Royal Unibrew A/S : H1 2020 Presentation

Interim Report H1 2020

1 January - 30 June 2020

19 August 2020

Solid H1 performance

• Strong operational focus and cost management
• Agile and resilient organization that quickly responded to COVID-19 challenges and leveraged new opportunities
• Net revenue decreased 6% (7% organically) and EBIT decreased by 7%
• Strong cash flow generation
• Outlook for full year 2020 EBIT upgraded from DKK 1,250- 1,375m to DKK 1,425-1,525m
• Full dividend payment in September
• COVID-19
• • Strong performance in Off-Trade
  • Part of the On-Trade business re-opened in May
  • Border trade re-opened in June
  • Most of nightlife (Finland and Italy open) and festivals remain closed

Development Net Revenue per month H1

mDKK
1000
										+7%
900
800
		-23%	-16%
700
		-9%
600
500	+5%	+6%

400

300

200

100

0

January February March	April	May	June
		2019		2020

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Baltic Sea

Financial result

• Net revenue decreased by 5%
• Total volume decreased by 1%
• EBIT increased 4% and EBIT-margin improved 1.6 percentage point to 21%
• Positive product mix and acquisition effect from Bauskas

COVID-19

• Good re-start after restaurant re-opening in May
• Excellent Zero Zone in-store execution
• Staycation has had a positive impact on Off-Trade (Finland)
• Innovative solutions to utilize public areas to build summer outdoor terraces in Lithuania

		Baltic Sea EBIT and EBIT margin
mDKK						21,0%
400	18,0%	19,4%
350
300			311	322
250	291
200			+7%	+4%
150
100
50
0
		H1-2018			H1-2019			H1-2020

The Baltic Sea segment comprises the markets in Finland and the Baltic countries (Lithuania, Latvia and Estonia) as well as a license business in Russia

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Western Europe

Financial result

• Net revenue decreased by 11%
• Total volume decreased by 8%
• EBIT decreased 24% and EBIT-margin declined 3 percentage point to 16.2%

COVID-19

• The COVID-19 outbreak has affected all countries negatively
• Off-Tradehas been positively impacted, although not in a scale compensating for the lost On-Trade business
• We will reimburse the salary compensation received in Denmark
• We have gained market shares in France

Western Europe EBIT and EBIT margin

mDKK	18,8%	19,2%
400
					16,2%
350
		353
300	308
250				267
200
		+15%	-24%
150
100
50
0
		H1-2018			H1-2019			H1-2020

The Western Europe segment comprises the markets in Denmark, Germany, Italy (incl. the Balkan countries) and France

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International

Financial result

• Net revenue increased by 13%
• Total volume increased by 4%
• EBIT increased 32% and EBIT-margin increased 3.1 percentage point to 21.3%
• We estimate that stock levels have been rebalancing in Q2
• Sales out trend just above 10%

COVID-19

• Fragmented impact from COVID-19 where we have seen Asia moving faster towards a more normal situation compared to Europe and the Caribbean markets

International EBIT and EBIT margin

mDKK
100	22,5%					21,3%
					18,2%
80
						82
60
59				62
40	+5%	+32%
20
0
		H1-2018				H1-2019			H1-2020

The International segment comprises the export and license business to international markets outside Denmark (incl. Germany), Finland, Italy (incl. the Balkan countries), France and the Baltic countries

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Our CSR agenda

• Despite COVID-19 our focus and commitment remain the same
• Changes in channel/product mix due to COVID-19 might adjust the speed of implementation of some targets
• Launch of new products supports the target of a more balanced portfolio between regular, sugar reduced and sugar free soft drinks
• More products with low or non-alcohol has been launched
• Several donations of products has been given to assist the first responder that are in the front line of COVID-19

Martinique - donation to doctors Department of Public Health

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Financial performance

	mDKK	H1 2020	H1 2019	FY 2019
	Volume (thousand hl)	5,269	5,462	11,023
	Net revenue	3,566	3,791	7,692
	EBITDA	833	879	1,814
	EBITDA margin (%)	23.4	23.2	23.6
	EBIT	663	710	1,469
	EBIT margin (%)	18.6	18.7	19.1
	Profit before tax	648	700	1,458
	Net profit	505	541	1,140
	Free cash flow	590	612	1,140
	Net interest-bearing debt	2,113	3,000	2,705
	NIBD/EBITDA (times)*	1.2x	1.7x	1.5x
	Equity ratio (%)	40	30	37
	* Running 12 months
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EBIT - Bridge

mDKK

750			-225		13
710
	123
600				42	663
450
		485

300

150

0

EBIT H1'19	Lost revenue	Production cost	Sales and distibution	Administrative expenses	EBIT H1'20
			expenses

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Outlook

mDKK	Outlook 2020	Outlook 2020	Outlook 2020	Actual
	(August 2020)	(June 2020)	(March 2020)	2019
Net revenue				7,692
EBIT	1,425-1,525	1,250-1,375	Around 2019 level	1,469

Assumptions

Guidance is based on the full year assumptions as presented in the outlook for 2020 set out in the 2019 annual report; however, supplemented with following assumptions:

• COVID-19will continue to impact the business - but with balanced restrictions
• Large part of the On-Trade remain open, but majority of nightlife and events remains closed in most markets. In general, On-Trade is expected to trade below last year
• Price/mix in Off-Trade to be broadly in line with 2019 assuming on-the-go consumption to get closer to the level of 2019 during the second half of the year
• Continued high focus on discretionary spend
• Sufficient financial flexibility to make commercial investments in marketing and sales initiatives

mDKK DEVELOPMENT IN NET REVENUE PER MONTH

1.000
+7%	+7%
800
600
400
200

0

January February March	April	May	June	July
		2019			2020

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Management priorities

• Safety of our employees and customers
• Stay very close to markets and follow the opportunities
• Building a strong commercial plan for 2021
• Secure financial flexibility
• Risk Management

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Appendix

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Financial performance

mDKK	H1'20	H1'19	Change
P&L ITEMS
Net revenue	3,566	3,791	-225
Gross margin	51.2%	53.0%	-1.8pp
EBITDA	833	879	-46
EBITDA margin	23.4%	23.2%	0.2pp
EBIT	663	710	-47
EBIT margin	18.6%	18.7%	-0.1pp
Profit before tax	648	700	-52
Net profit	505	541	-36

mDKK	H1'20	H1'19	Change
BALANCE SHEET ITEMS
Net interest bearing debt	2,113	3,000	887
Net working capital	-650	-749	-99
Total assets	8,837	8,907	-70
Equity	3,545	2,663	882
Equity ratio	40%	30%	10pp
Invested capital	6,076	6,068	8
ROIC ex. goodwill*	29%	32%	-3pp
ROIC incl. goodwill*	18%	20%	-2pp

* Running 12 months - EBIT not full year for acquisitions

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Development of key figures

Volume million hl

Change		-4%
6,0
5,0
4,0
3,0	5,5		5,3
2,0
1,0
0,0	2019	Change	2020

Net revenue DKKm

Change		-6%
4.000
3.200
2.400	3.791
1.600		3.566
800
0	2019	Change	2020

Net revenue /HL

700		-19
600
500
400	683		664
300
200
100
0	2019	Change	2020
EBIT DKKm
Margin	18.7%	-47	18.6%
900
750
600
450	710		663
300
150
0
	2019	Change	2020

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