CAPITAL MARKETS DAY MARCH 14th, 2019 - Cision
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
CAPITAL MARKETS DAY
MARCH 14th, 2019
0
Welcome to Arcus’ Capital Markets Day
08:30 Registration and breakfast
09:00 Introduction ………………………………………………….. Kenneth Hamnes, Group CEO
09:20 Spirits – Reignite profitable growth / Q&A ..….... Erlend Stefansson, Group Director, Spirits
10:05 Wine – Continue strong performance / Q&A …... Eirik Andersen, Group Director, Wine Norway
Øystein Gogstad-Andersen, Managing Director, Arcus Wine Brands
10.50 Break
11.00 Finance – Creating shareholder value / Q&A …... Sigmund Toth, CFO
11:20 Questions from Financial Analysts ……………..……. Preben Rasch-Olsen, Financial Analyst, Carnegie
Petter Nystrøm, Financial Analyst, ABG Sundal Collier
11:50 Closing remarks ………………………………………..………. Kenneth Hamnes, Group CEO
12:00 End of Arcus’ CMD
1
We are passionate about creating great moments
Bringing Nordic spirits to the world and importing
the world’s best wines and spirits to the Nordics
SPIRITS WINE D I ST R I B U T I O N
#1 in Norway #1 in Norway #1 supplier to Vinmonopolet
#2 in Denmark #2 in Sweden ~30% market share HORECA
#1 In Germany (Aquavit) #4 in Finland 115 external customers
#5 in Sweden
#6 in Finland
2
The history of Arcus dates back to the 1800s
Aalborg, Malteserkreuz
and Gammel Dansk Acquired Social Wines
brands acquired from in Finland Acquired the remaining
Acquired wine company
Excellars AS holding key Pernod Ricard Acquired Swedish 50% of Det Danske
First LINIE Aquavit agencies such as Les Separate management Snälleröds-brands Spiritus Compagni
travels around the Fumeés Blanches (51% + and Board of Directors Kenneth Hamnes new Acquired BevCo
world Ratos majority owner option for remaining) in Vectura CEO of ArcusGruppen Acquired the Vanlig brand
1805 1996 2005 2006 2011 2012 2013 2014 2015 2016 2017 2018
Arcus AS established Acquired Vingruppen New production Vingruppen AS established Restructured Acquired the
(demerger from i Norden AB with well facility at as holding company for the as a public limited Hot n’Sweet Brand
Vinmonopolet); 100% established wine Gjelleråsen Norwegian wine companies, company, Arcus
government owned operations in Sweden mirroring successful ASA, listed at the Established Atlung-
structure in Sweden, fully Oslo Stock stad Håndverks-
Sale of industrial owned by Arcus-Gruppen AS Exchange destilleri
spirits division
3
Arcus share performance in line with peers
Share price development since Arcus IPO – Arcus and selected peers 1,2
60
55
50
45
40
35
30
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18
Arcus Altia Lucas Bols
Source: Factset as at 26 February 2019
1) Stock prices rebased to Arcus’s share price as of 1 December 2016, 2) Stock prices adjusted for splits, spinoffs and cash dividends 4
Results have been a mixed bag in 2017 and 2018
2017 & 2018 FINANCIAL PERFORMANCE
2017 2018 Targets
Topline organic growth -1,3% +4,0% +3-5%
incl. minor M&A bolt-ons +0,5% +5,1%
EBITDA (adj.) growth +7.6% -13,4% +6-9%
Dividend pay-out 1.66 (60%) 1.66 (69%1) 50-70%
M&A # bolt-ons 4 0 Do bolt-ons
1 Final decision to be made by General Assembly, April 11, 2019 5
Market conditions are stable. Some changes need awareness
CO N S U M E R T R E N D S R EG U L ATO RY STAT U S
• Organic, vegan, local, authentic • Strong monopolies Norway/Sweden
• Low-alcohol (more control) • Monopolies step-up online efforts
• Trusted, transparent, green • Changes in Finland in 2018
• Taste always #1 • Political debate on tax-free in Norway
• US: Spirits outgrows wine and beer • Alcohol tax levels still fuel border trade
6
Our markets develop. We adapt
Border trade and tax-free Improve presence in border areas and shops,
outgrow monopolies further develop tax-free offering
Craft trend and more Strengthen innovation focus, communicate our
local competitors heritage, establish Atlungstad Håndverksdestilleri
Retail goes online and Support Vinmonopolet, Systembolaget and Alko in
monopolies follow their efforts to get maximum consumer satisfaction
Megatrends: Convenience, Adapt to local tastes, super-premium offerings,
taste/indulgence, and sustainability sustainable value chain and packaging
7
Stable consumption of wine and spirits in Sweden and Norway
Sweden and Norway, registered sale of wine and spirits 1,2 Norway, wine and spirits vs GDP 3
Pure alcohol, litre pr citizen above 15 years
4 5%
3,4 Wine Sweden 4%
3,1
3
3%
GDP (YOY)
2,2 2,2 Wine Norway
2% R2 = 0.0118
2
1%
1,3
Spirits, Sweden 0%
1 1,0 1,0 -2% 0% 2% 4% 6% 8%
Spirits Norway
-1%
0 -2%
2008 2010 2012 2014 2016 2018
1 Kilde: Centralförbundet för alcohol och narkotikaupplysning, CAN Rapport 175, 2 Kilde: Statistisk Sentralbyrå, desember 2018’
3 Kilde: Kepler Cheuvreux, Navigating polarized retail, February 2019 8
Sustainability and consumer preferences work together
Bag-in-box is …and next generation
environmentally plastic wine bottles
smart and very are refundable at your
practical… grocery store
99Arcus donates 7,000 water bottles to high-school graduates
10
10Arcus is a Nordic player with local brands and regional scale…
CLOSE -TO-MARKET
Arcus
Local
players
Global
players
SCALE AND SYNERGIES
11…and we have the people to do it
12
12We can do better! Priorities going forward
R E I G N I T E G ROW T H
1. Reignite growth in spirits, especially in high-profit markets
2. Work on productivity in production
3. Continue managing gross profits on wine
4. Ensure distribution regains operational leverage from increased revenue
5. Manage SG&A costs across the board
13SPIRITS – REIGNITE
PROFITABLE GROWTH
Erlend Stefansson
Group Director, Spirits
14Our spirits strategy is to create long-term profitable
growth by developing our brands, attracting new
consumers and exploiting our scale and competence.
15
15Leading position across Nordic and German home markets
Share of
revenue1
40% 19% 17% 4% 7%
1
~35% ~12% 2
~10% #5 ~2% #6Market and category development
Market
volume1
11.2 ML 13.4 ML 19.8 ML 20.7 ML
Aquavit Aquavit Grape
Aquavit AquavitGrape
11 % 0% 11 % Bitter
Other 16 % 5 % 2 %Bitter Other
Other Other
23 % 1% 24 % 1 %Gin
25 % 25 % 2%
Grape Gin
Grape 1% 8%
13 %
Bitter
Category 11 %
composition Whisky
Bitter
6%
Vodka
22 %
Whisky
12 % 8%
Gin Whisky
Gin
5% 14 %
11 %
Whisky Vodka/
Vodka Vodka 37 % Viina
30 % 22 % 54 %
Aquavit 1,6 % Aquavit -6,0 % Aquavit -1,9 % Aquavit -1,7 %
Grape -6,2 % Grape -9,3 % Grape -0,7 % Grape -1,9 %
Bitter 0,7 % Bitter -1,3 % Bitter 2,5 % Bitter -4,6 %
Category Gin 3,9 % Gin 16,1 % Gin 6,9 % Gin 6,8 %
CAGR
Vodka -0,9 % Vodka 4,4 % Vodka -0,8 % Vodka -3,6 %
2014-182
Whisky 0,9 % Whisky -0,6 % Whisky 5,2 % Whisky -1,1 %
Other 3,2 % Other -8,0 % Other -0,5 % Other 0,5 %
Total -0,1 % Total -1,2 % Total 1,8 % Total -2,1 %
1) Domestic sales 2018, off-trade, 2) 2015-18 for Denmark 17Arcus Spirits Strategic agenda
Grow core categories aquavit
and bitter
Accelerate innovation and local
adaptations
Grow partner portfolio
Improve gross margin
18Grow core categories aquavit and bitter
Premiumization
Rejuvenate brands and portfolio Drive Mixology for aquavit
3-tier mixed drinks Cocktail
strategy in Germany competition
Seeding use of aquavit in drinks across the
Nordics, USA and internationally
Craft and
19 nicheAccelerate innovation and local adaptations
Share of Arcus sales value at Vinmonopolet 2018 Focused investments in Future Growth initiatives
Introduced prior to 2014
Introduced since 2014 0,5% 2018
0,7% 2017
1,0% 2016
4%
96% 1,6% 2015
0,2% 2014
Top 100 products at Vinmonopolet, 2014 vs 2018 Local adaptations and brand stretch
New on top 100 list 16 4 New products*
3 Line extensions
Existing 84
9 Climbers
PET Brand Brand Duty-Free
conversion stretch stretch adaptation
* Skåne Akvavit, Akevitt Spesial, Dramm (likør), Glenwood (whiskey) 20Grow partner portfolio to leverage Nordic sales and distribution platform
Nordic markets too small and diverse for Net sales from agency business
most International Brand owners to run own
distribution effectively +60%
Arcus is one of few to offer integrated Nordic
organization with first class local knowledge
and strong position in all markets
Partner business has lower margins than
own brands, but is still profitable and
important to get scale on Arcus operation 2015 2016 2017 2018
21Drive gross margin through commercial excellence and supply chain
efficiencies
COMMERCIAL S U P P LY C H A I N
Premiumization Efficiency & capability
Price optimization Organization
Portfolio optimization
Streamlining & digitalization
perspective
Total Cost of Purchasing
22Gross margin development and aquavit portfolio example
Spirits gross margin development, % Aquavit in Norway: Arcus pricing January 2019 (70 cl bottle)
56
52 52 53 51
300
300 350
350 400
400 450
450
7% 8% 38% 37% 10%
2014 2015 2016 2017 2018
Share of sales value 2018
23Substantial efficiency improvements achieved
INCREASED VOLUME AND COMPLEXITY …
Volume produced at Gjelleråsen Number of SKUs produced
+29% +26%
2014 2018 2014 2018
… WHILE IMPROVING EFFICIENCY IN PRODUCTION
Production OPEX* FTEs in production Inventory finished goods
-15% -11%
-29%
2014 2018 2014 2018 2014 2018
* Total cost for process and bottling (OPEX incl. personnel) 24Making Supply Chain a competitive advantage for Arcus – Key priorities
EFFICIENCY & CAPABILITY STREAMLINING & DIGITALIZATION
• Capabilities to meet market needs • Digitalize administrative processes
• Increase efficiency based on • Optimize for “right” complexity
current volume • Optimize processes
• Increase technical availability
ORGANIZATION TOTAL COST OF PURCHASING
• De-layered structure and • Accelerate purchasing savings
empowered workforce • Reduced waste and scrapping
• Competence and flexibility in • Improve supplier collaboration and
production service level
25Supply Chain in figures
21.8
MILLION
98.2
PERCENT
4.5
TIMES/YEAR
Units produced Service level Inventory turn-
in 2018 in 2018 over in 2018
96
EMPLOYEES
1+2
PRODUCTION
≈450
COST BASE
SITES (MNOK)
31
26Arcus business model targets diverse Nordic Markets and Germany
• Local consumer and customer insight founded on strong local
presence
• Autonomy for local markets for better and faster decisions
• Budget and plans with markets in lead, supported by
marketing, Innovation and production
• Win with one integrated Nordic commercial platform, sharing
learnings and concepts between markets
• A true Nordic organization with Spirits management team
located across Norway, Sweden and Denmark
• One Arcus Spirits across commercial and production functions
27Key priorities Norway
ARCUS POSITION K E Y P R I O R I T I E S G O I N G F O R WA R D
• Leading player in strongly • Win Christmas season and de-seasonalize
regulated monopoly market aquavit consumption
• Dominant in attractive • Optimize and grow strong vodka portfolio
aquavit and vodka
segments • Continued price and portfolio optimization
crucial in a highly technical market place
• Expert on commercial
execution in a market with • Investments in selected growth initiatives
limited marketing • Attract and develop partner brands
opportunities
• Strong position in border
trade and tax-free
28Key priorities Denmark
ARCUS POSITION K E Y P R I O R I T I E S G O I N G F O R WA R D
• Strong No2 player in a highly • Category revitalization and recruitment via
competitive and open market consumer interaction and sampling
with spirits sold “everywhere” activities
• Close partner with top3 grocery • Drive innovations like Aalborg Basis to
chains rejuvenate and leverage core brands
• Aquavit and bitter champion • Drive mixed drinks agenda for aquavit
• Strong position in Germany • Investments in selected growth initiatives
Border trade • Attract and develop partner brands to
leverage Arcus strong market position
• Experts on combining full
marketing tool box and sales
execution in a very dynamic
market
29Key priorities Germany
ARCUS POSITION K E Y P R I O R I T I E S G O I N G F O R WA R D
• Aquavit champion in niche • Refine and implement in-store execution
category in huge market excellence programs
• Actively driving aquavit • Drive distribution and activation of
rejuvenation after decades of premium aquavit to revitalise aquavit as
segment decline premium digestive across on- and off-trade
• Strong and growing reputation • Continue to invest in Big Bet initiative
for Arcus aquavit portfolio mixed drinks for aquavit
• Focussed local Arcus presence • Grow bitter from low base with Gammel
in a fragmented market Dansk and Malteser Kräuterlikör
• Strengthen importer partnership via
increased local Arcus presence and
customer involvement
30Key priorities in other markets
• Grow with aquavit and • Defend and grow strong • Strengthen cooperation • Seed aquavit and bitter
vodka Braastad position with key players in Nordic through focused approach
Travel Retail in 2-3 states
• Leverage growth from • Grow with pre-mixed and
growing categories shots portfolio • Win key segments with • Focused efforts
channel-specific variants towards Nordic
• Grow partner • Grow partner roots
business and business and • Seed new
portfolio portfolio geographies • Explore aquavit
via expanded in Mixology
portfolio
offering
31Arcus Spirits Strategic agenda
Rejuvenate core brands and portfolio in Nordic
Grow core categories
markets and Germany through premiumization,
aquavit and bitter
mixology and craft initiatives
Invest in local adaptations and selected initiatives
Accelerate innovation
with significant growth potential targeting the local
and local adaptations
consumer
Attract leading international spirits partners to
Grow partner portfolio
leverage Nordic sales and distribution platform
Drive gross margin through focussed pricing and
Improve gross margin portfolio initiatives, supported by increased
efficiencies in production and value chain
32WINE – CONTINUE STRONG
PERFORMANCE
Eirik Andersen, Group Director, Wine Norway
Øystein Gogstad-Andersen, Managing
Director, Arcus Wine Brands
33Leading footprint in the Nordic wine market
Arcus with leading positions1 in all three countries with room for further consolidation Revenue split - 2018
Arcus Arcus
1 15% brands
~11%
2 Solera
Others
3
~65%
4 Agency
brands
1 Altia ~89%
Others
1 ~50% 2
#42 3
~4 Arcus
1 VIVA ~4 6%
~4 30%
Others Arcus
2 2
~59% 10%
3 58%
4
11%
1%
1) Wine category share by value 2) Shared wine category position 34Market and category development
Market volume1 67,0 ML 202,1 ML 52,4 ML
Other Other
Other wine 2 %
wine 2 % wine 3 %
White
wine
28 % White
wine White Red wine
Category 32 % Red wine wine 43 %
48 % 41 %
composition Red wine
58 %
Sparkling
wine Sparkling
8% Rosé wine wine 10 %
Rosé wine 8 % Rosé
4% Sparkling wine 10 % wine 3 %
Red wine -1,9 % Red wine -1,4 % Red wine -6,5 %
Rosé wine 8,9 % Rosé wine 2,0 % Rosé wine 28,2 %
Category CAGR Sparkling 5,9 % Sparkling 14,5 % Sparkling -1,1 %
2014-182 White wine 1,4 % White wine 1,1 % White wine -0,3 %
Other 9,0 % Other -1,6 % Other -8,8 %
Total 0,1 % Total 0,8 % Total -2,9 %
1) Domestic sales, off-trade. 2) Finland development is 2018 vs 2017 35Norway: Capturing market shares in a growing market
9,9 %
• Vingruppen has increased its
market share every month since
November 2017
4,8 % • Vingruppen increased the market
Vingruppen share from 15,8 to 16,9 % from
2017 to 2018
• In January 2019 Vingruppen had
Market
a market share of 18,2 %
Norway 2018
1Consumer sales
Source: Vinmonopolet and Systembolaget, year end 2018 36Red wine still largest category, but growth comes from lighter categories
Share of total volume per category Change in volume per category
Percent Thousand liter
Red wine 58% Red wine -1.114
White wine 28% White wine 1.178
Sparkling wine 8% Sparkling wine 366
Rosé wine 4% Rosé wine 578
Other 2% Other 208
Source: Vinmonopolet 37Increased demand for lighter wines, and our portfolio must adapt
Category mix Vinmonopolet Category mix Vingruppen
64.982 65.717 10.671 11.138
3,0% 4,2% 100% 0,8% 1,5% 1,7% 3,1% 100%
6,9% 7,9% 18,9%
23,8%
26,9% 29,0%
Rosé wine 78,8% 71,3%
63,2% 58,8% Sparkling
White wine
Red wine
2015 2018 2015 2018
Source: Vinmonopolet, volume % 38Several successful launches has strengthened our position within
lighter wines
• Tender-win • Successful test listing • Successful test listing • Tender win
• One of the most successful • Rosé - Line extension • Well received by the press • Well received by the press
launches in 2018 Fumées Blanches • Organic • Premium
• Almost fully distributed • Distributed to category 5 • Fully distributed • Distributed to category 4
39Creating growth with premium wines
• Premium Champagne • Three premium wines • Small quantities • Three basic listings
• Bestseller in Sweden listed in Norway • Super Premium • Premium wines
• Basic listing in Norway • Prestige producer • Prestige producer • Good distribution and
• Great potential for growth potential for growth
We’re taking important steps to position our portfolio
within thepremium and super premium categories
40New packaging types increases its market shares and organic wines
continues to grow
Thousand liter, 2018 vs 2017 at Vinmonopolet
Sales development per package type Sales development per 2018
BIB +347
Organic +233
Glas bottle +357
PET +181
Non organic +983
Pouch +303
PET and pouches accounts for 2% of the total Organic market share is 7,7%, but accounts for
market, but 40 % of the market growth. 19% of market growth.
Source: Vinmonopolet 41Focus on winning strategic tenders with sustainable and unique concepts
• Tender-win • Line extention Laroche • Tender-win • Tender win
• One of the most successful • Successful launch in • PET bottle with deposit • Most sold PET bottle and
rose launches. ordering range • Fully distributed from May best-selling French wine in
• Innovative packaging • Potential basic listing in bottle
2019
• Innovative packaging
42Over 50% of all wine sold at Vinmonopolet comes from less than
100 products
Wine sold at Vinmonopolet Average volume sold per product
%-share Thousand liter
Top 10 11% Top 10 748
Top 11 to 99 44% Top 11 to 99 328
Other (22.000 SKU’s) 45% Other (22.000 SKU’s) 2
Source: Vinmonopolet 43Building brands is a great opportunity in the wine category
Over 2,2 million
• Use local consumer insight to respond liters sold in 2018
(+20% vs. 2017)
consumer trends. Nordic innovation.
• Continue to strengthen our position
with local and Nordic brands
• Accelerate growth in other channels/
markets
• Our unique business model is our
competitive advantage (producer
contacts, logistics, bottling facilities, lab,
route-to-market and market know- how) Over 1,5 million
liters sold in 2018
(+25% vs. 2017)
Source: Internal numbers, total all markets 44Strong performance and growth in channels outside Norway
Sweden and Finland
Tax-free (DFTR), Color Line and Heinemann
2.058
CAGR +28,0%
1.687
1.256
1.713
1.550
1.190
345
66 137
2016 2017 2018
Source: Million liter, Ruby Zin and Falling Feather. Sales excluded the Norwegian monopoly. 45Think big with Falling Feather – Long term growth
2.200
Norway
Sweden, Iceland, taxfree
+28%
150
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Internal numbers. Graph shows volume development, from 150K liters to 2,2M liters. 46How Falling Feather was developed into a best-selling wine brand
INSIGHTS AND CONSUMER INTERACTIONS
• Insights – driver analysis best-selling brands
• Vinmonopolet fairs
• Strong presence at consumer tastings and events – meet core
target consumers and create interaction
• A&P (Sweden)
• Update the product regularly, design and blend
46
47Continue the positive development for our own brands
Increase distribution – a Nordic 35/35
wine brand
335/335
• On shelf where core target consumers
shop their wine Launch
Q1 2019
• Introduce Ruby Zin 315/439
• Strengthen position in existing channels
• Accelerate growth in new channels/
Listed at
markets
Heinemann airports.
Ferries: Color Line +
Fjordline
48Going forward we will focus on creating value through…
1 2 3
Improve portfolio management Strengthen insight & innovation Expand distribution
• Close cooperation with partners • Continue to strengthen our position • Strengthen position in existing
with local and Nordic brands channels
• Reduce portfolio complexity
– Current trends • Use local consumer insight to • Accelerate growth in new
– Growing categories respond consumer trends channels/markets
– Seasonality • Nordic innovation • Think BIG!
• Improve price management • Use our unique business model
49To be the best agency-partner in the Nordics
50T H INK BIG!
51FINANCE – CREATING
SHAREHOLDER VALUE
Sigmund Toth
CFO
52At the IPO we presented a value-creation model based on profitable
growth and high cash conversion
Organic growth (including minor bolt-ons)
of 3-5%
• Dividends of 50-70%
EBITDA growth of 6-9%, realized through
of net earnings
improved margins thanks to better asset
utilization • Value creating M&A
High cash flow conversion: Limited investment
needs (20 MNOK Capex vs. 50 MNOK
depreciation) and low working capital needs
53We promised (based on Euromonitor):
Resilient, non-cyclical and steady demand growth…
EUR million – retail end-market value 1
WINE CAGR
SPIRITS CAGR
4 000 ‘05-’15 ‘16-’20E 2 000 ‘05-’15 ‘16-’20E
3 500 3,9% 3,5%
1 750
1,2% 3,4%
3 000
1 500
2 500
0,6% 0,7%
2 000 1 250
3,6% 3,6%
1,6% 1,9%
1 500
1 000
3,8% 2,6% 1,0% 2,4%
1 000
750
500
0 500
2005 2008 2011 2014 2017E 2020E 2005 2008 2011 2014 2017E 2020E
SOURCE: Euromonitor, Vinmonopolet, Systembolaget
1) Retail Sales Price, on- and off-trade total 54…and an attractive financial profile…
Strong and non-cyclical revenue …with improved and resilient …and with high cash flow
growth… margins… generation
2,572 340 Well invested with limited
maintenance capital expenditure
13,2% requirements, well below current
depreciation level
Limited net working capital
requirements (albeit some
seasonality)
863
3,6%
Solid basis for attractive cash
31 conversion
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTM 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 LTM
Q3'16 Q3'16
Revenue (NOKm) Adj. EBITDA Adj. EBITDA margin (%)
55…which was translated into a set of key financial targets
Revenue • Organic revenue growth in the level of
Tax rate • Effective tax rate in the level of 22%
growth 3-5% p.a. incl. minor bolt-on acquisitions
• Net Interest Bearing DebtResults have been a mixed bag in 2017 and 2018
2017 & 2018 FINANCIAL PERFORMANCE
2017 2018 Targets
Topline organic growth -1,3% +4,0% +3-5%
incl. minor M&A bolt-ons +0,5% +5,1%
EBITDA (adj.) growth +7.6% -13,4% +6-9%
Dividend pay-out 1.66 (60%) 1.66 (69%1) 50-70%
M&A # bolt-ons 4 0 Do bolt-ons
1 Final decision to be made by General Assembly, April 11, 2019 57Arcus organic growth sales development has been good, except
on Spirits
Percent change vs. previous year
25 C O N S O L I D AT E D 1 25 WINE
20 20
15 15
10 10 8 7
5 3 3 4 5 3 4
0
0 0
0 -1
-5 -5
25 25
20
SPIRITS1 20 DISTRIBUTION
15 15
10 10 8 8
5
5 5
2
0 0
-5
-5 -4 -3 -3 -5
-4 -8
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
1 Adjusted to exclude effect of Vikingfjord exit from USA and Brøndums’ divestiture
SOURCE: Arcus analysis 58We can do better! Priorities going forward
R E I G N I T E G ROW T H
1. Reignite growth in spirits, especially in high-profit markets
2. Work on productivity in production
3. Continue managing gross profits on wine
4. Ensure distribution regains operational leverage from increased revenue
5. Manage SG&A costs across the board
59Ensure Distribution regains operational leverage from increased
revenues
History of cost reduction and revenue growth, but loss of Going forward, focus is to remove bottle-necks and improve
operational leverage from increased revenues in 2018 capacity utilization to regain operational leverage
Organic revenue growth (% YoY)
25
20
15
10 8 8
5
5
0
• Strong focus on our digital journey. Innovative
-5 solution for our customers and internal operations
-5
-8
2014 2015 2016 2017 2018 • Continuous improvement to gain higher efficiencies
in our operations
EDITDA adj. margin evolution (% of sales)
20
• Together with our customers optimize and improve
10 5,0 4,1
our plans and execution in our high season
1,0
0
-10 -6,4
-20 -12,9
-30 -22,0
2013 2014 2015 2016 2017 2018
60Black over red – we will further focus on costs to ensure organic growth
above the underlying growth in fixed costs
Percent
5 Underlying growth in fixed costs1
Organic growth revenues
0
2014 2015 2016 2017 2018
-5
-10
1 Fixed costs excludes A&P and Depreciation, and are FX-adjusted. 2017 is adjusted the
acquisition of the remaining 50% of the shares in Det Danske Spritus Kompagni A/S (DDSK).
SOURCE: Arcus analysis 61Maintaining our high levels of cash conversion
NOK millions
EBITDA (adj.) 313 2018 actual value used
Capex 20 As per external guidance (and in line with recent years of maintenance capex)
NB! As our assets age (and our volume grows) this level will not be sustainable
Change in NWC 4 Will depend on growth. Here assumed 4% growth, with normalized NWC
constant at 4% of sales
Tax 59 Assumed 22% as per external guidance; applicable on EBITA (EBITDA -45
MNOK in depreciation)
Free Cash Flow (normalized) 229
Reduction in tax paid 17 Reduction in tax paid (mainly due to the effect from deficit that can be carried
forward, total net 2018-effect of ~17MNOK used)
Interest and financial lease 50 Assumed same level as 2017 & 2018 (refinanced in 2016)
Cash flow available for 196
M&A and Dividend1
1 Not including effects from IFRS16 (see annual report 2017 for details on effects from IFRS16 introduction)
SOURCE: Arcus analysis 62We will continue to look for value-creating M&A to utilize our capacity,
returning cash to investors when we cannot
R AT I O N A L E EXAMPLES
Gross margin
EBITDA (adj) margin
Gjelleråsen facility can
Utilize spare capacity
handle increased volume and
in production and/or
margins from new volume
distribution
can be close to gross profit1
51%
In some markets/areas, new
Utilize spare capacity in volume can be handled with 27%
24%
sales and/or marketing current capacity within sales
• Wine importers
and/or marketing 11%
• Spirits importers
Spirits 2018 Wine 2018
1 Assuming a good fit with current production seasonality, competence, use of equipment etc. 63CLOSING REMARKS
Kenneth Hamnes
Group CEO
64We can do better! Priorities going forward
R E I G N I T E G ROW T H
1. Reignite growth in spirits, especially in high-profit markets
2. Work on productivity in production
3. Continue managing gross profits on wine
4. Ensure distribution regains operational leverage from increased revenue
5. Manage SG&A costs across the board
6566
You can also read
