Earnings Presentation 2012

PINAR SÜT MAMULLERİ SAN. A.Ş
2012 Earnings Presentation
Pınar Süt Highlights
• #1 brand that comes to mind*
• Best brand in dairy **
• Most sincere milk brand ***
• Among top 4 brands Turkish consumers
feel closest to****
• Best fruit juice brand *****
• One of the top ten most reputable brands
******
• Superbrands #10 *******
• Hygienic and EU standard
production
• Technical Expertise and sectoral
know-how
Product
Portfolio
Brand
Production
• Healthy, pure and standardized
products
• ISO 9001-2008
• ISO 14001
• ISO 22000 HACCP
• FSSC 22000
• YBP – Turkey’s biggest nationwide
cold and frozen distribution chain
• More than 150.000 sales points
• Technical know-how and expertise
• Synergy in the distribution of dairy and
meat products
Quality
Distribution
Network
• Innovator and pioneer
• More than 200 SKUs
• R&D expertise
• Supply from more than 30000 producers
• Continuous quality control in each step
• Strong relations with farmers
• More than 200 contracted farms
producing in EU standards
• Farms which are free of illness and
approved
• Training and consultancy services
Supply
* GFK 2011 ** Kalder (TMME Endeksi) 2012 ***Mediacat&IPSOS 2012 ****Nielsen 2010
1 GFK&Repman 2012 *******Superbrands 2012
***** Kalder (2012 TMME Endeksi) ******
Pınar Süt - 2012
Market Dynamics - I
► Annual raw milk production is
714 million tons in the world; about 15 million tons in Turkey
(Tetra Pak, Turk Stat)
► Turkey is 15th in world’s league,
► Growth is expected in the milk production/import of
developing and growing countries.
►World total milk and milk products market reached 300 bn
liters in 2012. It constitutes 18% of all beverages.
►Per capita consumption of dairy products is 44 liters in the
world. 47 liters is expected to come out in 2015.
World Milk Consumption (billion Lt)
90
80
72,5
50
Per Capita Liquid Milk Consumption (lt)
120
2011
Source: Tetra Pak, Dairy Index Mayıs 2012
99
80
47
49
52
42
Per Capita Milk Consumption in Turkey (lt)
66
57
37
40
6
2014 (t)
30
Source: Tetra Pak
33
24
13
0
Source: Tetra Pak
2
Pınar Süt - 2012
Market Dynamics - II
Raw Milk Base Price in Turkey (TL/lt)
Processed Food Products Prices
2012
2011
2010
2013
0,95 TL
0,80 TL
0,65 TL
0,50 TL
Jan
Source: TUİK, TCMB
Apr
Jul
Oct
Raw MilBase k Prices for Producers
Packaged Milk and Cheese Penetrations
90,3
 Rising raw milk prices
92,1
91,5
90,0
 Increasing feed prices
87,8
 Processed Meat and Dairy Products retail
prices had an upward movement in 2012.
83,9
2010
Source: HTP
2011
Packaged
Milk
Ambalajlı
Sütler
2012
PackagedPeynir
Cheese
Ambalajlı
3
Pınar Süt - 2012
Market Shares - I
Süt Ürünleri Pazarı (milyar TL)
3,5
3,0
2,5
2,0
1,5
1,0
0,5
0,0
16,3%
2,52
17,0%
2,70
17,9%
2,81
Pınar Ciro Payı
Products
20%
UHT Light Milk
65%
Leader
15%
Total UHT Milk
32%
Leader
Organic Milk
100%
Leader
Enriched Milk (Kids)
54%
Leader
Butter
17%
Second
Homogenized Yoghurt
10%
Third
Spreadable Cheese
42%
Leader
Fresh Cheese
82%
Leader
Labaneh
56%
Leader
Cream Cheese
24%
Leader
17,5%
10%
2,93
5%
0%
2009
2010
2011
2012
Source: Nielsen
Total dairy products are included milk, yoghurt, spreadable cheese,
butter and ayran.
Measurable dairy market has grown by 4,4% in terms of value but has
narrowed by %8,3 in terms of volume in 2012. (Nielsen)
Food category has decreased its share within FMCG from %48,4
to %47,1 in 2012. (Nielsen)
 Plain milk comprises 65% of the total mik market and Pınar Süt
has a share of 32% market share in this, which is more 2,5 times
more than the nearest competitor. (Nielsen)
Our marketing activities continued to increase the market share in 2012.
Significant market share gains were obtained in our value-added products.
4
Market Share Position
Source: Nielsen, 2012 - Value Share
100%
Pınar
Competitor
EnNearest
Yakın Rakip
80%
60%
40%
20%
0%
UHT Light
Milk
Total UHT
Milk
Source: Nielsen, 2012 - Value Share
Spreadable Fresh Cheese
Cheese
Labaneh
Pınar Süt - 2012
Market Shares - II
64,2%
60,3%
58,9%
40,9%
26,7%
39,0%
27,1%
18,4%
16,9%
9,8%
64,5%
10,9%
UHT Light Süt
(Lider)
39,2%
30,1%
17,0%
11,0%
41,8%
31,8%
17,2%
Toplam UHT Süt
(Lider)
Sürülebilir
Peynir (Lider)
Tereyağı (İkinci)
10,1%
Homojenize
Yoğurt (Üçüncü)
2009
2010
2011
2012
Source: Nielsen, - Value Share
5
Pınar Süt - 2012
New Launches & Product Differentiations
New tastes that respond to market tastes , reinforcing our expertise. New launches for different consumer segments.
Multipackages and promotions providing convenience for consumers.
Pınar Süt - 2012
Pınar Beyaz Çikolatalı Campaings
TV
Outdoor Activities
Pınar Süt - 2012
Pınar Beyaz Campaigns
Pınar Süt - 2012
Pınar Labne Campaigns
facebook.com/pinarlabne
TV
Pınar Süt - 2012
Pınar Cream Cheese Campaigns
TV
Flashmob
Pınar Süt - 2012
Pınar Kido Campaigns
Advertisements
www.kido.com.tr
Book
Magazine
Newspaper
Pınar Süt - 2012
Pınar Sade Süt Campaigns
TV
Classic Package
Pınar Süt - 2012
Breakdown of Net Sales by Product
Groups & Sales Channels
Products Groups (2012)
Sauce; 5%
Fruit Juice;
6%
Others; 7%
Milk; 36%
Butter; 7%
Yoghurt &
Ayran; 12%
Sales Channels (2012)
Export
10%
Cheese; 28%
Direct
3%
YBP
87%
13
Pınar Süt - 2012
Growth in Sales
Growth Rates of Product Groups
7%
300
2011
2012
16%
250
200
150
11%
12%
18%
18%
100
Million TL
50
0
Sos FruitMeyve
ve
Peynir
Sauce
Juice Suyu
ButterTereyağ
Others Yoğurt
Yoghurt&Ayran
Cheese
Ayran
Süt
Milk
Net Sales have grown by 11,7% in 2012.
14
Pınar Süt - 2012
Export

Foreign Sales by Countries (2012)
Pınar realizes 22% of Turkey’s Dairy Products Exports itself
 Export income was increased by %20 in terms of USD and
%33 in terms of TL.
UAE; 9%
Egypt; 3%
Azerbaijan;
5%
 Exports to 29 different countries which are Middle East, Europe, USA
and Asia. In 2012 in Switzerland, Hong Kong and Afghanistan joined
into Pinar Süt exporting countries.
Others;
11%
Qatar; 4%
Kuwait; 13%
 Pınar Labane Cheese have high market shares In Saudi Arabia,
Kuwait and UAE which are respectively %35, %50 ve %35.
Iraq; 17%
 Moreover, long-life milk, white cheese, Pınar Beyaz, whole cream,
fruit juice, yoghurt and ayran is exported to Gulf countries.
 Export sales have tripled from 2002 to 2011.

Bahrain; 3%
S.Arabia; 28%
Cyprus; 6%
Foreign Sales by years (Million USD)
As one of the most valuable Turkish brands, part of the
Share ofNet
Export
İhracatın
Satışlar
in TotalPayı
Sales
İçindeki
project supported by the Turkish government..
 Pinar Süt is among the first companies included in Turquality
Project. The first 5 years of project completed succesfully; taking
part in second 5 year was obtained.
 The vision of Turquality® is “Create 10 world brands
in 10 years”.
11%
8%
9%
7%
10%
8%
7%
28,0
24,6
24,4
2006
2007
9%
8%
29,7
29,0
2009
2010
39,9
33,3
21,1
14,5
2004
15
2005
2008
2011 2012
Pınar Süt - 2012
FİNANCİAL RESULTS
Sales and Profitability
Net Sales (Mn TL)
Net Profit (Mn TL)
727,1
577,1
482,8
72,9
651,1
57,8
60,1
2009
2010
54,8
480,7
34,2
2008
2009
2010
2011
2012
2008
 In 2012 sales have grown by %11,7, in both value and volume
terms. Growth in volume terms is by %2.
* Earnings (ex. other income and expenditures)
before tax, dep. and amortization.
17
2012
EBITDA* (Mn TL)
84,6
In accordance with our strategies, we have focused on market
investments and achieved growth in sales and market shares.
Base raw milk price system is in place, as a result of National
Milk Council’s practices. The higher average milk prices, which is
above by %18 YoY, narrowing market and increasing
competition in the market have had a negative impact on our
profitability.
2011
70,9
67,8
63,4
51,9
2008
2009
2010
2011
2012
Pınar Süt - 2012
Income Statement
(Million TL)
31.12.2012
Net Sales
727,1
Cost of goods Sold
(582,2)
Gross Profit
145,0
R&D Expenses
(7,2)
Sales, Distribution and MarketingExpenses
(54,9)
General Administration Expenses (33,1)
EBIT
49,8
Share of Results of Investments in
Associates
3,1
Other Income
7,5
Other Expenses
(2,0)
Financial Income (Net)
3,4
Profit Before tax
61,8
Tax
(7,0)
Net Profit for the Period
54,8
EBITDA
67,8
Total Assets
616,9
Equity
435,7
18
31.12.2011 Difference % Change
651,1
(517,3)
133,8
(5,6)
(35,3)
(24,5)
68,4
76,0
(64,8)
11,2
(1,7)
(19,6)
(8,6)
(18,6)
11,7
12,5
8,4
29,9
55,5
35,0
(27,3)
7,4
8,6
(2,8)
1,7
83,3
(10,4)
72,9
84,6
625,6
439,0
(4,2)
(1,2)
0,8
1,7
(21,5)
3,4
(18,1)
(16,8)
(8,7)
(3,2)
(57,3)
(13,5)
(29,3)
103,0
(25,8)
(32,5)
(24,8)
(19,9)
(1,4)
(0,7)
Pınar Süt - 2012
Growth Analysis
%7,0
%0,7
%4,0
%11,7
727,1 Mn TL
651,1 Mn TL
2011
Miktar
Fiyat ve Ürün
Miksi
19
Kur
2012
Pınar Süt - 2012
Profit Margins
Gross Profit Margins(%)
Operating Margins* (%)
10,5%
25,1%
20,5%
18,0%
2009
2010
19,9%
2011
21,6%
4Q12
6,8%
3Q12
2009
EBITDA Margins ** (%)
13,0%
13,0%
11,0%
2010
2011
2010
10,4%
11,9%
11,2%
8,3%
4Q11
2011
6,3%
4Q11
4Q12
3Q12
Net Profit Margins (%)
9,3%
2009
8,3%
8,4%
17,2%
4Q11
10,7%
4Q12
10,3%
8,4%
7,5%
2009
3Q12
2010
2011
6,9%
4Q11
** Earnings before Interest, Tax, Depreciation, and Amortization
* Ex. Other income and expenditures
20
4Q12
3Q12
Pınar Süt - 2012
Quarterly Results
Net Sales (Mn TL)
177
177
►Product price increases, depending on the positive
developements in the market, have improved our gross
margin in 2012 4Q compared to 2011 4Q.
►Similarly, a significant improvement was achieved in
the profit margins in 2012 4Q, compared to the third
quarter of 2012
188
EBITDA* (Mn TL)
23
4Q11
4Q12
21
3Q12
16
►Price competition is continuing in the market.
►In accordance with our strategy of growing
beyond market, we have focused on market
investments.
4Q11
4Q12
3Q12
* Earnings before Interest, Tax, Depreciation, and Amortization
21
Pınar Süt - 2012
Basic Ratios, Net Financial Debt & Net
Working Capital
Dec 31, 2012
Dec 31, 2011
1,64
1,81
Cash & Cash Equivalents
4,51
4,99
S/T Fin Debt/T. Fin Debt
0,29
0,99
0,30
0,58
S/T Bank Borrowings
L/T Bank Borrowings
15,52
0,13
20,45
15,07
Net Financial Debt/EBITDA
0,16
0,36
Net Financal Debt
11,15
30,54
Total Fin Debt/Equity
0,04
0,08
Current ratio
110
Mn TL
Leverage ratio
Dec 31, 2012
(Milyon TL)
Dec 31, 2011
►A 49% rise in net cash generated
from operating activities
2011
2012
32,9 Mn TL
49,0 Mn TL
90
70
50
30
10
-10
-30
►Continuous focus on risk management
and productivity
-50
-70
►Effective working capital management
-90
-110
Trade Recevables
Trade Payables
Inventories
22
►Strong balance sheet and liquidity
management
Pınar Süt - 2012
Dividends
89,4%
88,2%
78,2%
79,7%
84,6%
69,2%
70,9%
1,22 TL
0,96 TL
0,96 TL
0,59 TL
0,32 TL
5,1%
0,08 TL
2004
7,7%
2005
19,6%
0,37 TL
5,9%
2006
Hisse
Başı Net
Dividends
PerTemettü
Share
(Net)
8,7%
2007
7,1%
10,7%
0,13 TL
3,3%
2008
Payout Ödeme
Ratio Oranı
Temettü
5,8%
2009
2010
2011
DividendVerimi
Yield
Temettü
Pınar Süt - 2012
Overview of 2012
►Volatiliy in the raw milk prices was decreased as a result of National
Milk Council’s base price system. However, the average row milk prices
were %18 above 2011 in 2012.
► The costs have increased in 2012, particularly a %19 increase in the
energy costs.
► Following our strategy of increasing our market shares we have
focused on marketing investments and increased our market shares in
2012.
►New products and new variations in packaging have been launched.
►Cost savings, measures to decrease expenses and projects improving
efficiency in production have continued. (OMI-Lean Six Sigma Projects)
24
Pınar Süt - 2012
Strategies and Targets
Growing above market growth rates in the segments we operate in, with ;
 Effective price management
 Widespread distribution network
 Efficient utilization of social media
 Developments in “Away From Home” channel
Increasing export sales also in countries falling outside Gulf region
 Continued marketing investment.
25
Pınar Süt - 2012
Şanlıurfa Investment
 Pınar Süt Şanlıurfa plant, which will be established on a land of 100 thousand m², will have a
capacity of 180 million litres/year with raw milk collected from Şanlıurfa and cities around it.
 The milk and dairy products will be produced in the factory. The product range will be expanded
depending on the needs.
 The benefits from the region's proximity to the export markets will be provided.
 Investment incentives of Region-6
 The plant is projected to cost 100 million TL and to commence its operations by the end of 2013.
26
Pınar Süt - 2012
Ownership & Participation Structure
Share Performance
Ownership
Share Performance
31.12.2010 = 100
Free
Float
160
140
120
100
80
60
40
20
-
Relative and Absolute Performance
of
ofPınar
PınarSüt
Et Shares
Shares
16,80
20,00
15,00
105,85 10,00
5,00
0,00
İMKB-TÜM'e
göre (sol eksen)
Relative
to ISE-TUM
(left axis)
PNSUT
(Sağ (Right
eksen) Axis)
PNSUT
CORPORATE GOVERNANCE RATİNG: 8,87
%31,8
%44,9
%30,5
%12,6
27
%5,5
%8,8
Pınar Süt - 2012
Disclaimer and Contact Information
This presentation does not constitute an offer or invitation to purchase or subscription for any
securities and no part of it shall form the basis of or be relied upon in connection with any
contract or commitment whatsoever. This presentation contains forward-looking statements
that reflect the company management’s current views with respect to certain future events.
Although it is believed that the expectations reflected in these statements are reasonable, they
may be affected by a variety of variables and changes in underlying assumptions that could
cause actual results to differ materially. Neither Pınar Süt Mamulleri San. A.Ş. nor any of its
affiliates, advisors, representatives, directors, managers or employees nor any other person
shall have any liability whatsoever for any loss arising from any use of this presentation or its
contents or otherwise arising in connection with it.
Company’s financial statements are available on www.kap.gov.tr and www.pinar.com.tr
websites.
Investor Relations Department
Tel: 90 232 482 22 00
Fax: 90 232 484 17 89
investorrelations@pinarsut.com.tr
28
Pınar Süt - 2012
Thank You
APPENDIX
Company History
1975...
2003
The first UHT milk and
packaged dairy products
plant in Turkey was
founded (biggest milk
production facility in the
Middle East): PINAR SÜT
1975
’80
1997
1982
Milk, cheese,
butter, yoghurt
amd milk with
tarwberry began to
be exported the
Central European
and Middle East
countries and the
TRNCyprus.
’85
’90
First organic milk in
Türkiye, Pınar Organic
Milk, probiotic
products, were
introduced
Agreement with
Sodima SAS for the
production of fruit
yoghurt under
Yoplait brand was
introduced to
Turkish customer
Pınar SÜT new plant
founded in Eskişehir
2008
’95
1978
1983
1985
Pınar Sliced Kaşar
Cheese and Cream
Cheese were
introduced
Pınar
Fodder was
established
Labne was
introduced in the
domestic market
1980
Kraft-Pınar
Cooperation was
established
Production of Labne,
milk, ayran, butter,
yoghurt, cheese,
mayonnaise, cream.
Export of many
products to Kuwait,
Cyprus and Germany
began.
Pınar Kido
with Biscuit,
Pınar Çocuk
with Honey
and Kahvaltı
Keyfi white
cheese are
introduced
2011
Cream
Cheese with
cheddar
and thymeolive
Pınar Süt, Lean Six
Sigma has been started
to applied for the first
time in the F&B sector in
Turkey
Organic
Yognurt
’00 ’02 ’04 ’06 ’08 ’09 10 11
2001
1984
2010
2005
Pioneer and Leader of Modern Turkish Dairy
1999
2007
UHT plastic bottled
milk introduced
Functional milk
was introduced
YOPİ is
introduced
2004
1994
Pınar Kafela, Karamela
and Çikola were
introduced
Light mayonnaise
was introduced
www.pinarmutfagi.com
was established
23
2009
2008
Pınar
Lemonade
Milk for
children, Pınar
Çocuk is
introduced
Pınar Süt - 2012
Supply - Raw Milk Collection Process
Keen focus on milk collection processes:
LOCAL PROUCERS
FARMS

Route optimization; increase in truck fill rate and
L/km rate (TL 1m cost savings)

Successful Raw milk supply constitutes an
important entry barrier to potential competitors
VILLAGES
COOLING
CENTERS
PRODUCTION
TRADERS
COOPS
TRANSPORTATION

Competitive advantage due to strong long term relationship with milk
suppliers since 1975

Agreements with suppliers to ensure a steady raw milk supply

Continuous quality and control in each step of milk collection (fully
complied with EU requirements, tests in raw milk laboratories on daily
basis )

Raw milk from 380 cooling centers through advanced collecting systems
twice a day

More than 200 contracted farms producing in EU standards
ORGANIC MILK
32
Pınar Süt - 2012
Sales & Distribution
Yaşar Birleşik Pazarlama; Turkey’s biggest nationwide cold & frozen distribution chain
The distribution of food & beverage products are realized in -18˚C vehicles for frozen products, +4˚C vehicles for
fresh products and classic vehicles for the rest
The know-how and strong track record in the cold chain applications with a cold and frozen distribution chain and
storage conditions is a considerable asset for the Group
Strategically located distribution network throughout Turkey, by latest technology and flexible organization; over
150,000 sales points with a dedicated sales personnel
Group sales reflects homogeneous regional dispersal all around the Turkey
YBP Ownership Structure
PINAR
SÜT; 32%
PINAR ET;
38%
Others
DİĞER;
Directorate HQ
District Offices
8%
Dealers
33
YAŞAR
HOLDİNG
; 22%
Pınar Süt - 2012