almarai company - argaamplus.s3.amazonaws.com and environment overview almarai company 2017 q4...

Almarai Company Annual Results – 2017

Disclaimer

Information contained in this presentation is subject to change without further notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness 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’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and may change over time. No assurance can be given that future 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 Company management under any circumstances.

2017 Q4 Earnings Presentation 2 Almarai Company

Macro Environment This has changed

from Business

Environment to

Macro Environment.

Industry and Environment Overview


2017

First Half Second Half

• Higher uncertainty amid multiple reforms and

macroeconomic changes

• Lower consumer confidence/sentiment and slower market

growth, specially in discretionary sectors

• Certain frozen products from Brazil were banned due to

health concerns

• Increases in energy costs

• Government support payments were resumed

• Commodity prices remain at historically low levels

• Starting of import levy on frozen products

• Continued expansion in non-traditional channels like Food

services & Iktisaab (rural distribution model in Egypt)

• Expat levy was introduced from July

• Iraq border were re-opened

• Increased M&A activity, resulting in consolidation in the

F&B Sector

• Higher supply of milk driven by imbalance in global dairy

markets

• Tightening of Monetary Policy resulting in higher funding

cost

How Almarai Responded?

• Innovation driving top-line growth supporting market share position

• Continued cost optimization and efficiency journey resulting in nearly ~ SAR 300M savings

• Better product portfolio management

• Optimizing asset utilization

• Launch of key new products in new categories of Liquid Milk & Long life Juice

• Commissioning of Central Processing Plant 3 to further enhance production efficiency

Almarai Gaining Market Share Despite Declining KSA Food Market

• KSA Food Market is declining by 3.0% on

MAT basis.

• Core Dairy - Both Laban and Fresh milk

categories in decline

• Discretionary categories are in accelerated

decline (Juices, Jar Cheese, Ghista, Cheese

Slices)

Source: Nielsen Company MAT Nov-17


MAT Category

growth (Value)%

Almarai MAT Val.

Shr Change

Almarai Rank

(Value)

PLAIN REGULAR LABAN -9.6% +1.7 1

PLAIN FRESH MILK -4.9% +1.3 1

FLAVORED FRESH MILK -28.4% +0.0 1

UHT MILK -8.0% +1.3 2

ZABADI -3.8% +0.1 1

FRESH GISHTA -12.0% +4.7 1

FRUIT JUICE BOTTLES -20.9% +0.5 1

BUTTER -3.9% -1.7 1

CHEESE JARS -10.6% -2.8 1

CHEESE SLICES -8.3% +2.4 1

CHEESE TRIANGLES -10.0% +5.3 2

FETA CHEESE -8.7% +3.8 1

TOTAL WHIP & COOKG CREAM +5.2% -2.9 1

SLICED BREAD -5.4% -1.3 1

PUFFS -18.1% +1.1 1

CROISSANTS -10.9% +1.6 1

CUP CAKES +41.3% +29.2 1

WHOLE CHICKEN -5.2% +0.4 1

Market Share(Volume) - KSA

Puffs Juices UHT Laban

Jar Cheese Chicken Bread Fresh Milk


65.1 67.2

MAT NOV 16 MAT NOV 17

17.3 19.4


47.0 47.0


69.8 71.8


68.3 70.5


69.3 66.8


37.2 35.8


37.2 35.8


Business Highlights This is a new slide

called Business

Environment.

Highlights – Full Year 2017

• Almarai is FCF positive SAR 1.3B after a 10+ year investment cycle

• Strong turnaround in our poultry operations resulting in first ever annual breakeven of poultry operations at SAR 0.6M

• Amid generally lower market growth trends across product categories, we have retained and in most cases, gained

market share across nearly all categories

• Continued progress in our cost and efficiency programs by the agility we have developed at every level of our business

resulted in cost savings of nearly SAR 300M

• Egypt market struggled in the first half however it stabilised in the 2nd half resulting in higher than 30% growth in local

currency for our key product portfolio.

• CAPEX investment reduced year-on-year by SAR 1.6B to reach SAR 2.8B

• CPP3 plant opened in November 2017 to further our capacity in Dairy and Juice category

• Innovation: Introduced 42 new products including our long life juice product – Joosy Life. Additionally, we introduced our

game changing liquid infant nutrition product which is the first of it’s kind in the GCC

• Maintained our Nitiqat status as Platinum in most of our Keyans.

• Established a new Food Service Business Unit to service the growing HORECA (hotel, restaurant, catering) channel

• We continue to invest and develop our talent internally through multiple programs including the Future Leaders Program

and Graduate Professionals Program to name a few.


The items in red are

highlighted in red.

2013

SAR 11.2 B +12.4%

9 2017 Q4 Earnings Presentation Almarai Company

Key Trends for 2017 Net Sales

0.3%

-4.2%

-4.5% -2.6%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

3.0

3.2

3.4

3.6

3.8

4.0

Q1 Q2 Q3 Q4

SA

R in

Bil

lio

n

Y 2017

Y 2016

Y17 v Y16

Operating Income 13.2%

3.9%

3.1%

-5.7%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

-

0.2

0.4

0.6

0.8

1.0

Q1 Q2 Q3 Q4

SA

R in

Bil

lio

n

Y 2017

Y 2016

Y17 v Y16

Profit Attributable to Shareholders 13.7%

2.4%0.4%

-4.4%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

-

0.2

0.4

0.6

0.8

Q1 Q2 Q3 Q4

SA

R in

Bil

lio

n

Y 2017

Y 2016

Y17 v Y16

Operating Cash Flow 61.6%

22.4%

-26.9%

2.8%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

0.0

0.5

1.0

1.5

2.0

Q1 Q2 Q3 Q4

SA

R in

Bil

lio

n

Y 2017

Y 2016

Y17 v Y16

Investing Cash Flow

-33.3%

-20.9%

-39.9% -38.9%-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

-

0.5

1.0

1.5

2.0

Q1 Q2 Q3 Q4

SA

R in

Bil

lio

n

Y 2017

Y 2016

Y17 v Y16

Employees

2.2%

-1.1%

-2.3%

-4.2%-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

42

42

43

43

44

44

45

45

Q1 Q2 Q3 Q4

In T

ho

us

an

d

Y 2017

Y 2016

Y17 v Y16

Mohammed change the

charts in the arabic

version to be formatted

as they are here.

Sales Trends

Sales Analysis by Product – Full Year By Product 2016 By Product 2017


Fresh Dairy

5,903

41%

Long-Life

Dairy

1,500

11%

Fruit Juice

1,877

13%

Cheese &

Butter

1,681

12%

Bakery

1,881

13%

Poultry

1,332

9%

Other Sales

165

1%

SAR 14,339

Million

Fresh Dairy

5,674

41%

Long-Life

Dairy

1,486

11%

Fruit Juice

1,601

11%

Cheese &

Butter

1,749

13%

Bakery

1,807

13%

Poultry

1,464

10%Other Sales

154

1%

SAR 13,936

Million

Sales Analysis by Product – Full Year


1% 1%9% 11%

10% 11%

13% 11%

12% 13%

13% 13%

41% 41%

Y 2016 Y 2017

Net Sales in SAR Million

14,339 13,936

Growth

2017 v 2016

% of Total

Growth

Fresh Dairy

( YoY -4% )

(229) (2%)

Bakery

( YoY -4% )

(74) (1%)

Cheese & Butter

( YoY +4% )

68 0%)

Fruit Juice

( YoY -15% )

(276) (2%)

Long Life

( YoY -1% )

(15) (0%)

Poultry

( YoY +10% )

132 1%)

Other Sales

( YoY -6% )

(11) (0%)

Total

( YoY-3% )

(403) (3%)

Sales Analysis by Country – Full Year

By Geography 2016 By Geography 2017


KSA

9,057

63%

UAE

1,375

10%

Oman

724

5%

Kuwait

656

4%

Qatar

699

5%

Egypt

975

7%

Bahrain

293

2%

Jordan

282

2%

Export /

Others

278

2%

SAR 14,339

Million

KSA

9,300

67%

UAE

1,401

10%

Oman

738

5%

Kuwait

704

5%

Qatar

326

2%

Egypt

649

5%

Bahrain

312

2%

Jordan

286

2%

Export /

Others

220

2%

SAR 13,936

Million

Sales Analysis by Country – Full Year


2% 2%2% 2%2% 2%

5% 2%

7%5%

5%5%

5%5%

10%10%

63% 67%

Y 2016 Y 2017

Net Sales in SAR Million

14,339 13,936

Gro w th 2 017

v 2 016

% o f To ta l

Gro w th

KSA

( YoY +3% )

243 2%

UAE

( YoY +2% )

27 0%

Oman

( YoY +2% )

1 5 0%

Kuwait

( YoY +7% )

48 0%

Egypt

( YoY -33% )

(326 ) (2% )

Qatar

( YoY -53% )

(374) (3% )

Bahrain

( Yoy +7% )

1 9 0%

Jordan

( YoY +1% )

4 0%

Others

( YoY -21% )

(58) (0% )

Total

( YoY -3% )

(403) (3% )

Egypt Local Currency

Growth = 35.2%

Innovation Pipeline 2017

Q1 Q2

Q3 Q4


Financial Highlights

Operating Performance


5,522 5,584

Year 2016 Year 2017

SAR Million

Gross Profit

+61

+1.1%

2,518 2,583

Year 2016 Year 2017

SAR Million

Operating Income

+66

+2.6%

2,148 2,182

Year 2016 Year 2017

SAR Million

Profit Attributable to Shareholders

+35

+1.6%

% to Sales 38.5% 40.1% 17.6% 18.5% 15.0% 15.7% 1.6 pp 0.9 pp 07 pp

Statement of Income


Change Change

Net Sales 3,509 3,419 (2.6%) 14,339 13,936 (2.8%)

Cost of sales (2,120) (2,083) (1.7%) (8,816) (8,352) (5.3%)

Gross Profit 1,389 1,335 (3.8%) 5,522 5,584 1.1%

Selling and Distribution Expenses (579) (556) (4.0%) (2,480) (2,392) (3.6%)

General and Administration Expenses (100) (93) (7.4%) (433) (397) (8.2%)

Other Expense, net (74) (88) 18.3% (91) (211) 130.9%

Operating Income 635 599 (5.7%) 2,518 2,583 2.6%

Exchange Gain / (Loss) 9 (3) (136.9%) 45 7 (84.1%)

Finance Costs - net (97) (105) 8.2% (351) (401) 14.2%

Share of Results of Associates and Joint Ventures 4 9 119.6% 13 13 (2.3%)

Profit Before Zakat and Income Tax 552 499 (9.5%) 2,224 2,202 (1.0%)

Zakat and Foreign IncomeTax (17) 9 n.a. (74) (42) (43.2%)

Profit for the Period 534 508 (4.8%) 2,150 2,160 0.5%

Profit Attributable to Non Controlling Interest 2 5 93.4% (2) 22 n.a.

Profit Attributable to Shareholders 536 513 (4.4%) 2,148 2,182 1.6%

Earnings Per Share (Basic) 2.10 2.13 1.4%

Profit Attributable to Shareholders % 15.3% 15.0% 15.0% 15.7%

SAR million4th Quarter Full Year

2016 2017 2016 2017

Segment Reporting


SAR Million Dairy & Juice Bakery Poultry Other ActivitiesAlmarai

Consolidated

Q4 YTD 2017

Net Sales 10,510 1,807 1,464 154 13,936

Depreciation and Amortisation (1,222) (228) (309) (161) (1,920)

Profit Attributable to Shareholders 2,049 293 (29) (130) 2,182

Percent to Net Sales of Profit Attributable to Shareholders 19.5% 16.2% (2.0%) (84.4%) 15.7%

Total Assets 20,469 2,464 5,708 3,255 31,896

Growth versus 2016

- Net Sales (4.1%) (3.9%) 9.9% (6.4%) (2.8%)

- Profit Attributable to Shareholders (10.4%) (11.9%) 90.1% 26.8% 1.6%

Q4 2017

Net Sales 2,525 467 392 35 3,419

Depreciation and Amortisation (319) (63) (81) (38) (502)

Profit Attributable to Shareholders 498 72 13 (70) 513

Percent to Net Sales of Profit Attributable to Shareholders 19.7% 15.4% 3.4% (201.3%) 15.0%

Growth versus Q4 2016

- Net Sales (3.1%) (7.2%) 6.6% 11.2% (2.6%)

- Profit Attributable to Shareholders (11.9%) (17.1%) (131.7%) 4.3% (4.4%)

2,182 2,148 (224)

(40)

265 48

1,000

1,500

2,000

2,500

Year 2016 Dairy & Juice Bakery Poultry Other Year 2017

SA

R M

illi

on

Basic EPS* (SAR) 2.10 2.13

Net Income % 15.7% 19.5% 16.2% (2.0%) (84.4%)

Net Sales Growth (2.8%) (4.1%) (3.9%) 9.9% (6.4%)

Net Income Growth 1.6% (10.4%) (11.9%) 90.1% 26.8%

Net Income by Segment


*EPS – Earnings Per Share

Investing Cash Flows continue the downward trend in line with

revised 5 year Business Plan

• Manufacturing and Farming spent CAPEX of SAR ~1.7 Billion for various capacity expansion projects.

• Sales Depot, Poultry and Logistics expansion accounted for SAR ~0.6 Billion.

• Replacement and other CAPEX including IDJ accounted for another SAR ~0.5 Billion.

CAPEX spend for the 4th Quarter Year to Date 2017 was SAR 2.8 Billion.


824

1,488 1,572 1,711

2,189

3,575 3,284 3,302

3,115

4,409 4,900

3,312

30%

39%

31% 29% 32%

45%

33%29%

25%

32% 33%

24%

-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

SA

R i

n M

illi

on

s

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

Cash Flow Bridge


564

4,614

565 (3,312)

(718)

(78) 1,636

Cash at 31

Dec 2016

Operating Cash Flow

CAPEX / Biological

Assets DividendOthers

Cash at 31

Dec 2017+ SAR 1,072 Million

Loans Issues /

Payments /

Charges

Free Cash Flow = SAR 1.3 B (SAR1.8B over 2016)

Key Trends New Slide

Net Debt


4,606 6,653 8,237 8,053 8,762 9,344 10,889 10,883 10,910

74%

98% 101%

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

2.2x

2.8x

3.1x 3.0x

2.8x 2.7x

2.7x 2.7x 2.8x

0%

50%

100%

150%

200%

250%

300%

350%

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016 2016 2017

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

Capital gain of SAR 47m in 2012 *

234 235 242 255

274

306 309 328

343 349

380 398

433

530

629

674

425 430 450

476

539

595 655

667

284 286

369 373

428

484

489

513

0

100

200

300

400

500

600

700

800

SA

R M

illi

on

2017 versus 2016

Q1 = 13.7%

*#

289

Q 2 = 2.4%

#

658

Q3 = 0.4%

#

664

Q4 = (1.6%)

#

536

EBIT and EBITDA margins are starting to improve…

Net Sales, EBITDA and EBIT Evolution


6,931

7,951

9,883

11,219

12,606

13,79514,699

14,339 13,93621.1%

19.1%

16.9%

16.0%15.8%

16.4%17.3% 17.5%

18.5%

27.2%

25.6%

24.2% 24.4% 23.9% 24.2%

25.3%25.9%

28.1%

2010 2011 2012 2013 2014 2015 2016 2016 2017

SA

R M

illio

n Net Sales

EBIT % to Net Sales

EBITDA % to Net Sales

CAGR 2010 – 2017: 10.5% (w/o impact of acquisitions 6.9%)

SOCPA IFRS

Key Share Data


0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

Ju

n-0

5

Se

p-0

5

De

c-0

5

Ma

r-0

6

Ju

n-0

6

Se

p-0

6

De

c-0

6

Ma

r-0

7

Ju

n-0

7

Se

p-0

7

De

c-0

7

Ma

r-0

8

Ju

n-0

8

Se

p-0

8

De

c-0

8

Ma

r-0

9

Ju

n-0

9

Se

p-0

9

De

c-0

9

Ma

r-10

Ju

n-1

0

Se

p-1

0

De

c-1

0

Ma

r-11

Ju

n-1

1

Se

p-1

1

De

c-1

1

Ma

r-12

Ju

n-1

2

Se

p-1

2

De

c-1

2

Ma

r-13

Ju

n-1

3

Se

p-1

3

De

c-1

3

Ma

r-14

Ju

n-1

4

Se

p-1

4

De

c-1

4

Ma

r-15

Ju

n-1

5

Se

p-1

5

De

c-1

5

Ma

r-16

Ju

n-1

6

Se

p-1

6

De

c-1

6

Ma

r-17

Ju

n-1

7

Se

p-1

7

De

c-1

7

Almarai Tasi

Share Price (SAR) 53.75

Current P/E Ratio (ttm) 25.37

Earnings Per Share (SAR) (ttm) 2.12

Market Cap (SAR Million) 53,690

Shares Outstanding (Million) 1,000

Dividend Yield 1.39%

Key Statistics for Almarai (31 December 2017)

35%

24%

16%

25%

Savola

HHPrince

Sultan bin

MohammedPIF

Others

17%

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

Year to date total shareholder's

return since listing

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:

[email protected]

almarai company - argaamplus.s3.amazonaws.com and environment overview almarai company 2017 q4...

Documents