almarai company...almarai company 2018 q3 earnings presentation 5 almarai gaining market share...

Almarai CompanyInterim Results – 3rd Quarter 2018

Disclaimer

Information contained in this presentation is subject to change without further notice, its accuracy is notguaranteed and it may not contain all material information concerning the company. Neither we nor ouradvisors make any representation regarding, and assume no responsibility or liability for, the accuracy orcompleteness of, or any errors or omissions in, to any information contained herein.

In addition, the information contains projections and forward-looking statements that reflect the company’scurrent views with respect to future events and financial performance. These views are based on currentassumptions which are subject to various risks and may change over time. No assurance can be given thatfuture events will occur, that projections will be achieved, or that the company’s assumptions are correct.Actual results may differ materially from those projected.

This presentation is strictly not to be distributed without the explicit consent of Almarai Companymanagement under any circumstances.

2018 Q3 Earnings Presentation 2Almarai Company

Macro Environment

Main Events Q3, 2018


• Growth in the quarter remained relatively flattish compared to the corresponding quarter due to contraction in the overall market

and change in demographics

• Market continues to be impacted by multiple reforms and macroeconomic changes

• Good progress made against the strategic objectives set out in Almarai 2025

• On target for breakeven for infant nutrition segment by end of fiscal year 2018

• On track for 100% importation of alfalfa feed from 4th November 2018

• Continued cost optimization and efficiency projected to achieve SAR 200M savings for 2018 in response to a higher cost

environment

• Notably strong performance in the Poultry Segment

• Positive Free Cash Flow of SAR 425 million, a decrease of SAR 179 million due to feed stock build up to be ready for green fodder

production ban in KSA on 4th November 2018

• Increase in the price of milk by 5% on July 2nd 2018, the first price increase in ten years. Price increases were made to offset higher

costs impact as describe above

• The company continues strong product innovation and significant transformational efforts to offset this downward trending

pressure by introducing a value added brand known as Albashyer which now includes frozen chicken, mozzarella and feta

cheeses. The company will expand this value added category going forward which will serve the food service and retail sectors.

• The company managed to gain and maintain GCC market share in most categories. Within the regions we operate, it’s worth

highlighting, the company has consistent gain in market share in Egypt.


Almarai Gaining Market Share Despite Declining KSA Dairy and

Food Market

• Almost all of the Dairy and Foods categories are

declining in KSA in MAT August 2018 compared to

MAT August 2017.

• Despite the categories decline, Almarai gained

share in most of the categories in KSA on MAT

basis.

• Most of the categories, Almarai stands at #1 position

in the KSA market.

Source: Nielsen Company MAT Aug 18

MAT Category

Growth (Value) %

Almarai MAT Value

Share Change

Almarai Rank

(Value)

PLAIN REGULAR LABAN -4.6% +0.7 1

PLAIN FRESH MILK -5.0% +0.8 1

FLAVORED FRESH MILK -32.7% +3.7 1

UHT MILK -2.8% +2.4 2

ZABADI -4.0% -0.4 1

FRESH GISHTA -11.2% +2.5 1

FRUIT JUICE BOTTLES -16.1% +4.7 1

BUTTER +1.8% -1.2 1

CHEESE JARS -2.3% -2.2 1

CHEESE SLICES -4.4% +2.6 1

CHEESE TRIANGLES -4.6% +6.7 2

FETA CHEESE -7.8% +2.6 1

TOTAL WHIP & COOKG CREAM +13.9% -2.9 1

SLICED BREAD -10.9% -4.5 1

PUFFS -5.7% +1.2 1

CROISSANTS -0.8% +1.8 1

CUP CAKES -4.9% -0.8 1

WHOLE CHICKEN (FRESH) -8.7% -4.1 1

Business Highlights

2013

SAR 11.2 B +12.4%

HighlightsRevenue

Profit Attributable to Shareholders Employees

Operating Income

Free Cash Flow

2018 Q3 Earnings PresentationAlmarai Company 7

3.37 3.42 3.23

3.73

3.37

2.80

3.00

3.20

3.40

3.60

3.80

Q3, 2017 Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018

SA

R in

Bil

lio

n

Last 5 Quarters

0.78

0.60 0.48

0.76 0.76

-

0.50

1.00

Q3, 2017 Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018

SA

R in

Bil

lio

n

Last 5 Quarters

0.67 0.51

0.34

0.66 0.63

-

0.20

0.40

0.60

0.80

Q3, 2017 Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018

SA

R in

Bil

lio

n

Last 5 Quarters

43.2 42.7

42.3

43.0

42.6

42

42

43

43

44

Q3, 2017 Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018

In T

ho

us

an

d

Last 5 Quarters

0.42

0.70

0.06

0.37

(0.00)

(0.20)

-

0.20

0.40

0.60

0.80

Q3, 2017 Q4, 2017 Q1, 2018 Q2, 2018 Q3, 2018S

AR

in B

illi

on

Last 5 Quarters

Revenue Breakdown

Fresh Dairy

3,957

38%Long-Life

Dairy

982

10%

Fruit Juice

1,176

11%

Cheese,

Butter &

Cream

1,480

14%

Bakery

1,262

12%

Poultry

1,314

13% Other Sales

164

2%

SAR 10,334

Million

Revenue Analysis by Product – YTD Q3, 2018By Product 2017 By Product 2018


-1% +3%

-4%

+2%

-1%

=

Fresh Dairy

4,364

42%Long-Life

Dairy

889

8%

Fruit Juice

1,234

12%

Cheese,

Butter &

Cream

1,497

14%

Bakery

1,340

13%

Poultry

1,072

10% Other Sales

119

1%

SAR 10,517

Million

+1%

Revenue Analysis by Product – YTD Q3, 2018


Growth

2018 vs 2017

Co nt rib ut io n o f

To t al % Gro wt h

Fresh Dairy( YoY -9.3% )

(407) (4%)

Chees e, Butter & Cream( YoY -1.2% )

(18) (0%)

Bakery( YoY -5.8% )

(78) (1%)

Poultry( YoY +22.5% )

242 2%

Fruit Juic e( YoY -4.7% )

(59) (1%)

Long Life Dairy( YoY +10.4% )

93 1%

Other Sales( YoY +37.3% )

45 0%

Total( YoY-1.7% )

(183) (2%)1% 2%

8% 10%

12% 11%

10%13%

13%12%

14%14%

42% 38%

YTD Q3 2017 YTD Q3 2018

Net Sales in SAR Million

10,517 10,334

SAR in Million

KSA

7,003

68%

UAE

1,039

10%

Oman

555

5%Kuwait

509

5%

Egypt

577

6%

Bahrain

250

2%

Jordan

209

2%

Export /

Others

192

2%

SAR 10,334

Million

Revenue Analysis by Country – YTD Q3, 2018By Geography 2017 By Geography 2018


+2%

+1%= =

= =

=

KSA

6,987

66%

UAE

1,039

10%

Oman

554

5%

Kuwait

530

5%

Qatar

326

3%

Egypt

467

5%

Bahrain

233

2%

Jordan

218

2%

Export /

Others

163

2%

SAR 10,517

Million

=

Revenue Analysis by Country – YTD Q3, 2018


Growth

2018 vs 2017

Co nt rib ut io n o f

To t al % Gro wt h

KSA( YoY +0.2% )

16 0%

UAE( YoY +0.0% )

0 0%

Oman( YoY +0.3% )

2 0%

Kuwait( YoY -3.9% )

(20) (0%)

Egypt( YoY +23.5% )

110 1%

Qatar( YoY -100% )

(326) (3%)

Bahrain( Yoy +7.1% )

17 0%

Jordan( YoY -4.2%)

(9) (0%)

Others( YoY +17.3% )

28 0%

Total( YoY -1.7% )

(183) (2%)

SAR in Million

2% 2%2% 2%2% 2%3%5%

6%

5% 5%

5% 5%

10% 10%

66% 68%

YTD Q3 2017 YTD Q3 2018

Net Sales in SAR Million

10,517 10,334

Innovation Pipeline Q3, 2018


Financial Highlights

1,669 1,639

YTD Q3, 2017 YTD Q3, 2018

SAR Million

Profit Attributable to Shareholders

-30

-1.8%

1,985 1,995

YTD Q3, 2017 YTD Q3, 2018

SAR Million

Operating Income

+11

+0.5%

4,248 4,211

YTD Q3, 2017 YTD Q3, 2018

SAR Million

Gross Profit

-38

-0.9%

Operating Performance – YTD Q3, 2018


% to Sales 40.4% 40.7% 18.9% 19.3% 15.9% 15.9%0.3 pp 0.4 pp 0.0 pp

Statement of Income – 9 months and Q3, 2018


Change Change

Revenue 3,373 1 0 0 .0 % 3,371 1 0 0 .0 % (0.1%) 10,517 1 0 0 .0 % 10,334 1 0 0 .0 % (1 .7%)

Cost of sales (1,857) (55.1%) (1,919) (56.9%) (3.3%) (6,268) (59.6%) (6,123) (59.3%) 2.3%

Gross Profit 1,516 4 4 .9 % 1,452 4 3.1 % (4.2%) 4,248 4 0 .4 % 4,211 4 0 .7% (0.9%)

Selling and Distribution Expenses (600) (17.8%) (596) (17.7%) 0.8% (1,810) (17.2%) (1,813) (17.5%) (0.1%)

General and Administration Expenses (81) (2.4%) (79) (2.4%) 2.5% (304) (2.9%) (275) (2.7%) 9.6%

Other Expense, net (40) (1.2%) (46) (1.4%) (14.1%) (123) (1.2%) (124) (1.2%) (1.2%)

Impairment (Reversal) / Loss on Financial Assets (18) (0.5%) 24 0.7% n.a (26) (0.3%) (3) (0.0%) 88.2%

Operating Income 776 23.0 % 755 22.4 % (2.6%) 1,985 1 8 .9 % 1,995 1 9 .3% 0.5%

Exchange Gain / (Loss) (1) (0.0%) (5) (0.1%) (466.2%) 11 0.1% 2 0.0% (76.8%)

Finance Costs - net (97) (2.9%) (94) (2.8%) 3.1% (296) (2.8%) (284) (2.7%) 4.0%

Share of Results of Associates and Joint Ventures 6 0.2% 1 0.0% (81.2%) 4 0.0% (6) (0.1%) n.a

Profit Before Zakat and Income Tax 683 20 .3% 657 1 9 .5% (3.8%) 1,703 1 6 .2% 1,707 1 6 .5% 0.3%

Zakat and Foreign IncomeTax (18) (0.5%) (16) (0.5%) 9.4% (51) (0.5%) (65) (0.6%) (25.9%)

Profit for the Period 665 1 9 .7% 641 1 9 .0 % (3.7%) 1,652 1 5.7% 1,643 1 5.9 % (0.5%)

Profit Attributable to Non Controlling Interest 2 0.1% (6) (0.2%) n.a 18 0.2% (4) (0.0%) n.a

Profit Attributable to Shareholders 667 1 9 .8 % 634 1 8 .8 % (4.9%) 1,669 1 5.9 % 1,639 1 5.9 % (1 .8%)

Earnings Per Share (Basic) 0.66 0.62 (5 .2%) 1.63 1 .60 (1 .9%)

Profit Attributable to Shareholders % 19.8% 18.8% 15.9% 15.9%

2018SAR million

3rd Quarter YTD 3rd Quarter

2017 2018 2017

Segment Reporting – 9 months and Q3, 2018


SAR Million Dairy & Juice Bakery Poultry Other ActivitiesAlmarai

Consolidated

Q3 YTD 2018

Revenue 7,594 1,262 1,314 164 10,334

Depreciation and Amortisation (948) (189) (267) (142) (1,546)

Profit Attributable to Shareholders 1,352 146 144 (2) 1,639

Percent to Revenue of Profit Attributable to Shareholders 17.8% 11.6% 10.9% (1.3%) 15.9%

Total Assets 20,449 2,440 5,574 3,416 31,880

Growth versus YTD Q3, 2017

- Revenue - 2017 7,985 1,340 1,072 119 10,517

- Revenue Growth (4.9%) (5.8%) 22.5% 37.3% (1.7%)

- Profit Attributable to Shareholders - 2017 1,551 221 (42) (60) 1,669

- Profit Attributable to Shareholders Growth (12.8%) (33.9%) n.a 96.4% (1.8%)

Q3 2018

Revenue 2,431 435 457 49 3,371

Profit Attributable to Shareholders 525 59 52 (1) 634

Percent to Revenue of Profit Attributable to Shareholders 21.6% 13.6% 11.3% (1.2%) 18.8%

Growth versus Q3, 2017

- Revenue - 2017 2,570 437 328 38 3,373

- Revenue Growth (5.4%) (0.5%) 39.1% 28.9% (0.1%)

- Profit Attributable to Shareholders - 2017 613 68 (7) (8) 667

- Profit Attributable to Shareholders Growth (14.5%) (13.8%) n.a 92.6% (4.9%)

1,639 1,669 (199)

(75)

186 58

1,000

1,200

1,400

1,600

1,800

YTD Q3, 2017 Dairy & Juice Bakery Poultry Other YTD Q3, 2018

SA

R M

illio

n

Basic EPS* (SAR) 1.63 1.60

Net Income by Segment (9 Months)


*EPS – Earnings Per Share

Net Income % 15.9%17.8% 11.6% (1.3%)10.9%

Revenue Growth (1.7%)(4.9%) (5.8%) 22.5% 37.3%

Net Income Growth (1.8%)(12.8%) (33.9%) n.a. 96.4%

Q1 Net Income 328 (27) 55 50(62) 344 +16

Q2 Net Income 674 (38) 73 (0) 661(48) (14)

Q3 Net Income 667 (9) 58 7 634(89) (33)

Investing Cash Flows continue the downward trend in line with

revised 5 year Business Plan

• Manufacturing and Farming spent CAPEX of SAR ~0.6 Billion for various capacity expansion projects.

• Sales Depot, Poultry and Logistics expansion accounted for SAR ~0.4 Billion.

• Replacement and other CAPEX including IDJ accounted for another SAR ~0.4 Billion.

CAPEX spend for the 3rd Quarter Year to Date 2018 was SAR 1.4 Billion.


824

1,488 1,572 1,711

2,189

3,575

3,284 3,302 3,115

4,409 4,900

3,312

2,567

30%

39%

31% 29% 32%

45%

33%

29%25%

32% 33%

24%19%

-30 %

-20 %

-10%

0%

10 %

20 %

30 %

40 %

50 %

-

1,000

2,000

3,000

4,000

5,000

6,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Last 12

Months

SA

R i

n M

illi

on

s

Net Cash Used in Investing Activities Investment as a % of Net Sales

660

3,678 (771)

(2,567)

(746)

(5) 248

Cash at 30

Sept 2017

Operating Cash Flow

CAPEX / Biological

Assets

DividendOthers

Cash at 30

Sept 2018(SAR 412 Million)

Loans Issues /

Payments /

Charges

Cash Flow Bridge – Rolling 12 Months


YTD Q3,2018 Free Cash Flow = SAR 425M (SAR179M lower than 2017)

Key Trends

Net Debt


6,653 8,237 8,053 8,762 9,344 10,889 10,883 10,910 13,275

98% 101%

75% 75% 74% 81% 81% 73% 95%

2.8x

3.1x 3.0x

2.8x 2.7x 2.7x 2.7x 2.8x

3.1x

0%

50%

100%

150%

200%

250%

300%

350%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2011 2012 2013 2014 2015 2016 2016 2017 Last 12

Months

Net Debt Net Debt / Equity Ratio Net Debt / EBITDA

SA

R M

illi

on

SOCPA IFRS

Quarterly Performance – Net Income Trend Analysis


# IFRS revaluation adjustments

Please note that 2016 and subsequent years are based on IFRS however earlier years are based on SOCPA accounting standards

* Capital gain of SAR 47m in 2012

235 242 255

274 306 309

328 344 349

380 398

433

530 629

674 661

430 450

476

539

595 655

667 634

284 286

369 373

428

484

489

513

0

100

200

300

400

500

600

700

800

SA

R M

illi

on

2018 versus 2017

Q1 = 4.8%

*#

289

#658 #

664

#

536

Q2 = (2.0%)Q3 = (4.9%)

EBIT and EBITDA margins are starting to improve…Revenue, EBITDA and EBIT Evolution


7,951

9,883

11,219

12,606

13,79514,699 14,339

13,936 13,753

19.1%

16.9% 16.0% 15.8% 16.4% 17.3% 17.6%18.5% 18.9%

25.6%24.2%

24.4%

23.9% 24.2% 25.3% 26.0%28.1%

29.3%

2011 2012 2013 2014 2015 2016 2016 2017 Last 12 Months

SA

R M

illio

n

Net Sales

EBIT % to Net Sales

EBITDA % to Net Sales

CAGR 2011 – 2018: 8.5% (w/o impact of acquisitions 4.4%)

SOCPA IFRS

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Sep

-05

Jan

-06

May

-06

Sep

-06

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Jan

-16

May

-16

Sep

-16

Jan

-17

May

-17

Sep

-17

Jan

-18

May

-18

Sep

-18

Almarai TASI

Key Share Data


35%

24%

16%

25%

Savola

HHPrince

Sultan bin

Mohammed

PIF

Others

16%

10%

15%

20%

25%

30%

De

c-0

7

De

c-0

8

De

c-0

9

De

c-1

0

De

c-1

1

De

c-1

2

De

c-1

3

De

c-1

4

De

c-1

5

De

c-1

6

De

c-1

7

Se

p-1

8

Year to date total shareholder's

return since listing Share Price (SAR) 49.90

Current P/E Ratio (ttm) 31.19

Earnings Per Share (SAR) (ttm) 1.95

Market Cap (SAR Million) 49,900

Shares Outstanding (Million) 1,000

Dividend Yield 1.50%

Key Statistics for Almarai (30 September 2018)

www.almarai.com

Thank you

QR Code for Almarai IR App.

“We will encourage our major corporations to expand across borders

and take their rightful place in global markets”

For Investor Relations matters please contact:

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almarai company...almarai company 2018 q3 earnings presentation 5 almarai gaining market share...

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