PINAR SU SANAYİ VE TİCARET A.Ş. 2011 3Q 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 •The best packaged •ISO Quality Certificates water brand* 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 hygenic conditions and Gökçeağaç. •Know-How •Production from 3 sources close to target markets •Clean room technology Product Production Portfolio * Kalder, 2011 2Q Customer Satisfaction Survey Pınar Su 1
Market Dynamics Resin Prices (USD/Kg) Breakdown of Turkish Bottled Water Market Sales Volume 2,25 8,11 Bn Lt 8,7 Bn Lt 9 Bn Lt 9,3 Bn Lt 2,00 26% 28% 31% 33% 1,75 %14 %15 %11 1,50 1,25 74% 72% 1,00 69% 67% %5 %-1 %0 %5 %-1 %0 2008 2009 2010 2011 2007 2008 2009 2010 � There are 264 firms having Ministry of PC PET Health license. Per Capita Water Consumption by Countries (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 per capita water Source: Suder (Packaged Water consumption in Turkey to be 135 lt, in 2011. Manifacturers’ Association of Turkey) Pınar Su 2
Market Dynamics - II GDP vs. Turkish Bottled Water Market Growth Rate 15% 14% 13% � Growth rate of packaged water 9% 10% 7% 9% sector was below that of the GDP in 7% 8% 2010. 5% 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 Market Value 2011, in the packaged water (Bn TL) 0,6 0,8 1 1,2 2,5 3 3,1 3,3 3,45 Per Capita market. Consumption (Lt) 81 83 93 105 96 114 122 126 135 Pınar Su 3
Market Overview Natural Mineral Water - PET � In 9M11, PET market has grown by %8 in volume (Nielsen) Pınar Su; � Pınar Su has achieved a growth of 5,4% %10,9 in volume which is more than Competitor 1; market growth. 15,2% � Increasing � Increasing investments investments of of Competitor 2; multinational firms like nestle, Danone 9,1% and Coca Cola is a sign the room for Others; growth of the market (M&As, spring 49,8% Competitor 3; source investments etc) 8,1% Competitor 4; � Trend in the market is to increase Competitor 5; 6,9% 5,5% the number of spring sources in order to optimise logistic costs. Small scale local producers are causing a Source: Volume Share, Nielsen, 9M 2011 fragmented market structure. Pınar Su 4
Sales and Distribution Seasonality Exports (9M11) 1Q 2Q 3Q 4Q Germany; Others; 24% 32% Cyprus; 7% Cyprus; 7% Netherlands ; 17% U.K.; 20% Breakdown of Sales Volume (PET/PC) (9M11) � Export sales in USD has increased by %21 YoY, in 9M11. PET PC 50,8% � Share of exports in all sales for 9M11 is 6,3%. 49,2% (9M10: %5,5) Pınar Su 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. Pınar Su 6
New Concept & New Product � We have emphasized our water sub-brand Yaşar Pınarım on our label designs and our corporate identity has been renovated in this direction. � We have started 10 litre � Providing a privilege particularly production in our Hendek facility, facility, to to meet meet market market for for the the presentations presentations of of tendencies. The product is distinguished cafés and launched in January 2011. restaurants with its sleek packaging. 75cL and 33cl glass bottles, which are produced in the plant Madran, have been renewed to respond the market trends. Pınar Su 7
Media Campaign � Consumer communication is achieved through new concept and placement. Customers are reached via different channels. •TV •Newspapers •Outdoor •Leaflet Outdoor Newspaper Pınar Su 8 Leaflet
FINANCIAL RESULTS FINANCIAL RESULTS
Sales & Profitability Net Sales (Million TL) 75,3 69,0 � Net Sales with the help of seasonality rose by 63,5 60,6 61,2 %12,3 in 9M11 YoY by growing beyond the market 56,5 48,6 and with the help of seasonality. � Especially marketing expenses, rising due to increased marketing investments, led to a decrease in profit margins in 2011. � Both high preform costs and the fluctuation in 2006 2007 2008 2009 2010 9M10 9M11 exchange rates affected the raw material costs in 2011. Net Profit (Million TL) 8,3 6,8 5,7 6,1 � Continued strengthening of sales and distribution 5,0 network and investment in marketing, parallel to our 3,8 strategies. 1,0 � Local and small sized producers caused aggressive price competition in the industry. 2006 2007 2008 2009 2010 9M10 9M11 Pınar Su 10
Income Statement (Million TL) 30.09.2011 30.09.2010 Diff. % Change Operating Revenue 63,5 56,5 7,0 12,3 Cost of Sales (34,2) (27,7) (6,6) 23,8 Gross Profit 29,2 28,9 0,4 1,4 Selling and Marketing Expenses (23,1) (18,8) (4,3) 23,1 General and Administrative Expens(7,2) (7,2) (6,7) (6,7) (0,5) (0,5) 6,8 6,8 EBIT (1,1) 3,3 (4,4) (133,5) Other Income 3,4 1,4 2,0 137,3 Other Expenses (1,9) (0,2) (1,8) 934,6 Financial Income / (Expense) - (Net 0,6 1,4 (0,8) (57,4) Income Before Tax 0,9 5,9 (5,0) (84,3) Taxes on Income 0,1 (0,9) 1,0 (109,8) Net Profit 1,0 5,0 (4,0) (79,8) EBITDA 2,7 6,9 (4,2) (60,2) Total Assets 97,9 104,3 (6,4) (6,1) Shareholders' Equity 64,3 70,6 (6,3) (8,9) Pınar Su 11
Growth in Volume %8,3 %20,6 150 150 2Q11 3Q11 3Q10 3Q11 %18,4 %12,3 %4,5 thousand ton 100 %23,1 100 thousand ton 50 50 0 0 0 PET PC Total PET PC Total %8,6 400 9M10 9M11 � Sales have grown in volume more in PET 300 %10,9 %6,4 segment following market tendencies in 2011. 200 thousand ton 100 0 PET PC Total Pınar Su 12 12
Profit Margins Gross Profit Margins (%) Operating Profit Margins* (%) 10,6% 51,1% 50,1% 49,0% 46,1% 8,1% 5,8% 33,1% 2,5% 2008 2008 2009 2009 2010 2010 9M10 9M10 9M11 9M11 -1,7% 2008 2009 2010 9M10 9M11 EBITDA Margins** (%) Net Profit Margins (%) 9,3% 17,1% 8,8% 8,2% 14,4% 12,2% 9,6% 5,5% 4,3% 1,6% 2008 2009 2010 9M10 9M11 2008 2009 2010 9M10 9M11 Pınar Su 13 ** Earnings before Interest, Tax, Depreciation, and Amortization * Ex. Other income and expenditures
Quarterly Results Net Sales (Million TL) � Net sales have increased through the volume 25,5 growth in 3Q11 compared to 2Q11. � The sales growth in 3Q11 compared to 3Q10 includes both volume and price increases. %17 %20 � We have focused on marketing investments, 21,8 following our growth strategies. following our growth strategies. 21,3 21,3 EBITDA (Million TL) 3,4 3Q10 3Q11 2Q11 2,2 � Both high prices in raw materials and the fluctuation in exchange rates have affected the cost of goods and the margins. 3Q10 3Q11 2Q11 Pınar Su 14 (0,5)
Basic Ratios, Net Financial Debt&Net Working Capital September 30, 2011 December 31, 2010 September 30, 2011 December 31, 2010 (MillionTL) Current Ratio Cash & Cash Equivalents 1,14 1,41 2,53 0,92 Leverage Ratio S/T Bank Borrowings 0,34 0,24 1,92 1,71 ST Fin'al Debt/Total Fin'al Debt L/T Bank Borrowings 0,54 0,49 1,64 1,78 Net Fin'al Debt/EBITDA Net Financial Debt 0,42 0,39 1,03 2,57 Total Fin'al Debt/Equity 0,06 0,05 � A 9% rise in net cash generated � A 9% rise in net cash generated 15 from operating activities 9M10 9M11 5 Million TL 7,1 Million TL 7,7 Million TL -5 � Continuous focus on risk management and productivity -15 � Effective working capital management -25 Trade Receivables Trade Payables Inventories � Strong balance sheet and liquidity management Pınar Su 15
Overview of 9M 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. This also continues in 2011. � With the positive effects of advertisement campaigns, dealer restructuring and Call Center (444 99 00), net sales have grown by %12,3 through both volume and price increases. � In 9M2011, both PET and PC segments have achieved growths. 10 Lt bottle sales have contributed PET segment growth. Pınar Su 16
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