20
24
22
12
0.9
Country
an
y
G
er
m
UK
US
A
a
Ru
ss
i
Av
g
W
or
ld
na
Ch
i
In
do
ne
sia
0
In
di
a
Liters
100
Key performance highlights H1 2007-08
• 13.8% volume growth in UBL while the
combined business grew at 14.3% as against an
industry growth of 12.6%
• Kingfisher growth - premium 5.4%, strong
23.9%
• EBITDA at the half year end 112 Cr. as against
87 Cr., a growth of 29%
• Combined EBITDA at the half year end 143 Cr.
as against Cr.110, a growth of 30%
Operational performance
Volume Growth – H1
+ 14.3%
+ 13.8%
+ 16.6%
+ 12.6%
Industry
Combined
Business
UBL
Only
MABL
Only
Change in Consumption pattern
70
60
50
40
Mild Beer %
30
Strong Beer %
20
10
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
• Currently all international brands known in India are mild beers
& most of the new launches have been in this category, which
has been declining
Kingfisher Performance
Kingfisher premium - % growth
25.0%
20.0%
15.0%
Industry-Mild
10.0%
KF premium
5.0%
0.0%
2005-06
2006-07
2007-08 Est.
Kingfisher Strong - % growth
50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Industry-Strong
KF Strong
2005-06
2006-07
2007-08 Est.
UBL V’s SABM Market Share
47%
33%
UBL
SABM
March 07
Financial Performance
Results September 07
United Breweries Limited
In rupees crore
Year ended
30.9.2007
30.9.2006
Audited
Incl. of KBD
Net Sales/Income from operations
Other Income
Total Income
Expenditure
Cost of production
Advertisement & Sales Promotion
Other operating Costs
579.66
13.79
593.45
415.12
5.37
420.49 41%
301.88
144.72
34.61
193.70
114.31
25.51
PBIDT
Margin on sales
112.23
19.36%
86.97 29%
20.95%
PBIDT
112.23
86.97
Finance charges
19.02
12.00
Depreciation
26.02
10.15
Profit Before Non recurring items &Taxation
67.19
64.82
4%
Non Recurring items
Taxation
Net Profit
(25.01)
42.18
(24.09)
40.73 4%
COMBINED BUSINESS
PBIDT
Finance charges
Depreciation
Profit Before Non recurring items &Taxation
143.31
31.50
38.05
73.76
109.75 31%
27.67
20.29
61.79 19%
Margin on sales in the published financials not comparable as Sept. 06
does not include KBDL a 100% subsidiary
464.59
88.25
18.99%
Performance analysis
• An increase in the operating margins
despite cost push
• Despite a 29% growth in operating
margins PBT growth of only 4% on
account of interest & depreciation – Rights
issue approved by the Board expected in
the first half of the next financial year
• Healthy growth in operating margins of
31% in the combined business
Summary Balance Sheet
UNITED BREWERIES LIMITED
BALANCE SHEET
Amounts in rupees million
Sources
Share Holders Funds
Loan Funds
Total Sources
Application
Fixed Assets
Investments
Net Current Assets
Total Application
As at
As at COMBINED BUSINESS
30.9.07
31.3.07
30.9.07
31.3.07
5,998
4,075
10,073
5,583
4,762
10,344
4,012
7,185
11,197
3,498
7,766
11,263
6,172
591
3,310
10,073
5,262
591
4,491
10,344
7,462
1
3,733
11,197
6,561
1
4,702
11,263
Ratios
UNITED BREWERIES LIMITED
As at
As at COMBINED BUSINESS
30.9.07
31.3.07
30.9.07
31.3.07
Debt
4,075
4,762
7,185
7,766
Net Worth
5,998
5,583
4,012
3,498
GEARING
0.68
0.85
1.79
2.22
PBIDT
112
162
143
186
Interest
19
28
31
54
5.90
5.77
4.55
3.47
Rupees Million
INTEREST COVER

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