Investor Presentation • May 14, 2020
Investor Presentation
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To mark its 150th anniversary, Amorim challenged Eduardo Aires, a renowned design studio, to rethink the company's brand image, aiming to strike a balance between legacy and innovation.
The rebranding was presented in a special press conference, held in Amorim Cork's premises, attended by dozens of journalists.
The plan of events to mark the 150th anniversary was also presented.
Major Goal: to ensure the maintenance, preservation and enhancement of cork oak forests and guarantee continuous production of high-quality cork
+50k ha new cork plantations
+7% national cork forest
+35% cork production
A very special day for Corticeira Amorim, with more than 250 people gathering at Alfândega do Porto to look back at 2019 and plan the year ahead
Our CEO, António Rios Amorim, opened the event by presenting a retrospective of the previous year and disclosing the goals and challenges for the year 2020.
This meeting also featured a dynamic debate on the 150 years of Corticeira Amorim, where, in addition to history, the main challenges of the coming decades were discussed.
The event ended with the delivery of the annual awards. followed by a casual lunch.
During Vinexpo Paris, one of the world's most important wine events, Moët Hennessy created a sustainability forum in which cork was the highlighted material
The forum was an ecological, recyclable and biological space. The sound insulation guaranteed by cork played an especially important role, limiting noise pollution.
The project, designed by the architect Jeanne Dumont, responded to the sustainability demands set by Moët Hennessy to use only materials of "great purity", such as cork, a paradigm example of the circular economy, and wood.
Founded in May 2007 as a distribution company for the Amorim Group, Amorim Australasia is Australia's largest importer of cork for the wine industry, and supplies all of Asia Pacific's cork requirements with locally printed, branded and treated corks.
Cork Pure Signature is a carbon-negative balance collection, made from cork and recycled materials, which enables personalised patterns to be created, with more than 17,000 possible combinations.
Using this solution, consumers can create different patterns, choosing from 17 natural cork visuals, and then combining them with the 31 available colours, with different finishes, dimensions and thickness.
Amorim Cork Flooring also presented its new Wood Resist Eco range, by Wicanders as well as Amorim WISE.
Main features of Amorim WISE:
Installation in large areas without transition strips
Waterproof
Reinforced dimensional stability
Minimum sub-floor preparation
Sustainable
Using the website's new room simulator it is possible to choose from hundreds of different flooring options and try them all in the different rooms of the home.
The process is simple: upload a photo of the room and start changing the floor until you identify the specific tone that matches perfectly with the sofa.
$-309gCO_2$ eq natural cork stopper*
$-562$ gCO2eq sparkling wine stopper*
This independent study analysed the environmental footprint regarding the production of the stoppers, through a LCA approach and was based on the ISO 14040/44 standards complemented with the guidelines from ILCD and aligned with PEFCR for still and sparkling wines.
*Carbon balance considering sequestration in the cork oak forest
Environmental footprint for natural and sparkling cork stoppers, EY 2019
average value estimated of the ecosystem services associated with a cork bak forest properly managed
Using four case studies, EY monetized three regulation services that the cork oak forest provides:
1 Climate regulation
2 | Extreme events regulation: fire prevention
3 | Water regulation and soil protection
Serpentine Pavilion 2020 designed by Counterspace, Design Render, Interior View © Counterspace
Almost a decade after the project designed by Herzog & de Meuron and Ai Wei Wei, cork has once again been chosen for the Serpentine Summer Pavilion, this time in an installation with a focus on sustainability, created by the South African architecture studio, Counterspace.
Due to the global impact of Covid-19, the opening of the pavilion, scheduled for June this year, has been postponed until the summer of 2021, and the project is renamed Serpentine Pavilion 2020/21, reflecting the biannual character of this edition, readjusted to the new normality created by the pandemic.
Installation »Home Stories: 100 Years, 20 Visionary Interiors« © Vitra Design Museum, Photos: Ludger Paffrath
The partnership between Corticeira Amorim and Vitra Design Museum brought more than 3200 agglomerated cork blocks to Germany, for the exhibition "Home Stories: 100 Years, 20 Visionary Interiors"
The blocks were used by Space Caviar, the Italian design, architecture and research firm, to create artistic structures that cover about one third of the entire exhibition space, showcasing design objects, decorative products and items of furniture.
Home Stories explores current interior design trends, while revisiting pioneering spaces.
City Cortex is a research programme, developed in partnership with experimentadesign, that focuses on the intersection between cork and contemporary urban contexts
New York is the main arena for showcasing the research. The invited design studios are Diller Scofidio + Renfro, Gabriel Calatrava, Leong Leong, Philippe Starck and Sagmeister & Walsh.
Update: Unfortunately, due to current global events caused by the Covid-19 pandemic, experimentadesign and Corticeira Amorim have decided to postpone presentation of the results, initially scheduled for June 2020, in New York. The new dates will be disclosed as soon as possible.
Sustainable Development Goals are an integral part of our Sustainability Strategy
We are committed to a solid and dynamic future with sustainability as the main reference
Corticeira Amorim aligns its strategy with 12 Sustainable Development Goals
• 1,175 M€/year: total net value of Corticeira Amorim's contributions to society when considering ecosystem services induced by its activities (more than 7x higher than the estimated direct gross value added)
Sales & EBITDA
Floor & Wall Coverings: strong sales growth $(+11\%)$ and sound improvement of profitability, signaling the turn-around of the BU, following two tough years;
Share of profit of Associates decreased to 1.5 M $\epsilon$ ; the final distribution of Escrow Funds from the sale of US Floors totalled 2.3 M $\oplus$ in 1Q19;
Net debt of 152.3 M€ (FY19:161.1 M€):
$\bullet$ Higher NWC needs (15.1 ME), $\cdot$ Capex (8.4 ME);
SAP Project: progressing as planned; extension to remaining
sales companies of Cork Stoppers BU, as well as to Floor & Wall Coverings, Composite Cork and Insulation Cork BUs;
Annual Shareholders Meeting scheduled for April 20, 2020 was called off; in due course, and under the terms admitted by law (before June, 30), it will be convened again.
Priorities
Containment measures likely to cause a deterioration and/or postponement of global consumption of our products; wine production may be impacted both in quantity and quality No homogeneous behaviour: markets, products and channels impacted differentially $\bullet$ Evident shift of wine consumption from on-premise to off-premise segments $\bullet$ HoReCa channel has disappeared in a significant number of countries (economic shutdowns and collapse of tourism); online channel very dynamic OIV expects decreases in volumes consumed, declines in average prices and $\bullet$ deterioration of winery profitability (especially among smaller players) Shut down of some European distribution channels (specifically DIY) likely to impact $\bullet$ demand for some non-wine products Suspension of remodelling works of several projects, namely in the hospitality $\bullet$ sector (hotels, residences, nursing houses) Securing liquidity: negotiation of new credit lines and extension of short-term credit lines to 12 months (cash & equivalents totalled 74 M $\epsilon$ as of March, 31) Capex: revision of all investment projects - only to progress with those seen as critical or that had been already contracted Measures Rigorous cost control, reducing non-essential spending Active management of Working Capital, namely a close monitoring of receivables (though no relevant deterioration so far)
AMORIM 24
-- NET DEBT / EBITDA
Sales
Values in million euros.
Adjustment of activity levels to the expected decline of demand from the other Bus was the main cause of the fall in sales;
EBITDA margins were negatively impacted by:
New technology to produce discs introduced in 2019 expected to result in better cork yields and margins;
CorkNova project (eradication of TCA from natural cork discs) extended to all production in 2020; this technology provides additional guarantees on discs' treatment, being an important step towards achieving the highest standards of sensorial quality;
Automation project expected to simplify preparation process (cork grading), resulting in a significant increase in productivity in this production segment.
Sales
EBITDA
Values in million euros.
Higher volumes and price increases drove sales growth, in an adverse context marked by trade tensions and tariffs on European wine imports;
Sales growth led by sparkling wines $(+4%)$ and still wines $(+1%)$ ; spirits segment's sales declined by 2%; Neutrocork continues to show strong growth (+16% sales);
Sound sales performance in the US and Italy; sales declines in France and Spain; Bordeaux wines suffering from lower consumption of imported wines in China and from "Bordeaux bashing";
NDtech® sales of 14.2 million stoppers (1Q19: 13.6 million);
Despite higher raw material prices and increased operating costs, EBITDA margins improved on:
New technology aimed at guaranteeing eradication of TCA in all cork stoppers by YE2020 progressing according to the plan.
EBITDA
Values in million euros.
Sales growth supported by higher activity levels and price increases; growth of manufactured products sales outpaced that of trade products;
Amorim WISE sales totalled 3.0 M€ (1Q19: 0.4 M€ | FY19: 5.7 M€);
Positive performance in Scandinavia, Germany, and North America;
EBITDA margins improved, reflecting:
Non-repetition of one-off-costs, increased efficiency (industrial revamping in 2019), improvements in activity levels and product mix seen as key to support the turn-around of this BU and create the grounds for sustainable growth in the future.
Values in million euros.
Despite a favourable USD and price increases, lower volumes and worse mix led to a decrease in sales:
New products and applications, continue to contribute positively to sales and profitability growth;
Major sales increases in Auto & Auto Parts, Resilient & Engineering Manufactures and Industrial Packaging segments;
Sales declines in Cork & Corkrubber Manufacturers, Building Materials & Fixtures and Construction & Specialty Retail segments;
Sales declines in most regions, particularly in North America, India, Russia and Italy;
Profitability decreased on sales and product mix deterioration, partially offset by:
Lower volumes drove sales decline, despite price increases and a favourable FX;
Positive sales performance in Portugal and Middle East; sales declines in Italy, Spain and France;
Having bottomed out in 2Q19, profitability continued to improve, driven by:
Expanded insulation corkboard is a 100% natural product, using only cork as a raw material, so highly sensitive to changes in cork prices and yields;
Offering technical performance with virtually unlimited durability, is especially designed to match the demands of sustainable construction.
Values in million euros.
EBITDA
| EBITDA/Sales (%) | 1Q18 | 1Q19 | 1Q20 |
|---|---|---|---|
| Raw Materials + Cork Stoppers | 25.1% | 22.8% | 23.2% |
| Floor and Wall Coverings | $2.0\%$ | $-3.7\%$ | 4.1% |
| Composite Cork | $14.7\%$ | $122\%$ | 8.3% |
| Insulation Cork | 10.3% | $-1.4%$ | 5.2% |
| Consolidated | 19.9% | 17.2% | 17.6% |
| 1Q18 | 1Q19 | 1Q20 | yoy | |
|---|---|---|---|---|
| Sales | 185.4 | 202.3 | 203.7 | 0.7% |
| Gross Margin | 100.0 | 102.7 | 105.7 | 2.9% |
| Operating Costs (incl. depreciation) | 71.2 | 77.1 | 79.1 | 2.6% |
| EBITDA | 36.8 | 34.8 | 35.8 | 2.8% |
| Depreciation | 8.1 | 9.2 | 9.2 | 0.4% |
| EBIT | 28.7 | 25.6 | 26.6 | 3.7% |
| Non-recurrent costs | 0.1 | 0.0 | 0.0 | |
| Net financial costs | 0.4 | 0.7 | 0.5 | $-25.4%$ |
| Share of (loss)/profit of associates | 0.8 | 2.9 | 1.5 | $-47.4%$ |
| Profit before tax | 29.1 | 27.8 | 27.6 | $-1.0%$ |
| Income tax | 8.6 | 8.0 | 6.4 | $-19.5%$ |
| Non-controlling interest | 1.6 | 1.2 | 1.3 | 2.2% |
| Net Income | 18.8 | 18.6 | 19.9 | 6.8% |
| 1Q18 | 1Q19 | 1Q20 | yoy | |
| Gross Margin / Production | 50.8% | 48.1% | 49.9% | $+187 b.p.$ |
| EBITDA / Sales | 19.9% | 17.2% | 17.6% | $+37 b.p.$ |
0.142
0.149
6.8%
0.140
Earnings per share $(\epsilon)$
Values in million euros.
| March 31, 2018 |
December 31, 2018 |
March 31, 2019 |
December 31, 2019 |
March 31, 2020 |
|
|---|---|---|---|---|---|
| Net Goodwill | 14.4 | 14.0 | 13.9 | 13.7 | 13.7 |
| Net Fixed Assets / Right of use | 223.3 | 259.6 | 270.4 | 284.6 | 283.9 |
| Net Working Capital* | 374.4 | 414.5 | 432.8 | 427.4 | 442.5 |
| Other** | 27.9 | 21.4 | 23.3 | 39.5 | 40.1 |
| Invested Capital | 640.0 | 709.4 | 740.4 | 765.3 | 780.2 |
| Net Debt | 85.9 | 139.0 | 141.7 | 161.1 | 152.3 |
| Share Capital | 133.0 | 133.0 | 133.0 | 133.0 | 133.0 |
| Reserves and Retained Earnings | 314.9 | 333.4 | 353.2 | 376.5 | 394.4 |
| Non Controlling Interests | 31.5 | 31.9 | 33.5 | 30.1 | 30.5 |
| Agreement to acquire non-controlling interests | 19.0 | 20.4 | 20.5 | 15.0 | 15.0 |
| Taxes and Deferred Taxes **** | 29.9 | 27.6 | 35.5 | 26.1 | 32.5 |
| Provisions | 3.5 | 3.2 | 2.4 | $5.5\,$ | 5.2 |
| Grants *** | 22.3 | 21.3 | 20.5 | 18.1 | 17.3 |
| Equity and other sources | 554.1 | 570.7 | 598.7 | 604.2 | 627.9 |
* Inventories + accounts receivables - accounts payables + other operating assets/(liabilities)
** Investment property + Investments in associates + Intangible assets + Other non-operating assets/(liabilities)
*** Non inte
| 1Q18 | 2018 | 1Q19 | 2019 | 1Q20 | |
|---|---|---|---|---|---|
| Net Debt / EBITDA* | 0.63 | 1.04 | 1.07 | 1.29 | 1.21 |
| EBITDA / Net Interest | 128.2 | 108.0 | 92.3 | 88.2 | 109.8 |
| Gearing | 17.9% | 27.9% | 27.3% | 29.9% | 27.3% |
| NWC / Market capitalization | 27.2% | 34.6% | 30.6% | 28.4% | 40.2% |
| $NWC / Sales \times 360*$ | 188.4 | 195.5 | 199.7 | 197.0 | 203.6 |
| Free cash flow (FCF) | 9.7 | 11.2 | 4.0 | 37.5 | 11.6 |
| Capex | 8.7 | 57.9 | 11.6 | 58.8 | 8.3 |
| Return on invested capital (ROIC) pre-tax | 20.2% | 16.4% | 15.6% | 12.5% | 11.1% |
| Return on invested capital (ROIC) | 14.7% | 11.8% | 11.1% | 10.8% | 14.6% |
| Average Cost of Debt | 1.49% | 1.09% | 1.23% | 1.14% | 1.06% |
* Current sales and EBITDA of the last four quarters
FCF = EBITDA — Net financing expenses — Income tax — Capex — NWC variation
ROIC = Annualized NOPAT / Capital employed (average)
9% Compound Annual Growth Rate in the last 5 years;
In 2019, a total of 35.9 ME was paid out in dividends, in line with 2018.
$\Box$ Dividend per share $(\epsilon)$
| 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||
|---|---|---|---|---|---|---|---|---|
| Issued shares | Qt. | 133,000,000 | 133,000,000 | 133,000,000 | 133,000,000 | 133,000,000 | 133,000,000 | 133,000,000 |
| Year-end close $(N-1)$ | € | 1.600 | 2.210 | 3.020 | 5.948 | 8.500 | 10.300 | 9.000 |
| Earnings per share (N-1) | € | 0.246 | 0.242 | 0.285 | 0.431 | 0.772 | 0.549 | 0.582 |
| Payout | $\frac{0}{0}$ | 68.5% | 83.3% | 143.2% | 58.0% | 33.7% | 49.2% | 46.4% |
| Dividend per share | € | 0.160 | 0.190 | 0.385 | 0.240 | 0.260 | 0.270 | 0.270 |
| Total dividend | M€ | 20.1 | 23.9 | 50.2 | 31.9 | 34.6 | 35.9 | 35.9 |
| Dividend Yield | $\frac{0}{0}$ | 11.3% | 9.3% | 13.5% | 5.5% | 3.6% | 2.4% | 2.5% |
Dividend of year N-1 is payed in year N
Dividend yield = dividend per share/average share price (N-1)
2015: dividend of 0.385€ per share includes an additional dividend of 0.195€ per share (Nov. 2015) as an application of gains accrued in the ABB of treasury stock (5.62%)
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 1Q20 | |
|---|---|---|---|---|---|---|---|
| Qt. of shares traded | 3,481,685 | 12,693,424 | 10,801,324 | 19,290,907 | 14,884,641 | 9,481,944 | 4,199,895 |
| Share price $(\infty)$ : | |||||||
| Maximum | 3.650 | 6.290 | 9.899 | 13.300 | 12.000 | 11.520 | 11.780 |
| Average | 2.850 | 4.340 | 7.303 | 11.067 | 10.604 | 10.062 | 10.182 |
| Minimum | 2.200 | 2.990 | 5.200 | 8.180 | 8.370 | 8.710 | 7.480 |
| Period-end | 3.020 | 5.948 | 8.500 | 10.300 | 9.000 | 11.300 | 8.270 |
| Trading Frequency | 96.1% | 98.8% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Stock market capitalisation at period-end $(M\mathbb{C})$ | 402 | 791 | 1,131 | 1,370 | 1,197 | 1,503 | 1,100 |
Source: Euronext | Corticeira Amorim
Qt. of shares traded in 2015 includes the ABB of 7,399,262 shares (17-09-2015)
Ana Negrais de Matos, CFA IRO $T + 351227475423$ [email protected]
Corticeira Amorim, SGPS, S.A. Public Company Rua de Meladas, 380 PO BOX 20 4536-902 Mozelos, Portugal
Disclaimer:
This document has been prepared by Corticeira Amorim, SGPS, SA and solely for use at the presentation to be made on this date and its purpose is merely of informative nature. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the following limitations and restrictions.
This document contains general information based on management's current expectations or beliefs, which, although based on assumptions deemed appropriate on this date, are subject to several known or unknown and usual or extraordinary factors, risks and uncertainties, which are beyond the control of Corticeira Amorim, SGPS, SA and are difficult or impossible to predict. These factors, risks and uncertainties could cause the information expressed or implied in this presentation to differ materially from the actual results or achievements of Corticeira Amorim, SGPS, SA.
This presentation cannot be considered as advice, and should not be treated as such. The information contained in this presentation has not been independently verified by any of our advisors or auditors. Investor and analysts, and generally all recipients of this document, must not rely on the information in this document as an alternative to other sources of information or advice.
To the maximum extent permitted by applicable law, we exclude all express or implied representations, warranties, undertakings and guarantees relating to this document content.
T+351227475400 F+351227475407
Without prejudice to the generality of the foregoing paragraphs, we do not represent, warrant, undertake or guarantee:
that the information in this document is absolutely correct, accurate or complete; or
that the forward-looking statements or the use of this document as guidance will lead to any particular outcome or result:
that we will update any information included in this presentation, including forward-looking information, opinions or other statements contained herein, either to reflect the mere updating of management's current expectations and beliefs or to reflect any changes in the relevant conditions or circumstances on which these current expectations and beliefs were initially based.
Neither Corticeira Amorim, SGPS, SA nor any of its affiliates, subsidiaries, directors, representatives, employees and/or advisors shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this presentation.
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