Slide 1: Operations Review: Accelerating Growth: Customers, Markets, People
Operations Review 24 October 2007 Accelerating Growth: Customers, Markets, People Mike Ihlein Chief Executive Officer
Slide 2: 2007 Operations Review - Introduction
2007 Operations Review - Introduction • Welcome • Major and successful transformation since last Operations Review (December 2005) • Excellent performance throughout reorganisation • Strong foundations • Continuous improvement and leading-edge technology • Well positioned to accelerate growth • Cust
Slide 3: Major transformation since last Operations Review
Major transformation since last Operations Review • Unification of DLC • Divestment program - focus on CHEP and Recall – US$3.6 billion in gross proceeds • US$3.4 billion in capital management initiatives – On-market share buy-back program (US$2.1 billion) – Cash alternative and special dividend (US
Slide 4: Excellent performance since last Operations Review
Excellent performance since last Operations Review • Sales up 7% per annum1 • Comparable operating profit growth up 23% per annum1 • Profit after tax up 38% per annum2 • Cash flow from operations up US$138 million • Earnings per share up 44% per annum2 • BVA up US$293 million3 STRONG FOUNDATIONS IN
Slide 5: Continuous improvement and leading-edge technology
Continuous improvement and leading-edge technology • Enhancing customer service offerings – Site visits (Costco – DTPM, Kraft – ETPM) • Investing in world class information systems – Donna Slyster (Orlando) • Optimising our network – Ramon Genemaras (Orlando), Carmelo Alonso (London) • Leading in te
Slide 6: Well positioned to accelerate growth
Well positioned to accelerate growth • We are financially and operationally strong • CHEP is an integral part of the supply chain – particularly FMCG • Reorganisation required internal focus • Energy and resources now dedicated to Customers, Markets, People • We are in an excellent position to accel
Slide 7: Accelerating growth: Customers
Accelerating growth Customers Customer Information Satisfaction Systems Customers Technology Service and Innovation Offerings 7
Slide 8: Accelerating growth: Markets
Accelerating growth Markets Existing geographies, Existing geographies, segments, customers new segments • new FMCG customers • beverages USA Organic Organic “Plus” • private label • food service Markets Acquisition of related New geographies, superior supply chain existing or new solutions business
Slide 9: Accelerating growth: People
Accelerating growth People Skilled New Team Organisation People Safety Talent Zero Harm Management 9
Slide 10: Today's presenters
Today’s presenters Dave Mezzanotte Kevin Shuba Matt Phelps Miguel D’Cotta Elton Potts 10
Slide 11: Operations Review
Operations Review 24 October 2007 Accelerating Growth: Customers, Markets, People Mike Ihlein Chief Executive Officer
Slide 12: Disclaimer statement
Disclaimer statement The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrict
Slide 13: Contact details
Contact details Michael Sharp Vice President Corporate Affairs michael.sharp@brambles.com +61 (2) 9256 5255 13
Slide 14: CHEP
CHEP DAVE MEZZANOTTE - CHIEF OPERATING OFFICER 24 October 2007
Slide 15: Agenda
AGENDA Introduction Dave Mezzanotte, Chief Operating Officer Strong foundations Customer focus Environmental sustainability Drivers of excellent performance Experienced leadership and team Leveraging best practice globally Accelerating growth CHEP USA Kevin Shuba, President, CHEP USA Innovation and
Slide 16: Strong foundations
STRONG FOUNDATIONS • US$3.2B sales • 44 countries • ~8,000 employees • 285M pallets and containers • 2.8M daily equipment movements • 300,000 customer locations and growing 16
Slide 17: Blue chip customers
STRONG FOUNDATIONS “BLUE CHIP” customers 17
Slide 18: Customer commitment
STRONG FOUNDATIONS Customer commitment • Customer Satisfaction has improved four years in a row – On-time delivery – Responsiveness – Account management • Established broader relationship with customer leadership • On-site management – ETPM – DTPM – Managed Recovery Aim to improve ease of doing busi
Slide 19: Activity Based Pricing > One-way Trip
STRONG BUSINESS MODEL Activity Based Pricing > One-way Trip Issue fee* (US$3.00) s C E Daily hire fee* (US$0.03) a c Transfer fee* B t CHEP (US$1.00) b r A D *Indicative USA pricing and does not include up-charges for NPD channels or sales allowances 19
Slide 20: Market alternatives
MARKET ALTERNATIVES One Way or Pallet Exchange White Wood Pallets Pooled Pallets 20
Slide 21: CHEP pooling proposition adds value
STRONG BUSINESS MODEL CHEP pooling proposition adds value • Consistent, high quality pallet • Faster loading and unloading • Lower supply chain costs • Lower disposal costs for Ds • Reduced product damage • On-site management • Lower transport costs for Es • Environmental sustainability CHEP is US$1
Slide 22: Limited sensitivity to USA lumber prices
STRONG BUSINESS MODEL Limited sensitivity to USA lumber prices RANDOM LENGTHS INDEX FOR SELECT COMPONENTS 500.0 Price per Thousand Board Feet 450.0 400.0 350.0 300.0 250.0 200.0 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Source: Random Lengths Dual lumber sourcing strategy has stabilized lumber costs
Slide 23: European lumber prices enhance value proposition
STRONG BUSINESS MODEL European lumber prices enhance value proposition CONIFER SAWLOG PRICE: CENTRAL & WESTERN EUROPE 150 140 130 Price (US$/m3) 120 110 100 90 80 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Source: Wood Resource Quarterly – Volume 20 23
Slide 24: Environmental sustainability
ENVIRONMENTAL SUSTAINABILITY • In addition to the financial benefits of using the CHEP system, customers recognise the environmental sustainability benefits delivered by CHEP • In the USA alone, the use of CHEP pallets saves approximately 6 million trees per annum • In Europe, in particular, custome
Slide 25: Drivers of strong financial performance
DRIVERS OF STRONG FINANCIAL PERFORMANCE
Slide 26: Excellent results
EXCELLENT RESULTS US$M SALES US$M COMPARABLE OPERATING PROFIT 3,500 900 CAGR = 12% 800 CAGR = 28% 3,000 700 600 2,500 500 400 2,000 300 FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07 • 12% CAGR Sales Growth • Margin Expansion – Perfect Trip Initiative – Perfect Plant Initiative – Network Optimiza
Slide 27: Excellent results
EXCELLENT RESULTS CASH FLOW FROM OPERATIONS BVA (Fixed June 06 FX rates) US$M US$M 800 700 US$618M 500 US$481M 600 400 500 300 400 300 200 200 100 100 0 0 -100 FY03 FY04 FY05 FY06 FY07 FY03 FY04 FY05 FY06 FY07 • Improved Asset Productivity • Improved Capital – Lower Plant Stocks Productivity – Lower
Slide 28: Continuous improvement embedded into culture
CONTINUOUS IMPROVEMENT Embedded into Culture Enabler CHEP STRATEGY PYRAMID • Global Councils Initiatives • Best Practices BVA • Perfect Trip (Six Sigma) • Network Optimization CUSTOMER SATISFACTION • QUALITY • COST EFFICIENCY ASSET • TECHNOLOGY PRODUCTIVITY • INNOVATIVE PRODUCTS Enabler GLOBAL STAND
Slide 29: Perfect Trip drives productivity
CONTINUOUS IMPROVEMENT Perfect Trip (Six Sigma/Lean) drives productivity ANNUAL BVA IMPACT US $M 60 50 48 40 35 30 25 20 14 10 0 FY04 FY05 FY06 FY07 29
Slide 30: People: Experienced leadership
PEOPLE Experienced Leadership REGION LEADERSHIP AMERICAS EMEA ASIA-PACIFIC CHEP AFRICA CHEP LATIN CHEP ASIA- CHEP USA CHEP CANADA CHEP EUROPE AND MIDDLE CHEP CHINA AMERICA PACIFIC EAST KEVIN ARTURO MIKE MIGUEL JURIE HOWARD JOHN SHUBA CABRERA DIMOND D'COTTA WELMAN WIGHAM WAN PRESIDENT PRESIDENT PRESI
Slide 31: People: Talent management
PEOPLE Talent Management Training • Strategic Selling and Large Account Management • Ongoing Lean and Six Sigma skill development • Investing in Leadership development Building the Bench • Continuous Graduate and MBA recruiting – Targeted Universities – Skill diversity 31
Slide 32: Leveraging global scale
LEVERAGING GLOBAL SCALE People SAP Network Optimization Innovation Perfect Plants Manugistics Best Practices 32
Slide 33: Accelerating profitable growth
ACCELERATING PROFITABLE GROWTH 33
Slide 34: Americas – USA and Canada
ACCELERATING GROWTH Americas – USA and Canada USA • Deeper penetration into FMCG • New market segments (Organic “Plus”) • US$3.5B on 48x40 Canada • Continued penetration of FMCG • Organic “Plus” for pallets • Automotive containers 34
Slide 35: Americas - Latin America
ACCELERATING GROWTH Americas - Latin America • Organic and Organic “Plus” growth – Mexico, Argentina, Brazil, Chile • Core Expansion – Guatemala, Honduras, Costa Rica, El Salvador, Nicaragua 35
Slide 36: EMEA
ACCELERATING GROWTH EMEA • Organic and Organic “Plus” Growth • Core Expansion in Europe – Germany (US$0.5B opportunity) – Central and Eastern Europe (US$0.5B opportunity) • Gulf Cooperative States (US$0.1B opportunity) – Launched with Panda in Saudi Arabia – Preparing to expand into Kuwait and UAE •
Slide 37: Asia–Pacific: Australia and New Zealand
ACCELERATING GROWTH Asia–Pacific Australia and New Zealand • Strong positions across all service lines • Australia sales growing at 8% • Multiple platforms offered: – Pallets – Automotive Containers – Intermediate Bulk Containers (IBC) – Reusable Plastic Containers (RPC) • Pursuing growth opportunit
Slide 38: Asia-Pacific: Asia
ACCELERATING GROWTH Asia-Pacific Asia • Existing countries Malaysia, Thailand, Singapore, Hong Kong – Pallets in Malaysia industry verticals beyond FMCG – Expand to alternative platforms, e.g. RPCs – Recent launch of automotive operations in Thailand • New countries – China – Building momentum in pa
Slide 39: China – Building momentum
ACCELERATING GROWTH China – Building momentum In 12 months we have: • Implemented operating structure – 51 staff (as at 30/9/07) – 25 staff in Sales/Marketing • Developed tailored IS solutions • Designed and launched – 1210 plastic RFID enabled pallet • Local and international customers – Converted
Slide 40: Key points
KEY POINTS • Strong foundations • Excellent performance • Commitment to customer service excellence • Culture of continuous improvement • Accelerating growth globally 40
Slide 41: Brambles
1, Brambles ~
Slide 42: CHEP USA
CHEP USA KEVIN SHUBA - PRESIDENT, CHEP USA
Slide 43: Agenda
AGENDA • Strong Foundations • Driving Customer Satisfaction • Supply Chain Excellence • Growth 43
Slide 44: Strong foundations: Overview
STRONG FOUNDATIONS Overview • 76 million pallets and containers • 0.7 million movements per day • 4,100 customers • 21,000 customer locations • 800 employees • 195 Service center and TPM SERVICE locations DTPM CENTER ETPM 44
Slide 45: Supply chain velocity
STRONG FOUNDATIONS Supply chain velocity RETAIL INVENTORY TO SALES RATIO 1.6 1.5 1.4 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Higher supply chain velocity increases asset productivity 45
Slide 46: Excellent results
STRONG FOUNDATIONS Excellent results $USM BVA (Fixed June 06 FX rates) $USM 1,100 SALES CAGR 8.0% 200 Growth: $235M 150 1,000 100 900 50 800 0 FY03 FY04 FY05 FY06 FY07 ($50) 700 FY03 FY04 FY05 FY06 FY07 ($100) 350 $USM COMPARABLE OPERATING PROFIT 300 $USM CASH FLOW FROM OPERATIONS % of Sales Growth
Slide 47: Performance key metrics
STRONG FOUNDATIONS Performance Key Metrics Plant cost ratio 35% 35% Gross transportation cost ratio (Plant costs / Sales) (Transportation costs / Sales) 30% 30% 25% 25% 20% 20% FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 Control ratio 100% (Returns + Recoveries / Total Issues) 98% 96
Slide 48: Key performance drivers
KEY PERFORMANCE DRIVERS SALES GROWTH OPERATING PROFIT Expansion in Core FMCG Segment Total Pallet Management (TPM) Distributor recognition of Network Optimization CHEP Value Proposition Continued growth with new Perfect Trip Initiatives customers Enhanced Service offerings Asset Recovery Program (DT
Slide 49: Market trends support CHEP value
MARKET TRENDS SUPPORT CHEP VALUE MARKET TREND ISSUES Distributors Implementing Automated Storage and Retrieval Systems Automation Emitters Further Automating, Increasing Line Speeds Focus on Condition of Goods Received Product Damage Joint Industry Initiatives to Lower Unsaleables Solid Waste Reduct
Slide 50: Customer satisfaction framework
CUSTOMER SATISFACTION Framework • RFID • Perfect Plants • Blue Step QUALITY • Quality Teams TECHNOLOGY • Manugistics • On-time delivery • SAP • Pallet hygiene CUSTOMER SATISFACTION • Customer Scorecard • On-site Management CUSTOMER EASE OF • Customer portals • Innovation Center SERVICE DOING • Accou
Slide 51: Customer satisfaction: Quality initiatives
CUSTOMER SATISFACTION Quality initiatives Organization • Director of Quality • 4 Regional Quality Managers • 26 Quality Representatives at select Service Centers – CHEP on-site person responsible for Plant Quality – Trained quality professionals with process control capabilities • Alignment of Opera
Slide 52: Blue Step pallet
RESPONDING TO CUSTOMER NEEDS Blue Step pallet • Innovative new design – CHEP patent-pending • Improved Customer Satisfaction – Stronger leadboards/blocks – Greater nail retention – Smaller inter-board gaps – Greater product protection • Reduces Pallet Damage/Repair Costs – Substantially lowers damag
Slide 53: Blue Step pallet rollout
RESPONDING TO CUSTOMER NEEDS Blue Step pallet • US assembly tooling complete • LOI in progress for 3-year block production • US production start scheduled for 2008 • Rollout planning started for all block pallet markets – Europe – Latin America – South Africa • Technology transfers to repair of curr
Slide 54: Ease of doing business with CHEP
CUSTOMER SATISFACTION Ease of doing business with CHEP • Customer scorecard – Platform for externalizing our internal KPI focus and Six Sigma methodologies • Helps ensure we meet our customers’ requirements • KPIs jointly selected • Drives us to consistently meet our internal KPIs 54
Slide 55: Customer service differentiation
CUSTOMER SATISFACTION Customer Service Differentiation On-Site Management (TPM) • Optimizing transport activity and equipment moves within the network • Possibility to reduce empty hauls between specific Distributors and Emitters • Improved communication and coordination between Customer and CHEP On
Slide 56: On-Site Management initiatives
CUSTOMER SATISFACTION On-Site Management initiatives STRATEGIC INITIATIVES KEY DELIVERABLES Tool to assist Account Management On-line view of supply chain demand Leverage Real Time Integration Improve visibility with systems Joint Web Services Integration with CHEP Embedded services model Customers
Slide 57: Sustainability of CHEP versus alternatives
CUSTOMER SATISFACTION Sustainability of CHEP versus alternatives ONE-WAY PALLET EXCHANGE SLIP SHEET Produces ~20 times Produces ~7.5 times Produces ~2.6 times more solid waste more solid waste more solid waste Consumes ~125% Consumes ~28% Consumes ~18% more total energy more total energy more total
Slide 58: Supply chain excellence: Market overview
SUPPLY CHAIN EXCELLENCE Market Overview TRADE FLOW TECHNOLOGY: TRANSPORT: ENVIRONMENTAL: IMBALANCE: Fuel rates driving Pressure to Real time demand Increased security costs > revenue control transport fulfillment with port system growth emissions Distributors Data collaboration opening major DCs Red
Slide 59: Supply chain excellence: Best practice
SUPPLY CHAIN EXCELLENCE Best practice ON-SITE NETWORK MANAGEMENT OPTIMIZATION EXPANSION SUPPLY CHAIN EXCELLENCE TECHNOLOGY SUPPLIER & STRATEGY INFORMATION 59
Slide 60: Network optimization
SUPPLY CHAIN EXCELLENCE Network Optimization STRATEGIC INITIATIVES KEY DELIVERABLES Develop a flexible, real-time Operate US as one single Optimization Model solving for integrated network new nodes Develop flexible site Visibility to network solution and rationalization solution YOY growth Fully in
Slide 61: Network optimization
SUPPLY CHAIN EXCELLENCE Network Optimization 400 Service Centers DTPM ETPM 350 300 • Integrated planning 250 and network optimization # of Nodes 200 150 drive cost reduction 100 50 • Migration from full Service 0 FY07 FY08e FY09e FY10e FY11e FY12e Center activities to repair facility US$ bias 220 2.
Slide 62: On-site management expansion
SUPPLY CHAIN EXCELLENCE On-Site Management Expansion NETWORK TRANSITION STRATEGIC INITIATIVES 400 Service Centers DTPM ETPM Implement rapid growth model for 350 ETPM, taking advantage of network 300 optimization opportunity 250 6 200 Build out DTPM with key regional 150 133 distributors 100 50 75 De
Slide 63: Opportunities: total USA pallet opportunity
ACCELERATING GROWTH Opportunities TOTAL USA PALLET OPPORTUNITY – US$10 BILLION 42x42 US$0.7B Other size 36x36 "white wood" US$0.7B pallets US$5.1B 48x40 Total US$3.5B CHEP 48x40 Other US$1.1B 48x40 US$2.4B • Industry is approximately 40% new, 45% recycled and 15% pooled 63 •Total opportunity estimat
Slide 64: Organic opportunities
ACCELERATING GROWTH Organic Opportunities OPPORTUNITY ORGANIC ~40% of FMCG in USA US$2B Beverages US$0.6B alcoholic and non-alcoholic Food Service ORGANIC broadline distributors; US$0.3B "PLUS" system speciality distributors Other Segments home improvement; office supplies; US$0.4B pet supplies 1. T
Slide 65: Organic FMCG opportunities
ACCELERATING GROWTH Organic FMCG Opportunities • Canned Goods • Dry Food • Confectionery • Health & Beauty • Dairy • Meat / Seafood • Paper Products • Fresh Produce Continued Penetration in Target Categories 65
Slide 66: Organic Plus opportunities
ACCELERATING GROWTH Organic “Plus” Opportunities 300 million movements (%) 100 80 60 40 20 0 BEVERAGE HOME IMPROVEMENT FOODSERVICE OFFICE SUPPLY CHEP POTENTIAL OPPORTUNITY 66
Slide 67: Beverages
ACCELERATING GROWTH Beverages • Bottled Water – Standard CHEP value proposition and pricing model used with push/pull strategy • Soda, Syrup – Pool conversion (to 48x40) or acquisition • Alcoholic Beverages – Roll out new pricing/distribution solution to convert Middle Tier Beverage Distributors. 48
Slide 68: Food service
ACCELERATING GROWTH Food Service BROADLINE • Leverage and Expand TPM • Managed Return Program • Tailored Pricing to meet customer needs SYSTEM / SPECIALTY • System Business Model Study • Channel Pricing for Cross-over Distribution 68
Slide 69: New segments
ACCELERATING GROWTH New Segments HOME IMPROVEMENT OFFICE SUPPLY Expansion with current 48x40 Complete Supply Chain study customer base Scope opportunity for non-48x40 Develop value proposition for pallets in segment distributors and emitters PET PRODUCTS AUTO AFTERMARKET Complete Supply Chain study
Slide 70: Summary CHEP USA
SUMMARY CHEP USA SUPPLY CUSTOMER ACCELERATED CHAIN SATISFACTION GROWTH EXCELLENCE ONGOING REVIEW AND OPTIMIZATION OF OUR BUSINESS MODEL DELIVERS SUPERIOR RETURNS 70
Slide 71: Brambles
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Slide 72: CHEP Europe
CHEP EUROPE MIGUEL D’COTTA - PRESIDENT, CHEP EUROPE 24 OCTOBER 2007
Slide 73: Agenda
AGENDA • Strong Foundations • Operational Excellence • Customer Satisfaction • Accelerating Growth • Summary 73
Slide 74: Strong foundations: Market overview
STRONG FOUNDATIONS Market Overview 1974 - UK 1977 - Belgium 1978 - Ireland 1978 - Luxemburg 1979 -The Netherlands 1980 - France 1985 - Germany 1987 - Spain 1991 - Italy 1993 - Portugal 1995 - Austria 1997 - Norway 1997 - Sweden 1997 - Finland 1997 - Denmark 1998 - Switzerland 1998 - Greece 1999 - Po
Slide 75: Strong foundations: Market overview
STRONG FOUNDATIONS Market Overview • More than 165 million pallets and containers • Over 1.2 million pallet and container issues per day • More than 240,000 customer locations • 1,500 staff employees and 1,200 in Service Centres • 170 Service Centre and TPM/TCM locations • 23 countries CHEP Service
Slide 76: Excellent results
STRONG FOUNDATIONS Excellent results 1,500 $USM SALES $USM BVA (Fixed June 06 FX rates) CAGR 11.6% 160 Growth: $140M 1,400 140 1,300 120 100 1,200 80 1,100 60 1,000 40 900 20 800 0 FY03 FY04 FY05 FY06 FY07 ($20) FY03 FY04 FY05 FY06 FY07 $USM $USM COMPARABLE OPERATING PROFIT 450 CASH FLOW FROM OPERAT
Slide 77: Performance key metrics
STRONG FOUNDATIONS Performance Key Metrics Plant cost ratio Gross transportation cost ratio (Plant costs / Sales) (Transportation costs / Sales) 35.0% 28.0% 30.0% 24.0% 25.0% 20.0% 20.0% 16.0% FY02 FY03 FY04 FY05 FY06 FY07 FY02 FY03 FY04 FY05 FY06 FY07 Control ratio (Returns 96% + Recoveries / Total
Slide 78: Operational excellence
OPERATIONAL EXCELLENCE The key to delivering exceptional performance Driving Delivering Strong Continuous Exceptional Foundations Improvement Performance •ABPA and Channel Growth capability Volume growth Pricing Customer satisfaction Six Sigma processes •Network optimisation improvement Easy an
Slide 79: Enabling margin expansion
OPERATIONAL EXCELLENCE Enabling Margin Expansion • Network Optimisation NETWORK COST • Perfect Plant • TEM OPTIMISATION EFFICIENCIES • Lean and Perfect Trip OPERATIONAL EXCELLENCE • D Responsibility •Leadership • CAT roll-out •Talent Management PEOPLE ASSET • Pallet recycler program CONTROL 79
Slide 80: Network optimisation
OPERATIONAL EXCELLENCE Network Optimisation • Extensive service network, a key competitive advantage – 142 service centres – Plant Network Optimisation driving down overall costs – Network decisions using advanced optimisation tools – Scenario modelling for new growth – Transport loads also optimise
Slide 81: Cost efficiencies - Perfect Plants
OPERATIONAL EXCELLENCE Cost Efficiencies - Perfect Plants • 13 Perfect Plants operating across Europe – 4 Perfect Plants to be commissioned in coming months – New technolgy: FMS (Factory Management System) and ADI (Automated Digital Inspection) – Ongoing cost reduction: Perfect Trip and Lean sharing
Slide 82: Asset control
OPERATIONAL EXCELLENCE Asset Control • Control Ratio in FY07 impacted by resumption of growth • Improved critical collection processes, with Stray Recovery collection engine in place across Europe • Progress in Major D converting to Responsibility Transfer (RT) – 23M flows converted, with 8M with LO
Slide 83: Leadership and talent development
OPERATIONAL EXCELLENCE Leadership and Talent Development • Experienced executive team • Average length of service of 6 years at CHEP • Team drawn from major blue chip organisations • GE, Masterfoods, ICI, P&G, Reckitt Benckiser • Top talent management programs (INSEAD, London Business School) • 65%
Slide 84: Customer satisfaction
CUSTOMER SATISFACTION •Managed Recovery NEW SERVICE •Invoice Improvements QUALITY OFFER CUSTOMER SATISFACTION • Working with • e Tools customers EASE OF DOING TECHNOLOGY • Innovation BUSINESS 84
Slide 85: Customer satisfaction
CUSTOMER SATISFACTION • Positive progress in Customer Satisfaction in FY07 • Customer Satisfaction continues to improve across Europe (including UK) • Key improvement areas: – Invoice and tracking stock balance – CHEP contact and responsiveness – Introduction of Managed Recovery in UK • Overall sati
Slide 86: Introduction of UK new service offer
CUSTOMER SATISFACTION Introduction of UK New Service Offer Managed Recovery • New service to meet changing C E customer needs in the UK • All top 9 UK Ds have agreed to B d D t E the service E D • Provides choice and flexibility A D in service offering • Supports lower supply chain cost • Roll out c
Slide 87: Invoice improvements – Impact Team Project
CUSTOMER SATISFACTION Invoice improvements – Impact Team Project Major improvement delivered in FY07 • 36 Perfect Trip projects delivering a 50% reduction in invoice disputes • Sharing Global Best Practices • All legacy and manual declaration systems have been eliminated and converted to standard ED
Slide 88: Electronic tools – Portfolio Plus
CUSTOMER SATISFACTION Electronic Tools – Portfolio Plus • Automation of manual effort – Customer productivity – Reduce errors/disputes • Dashboard of key KPI trends – Early warning of issues – Benchmarking opportunity • Account Management tools – Improved reporting – Knowledge Library Tools develope
Slide 89: Working with customers
CUSTOMER SATISFACTION Working with Customers • Engaged with key FMCG working groups – Efficient Consumer Response Year 1 – AIM (International Brand Manufacturers Association) – Local country user groups • Many joint successes – Managed Recovery UK – Transaction Accuracy projects – NCD Conversion pro
Slide 90: Developing growth capability
ACCELERATING GROWTH Developing Growth Capability • Sales organisation restructured in September 06, separating: – Growth of New Business – Lane Expansion of Exisiting Customers • Strengthened – Distributor Sales team – Marketing Communications team • Created – The Supply Chain Value Analysis Team –
Slide 91: Focus on profitable customers/segments
ACCELERATING GROWTH Focus on Profitable Customers/Segments • Eliminated unprofitable pallet issues – ABPA introduced after extensive customer profitability analysis – Over 90% of pallet contracts include annual indexing • Resumption of volume growth – From flat volume in FY06 to 3% volume growth in
Slide 92: Key market trends
ACCELERATING GROWTH Key Market trends Market Trend Issues Timber costs up 45% in the last 2 years driving up cost of white wood exchange significantly Costs Transport costs up 21% in last 2 years leading to visibility of white wood costs exchange. Increased practice of unbundling transport cos
Slide 93: Significant pallet opportunities in Europe
ACCELERATING GROWTH Significant Pallet Opportunities in Europe Driving sustainable revenue growth Future Currently Potential OPPORTUNITY Addressable Opportunity Opportunity 1,2 not Currently Addressable Existing Geographies Organic US$B US$B - existing segments/customers Main Pallet types 2.0 9.4 Co
Slide 94: B1208A white wood exchange conversion
ACCELERATING GROWTH B1208A White Wood Exchange Conversion • Cost of w hite w ood exchange has great variation among users • Targeting white wood exchange users that have higher costs CHEP is well placed to manage the complexity No Automation Automated Prod. Low Quality needs & Warehousing LOWER COST
Slide 95: B1208A white wood exchange conversion
ACCELERATING GROWTH B1208A White Wood Exchange Conversion • Continued focus on core FMCG segments in Western Europe • Opportunity remains large in France, Italy • Increasing cost of timber is driving up the cost of white wood exchange • Some transporters across Europe have announced charges to handl
Slide 96: Core expansion – Germany
ACCELERATING GROWTH Core Expansion – Germany • Largest opportunity in Europe - estimated US$0.5B • Opportunity is 130M+ pallet issues • EPAL white co-operative exchange pool is well established • Most costs are hidden and supported by Transporters and LSPs (Logistics Service Providers) • Current cos
Slide 97: Core expansion – Germany
ACCELERATING GROWTH Core Expansion – Germany • Where are the opportunities? – Rise of timber costs has raised awareness of pallet costs – Transporters and LSPs carry most of the costs and are now discussing extra charges for pallet management – Exchange unfavourably impacted by increase of Emitters
Slide 98: Core expansion – Central and Eastern Europe
ACCELERATING GROWTH Core Expansion – Central and Eastern Europe • Significant Opportunity in Central and Eastern Europe – Estimated at 130M issues and US$0.5B – Poland (largest market), Hungary, Czech Republic, Slovakia, Slovenia, Switzerland, Austria – CHEP has only 3% penetration – Modern manufact
Slide 99: Organic Plus - Display pallets
ACCELERATING GROWTH Organic “Plus”- Display Pallets • Display pallets are used for in-store promotions and high rotation goods • 9% revenue growth p.a. • Initially launched in Germany • Rolled out successfully to Spain, Portugal, France and Italy • Revenue US$135M in FY07 • Total Opportunity current
Slide 100: Organic – Reusable plastic containers
ACCELERATING GROWTH Organic – Reusable Plastic Containers Strong value proposition v cardboard Benefits of CHEP RPC • Clear trend to move from one way Pan Europe network Washing standards packaging to plastic reusable containers Range optimal pack-out Reduced damage design • Objective to be lowest c
Slide 101: Organic - Automotive
ACCELERATING GROWTH Organic - Automotive • Major customers - GM, Ford, Nissan, Suzuki • Key contracts extended in FY07 until FY10 and FY11 • Lane expansion driving current growth • Intercontinental activity increasing • Main alternative is in-house solutions • Major growth opportunities are OEM and
Slide 102: Summary CHEP Europe
SUMMARY CHEP Europe DELIVER ENHANCED MAKE CHEP EASIER TO OPERATIONAL SERVICE DO BUSINESS WITH OFFERING EXCELLENCE FOCUS ON ACCELERATING PROFITABLE GROWTH DELIVERS SUPERIOR RETURNS 102
Slide 103: Summary
SUMMARY • Strong foundations established • Build advantage in cost base and service delivery – Leverage Perfect Trip and Global Technology • Customer satisfaction improving • New initiatives underway make CHEP easier to do business with • Focus on profitable volume growth – Expansion with existing c
Slide 104: Brambles
1, Brambles ~
Slide 105: Summary
SUMMARY Our culture of CHEP is committed to continuous improvement operational excellence. will provide ongoing productivity gains. CHEP’s primary focus is shifting to profitable growth: • Continued growth in FMCG and new segments in the USA • Organic Growth in Latin America • Geographic Growth in E
Slide 106: Brambles
1, Brambles ~
Slide 107: Disclaimer statement
DISCLAIMER STATEMENT The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrict
Slide 108: CHEP Equipment Pooling Systems
CHE EQUIPMENT POOLING SYSTEMS
Slide 109: 2007 Operations Review
2007 Operations Review Elton Potts President and Chief Operating Officer 24 October 2007
Slide 110: Agenda
AGENDA • Strong Foundations • Business Strategy • Accelerating Growth • Q&A 110
Slide 111: Strong foundations: Global footprint
STRONG FOUNDATIONS • Global Footprint – 5 continents – 22 countries – ~300 dedicated facilities – ~4,500 employees – ~80,000 customers • Service Lines – Document Management Solutions 111 – Secure Destruction Services
Slide 112: Growing sales (by region)
STRONG FOUNDATIONS Growing Sales (by region) 650 3% 566 512 3% 24 453 2% % 22 2% 18 % 388 2% 18 % 26 17 % 30 26 % % 28 % % 26 % % 47 US$ millions 50 49 52 % 55 % % % % 2003 2004 2005 2006 2007 Americas Europe Australia/NZ Rest of World FY03 and FY04 are reported under UKGAAP. FY05, FY06 and FY07 112
Slide 113: Strong foundations: Globally
STRONG FOUNDATIONS Globally Vended Position by Region Breakdown of Sales by Customer 1% 1% 4% 6% 17% 25% 4% 40% 3% 3% 5% 54% 16% 14% 12% Leader Banking & Finance Retail #2 Insurance Utilities #3 Government Media #4 Medical Manufacturing 113 #5 Professional Services Others & Legal
Slide 114: North America
STRONG FOUNDATIONS North America • Regional Footprint – 3 Countries Service Lines - Sales 14% – ~144 Dedicated Facilities 46% – ~2,300 Employees – ~19,000 Customers 40% Document Management Solutions Secure Destruction Services Data Protection Services 114
Slide 115: Growing comparable operating profit
STRONG FOUNDATIONS Growing Comparable Operating Profit 119 98 84 75 76 US$ millions 2003 2004 2005 2006 2007 Comparable Operating Profit FY03 and FY04 are reported under UKGAAP. FY05, FY06 and FY07 115
Slide 116: Business strategy
BUSINESS STRATEGY Fire Prevention CARTONS Model Risk Management Benchmarking and Standard Operating Efficiency Best Practices Security Procedures RFID Technology Six Sigma/Lean Superior Value Proposition Perfect Order Environment Global Operating Financial Strength Platform Customer and Stability Su
Slide 117: Efficiency: CARTONS model
EFFICIENCY CARTONS Model collection (cCT) DMS Information Center Awaiting intake (iTA) Custome unload (uTC) Transporte request value add (rAV) Storage r V r store (sAR) Secure rRV Destruction Value Services Added bins returned to the Services sVR Secure customer (bST) Destruct unload (uTS) Outgoin i
Slide 118: Efficiency: RFID technology
EFFICIENCY RFID Technology • Increased speed, accuracy and efficiency of audits • Seamless transition from traditional barcoding process • Increased customer satisfaction • Rapid implementation • Product leadership – development, testing, implementation 118
Slide 119: Sustainability: Environment
SUSTAINABILITY Environment Sydney, Austr “…Recall is a great example of a company committed to reducing its carbon footprint while at the same 119 time making Source: Australian Financial Review, 19 September 2007
Slide 120: Customer satisfaction: Perfect Order
CUSTOMER SATISFACTION Perfect Order On Time & Complete AT CUSTOMER LOCATION CUSTOMER CARE INFORMATION CENTER CUSTOMER COURIER COURIER REPRESENTATIVE SPECIALIST Order Placed Work Add Items Work RequestedI Staging Work Order Loading Hand-Off -via web Order -To work Order tems -Items Transfer -Items -I
Slide 121: Accelerating growth: People
ACCELERATING GROWTH People • Leadership Team – 73 combined years with Brambles – 49 combined years with Recall • Talent Management and Succession • Annual Employee Engagement Survey • Employee Development 121
Slide 122: Accelerating growth: Strategy
ACCELERATING GROWTH Strategy • Primary focus on unvended segment • Organic growth • Expansion of existing relationships – Geographic and service line • Increase multinational customer base • Extension of service lines • Leverage vertical expertise • Acquisitions, where appropriate 122
Slide 123: Customer relationships
ACCELERATING GROWTH Customer Relationships • Customer satisfaction – Account Management / Customer Service • Customer segmentation – North America example » Fortune 500 customers » Medium to large regionally based customers » Small to medium customers CUSTOMER SALES CYCLE AVERAGE SEGMENT (months) MA
Slide 124: Australia and New Zealand
ACCELERATING GROWTH Australia and New Zealand • Strong presence with room for growth • Successful integration of former competitor • Successful consolidation of four markets • RFID • Cross-selling 124
Slide 125: Asia
ACCELERATING GROWTH Asia • Fastest and strongest growing region • Geographic expansion • Regional expansion of key clients 125
Slide 126: Brazil
ACCELERATING GROWTH Brazil • Strong presence with room for growth • Comprehensive market coverage in region’s strongest economy • Geographic expansion in process • Strong government relationship 126
Slide 127: North America
ACCELERATING GROWTH North America • Leverage existing customer relationships • Address unvended market – Majority in strongest verticals » Banking and Finance » Insurance » Healthcare » Legal » Government 127
Slide 128: Delivering our potential
DELIVERING OUR POTENTIAL • Building on strong foundations • Leveraging customer relationships • Implementing best practices • Focus on profitability and growth 128
Slide 129: Q&A
O&A Brambles Brambles
Slide 130: Disclaimer statement
DISCLAIMER STATEMENT The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrict