Slide 1: Mcpherson's Limited 1H20 results release
For personal use only Mcpherson’s Limited 1H20 th results release 19 february 2020 CREATING BETTER IN Health Wellness & Beauty
Slide 2: Agenda
Agenda For personal use only 1 Introduction – LAURIE MCALLISTER 2 1H 2020 Financial results – Paul Witheridge 3 CORE BRANDS – Donna chan 4 R&D – DONNA CHAN 5 Channel & CUSTOMER – Lori Pirozzi 6 ventures- David Fielding 7 Export – David fielding 8 NEW BUSINESS – brett owers 9 Summary and OUTLOOK – La
Slide 3: Health, Wellness & Beauty – A $17 billion market
HEALTH, WELLNESS & BEAUTY – A $17 billion market For personal use only health WELLNESS beauty ($4.9 Billion, +3.9% vs YA) ($5.7 Billion, +3.8% vs YA) ($6.5 Billion, +2.8% vs YA) The intent of enhancing and restoring health Maintain the state of good health by pro- The subjective enhancement of physi
Slide 4: Strategic business imperatives
strategic business imperatives For personal use only Refocus McPherson's on Health, 1 Wellness & Beauty with 6 Create a China facing business sustainability and people at the core Ensure we have our team fit for the 2 Revitalise our own McPherson’s brands 7 future with appropriate expertise, capabil
Slide 5: 1H 2020 Financial Results Highlights
Mcpherson’s A’KIN 1H 2020 Cellular Radiance Booster Oil For personal use only FINANCIAL RESULTS HIGHLIGHTS 5
Slide 6: 1H20 sales revenue breakdown by product category
1H20 SALES REVENUE BREAKDOWN BY PRODUCT CATEGORY Sales revenue from owned brands increased by 13% For personal use only Owned brands: 1H20 $m 1H19 $m % change Comments • Strong export and domestic sales of Dr. LeWinn’s Skin, Hair and Body 28.7 15.1 90% • Domestic growth for A’kin • Growth in Manicar
Slide 7: Rapid growth in Dr. LeWinn's China revenue
RAPID GROWTH IN DR. LEWINN’S CHINA REVENUE For personal use only DLW China to Total Owned Brands Sales DLW China Sales % DLW to Owned Brands $16m 13.8% 14% 13.0% $14m 1H20 $13.9m 12% $12m 2H19 $12.5m 10% $10m 8% $8m 6% $6m 3.7% $4m 4% 2.4% 1H19 $3.7m $2m 0.9% 2% 2H18 1H18 $2.2m $0m $0.9m 0% 1H18 2H1
Slide 8: Strong growth in Dr. LeWinn's domestic revenue
STRONG GROWTH IN DR. LEWINN’S domestic REVENUE For personal use only DLW Domestic to Total Owned Brands Sales DLW Domestic Sales % DLW to Owned Brands $18m 2H19 20% $16.8m $16m 18% 17.5% 16% $14m 2H18 1H20 14% $12m $11.2m $11.2m 12% $10m 11.7% 1H19 10% $7.5m $8m 9.8% 8% 1H18 $6m $5.1m 7.4% 6% $4m 5.
Slide 9: Bridge of 1H19 to 1H20 sales
BRIDGE OF 1H19 TO 1H20 SALES $M For personal use only $140 $130 Increase in Dr. LeWinn's Increase in Domestic Manicare $120 Increase in sales sales Dr. LeWinn's $3.7m $0.3m sales to ABM Trilogy & $10.2m $110 Karen Murrell 1H20 Decrease in ($6.3m) $106.0m Multix sales Decrease in Others ($3.5m) Priva
Slide 10: Bridge of 1H19 to 1H20 PBT
BRIDGE OF 1H19 TO 1H20 PBT For personal use only $M $16 $14 EBIT from New Multix Leasing Std EBIT from $1.4m $0.5m DrLeWinn's $12 growth $4.5m Adverse AUD/USD $10 Trilogy & impact (ex Seed Karen Multix) investment 1H20 Murrell STI & LTI $8.5m ($1.4m) in Joint ($1.3m) expense Singapore Ventures $8 ($
Slide 11: Balance sheet
BALANCE SHEET ❑ Net debt excluding lease liabilities has remained For personal use only stable at $19.6m over the last 12 months 100 NET DEBT* ($M - 31 DECEMBER) ❑ Key additional investments in Aware ($3.0m), joint 90 ventures ($1.8m) and display stands ($1.0m) made 80 over last 6 months ❑ Gearing m
Slide 12: Cashflow
cashflow ❑ Seasonally low cash conversion of 47% due to: For personal use only i. High December 19 sales; OPERATING CASHFLOW BEFORE INTEREST ii. Build in skincare inventory to support future 18 AND TAX ($M) growth in export sales; and 16 iii. General seasonal increase in stock ahead of Chinese new y
Slide 13: 1H20 interim ordinary dividend
1H20 INTERIM ORDINARY For personal use only ❑ Interim ordinary dividend of 4.0 cents per share fully franked (1H19 4.0 cents per share) ❑ Payout ratio of 74% of 1H20 Earnings per Share ❑ Interim dividend payable 19 March 2020 ❑ Dividend reinvestment plan retained, 2.5% discount to VWAP re- introduce
Slide 14: Coronavirus: current status and diligent management of impacts
CORONAVIRUS: CURRENT STATUS AND DILIGENT MANAGEMENT OF IMPACTS 1. Staff For personal use only ▪ MCP Human Resources actively supporting staff, particularly those based in Hong Kong ▪ No incidence of staff infection with appropriate workplace and travel controls implemented 2. Product supply ▪ Majori
Slide 15: FY20: guidance maintained
fy20: guidance maintained For personal use only ❑ Solid 1H20 PBT outcome ❑ Good start to 2H20 ❑ No material impact from Coronavirus at this stage – monitoring situation closely ❑ Guidance of 10% increase in FY20 PBT vs FY19 maintained 15
Slide 16: Core Brands
A’KIN Australian Tea Tree Oil Detoxifying Mask For personal use only Mcpherson’s CORE BRANDS 16
Slide 17: Portfolio of leading brands
Portfolio of Leading Brands For personal use only #1 Australian cosmeceutical brand #1 beauty accessories #1 hair accessories #1 cotton #1 bags, wraps & foil #3 natural haircare 17
Slide 18: Leveraging macro trends
Leveraging Macro Trends CHINA DEMAND FOR SUSTAINABLE PROACTIVE HOLISTIC For personal use only EXPORT NATURAL SOLUTIONS SELF CARE WELNESS – China middle-class – Global Organic Personal – Renew | Reuse | Recycle | – Global Face Mask Market – Beauty & wellness market in population projected to Care Mar
Slide 19: Innovation driving sustainable growth
Innovation driving sustainable growth For personal use only MCP Core Brands NPD Accumulative Share % Rolling 3FY #1 Facial Skincare NPD in Pharmacy (MAT) Dr. LeWinn’s R4 Collagen Surge 26.0% #1 Facial Skincare NPD in Pharmacy (QTR) 20.5% Dr. LeWinn’s LSC Boosting Essence 15.3% #1 Hair Accessories Br
Slide 20: Leading sustainable innovation with Multix
Leading Sustainable Innovation with Multix For personal use only MCPHERSON’S FIRST TO MARKET GREENER COMPOSTABLE GREENER 60% PLANT BASED RE-USE ME & RECYCLED 80% Sustainable Market Share growing +70% 20
Slide 21: Earth Kind innovation with Swisspers
Earth Kind Innovation with Swisspers For personal use only MCPHERSON’S FIRST TO LAUNCH COTTON TIPS WITH SUSTAINABLY SOURCED PAPER STEMS Outpacing category growth extending market leadership by +1.6 share points 21
Slide 22: Category leadership innovation with Manicare
Category Leadership Innovation with Manicare For personal use only CLINICALLY PROVEN MASSTIGE INNOVATION ACCESSIBLE & AVAILABLE driving category growth extending market leadership by +1 share point 22
Slide 23: First to market innovation with Glam
st 1 to Market Innovation with For personal use only Glam MCPHERSON’S LAUNCHED THE MOST INNOVATIVE LASH TECH +15% mat GROWTH PROPELLING GLAM TO THE #1 LASH BRAND 23
Slide 24: Consumer driven innovation with Lady Jayne
Consumer driven innovation with Lady Jayne For personal use only 5 STAR RATED DETANGLING INNOVATION Flexi Glide #1 Brush NPD extending market leadership by +1 share point 24
Slide 25: Bio-degradable innovation with A'kin
Bio-degradable innovation with A’kin For personal use only MADE FROM 100% NATURAL EUCALYPTUS FIBRES Top 5 natural sheet mask in Priceline attracting 23% new users to the category 25
Slide 26: Powerfully effective innovation with Dr. LeWinn's
Powerfully effective innovation with Dr. LeWinn’s For personal use only #1 NPD #1 NPD in last in latest 12 Quarter Months #1 value growth brand within facial skincare & fastest growing top 10 brand +41% gaining 1% share 26
Slide 27: R&D investment fuelling growth in sales and marketing
R&D INVESTMENT FUELLING GROWTH IN Sales and Marketing For personal use only Capability Process Investment in Internal Develop strong external resources partnerships 2 PhD degrees & 4 Masters degrees in Science Portfolio Quality Focus Regulatory Role Clarity Bachelor Degrees in Biochemistry, balance
Slide 28: R&D investment fuelling growth in sales and marketing
R&D INVESTMENT FUELLING GROWTH IN Sales and Marketing fy20 fy19 For personal use only fy18 Sustainability Pillar New Eco offerings Expanded sustainable Leadership in new Implementation Sustainable product portfolio categories options Natural Personal Care Accelerated Dr LeWinn’s New exciting categor
Slide 29: Outpacing pharmacy channel growth by 20x
Outpacing pharmacy channel growth by 20x For personal use only Australia Pharmacy Dollars Growth % YA Total Defined Pharmacy Total McP Core brands 18.0 16.3 16.0 14.0 11.6 12.0 10.0 9.2 8.7 8.0 6.0 4.0 2.1 2.0 0.8 0.0 0.0 0.0 -2.0 Qtr to 03/03/19 Qtr to 02/06/19 Qtr to 01/09/19 Qtr to 01/12/19 29
Slide 30: 2020 innovation
2020 INNOVATION NEW For personal use only CLINICALLY PROVEN^ INNOVATION Australian Bio-Active Marine Algae ProRenew CLR™ Probiotic Complex* Dermatologist Tested ^Results based on a 1 week clinical study of the Recoverëderm™ range as part of an independent laboratory study * Applies to Day Cream, Nig
Slide 31: 2020 natural innovation
2020 natural INNOVATION For personal use only MIRACLE shine CONDITIONING HAIR MASK With Australian Avocado Oil, Australian Jojoba Oil & Squalene *Results based on independent laboratory testing 31
Slide 32: 2020 Innovation
For personal use only 2020 INNOVATION
Slide 33: 2020 sustainable innovation
2020 SUSTAINABLE INNOVATION For personal use only EARTH KIND FACIAL WIPES ✓ Bio-Degradable ✓ 100% plant based ✓ Widget made from recycled plastic 33
Slide 34: Channel & customer
For personal use only Mcpherson’s Channel & customer 34
Slide 35: Channel landscape overview
Channel Landscape Overview For personal use only Channel Performance PHARMACY GROCERY P&C Market & Retailer RETAILER SHARE SHIFTS PRICING AND PROMOTIONS RATIONALISATION Dynamics DIFFERENTIATION SUSTAINABILITY ONLINE Source: IRI Grocery National Panel – Shopper Panel MAT to 05.01.20 35
Slide 36: MCP bucking the retail macro trend
MCP bucking the Retail Macro trend For personal use only MCp H&B growth 5 X retail 1 performance Latest Qtr 2 Driving category growth 3 HIGH BRAND Relevance in market Source: MCP Ex-Factory sales - YTD July - December 2020 36
Slide 37: Delivering sustainable growth
Delivering Sustainable Growth For personal use only Core brand growth expansion execution • HW&B growth core 1.7 times the category FYTD • + 6968 Distribution points • +32K total Incremental distribution points expansion in Coles Lady Jayne, • HW&B Ex Factory +12% Manicare & Eylure • +3% improvement
Slide 38: Innovation fuelling in market performance
INNOVATION fuelling In Market Performance For personal use only NPD Launched in facial skincare latest #1 Qtr - Dr. Lewinn’s LSC Ampules #1 Brush NPD – Lady Jayne detangle Treatment NPD In CWH last 39 weeks – #1 miracle shine mask #4 Mask Brand in Priceline – Akin Skin 38 Data sourced from IRI Marke
Slide 39: Activations driving growth pharmacy
Activations Driving Growth Pharmacy For personal use only Beauty break Goody bag Promotion DRL $3.3M RSV $0.85M RSV DRL 14.1% share during promotional period DRL 9% Share during promotional Period 39 Source: IRI Market Measurement – Scan, Data during promotional period
Slide 40: Continued investment in real estate
Continued investment in Real Estate For personal use only Drive the core Support innovation Category Solution Off Location Stands Gondola Ends Launch Off locations 40
Slide 41: Activations driving growth in grocery
Activations Driving Growth in Grocery For personal use only ALDI SPECIAL BUYS manicare catalogue/Aisle Fin 85,000 units sold in one week $0.32M RSV during promotion 41 Source: IRI Market Measurement – Scan, Data during promotional period/MCP Ex Factory
Slide 42: Continued investment in real estate
Continued investment in Real Estate For personal use only Drive the core Support innovation 2 SKUs +10% vs Brand presence Multix Greener Swisspers $0.73M RSV Category 42 Source: IRI Market Measurement – Scan, Data during promotional period/MCP Ex Factory
Slide 43: Upweighted online presence customer partnerships
Upweighted ONLINE PRESENCE Customer Partnerships 1 For personal use only 25.5M chemist warehouse ad Impressions increase Ex factory sales to chemist 9% warehouse online yTD v LY increase Ex factory sales to priceline 154% online yTD v LY Total recycled range Multix sales in 28.4% woolworths, in 4 da
Slide 44: New Zealand stable and poised for growth
NEW ZEALAND Stable and poised for Growth For personal use only Core brand growth Expansion Partnering • +12% growth versus last year Ex • +600 Distribution points in Multix • Joint Business Planning with Key agency and swisspers Retailers – Pharmacy & Grocery . • +140.5% Growth on last year Dr. • +7
Slide 45: ANZ business growth pillars outlook
ANZ business Growth Pillars Outlook For personal use only New Retailers new channels Greater exposure IN STORE Leveraging Online retail Range and Investment Innovation HIGH CALIBRE TEAM Optimisation Drive growth from Innovation Rationalise the core LEAD in category Diligent Promotional effectiveness
Slide 46: Export
For personal use only Mcpherson’s export Dr lewinn’s Line Smoothing Complex S8 46
Slide 47: Expanding across Asia strategy
EXPANDING ACROSS ASIA strategy Continue to expand our presence geographically with a focus on Asia For personal use only Capabilities people Global coverage innovation 30 Dedicated Headcount for MCP npd Driven by health, Southeast Asian expansion Strong partnerships wellness & beauty Execution chann
Slide 48: Virtuous ABM China cycle
Virtuous ABM CHINA Cycle 良性循环 For personal use only Trusted Partnerships AUSTRALIA Speed To Market Agreed Business Model Flexibility To React To Change Appropriate Pricing Corridors Rigorous Processes China Continuity Of Supply Adaptable To Market Dynamics 48
Slide 49: Dr. LeWinn's – driving a virtuous cycle
DR. LEWINN’S – DRIVING A VIRTUOUS CYCLE For personal use only AUSTRALIA PHARMACY DR. LEWINN'S EXFACTORY SALES DR. LEWINN’S LINE SMOOTHING COMPLEX DOMESTIC VS EXPORT VALUE GROWTH % VS YA 100.9% 36.5% -0.9% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 MAT To 07/01/18 MAT To 06/01/19 MAT To 05/01/20 FY 20
Slide 50: ABM & Dr. LeWinn's joint venture
ABM & dr. lewinn’s Joint Venture For personal use only 1 HK based jv representing greater china (PRC) 2 Abm target: AUD$35 Mill annual purchases, AUD$82.5 over 3 yrs 3 Secures earnings from the china market 4 Significant upside opportunity for dr. lewinn’s 5 ABM & MCP exploring future potential acqu
Slide 51: ABM's accelerating growth journey
ABM’s Accelerating Growth Journey For personal use only + AUSTRALIA Reach: 20+ 澳大利亚 Countries Rapid Growth 750+ Employees Executed 500+ 2019 Revenue: Events in 2019 AUD $1.2 Bill China 中国 3 Million+ ABM’ers 3 global offices 51
Slide 52: Celebrating Success
For personal use only Celebrating Success 52
Slide 53: ABM / Dr. LeWinn's sales update
ABM / Dr. LeWinn’s Sales Update For personal use only Total December Sales rmb 38,970,000 (AUD 7,794,000) 5 th Dec 30 th Dec Launch of cny gift boxes 2 nd release of cny gift boxes Total sales in one day Total sales in one day Rmb 9,699,000 Rmb 9,454,000 (aud 1,939,800) (AUD 1,890,800) 53
Slide 54: ABM Dr. LeWinn's sales update
ABM Dr. LeWinn’s Sales Update For personal use only 3X 10,000 15,000 117% No. visitors on abm CNY gift boxes sold CNY gift boxes sold Total sales increase app (Dec ’19) out in 5 days out early jan compared with December 2018 54
Slide 55: Mcpherson's Ventures
For personal use only Mcpherson’s VENTURES 55
Slide 56: Research undertaken shows brand potential
For personal use only Research undertaken shows brand potential… The brand FY2020 key marketing activations Awards Premium deer milk skincare saw base ATL sales rise Campaign by 50% Distribution FY2020 Upcoming 342 148 activation doors doors Office sampling 2020 incremental distribution opportunitie
Slide 57: Research undertaken shows brand potential
For personal use only Research undertaken shows brand potential… Domestically AUSTRALIAN brand 3 out of 5 consumers open Purchase intent at awareness at 5% & to buying deer milk 70%+ with consumers growing skincare intending to buy multiple products INSIGHTS & in China In china deer milk seen as Ant
Slide 58: The brand China opportunity
For personal use only The brand China Opportunity Digestive remedies Growth +44.9% 16.7b CNY CAGR 2018-23 Laxatives Natural wellness Nutrition solutions 384m $70bn China’s emerging health and wellness CNY market will climb to nearly $70bn by 2020. Innovative Formats Active ageing Immunity Authentic
Slide 59: The brand opportunity
For personal use only Product THE BRAND OPPORTUNITY Millennial skin treatments & Tanning E-COMMErce $26.8BN Industry in AUS 115k 5k 1 In 10 items will be bought online in 2020 followers followers Beauty e-commerce Millennial consumer $100M+ 2BN Globally 15-34 Target audience want NaturaL, Specialty
Slide 60: New Business Development
For personal use only Mcpherson’s New Business development 60
Slide 61: Mergers & acquisitions activity
MCPherson’s MERGERS & ACQUISITIONS ACTIVITY • Business continues to review opportunities For personal use only Overview of Current opportunities being reviewed Health Wellness Beauty # of projects reviewed 25 49 41 # of live projects 5 3 5 61
Slide 62: Mergers & acquisitions activity
MCPherson’s MERGERS & ACQUISITIONS ACTIVITY • M&A remains a strategic priority for MCP For personal use only • +100 new business opportunities reviewed • Business being prudent on opportunities due to high valuations in categories Overview of Opportunities Taken to Due Diligence Health Wellness Beau
Slide 63: Summary and Outlook
For personal use only A’Kin Natural Australian Skincare Mcpherson’s SUMMARY AND OUTLOOK 63
Slide 64: Year strategy
3 year strategy For personal use only Focus on Explore new Move to strategic Drive value core 6 product growth Customer and supplier From geographic Owned brands platforms partnerships footprint End to end capability and capacity Strategic enablers Strong agency partners complement – supply chain, r
Slide 65: Summary and outlook
SUMMARY AND OUTLOOK 1 For personal use only STrONG brand and channel MIX –OWNED brands +13% vs 1h19 2 Exceptional demand for Dr. LeWinn’s in domestic / export channels 107% Strategic JV with ABM secures china growth. 3 Aware investment supporting supply chain 4 Investments in key capabilities suppor
Slide 66: Q&A
For personal use only 66 — Q&A