Almarai Company 1 st Half 2019
Almarai Company
1st Half 2019
Business Performance
Main Events – 1st Half 2019
Almarai Company 2019 Q2 Earnings Presentation 3
Market Update• Core Markets continue to stabilize in first half, returning to growth
• Juice market continues to decline….consumers are trading down
• UHT discounting continues to stabilize in general
• VAT implemented in Bahrain
Company Highlights • New Board, along with 4 sub-committees for Executive, Remuneration & Nomination, Audit and Risk, successfully nominated
• Continued strong performance in the Poultry Segment of 20% yoy driven by HORECA channel expansion (over 50% of
Poultry Sales volume)
• Bakery and Dairy growth has stabilized post Q1 2018 VAT implementation impact
• Fresh milk, laban and zabadi market share remains strong
• USD 500 M international sukuk issued in Q1 which was oversubscribed 11 times
• Sukuk Series II amounting to SAR 1.0 B was successfully repaid in Q1
• High financing cost due to a) higher rate environment & b) revised Almarai capital structure post perpetual sukuk repayment
• Almarai continues to focus on controlling input costs, reducing operating cost, reducing capex and maximizing FreeCashFlow
• Acquisition of Premier Foods finalised
Market Share
• Almarai market share is stable in
most categories in KSA on MAT
basis.
• Most of the categories, Almarai
stands at #1 position in the KSA
market.
Almarai Company 2019 Q2 Earnings Presentation 4
CategoryMAT Value
Growth %
Almarai MAT Value
Share Change
Almarai Rank
(Value)
Total Laban +1.8 -3.4 1
Fresh Milk -1.5 -5.4 1
UHT Milk +3.4 -6.4 2
Zabadi -2.4 -5.6 1
Fresh Ghista +12.1 +12.9 1
Total Juice +1.9 -9.6 1
Processed Cheese +5.3 +4.5 1
Total Natural Cheese +11.9 +9.9 1
Total Whip & Cooking Cream +21.6 +20.1 1
Total Bread +8.5 +5.4 1
Total Fresh Chicken +12.6 +13.2 1
Total Infant Formula +10.6 +8.0 7
• A C Neilsen, May 2019
Almarai Company 2019 Q2 Earnings Presentation 5
Innovation Pipeline – 1st Half 2019
Segment YTD 2019
Dairy & Juice
Bakery
Poultry
Infant
Nutrition
Financial Performance
Financial Performance – 1st Half 2019(SAR in Millions) Revenues
EBIT
Net Income
3,307 3,767
7,074
Q1, 2019 Q2, 2019 YTD Q2, 2019
2.6%
3.1%
3.8%
336
583
919
Q1, 2019 Q2, 2019 YTD Q2, 2019
-11.9%
-8.7%
-2.6%
Almarai Company 2019 Q2 Earnings Presentation 7
Revenue• Market returning to growth
• Stable & increasing market share
• Poultry continues double digit growth
EBIT• Higher feed cost, driven by alfalfa
• Higher marketing spend, mainly in bakery
• Higher labour costs
• Timing difference for overseas crop plantation
Net Income • Higher funding cost due to higher SIBOR (SAR
35M), Higher debt due to capital re-structuring
SAR 35M) and lower capitalization due to lower
capex• Normalised net income, excl higher funding costs,
is ~1.7% lower yoy
• Full year funding cost is expected to be higher by
SAR ~150 M due to higher SIBOR and
capital re-structuring
481 739
1,219
Q1, 2019 Q2, 2019 YTD Q2, 2019
-3.3%
-2.4%
-0.9%
Results by Segment – 1st Half 2019
Almarai Company 2019 Q2 Earnings Presentation
Revenues by Segment Dairy &Juice• Stable market share
• Higher feed & labour costs
• Higher funding costs impacting profitability
Bakery • Volume led improved performance
• Higher market spend
Poultry • Volume led strong performance in first half ,
through HORECA channel expansion
Other • Infant Nutrition continues to perform well.
However, timing difference due to rotational
crops impacted the first half numbers, which
are likely to reverse later in the year
Profit Attributable to Shareholders
5,109
783 855 112
5,117
816 1,027 115
Dairy & Juice Bakery Poultry Others
YTD Q2, 2018 YTD Q2, 2019
0.1%
4.2% 20.0%3.2%
828
87 92 (1)
753
76 125 (35)
Dairy & Juice Bakery Poultry Others
YTD Q2, 2018 YTD Q2, 2019
-13.1%
16% 15%
11% 9% 11% 12%
-9.1%
36.2%
(SAR in Millions)
Growth YOY by Category and Geography – 1st Half 2019
Almarai Company 2019 Q2 Earnings Presentation 9
Revenue By Category Revenue By Geography
Fresh Dairy ,
2,720 , 38%Cheese, Butter
& Cream , 1,131 ,
16%
Poultry , 1,027 ,
15%
Bakery , 816 ,
12%
Long-Life
Dairy , 602 , 8% Fruit Juice ,
663 , 9%
Other Sales ,
115 , 2%
SAR 7,074
Million
2%
2%
20%
4%
(10%)
3%
3%
KSA , 4,832 ,
68%
UAE , 692 , 10%
Egypt , 377 , 5%
Oman , 373 ,
5%
Kuwait , 358 ,
5%Bahrain , 167 ,
3% Export /
Others , 149 ,
2%
Jordan , 128 ,
2%
SAR 7,074
Million
4%
0%
6%
1% (1%)
(7%)
5%
7%
(SAR in Millions)
Growth YOY by Category and Geography – 1st Half 2019
Almarai Company 2019 Q2 Earnings Presentation 10
Revenue By Geography & Category(SAR in Millions)
Q2 YTD YoY
SAR in Million Fresh Dairy
Long Life
Dairy Fruit Juice
Cheese,
Butter &
Cream
Bakery Poultry Other Sales Total
35 (11) (42) 20 23 146 3 174
2% (4%) (10%) 3% 4% 19% 6% 4%
(12) 6 (18) 25 8 19 (1) 27
(2%) 5% (11%) 9% 6% 27% (100%) 2%
19 15 (15) (14) 2 7 1 14
12% 8% (10%) (20%) 122% 39% 2% 2%
41 10 (75) 31 33 171 4 215
2% 2% (10%) 3% 4% 20% 3% 3%
Export / Others
GCC
KSA
Total
219
4,755 (848)(1,700) 1,876 (1,000)
276 (2,418)
(850)9 320
Cash 30 June
2018
Operating Cash
Flow (Net of
Working Capital)
Working Capital Perpetual Sukuk
Repayemnt
International
Sukuk
International
Sukuk
Repayment
Loans Payment /
Others
Capex Dividend Others Cash 30 June
2019
(SAR 101 Million)
CAPEX and FCF
Almarai Company 2019 Q2 Earnings Presentation 11
Capital Investment 2014-Present
Cash Flow Bridge Rolling 12 Months
CAPEX
• Capex continues to declines as company previous investment
cycle has come to an end
• Remaining Capex is comprised of mostly maintenance Capex
YTD Q2 2019 Free Cash Flow = SAR 775M
• OCF: +3.9B in line with profit growth however OCF is reduced by
more than SAR 0.8B due to investment in alfalfa feed stock to
manage the green forage ban in KSA from Nov 18
• ICF: -2.4B and is in line with our reduced capex guidance
• FCF: +1.5B & expected to continue to increase in the short and
medium term
2,879 3,986 4,389
2,844 1,923 1,884
23% 29% 30%20%
14% 14%
-30%
-20%
-10%
0%
10%
20%
30%
40%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2014 2015 2016 2017 2018 Last 12 Months
Net Cash Used in Investing Activities
Debt Movement = SAR -548MOCF = SAR 3,907M
Net Debt
Almarai Company 2019 Q2 Earnings Presentation 12
Net Debt and EBIT/EBITDA Margins
EBIT and EBITDA Margins
Net Debt Trend
Almarai leverage target is to reach 2.5x-2.7x Net Debt to EBITDA in the next 2-3 years
8,762 9,34410,883 10,910
12,659 13,025
75% 74% 81% 73% 87% 88%
2.9x 2.8x 2.9x 2.8x
3.3x 3.4x
-1
-1
0
1
1
2
2
3
3
4
2 ,000
7,000
12 ,000
17,000
2014 2015 2016 2017 2018 Last 12 Months
Net Debt Net Debt / Equity Ratio Net Debt / EBITDA
12,60613,795
14,339 13,936 13,559 13,774
15.8% 16.4% 17.6% 18.5% 18.2% 17.7%
23.9%24.2%
26.0%28.1% 28.5% 28.0%
2014 2015 2016 2017 2018 Last 12 Months
Net Sales EBIT % to Net Sales EBITDA % to Net Sales
Key Share Data
2019 Q2 Earnings Presentation 13Almarai Company
35%
24%
16%
25%
Savola
HHPrinceSultan binMohammedPIF
Others
0%
50%
100%
150%
200%
250%
300%
350%
400%
Almarai TASI Food & Beverages
15%
10%
15%
20%
25%
30% Year to date total shareholder's
return since listing
Key Statistics for Almarai (30 June 2019)
Share Price (SAR) 53.50
Current P/E Ratio (ttm) 27.82
Earnings Per Share (SAR) (ttm) 1.92
Market Cap (SAR Million) 53,500
Shares Outstanding (Million) 1,000
Dividend Yield 1.59%
Appendix
Almarai Company 2019 Q2 Earnings Presentation
Profit & Loss Statement
Almarai Company 2019 Q2 Earnings Presentation 15
Change Change
Revenue 3,672 1 0 0 .0 % 3,767 1 0 0 .0 % 2.6% 6,859 1 0 0 .0 % 7,074 1 0 0 .0 % 3.1%
Cost of sales (2,224) (60.6%) (2,300) (61.1%) (3.4%) (4,202) (61.3%) (4,445) (62.8%) (5.8%)
Gross Profit 1,448 39 .4 % 1,467 38 .9 % 1.3% 2,658 38 .7% 2,629 37.2% (1 .1%)
Selling and Distribution Expenses (558) (15.2%) (586) (15.6%) (5.1%) (1,108) (16.1%) (1,148) (16.2%) (3.7%)
General and Administration Expenses (99) (2.7%) (100) (2.6%) (0.9%) (195) (2.8%) (195) (2.8%) 0.3%
Other Expense, net (34) (0.9%) (45) (1.2%) (33.6%) (78) (1.1%) (68) (1.0%) 13.6%
Impairment (Reversal) / Loss on Financial Assets 6 0.2% 2 0.1% (63.8%) (27) (0.4%) 0 0.0% n.a
Operating Income 764 20 .8 % 739 1 9 .6 % (3.3%) 1,249 1 8 .2% 1,219 1 7.2% (2.4%)
Exchange Gain / (Loss) 26 0.7% 1 0.0% (96.8%) 7 0.1% 10 0.1% 45.2%
Finance Costs - net (95) (2.6%) (136) (3.6%) (43.4%) (197) (2.9%) (266) (3.8%) (35.1%)
Share of Results of Associates and Joint Ventures (4) (0.1%) 0 0.0% n.a (7) (0.1%) 0 0.0% n.a
Profit Before Zakat and Income Tax 691 1 8 .8 % 603 1 6 .0 % (12.7%) 1,052 1 5.3% 963 1 3.6 % (8.4%)
Zakat and Foreign IncomeTax (28) (0.8%) (19) (0.5%) 31.1% (48) (0.7%) (42) (0.6%) 12.0%
Profit for the Period 663 1 8 .1 % 584 1 5.5% (12.0%) 1,004 1 4 .6 % 921 1 3.0 % (8.2%)
Profit Attributable to Non Controlling Interest (2) (0.0%) (1) (0.0%) 26.6% 3 0.0% (2) (0.0%) n.a
Profit Attributable to Shareholders 661 1 8 .0 % 583 1 5.5% (11.9%) 1,006 1 4 .7% 919 1 3.0 % (8.7%)
Earnings Per Share (Basic) 0.65 0.59 (9.1%) 0.98 0.93 (5 .1%)
Profit Attributable to Shareholders % 18.0% 15.5% 14.7% 13.0%
2018 2019
2nd Quarter YTDSAR in Millions
2nd Quarter
2018 2019
Results by Segment
Almarai Company 2019 Q2 Earnings Presentation 16
SAR in Millions Dairy & Juice Bakery Poultry Other ActivitiesAlmarai
Consolidated
1st Half 2019
Revenue 5,117 816 1,027 115 7,074
Depreciation and Amortisation (654) (123) (176) (69) (1,021)
Profit Attributable to Shareholders 753 76 125 (35) 919
Percent to Revenue of Profit Attributable to Shareholders 14.7% 9.3% 12.2% (30.6%) 13.0%
Growth versus 1st Half 2018
- Revenue - 2018 5,109 783 855 112 6,859
- Revenue Growth 0.1% 4.2% 20.0% 3.2% 3.1%
- Profit Attributable to Shareholders - 2018 828 87 92 (1) 1,006
- Profit Attributable to Shareholders Growth (9.1%) (13.1%) 36.2% 3,159.3% (8.7%)
Q2 2019
Revenue 2,785 395 527 61 3,767
Depreciation and Amortisation (323) (61) (90) (35) (508)
Profit Attributable to Shareholders 483 27 83 (10) 583
Percent to Revenue of Profit Attributable to Shareholders 17.4% 6.7% 15.7% (16.7%) 15.5%
Growth versus Q2, 2018
- Revenue - 2018 2,783 386 438 64 3,672
- Revenue Growth 0.0% 2.2% 20.2% (5.3%) 2.6%
- Profit Attributable to Shareholders - 2018 547 47 67 1 661
- Profit Attributable to Shareholders Growth (11.6%) (43.7%) 24.2% n.a (11.9%)