Slide 1: Preliminary Statement of Results
Preliminary Statement of Results 19 FEBRUARY 2019 Foundational Technologies Integrated Technology Value Creation Channels & Customers
Slide 2: Disclaimer: Forward Looking Statements
Disclaimer: Forward Looking Statements This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Group’s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow, n
Slide 3: Preliminary Statement of Results 2018
Preliminary Statement of Results 2018 1 Review of Business 2 Financial Review 3 Outlook & Future Prospects Edmond Scanlon, Chief Executive Marguerite Larkin, Chief Financial Officer © Kerry Group 2019 | 3
Slide 4: 2018 – Consistent Performance in a Rapidly Changing Marketplace
2018 – Consistent Performance in a Rapidly Changing Marketplace Continued Enhanced Taste & Continued Outperformance Nutrition Portfolio Investment Continued development Business development, Strong volume driven capital and M&A enhancing performance ahead of our industry-leading integrated Taste & f
Slide 5: 2018 Performance – Delivering Growth and Return
2018 Performance – Delivering Growth and Return Volume Trading Margin Adjusted EPS* (CCY) Volume (LFL) Trading Margin Adjusted EPS (CCY) +3.5% +4.3% 12.2% 12.2% +8.6% Growth +9.4% Outperforming Good underlying Continued growth market progression Increased ROACE* Free Cash Flow Total Dividend Return
Slide 6: 2018 Marketplace Overview
2018 Marketplace Overview Marketplace Developed Developing Dynamics Markets Markets • Consumer demanding • Economic conditions relatively • Economic conditions more – continuing to drive robust varied but stable overall marketplace fragmentation • Food choices becoming more • Currency volatility per
Slide 7: 2018 Revenue and Margin Growth
2018 Revenue and Margin Growth Group €6,608m VOLUME +3.5% MARGIN +0bps Taste & Nutrition Consumer Foods €5,351m €1,339m VOLUME +4.1% VOLUME +1.1% MARGIN +20bps MARGIN -60bps © Kerry Group 2019 | 7
Slide 8: Business Review – Taste & Nutrition
Business Review – Taste & Nutrition 2018 Growth End Use Markets (EUMs) 1 Revenue €5,351m +4.1% Trading margin 15.1 % +20bps Pharma +9.0% Meat Beverage • Continued volume growth ahead of our markets: +5.2% +5.7% • Meat, Beverage and Snacks EUMs growing strongly • Authentic Taste and Clean Label techn
Slide 9: Taste & Nutrition – Business Growth by Region
Taste & Nutrition – Business Growth by Region Volume Growth by Region Americas Europe APMEA 10.1% 52% 27% 21% • North America – Meat, • Beverage, Meat and Dairy • Meat, Meals and Snacks EUMs Beverage and Snacks EUMs EUMs delivered good delivered strong growth delivered good growth growth 2.8% 2.3% •
Slide 10: Business Review – Consumer Foods
Business Review – Consumer Foods Everyday Fresh 2018 Growth • Richmond – good performance, with Revenue €1,339m +1.1% 1 new Richmond chicken sausage Trading margin 7.5 % (60bps) growing well • Spreads – spreadable butter technology continued to perform well Convenience Meal Solutions • Volume growth
Slide 11: Financial Highlights
Financial Highlights €6,608m €806m 353.4c REVENUE TRADING ADJUSTED PROFIT EPS Marguerite Larkin, Chief Financial Officer © Kerry Group 2019 | 11
Slide 12: Continued Delivery in a Rapidly Changing Environment
Continued Delivery in a Rapidly Changing Environment Volume Growth Raw Material Costs Geopolitical Uncertainty Strategic Priorities 3.5% 4% 1.0% 2016 2017 2018 Taste Nutrition Developing Foodservice (1%) Kerry Market Markets (4%) Consistent volume Managing input cost Geopolitical Continued investmen
Slide 13: 2018 Financial Highlights
2018 Financial Highlights Result Comment Revenue €6,608m +3.5% volume growth +7.0% constant currency Trading profit €806m (+3.1% reported) Reported margin maintained Trading margin 12.2% (impacted by 30bps fx headwinds) Adjusted EPS* 353.4c +8.6% constant currency (8.3%) reported Basic EPS 305.9c (r
Slide 14: Revenue Growth Analysis
Revenue Growth Analysis 2017 2018 €6,408m €6,608m 3.1% Volume Volume 3.5% 3.6% Translation Transaction Acquisitions/ Price currency currency disposals (3.4%) (0.1%) (0.5%) 3.6% © Kerry Group 2019 | 14
Slide 15: Continued Volume Growth Ahead of Our Markets
Continued Volume Growth Ahead of Our Markets Group Volume Growth Breakdown by Business €6.6bn €5.4bn 3.5% 1.0% 4.1% 4.3% 3.5% 1.3% €1.3bn 3.6% 1.5% 1.3% 1.0% 1.1% 2016 2017 2018 Group Taste & Consumer (0.3%) Nutrition Foods Kerry Volume Growth Market Volume Growth Kerry Reported Revenue Source: Kerr
Slide 16: Group Trading Margin Maintained at 12.2% – Led by Taste & Nutrition
Group Trading Margin Maintained at 12.2% – Led by Taste & Nutrition Trading Margin by Business Taste & Nutrition Trading Margin +20bps +20bps +20bps 15.1% 15.1% +60bps 14.9% €805m €805m 14.7% €767m -60bps €716m 7.5% €100m Consumer Foods Taste & Nutrition 2016 2017 2018 Trading profit Trading margin
Slide 17: Group Trading Margin Breakdown
Group Trading Margin Breakdown KerryExcel 806 781 2017 Operating leverage Net price Kerryexcel Kerryexcel Currency Acquisitions 2018 / Portfolio mix Efficiencies Investments Group 12.2% +0.3% +0.1% 0.2% (0.3%) (0.3%) 0.0% 12.2% © Kerry Group 2019 | 17
Slide 18: Free Cash Flow – Performance in Line with Expectations
Free Cash Flow – Performance in Line with Expectations 2018 2017 €m €m Trading profit 806 781 Depreciation (net) 134 134 Movement in average working capital (57) 93 Pension contributions paid less pension expense (40) (95) Cash inflow from operations 843 913 Finance costs (net) (65) (60) Taxation (4
Slide 19: Financial Ratios and Debt Profile
Financial Ratios and Debt Profile Returns Target 2018 2017 1 ROACE 12% 12.0% 13.0% Banking Ratios Covenant Net debt: EBITDA* Max 3.5x 1.7x 1.4x EBITDA: net interest* Min 4.75x 14.7x 16.2x Maturity Profile of Net Debt €799m €648m €435m €142m 2018 2019 2020 2021 2022 2023 2024 2025 (€400m) Note: ¹ bef
Slide 20: Other Matters
Other Matters Finance costs Increase of €1.4m to €67m – acquisition activity offset by good cash flow Net deficit down to €44m – driven by favourable movements in discount Pension and inflation rates Non-trading items Net charge of €55m – acquisition integration & Brexit currency mitigation programm
Slide 21: Outlook & Future Prospects
Outlook & Future Prospects Edmond Scanlon, Chief Executive © Kerry Group 2019 | 21
Slide 22: Food for Life and Wellbeing Across Life-stages
Food for Life and Wellbeing Across Life-stages Generation Z (18-25 years) Growth in Demand for Elevated Nutrition Key dietary changes Lifestyle • (% Growth rate NPD 2016-2018) • High protein Physical health • Digestive health • Experiences, ‘made for me’ • Vegan/vegetarian and ethical key drivers 42
Slide 23: Accelerating Consumer Change – Impacting End-to-end Supply Chain
Accelerating Consumer Change – Impacting End-to-end Supply Chain Consumer Revolution Driving Customer Transformation Reshaping Industry Food for Life & Wellbeing Managing Accelerating Fragmentation Organisational Agility Critical • Proactive nutrition • Shorter product development cycles • Integrate
Slide 24: Unique Taste & Nutrition Positioning
Unique Taste & Nutrition Taste Nutrition Positioning Taste Nutrition 100+ 80+ 13 Nutrition Research White Articles Papers Papers Kerry Consumer Kerry Compass First Kerry Trendspotting Consumer Eat the Underpinned by 5R Clean Label Strategy 50+ 20 6 2.0 Insights Streets Blog Research Specialised Arti
Slide 25: Consumer Foods – Realignment for Growth in a New Landscape
Consumer Foods – Realignment for Growth in a New Landscape Consumer Foods Grow and outperform in our core | Invest and expand into adjacencies Strategy Consumer Revolution Channel Disruption Customer Transformation Fundamental • Rapidly changing preferences • Traditional store format • Retailer cons
Slide 26: Strategic Acquisitions
Strategic Acquisitions Total Taste Nutrition Developing Foodservice consideration Markets of c. €843m Completed in 2018 Hangman SIAS Season to Season Foremost Farms Ojah (JV) Flavour Source AATCO Fleischmann’s (FVC) Post Y/E Southeastern Mills (SEM) Ariake USA Note: Ariake USA expected to close in Q
Slide 27: Outlook 2019
Outlook 2019 • Continue to outperform our markets • Taste & Nutrition: strong innovation pipeline and good growth prospects, as we continue to evolve our unique business model aligned to the changing market landscape • Consumer Foods: building on strategy – realigning core and investing in adjacenci
Slide 28: Additional Information
Additional Information © Kerry Group 2019 | 28
Slide 29: Revenue Growth Components FY 2018
Revenue Growth Components FY 2018 Transaction Translation Acquisitions Volume Price Currency Currency / Disposals Total Taste & Nutrition 4.1% (0.5%) (0.1%) (4.0%) 4.2% 3.7% Consumer Foods 1.1% (0.4%) (0.3%) (0.6%) 0.8% 0.6% Group 3.5% (0.5%) (0.1%) (3.4%) 3.6% 3.1% © Kerry Group 2019 | 29
Slide 30: Trading Margin by Business
Trading Margin by Business 2018 2017 2018 Trading 2017 Trading Revenue Profit Revenue Profit €m €m % €m €m % Taste & Nutrition 5,350.6 805.3 15.1% 5,158.8 767.2 14.9% Consumer Foods 1,339.0 100.1 7.5% 1,331.0 107.8 8.1% Eliminations/unallocated (82.0) (99.8) (81.9) (93.7) Group 6,607.6 805.6 12.2% 6
Slide 31: EPS Reconciliation
EPS Reconciliation 2018 2017 Growth € cent € cent % Basic EPS 305.9 333.6 (8.3%) Brand related intangible asset amortisation 16.3 13.4 Non-trading items (net of related tax) 31.2 (5.8) Adjusted EPS 353.4 341.2 3.6% Retranslating PY adjusted EPS at current year average fx rates (15.8) Adjusted EPS in
Slide 32: Net Debt as at 31 December 2018
Net Debt as at 31 December 2018 Debt @ Floating Rates @ Fixed Rates €m €m €m Euro 1,416 622 794 Sterling - - – US dollar 607 389 218 Other 15 15 – Gross debt 2,038 1,026 1,012 Cash (414) (414) – Net debt 1,624 612 1,012 Gross debt 2018 50% 50% Gross debt 2017 40% 60% Weighted average period for whic
Slide 33: Exchange Rate Movements
Exchange Rate Movements Average Exchange Rates – 2018 v 2017 2% AUD BRL CAD CNY GBP MXN MYR USD ZAR (3%) (1%) (5%) (5%) (6%) (7%) (7%) (20%) © Kerry Group 2019 | 33
Slide 34: Strong Earnings Growth While Maintaining Return on Capital Employed
Strong Earnings Growth While Maintaining Return on Capital Employed ROACE* % EPS* Cent 500 14% 450 12% 400 350 10% 353.4 341.2 323.4 300 8% 301.9 278.9 250 257.9 6% 234.0 200 213.4 192.1 150 4% 163.9 100 2% 50 0% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EPS* ROACE* Note: * before brand re
Slide 35: Leader in R&D | No. 1 in Developing Markets
Leader in R&D | No. 1 in Developing Markets Largest R&D Spend 264 Taste & Nutrition 230 €m 164 148 108 102 97 97 73 72 35 21 12 Developing Market 1,426 1,385 Sales Taste & Nutrition 1,180 1,033 €m 821 732 654 392 303 298 264 190 155 Kerry estimates based on most recent accounts published & available
Slide 36: Shareholder Analysis
Shareholder Analysis Institutional Analysis Institutions 58% Kerry Co-operative 14% North America 19% UK 13% Continental Europe | Rest of World 23% Ireland 3% Retail 28% Shares in issue at 31 December 2018: 176,298,416 © Kerry Group 2019 | 36
Slide 37: Towards 2020
Towards 2020 Sustainability Pillars Environmental Marketplace Workplace Community Sustainability Sustainability Sustainability Sustainability Climate Change Nutrition & Health Our People Social Impact Resource Efficiency Responsible Sourcing Business Ethics Economic Development Waste Reduction Produ
Slide 38: Preliminary Statement of Results
Preliminary Statement of Results 19 FEBRUARY 2019 Foundational Technologies Integrated Technology Value Creation Channels & Customers