United Spirits Limited has informed the Exchange regarding Investor Presentation which is presented to investors at their meeting on June 3, 2019 and June 4, 2019.
DIAGEO
INDIA
United Spirits Limited
Registered Office: UBTower #24 Vittal Mallya Road Bengaluru 560 001
Tel: +91 802221 0705 Fax:+91 803985 6862 www.diageoindia.com
June 4,2019
BSE Limited, (Regular Office & Corporate Relations Dept.) Dalal Street, Mumbai 400 001 Scrip Code: 532432
National Stock Exchange of India Ltd Exchange Plaza, C-1 Block G, Bandra Kurla Complex, Bandra East, Mumbai- 400051 Scrip Code: MCDOWELL-N
Dear Sir/Madam,
Intimation pursuant
Sub: (Listing Obligations And Disclosure Requirements) Regulations,
to Regulation 30 of Securities And Exchange Board Of India
2015
Pursuant to regulation 30 and other applicable regulations, presentation made to the Investors at their meeting on June 3, 2019 and June 4, 2019 is enclosed. Please take this in your record.
Thanking you,
Yours faithfully, for United Spirits Limited
1(lt V.Ramac~ Company Secretary
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JOIINNIE WALXU.
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Corporate Identity Number: L01551KA1999PLC024991
contactus@diageo.com
F19 FULL YEAR RESULTS ROADSHOW 3 JUNE 2019
ANAND KRIPALU
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
WHAT WE WILL COVER TODAY
FY19 REVIEW
PROGRESS AGAINST STRATEGY
F19 FINANCIAL PERFORMANCE
CONFIDENCE IN THE FUTURE
3
WHAT WE WILL COVER TODAY
FY19 REVIEW
PROGRESS AGAINST STRATEGY
F19 FINANCIAL PERFORMANCE
CONFIDENCE IN THE FUTURE
4
WE HAVE THE LEADING PORTFOLIO ACROSS PRICE POINTS
Focus brands
Consumer prices*
>Rs.2000
Rs.900‐2000
Rs.350‐900
<Rs.350
y r u x u L
i
m u m e r P
e g i t s e r P
l
r a u p o P
*Average consumer prices in India, 750ml bottle
5
F19 IN A NUTSHELL
Net sales
+10%
Prestige & Above net sales
+15%
Gross margin
48.8%; +21bps
EBITDA margin
14.3%; +175 bps
Interest costs
‐18%
Profit after tax
659 Cr; +17%
* Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Press Release for further details.
6
FY19 ‐ EXTERNAL RECOGNITION HIGHLIGHTS
Corporate Governance Rating
ICRA assigned a Corporate Governance Rating of CGR2, reinforcing the quality of our corporate governance practices.
Corporate Excellence Award
USL received Dun & Bradstreet 2019 Award for Corporate Excellence in the Acobev Category.
Finance Leadership Awards
Sanjeev Churiwala named CFO of the year, FMCG category, ICAI’s Leadership & Business Excellence Award, 2018
USL’s Annual Report featured in Top 100 Annual Reports worldwide by League of American Communication Professionals (LACP).
7
WHAT WE WILL COVER TODAY
FY19 REVIEW
PROGRESS AGAINST STRATEGY
F19 FINANCIAL PERFORMANCE
CONFIDENCE IN THE FUTURE
8
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
9
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
10
Strengthen & accelerate core brands
PLAYING INTO INDIA’S TOP PASSION POINTS
Music
Food
Cricket
11
Strengthen & accelerate core brands
BRINGING PASSION POINT ALIVE THROUGH PURPOSE‐LED MARKETING
#challengeaccepted campaign
RCB app
Coa ch
12
Strengthen & accelerate core brands
LEVERAGING OUR EXTENSIVE SCOTCH PORTFOLIO
OUR PORTFOLIO
F19 SCOTCH NET SALES GROWTH (%)
Bottled in Origin (BIO)
46%
28%
18%
Bottled In India (BII)
Overall
Bottled in Origin Bottled in India
13
Strengthen & accelerate core brands
BRINGING CATEGORY VIBRANCY THROUGH INNOVATION
RE‐RECRUIT
RECRUIT
DISRUPT
through new variants
through new propositions
through untapped categories
14
Strengthen & accelerate core brands
MAKING SCOTCH HIP: RECRUITING NEW CONSUMERS
15
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
16
Evolve route to consumer
MULTI‐PRONGED APPROACH
AFFLUENT INDIA
MIDDLE INDIA
ASPIRING INDIA
Unique experiences, Weddings & Banquets
Leverage outlets to build brand equity
Focus on retained states, support franchisees
17
Evolve route to consumer
ENABLING THE MULTIPRONGED APPROACH
Affluent India
Middle India
Aspiring India
•
•
Dedicated team driving joint business planning with top 1300 Key Accounts Bespoke brand experiences
•
•
Clear outlet execution standards Customized activations at brand‐state‐channel level
•
•
Dedicated teams driving distribution in retained states Strengthened engagement with Franchise partners
IT INITIATIVES
MASTER DATA MANAGEMENT
SALES FORCE AUTOMATION
POWER BI DASHBOARDS
EDGE INDIA ‐ ADVANCED ANALYTICS
EDGE INDIA ‐ TRAX
18
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
19
Driving productivity
PRODUCTIVITY IS NOW EMBEDDED IN OUR ORGANIZATION
Net Revenue Management
COGS
Marketing
Overheads
•
•
•
Efficient commercial spends
Positive price/mix from P&A growth
Rate and feature optimization
• Manufacturing footprint optimisation
•
•
•
•
Efficiency in agency and point of sale costs
Catalyst to calculate & improve ROI
Right size the organisation
Tight control on discretionary costs
Interest costs
• Debt reduction of INR 676 Cr. during FY19
•
Interest cost saving of INR 48 Cr. during FY19
F19
Gross margin improvement +21bps
EBITDA margin improvement +175bps
PAT margin improvement +46 bps
20
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
21
Corporate citizenship
CORPORATE CITIZENSHIP
Shape regulatory environment
Relatively modest ED hikes
Partner with regulators on policy reform
Change reputation of industry
Alcohol in Society: Road safety, underage consumption
Building thriving communities: Project SHE
22
ALCOHOL IN SOCIETY: ROAD SAFETY PROGRAM
Expanding regional reach for Road Safety Program
Road Safety Week with local universities
23
BUILDING THRIVING COMMUNITIES
Women empowerment: Health & Sanitation
Water replenishment
Women Self Help Group who produce and market sanitary napkins to improve sanitation and create livelihood at Alwar, Rajasthan
Pond excavation work done in Udaipur, Rajasthan increasing the storing capacity by 4114 cu. mtr.
24
OUR FIVE STRATEGIC PRIORITIES
To be one of the best performing, most trusted and respected consumer products companies in India
5 Strategic Priorities
Strengthen & accelerate core brands
Evolve route to consumer
Drive productivity to invest in growth
Corporate citizenship
Winning organization
25
Winning organization
BUILDING A FUTURE READY ORGANISATION
Attracting and developing talent
Enhancing diversity
Winning organization
SHARING OUR MESSAGE ON DIVERSITY
Winning organization
BUILDING A FUTURE READY ORGANISATION
Attracting and developing talent
Enhancing diversity
Driving Simplification
Building a high performance culture
WHAT WE WILL COVER TODAY
FY19 REVIEW
PROGRESS AGAINST STRATEGY
F19 FINANCIAL PERFORMANCE
CONFIDENCE IN THE FUTURE
29
SANJEEV CHURIWALA EXECUTIVE DIRECTOR & CHIEF FINANCIAL OFFICER 3 JUNE 2019
30
F19 IN A NUTSHELL
Net sales
+10%
Prestige & Above net sales
+15%
Gross margin
48.8%; +21bps
EBITDA margin
14.3%; +175 bps
Interest costs
‐18%
Profit after tax
659 Cr; +17%
* Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Press Release for further details.
31
NET SALES GREW DOUBLE‐DIGIT, WITH P&A SEGMENT GROWING FASTER
Reported net sales up 9.9%
Rs Crore
8,170
(41)
439
413
8,981
Underlying* net sales up 10.5%
F18 FY Reported
Operating model changes
Volume
Price/mix
F19 FY Reported
Prestige & Above
Popular
Total
Reported net sales % FY19 15.2
Underlying* net sales % FY19 15.2
(0.1)
9.9
1.4
10.5
* Underlying movement excludes the one off impact of operating model changes
32
UNDERLYING* VOLUME GROWTH OF 5.4%
Cases, mn
84
82
80
78
76
74
P&A
Popular
Total
Underlying* volume growth 5.4%
+11.8% 4.4
(0.5)% (0.2)
81.6
78.5
(1.1)
F18 FY Reported
Operating model changes
Prestige & Above
Popular
F19 FY Reported
Reported volume %
Underlying volume %
Price Mix
11.8
(3.1)
4.0
11.8
(0.5)
5.4
3.4
1.9
5.1
* Underlying movement excludes the one off impact of operating model changes
33
CONSISTENT PROGRESS TOWARDS PREMIUMISATION
NET SALES BY SEGMENT (%)
FY17
FY18
FY19
40%
58%
35%
32%
63%
66%
Prestige & Above Popular
* The total doesn’t add up to 100%; the rest is “Other lines of business”
34
EBITDA GROWTH OF 25%, EBITDA MARGIN EXPANSION OF 175BPS
12.6*%
Rs Crore
1,028
21bps
413
9bps
(71)
56bps
90bps
14.3%
(15)
(68)
1,287
EBITDA margin up 175bps
F18 FY Reported
Gross profit
Marketing spend
Staff costs
Other overheads
F19 FY Reported
Underlying EBITDA margin excluding the impact of operating model changes, one‐off restructuring costs expanded by 174bps. *Reported EBITDA margin for F18 has gone up by 10bps due to some regrouping as explained in the published financials.
35
PAT GROWTH OF 17%
175bps
(146)bps
4bps
82bps
(41)bps
(30)bps
6.9%
562
260
(111)
(9)
48
(36)
(54)
7.3%
659
Rs Crore
F18 FY Reported
EBITDA
Other income Depreciation Interest cost
saving
Exceptional items
Tax
F19 FY Reported
36
FURTHER DELEVERAGING BALANCE SHEET
Net debt
Interest
Reduction of Rs. 676 Cr.
Interest cost saving of Rs. 48Cr.
Rs Crore
3,265
Rs Crore
268
2,589
220
7.3%
7.6%
F18 FY
F19 FY
F18 FY
F19 FY
37
CONTINUED FOCUS ON CASH MANAGEMENT
Rs. Crore
86
1,287
321
59
34
(27)
(169)
(220)
(676)
(756)
112
Opening cash F18
EBITDA
Sale proceeds of non core assets
Working capital movement
Other income
Sale of subsidiary (FSWL)
Investment in subsidiary (Hipbar)
Capex
Interest expense (gross)
Loan repayment
Tax paid
51
Closing cash F19 FY
38
FURTHER IMPROVEMENT IN KEY FINANCIAL INDICATORS
Return on Capital Employed
Debt‐Equity ratio
Interest Coverage ratio
18%
19%
22%
2.1
6
4
1.3
3
0.8
F17
F18
F19
F17
F18
F19
F17
F18
F19
39
CREATING VALUE FOR OUR SHAREHOLDERS
EPS Rs/share
Up 440%
7.7
9.1
#
1.7
2.3
F16 FY
F17 FY
F18 FY
F19 FY
* EPS has been retrospectively adjusted for the 1:5 stock split that became effective in F19
40
WHAT WE WILL COVER TODAY
FY19 REVIEW
PROGRESS AGAINST STRATEGY
F19 FINANCIAL PERFORMANCE
CONFIDENCE IN THE FUTURE
41
EVOLUTION OF CONSUMER LANDSCAPE
e m o c n
i
l
a u n n a y b s d o h e s u o H
l
Affluent (>Rs. 25 lakhs)
Middle (Rs.2.5‐25 lakhs)
Aspiring (<Rs.2.5 lakhs)
# of households
2005
1%
7%
23%
69%
219M
2018: 7th largest economy (GDP Rs.190 lakh crores) 2018
2030: 3rd largest economy (GDP Rs.700 lakh crores) 2030
3%
21%
33%
43%
293M
7%
44%
34%
15%
386M
India is a young nation
• ~45% of India’s population is <25 years; ~65% is <35 years • ~17m people enter Legal Drinking Age* each year in India
Source: World Economic Forum‐Bain report, Census of India (for 2016), Internal analysis *Legal Drinking Age assumed as >21 years for Spirits; period 2016‐21
42
GROWING PER CAPITA CONSUMPTION AND PREMIUMIZATION
Per capita consumption (liters of pure alcohol)
Alcohol consumption vs per capita income
Spirits net sales (CAGR)
India 2030
India 2023
Upper range
Lower range
+7%
17%
9%
1%
Premium+
Prestige
Popular
Per capita income ($)
2017
2022
Source: David Turtle model
Source: IWSR, , Internal estimates
43
CONSISTENT DELIVERY ACROSS P&L
Gross margin
48.6%
48.8%
42.9%
EBITDA margin
F17
F18
F19
A&P (% of sales)
7.8%
9.6%
9.6%
14.3%
12.6%
11.4%
F17
F18
F19
PAT margin
7.3%
6.9%
2.0%
F17
F18
F19
EPS (Rs/share)
9.1
7.7
2.3
F17
F18
F19
F17
F18
F19
* Gross margin for F18 has undergone a change due to a reclassification to maintain conformity – please refer to Annexure in Press Release for further details.
44
CONFIDENCE IN THE FUTURE
India continues to present an attractive market opportunity
Consistent progress on our strategic priorities
Transforming business to harness the future
Medium Term Goal
Grow topline by double digit and improve EBITDA margin to mid‐high teens
45
THANK YOU