Mcbride Plc · LSE:MCB
Mcbride — H1 2010-11 Earnings Presentation
43 slides from Mcbride's earnings presentation, Feb 8, 2011
Slide 1: 2010-11 Interim Results
2010‐11 Interim Results 8 February 2011
Slide 2: Introduction
Introduction Iain Napier ‐ Chairman Passionate about Private Label 2
Slide 3: Introduction
Introduction • Good financial performance in a challenging economic environment • Conclusion of the “Refresh” strategy review being communicated today • Strategic Actions: • Organisational change • Category review • Improved competitiveness and efficiency • Exploit new opportunities • Category exten
Slide 4: Summary
Summary Chris Bull Passionate about Private Label
Slide 5: Summary
Summary • Revenue growth of 2% on a constant currency basis • Adjusted operating profit1 down 24% driven by increases in raw material input costs • Restructuring programmes announced in 2010 delivering on plan • Recovery of 2010 material cost increases continues to be implemented; further price rise
Slide 6: Financial review
Financial review Richard Armitage ‐ Finance Director Passionate about Private Label 6
Slide 7: Financial headlines
Financial headlines Constant Currency 2010-11 2009-10 Y/Y 2009-10 Y/Y H1 H1 H1 Revenue (£m) 407.9 412.4 -1% 401.2 +2% EBITA (£m) 20.2 26.5 -24% 25.6 -21% EBITA margin 5.0% 6.4% -1.4pts 6.4% -1.4pts Profit before tax (£m) 16.9 23.5 -28% Diluted earnings per share (pence) 6.9 9.7 -29% Dividend per sha
Slide 8: Income statement
Income statement 2010-11 2009-10 Y/Y H1 H1 £m £m Revenue 407.9 412.4 -1% Gross profit 139.4 152.0 -8% Gross margin 34.2% 36.9% -2.7pts Distribution costs (27.4) (27.8) -1% Administrative costs (91.8) (97.7) -6% EBIT 20.2 26.5 -24% Net financing costs (3.3) (3.0) +10% Profit before taxation 16.9 23.5
Slide 9: Regional performance - Revenue
Regional performance ‐ Revenue Constant Currency 2010-11 2009-10 Y/Y 2009-10 Y/Y £m £m £m UK 155.8 160.6 -3% 160.6 -3% Western Continental Europe 183.3 199.9 -8% 190.5 -4% Central and Eastern Europe 64.7 51.9 +25% 50.1 +29% Asia 4.1 0.0 n/a 0.0 n/a Total 407.9 412.4 -1% 401.2 +2% (1) Revenue is by g
Slide 10: Private Label share performance in UK
Private Label share performance in UK Q4 2009 to Q4 2010 Household Cleaners Personal Care • Private Label volume share up 2% points • Private Label Personal Care volume share compared to Q1 2010 lower than Household Cleaners • Private Label cleaners account for almost • Volume share impacted by incr
Slide 11: Private Label share performance in France
Private Label share performance in France Q3 2009 to Q3 2010 Household Cleaners Personal Care • Private Label Household Cleaners volumes • Private Label Personal Care volumes in in France remain robust at c 35% France remain buoyant • Private Label cleaners account for over • Value share performance
Slide 12: Regional performance - Operating profit
Regional performance – Operating profit Constant Currency 2010-11 2009-10 Y/Y 2009-10 Y/Y £m £m £m UK 8.3 11.1 -25% 11.1 -25% Western Continental Europe 12.8 15.7 -18% 14.9 -14% Central and Eastern Europe 3.4 3.5 -3% 3.4 +0% Asia 0.1 (0.2) n/a (0.2) n/a Corporate costs (4.4) (3.6) -22% (3.6) -22% To
Slide 13: Movement in net debt June 2010 to December 2010
Movement in net debt June 2010 to December 2010 Net cash generated Opening net from Capital (1) (2) Closing net debt operations expenditure Dividend Tax Acquisitions Other debt 0.0 -20.0 £m -40.0 (12.3) -60.0 (8.7) (60.0) 27.2 (7.4) (3.1) (7.9) (72.2) -80.0 (1) Acquisitions includes £2.2m net cash c
Slide 14: Managing material costs is a core skill
Managing material costs is a core skill • An increased Procurement team, organised on a Group basis, with c.50% new high‐quality staff • Development of procurement strategies for key categories that leverage McBride’s scale • Hard negotiation • Improved forecasting • Product re‐engineering and alter
Slide 15: Material purchases
Material purchases (McBride M4 Polymers, solvents y @ Surfactants TRUTYIN IIRL LLL @ Aerosols @ Bottles, caps, tubes, lids, film @ Cartons and labels @ Chemicals & Bases fj Components @ Fragrances
Slide 16: "Refresh" - Costs and benefits
“Refresh” ‐ Costs and benefits Implementation Costs: Estimated exceptional cost for next phase of initiatives of c£20m Cash cost of c£13m with a payback of 2 - 2½ years Further value-enhancing opportunities identified Rationale: Recurring annualised benefit by year 2 of £11m Underpin EPS g
Slide 17: Going forward - Project 'Refresh'
Going forward – Project ‘Refresh’ Chris Bull 17
Slide 18: Project "Refresh": From Good to Great
Project “Refresh”: From Good to Great A Fundamental Business Review... Key Strategic Actions Competitive Competitive advantage & advantage & Acquisitions growth potential growth by category potential by • Organisational Change category Supply chain Acquisitions efficiency & • Category review footpri
Slide 19: The Private Label opportunity
The Private Label opportunity Private Label Growth Drivers Private Label share Western European markets % Value Share Consumers seek value for money 18 16 Retailers continually looking to 14 differentiate offer and build loyalty 12 Demand for Private 10 Major retailers require price‐competitive Labe
Slide 20: Our current business
Our current business Growth markets with scope for market share gain Robust business model with strong product offerings and expertise Strong balance sheet enabling acquisitions and geographic expansion But: • Volatile ‐ Insufficient responsiveness and flexibility ‐ Untapped production and supply ch
Slide 21: Our planned business
Our planned business Growth markets with scope for market share gain Robust business model with strong product offerings and expertise Strong balance sheet enabling acquisitions and geographic expansion Plus: • A rationalised and enhanced operating platform • Increased customer responsiveness and fl
Slide 22: Strategic action: Organisational change
Strategic action: Organisational change Customers Product Development Supply Chain Building stronger Group leader Group leader of Supply strategic relationships of R & D appointed Chain Effectiveness at senior level and Footprint Categories identified appointed International for Group wide
Slide 23: Strategic action: Category review
Strategic action: Category review Focus on Growth Categories • 3 Core Growth Categories (characterised by market position, growth, technology and margin potential) – Laundry liquids – Machine dishwashing – Specialist cleaners • Future Growth Categories (offering broadening product range, increasing
Slide 24: Category review - Core growth categories
Category review – Core growth categories • Laundry liquids – c €3bn pa market ‐ category growing at the expense of powders and tablets – McBride has established position in gels and sachets – Opportunity to leverage scale and grow Private Label share • Machine dishwashing – Growing market worth c €1
Slide 25: Category review - Future growth categories
Category review – Future growth categories • Skin care – c€15bn pa market driven by growth of facial skincare – Exploit Brno skincare capability into core UK and European customers • Air care (non aerosol) – Total air care market worth €1.9bn pa but very fragmented – Overall category most impacted b
Slide 26: Strategic action: Improve competitiveness
Strategic action: Improve competitiveness • Embark on further selective rationalisation of the manufacturing footprint • Implement a group‐wide lean manufacturing programme • Improve relationships and offering through International customer teams • Utilise Group scale to improve responsiveness 26
Slide 27: Strategic action: New opportunities - category extension
Strategic action: New opportunities Selective category extension Baby Household wipes wipes Facial Cleansers Insecticides Air Toilet Surface Dish Laundry Body Hair Oral Male Skin Sun Colour Care Care Care Wash Care Care Care Care Grooming Care Care Cosmetics Household Personal Care Car Care Medicate
Slide 28: Strategic action: New opportunities - geographic expansion
Strategic action: New opportunities Geographic expansion • Developing and Emerging markets provide an excellent opportunity for Private Label fuelled by the expansion of International retailers. • Detailed review confirms Central and Eastern Europe and identifies Asia and Australia as opportunities
Slide 29: Implementation roadmap
Implementation roadmap Within 12 months: Complete organisational changes Implement first Group-wide category investments Complete next phase of manufacturing rationalisation Perform Lean Manufacturing assessment at key sites Continue expansion in Developing and Emerging markets Within 24 m
Slide 30: KPIs
KPIs Organic Revenue growth Private Label Penetration Growth % Revenue from D&E Geographies % Revenue from Core Categories Overheads % Sales Capital Allocation Efficiency Working Capital Fixed Asset Turnover Operating Margin Financial Health Cash Conversion Debt Cover 30
Slide 31: Investment case
Investment case • Private Label has excellent long term potential Strong market position with good opportunities to improve execution Sustainable organic revenue growth ahead of market Supply Chain cost reduction opportunities of £11m p.a. in year 3 Sustainable earnings growth Strong cash conversion
Slide 32: Appendices
Appendices 32
Slide 33: Private Labels benefit in times of recession
Private Labels benefit in times of recession Private Labels gain and continue to grow share during and after recessions % Private Label share of UK packaged groceries 45 40 35 30 25 20 15 79 80 81 82 89 90 91 92 93 06 07 08 09 Source Kantar, Datamonitor 33
Slide 34: Private Label growth outperforming the market
Private Label growth outperforming the market Source: Euromonitor International
Slide 35: Private Label is forecast to grow in all markets
Private Label is forecast to grow in all markets Note: Based on selected mature and emerging markets; f - forecast. Estimated shares of MGD sales; may exclude fresh produce. Source: Planet Retail Ltd - www.planetretail.net; partly based on Nielsen and GfK 35
Slide 36: The Private Label Business Model
The Private Label Business Model Consumers seek value for money Retailers continually looking to differentiate offer and build loyalty Demand for Private Label Opportunity to tender for Major retailers require price‐competitive products retailer supply products to improve value stream Private Label
Slide 37: Core Growth Actions - Laundry Liquids
Core Growth Actions ‐ Laundry Liquids Western European market ¾ Category Attractiveness €m • Large category c €3bn, growing at expense of 4500 powders and tablets 4000 • High level of innovation Powders 3500 • Private label has established share 3000 Tablets • McBride has strong position in concentr
Slide 38: Core Growth Actions - Machine Dishwashing
Core Growth Actions ‐ Machine Dishwashing Western European market €m ¾ Category Attractiveness 2000 1900 • Large market €1.8bn, growth driven by increasing dish 1800 washer ownership & convenience 1700 • High level of innovation eg “ Tab in Tab” and “Soluble 1600 Auto sachet” 1500 Dishwashing 1400 •
Slide 39: Core Growth Actions - Speciality Cleaners
Core Growth Actions ‐ Speciality Cleaners Western European market ¾ Category Attractiveness €m 1400 • Combined surface cleaner market is worth €3bn 1200 • Mix of room ‐ surface specific cleaners and multipurpose 1000 products Spec cleaners • Growth driven by consumers increased hygiene awareness in
Slide 40: Future Growth Actions - Skin care
Future Growth Actions ‐ Skin care Western European market €m ¾ Category Attractiveness 18000 16000 • Large market €15bn, driven by growth of facial skincare 14000 • Demand for anti–aging products a key growth driver 12000 • Brno has strong face and skin care heritage 10000 Skin care • Growing Privat
Slide 41: Future Growth Actions - Air care (non aerosol)
Future Growth Actions ‐ Air care (non aerosol) Western European market ¾ Category Attractiveness €m • Total air care market worth €1.9bn but fragmented 700 • Category most impacted by the economic downturn with 600 products perceived as neither essential or luxury Candle Air 500 Fresheners • Discoun
Slide 42: Future Growth Actions - Selected Personal Care
Future Growth Actions – Selected Personal Care Western European market ¾ Category Attractiveness €m • The European Personal Care market is large but fragmented. 1400 • Historically growth has outperformed the Household products 1200 sector 1000 • Private Label has a growing share in many categories
Slide 43: Cash Generation 2010
Cash Generation 2010 2010-11 2009-10 H1 H1 £m £m Cash generated from operations (1) 27.2 48.8 Other net outflows (21.9) (17.7) Free cash flow 5.3 31.1 Acquisitions (3.1) (4.7) Dividends (8.7) (7.8) Exceptional items (3.5) (1.5) Exchange (2.2) (4.1) Debt (increase)/reduction (12.2) 13.0 Opening net d