1 united breweries limited investors meeting august 2007
TRANSCRIPT
1
United Breweries Limited
Investors Meeting August 2007
2
The Indian Beer Industry
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Alcohol Consumption
India EmergingMarkets
21.5% 87%Beer
Spirits/Liquor
Wine 5%
8%
<0.5%
78%Beer is under represented in
India
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Consumption Per Capita
India China USA
1 litre
23 litres
83 litres
24 litres
World Average
12 litres
Indonesia
1 litre per capita is a major milestoneachieved in India in the last 12 months,
BUT ………
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Industry Growth
5%
10%
15%
20%
25%
30%
5 YearCAGR 2005
2006 2007
Future:strong doubledigit growth
2008 +
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Opportunity for Growth
• Current population 1.1 billion• Over 50% of the population is below the age of 25 years, demographics remain until 2020•Increasing personal GDP•The emerging young population hold more liberal views on alcohol, than earlier generations
Higher penetration
Sustainable profit growth
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UBL’s Capability
• Iconic brand – KINGFISHER
• Balanced portfolio of supporting brands
• Manufacturing network across all major states
• Leadership in cold chain management, and point of sale visibility
• Established trade relationships
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UBL’s Competitive Advantage-Through our Promoters
UBLS & N UB Group
• Brewing processes• Procurement synergies• International best practice• Experience in capacity investment• People resource
• Strength in distribution• Enhanced recognition through KFA• Relationship with USL
• Buying influence• Route to market influence• One stop portfolio of leading brands for modern trade
Equal to competition Competitive Advantage
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Competitor Positions
• SABM– Established in India as the No 2 player– Investment in capacity– Brand launches eg Peroni, Castle
• International brands have not worked– Castle launched over 2 years ago > No market share– Peroni launched over 6 months ago > No market share– Fosters launched over 5 years ago, pre advertising ban
> 2% market share
1010
Competitor Positions• Carlsberg
– Acquired Himneel brewery early 2007, new greenfield breweries in Rajasthan & Maharashtra. Plans to launch a Polish beer.
• A – B– JV brewery with Crown in AP, plans to build more greenfield
units. Recent launch of Budweiser & Armstrong beer brands
• APB– 2007 acquisition of Aurangabad brewery, greenfield construction
in progress in AP.
• Coors– Announced plan to build a greenfield unit in Maharashtra
• Inbev– Recently announced JV entry into India.
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Impact of Competitors
• Invest in the market
• Invest in capacity
• Provide consumers with more choice
• Drive improvement through the upstream supply chain
BENEFIT ALL PLAYERS IN THE INDUSTRY
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Environment for New Competitors
• Excessive State regulation and intervention– Route to market– Economics, need to have a brewery in each state– Pricing– Licensing
• Driver of growth is Strong beer,– all new International entrants brands are leaders in
Mild beer not Strong
• Ban on advertising alcohol
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UBL Reaction to Competition
Maintain profitable Industry leadership• Aggressively invest in new capacity, and
upgrade process technology– Lower cost of investment:
• Europe $100 per HL• Russia $55 per HL• India $35 per HL
• Develop and launch exciting new products– Kingfisher Ultra, Kingfisher wine
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FULL YEAR FY’07
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Performance Highlights – FY’07• KF Strong overtakes KF premium to become
India’s biggest selling beer, sales of over 26m cases
• Invested around Rs200Cr in new capacity, to increase own brewery capacity by 20%, and 2 new greenfield breweries with over 8.5m cases of capacity pa
• Completed acquisition of KBDL, and now fully merged into UBL
• Market capitalisation exceeds $1bn• Total annual dividend of 25%
1616
Market Share
33%
48%
UBL SABM MM Mt Shiv Others
6%4%
9%
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Profit Performance – FY’07
EBITDA Net Profit
UBL Consolidated
Net ProfitEBITDA
Rs162 Cr +18%
Rs55 Cr+550%
Rs172 Cr +24%
Rs65 Cr+350%
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Q1’08
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Performance Highlights Q1’08
• KF Strong and KF premium outgrow the industry
• New greenfield breweries commissioned and in operation
• Capacity investment for 2008-09 on track
• Market capitalisation exceeds $1.7bn
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Kingfisher Performance – Q1’ 08
7.15m
7.7m
7.2m
9.3m
June 06 June 07 June 06
Industry Growth +7.2%
Premium
Industry Growth +19.5%
Strong
June 07
+7.6%+28.5%
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Profit Performance Q1’ 08• Price increases achieved on around 55% of
volume• Results impacted by:
– Capped capacity of Hyderabad brewery impacts UBL standalone results by Rs6Cr, profit of Rs6Cr recorded in UMBL
– Continuing impacts of prices increases on barley and hops affects margins
• UBL stand alone now includes KBDL, MBDL & ABDL, not included in last years numbers
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Profit Performance – Q1’08
EBITDA PBT
UBL Combined
PBTEBITDA
Rs79 Cr +54%
Rs71 Cr +5%
Rs105 Cr +18%
Rs65 Cr +57%
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THANK YOU