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TATA Tea Group 2008/2009 Results Presentation Peter Unsworth. Introducing The Tata Tea Group. Creating a global leader in branded good for you beverages Five businesses being operationally integrated a nd transformed to make one global beverage group. Led by a Single Management Team.

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TATA Tea Group

2008/2009 Results Presentation

Peter Unsworth


Introducing the tata tea group
Introducing The Tata Tea Group

  • Creating a global leader in

  • branded good for you beverages

  • Five businesses being operationally integrated and transformed to make one global beverage group


Led by a single management team
Led by a Single Management Team

  • Peter Unsworth – CEO Tetley Group

  • Percy Siganporia – MD Tata Tea, Chairman MEMW

  • Hamid Ashraff – MD Tata Coffee

  • L Krishna Kumar – Chief Financial Officer

  • Nalin Miglani – Chief HR Officer

  • John Nicholas – Chief Marketing Officer


Key highlights for 2008 09
Key Highlights for 2008/09

  • Strong performance with resilient core categories in difficult economic and trading conditions

  • Product portfolio expands

  • Strong brand growth in our target categories

  • Integration and transformation


Key highlights for 2008 091
Key Highlights for 2008/09

  • Group operating income up 12% at Rs 4874 crores

  • Group PBT before exceptional up 21% at Rs 531 crores

  • Group PBT lower by 39% at Rs 1256 crores as compared PY figure of Rs 2060 cr*

  • * PY figure include one time profit on sale of EBI amounting to Rs 1608 crores



Products categories
Products & Categories

Moving from a tea and coffee

company to a wider beverage

business spanning

six product categories


Brands
Brands

A new central marketing

function driving global brands

management and innovation


Distribution
Distribution Expansion into new geographies underway – Russian entry recently announced


People
People

A single management team and

six consumer/customer

focused regions


Process
Process

Gaining scale economies through common systems


The business strategy products categories
The Business Strategy – Products & Categories


Innovation Drives Category Growth

Water:Expansion of Himalayan water range into more cities in India

RTD: National launch of Tetley Iced Tea following successful test market in Canada

National launch of Tetley Infusions (iced tea concentrate sachets) in Canada

Test market launch of T!on juice drinkin India


Expansion of Product Portfolio

Tea:National launch of Tetley Red Tea in Canada

National launch of Good Earth Organic teas in UK

Coffee: National launch of Good Earth Organic Coffee in USA



The Business Strategy - Global & Regional Brands

Regional Focus Brands

Tata Coffee


Share Growth in Tea Brands in Core Market

Strong Tea Performance Relative to Peers

%

Core Markets Tea Value Share %

Core markets include India, UK, US, Canada, Australia, Poland, France, Czech Republic

Source: Euromonitor 2008


Global Brands Performance Highlights

Record brand shares in both Canada and France

launched into UK and Canada (Tea), US (Coffee)

Premium, Agni and Gold all exhibiting strong growth post the Jaago Re campaign and despite increased consumer pricing


Regional Brands Performance Highlights

strong gains in both rate of sale and distribution

in continued growth after brand relaunch

awarded ‘Product of the Year’ by Polish consumers


Focus on brands
Focus on Brands

  • Ability to drive marketing excellenceacross different countries and cultures

  • Here’s a flavour...


Focus on brands the growth story of tetley redbush
Focus on BrandsThe Growth Story of Tetley Redbush

Following the success of the 40’s pack –

larger pack sizes and new variants have been introduced

In the UK

Tetley Redbush

is the No. 2 brand

in the UK

with a 26%

market share

Introduction

into

the Canadian

market

in 2008

One of the

fastest

growing brands

in the UK tea

segment


Focus on brands the impact of the jaago re campaign
Focus on BrandsThe Impact of the “Jaago Re Campaign”


Focus on brands eight o clock coffee 100 colombian drives brand growth
Focus on BrandsEight O’Clock Coffee 100% Colombian Drives Brand Growth

Source: *IRI, 52 weeks ended 3/22/09 **Internal sales data F’09



Design of tata tea group organisation
Design of Tata Tea Group Organisation

Now Six Regions:

GB & Africa

Europe & Middle East

USA

Canada & South America

South Asia

Asia Pacific


Regional highlights
Regional Highlights

GB and Africa:

Retained UK tea categorypartnership with Tesco

Acquired CTC givingwest coast presence

in South Africa


Regional Highlights

USA:

Recent new CostCo and Walmart* listings

South Asia:

Launched T!on and extended distribution of Himalyan


Regional Highlights

Europe & Middle East:

Entry into Russian market

Canada & South America:

Launch of Tetley RTD Iced Tea

into over 6,000 conveniencestores across Canada


Russia market entry
Russia Market Entry

Russia is the #2 tea market in the world

Recent 51% acquisition of Grand

A major Russianpackaging and distributioncompany in coffee and tea



Building a global organisation
Building a global organisation

New single management structure in place

New and distinct company values defined

Integrated Global Reward Strategy


Us restructuring well underway
US Restructuring well underway

  • Centralized HQ for three US businesses

  • Cross fertilization of ideas across tea and coffee brands

  • Management and administration is consolidated reducing cost

  • Full integration expected to be realised by end of 2009/10



World class processes continue to be built
World class processes continue to be built

  • Development of global information systems to support global integration

  • Consolidated global financial systemin place

  • Drive global efficiencies

  • Balanced scorecard for strategy implementation


Outcomes of strategies the global picture
Outcomes of Strategies – The Global Picture

Multi category portfolio

Global consumer brands

Global distribution coverage

World-class business processes

The place to be for exceptional talent


The tata tea group
The Tata Tea Group

  • A global leaderin good for you beverages

  • THANK YOU


TATA Tea Group

2008/2009 Financial Results

L Krishna Kumar, CFO


Key highlights for 2008 092
Key Highlights for 2008/09

  • Strong performance in difficult economic & trading conditions – but resilient core portfolio

  • Increase in input costs largely recovered through price increases

  • Benefits from effective management ofsterling currency risk


Key highlights for 2008 093
Key Highlights for 2008/09

  • Continued improvements in product portfolio and new launches

  • Initial costs of restructuring absorbed

  • Strong brand growth in our target categories


Performance 2008 09
Performance 2008/09

  • Group operating income up 12% - growth in brand sales, price increases and favourable currency

  • Group PBT before exception up 21% - Cost increases offset by interest savings

  • Cost increases mainly on commodities, growth initiatives like water launch, brand launch/support in US, UK and Canada


Performance 2008 091
Performance 2008/09

  • Other cost increases – market driven impact on domestic defined benefit retirement schemes

  • Group PBT lower mainly on account of one off items

  • One off items in the CY-exchange gain on surplus cash Rs 814 Crs (realised component Rs 471 Crs) actuarial provisions in UK Rs 54 Crs, last year gain on sale of EBI shares Rs 1607 Crs

  • EPS Rs 113 (Rs 250) EPS excluding exceptional items Rs 47.87 (Rs 41.50) reflecting improvement in underlying performance


Performance for 2008/9

Currency: Indian Rs Crores

2008/09

2007/08

Variance

Net Operating Income

4,874

4,336

538

EBIT

552

617

(66)

PBT before Exceptionals

531

437

94

Exceptional Items

725

1,622

(897)

PBT

1,256

2,059

(803)

PAT

832

1,906

(1,074)

Group Consolidated Net Profit

701

1,543

(842)


Strong brand growth for 2008 9 coming from tata tea and eight o clock coffee
Strong Brand Growth for 2008/9Coming from Tata Tea and Eight O’Clock Coffee

IndianTea Brands

19.4%

IndianTea Brands

21.1%

Jemca 0.7%

Tetley

42.2%

Jemca 0.7%

Tetley

48.5%

Vitax 1.4%

Vitax 1.6%

Others

13.7%

Others

16.1%

Good Earth1.4%

Good Earth1.4%

Eight O’Clock

14.9%

Eight O’Clock

16.9%

Source : Internal


Branded share of business increases

Categorywise Sales Breakup 2007-08

Categorywise Sales Breakup 2008-09

Others 0.43%

Others 0.82%

Plantation& Extraction

11.31%

Plantation& Extraction

9.95%

Tea

72.65%

Tea

73.95%

Coffee

14.31%

Coffee

16.58%

Source : Internal


US, South Asia and Canada driving sales growth

Regions

2008/09

2007/08

Variance

%

GB & Africa

1,208

1,272

(64)

-5%

South Asia

1,301

1,049

252

24%

Canada & South America

303

271

32

12%

US

1,132

913

219

24%

Europe & Middle East

307

282

25

9%

Asia Pacific

125

121

4

3%

Total Other

498

428

70

14%

Total Group

4,874

4,336

538

13%

Indian Rs Crores


Robust balance sheet position
Robust Balance Sheet Position

Indian Rupees Crores


Performance Over Time

In Rs Lacs

In Rs

6000

300

4874

4336

5000

250

4005

4000

200

3000

150

2000

100

1000

50

532

436

393

0

0

2006/07

2007/08

2008/09


Significant Increase in Dividend PayoutDividend Quantum Performance

216

Currency:Indian Rupees Lakhs

Exceptional

Dividend

108

92

124

92

67

56

2004/5

2005/6

2006/7

2007/8

2008/9


Standalone performance tata tea ltd
Standalone PerformanceTata Tea Ltd

Operating incomeUp 20%

Optg income of Rs 1379 Crs for the year compared to Rs 1153 Cr in the prior year. Reflective of growth in brands and price increases

Operating EBITDown 15%

Strong brand performance with recovery of commodity cost increases and lower export profitability, Retiral benefits cost increases driven by market conditions. EBIT at Rs 142 Crs

PBT before exceptionalsUp 4%

Investment income including dividends from Group companies results in PBT at Rs 239 Crs

PBTDown 41%

Exceptional expenditure in the current year reduces PBT to Rs 229 crs. PY had profit on sale of North India Plantation Operations


Standalone performance tata coffee group
Standalone PerformanceTata Coffee Group

Operating incomeUp 21%

Operating income of Rs 1121 Crs compared to Rs 925 Crs in the prior year. Strong branded sales in the US coupled with favourable Fx translation and higher plantation sales

Operating EBIT Up 1%

Strong brand performance offset by investment behind ‘Good Earth’ launch, lower export profitability translates to a growth of 1%. EBIT at Rs 148 Crs

PBT before exceptionalsUp 16%

Loan restructuring drives lower interest costs results in PBT before Exceptional items at Rs 83 Crs up 16%

PBTDown 2%

Exceptional expenditure relating to US reorganisation reduces PBT to Rs 70 Crs, down 2%


Strategy in place and journey started
Strategy in Place and Journey Started

Focus on the branded business and development of global brands

Investment focus will be brands

Broader branded portfolio and expansion into new categories

Entry into wider beverage category

Wider global footprint – global not international

Focus on six regions

Integrated global business

Products, brands, distribution, people

and processes


Summary of year end results
Summary of Year End Results

  • Strong performance in difficult conditions

  • Strong, well financed business platform

  • The journey has begun to becoming :

  • A global leaderin good for you beverages!



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