Kerry Group Plc · EURONEXT:KRZ
Kerry — FY 2023 Earnings Presentation
29 slides from Kerry's earnings presentation, Feb 15, 2024
Slide 1: FY 2023 Preliminary Statement of Results
KERRY FY 2023 Preliminary Statement of Results 15 February 2024
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, EBITDA, EBITDA margin, finance costs, tax rate, capital expenditure, dividends, share buybacks, cash
Slide 3: Edmond Scanlon, CEO and Marguerite Larkin, CFO
Edmond Scanlon Marguerite Larkin Chief Executive Officer Chief Financial Officer
Slide 4: Solid Overall Performance | Continued Strategic Development
SOLID OVERALL PERFORMANCE | CONTINUED STRATEGIC DEVELOPMENT Taste & Nutrition Dairy Ireland EBITDA Margin Cash Generation ROACE Volume growth Reflecting market Good expansion Strong performance In line with ahead of market – conditions expectation driven by foodservice Portfolio Evolution Organic In
Slide 5: Business Review: Taste & Nutrition Overview
BUSINESS REVIEW: TASTE & NUTRITION OVERVIEW VOLUME GROWTH 2023 Performance DRIVEN BY STRONG Revenue €6,975m +1.1%¹ FOODSERVICE PERFORMANCE EBITDA margin 17.0% +50bps → Volumes +1.1% given strong comparatives and challenging market conditions (Q4: +0.1%) T&N Volume Growth → Pricing +1.1% with inflati
Slide 6: Business Review: Performance by Region
BUSINESS REVIEW: PERFORMANCE BY REGION AMERICAS EUROPE APMEA €3.8bn €1.5bn €1.6bn FY: -1.8% | Q4: -1.9% FY: +2.9% | Q4: +0.8% FY: +6.2% | Q4: +3.1% → Overall volumes reflected customer → Good overall growth led by Dairy, → Performance led by Bakery, inventory management and strong Meals and Snacks E
Slide 7: Business Review: End Use Markets
BUSINESS REVIEW: END USE MARKETS +3% +7% Performance by EUM +2% +2% Food EUM achieved good broad-based growth → Meat – good growth across taste, texture and preservation systems → Snacks – led by savoury taste and TastesenseTM salt-reduction technologies Taste & Nutrition +2% End Use Market +2% Dair
Slide 8: Business Review: Dairy Ireland
BUSINESS REVIEW: DAIRY IRELAND PERFORMANCE 2023 Performance REFLECTED SIGNIFICANT Revenue €1,283m -6.5%¹ REDUCTION IN DAIRY MARKET PRICES EBITDA margin 4.2% -40bps → Volumes -6.5% reflected challenging market environment and constrained supply conditions (Q4: -7.5%) → Pricing -9.3% with reduced pric
Slide 9: Marguerite Larkin, Chief Financial Officer
Marguerite Larkin Chief Financial Officer
Slide 10: FY 2023 Financial Overview
FY 2023 FINANCIAL OVERVIEW Revenue €8,020m -0.9% volumes EBITDA margin 14.5% +60bps EBITDA €1,165m 2022: €1,216m +1.2% constant currency Adjusted EPS 430.1c -2.4% reported Basic EPS 410.4c 2022: 341.9c ROACE 10.0% 2022: 10.3% Free cash flow €701m 92% cash conversion © Kerry 2024 | 10 | Note: Alterna
Slide 11: Group Revenue Analysis
GROUP REVENUE ANALYSIS 2022 2023 -8.6% Translation Disposals Currency Volume Price -5.1% -2.9% Acquisitions -0.9% -0.7% +1.0% © Kerry 2024 | 11 |
Slide 12: Divisional Revenue Analysis
DIVISIONAL REVENUE ANALYSIS GROUP REVENUE 2023 TASTE & NUTRITION BUSINESS Regional Volume Growth -0.9% +1.1% Americas Europe APMEA €8,020m €6,975m 8.4% 8.1% 6.2% 6.2% -6.5% 2.9% €1,283m Group Dairy Taste & Ireland Nutrition Reported Revenue Volume Growth (1.8%) 2022 2023 © Kerry 2024 | 12 |
Slide 13: Group EBITDA Margin Bridge
GROUP EBITDA MARGIN BRIDGE +60bps €1,216m €1,165m 2022 Operating Leverage Net Price Accelerate Programme Currency Disposals net 2023 / Portfolio Mix Cost Initiatives of Acquisitions EBITDA 13.9% 0.0% (0.1%) 0.4% 0.0% 0.3% 14.5% Margin © Kerry 2024 | 13 |
Slide 14: Free Cash Flow
FREE CASH FLOW 2023 2022 €m €m EBITDA 1,165 1,216 Movement in average working capital 38 (201) Pension contributions paid less pension expense (13) (16) Finance costs paid (net) (66) (62) Income taxes paid (120) (80) Capital expenditure (net)¹ (303) (217) Free cash flow 701 640 Cash conversion² 92%
Slide 15: Recent Cash and Returns Development
RECENT CASH AND RETURNS DEVELOPMENT STRONG CASH DEVELOPMENT KERRY & SECTOR RETURNS FCF Cash Conversion ROACE COMMENTARY Target 80%+ Target range 10-12% 92% → 2023 returns impacted by currency 10.5% 10.3% (2023 CCY ROACE: 10.3%) 82% €701m 10.0% 84% €640m → Development in recent years reflects more ch
Slide 16: Capital Allocation – Balanced Deployment
CAPITAL ALLOCATION – BALANCED DEPLOYMENT DIVIDEND CAPITAL ALLOCATION FRAMEWORK 115.4c FY 2023 Dividend Capital Returns ~€200m Reinvestment Capital Investment Dividends 1986 2023 Long-term CAGR of 16% SHARE BUYBACK PROGRAMME Share M&A Buybacks Existing €300m Further buyback programme Nov 2023 – Apr 2
Slide 17: Good Debt Maturity Profile and Strong Credit Metrics
GOOD DEBT MATURITY PROFILE AND STRONG CREDIT METRICS MATURITY PROFILE OF NET DEBT Total Net Debt of €1.6bn Undrawn €1.5bn RCF €973m €751m €745m €26m €16m 2023 2024 2025 2028 2029 2031 €907m Weighted average maturity of debt is 4.8 years Key Credit Metrics 2023 2022 Net debt: EBITDA 1.5x 1.8x EBITDA:
Slide 18: Other Financial Matters
OTHER FINANCIAL MATTERS Finance Costs €50m (2022: €66m) reflective of cash generation and interest income Pension Net surplus of €48m → Profit on disposal of Sweet Ingredients Portfolio Non-Trading Items → Accelerate Operational Excellence Programme Input Costs H1 inflation turned to deflation in H2
Slide 19: Edmond Scanlon, Chief Executive Officer
Edmond Scanlon Chief Executive Officer
Slide 20: Strongly Positioned for Growth and Margin Expansion
STRONGLY POSITIONED FOR GROWTH AND MARGIN EXPANSION Key Growth Differentiators Strong Margin Expansion 20%+ Sustainable Deflation T&N Margin Nutrition Target Operational Efficiencies 18%+ Group Operating Leverage, Target 17% Mix & Portfolio Foodservice T&N Margin Emerging Markets 2023 2026 © Kerry 2
Slide 21: Outlook and Future Prospects
OUTLOOK AND FUTURE PROSPECTS → Kerry’s recent strategic portfolio developments and geographical expansion strongly position the Group for continued market outperformance and good margin progression in the coming years → Kerry will continue to develop its business and portfolio aligned to strategic p
Slide 22: Appendix
KERRY Appendix
Slide 23: 2024 Outlook
2024 OUTLOOK Key items within Constant Currency Adjusted Earnings Per Share Growth Guidance¹ Volume growth Low-single digit EBITDA margin Good margin expansion Tax Rate Towards 15% Average shares in Issue ~174.1m Constant Currency Adjusted Earnings Per Share Guidance 5% to 8% growth © Kerry 2024 | 2
Slide 24: Revenue Components 2023
REVENUE COMPONENTS 2023 Transaction Translation Acquisitions Reported Volume Price Currency Currency / Disposals Growth Americas (1.8%) (0.1%) - (2.6%) (4.9%) (9.4%) Europe 2.9% 6.4% - (1.4%) (10.0%) (2.1%) APMEA 6.2% (1.0%) 0.1% (6.6%) (0.2%) (1.5%) Taste & Nutrition 1.1% 1.1% - (3.4%) (4.8%) (6.0%
Slide 25: EBITDA Margin by Business
EBITDA MARGIN BY BUSINESS 2023 2023 EBITDA 2022 2022 EBITDA Revenue EBITDA Margin Revenue EBITDA Margin €m €m % €m €m % Taste & Nutrition 6,974.9 1,185.9 17.0% 7,416.6 1,220.1 16.5% Dairy Ireland 1,283.4 53.4 4.2% 1,538.9 70.7 4.6% Eliminations/unallocated (238.0) (74.2) (183.6) (74.7) Group 8,020.3
Slide 26: EPS Reconciliation
EPS RECONCILIATION 2023 2022 Growth € cent € cent Basic EPS 20.0% 410.4 341.9 Brand related intangible asset amortisation 29.5 28.7 Non-trading items (net of related tax) (9.8) 70.0 Adjusted EPS (2.4%) 430.1 440.6 Impact of exchange rate translation 3.6% Adjusted EPS growth in constant currency 1.2%
Slide 27: Total Net Debt as at 31 December 2023
TOTAL NET DEBT AS AT 31 DECEMBER 2023 Debt @ Floating Rates @ Fixed Rates €m €m €m Euro 2,305 30 2,275 Sterling 9 9 - US Dollar 201 201 - Other 33 33 - Gross debt 2,548 273 2,275 Cash (944) (944) - Total net debt 1,604 (671) 2,275 Gross debt 31 December 2023 11% 89% Gross debt 31 December 2022 14% 8
Slide 28: Financial Metric Definitions
FINANCIAL METRIC DEFINITIONS Volume Growth Free Cash Flow This represents the sales performance year-on-year excluding Free cash flow is EBITDA plus movement in average working pass-through pricing on input costs, currency impacts, capital, capital expenditure net (purchase of assets, payment of acq
Slide 29: Questions and Answers
KERRY Questions and Answers