GENOMMA L GENOMMA LAB INTERN AB INTERNACION CIONAL AL June, 2016
COMP COMPANY O ANY OVER VERVIEW VIEW
THE EV THE EVOL OLUTION OF GENOM UTION OF GENOMMA LAB MA LAB Continue to implement Turnaround process 2016 Sale of majority stake in Grupo Marzam 2015 Beginning of 2014 Entrance to IPC Sustainability Turnaround process Index and MSCI Index 2013 Appointment of Máximo 2012 Business Realignment Juda as CEO and 2011 Antonio Zamora as CFO 2010 Performed its IPO in the 2009 Acquisition of Marzam Changed Business Mexican Stock Market 2008 Model to OTC/PC 2007 Expanded management team Several PC & OTC brand acquisitions Organic growth 2006 from 2009 – 2014 through brand and 2005 Founded as an product development 2004 infomercial marketing company Launch of operations in Brazil 2003 and USA 2002 2001 Nexxus Capital invested 2000 1999 30% of Equity 1998 1996 1997 Expansion 3
SUCCESSFUL BUSINESS MODEL SUCCESSFUL B USINESS MODEL Our business model is focused on adapting quickly to marketing dynamics. Best formulation and Performance presentation Analysis (Product Selection) MANUFACTURING DEVELOPMENT INNOVATION & MARKETING & OUTSOURCED DISTRIBUTION POS COMMERCIAL ASSURANCE BRANDING QUALITY SALES STRATEGY Impressively short lead time from an idea generation to new Rapid and effective product launches and line reaction to competitive extensions. challenges Pillars 4
ORGANIC GR OR GANIC GROWTH THR WTH THROUGH OUGH INNOVATION AND DEVEL INNO TION AND DEVELOPMENT OPMENT • Our product launch strategy is based on Innovation and Development of new brands and products, as well as on the launch of Line Extensions to strengthen our existing brands. INTERNALLY LINE EXTENSIONS DEVELOPED BRANDS Nasal Hygiene Nasalub Max For adults For children Vitamins Energetic beverage Vitamins for with vitamins children
MARKETING AND BRANDING RESUL MARKETING AND BRANDING RESULTS TS ORIENTED METRICS ORIENTED METRICS Demand for our products is mainly generated through advertising. We have a directed advertising strategy, based on metric analyses of our clients and the market. We monitor such information weekly, which allows us to have a quick response to changes in competition and consumer’s preferences. 6
COMMER COMMERCIAL STRA CIAL STRATEGY TEGY - UPD UPDATE TE POS POS EXECUTION EXECUTION 1 71% STORES in Mexico executed in line with IN-STORE VISION CHANNEL CHA NNEL AND AND CUST CUSTOMER OMER EXP EXPANSION ANSION 2 +58 New Customers / +27,600 Stores (Mexico and International) GO TO GO O MA MARKET RKET 3 (-)3 to 5 pts trade terms improvement and PAY FOR PERFORMANCE (Mexico and International) COMMER COMM ERCIAL INNO CIAL INNOVATION TION 4 +5-7 Global Initiatives 7
CORE COMPETENCES CORE COMPETENCES BEFORE BEFORE AFTER AFTER Demand Generation Demand Generation Win Online Talent Talent POS Execution Flawless POS Execution Mexico: Sell-in Genomma Lab: International: Sell-out, Sell-out, EBITDA, FCF EBITDA, FCF Brand Sustainability Growth Core Brands 8
DIVERSIFIED DISTRIBUTION PLA DIVERSIFIED DISTRIB UTION PLATFORM TFORM Genomma’s balanced and broad distribution platform is unique. Through a combination of mass merchandisers, pharmacy chains, and wholesalers, Genomma’s products reach over 50,000 points of sale in Mexico and more than 150,000 in the international operations. SALES DISTRIBUTION IN MEXICO: CONVENIENCE AND 6% DEPARTMENT STORES 18% PHARMACY CHAINS 52% RETAILERS 24% WHOLESALERS 9 *% of Mexico Sales as of December 2015 (LTM)
TURN TURNAR AROUND OUND PR PROCESS OCESS
TURN TURNAR AROUND PR OUND PROCESS OCESS Shareholder value creation • Sustainable business model • and stronger brands STRATEGIC International expansion • IMPERATIVES Less dependence on Mexico • TURNAROUND PROCESS Brands: Focus on core • • Strengthening of brands corporate policies Mexico: Destocking of STRONGER PILLARS OF • and procedures POLICIES & NEW channel inventory • Tightened policies and Geographical presence: DISCLOSURE STRATEGY • procedures with diversification additional oversight Efficiency: SGM&A • to support the future leverage strategy New management team • 11
TURN TURNAR AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRA PILLARS OF NEW STRATEGY TEGY 1 FOCUS FOCUS ON ON CORE CORE BRA BRANDS, NDS, REINFOR REINFORCE CE BRA BRAND ND EQUITY EQUITY AND AND SUS SUSTAIN AINAB ABILITY ILITY Genomma's core asset is its portfolio of market leading brands. As of March 2016, the Company has a total of 95 brands . The following table shows the Company’s top 25 brands for the last twelve months as of March 2016, which represented 88.2% of Total Sales. OTC PC OTC / PC BRAND PRODUCT CATEGORY BRAND PRODUCT CATEGORY BRAND PRODUCT CATEGORY Pain Relief Hair Care Anti-acne Analgesic Spider Vein Treatment Anti-scar, Anti-wrinkle Sexual Protection and Nail Fungus Treatment Baldness Treatment Enhancement Cervical Infections Skin Care Anti-micotic Treatment Anti-dandruff Shampoo Skin Care Anti-flu Hair Care Hemorrhoid Treatment Hair Care Colitis Treatment Vitamins Athlete’s Foot Treatment Analgesic Cough Syrup Anti-flu Osteoarthritis Treatment 12
TURNAR TURN AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRA PILLARS OF NEW STRATEGY TEGY 2 MEXICO DEST MEXICO DESTOCKING OF C OCKING OF CHANNEL HANNEL INVENT INVENTOR ORY SELL-OUT SELL-IN 40% 12% 30% 10% 20% 8% 12% 10% 6% 1Q15 2Q15 3Q15 4Q15 2% 0% 4% -10% 2% -26% 3% 2% 1Q16* -35% -20% 0% 2Q15 3Q15 4Q15 -59% -30% -2% -8% -40% -4% -50% -6% -60% -8% INVENTORIES Objective 2Q15 3Q15 4Q15 1Q16 2Q15 3Q15 4Q15 1Q16 13 *In line with guidance
TURN TURNAR AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRATEGY PILLARS OF NEW STRA TEGY GEO GEOGRAPHI GRAPHICAL CAL PRES PRESENCE ENCE – INTERN INTERNATI TION ONAL AL 3 GR GROWTH WTH & & MAR MARGIN GIN U.S.A. 13% MEXICO MEXICO 35% 35% LATAM 52% TOP Mexico INTERNATIONAL COUNTRIES 45% 1. Argentina 55% 2. U.S.A. 3. Brazil 4. Chile Pharma PC 5. Colombia 6. Peru Pharma – Over the Counter (OTC) and Generics 7. Ecuador PC – Personal Care 14 As of March 2016 LTM
TURN TURNAR AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRA PILLARS OF NEW STRATEGY TEGY GEO GEOGRAPHI GRAPHICAL CAL PRES PRESENCE ENCE: : DIVERSIFICA DIVERSIFICATION TION 3 Presence in 20 countries • More than 200,000 POS • U.S.A. A population over 600 million • BRANDS: 21 As of March 2016 LTM, 65% of • POS: 41,000 our Total Sales came from our MEXICO International Operations BRANDS: 72 POS: 50,000 *REST OF LATAM: Bolivia Chile COLOMBIA Costa Rica BRANDS: 14 Dominican Republic POS: 16,166 Ecuador El Salvador BRAZIL Guatemala REST OF Honduras BRANDS: 15 LATAM* POS: 60,000 Nicaragua BRANDS: 24 Panama POS: 23,924 Paraguay Peru ARGENTINA Puerto Rico BRANDS: 19 Trinidad and Tobago POS: 10,400 Uruguay 15
TURN TURNAR AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRATEGY PILLARS OF NEW STRA TEGY 4 EFFICIENCY: EFFICIENCY : SGM SGM&A &A LEVE LEVERA RAGE GE • To increase efficiency and improve margins, we have made a significant reduction in headcount in the past months. • Inventories in our warehouse have also been reduced significantly to improve cash conversion cycle and free cash flow generation. INVENTORIES* HEADCOUNT* 1200 800.0 -63.0% -47.9% (Number of Employees) (Million Pesos) 600.0 800 743.3 400.0 1,037 400 540 200.0 274.7 0 0.0 SEPTEMBER 2014 MARCH 2016 MARCH 2015 MARCH 2016 *Mexican operations 16
TURN TURNAR AROUND PR OUND PROCESS OCESS – PILLARS OF NEW STRA PILLARS OF NEW STRATEGY TEGY 4 EFFICIENCY EFFICIEN CY: SG& : SG&A A LEVERA LEVERAGE GE • We have made significant efforts to achieve SGM&A efficiencies in order to improve margins, which have started to show results in our operations. NEW MANAGEMENT TEAM T NEW MA GEMENT TEAM TO O EXECUTE EXECUTE THE NEW STRA THE NEW STRATEGY TEGY 5 AND DRIVE VAL AND DRIVE V ALUE CREA UE CREATION TION IN THIS NEW PHASE IN THIS NEW PHASE 17
FIN FINANCIAL ANCIAL PERFORMANCE PERFORMANCE
NET SALES NET SALES (MIL (MILLION LION PESOS) PESOS) CAGR 23% $11,361 $11,541 $11,042 $9,800 $8,056 $6,264 $4,425 $2,629 $2,769 $2,851 2008 2009 2010 2011 2012 2013 2014 2015 1Q15 1Q16 1Q16 1Q15 Pharma* PC Total 1Q16 Pharma* PC Total 1Q15 %Var Mexico 580.1 417.6 997.7 491.8 490.2 982.1 1.6% International 695.9 1,157.0 1,852.9 661.7 1,124.8 1,786.5 3.7% TOTAL 1,276.0 1,574.6 2,850.6 1,153.5 1,615.0 2,768.6 3.0% *Pharma refers to OTC and Generics in Mexico. 19
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