PINAR SU SANAY � VE T � CARET A. � . PINAR SU SANAY � VE T � CARET A. � . 2011 H1 Investor Presentation
Pınar Su Highlights •2nd brand that comes to •366 PC, 167 PET dealers • HACCP Food Security mind in PET and PC Management System •Call Center application categories (Nielsen •NSF Sufficiency 2009) Certificate •ISO Quality Certificates Brand Distribution Quality Recognition Recognition Network Network •Natural spring water reaching •Production in all SKUs form consumers in most natural and sources of Madran, Toros ve hygenic conditions Gökçeağaç. •Know-How •Production from 3 sources close to target markets •Clean room technology Product Production Portfolio 1
Market Dynamics Breakdown of Turkish Bottled Water Market Sales Volume Resin Prices (USD/Kg) 8,11 Bn Lt 8,7 Bn Lt 9 Bn Lt 9,3 Bn Lt 2,25 2,00 26% 28% 31% 33% 1,75 %14 %15 %11 1,50 1,25 74% 72% 69% 67% 1,00 %5 %-1 %0 %5 %-1 %0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2011 2007 2008 2009 2010 PC PET � There are 264 firms having Ministry of Health license. Per Capita Water Consumption by Countires (2010) � Average capacity usage rate of the sector is Italy Germany Turkey Spain Belgium %40. Per Capita Water 189 Lt 165 Lt 126 Lt 123 Lt 120 Lt Consumption � SUDER expects the per capita water Source: Suder (Packaged Water consumption in Turkey to be 135 lt, in 2011. Manifacturers’ Association of Turkey) 2
Market Dynamics - II GDP vs. Turkish Bottled Water Market Growth Rate 15% 14% 13% � Growth rate of packaged water 9% 10% 7% 9% 7% sector was below that of the GDP in 8% 5% 2010. 7% 3% 3% 5% 3% 1% 0% 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 -5% -5% GDP Growth Rate Turkish Bottled Water Market Growth -10% Source: TUİK, SUDER The Bottled Water Sector in Turkey 2003 – 2010 2003 2004 2005 2006 2007 2008 2009 2010 2011* Production � SUDER expects a growth of %5 in (bn Lt) 5,7 6,2 7 7,8 8,1 8,7 9 9,3 9,8 2011, in the packaged water Market Value (Bn TL) 0,6 0,8 1 1,2 2,5 3 3,1 3,3 3,45 market. Per Capita Consumption (Lt) 81 83 93 105 96 114 122 126 135 3
Market Overview � In the 1H2011, PET market has grown Natural Mineral Water - PET by %8 in volume and by %10 in value Pınar Su; 5,3% terms. Pınar Su has achieved a growth Competitor1 of %12 in value and %16 in volume. ; 15,2% (Nielsen) Competitor2 � Increasing � Increasing Others; Others; investments investments of of ; 8,7% ; 8,7% 50,0% multinational firms like nestle, Danone Competitor3 and Coca Cola is a sign the room for ; 8,5% growth of the market (M&As, spring Competitor5 source investments etc) Competitor4 ; 5,4% ; 6,7% � Trend in the market is to increase Source: Volume Share, Nielsen, 1H 2011 the number of spring sources in order to optimise logistic costs. Small scale local producers are causing a fragmented market structure. 4
Sales and Distribution Seasonality Exports (1H11) 1Q 2Q 3Q 4Q Others; 20% Germany; 35% Cyprus; 7% Holland; U.K.; 19% 20% Breakdown of Sales Volume (PET/PC) (1H11) � Export sales in USD has increased by %21 PET YoY, in 1H2011. 50,2% PC � Share of exports in all sales for 1H11 is 49,8% 7,5%. (1H10: %6,5) 5
Short Neck Investment � With our short-neck investment, the weight of PET bottles is reduced and environmental effect is minimized by decreasing carbon footprint � A reduction of %10 is attained in the preform cots, due to the diminished preform weights in grams in 0,5 Lt and 1,5 Lt bottles. 6
New Concept & New Product � We have emphasized our water sub-brand Ya � ar Pınarım on our label designs and our corporate identity has been renovated in this direction. � We have started 10 litre production in our Hendek facility, to meet market tendencies. The product is launched in January 2011. 7
Media Campaign � Consumer communication is achieved through new concept and placement. Customers are reached via different channels. •TV •Newspapers •Outdoor Outdoor Newspaper 8
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Sales & Profitability Net Sales (Million TL) 75,3 69,0 � Sales rose by %10 in 1H2011 YoY. Especially 60,6 61,2 marketing expenses, rising due to increased 48,6 marketing investments, led to a decrease in profit 38,0 34,7 margins in 2011. � By growing beyond the market and with the help of seasonality, sales increases are expected to continue seasonality, sales increases are expected to continue also after 3. quarter. 2006 2007 2008 2009 2010 1H10 1H11 � Preform costs showed an increase in 2011, Net Profit (Million TL) compared to 2010, causing a rise in production costs. 8,3 6,8 5,7 6,1 3,8 � Continued strngthening of sales and distribution 3,0 network and investment in marketing, paralel to our strategies. 0,8 � Local and small sized producers caused aggressive 2006 2007 2008 2009 2010 1H10 1H11 price competition in the industry. 10
Income Statement (Million TL) June 30, 2011 June 30, 2010 Diff. % Change Operating Revenue 38,0 34,7 3,3 9,6 (21,1) (17,5) (3,6) 20,8 Cost of Sales Gross Profit 16,9 17,2 (0,3) (1,7) (14,2) (11,6) (2,6) 22,0 Selling and Marketing Expenses General and Administrative Expenses (4,7) (4,5) (0,3) 5,6 EBIT (2,0) 1,1 (3,1) (274,4) 3,4 1,5 1,9 128,6 Other Income (1,2) (0,2) (1,0) 655,8 Other Expenses 0,4 1,1 (0,7) (61,5) Financial Income / (Expense) - (Net) Income Before Tax 0,7 3,6 (2,9) (80,9) 0,1 (0,6) 0,7 (117,7) Taxes on Income Net Profit 0,8 3,0 (2,2) (73,3) 0,5 3,5 (3,0) (85,5) EBITDA Total Assets 95,4 100,3 (4,9) (4,9) 64,2 68,6 (4,3) (6,3) Shareholders' Equity 11
Growth in Volume 150 %10,5 150 1Q11 2Q11 %23,8 2Q10 2Q11 %35,3 %12,1 thousand ton 100 %8,8 100 %13,3 thousand ton 50 50 0 0 0 0 PET PC Total PET PC Total %8,8 250 1H10 1H11 � Sales have grown in volume more in PET 200 %10,0 %7,6 segment following market tendencies. 150 100 thousand ton 50 0 PET PC Total 12 12
Profit Margins Gross Profit Margins (%) Operating Profit Margins* (%) 10,6% 50,1% 49,6% 49,0% 8,1% 44,5% 33,1% 3,3% 2,5% 2008 2009 2010 1H10 1H11 -5,2% 2008 2009 2010 1H10 1H11 EBITDA Margins** (%) Net Profit Margins (%) 17,1% 9,3% 8,6% 14,4% 8,2% 10,2% 9,6% 5,5% 2,1% 1,3% 2008 2009 2010 1H10 1H11 2008 2009 2010 1H10 1H11 ** Earnings before Interest, Tax, Depreciation, and Amortization * Ex. Other income and expenditures 13
Quarterly Results Net Sales (Million TL) 21,3 � ��� ����� �� �� ����� ���� ��������� ���� 19,0 �������� �� ���� �� ���� ��� �� ����� 16,7 ������ ��� �� ��� �������� �� ����� �������� 12,1% 27,5% � �� ���� ������� �� ��������� ����������� � ��������� ��� ������ ����������� EBITDA (Million TL) 2,3 2Q10 2Q11 1Q11 1,1 � ���� ������ �� ������� �� ���������� �� �� ����� ���� �������� ���������� ��� ������ �������� 2Q10 2Q11 1Q11 (0,5) 14
Basic Ratios, Net Financial Debt&Net Working Capital June 30, 2011 December 31, 2010 June 30, 2011 December 31, 2010 (MillionTL) Current Ratio Cash & Cash Equivalents 1,1 1,4 2,1 0,9 Leverage Ratio S/T Bank Borrowings 0,3 0,2 2,3 1,7 ST Fin'al Debt/Total Fin'al Debt L/T Bank Borrowings 0,6 0,5 1,5 1,6 Net Fin'al Debt/EBITDA Net Financial Debt 0,5 0,4 1,7 2,4 Total Fin'al Debt/Equity 0,1 0,0 � A 18% rise in net cash 20 generated from operating activities generated from operating activities 10 1H10 1H11 Million TL 3,9 Million TL 4,6 Million TL 0 � Continuous focus on risk management and productivity -10 � Effective working capital management -20 Trade Receivables Trade Payables Inventories � Strong balance sheet and liquidity management 15
Overview of 1H 2011 � Mostly local small scale and economic brands cause an aggressive price competition in the market. � Even though showing signals of recovery in economic conditions, 2010 was a period when consumers’ preferences were similar to crisis period. was a period when consumers’ preferences were similar to crisis period. � With the positive effects of advertisement campaigns, dealer restructuring and Call Center (444 99 00), net sales have grown by %9,6 from volumes. � In 1H2011, both PET and PC segments have achieved growths. 10 Lt bottle sales have contributed PET segment growth. 16
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