update on five year plan...sales growth – geography mix almarai company 2013 q1 earnings...

Almarai Company

2013 Q1 Earnings Presentation

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.

Almarai Company 2 2013 Q1 Earnings Presentation

Business Highlights

Revenue of 2.4B SAR, growth of 18.2% driven by poultry 70%, juice 39% and inclusion of IDJ results.

Revenue growth of 9.4% in KSA, 9.6% in all other GCC states and 609.8% in rest of the world including Jordan and Egypt, driven by first time consolidation of IDJ. Note that this is the last quarter where consolidation effect of IDJ will impact the growth rate.

EBITDA of 509.7 million SAR grew by 13.9%, EBITDA Margin now stands at 21.1% of revenue.

EBIT of 300.8 million SAR grew by 2.9% over Q1, 2012. Whilst margin over material are now growing at a higher growth rate than revenue growth, higher labour overheads, higher depreciation and inclusion of IDJ overheads have resulted in lower EBIT growth.

Net operating cash flow of 54 million SAR is down by 85.9% over Q1, 2012, mainly driven by working capital expansion, partially due to inventory investment for poultry segment expansion plan.

Capital expenditure for the quarter was 0.7B SAR, which is in line with our earlier forecast of 3.1B capex spend for the full year 2013.

The second tranche of Sukuk program amounting to 1.3B SAR was successfully completed just prior to Q1, 2013.

The Board of Directors proposal for a dividend of SAR 0.5B (SAR 1.25 per share) was approved on 2nd April 2013 and the dividend will be paid on 10th April 2013.

Staff strength stood at more than 30K at the end of Q1, 2013. Growth in headcount accounted for part of the increase of overhead growth, including higher statutory charges, which is running in line with capacity expansion but is growing faster than volume and revenue growth. Within KSA, Almarai ranking still stands at the high end of green band in Nitaqat.

Lead the innovation efforts in our selected markets by launching 15 new products during the first quarter of 2013.

Highlights – Q1 2013


Strong pipeline of innovation continues in 2013

5 2013 Q1 Earnings Presentation Almarai Company

Sales Highlights

Sales Growth – Geography mix


KSA

All

Others

GCC

9.4%

9.6%

609.8%

Almarai

Group 18.2%

% Growth

Q1 2012 Rev

in B SAR

Q1 2013 Rev

in B SAR

KSA70 .6%

GCC27.9%

All Others1.5%

Q1 2012

KSA65.4%

GCC25.9%

All O thers8 .7%

Q1 2013

0 .0 3

0 .21

0 .57

0 .62

1.44

1.58

2.0 4

2.41

Sales Analysis by Product & Region


Sales by Product

Participation vs Growth – Q1 2013

20 13 20 12 % change

Fresh Dairy 953.7 808 .2 18.0%

Long-Life Dairy 258 .7 213.5 21.2%

Fruit Juice 288 .0 207.3 39.0%

Cheese & Butter 394.8 394.9 (0.0%)

Bakery 340 .9 293.5 16.1%

Poultry 162.1 95.4 69.9%

Arable and Horticulture 6.9 15.7 (56.5%)

Other Sales 5.9 11.8 (50.4%)

Total Sales 2,411.0 2 ,0 40 .3 18 .2%

Sales by Product

Group SAR M illion

Q1

39 .6%

16 .4%

14 .1%

11.9%

10 .7%

6 .7%

18 .0%

0 .0 %

16 .1%

39 .0%

21.2%

69 .9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Fresh Dairy

Cheese & Butter

Bakery

Fruit Juice

Long-Life Dairy

Poultry

Participation Q1 2013 Growth (Q1 2013 v Q1 2012)

40% 30% 20 % 10% 0% 10% 20% 30% 40% 50%

KSA65.4%

Kuwait5.0%

Qatar4.2%

Bahrain2.1%

UAE9.4%

Oman5.2%

Egypt4.4%

Jordan2.6%

Export / Others1.8%

Sales by Country - Q1 2013

Change in growth rates and IDJ consolidation results in higher

share of poultry , Juice and Long life dairy


39 .6% 39 .6%

19 .4% 16 .4%

14 .4%14 .1%

10 .2%11.9%

10 .5% 10 .7%

4.7% 6 .7%

1.3% 0 .5%

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

8 0 %

90 %

10 0 %

Q 1 20 12 Q 1 20 13

O ther Sales

Poultry

Long-Life Dairy

Fruit Juice

Bakery

Cheese & Butter

Fresh Dairy

Product mix in different geographical regions highlights revenues

growth potential….


Fresh Dairy40%

Long-Life Dairy11%

Fruit Juice12%

Cheese & Butter16% Bakery

14%

Poultry7%

Arable and Horti0%

Other Sales0%

Total

Fresh Dairy48%

Long-Life Dairy13%

Fruit Juice13%

Cheese & Butter16%

Bakery8%

Poultry2%

Other Sales0%

Gulf

Fresh Dairy38%

Long-Life Dairy8%

Fruit Juice10%

Cheese & Butter17%

Bakery18%

Poultry9%

Arable and Horti0%

Other Sales0%

KSA

Fresh Dairy25%

Long-Life Dairy28%

Fruit Juice26%

Cheese & Butter15%

Bakery2%

Arable and Horti3%

Other Sales1%

All Other Countries

`

..which can be achieved via expanding presence of Almarai

Operations throughout the region(excl Farms in Argentina)


Distribution

centre

Manufacturing

facility

Statement of Income

Statement of Income


SAR million 20 13 20 12 Change

Net Sales 2,411.0 2,0 40 .3 18 .2%

Cost of sales (1,583.2) (1,333.0 ) 18 .8 %

Gross Profit 8 27.8 70 7.3 17.0 %

Selling and Distribution Expenses (450 .1) (344.7) 30 .6%

General and Administration Expenses (76.8 ) (70 .1) 9.5%

EBIT 30 0 .8 292.5 2.9%

Share of Results of Associates (6.0 ) (12.3) (51.4%)

Bank Charges (38 .8 ) (27.4) 41.6%

Income from Main and Continuing

Operations256 .1 252.8 1.3%

Zakat and Income Tax (7.6) (7.9) (3.8%)

Net income before Minority Interest 248 .5 244 .9 1.5%

Minority Interest 6.6 (2.8 ) (339.4%)

Net Income 255.1 242.1 5.4%

Earnings Per Share 0 .64 0 .61 5.4%

Net Income % 10 .6% 11.9%

1st quarter

• GCC Margin over material has continued to show higher growth than revenue in Q1 2013, similar to previous quarter. However, higher depreciation, IDJ consolidation effect and overhead growth resulted in lower gross profit growth compared to revenue growth.

• Similarly, growth in overheads is driven by head count increase and IDJ consolidation, resulting in lower net profit growth relative to revenue growth

• than revenue.

Segment Reporting


SAR MillionDairy &

JuiceBakery Poultry

Arable and

Horticulture

Other

Activities

Almarai

Consolidated

Q1 2013

Sales 1,903.6 340.9 162.1 24.4 0.0 2,431.1

Third Party Sales 1,901.2 340.9 162.1 6.9 0.0 2,411.0

Net Depreciation (140.1) (31.7) (15.9) (17.6) (3.6) (208.9)

Income/(loss) before Minority

Interest250.4 34.3 (46.1) 26.7 (16.9) 248.5

Total Assets 12,833.2 2,023.2 4,127.7 1,683.6 1,004.8 21,672.6

Total Liabilities (11,873.0) (337.1) (317.4) (238.4) (535.3) (13,301.2)

Return on Sales 13.2% 10.1% (28.4%) 390.2% n.a. 10.3%

Growth versus Q1 2012

- Third Party Sales 16.2% 16.1% 69.9% (56.5%) n.a. 18.2%

- Income before Minority Interest (7.5%) (2.5%) 44.0% n.a. 84.9% 1.5%

Trend charts

Robust revenue growth with challenging – but

anticipated – EBITDA & EBIT trend


Revenue, EBITDA and EBIT Evolution

• After excluding the impact of IDJ consolidation in full, Net Operating income % for the last 12

months is revised to 17.6%.

2,757

3,770

5,0 30

5,8 69

6 ,931

7,951

9 ,8 8310 ,254

19 .4%

20 .7% 21.0%21.8%

21.1%

19.1%

16.9%16.4%

25.7% 26 .0%25.3%

26 .7% 27.2%

25.6%

24.2% 23.9%

20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 Last 12 months

SA

R in

Mill

ion

Revenues

EBIT %

EBITDA %

CAGR 2006 –2013: 20 .6% (w/o impact of acquisit ions 19.4%)

Quarterly Performance – Net Income


90.6

122.8

162.2

197.4

234.1

235.2

242.1

255.1

121.8

165.3

235.2

287.1

343.1

349.3

379.5

122.6

186.1

293.7

363.4

424.5

429.7

450.0

130.2

193.1

219.2

248.8

283.5

285.5

369.0

0

50

100

150

200

250

300

350

400

450

SA

R M

illio

n

Q1 = 5.4%

2013 versus 2012

Cash Flows

Cash Flow Statement (Q1 2013)


Higher revenue growth

resulted in positive operating

cash flow, which was

partially subdued by working

capital expansion,….

….but additional capex

investment, especially for

poultry (0.2B) resulted in

negative free cash flow of

0.6B

4 17 54

2,0 06

6 8 2 1

1,794

0

50 0

1,0 00

1,500

2,0 00

2,500

3,0 00

Cash at

beginning of period

From

O perating Act ivities

From Financing

Act ivities

Used in

Investing Act ivities

Currency

Impact

Cash at end of

period

SA

R M

illio

n

SAR M illion 20 13 20 12

From Operat ing Act ivit ies 54 383

Used in Invest ing Act ivit ies (682) (832)

Cashflow Av'ble for Dist 'n (629) (449)

From Financing Act ivit ies 2,006 465

Increase/(Decrease) in Cash 1,377 16

Currency Impact on Cash

& Cash Equivalent(1)

Cash at beginning of period 417 272

Cash at end of period 1,794 28 8

Q 1

Cash Flow Bridge – rolling 12 months


28 8

2,0 55

1,447

1,300 (2,767)

(512)

(17) 1,794

Cash at 31 M ar 2012

Operating Cash Flow

Loans Issues / Others

Sukuk

Capex

Dividend Others

Cash at 31 M ar 2013

+ SAR 1,506 m

Balance Sheet

Balance Sheet


SAR M illion 31/0 3 /13 31/0 3 /12

1,373 1,037

919 855

13,845 11,854

16,137 13,746

1,335 1,383

298 596

17,770 15,725

8 ,983 7,450

302 254

114 130

8 ,371 7,891

17,770 15,725

107.3% 94.4%

Net Operat ing Working Capital

Biological Assets

Property , Plant and Equipment

Net Operat ing Assets

Total Equity

Net Capital Employed

Net Debt to Equity Rat io

Intangible Assets - Goodwill

Investment and Financial Assets & Deferred

Charges

Net Debt

Employee Terminat ion Benefits

Deferred Tax (Net)

Net Debt


1,315 2,463 3,499 3,951 4,679 6,749 8,305 8,983

69% 81%

96% 73% 76%

100% 102% 107%

2.0x

2.3x 2.3x 2.4x 2.3x

2.8x

3.2x 3.4x

0%

50%

100%

150%

200%

250%

300%

350%

400%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2006 2007 2008 2009 2010 2011 2012 Last 12 months

Net Debt Net Debt / Equity Ratio Net Debt / EBITDA

in m

illio

nS

AR

Debt Profile highlights balanced approach for

funding….


0 .0

0 .5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2013 2014 2015 2016 2017 2018 & Beyond

SA

R B

illio

n

Debt Maturity by Age and Type

Islamic Bonds

Govt / Semi Govt Inst .

Banks

6 .4 ,

65%1.1,

12%

2.3 ,

23%

Capital Expenditure

Capex spend in line with Guidance…


Capex spend of 0.7B SAR, which is in line for with our earlier forecast of 3.1B SAR for the year 2013.

Poultry capex spend for the quarter amounted to slightly more than 0.2B SAR. The key highlight for Q1

was the commercial production start of the first of the three lines.

Each of the three main functions of Sales,

Manufacturing and Farming consumed capex of ~0.1B

SAR.

Replacement and other capex including IDJ,

accounted for another 0.1B SAR.

Key Share Data


0 %

50 %

10 0 %

150 %

20 0 %

250 %

30 0%

Almarai TASI

Key Stat ist ics for Almarai (1 April 20 13 )

Current P/E Rat io (t tm) 18 .9

Est imated P/E(12/20 13 ) 16 .8

Earnings Per Share (SAR) (t tm) 3 .6

M arket Cap (M SAR) 27,198

Shares O utstanding (M ) 40 0 .0

30 Day Average Volume 212,0 20

Dividend Indicated Gross Yield 1.8 %

Cash Dividend (SAR) 1.3

Last Dividend 4 /3 /20 13

5 Year Dividend Growth 12.5%

Q & A


Thank you

Almarai Company

Exit 7, North Circle Road

Al Izdihar District

P.O. Box 8524

Riyadh, 11492

Saudi Arabia

Contact for investor relations matters:

Khalid M. Al Nasser

+966 1 470 00 05 ext 1280

[email protected]

update on five year plan...sales growth – geography mix almarai company 2013 q1 earnings...

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