Analyst presentation H1 2015/16 Half year ended 30 September 2015 18 November 2015
Disclaimer DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols¹s management and information currently available to the company. Lucas Bols cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. Lucas Bols disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or circumstances, except as required by law. Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them. 2
1. Lucas Bols at a glance 2. Highlights H1 2015/16 3. Operational review 4. Financials H1 2015/16 5. Outlook
Lucas Bols at a glance 77.7 Amsterdam Focus on cocktails and margin In over 110 countries 1575 genever Emerging Markets Western 22.1 1) Europe 12.9% North 28% America 18.5% 45.9% Revenue Operating 22.7% € m profit € m Asia-Pacific 24 brands 42 liqueur FY 2014/15 >50% of revenue outside Western flavours Europe 4 Note 1: Excluding IPO costs
Strong offering of global brands and regional brands Global brands Revenue structure Regional brands Bols Liqueurs Range FY 2014/15 Liqueurs Regional brands 30.7 % 69.3 % Dutch Jenever portfolio Global brands White Spirits Italian Liqueurs Value brands 5
1. Lucas Bols at a glance 2. Highlights H1 2015/16 3. Operational review 4. Financials H1 2015/16 5. Outlook
Highlights H1 2015/16 Revenue of € 39.4 million, down 2.9% organically, mainly following one-off stock reductions in Asia-Pacific. Revenue North America reports healthy 3.4% organic growth as a result of our strategy for growth. Gross Gross margin of 60.8%, at the same level as last year, at constant currency. Margin % Operating Operating profit of € 11.6 million, down 5.3% organically over last year. Profit Free operating cash flow of € 8.8 million ( € 8.3 million in H1 2014/15). FOCF Net profit of € 7.7 million, versus € 2.0 million in H1 2014/15. Net Profit Net debt significantly reduced to € 53.5 million, with a net debt to EBITDA ratio of 2.4. Net Debt Earnings per share of € 0.61. EPS The interim dividend in cash set at € 0.31 per share. Dividend 7
Highlights regions in H1 2015/16 • Western Europe operated in line with H1 last year. • Strong performance in the on-trade market in Scandinavia and Southern Europe. Western • Europe Challenging circumstances in the retail markets Belgium, Germany and the UK. • Positive trend sales of global brands by Maxxium Netherlands. • Decrease in revenues caused by one-off in-market stock reductions in Australia and South East Asia. In Australia adjusted supply chain structure, leads to reductions in warehouses by our local distributor. Asia-Pacific South East Asia, in anticipation of a change in distribution partner effective 1 January, 2016. • The remainder of the Asia Pacific region performed in line with last year. • In North America we see our market strategy for growth pay-off. North • Good performance of the US market, in accordance with our expectations, leading to healthy organic revenue growth. America • Growth in an increasing number of states and a growing customer base. • Emerging Markets showed a slight increase compared to last year. • Revenues in Eastern Europe (including Russia) were in line with last year. Emerging Markets • In Russia we returned to growth in the market, due to continued A&P investments. • Revenues in Africa were slightly down balanced by higher sales in Central and South America. 8
1. Lucas Bols at a glance 2. Highlights H1 2015/16 3. Operational review 4. Financials H1 2015/16 5. Outlook
Lucas Bols’ mission & strategic framework Mission Lucas Bols We aim to create great cocktail experiences around the world . Strategic framework Lucas Bols 1 2 3 4 Lead the development of Accelerate global brand Leverage operational Build the brand equity the cocktail market growth excellence • To strengthen and grow our global brands in the international cocktail market • To maintain the competitiveness of our regional brands in regional and local markets 10
Lead the global Cocktail Market New product innovations Bols Bartending Academy Online Bartender Community Bols Around the World Bols brand ambassadors Strong quality recognition Leading the cocktail culture Bols Business Class Bols.com for inspiration The World’s Oldest Distilled spirit Brand Trade shows Extensive cocktail database 11
Global Bols Bartending program Ensures Lucas Bols to be at the fore front of the cocktail culture and to be the #1 source of inspiration and education for the global bar industry 2 BOLS BARTENDING SUPPORT BOLS BARTENDING 1 BARTENDING ACADEMY BOLS AROUND THE WORLD BOLS BUSINESS CLASS SEMINARS TRAINER TRAINING ONTRADE ACTIVITIES TRADESHOW SUPPORT BOLS AMSTERDAM EXPERIENCE 3 BARTENDING ACADEMY HOUSE OF BOLS LUCAS BOLS DISTILLERY DAMRAK CANAL TOUR HISTORICAL BAR TOUR COCKTAIL BAR TOUR 12
Innovations are drivers for growth Product innovation Product development In the past months three new liqueur flavors have been introduced: Product innovation is essential for spirits players to Bols Date differentiate themselves and capture growth. Bols Pineapple Chipotle Introducing new flavours and launching distinctive and Bols Blackberry (relaunch) appealing packaging are key. Lucas Bols aims at introducing new products regularly. 13
US spirits industry – 3-tier system Lucas Bols USA National manufacturers or suppliers 24 people dedicated to sales and marketing (Breweries, Wineries, Distilleries and Importers) MHW – compliance and Federal Excise Tax customer service 67 distributors nationwide State wholesalers Covering 33 open states and 17 control states (Licensed importers, Distributors and Control Boards) State Excise Tax Approximately 50 thousand Lucas Bols customer Local retailers (Licensed Outlets) base – 80% on premise and 20% off premise (On Premises: Bars, Clubs, Restaurants (Off Premises: Liquor stores, Grocers) State Sales Tax Consumers Consumers On-premise and retail activation and social media 14
Lucas B ols’ set up for success in the US • Strong portfolio of liqueurs and spirits to leverage the growing cocktail trend • Lucas Bols’ route to market in place • Efficient supply chain / back office model • Dedicated sales and marketing organization • Established nationwide distributor partnerships • Most advanced sales data insights worldwide; every sku to every account • Account base of approximately 50 thousand nationwide and growing • Bols liqueurs declining trend, reversed to growth Distributors 15
Lucas Bols US growth potential Strongly represented with Lucas Bols USA sales team in the largest states. Leading role with the Bols Liqueurs range within our distributor network; at the center of their spirits portfolio when selling the cocktail. Unique position with current Bols Liqueurs sales in the on premise (80%) versus the off premise (20%) where the industry standard is reverse. Growing number of contracts with national and regional on-premise chains. Known as the cocktail authority with the Bols around the World cocktail competition and the Bols Bartending Academy on tour; educating and inspiring distributors, bartenders and consumers. Dedicated brand ambassador team in place with Bols Genever within nationwide growing bartender community. Reaching and activating the consumer with the Galliano retro drinks strategy. Expanding distribution of Damrak Gin nationwide and building on the growing imported Gin trend. 16
1. Lucas Bols at a glance 2. Highlights H1 2015/16 3. Operational review 4. Financials H1 2015/16 5. Outlook
Corporate P&L H1 2015/16 Highlights Reported Organic REPORTED (in €m) H1 2015/16 H1 2014/15 growth growth Revenue 39.4 40.8 -3.4% -2.9% One-off reduction of in-market stocks in Australia and South East Asia: Cost of Sales (15.4) (15.6) Impact on revenue of GROSS PROFIT 24.0 25.2 -4.9% -2.9% € 0.9 million 60.8% 61.8% Impact on gross profit D&A Expenses (12.4) (12.3) and operating profit of 31.4% 30.1% € 0.7 million OPERATING PROFIT 11.6 12.9 -10.3% -5.3% 29.4% 31.7% 18
Important aspects of Lucas Bols’ currency effects Revenue denominated in foreign currencies is 53.5% in H1 2015/16 Foreign exchange impact Rates Rates (in €m) H1 2015/16 H1 2014/15 Delta % US dollar 1.12 1.27 12.7% USD Japense yen 132.59 118.89 -10.3% JPY Australian dollar 1.51 1.44 -4.5% AUD Russian rouble 70.00 50.50 -27.9% RUB 19
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