GENOMMA LAB INTERNACIONAL

GENOMMA LAB INTERNACIONAL
June, 2016
COMPANY OVERVIEW
THE EVOLUTION OF GENOMMA LAB
Continue to implement Turnaround process
2016
Sale of majority stake in Grupo Marzam
2015
2014
Entrance to IPC Sustainability
Index and MSCI Index
Beginning of
Turnaround process
2013
2012
Business Realignment
2011
Appointment of Máximo
Juda as CEO and
Antonio Zamora as CFO
2010
Performed its IPO in the
Mexican Stock Market
Changed Business
Model to OTC/PC
Expanded management team
Founded as an
infomercial marketing
company
Organic growth
through brand and
product development
2009
Acquisition of Marzam
2008
2007
2006
2005
Several PC & OTC
brand acquisitions
from 2009 – 2014
2004
Launch of operations in Brazil
and USA
2003
2002
2001
2000
1999
Nexxus Capital invested
30% of Equity
1998
1996
1997
Expansion
3
SUCCESSFUL BUSINESS MODEL
Our business model is focused on
adapting quickly to marketing dynamics.
Impressively short lead time
from an idea generation to new
product launches and line
extensions.
POS COMMERCIAL
STRATEGY
MARKETING &
BRANDING
DISTRIBUTION
SALES
QUALITY
ASSURANCE
Performance
Analysis
OUTSOURCED
MANUFACTURING
INNOVATION &
DEVELOPMENT
(Product Selection)
Best formulation and
presentation
Rapid and effective
reaction to competitive
challenges
Pillars
4
ORGANIC GROWTH THROUGH
INNOVATION AND DEVELOPMENT
• Our product launch strategy is based on Innovation and Development of new brands and products,
as well as on the launch of Line Extensions to strengthen our existing brands.
INTERNALLY
DEVELOPED BRANDS
LINE EXTENSIONS
Nasal Hygiene
For adults
Vitamins
For children
Energetic beverage
with vitamins
Nasalub Max
Vitamins for
children
MARKETING AND BRANDING RESULTS
ORIENTED METRICS
Demand for our products is mainly generated
through advertising. We have a directed
advertising strategy, based on metric analyses of
our clients and the market. We monitor such
information weekly, which allows us to have a
quick response to changes in competition and
consumer’s preferences.
6
COMMERCIAL STRATEGY - UPDATE
1
2
3
4
POS EXECUTION
71% STORES in Mexico executed in line with IN-STORE VISION
CHANNEL AND CUSTOMER EXPANSION
+58 New Customers / +27,600 Stores
(Mexico and International)
GO TO MARKET
(-)3 to 5 pts trade terms improvement and
PAY FOR PERFORMANCE (Mexico and International)
COMMERCIAL INNOVATION
+5-7 Global Initiatives
7
CORE COMPETENCES
BEFORE
AFTER
Demand Generation
Demand Generation
Win Online
Talent
Talent
POS Execution
Flawless POS Execution
Mexico: Sell-in
International: Sell-out,
EBITDA, FCF
Growth
Genomma Lab:
Sell-out, EBITDA, FCF
Brand Sustainability
Core Brands
8
DIVERSIFIED DISTRIBUTION PLATFORM
Genomma’s balanced and broad distribution platform is unique. Through a combination of mass
merchandisers, pharmacy chains, and wholesalers, Genomma’s products reach over 50,000
points of sale in Mexico and more than 150,000 in the international operations.
SALES DISTRIBUTION IN MEXICO:
6%
CONVENIENCE AND
DEPARTMENT STORES
18%
PHARMACY CHAINS
52%
RETAILERS
24%
*% of Mexico Sales as of December 2015 (LTM)
WHOLESALERS
9
TURNAROUND
PROCESS
TURNAROUND PROCESS
STRATEGIC
IMPERATIVES
• Shareholder value creation
• Sustainable business model
and stronger brands
• International expansion
• Less dependence on Mexico
TURNAROUND
PROCESS
• Brands: Focus on core
• Strengthening of
corporate policies
and procedures
• Tightened policies and
procedures with
additional oversight
to support the future
strategy
brands
STRONGER
POLICIES &
DISCLOSURE
PILLARS OF
NEW
STRATEGY
• Mexico: Destocking of
channel inventory
• Geographical presence:
diversification
• Efficiency: SGM&A
leverage
• New management team
11
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
1
FOCUS ON CORE BRANDS, REINFORCE BRAND EQUITY AND
SUSTAINABILITY
Genomma's core asset is its portfolio of market leading brands. As of March 2016, the Company has a total of 95
brands. The following table shows the Company’s top 25 brands for the last twelve months as of March 2016, which
represented 88.2% of Total Sales.
OTC
BRAND
PC
PRODUCT CATEGORY
BRAND
OTC / PC
PRODUCT CATEGORY
BRAND
PRODUCT CATEGORY
Pain Relief
Hair Care
Anti-acne
Analgesic
Spider Vein Treatment
Anti-scar, Anti-wrinkle
Sexual Protection and
Enhancement
Nail Fungus Treatment
Baldness Treatment
Cervical Infections
Treatment
Skin Care
Anti-micotic
Anti-dandruff Shampoo
Skin Care
Anti-flu
Hair Care
Hemorrhoid Treatment
Hair Care
Colitis Treatment
Vitamins
Athlete’s Foot Treatment
Analgesic
Cough Syrup
Anti-flu
Osteoarthritis Treatment
12
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
2
MEXICO DESTOCKING OF CHANNEL INVENTORY
SELL-OUT
SELL-IN
40%
12%
30%
10%
20%
8%
10%
1Q15
2Q15
3Q15
0%
-10%
4%
-35%
-20%
-30%
2%
2%
-26%
12%
6%
4Q15
3%
2%
1Q16*
0%
-59%
-2%
-40%
-4%
-50%
-6%
-60%
-8%
2Q15
3Q15
4Q15
-8%
INVENTORIES
Objective
2Q15
2Q15
*In line with guidance
3Q15
3Q15
4Q15
4Q15
1Q16
1Q16
13
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
3
GEOGRAPHICAL PRESENCE – INTERNATIONAL
GROWTH & MARGIN
U.S.A.
13%
MEXICO
35%
LATAM
52%
Mexico
45%
55%
Pharma
PC
Pharma – Over the Counter (OTC) and Generics
PC – Personal Care
As of March 2016 LTM
TOP
INTERNATIONAL
COUNTRIES
1. Argentina
2. U.S.A.
3. Brazil
4. Chile
5. Colombia
6. Peru
7. Ecuador
14
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
3
GEOGRAPHICAL PRESENCE: DIVERSIFICATION
•
•
•
•
U.S.A.
BRANDS: 21
POS: 41,000
MEXICO
BRANDS: 72
Presence in 20 countries
More than 200,000 POS
A population over 600 million
As of March 2016 LTM, 65% of
our Total Sales came from our
International Operations
POS: 50,000
*REST OF LATAM:
COLOMBIA
BRANDS: 14
POS: 16,166
BRAZIL
REST OF
LATAM*
BRANDS: 15
POS: 60,000
BRANDS: 24
POS: 23,924
ARGENTINA
BRANDS: 19
POS: 10,400
Bolivia
Chile
Costa Rica
Dominican Republic
Ecuador
El Salvador
Guatemala
Honduras
Nicaragua
Panama
Paraguay
Peru
Puerto Rico
Trinidad and Tobago
Uruguay
15
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
4
EFFICIENCY: SGM&A LEVERAGE
• To increase efficiency and improve margins, we have made a significant reduction in
headcount in the past months.
• Inventories in our warehouse have also been reduced significantly to improve cash
conversion cycle and free cash flow generation.
INVENTORIES*
HEADCOUNT*
1200
800.0
-63.0%
(Million Pesos)
(Number of Employees)
-47.9%
800
1,037
600.0
400.0
743.3
400
540
0
200.0
274.7
0.0
SEPTEMBER 2014
MARCH 2016
MARCH 2015
MARCH 2016
*Mexican operations
16
TURNAROUND PROCESS –
PILLARS OF NEW STRATEGY
4
EFFICIENCY: SG&A LEVERAGE
• We have made significant efforts to achieve SGM&A efficiencies in order to improve
margins, which have started to show results in our operations.
5
NEW MANAGEMENT TEAM TO EXECUTE THE NEW STRATEGY
AND DRIVE VALUE CREATION IN THIS NEW PHASE
17
FINANCIAL
PERFORMANCE
NET SALES
(MILLION PESOS)
CAGR
23%
$11,361
$11,541
$11,042
$9,800
$8,056
$6,264
$4,425
$2,629
2008
$2,769 $2,851
2009
2010
2011
2012
2013
1Q16
2014
2015 1Q15 1Q16
1Q15
Pharma*
PC
Total 1Q16
Pharma*
PC
Total 1Q15
%Var
Mexico
580.1
417.6
997.7
491.8
490.2
982.1
1.6%
International
695.9
1,157.0
1,852.9
661.7
1,124.8
1,786.5
3.7%
1,276.0
1,574.6
2,850.6
1,153.5
1,615.0
2,768.6
3.0%
TOTAL
*Pharma refers to OTC and Generics in Mexico.
19
EBITDA
(MILLION PESOS)
6,000
100.0%
CAGR
15%
5,000
90.0%
80.0%
70.0%
4,000
2,000
1,000
60.0%
50.0%
40.0%
30.0%
16.2%
691
EBITDA
2015*
2014
2013
2012
2011
2010
2009
2008
-
1Q15*
449
19.7%
20.0%
563
1Q16*
3,000
26.4%
26.1% 3,001 22.0%
2,543
25.8% 2,558
16.3%
27.0%
2,083
25.8%
1,798
26.3% 1,144 1,694
10.0%
0.0%
EBITDA MARGIN
*EBITDA was adjusted by adding non-recurring expenses related to the downsizing of our headcount in Mexico (severance payments) incurred during 2015, and
inventory destructions and fees and other expenses derived from the sale of Grupo Marzam during Q4’15. One-off effects are related to the reinforcement of policies
and procedures during Q4’15.
20
NET INCOME
(MILLION PESOS)
17.5%
17.5%
1,700
1,200
19.5%
513
17.2%
760
1,406
16.4%
1,606
15.9%
1,811
13.1%
1,507
70.0%
50.0%
1,093
700
-9.2%
-1,013
200
5.3%
146
15.0%
426
30.0%
10.0%
-10.0%
-300
-30.0%
-1,800
1Q16
1Q15
2015
2014
2013
2012
2011
2010
2009
-1,300
2008
-800
-50.0%
-70.0%
NET INCOME
AS % OF REVENUE
21
INVESTOR RELATIONS CONTACT:
ANA MARÍA YBARRA – Investor Relations Officer
[email protected]
Tel. +52 (55) 5081-0000 ext. 4016
BARBARA CANO – MBS Value Partners
[email protected]
Tel. +1 (646) 452-2334
www.genommalab.com/inversionistas