Foster’s Group 2011 Interim Results15 February 2011
2OUTLOOK STATEMENT DISCLAIMER
Foster’s Group Limited (Foster’s) advises that the following presentation contains forward looking statements which may be subject to significant uncertainties outside of Foster’s control.
No representation is made as to the accuracy or reliability of forecasts or the assumptions on which they are based.
Actual future events may vary from these forecasts and you are cautioned not to place undue reliance on any forward looking statement.
For
per
sona
l use
onl
y
3
Ian JohnstonChief Executive Officer
42011 INTERIM RESULT HIGHLIGHTS
Remain robust
Demonstrating improved financial performance
Impacted by significant decline in the Australian beer market volume but demonstrating improved in-market execution
Good progressPerformance Improvement
CUB
Treasury Wine Estates
Balance Sheet and Cash Flow
For
per
sona
l use
onl
y
52011 INTERIM RESULTFINANCIAL SUMMARY
Dividend
Earnings per share
Earnings per share
Net profitNet profit
EBITSEBITS
Net sales revenue
Net sales revenue
Constant Currency
Reported
- 4.1%
- 3.5%
- 6.2%
- 6.4%
- 6.6%
- 5.7%
- 7.5%
- 7.7%
12 cents
All figures are before SGARA and Material Items Percentage change in earnings per share calculated prior to rounding
6RESULT HIGHLIGHTSGLOBAL BEER
Strong progress in implementing Urgent Agenda
EBITS impacted by lower Australian beer market volume
Subdued consumer environment
Unusually high beer market volume in the prior year
Unseasonal weather in peak consumption months
Efficiencies moderating earnings impact
Cash conversion remains outstanding
Rest of World BCS EBITS up 66% on constant currency basis
Strong progress on implementation
Improved execution and organisational capability
Increased brand investment and innovation momentum
Market share gains in on and off premise¹
Urgent Agenda
Financial Performance
¹ 6 months to 31 December 2010 draught beer and off premise packaged beer volume; Source: market data (refer to definition of market data on slide 39)
For
per
sona
l use
onl
y
7RESULT HIGHLIGHTS TREASURY WINE ESTATES
2nd consecutive half of 20%+ growth
2 consecutive halves of greater than 20% constantcurrency EBITS growth
Premiumisation is driving constant currency revenue per case growth
Realisation of efficiency benefits driving margin growth
Cash conversion remains strong
Currency impact on Australian exports
All regions contributing improvement
Premiumisation underway
Discontinued unprofitable promotions
Improving product, channel and market mix
Enhanced sales and marketing capability
Performance Improvement
Financial Performance
8
Tony ReevesChief Financial Officer
For
per
sona
l use
onl
y
9
+0.2+0.21,932.6 mWeighted average number of shares
+1.3
+0.1ppts
+0.96ppts
-1.3
+0.2ppts
+0.96ppts
$28.36
25.0%
29.0%
Net sales revenue per case
EBITS/Net sales revenue
Effective tax rate
1H 11
$m
ReportedChange
%
ConstantCurrencyChange
%
Volume (million 9L cases)
Net sales revenue
EBITS
Net interest expense
Tax expense
Net profit
Earnings per share
75.8
2,150.3
537.7
(64.1)
(137.3)
335.7
17.4¢
-5.3
-6.6
-5.7
-0.3
-3.2
-7.5
-7.7
-4.1
-3.5
+9.0
-1.8
-6.2
-6.4
KEY FINANCIALS
All figures are before SGARA and Material Items Percentage change in earnings per share calculated prior to rounding + denotes an increase, - denotes a decrease
10
(5.2)1.5
(11.2)(17.3)(28.5)
8.6
1H 11$m
312.1
(3.7)
(19.9)
335.7
1H 10$m
-----
Demerger costsForeign exchange derivativesMaterial Items pre tax profit / (loss)Tax benefit
Material Items after tax profit / (loss)
Net profit after tax (before material items and SGARA) 363.0
SGARA pre taxTax benefit
SGARA after tax
(10.1)2.8
(7.3)
Net profit / (loss) after tax 355.7
STATUTORY RESULT
For
per
sona
l use
onl
y
11INCOME TAX EXPENSE RECONCILIATION
28.0%29.0%Effective tax rate
495.6468.4Net profit pre tax (before material items and SGARA)
139.0135.8Total tax expense excluding material items
148.7
-3.8
(3.2)0.40.7
(12.1)0.7
140.5
2.16.4
(3.2)(3.8)(2.0)(4.5)
0.3
Prima facie tax payable at 30%
Depreciation and amortisationNon taxable income and profits, net of non deductible expenditureOther assessable income/deductible expenditure Tax losses booked/recouped Foreign tax rate differential Under/(over) provisions in previous years Other
1H 10
$m
1H 11
$m
12GLOBAL BEERKEY FINANCIALS
CUB Australia beer volume down 5.8%
CUB Australia beer NSR down 5.4%, NSR per case up 0.4%:
– Domestic portfolio NSR per case up 1.9%
– International premium NSR down 2.9%
Australia cider volume up 13.1%, NSR up 16.2%
CUB Australia EBITS down 6.7%:
– A&P investment up 2.6%, above 10% of NSR
– Mix adjusted cost of sales per case down ~2.0%
CUB Pacific EBITS down 20.0%, Rest of World BCS EBITS up 66% on constant currency basis
~$16.5m cash benefit from timing of excise tax payments, strong receivables management
Timing impact on capex
Earnings reflect lower Australian beer market volume
-(0.1)%21.2NSR/case ($)
(1.0)ppts(0.4)ppts37.7%EBITS/NSR margin
17.9Capex ($m)
Cash conversion
EBITS ($m)
NSR ($m)
Volume (m 9LEs)
7.7ppts97.1%
(7.5)%(6.3)%462.7
(5.2)%(5.3)%1,226.6
(5.1)%57.8
Constant Currency
Reported 1H 11
For
per
sona
l use
onl
y
13TREASURY WINE ESTATESKEY FINANCIALS
Strong constant currency EBITS growth on lower volumeFocus on value; with lower volume:
– US sales promotions aligned to higher margin products
– Australian tail brands to the Vok joint venture– Growth in Asia, Nordics/Continental Europe
and underlying growth in ANZConstant currency NSR per case up 3.4%:
– Positive product and channel mix– Competitive pricing in the US and Australia
$19 million unfavourable currency impact on EBITSOn constant currency EBITS up 25.2%:
– 11.6% increase in marketing investment– Lower Australian and Californian sourced cost
of sales from efficiency realisation and grape costs
Cash conversion remains strong
3.4%(2.5)%51.2NSR/case ($)
2.4ppts1.0ppts10.8%EBITS/NSR margin
18.8Capex ($m)
Cash conversion
EBITS ($m)
NSR ($m)
Volume (m 9LEs)
(80.3)ppts99.2%
25.2%0.7%99.9
(2.7)%(8.3)%923.7
(5.9)%18.0
Constant Currency
Reported 1H 11
14
WineEBITS
$m
Group ProfitBefore Tax
$m
Average
AUD/USD
AUD/GBP
Other
1H 10
86.99
53.10
1H 11
94.34
60.25
(11.7)
(11.4)
3.8
0.6
(11.0)
3.4
Total (19.3) (7.0)
AUD/USD
AUD/GBP
1H 11
94.34
60.25
Sensitivity
1¢ change
1p change
1.7
2.0
1.0
2.0
CURRENCY SENSITIVITIES
Impact of FX on 1H 11
2H 11Indicative
SensitivitiesFor
per
sona
l use
onl
y
15CASH FLOW AND NET DEBT
1,867.1
(331.7)80.6(1.1)268.3
58.7149.2
56.1
(597.6)2,184.6
500
1,000
1,500
2,000
2,500
FY 10 NetDebt
OCFPIT Net Interest Tax Net Capex Net Dividends NetAcquisitions &
Loans
MaterialItems /
Disputed TaxPayment
Non-cashItems
1H 11 NetDebt
$m
Operating cash flow after dividends $65.3m
16NET DEBT AND INTEREST EXPENSE
531.61,600.0
-3.6
60%6.5 Yrs
50.01,965.6
42.54.5
52 %7.1 Yrs
304.51,980.5
42.5-
58 %6.8 Yrs
AUD (A$)USD (US$)GBP (GBP)Other (A$)% Fixed – Gross BorrowingsWeighted average maturity of gross debt
Debt Portfolio
(225.5)(98.9)
1,867.1
(236.7)(143.2)2,184.6
(352.3)(106.2)2,217.7
CashFair Value of Fixed Rate Debt HedgesNet Debt
Net Debt
1H 10$m
FY 10$m
1H 11$m
Gross Debt
Gross BorrowingsDebt Issuance CostsFair Value Adjustment to Fixed DebtBorrowings per Balance SheetForward Exchange Contracts on 2011 BondsBorrowings after Forward Exchange Contracts on 2011 Bonds
2,598.6(27.3)104.9
2,676.2-
2,676.2
2,448.8(24.4)140.1
2,564.5-
2,564.5
2072.2(15.5)
99.02,155.7
35.82,191.5
For
per
sona
l use
onl
y
17CAPITAL STRUCTUREAND DEBT PROFILE
A strong balance sheet and significant liquidity maintained
¹ EBITS pre material items to interest expense² Debt to equity³ Includes forward exchange contracts of $35.8 million
Interest cover¹ 8.4x, gearing² 67%
Gross debt weighted average maturity 6.5 years
$304.8 million debt repayable in FY11³
$225.5 million of cash
$1.0 billion of committed undrawn bank facilities
Interest Cover1 Debt Maturity
6.1
7.8 7.98.9 8.4
4
5
6
7
8
9
10
1H 07 1H 08 1H 09 1H 10 1H 11
times
0
400
800
1,200
FY11 FY12 FY13 FY14 FY15 BeyondFY15
$m
³
18
John PollaersCarlton & United Breweries
For
per
sona
l use
onl
y
19CUB AUSTRALIA
Good progress in implementing Urgent Agenda
Aligned sales and marketing focus
Customer marketing team activated
Promotional program compliance
Increased share of taps
Senior sales leadership team upgraded
Marketing and innovation restructured
Program discipline implemented
Brand architecture and communications strengthened
New campaigns for major brands
Accelerating innovation program
Capability
Positioning
Execution
20
1H10 Sub-CategoryAlignment
Share within Sub-Category
1H11
CUB AUSTRALIA MARKET SHARE IMPROVING EXECUTION
Execution offsetting positioning
49.6%
Portfolio Position(-0.1%)
Execution(+0.6%) 50.1%
Source: internal analysis; market data (refer to definition of market data on slide 39)
CUB off-premise beer volume share
For
per
sona
l use
onl
y
21
-10
-5
0
5
Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10
CUB AUSTRALIABEER MARKET
CUB estimates Australian beer market volume declined 7%
Beer volume growth (%), Off-premise, rolling QTR vs LY
Source: market data (refer to definition of market data on slide 39)
Lapping very strong market volume in 1H10
– Stimulus payments
– Low interest rates
Market volume decline 7%¹ - Queensland contributed 2 ppts of national decline
1H11 impacted by:
– Subdued consumer environment
– Exceptional weather in December quarter -higher rainfall and lower temperature
– Consumer confidence impact from November interest rate increase
%
¹ Foster’s estimate
22
13
14
15
16
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
m 9
LEs
CUB AUSTRALIA BEER MARKET
Seasonally adjusted volume highlights underlying trends
June to December 2009 - extraordinary beer market volume
January to September 2010 – stable but rebased by soft consumer environment
December quarter 2010 significant weather impact
2H11 beer market volume expected to decline by 3-4%
– January 2011 weather impact
– 2H11 rate of market volume decline is expected to moderate
Longer term return to trend
Seasonally adjusted monthly beer volume
Source: internal analysis; market data (refer to definition of market data on slide 39)
For
per
sona
l use
onl
y
23CUB AUSTRALIANSR PER CASE
Domestic revenue per case growth, lower international revenue
Lower volumeCompetitive retail environment
February 2011 ~2% average price increaseOptimistic 2H11 NSR per case improving
– Cycling International premium realignment– Moderation of market volume declines
Disciplined but competitive1H11 beer NSR per case up 0.4%Domestic portfolio NSR per case up 1.9%International premium net sales revenue down 2.9%
– Pricing re-aligned in 2H10– Largely offset by volume and cost of sales benefit
Market Environment
CUB Pricing
2H 11Expectations
24
David DearieTreasury Wine Estates
For
per
sona
l use
onl
y
25TREASURY WINE ESTATES
Encouraging progress on building a sustainable business
Lower and re-aligned promotional spend to support more profitable channels and products
Increasing consumer marketing and brand building investment
Flexible and efficient production network
Significant progress on reducing costs
Supply aligned with demand
Increasing production flexibility
Positive net sales revenue per case trends in all regions
Improving channel and product mix
Emerging benefits from route to market investment
Production Efficiency
NSR perCase
Brand Building Investment
26TREASURY WINE ESTATES AMERICAS
Performance improvement program gaining traction
Modest recovery in consumer spending environment but still weaker than 3 years ago
Continued high level of pricing activity
Blush performing in-line with the category
Strong “Light and Refreshing’ growth (ex blush) volume up 7.9%
Founders Estate volume in line with prior year with solid NSR/case growth
EBITS up 39% on a constant currency basis
Benefits from organisation transformation
NSR/case increased 6.8% on a constant currency basis and benefiting from
– Distributor and sales focus on key priorities
– Promotional investment re-alignment
– Good growth in luxury and new & emerging brands
79 wines with 90+ scores in Wine Spectator & Wine Advocate in 1H
Consumer Environment
Performance Improvement
BeringerRe-Launch For
per
sona
l use
onl
y
27TREASURY WINE ESTATESEMEA
Solid performance in Continental Europe and Nordics
Continental Europe & Nordics
UK & Ireland
Route to market investment delivering distribution gains:
– Wolf Blass in Germany
– Beringer in Denmark
– Lindemans in the Netherlands and Finland
– Yellowglen in Finland
NSR per case impacted by higher alcohol taxes in the Nordics andadverse country mix
Improving profitability - NSR per case up 5.0% on a constant currency basis:
– Promotional investment aligned to more profitable channels and products
– Premium innovation
– Solid growth in convenience and impulse channels
28
20% volume growth with constant currency NSR per case up 4.7%:
– Foundation brand growth led by Beringer and Penfolds
– Expanded distributor network contributing to 44% volume growth in China
– Japan impacted by continued weakness in consumer environment
Further in-market sales and marketing capability
Increased A&P investment:
– Penfolds Experience in China, Singapore and Thailand
– Print advertising campaigns for Wolf Blass and Yellowglen
TREASURY WINE ESTATESASIA
Increasing distribution in Asia
Profitable Growth
Measured Investment
For
per
sona
l use
onl
y
29TREASURY WINE ESTATES ANZ
Improving performance trend
Promotional investment realigned to higher returning activities
Rigorous planning, activation and evaluation processes
Partnering model activated with an expanded number of the customers
– Joint business planning
– Shared objectives
33 Trophies & 138 Gold medals in 2010 national wine shows
EBITS up 5% on constant currency basis
Strong innovation program
New listings in the on-premise and off-premise channels
Profitable Growth
Improving Sales Execution
Supplementary Information
For
per
sona
l use
onl
y
31
1H 10 2H 10 FY 10 1H 11
Volume1
NSR ($m)
EBITDAS ($m)
EBITAS ($m)
EBITS ($m)
EBIT ($m)
Net Profit ($m) (before material items and SGARA)
80.1
2,302.2
647.2
570.5
570.1
560.0
363.0
69.3
1,983.4
619.7
539.5
538.6
530.7
348.3
149.4
4,285.6
1,266.9
1,110.0
1,108.7
1,090.7
711.3
75.8
2,150.3
602.8
538.7
537.7
532.5
335.7
1 9L cases millions
RESULT SUMMARY
32
1H 10 1H 11 Change
OCFPIT before Material Items ($m)
Less: Material Items ($m)
Reported OCFPIT ($m)1
694.5
30.3
664.2
597.6
47.3
550.3
EBITDAS ($m)
OCFPIT ($m)
Cash Conversion (%)
647.2
694.5
107.3
602.8
597.6
99.1
(6.9)%
(14.0)%
(8.2) pts
1 Statutory Operating Cash Flow pre Interest, Tax & Dividends
CASH FLOWCONTINUING BUSINESS
For
per
sona
l use
onl
y
33
1H 10$m
1H 11$m
EBITDAS
Working Capital
Other Items
647.2
52.4
(5.1)
602.8
(0.8)
(4.4)
Continuing OCFPIT before Material Items
Net Interest Paid
Tax Paid
694.5
(68.9)
(127.2)
597.6
(56.1)
(149.2)
Continuing Net Operating Cash Flows before Material Items
Net Capex
Dividends Paid
Free Cash Flow after Dividends
498.4
(17.2)
(293.9)
187.3
392.3
(58.7)
(268.3)
65.3
CONTINUING BUSINESS FREE CASHFLOW PRE MATERIAL ITEMS
34
1 9L cases millions
GLOBAL BCS
470.6
5.6
988.7
34.9
524.2
19.3
464.5
15.6
OCFPIT
Net Capex ($m)
1H 10 2H 10 FY 10 1H 11
Total Volume1
Total NSR ($m)
Total EBITDAS ($m)
Total EBITAS ($m)
Total EBITS ($m)
Total EBIT ($m)
60.9
1,295.0
519.5
493.7
493.6
493.6
52.9
1,100.4
456.6
428.7
428.5
428.5
113.8
2,395.4
976.1
922.4
922.1
922.1
57.8
1,226.6
484.9
462.8
462.7
462.7
Capital Employed 1,546.8
For
per
sona
l use
onl
y
35
1 9L cases millions
GLOBAL BCS
54.3
1,199.9
453.1
106.6
2,337.1
904.1
49.2
1,073.1
417.7
57.4
1,264.0
486.4
CUB Volume1
CUB NSR ($m)
CUB EBITS ($m)
1H 10 2H 10 FY 10 1H 11
Other Volume1
Other NSR ($m)
Other EBITS ($m)
3.5
31.0
7.2
3.7
27.3
10.8
7.2
58.3
18.0
3.5
26.7
9.6
36
1 9L cases millions
TREASURY WINE ESTATES
3,130.3Capital Employed
1H 10 2H 10 FY 10 1H 11
Total Volume1
Total NSR ($m)
Total EBITDAS ($m)
Total EBITAS ($m)
Total EBITS ($m)
Total EBIT ($m)
19.2
1,007.2
146.0
99.2
99.2
89.1
16.4
883.0
170.3
122.1
122.1
114.2
35.6
1,890.2
316.3
221.3
221.3
203.3
18.0
923.7
138.1
99.9
99.9
94.7
OCFPIT
Net Capex ($m)
262.1
(5.0)
160.9
16.0
423.0
11.0
137.0
18.0
For
per
sona
l use
onl
y
37
1H 10 2H 10 FY 10 1H 11
Americas Volume1
Americas NSR ($m)
Americas EBITS ($m)
9.4
488.6
43.8
8.5
444.4
63.6
17.9
933.0
107.4
8.3
431.3
54.2
ANZ Volume1
ANZ NSR ($m)
ANZ EBITS ($m)
4.5
304.0
37.0
3.4
250.5
38.8
7.9
554.5
75.8
4.4
294.3
39.6
EMEA Volume1
EMEA NSR ($m)
EMEA EBITS ($m)
4.9
189.5
12.0
4.0
146.9
3.0
8.9
336.4
15.0
4.9
166.8
(0.5)
Asia Volume1
Asia NSR ($m)
Asia EBITS ($m)
0.4
25.1
6.4
0.5
41.2
16.7
0.9
66.3
23.1
0.4
31.3
6.6
1 9L cases millions
TREASURY WINE ESTATES
38
Gearing Group Interest Cover1
1 EBITS Interest cover, before material items
4.66.0 6.2
7.8 7.9 7.9 7.98.9 9.3
8.4
0123456789
10
FY06
1H07
FY07
1H08
FY08
1H09
FY09
1H10
FY10
1H11
X78
6455
63 62
7670
59
81
67
0102030405060708090
FY06
1H07
FY07
1H08
FY08
1H09
FY09
1H10
FY10
1H11
%
CAPITAL STRUCTURE
For
per
sona
l use
onl
y
39
BCSBeer, Cider, Spirits / Ready To Drink (RTD) category.CUBCarlton & United Breweries.Constant CurrencyThroughout this presentation constant currency assumes current and prior period earnings of self-sustaining foreign operations are translated and cross border transactions are transacted at current year exchange rates. EBITEarnings before interest, tax and significant items.EBITSEarnings before interest, tax, significant items and SGARA.EBITDAS Earnings before interest, tax, depreciation, amortisation, significant items & SGARA.Exchange rateAverage exchange rates used for profit and loss purposes in the 6 months ended 31 December 2010 are: $A1 = $US 0.9434 (2010: $A1 = $US 0.8699), $A1 = GBP 0.6025 (2010: $A1 = GBP 0.5310). Period end exchange rates used for balance sheet items are: $A1 = $US 1.0173 (2010: $A1 = $US 0.8938), $A1 = GBP 0.6594 (2010: $A1 = GBP 0.5559). Market data
CUB calculation based in part on data reported by Nielsen through its ScanTrack Liquor Service for the Liquor Category for the Australian liquor market. Copyright © 2011, The Nielsen Company.NSRNet sales revenueOCFPITOperating cash flow before cash receipts and payments associated with significant items and other one-off transactions and prior tointerest and tax.SGARAAustralian accounting standard AASB141 “Agriculture”.
DEFINITIONS
For
per
sona
l use
onl
y