GENOMMA LAB GENOMMA LAB INVESTOR DAY
Safe Saf e Harbor Harbor This presentation may contain certain forward-looking statements and information relating to the Company that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “believe,” “anticipate,” “expect,” “envisages,” “will likely result,” or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation and in oral statements made by authorized officers of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. 2
Today’s Presenters GL GL. . PRES PRESIDENT IDENT OF BRANDS OF NDS - Joined Dec 2015 - 14 years at LABB - Joined April 2014 - Recently joined Prior Experience: Prior Experience: Prior Experience: Prior Experience: • • • • CCO Cydsa COO, Head of EVP Sales P&G Global President J&J • • • CFO Grupo LALA International +20 years of CEO & Board • • Strat. & Financial Launched Argentina, experience in Member in Venture Planning PEPSICO Brazil and US consumer goods Capital and Private • McKinsey & Co operations Equity -backed PC and Beauty Cos. 3
Genomma Lab’s Key Imperatives Balanced geographic Shareholder reach / value International creation expansion Sustainable business model & enduring brands 4
Cor Core Compete e Competencies ncies Today Before Future Demand generation Demand generation Demand generation Win online Developing online Talent Talent + Continue attracting global talent ++ POS execution Better POS execution Best POS execution Sell-out, EBITDA, FCF EBITDA, FCF and ROIC Mexico: sell-in International: sell- out, EBITDA, FCF Sustainable growth Sustainable growth Growth and brands and brands 5
Agenda Agenda LAB Highlights: Then and Now 1 Me Mexico: T xico: The he Tur urnar naround ound 2 Brand Equity Sustainability Commercial Strategy 3 Innovation Financial Results and Outlook 4 6
Growth wth Achie hieved in O ed in OTC an C and PC d PC Since Since 201 2010 Sales by Sales by Ca Cate tegor gory (Million MXN) CAGR 11,287 + 10.8% 6,264 PC PC OTC OTC Generics 2010 3Q16 YTD 7
Significant Geog Significant Geographic Div phic Diver ersifica sification tion Revenue enue Mix Mix by by Region gion 100% 100% International Mexico 15 countries 20 countries 8
Rights Rightsizing the izing the Or Organ ganiza ization tion Emplo Employees ees 514 XXX 9
Gr Growth Fu wth Fueled eled by Or by Organ ganic Br ic Brand ands s and Str and Strate tegic Acquisitions gic Acquisitions (Million MXN) Examples of Acquired Brands CAGR: +10.8% 11,287 12,000 + 14.6% 21% 10,000 6,264 8,000 Examples of Organic Brands 17% 6,000 Acquired + 9.9% 79% Brands 4,000 83% Organic 2,000 Brands - 2010 3Q16 LTM 10
New Mana New Managemen gement F t Focus ocused ed on on Gene Generating ting Cash Cashflo flow Consolida Conso lidated ted Cash Cash Con Conver ersion sion Cy Cycle in le in Days Days New Management 11
Agenda Agenda LAB Highlights: Then and Now 1 Me Mexico: T xico: The he Tur urnar naround ound 2 Brand Equity Sustainability Commercial Strategy 3 Innovation Financial Results and Outlook 4 12
Sell Sell-in in Con Conver erging ging with Sell with Sell-out: out: Succ Successful Destoc essful Destocking king Pr Proce ocess ss Sell-in & sell-out 1300 converging Destocking completed 1200 Sell-out 1100 1000 900 Sell-in 800 700 600 500 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 13
True Demand ue Demand Suppor upported ted by the Str by the Strength ength of of ou our Br r Brand ands Actions taken to offset significant media inflation: • Reduction of 60% in GRP’s vs YAGO • Budget reallocated to optimize advertising expense Sell-out* Index 100 GRPs 0 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 Q1 Q1 Q2 Q2 Q3 Q3 2014 2014 2015 2015 2016 2016 *Real terms: adjusted by inflation. Sell-out affected by fill-rate. Base 100: 1Q14 14
Agenda Agenda LAB Highlights: Then and Now 1 Mexico: The Turnaround 2 Brand Equity Sustaina Sustainability bility Commercial Strategy 3 Innovation Financial Results and Outlook 4 15
LAB Par LAB articipa ticipates i tes in At n Attr tractiv active and e and Growing Bu Gr wing Business siness Segment gments • Sizable markets BUSINE USINESS SS SEGMEN SEG MENTS TS • Growth potential • Latin America • U.S. Hispanic market PC OTC • Well-recognized leading brands 16
Genomma is a Leading OTC Genomma is a Leading C Play Player er within its Mar within its Markets ets Highl Highly Fragmented gmented Top op Two o Countr Countries ies USA Mexico Argentina Brazil Hispanic OTC Total OTC 0.45% Position: Position: Position: Position: Significant Significant Gr Growth wth Oppor pportunit tunity Colombia Chile Ecuador Peru Central America Position: Position: Position: Position: Position:
Increas Incr eased P ed Pene enetr tration tion of of Co Core Br e Brand ands Revenue enue Mix Mix in Me in Mexico xico 7.3% 100.0% 11.0% Non-Core Brands 90.0% 31.8% 80.0% • Better product 70.0% rotation in the POS 60.0% • 92.7% Higher profitability 50.0% 89.0% than non-core brands 40.0% 68.2% Core Brands 30.0% 20.0% 10.0% 0.0% 3Q14 YTD 3Q15 YTD 3Q16 YTD ~ 95% of sales in our international operations come from core brands. 18 18
Agenda Agenda LAB Highlights: Then and Now 1 Mexico: The Turnaround 2 Brand Equity Sustaina Sustainability bility Commercial Strategy 3 Innovation Financial Results and Outlook 4 19
Our P Our Path to De th to Developing Me eloping Mega gabr brands ands Two Me Mega gabr brands ands > US $100 > US $100 million million Product Line Extensions Caps Gel Neutral soap Makeup Anti-acne soap BB cream Asepxia Powder makeup Gel Body cream Caps Liquid makeup Anti-scar Eye cream BB cream Stretch mark Facial cleansing wipes Anti-aging Anti-acne wipes SPF Mexico Global Mexico Global 20
Our F Our Focu ocus on P s on Power Br er Brand ands Driv s Drives es Ca Cate tegor gory Gr y Growth wth Antimycotics 21
Genomma’s DNA: Disruptive Marketing Strategies to Grow Brands “100 Secrets ” Home-made “ recipes ” of Pomada de la Campana Mix with natural ingredients to obtain different skin benefits (exfoliation, hydration, etc.). 22 22
Teatrical: Developing a Power Brand Sustainabl Sustaina bly Successful Successful Launc aunch Model odel Winning Strategy: 4.6x • Relevant Concept $164 • Value Offering & Innovation Sales • POS Execution $35 2013 2014 2015 2016 • • • • 90 years of tradition Launch into mass Expansion into body Design relaunch • • Quality & heritage facial skin lotions lotion segment “Anti -wrinkle ” segment innovation • • Unique trend New sizes ingredient 23
Acquir Acqu ired Br ed Brand and T Transf ansfor ormed med into a into a Loc Local P al Power Br er Brand and 57.4 Acquired in 2012 from Market 43.1 Andrómaco Share in 43.1 Units (%) 53 43 14.5 31 Sales 11 in Million 6 AR Pesos Cream, spray, powder, lotion & gel ‘15 Aug’16 ‘12 ‘14 ‘13 Source: Cid Latina – CT D01A OTC. 24
Acqu Acquir ired Br ed Brand and T Transf ansfor ormed med into a into a Local P Loc al Power Br er Brand and 39.07 Acquired in 2012 25.74 from Sidus Market Share in 17.8 Units 20.69 (%) 285 133 Sales in Million 77 AR Pesos 37 23 OTC and Rx product portfolio ‘15 Aug’16 ‘12 ‘14 ‘13 Source: Cid Latina – N02B + M01A. 25
Str Streng engthe thening ning our our Pr Produ oduct ct Por ortf tfolio olio Ca Cate tegor gory Mi y Mix in x in the U the U.S. .S. Supplements OTC Personal Care *Percentage points. 26
Top Br op Brand ands Sho s Showing Str wing Strong ong Gr Growth wth in th in the U e U.S. .S. (Million USD) 14.0 10.7 8.4 10.3 6.1 4.5 5.0 1.4 0.4 0.9 2012 2013 2014 2015 YTD 2016 2012 2013 2014 2015 YTD 2016 9.1 6.2 8.2 7.0 4.5 6.1 1.2 1.8 2014 2015 YTD 2016 2012 2013 2014 2015 YTD 2016 27 27
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