Slide 1: McPherson's Limited 2018 Full Year Results Presentation
For personal use only MCPHERSON’S LIMITED 2 018 F U L L Y E A R R E S U LT P R E S E N TAT I O N 22 AUGUST 2018 Presented by: Laurie McAllister, Managing Director Paul Witheridge, Chief Financial Officer
Slide 2: 6 Key Priorities to Win in FY18
I N J U N E L A S T Y E A R ( F Y 1 7 ) , W E S E T O U R S E LV E S 6 KEY PRIORITIES TO WIN IN FY18 For personal use only Accelerate core six owned brand performance Live the virtuous cycle of the export business model Redesign the top six customer trading terms via joint customer business plans Ex
Slide 3: McPherson's Results for FY18
M c P H E R S O N ’ S R E S U LT S FO R F Y 1 8 For personal use only +6% increase in sales from core six brands, with Multix now back to growth of +11% in the 2nd Half vs. FY17 +17% increase in underlying PBT from continuing operations +41% increase in sales from skincare brands, driven by Domestic
Slide 4: FY18 Business Highlights
FY18 BUSINESS HIGHLIGHTS For personal use only Tangible benefits realised from strategic customer partnerships • #1 Australian beauty supplier within Pharmacy. • Executed new / realigned trading terms with top 10 Pharmacy customers for mutual growth • Delivering “Greener” solutions to Grocery to sup
Slide 5: FY17 & FY18 Geographical Sales Revenue Breakdown
F Y 1 8 & F Y 17 G E O G R A P H I C A L S A L E S R E V E N U E BREAKDOWN For personal use only Other 2017 NZ Singapore $5m 2018 NZ Singapore Other $6m $5m $4m China $9m 2% $8m 3% 2% China 2% $1m 4% $7m 4% 1% 3% Australia Australia $191m $186m 91% 88% (Includes $22m Fine Fragrances) (Includes $14m
Slide 6: Financials
For personal use only FINANCIALS 22/08/2018 2017 ANNUAL GENERAL MEETING 6
Slide 7: FY Sales Revenue Breakdown by Category
F Y 1 8 S A L E S R E V E N U E B R E A K D O W N B Y C AT E G O R Y For personal use only Sales revenue from continuing operations reduced by 0.3% to $210.4m. Owned brands: FY18 $m FY17 $m % change Comments Skin, Hair and Body 23.1 16.3 41% • Strong export and domestic sales of both Dr. LeWinn's an
Slide 8: 2H Sales Revenue Breakdown by Category
2 H 1 8 S A L E S R E V E N U E B R E A K D O W N B Y C AT E G O R Y For personal use only Sales revenue from continuing operations increased by 7.0% to $104.2m. Owned brands: 2H18 $m 2H17 $m % change Comments Skin, Hair and Body 13.4 8.6 56% • Strong export and domestic sales of both Dr. LeWinn's a
Slide 9: Underlying PBT FY17 to FY18
U N D E R LY I N G P B T- F Y 17 t o F Y 1 8 For personal use only Decrease in FX contribution Increase hedge from in book Agency / contribution Impact Fragrance from 2.6 brands Decrease in owned (4.9) contribution Business brands from 5.6 Additional Development Private FY17 co-op Research Label 16.
Slide 10: Balance Sheet & Cashflow Metrics
BALANCE SHEET & CASHFLOW METRICS For personal use only $19.4m operating cash flow before interest and tax Underlying Cash Conversion* 82% payments, ex Home Appliances Divestment of Home Appliances, all outstanding Net Debt $9.8m 73.0% bonds bought back Gearing 9.9% 19.3pp Strong financial platfo
Slide 11: FY18 Key Financials – Other Information
F Y 1 8 K E Y F I N A N C I A L S – OT H E R I N F O R M AT I O N For personal use only • Final dividend of 2.5 cents per share fully franked payable 19 October 2018 • Total FY18 dividend 8.5 cents per share fully franked (FY17 – 8.0 cents per share). • Dividend reinvestment plan retained • Current
Slide 12: Market Environment
For personal use only MARKET ENVIRONMENT 22/08/2018 2017 ANNUAL GENERAL MEETING 12
Slide 13: Trading Environment
TRADING ENVIRONMENT For personal use only MARKET CONDITIONS PHARMACY GROCERY PRIVATE LABEL EVOLVING CHANNELS •Accelerating +6% Qtr with •Slowing +1% Qtr - continued •Coles forecast 41% range to be •Amazon Pharmacy +50% growth Discount Pharmacy over half the range rationalisation Private Label by 202
Slide 14: Health & Beauty Categories Are Winning
H E A LT H & B E AU T Y C AT E G O R I E S A R E W I N N I N G For personal use only Skincare 2nd highest GROCERY growth category in both PHARMACY Grocery and Pharmacy $M Growth Actual vs YA $M Growth Actual vs YA Infant Formula 16 Infant Formula Dietary Supps 45 Vitamins Health & Beauty 4 24 Skinca
Slide 15: Continued Growth of Daigou Demand
CONTINUED GROWTH OF DAIGOU DEMAND For personal use only China’s current population is 1.42 Billion Estimated that between 2009 and 2030, China will have added 850 million people to it’s middle class. 850M Chinese Middle Class = Size of Prize $2.8 Trillion Source: IRI Future of Pharmacy Presentation
Slide 16: Australian Pharmacy Domestic & Export
AUSTRALIAN PHARMACY DOMESTIC & EXPORT For personal use only $5.9b 88% MAT SHARE 1% OF $ VALUE $6.8b $846m 13% SHARE 6% MAT OF $ VALUE Source: IRI Future of Pharmacy Presentation August 2018 MAT= Moving Annual Total; Qtr= Quarter; YA= Year Ago
Slide 17: Top Australian Pharmacy Export Categories
TO P 4 AU S T R A L I A N P H A R M AC Y E X P O R T C AT E G O R I E S For personal use only 28% 45% EXPORT EXPORT +1%YOY +28%YOY SHARE $ SHARE $ 12% 6% EXPORT EXPORT +14%YOY -4%YOY SHARE $ SHARE $ Source: IRI Future of Pharmacy Presentation August 2018 MAT= Moving Annual Total; Qtr= Quarter; Y
Slide 18: Daigou Pharmacy Channel Evolution
DAIGOU PHARMACY CHANNEL EVOLUTION For personal use only Traditional Retail Stores E-commerce Platforms Distribution Daigou to consumer Omni-Channel marketing & distribution Source: IRI Future of Pharmacy Presentation August 2018
Slide 19: Strategy Update
For personal use only S T R AT E GY U P D AT E 22/08/2018 2017 ANNUAL GENERAL MEETING 19
Slide 20: Year Strategy – To Grow in Health, Wellness and Beauty
3 Y E A R ST R AT E GY – TO G ROW I N H E A LT H , W E L L N E S S A N D B E AU T Y For personal use only FOCUS ON CORE Explore new 6 OWNED product growth BRANDS platforms DRIVE VALUE Move to strategic FROM GEOGRAPHIC customer and supplier FOOTPRINT partnerships S T R AT E G I C E N A B L E R S End
Slide 21: Macro Trends to Leverage
MACRO TRENDS TO LEVERAGE For personal use only CHINA DEMAND FOR SUSTAINABLE PROACTIVE CARE EXPORT NATURAL SOLUTIONS Global Face Mask Market expected to reach $8.8B in 2021 China middle-class Global Organic Personal Care Renew | Reuse | Recycle population projected to Market projected to reach China
Slide 22: No. 1 Australian Cosmeceutical Brand
NO. 1 AUSTRALIAN COSMECEUTICAL BRAND For personal use only CORE MASK CHINA EXPORT INNOVATION DEMAND REJUVENATION EXPANSION ETERNAL YOUTH REVERSADERM COSMECEUTICAL BENEFITS LINE SMOOTHING COMPLEX #2 sub-brand launched by 10X versus YA following range Over 300,000 Export demand fuels McPherson’s in 20
Slide 23: China Sales Fuel the Domestic/Export Virtuous Cycle
CHINA SALES FUEL THE DOMESTIC/EXPORT VIRTUOUS CYCLE For personal use only Total Pharmacy Dr. LeWinn's Line Smoothing Complex Growth % vs YA 50.4% 32.8% 12.9% -9.7% CHINA EXPORT Quarter To 22/10/17 Quarter To 21/01/18 Quarter To 22/04/18 Quarter To 22/07/18 DEMAND Source: IRI Market Measurement – Pha
Slide 24: Fast Growing Natural Skincare and Haircare
FA S T G R O W I N G N AT U R A L S K I N C A R E A N D H A I R C A R E For personal use only CHINA EXPORT INTERNATIONAL INNOVATION & DISTRIBUTION EXPANSION DEMAND EXPANSION DOMESTIC GROWTH INTERNATIONAL GROWTH Haircare: +16% growth MAT, accelerating +35% QTR Total Export : +117% CAGR ex. factory gr
Slide 25: Leaders in Beauty Tools and Hair Accessories
LEADERS IN BEAUT Y TOOLS AND HAIR ACCESSORIES For personal use only CORE DISTRIBUTION SMART REJUVENATION EXPANSION TECHNOLOGY Packaging Rejuvenation +16% sales growth New Rechargeable Facial Cleansing Brush +0.4 ppt share gains 15 new lines accepted +$2M annual retail sales Youthful & Sophisticated
Slide 26: Manicare Sonic Launch Campaign
MANICARE SONIC LAUNCH CAMPAIGN For personal use only
Slide 27: No. 1 Cotton Brand
NO. 1 COTTON BRAND For personal use only CORE DISTRIBUTION SUSTAINABLE CATEGORY REJUVENATION EXPANSION INNOVATION EXPANSION 55% Share of Cotton Category +12% growth in a flat Plastic alternatives High growth categories #1 Cotton Tips category Bio-degradable materials adjacent to skincare and +0.8ppt
Slide 28: No. 1 Bags, Wraps & Foil
NO. 1 BAGS WRAPS & FOIL For personal use only $112M #1 51% 18% Aluminium Foil, Kitchen Tidy, of Australian Households Retail Sales Value Garbage Bags, Baking Paper have purchased a Multix product within Unprompted Awareness and Freezer Bags the last year Source: IRI Market Measurement – Scan, Data t
Slide 29: A Strong History of Innovation
A S T R O N G H I S TO R Y O F I N N O VAT I O N For personal use only Carrum First tidy, garbage Drawstring factory burns Star seal bag and freezer bags garbage bags down, launched in retail launched 1971 1975 1980 1984 Business started 1973 Multix sold to 1978 Multix wins 1982 Tear off 1989 by Cho
Slide 30: Building a Greener Future
BUILDING A GREENER FUTURE For personal use only
Slide 31: Leading Innovation in a Large Tired Category
L E A D I N G I N N O VAT I O N I N A L A R G E T I R E D C AT E G O R Y For personal use only Multix Greener Brown Baking Paper 15m Unbleached and chlorine free; sourced from plantation forest New Compostable Tidy Bags Made from GMO free Corn Starch… even the worms can eat them! Multix Greener
Slide 32: Growing Again & Driving the Category Growth
G R O W I N G AG A I N & D R I V I N G T H E C AT E G O R Y G R O W T H For personal use only First to Market Incremental Innovation Ranging • Multix Greener range • Multix share gains Feb launched Feb 2018 - Jul 30.2% to 32.3% • Product range includes • 15 incremental sku’s Kitchen Tidy, Alfoil, Ba
Slide 33: Major ATL Brand Campaign
M A J O R AT L B R A N D C A M PA I G N For personal use only • New CHOOSE WISELY TV & Digital Brand Campaign • Featuring Multix Alfoil and Multix Greener • $1.6M Media Spend • Reach: 65% Main Grocery Buyers up to 8 times • 6 weeks on air commencing 12 August Source: IRI Market Measurement – Scan, D
Slide 34: Multix Leading Innovation with a First Mover Sustainability Drive
M U LT I X L E A D I N G I N N OVAT I O N W I T H A F I R ST M OV E R S U STA I N A B I L I T Y D R I V E • Multix market leadership with first to market innovation “Greener” supported by strong in-store activation For personal use only 22/08/2018 2018 MCPHERSON’S FULL YEAR RESULT PRESENTATION 34
Slide 35: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Approach to strategic customer partnership delivering outcomes (channel expansion of Manicare into Grocery) For personal use only • Formalised Top to Top Meetings with Customers and Suppliers • Structure and engaged joint business planning t
Slide 36: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS For personal use only • Consumer led exclusive retailer offers driven by category trends, insights and demand. Exclusive Pack Sizes and First to Market Retailer Offers Differentiated Gift Sets 22/08/2018 2018 MCPHERSON’S FULL YEAR RESULT PRESE
Slide 37: Digital Content Amplification
D I G I TA L C O N T E N T A M P L I F I C AT I O N For personal use only RETAILER AMAZON DIGITAL PRESENCE PARTNERSHIPS OPPORTUNITY 700+ products syndicated YOY +250% increase in digital presence & 852 Amazon product listings media: 800k+ impressions on retailer websites 10X increase since January 2
Slide 38: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS For personal use only 22/08/2018 2018 MCPHERSON’S FULL YEAR RESULT PRESENTATION 38
Slide 39: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Incremental ranging and channel expansion in over 1,000 doors across both Grocery and Pharmacy For personal use only • 45,000 incremental distribution points • Chemist Warehouse: 55 new SKU’s, 22.6k incremental distribution points Vs YA • 11
Slide 40: Pre Capex Investment Look
PRE CAPEX INVESTMENT LOOK For personal use only Chemist Warehouse Hillsdale, NSW – Before shots of Essential Beauty areas
Slide 41: Investment in Real Estate, ROI in 12 Months
+ 4 5 % I N V E S T M E N T I N R E A L E S TAT E , R O I I N 1 2 M O N T H S For personal use only CATEGORY LEADERSHIP MERCHANDISING • Implementing in 125 high performance Chemist Warehouse stores in 2018 • High impact within front of store high traffic areas • Ease of shopper shelf navigation • Fu
Slide 42: Outlook
For personal use only OUTLOOK 22/08/2018 2017 ANNUAL GENERAL MEETING 42
Slide 43: Strategy Focus Areas
ST R AT E GY F O C U S A R E A S For personal use only FOCUS ON CORE 6 OWNED Explore new BRANDS product growth platforms DRIVE VALUE Move to strategic FROM GEOGRAPHIC customer and supplier FOOTPRINT partnerships 22/08/2018 2018 MCPHERSON’S FULL YEAR RESULT PRESENTATION 43
Slide 44: Brand Strategy Focus Areas
B R A N D ST R AT E GY F O C U S A R E A S • Major new product launches for Dr. LeWinn's and A’kin For personal use only FOCUS ON CORE 6 OWNED BRANDS • Continued A’kin skincare range expansion with double share of shelf • Step-change Dr.Lewinn’s Mask participation • Continue building eco platform wi
Slide 45: Explore New Product Growth Platforms
E X P LO R E N E W P R O D U C T G R O W T H P L AT F O R M S CAPABILITY & CAPACITY (430 FTE’s) = THE MCP MACHINE...IS OPEN FOR (SELECTIVE) BUSINESS! For personal use only Consumer & Business Intel. R&D Sales & Marketing Supply Chain •2X Investment IN CI & BI •11 FTE’s / Specialists •26 FTE’s KAM’s,
Slide 46: Export Channel Models
EXPORT CHANNEL MODELS (FROM 1 TO 10 FTE’S) China Nth Asia Sth Asia UK Dubai For personal use only % Chg vs YA FY18 3X 100% Incremental 100% Incremental 25% Flat Establish cross border e-comm. Capture new Export Mkts Utilise Singapore hub to capture new High Penetration High Penetration trading model
Slide 47: So Are We Poised for Growth?
For personal use only So Are We Poised for Growth? 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION
Slide 48: Platform for FY19
P L AT F O R M F O R F Y 1 9 Exclusively focused on growing in $13.0B Health, Wellness and Beauty categories For personal use only •Business well positioned to deliver growth with strong Capex & OPEX Management Accelerating MCP growth brands & selective premium agency partnerships • (Trilogy, Karen
Slide 49: FY17 & FY18 Geographical Sales Revenue Breakdown
F Y 1 8 & F Y 17 G E O G R A P H I C A L S A L E S R E V E N U E BREAKDOWN For personal use only Other 2017 NZ Singapore $5m 2018 NZ Singapore Other $6m $5m $4m China $9m 2% $8m 3% 2% China 2% $1m 4% $7m 4% 1% 3% Australia Australia $191m $186m 91% 88% (Includes $22m Fine Fragrances) (Includes $14m
Slide 50: Poised for Growth
For personal use only Poised for Growth 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION
Slide 51: Poised for Growth
For personal use only Poised for Growth 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION
Slide 52: Focussed on Growth
For personal use only Focussed on Growth 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION
Slide 53: Non-IFRS Measures and Disclaimer
M c P h e r s o n ’ s L i m i te d For personal use only Non-IFRS measures The non-IFRS measures used by the Company are relevant because they are consistent with measures used internally by management to assess the operating performance of the business. The non-IFRS measures have not been subject t