Almarai Company Interim Results – 3 rd Quarter 2018
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
2018 Q3 Earnings Presentation 4Almarai Company
• 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.
2018 Q3 Earnings Presentation 5Almarai Company
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
2018 Q3 Earnings Presentation 9Almarai Company
-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
2018 Q3 Earnings Presentation 10Almarai Company
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
2018 Q3 Earnings Presentation 11Almarai Company
+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
2018 Q3 Earnings Presentation 12Almarai Company
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
2018 Q3 Earnings Presentation 13Almarai Company
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
2018 Q3 Earnings Presentation 15Almarai Company
% 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
2018 Q3 Earnings Presentation 16Almarai Company
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
2018 Q3 Earnings Presentation 17Almarai Company
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)
2018 Q3 Earnings Presentation 18Almarai Company
*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.
2018 Q3 Earnings Presentation 19Almarai Company
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
2018 Q3 Earnings Presentation 20Almarai Company
YTD Q3,2018 Free Cash Flow = SAR 425M (SAR179M lower than 2017)
Key Trends
Net Debt
2018 Q3 Earnings Presentation 22Almarai Company
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
2018 Q3 Earnings Presentation 23Almarai Company
# 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
2018 Q3 Earnings Presentation 24Almarai Company
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
2018 Q3 Earnings Presentation 25Almarai Company
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
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