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ATLANTIC GRUPA Company of Added Value EBRD’s 15th ANNUAL SYNDICATIONS AND CO-FINANCIERS MEETING
March 2013
CONTENT
OVERVIEW OF ATLANTIC GRUPA
REFINANCING
2012 FINANCIALS AND 2013 OUTLOOK
2
ONE OF THE LARGEST FOOD AND BEVERAGES COMPANIES IN THE REGION*
Key business segments: Key brands:
The leading coffee producer in the region GRAND KAFA, BARCAFFE
Prominent European company in the sports nutrition MULTIPOWER
Among the leading soft drinks producers in the region CEDEVITA, COCKTA, DONAT Mg
Among the leading confectionary & snacks producers in the region SMOKI, NAJLEPŠE ŽELJE, BANANICA
Among the leading savoury spreads producers in the region ARGETA
Producer of the No1 Croatian brand in the VMS segment DIETPHARM
The leading private pharmacy chain in Croatia FARMACIA
The leading FMCG distributer in the SEE region International Brands (Ferrero, Wrigley...)
Business Fast Moving Consumer Goods
Headquarters Zagreb, Croatia (Europe)
Foundation 1991
No of employees 4,247
FY12 sales EUR 657 millions
Key Markets CEE region, Western Europe, Russia presence on over 40 markets
Production locations 14 production locations in Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Macedonia and Germany
*The region includes: Croatia, Slovenia, Bosnia and Herzegovina, Serbia, Montenegro, Macedonia and Kosovo; Figure translated at EUR/HRK FX rate of 7.5
3
1 6 12 17 27 33 36 42 61 81 90 102145
186223
267 293 302
602630
657
0
100
200
300
400
500
600
700
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2010* 2011 2012
Sales in EUR millions
CAGR 1993-2012:+40.2%
DEVELOPMENT CYCLE: EXTENSIVE M&A TRACK RECORD
Acquisition of Kalničke vode Bionatura
Acquisition of DROGA KOLINSKA
Acquisition of pharmacies – Farmacia
IPO
Acquisition of Fidifarm (Croatia) & Multivita (Serbia)
Representative office Moscow
Acquisition of Haleko & Power Gym: MULTIPOWER
European company
2010
2010
2008/9
2007
2007
2006
2005
Acquisition of Melem
Atlantic Slovenia
Atlantic Macedonia
Acquisition of Neva
Acquisition of CEDEVITA
Atlantic Serbia
Representative office Bosnia and Herzegovina
Regional company
2004
2004
2003
2003
2001
2001
2001
Cooperation Johnson & Johnson
Cooperation Duracell
Distribution center Rijeka
Distribution center Osijek
Distribution center Split
Cooperation Wrigley
National company
1999
1996
1994
1994
1992
1991
DIST
RIBU
TIO
N CO
MPA
NY
DIST
RIBU
TIO
N &
PRO
DUCT
ION
COM
PANY
VERT
ICAL
LY IN
TEG
RATE
D CO
MPA
NY
2010*: Pro-forma consolidated with Droga Kolinska; Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences
4
ATLANTIC GRUPA’S BUSINESS MODEL FROM 2012
SBU
COFFEE
Reorganization in 2012 with an aim to manage business segments and distribution markets in a more efficient manner The new business organisation includes six Strategic Business Units (SBU), four Strategic Distribution Units (SDU) and
Russian market
SBU
BEVERAGES
SBU
SPORTS AND FUNCTIONAL
FOOD
SBU
PHARMA AND PERSONAL
CARE
SBU
SAVOURY SPREADS
SBU
SNACKS
SDU
Croatia
SDU
Slovenia, Serbia and Macedonia
SDU
HoReCa Hotels,
Restaurants, Cafes
RUSSIAN MARKET
Baby food,
All products in Russia and CIS
SDU
International Markets
All markets outside the region,
Russia and CIS
5
PRODUCT/DISTRIBUTION PORTFOLIO OVERVIEW
Cof
fee • Turkish Coffee
• Espresso coffee • Instant coffee
Be
vera
ges • Carbonated soft drinks
• Vitamin instant drinks • Functional waters • Waters • Tea and Functional tea
P
harm
a • Food supplements • OTC products • Pharmacy chain
Snac
ks
• Savoury snacks • Chocolate tablets • Wafers & Biscuits • Bars
S
avou
ry
s
prea
ds • Meat spreads • Fish spreads • Sandwiches
B
aby
food • Baby cereals
• Milk formula • Juices, tea, water • Biscuits, jars
S
ports
and
fu
nctio
nal f
ood
• Sports food • Weight management range • Energy range • Body building range
6
ATLANTIC GRUPA’S GREATEST ASSETS
Brands with key market positions - among the top 3 in their category based on Nielsen Retail Panel and company data
7
STABLE MANAGEMENT TEAM AND OWNERSHIP STRUCTURE Management Ownership structure on 31/12/2012
Supervisory board
Supervisory Board
Audit Committee Nomination and Remuneration
Committee
Corporate Governance Committee
Mladen Veber Senior Group Vice President Business Operations
Zoran Stanković Group Vice President Finance
Neven Vranković Group Vice President Corporate Affairs
Emil Tedeschi President of the Management Board
Lada Franz VedranaZdenko Tedeschi Siniša Željko Josef Saša JelušićAdrović Fiorio Petrović Perić Flosbach Pekeč Kašić
President Vice President Member Member Member Member Memberof the of the of the of the of the of the of theSupervisory Supervisory Supervisory Supervisory Supervisory Supervisory SupervisoryBord Bord Bord Bord Bord Bord Bord
Emil Tedeschi50.2%
Pension funds18.6
EBRD 8.5%
DEG 8.5%
Lada Tedeschi Fiorio 5.8%
Management 1.1%
Other 7.3%
8
Strategic Management Council: deals with vital strategic and operational corporate issues. Consists of: Board Members, Vice Presidents and Senior Executive Directors of each SBU and SDU, Senior Executive Director for Regional KAM and Sales Croatia, the Secretary General, Executive Directors of Corporate Controlling, Central Procurement and Human Resources, and the Head of the Investment Committee.
GEOGRAPHIC PRESENCE
PRESENCE ON MORE THAN 40 MARKETS INCLUDING: Regional countries: Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia, Montenegro, Kosovo Western European countries: Germany, United Kingdom, Italy, Austria, Switzerland, Spain, France Northern European countries: Sweden, Norway Eastern European countries: Russia, Ukraine, Poland, CIS countries
Strong production and distribution network in the region
17 production facilities in Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia and Germany
Own distribution network in Croatia, Slovenia, Serbia and Macedonia
16 distribution centers in the region
11 companies and representative offices in Croatia, Serbia, Slovenia, Bosnia and Herzegovina, Macedonia, Montenegro, Germany, United Kingdom, Italy, Spain and Russia
Slovenia Croatia
Bosnia and Herzegovina
Serbia
Macedonia + production facility in Germany
Overview of production facilities
9
OVERVIEW OF ATLANTIC GRUPA
REFINANCING
2012 FINANCIALS AND 2013 OUTLOOK
10
CONTENT
REFINANCING
Refinancing structure
EBRD arranged loan EUR 232m
EBRD EUR 60m
Raiffeisen Bank, Unicredit Bank,
Sberbank, Erste Bank EUR 172m
Bilateral loan EUR 75m
IFC EUR 50m
Raiffeisenbank Austria Zagreb,
Zagrebačka banka
EUR 25m
Transaction value and purpose
EUR 307m, out of which: Balance sheet restructuring → EUR 272m Energy efficiency improvement → EUR 10m Working capital financing → EUR 25m
Reasoning for refinancing
Agreement of more favourable loan conditions with average interest rate of 4.71% at the time of refinancing and prolonged maturity
Cost savings Balance sheet restructuring – placing a
permanent financing structure Diversifying lenders’ base Creating platform for growth Increasing operational efficiency on the group
level
EBRD19.5%
Raiffeisen Bank, Unicredit Bank,
Sberbank, Erste Bank56.0%
IFC16.3%
Raiffeisenbank Austria Zagreb, Zagrebačka banka
8.1%
11
OVERVIEW OF ATLANTIC GRUPA
REFINANCING
2012 FINANCIALS AND 2013 OUTLOOK
12
CONTENT
RESULTS IN LINE WITH THE GUIDANCE
2012 and 2011 results normalized
(in EUR millions) 2012A/2011E: 99.3% 2012A/2011A: 104.3%
2012A/2011E: 101.6% 2012A/2011A: 108.0%
2012A/2011E: 103.7% 2012A/2011A: 113.6%
0
100
200
300
400
500
600
700
Sales
657 662 6302012A2012E2011A
0
20
40
60
80
EBITDA EBIT
74
53
73
51
69
47
2012A2012E2011A
Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences
13
SALES PROFILE BY STRATEGIC BUSINESS UNITS AND STRATEGIC DISTRIBUTION UNITS
HRKm
* Other segments include SDU HoReCa, Russian market and non-allocable business activities (headquarters and support functions in Serbia, Slovenia and Macedonia) which are excluded from the reportable operating segments. For the time being, SDU International Markets will not be separated, but its sales and profitability will be presented within SBU to which they relate. For the time being, the Russian market will include only the baby food product range sales under the Bebi brand.
** Line item “Reconciliation” relates to the sale of own brands which is included in the appropriate SBU and in SDUs through which the products were distributed.
Key highlights:
Strategic Business Unit Coffee recorded highest increase in sales with this year being the second best year after 2008
SBU Pharma and Personal Care and SBU Savoury Spread recorded significant increase in sales – 7.8% and 7.6%, respectively
SDU Croatia recorded decrease in sales as a consequence of a drop in the principals’ brands segment distribution, primarily caused by the termination of a portion of Karolina product range distribution
(in EUR thousands) 2012 2011 2012/2011
SBU Beverages 89,591 89,380 0.2%
SBU Coffee 145,423 133,555 8.9%
SBU (Sweet and Salted) Snacks 80,063 77,170 3.7%
SBU Savoury Spreads 61,822 57,460 7.6%
SBU Sports and Functional Food 90,663 86,419 4.9%
SBU Pharma and Personal Care 64,177 59,507 7.8%
SDU Croatia 116,910 118,411 (1.3%)
SDU Slovenia, Serbia, Macedonia 257,385 250,060 2.9%
Other segments* 49,754 43,685 13.9%0 0
Reconciliation** (298,396) (285,277) n/a
Sales 657,392 630,369 4.3%
Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences
14
SALES BY CATEGORIES
HRKm
Key highlights:
The product category coffee with Grand kafa and Barcaffe brands is the largest individual product category, with a share of 22%
The product category Sports and functional food with key brands Multipower and Champ, and the product category Beverages with key brands Cedevita, Cockta and Donat Mg are the second and third largest product categories, with 14% shares, respectively
Principal brands make 16% of the total sales
Baby food 3%Principal
brands 16%
Sports and FunctionalFood 14%
Pharma & Personal care 10%
Coffee 22%
Sweet and salted snack12%
Savoury spreads 9%
Beverages 14%
15
SALES PROFILE BY MARKETS
HRKm
Key highlights:
Reduced share of the Croatian market in total sales, but the Croatian market still remains the largest retail market of the Group
Serbian market has generated nearly a quarter of the Group’s sales in 2012.
Growth of the share of Slovenia in the Atlantic Grupa’s total sales as a result of sales increase in the above market
The share of Bosnia and Herzegovina in the Atlantic Grupa’s total sales remained unchanged compared to 2011
A slight increase of the share of other markets in the region
Increased market share of Russia and the CIS
Increase in the share of other markets
*Other regional markets: Macedonia, Montenegro, Kosovo; **Western Europe: Germany, United Kingdom, Italy
2012
Croatia 26.6%
Serbia 24.9%
Slovenia 13.2%Bosnia and Herzegovina
7.6%
Other regionalmarkets* 6.4%
Western Europe**7.3%
Russia and Commonwealthof Independent States 5.0%
Other markets 8.9%
2011
Croatia 28.2%
Serbia 25.5%
Slovenia 12.7%
Bosnia and Herzegovina7.6%
Other regionalmarkets* 6.2%
Western Europe**8.0%
Russia and Commonwealthof Independent States 3.9%
Other markets 8.0%
16
Ownbrands72.0%
Farmacia6.1%
2012
Private label6.0%
Principal brands15.9%
Own brands71.6%
Farmacia5.8%
2011
Private label5.3%
Principal brands 17.3%
SALES PROFILE BY PRODUCT CATEGORY
HRKm
Own brands: Sales of EUR 473.6 million with a growth in sales of 5.1% compared to
2011 The most prominent growth in sales was recorded by brands in the
following segments: (i) coffee – Barcaffe, Grand kafa and Bonito, (ii) beverages – Donat Mg and Cocta, (iii) savoury spreads - Argeta, (iv) snacks - Smoki, and (v) baby food - Bebi
Principal brands: Sales of EUR 104.3 million with the 5.1% decrease in sales compared to
2011 Impact of the termination of a portion of the Karolina product range
distribution and the termination of the Tvornica Duhana Rovinj product portfolio distribution
Private labels: Sales of EUR 39.5 million with the growth of 18.7% compared to 2011. The growth primarily relates to the product range sports and functional food
Farmacia: 9.4% growth in sales compared to 2011 The growth in the pharmacy chain was achieved at the organic level, as
well as through the merger of 5 pharmacies acquired in May 2011 As at 31 December 2012, the pharmacy chain Farmacia consisted of 45
pharmacies and 13 specialised stores
Figures translated at EUR/HRK FX rate of 7.5
17
OPERATING PROFITABILITY OF SBU’S AND SDU’S
HRKm
Key highlights:
The most significant contribution to the Group EBIT by the SBU Coffee with EBIT of EUR 18.8 million, SBU Savoury Spreads with EBIT of EUR 14.7 million and SBU Beverages with EBIT of EUR 14.1 million.
Management of Atlantic Grupa is focused on the growth in operating result of the SBU Sports and Functional Food and especially SDU Croatia, which recorded a negative EBIT of EUR 0.6 million.
Since in 2012 the organisational structure, business model and manner of reporting significantly changed, it was not practical to restate the comparative results for 2011 by Strategic Business Units and Strategic Distribution Units.
Figures translated at EUR/HRK FX rate of 7.5
(in EUR millions) 2012
SBU Beverages 14.1SBU Coffee 18.8SBU (Sweet and Salted) Snacks 12.8SBU Savoury Spreads 14.7SBU Sports and Functional Food 0.6SBU Pharma and Personal Care 6.7SDU Croatia (0.6)SDU Slovenia, Serbia, Macedonia 10.0Other segments (24.5)
Group EBIT 52.7
18
Equity and liabilities structure as at 31 December 2012
Short term financialdebt 6.9%
Bond 2.2%
Trade and otherpayables 15.4%
Other liabilities 6.5%
Long term financial debt
40.6%
Capital and reserves 28.4%
FINANCIAL INDICATORS
HRKm
Key highlights:
Net debt was reduced by EUR 18.8 million compared to previous year
Non-current and current financial liabilities with the bond make 49.7% of the Atlantic Grupa’s total equity and liabilities.
Key capital expenditures in 2012:
The construction of the Cockta bottling plant in Apatovac
Investment in IT – SAP licence for Slovenia, purchase of HRIS system (human resources information system)
Investments related to transferring the production of Multipower beverages to Rogaška Slatina
Investment in modernisation of equipment – the wafers packaging machine in Soko Štark, equipping the bottling plant of Palanački Kiseljak, purchase of equipment for the production of coffee, automation of the Bosch line for coffee in Izola
purchase of espresso machines for the HoReCa channel
(in EUR millions) 2012 2011
Net debt 313.8 332.5
Total assets 685.6 714.0
Equity 194.8 201.6
Current ratio 1.8 1.8
Gearing ratio 61.7% 62.3%
Net debt/EBITDA* 4.2 4.8
Interest coverage ratio* 2.6 2.3
Capex 10.5 12.9
Cash flow from operating activities 39.5 21.2
*Normalized; Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences
19
Strategic management
guidance
Focus on organic business growth through active brand management with a special emphasis on strengthening the position of brands in international markets; strengthening the regional character of distribution business and further development of the HoReCa segment;
Focus on further business rationalisation and cost management through the CORE program and optimisation of operating processes on all operating levels, aimed to improve operating efficiency;
Regular settlement of existing financial liabilities with an active management of debt and finance costs; and
Prudent liquidity management.
ATLANTIC GRUPA’S STRATEGIC MANAGEMENT GUIDANCE FOR 2013
Figures translated at EUR/HRK FX rate of 7.5 to avoid FX differences
(in EUR millions) 2013 Guidance (normalized) 2012 Normalized 2013/2012
Sales 684 657 4.0%
EBITDA 78 74 4.7%
EBIT 56 53 5.3%
Interest expense 25 29 (14.1%)
20
CONTACT
Atlantic Grupa
Investor Relations
Miramarska 23, 10 000 Zagreb, Croatia
+385 1 2413 908
21