Brambles Limited · ASX:BXB
Brambles — Investor Day (September 2021)
83 slides from Brambles's investor day presentation, Sep 14, 2021
Slide 1: ASX cover letter: 2021 Investor Briefing Day 2 Presentations
Brambles Limited ABN 89 118 896 021 Level 10, Angel Place, 123 Pitt Street Sydney NSW 2000 Australia GPO Box 4173 Sydney NSW 2001 Tel +61 2 9256 5222 Fax +61 2 9256 5299 www.brambles.com For personal use only 14 September 2021 The Manager - Listings Australian Securities Exchange Limited Exchange Ce
Slide 2: Day 2 Investor Day
For personal use only Day 2 Investor Day 14 September 2021 2021
Slide 3: Day 2 agenda
2 Sydney London Presentation Presenter Day 2 18:00 9:00 CHEP Europe David Cuenca, President CHEP Europe For personal use only agenda 18:40 9:40 Q&A CHEP Latin America Paola Floris, President CHEP Latin America Q&A 19:15 10:15 BREAK 19:20 10:20 CHEP North America Laura Nador, President CHEP North Ame
Slide 4: Financial numbers and format
3 Financial For personal use only numbers and Unless otherwise stated: format • All currency amounts are in US dollars • All historical dollar amounts are at actual foreign exchange (FX) rates • All outlook statements are at fixed 30 June 2021 FX rates • Year-on-year percentage growth rates are in c
Slide 5: Disclaimer
4 Disclaimer For personal use only 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
Slide 6: CHEP Europe Investor Day
For personal use only CHEP Europe Investor Day David Cuenca 2021 President, CHEP Europe
Slide 7: CHEP Europe overview
6 CHEP Europe For personal use only overview ~US$1.8b revenue Network advantage underpins the strength of the European business CHEP Nearest Europe competitor FY21 revenue US$1.8bn ~US$290m 3% 10% Employees ~3,100 ~300 Delivery Revenue by ~315,000 ~28,000 product line points Service centres ~300 ~13
Slide 8: CHEP is the market leader in Europe
7 CHEP is the market European pallets markets competitive maturity For personal use only leader in Europe Significant growth opportunities within existing markets European Pallets Market Share Pallet 178m 159m 82m 179m 79m 110m 165m 539m 1.5b Units1 14% 6% 21% 40% 24% 57% 21% 56% 69% 67% 20% 84% 1%
Slide 9: FY21 Performance
8 FY21 For personal use only Performance • COVID-19 and Brexit created disruptions in supply chain with elevated and Proven business resilience with unpredictable demand patterns and higher inventory balances to de-risk supply chains strong financial and business – Supported our customers to keep th
Slide 10: Sales performance and outlook
9 Sales performance and outlook For personal use only History of resilient sales performance driven by mix of portfolio, pricing mechanisms and multiple avenues for growth Add a graphic / photo: Ideally something on customer or a History of resilient sales performance CHEP Europe sales growth outloo
Slide 11: Growth in Germany
10 Growth in Germany Market Position and Growth Objectives For personal use only Central Eastern Product Revenue (US$m) Market Share % Objective Europe Full-size ~110 27 Grow at double-digits each year, through segmented pricing A clear strategy to drive Grow and defend through best- Half Display ~2
Slide 12: Automotive
11 Automotive For personal use only Electric vehicles (EV) and supply chain visibility are key customer priorities we are addressing CHEP Auto Strategic Response • CHEP’s electric vehicle programme launched three years ago Original Equipment Manufacturer (OEM) Opportunities and Challenges and curren
Slide 13: Focus on transformation
12 Focus on For personal use only transformation European priorities to build on our competitive advantage to underpin future growth and sustain strong margin levels Customer Asset Efficiency & Digital Business Value Network Productivity Transformation Excellence
Slide 14: Unrivalled Customer Value
13 Unrivalled For personal use only Customer Value Extending our competitive advantage by improving the customer experience, differentiating service and leading on sustainability Customer experience Service differentiation Sustainability leadership • Reorganising customer service structure • ETA not
Slide 15: Network Productivity
14 Network Productivity For personal use only A range of cost and efficiency initiatives underpin sustainability of margins Plant automation Transport efficiency Agile networks • Ongoing investment in service • Manage relationship with • Addition of manufacturer and centre automation to improve 1,00
Slide 16: Asset Efficiency & Productivity
15 Asset For personal use only Asset Efficiency Control & Productivity Asset productivity ecosystem to drive improved cash flow and ROCI outcomes Asset Use of advanced data analytics to improve customer account productivity health and anomaly detection to proactively address potential Asset Digitisi
Slide 17: Business Transformation
16 Business For personal use only Transformation Ireland Targeted Field Diagnostics Northern Europe Continuous Field Diagnostics enabled by 5,000 tagged pallets 100,000 tagged pallets digital Data Analytics Data Analytics Driving real business benefits in Europe through supply Optimised service Cust
Slide 18: Business Excellence
17 Business For personal use only Excellence Investing in our people in order to better support future growth Health & Safety Future Skills & Talent Amazing Place to Work Effective Organisation • Safety Differently promotes a • Suite of learning and talent • Specific 2025 targets for Inclusion • Org
Slide 19: Summary
18 Summary For personal use only CHEP Europe well placed to create • Strong FY21 revenue growth with Underlying Profit shareholder value through leverage and improvement in ROCI demonstrating customer focus and growth, resilience of business digital transformation and cost • Operating environment an
Slide 20: September 2021 Investor Day
For personal use only 14 September 2021 Investor Day 2021
Slide 21: CHEP Latin America Investor Day
For personal use only CHEP Latin America Investor Day Paola Floris 2021 President, CHEP Latin America
Slide 22: CHEP's evolution in Latin America
21 Market entry Developing CHEP’s evolution 2018 Markets: 25% For personal use only in Latin America Colombia and of LATAM Peru revenue Diverse businesses at various points of maturity 2010 Central America Mature markets: CHEP LATAM 74% of LATAM FY21 revenue US$353m revenue 1998-1999 Employees ~700
Slide 23: CHEP is the market leader in Latin America
22 CHEP is the market Latin America Pallets markets competitive maturity For personal use only leader in Latin America Significant growth opportunities across the region Market pallet 57m 12m 75m 206m units1 29% 28% 1% 59% 9% 76% 70% 6% 63% <1% CHEP Pooling Modern trade CHEP growth Whitewood 35% mar
Slide 24: Established strong foundations for future growth
23 Established strong Improved financial outcomes… For personal use only foundations CAGR +14% Revenue momentum for future growth market share expansion and increased price realisation in 353 line with cost-to-serve and 327 314 inflationary pressures 295 Focus on asset control and pricing reflecting
Slide 25: Transformation in Latin America
24 Transformation For personal use only in Latin America Improving the customer experience and driving further asset and network efficiencies to support revenue growth, margin improvement and cash flow generation Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Pr
Slide 26: Sales performance and outlook
25 Sales performance For personal use only and outlook Enhanced Customer Value… • Commercial reorganisation to improve customers’ experience Ongoing revenue momentum driven by market share with a focus on value creation expansion and price realisation supported by an enhanced customer value proposit
Slide 27: Growth: double market share in Brazil by FY25
26 Growth: double market For personal use only share in Brazil by FY25 Market overview • Largest, most populated country Strategy to double market share in Latin America • Strong value proposition for Grow market share through expansion with major local (+200m inhabitants) manufacturers and retailer
Slide 28: Growth: increasing export volume
27 Growth: For personal use only increasing export volume Strategy to accelerate growth • Leverage superior value proposition: Increase fresh produce exports into North America, expand into other regions – expertise across borders within fresh and assess diversification into other export categories
Slide 29: Growth: Last Mile Solutions
28 Growth: Last Mile Solutions For personal use only CHEP is well positioned to capitalise on increasing demand for in-store solutions across Latin America Market pallet 7.4m Opportunity Point-of-sale platform Strategy to service market demand flows for point-of-sale solutions • Manufacturers seekin
Slide 30: Strengthening asset efficiency
29 Strengthening For personal use only asset efficiency Digitising assets and data Asset Control & Productivity: Changing customer behaviour: Through digital, advanced data analytics: • Improved customer declaration • Legal action to enforce legal title analytics and enforcing legal title • Stray po
Slide 31: Excellence in supply chain
30 Excellence For personal use only in supply chain Strategic initiatives to improve network capacity and capabilities, optimise transport and increase automation San Martin Obispo Plant in Mexico • Automation and network expansion – Reduce manual interventions/labour dependence through • Largest se
Slide 32: Summary
31 Summary For personal use only Transformation to support • Consistent delivery of double-digit revenue growth over the past four years sustainable profitable growth, with material opportunities for further growth in the region improved customer service and increased financial returns • Actions tak
Slide 33: September 2021 Investor Day
For personal use only 14 September 2021 Investor Day 2021
Slide 34: CHEP North America Investor Day
For personal use only CHEP North America Investor Day Laura Nador 2021 President, CHEP North America
Slide 35: CHEP North America Overview
34 ~4,000 CHEP North America employees For personal use only Overview US$2.3b revenue Our scale and efficiency advantages enable us to serve most customers within 50 miles CHEP North America 2% FY21 revenue ~US$2.3b Employees ~4,000 Revenue Delivery points ~60,000 by product 45% line market share Se
Slide 36: Ongoing market volatility in FY22
35 Ongoing market For personal use only volatility in FY22 Lumber inflation Transportation shortages • Lumber surcharges • Deployed technological enhancements • Optimised sourcing strategies • Rationalised carrier base Range of pricing mechanisms and • Expansion of North American • Updated commercia
Slide 37: Pallet availability challenges, impacts and actions
36 Market Dynamics: Pallet • COVID-19 driven demand volatility • Severe labour shortages and transport capacity issues For personal use only availability • Lumber inflation and supply challenges driving pallet shortages across the market • Increased unauthorised reuse and sale of pallets driven by s
Slide 38: CHEP US margin improvement
37 CHEP US margin For personal use only improvement Initiatives CHEP US targeting to Supply chain cost out • Annual transport and network optimisation deliver ~0.5pt margin exercise undertaken US margins increased ~2 pts improvement in FY22 • Productivity cost improvements from FY19 to FY21 with not
Slide 39: Market leadership with enhanced capabilities to support future growth
38 Market leadership Unserved market addressability with enhanced capabilities For personal use only Near to Near to medium term: addressable with medium-term standard 48x40 wooden pallet, conversion to support future growth 37% to a 48x40 footprint, introduction of an 63% alternative 48x40 platform
Slide 40: Differentiated customer value proposition
39 Differentiated For personal use only Trusted Partnership customer value • Responsive during volatile market conditions (like COVID-19) via our advantaged network size and density proposition • Continued value creation for manufacturers and retailers, i.e. freight collaboration, empty mile reducti
Slide 41: A model positioned to deliver profitable volume growth
40 A model positioned For personal use only to deliver profitable volume growth Leveraging our pipeline of whitespace and expansion opportunities to grow our portfolio based on market attractiveness Protect Improve Grow Strategic partnerships Higher potential markets Higher value segments • Target m
Slide 42: Pricing transformation to deliver customer value
41 Pricing transformation FY19 FY22 FY25 For personal use only to deliver customer value Cost-to-serve analysis and ideal customer profiling and profitable growth Customer portfolio management Leveraging customer and market insights Surcharges to cover inflationary costs (lumber, transport, fuel) in
Slide 43: Ongoing revenue growth balancing volume and price
42 Ongoing CHEP North America Pallet Growth Opportunities For personal use only revenue growth Product Historical 4- year average Medium-term expectations Initiatives balancing Like-for-Like 2% ~1-2% • Strong partnerships with strategic customers through joint value creation volume and • Medium-term
Slide 44: North America Transformation initiatives
43 North America For personal use only Transformation initiatives Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Productivity • Customer collaboration • Asset productivity initiatives • Asset digitisation and • People, safety and sustainability productivity • Be
Slide 45: Automation building on success of Phase 1
44 Automation Continue automation programme to achieve further capacity and agility gains For personal use only building on FY22 FY24 FY25+ success of Phase 1 1 Further rollout current 2 Reducing Manual Effort 3 Minimal human touch FY18-FY21 investments supported technologies • Eliminates physically
Slide 46: Asset productivity
45 Asset For personal use only productivity Initiatives Transforming North America Changing • Targeted smart asset deployments by channel/customer Asset Productivity through customer • Channel pricing to cover higher costs and losses • Increase compensation for lost assets technology, process redesi
Slide 47: Enhanced customer value through digitisation
46 Enhanced customer value For personal use only through digitisation Leveraging data analytics and automation to enhance customer insights and value creation Digitise the Customer Experience Process automation Customer centric organisation New value creation optimisation myCHEP portal and process a
Slide 48: Summary
47 Summary For personal use only CHEP US delivering margin improvement despite significant challenges • CHEP North America largest contributor to Group growth • Organisational focus on asset productivity • Continued investment in automation and quality to improve safety, increase capacity, deliver c
Slide 49: Plastic pallets Investor Day
For personal use only Plastic pallets Investor Day Laura Nador 2021 President, CHEP North America Joaquin Gil Senior Vice President, FP&A
Slide 50: Costco and CHEP: a history of collaboration and partnership
49 Costco and CHEP For personal use only A history of collaboration and partnership Costco Pallet History The Beginning 2019-2021 Costco is one of our fastest-growing retail customers, Exclusive Plastic Pallets Stringer & Pooled Pallets and represents ~10% of our volume in the US Pallet Exchange Poo
Slide 51: Why Costco's supply chain is different to other retailers
50 Why Costco’s supply chain is For personal use only different to other retailers Pallets play an important role in Costco’s business given Out In their fast-moving, cross dock-based supply chain and their warehouse-style stores, where consumers shop directly from the pallet Costco’s decision to mo
Slide 52: Trialling new operating model for CHEP plastic vs. wood
51 Trialling new operating model for CHEP plastic vs. wood Testing Costco on-site pallet sortation and digital operating model to drive supply chain synergies, reduce risk and For personal use only support enhanced customer value Expected low damage rate on plastic pallets enables a retail sort-base
Slide 53: The UL approved, repairable CHEP plastic pallet
52 The UL approved, For personal use only repairable CHEP plastic pallet
Slide 54: Development of our plastic pallet
53 Development of our plastic pallet For personal use only Costco was a partner during every step of the product development journey. The pallet meets all Costco and regulatory requirements while being positioned for long term success 1 Pallet developed with Costco for their 2 We believe our plastic
Slide 55: Large-scale pilot in progress
54 Large-scale pilot in progress For personal use only Pilot with multiple manufacturers and Costco to test key operating and economic model assumptions and inform final recommendation Categories Fresh Sundries Hardlines Softline Other Pilot testing key variables of plastic pallet Food economics: De
Slide 56: Pricing and returns on plastic pallets dependent on key variables
55 Pricing and returns on plastic pallets dependent on key variables For personal use only Given the high capital cost of plastic pallets, low loss rates and driving operational costs savings are essential for a viable business case. Hence, plastic pallets are only suited to more closed loop, low lo
Slide 57: Decision criteria
56 Decision If returns are: For personal use only criteria • >15% ROCI - Proceed Forecast returns (ROCI) post roll-out • Single-digit ROCI - Don’t proceed (steady state, ~year 5) • ROCI between these two ranges, requires assessment of further opportunities to improve returns over the longer term For
Slide 58: Decision criteria: ROCI sensitivity
57 Decision criteria For personal use only ROCI is one of the key variables in Brambles’ decision criteria Key variables of expected return on investment in Costco plastic pallets are asset cost, loss rate and pricing Costco plastic pallet (at ~mid-point of unit cost1) Steady State (~year 5) ROCI se
Slide 59: What if Costco proceeds with plastic pallets
58 “What if“ For personal use only Costco proceeds with plastic pallets • Conversion to plastic pallets would be phased. Most likely over ~3 years • Short-term transition costs (for example pallet relocation costs) and and Brambles inefficiencies in the wood pool due to loss of Costco volume decides
Slide 60: Decision on investment in Costco plastic pallets expected in H2 FY22
59 Decision on For personal use only investment in Costco plastic • We are proud of our long and mutually successful partnership with Costco pallets expected • While we strive to meet our customers’ needs it is also important that we continue with a disciplined approach to capital allocation. Consis
Slide 61: September 2021 Investor Day
For personal use only 14 September 2021 Investor Day 2021
Slide 62: CHEP Asia-Pacific Investor Day
For personal use only CHEP Asia-Pacific Investor Day Phillip Austin 2021 President, CHEP Asia-Pacific
Slide 63: CHEP Asia-Pacific Overview
62 CHEP Asia-Pacific For personal use only Overview Developing markets: 13% Performance and potential across the portfolio of CHEP APAC revenue Developed Markets: ANZ • Strong and stable competitive market positions Mature • Ongoing system growth and attractive markets: incremental growth opportunit
Slide 64: Developed markets: Australia & New Zealand
63 Developed markets: For personal use only Australia & New Zealand Australia New Zealand Add a graphic /Products photo: • Multi product service offering driving • Multi product service offering driving <1% opportunities for accretive growth opportunities for accretive growth Ideally something on cu
Slide 65: RPCs: developed markets
64 RPCs: developed markets Retained and rebuilt a strong Improving performance and foundation for growth exploring potential For personal use only • Retention of key long-term • Considerable category volume contracts in New Zealand remains unserved in existing Significant incremental growth opportun
Slide 66: Operational focus: Australia
65 Operational focus: For personal use only Australia Delivering ongoing competitive advantage and growth through relentless evolution and renewal Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Productivity • New and improved products • Collaborative customer as
Slide 67: Developing markets: South East Asia
66 Developing markets: For personal use only South East Asia Add a graphic / photo: Strengthening the foundations for ongoing growth Ideally something on customer or a Progress Performance service centre Products • Ensuring high customer retention • Mid to high single-digit revenue growth rates Wood
Slide 68: Developing markets: China
67 Developing markets: For personal use only Building foundations and options for investment- China worthy growth • Targeted growth with key retail, Market progressing on the path to pooling e-commerce, FMCG and logistics sectors • New leadership with entrepreneurial • Established pallet and support
Slide 69: CHEP Asia-Pacific summary
68 CHEP For personal use only Asia-Pacific summary • Protect and grow our strong market positions in developed markets and Well positioned to deliver profitable growth and strong unlock further value in developing markets returns with ongoing disciplined • Investments in optimisation of growing base
Slide 70: CHEP IMETA Investor Day
For personal use only CHEP IMETA Investor Day Phillip Austin 2021 President, IMETA
Slide 71: CHEP in IMETA
70 CHEP in IMETA 2010 US$263m For personal use only Turkey market entry Revenue A broad regional portfolio reflecting diverse business and market maturities generating profitable growth and sustained growth opportunities across the portfolio 2008 India market entry CHEP IMETA 1% FY21 revenue US$263m
Slide 72: Growth Environment in IMETA
71 Favourable market structures with increased modern trade Growth Environment Grocery sales by type of trade (2020, based on Retail Value) For personal use only in IMETA 34% 43% 40% Traditional Trade Modern Trade 98% Increasing growth momentum and further potential… 66% 57% 60% 2% FY21-FY25 South A
Slide 73: IMETA: developing markets
72 IMETA: Turkey Middle East India For personal use only developing • Leverage standardisation trend with key retailers to • Grow core business and markets as industries • Selectively target core business growth assuming markets grow core business solutions continue to mature appropriate commercial
Slide 74: Developed markets: Sub-Saharan Africa
73 CHEP SSA Value chain Developed markets: For personal use only Sub-Saharan Africa Forestry Milling Manufacturing Distribution Service centres Industry supply chain Continued profitable growth opportunities in First mile Mid mile Last mile Sub-Saharan Africa by leveraging strong position and expert
Slide 75: Developed markets: Sub-Saharan Africa
74 Developed markets: For personal use only Sub-Saharan Africa Relentless continuous improvement, Close partnerships and continuous Mitigating forward supply and cost risk to innovation and optimisation across the development with decision making maximise shareholder and customer value business driv
Slide 76: CHEP IMETA summary
75 CHEP IMETA For personal use only summary • Strong foundation for sustained performance and potential for ongoing growth A broad portfolio of diverse with a broad portfolio in developed and developing markets businesses and market maturities • CHEP's strong network in key markets gives a clear com
Slide 77: September 2021 Investor Day
For personal use only 14 September 2021 Investor Day 2021
Slide 78: Appendix
For personal use only 77 Appendix
Slide 79: Glossary
78 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: For personal use only ACI Average Capital Invested (ACI) is a twelve-month average of capital invested. (Average Capital Invested) Capital invested is calculated as net assets
Slide 80: Glossary
79 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: For personal use only Cobots Collaborative robot COLT CHEP Operations and Logistics Technology Constant currency/constant FX Current period results translated into US dollars at
Slide 81: Glossary
80 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: For personal use only FSC Forest Stewardship Council IBC Palletised containers used for the transport and storage of bulk products in a variety (Intermediate Bulk Container) o
Slide 82: Glossary
81 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: For personal use only NPS Net Promoter Score OEM Original Equipment Manufacturer RFID Radio Frequency Identification Device ROCI Underlying Profit divided by Average Capital
Slide 83: Investor Relations contact
82 Investor For personal use only Relations contact Raluca Chiriacescu Vice President, Investor Relations raluca.chiriacescu@brambles.com +44 7810 658044