Mcbride Plc · LSE:MCB
Mcbride — H1 2011-12 Earnings Presentation
41 slides from Mcbride's earnings presentation, Feb 9, 2012
Slide 1: Interim Results 2011-12
2011-12 Interim Results 9 February 2012
Slide 2: Introduction – Iain Napier, Chairman
Introduction Iain Napier - Chairman Passionate about Private Label 2
Slide 3: Introduction
Introduction • A satisfactory revenue performance in a challenging economic environment • Net debt within Board targets • Strategic initiatives on track • Board changes completed • Interim dividend maintained at 2.0p (2010: 2.0p) Passionate about Private Label 3
Slide 4: Summary – Chris Bull
Summary Chris Bull Passionate about Private Label
Slide 5: Summary
Summary • Revenue growth of 2% on a constant currency basis • Private Label market shares growing across Europe • “Refresh” initiatives delivering • Adjusted operating profit1 down 49% driven by time-lag in recovering previously announced increases in raw material input costs • Net debt of 1.9x annu
Slide 6: Financial review – Richard Armitage, Finance Director
Financial review Richard Armitage - Finance Director Passionate about Private Label 6
Slide 7: Financial headlines
Financial headlines 2011-12 2010-11 Y/Y 2010-11 Revenue at constant currency H1 H1 £412.8m, +2% Revenue (£m) 423.1 407.9 +4% growth EBITA (£m) 10.3 20.2 -49% 2010-11 H2 EBITA EBITA margin 2.4% 5.0% -2.6pts £8.8m, +17% growth Profit before tax (£m) 7.3 16.9 -57% Diluted earnings per share (pence) 3.0
Slide 8: Income statement
Income statement 2011-12 2010-11 Y/Y H1 H1 £m £m Revenue 423.1 407.9 +4% Gross profit 128.8 139.4 -8% Gross margin 30.4% 34.2% -3.8pts Distribution costs (28.2) (27.4) +3% Administrative costs (90.3) (91.8) -2% EBIT 10.3 20.2 -49% Net financing costs (3.0) (3.3) -9% Profit before taxation 7.3 16.9 -
Slide 9: Regional performance - Revenue
Regional performance - Revenue Constant Currency 2011-12 2010-11 Y/Y 2010-11 Y/Y £m £m £m UK 163.5 159.0 +3% 159.0 +3% Western Continental Europe 211.4 203.4 +4% 208.4 +2% Central and Eastern Europe 71.3 67.6 +5% 68.0 +5% Asia 5.1 5.3 -4% 5.3 -4% Sub-total 451.3 435.3 +4% 440.7 +2% Eliminations (28.
Slide 10: UK Household Private label Value and Volume share July – Dec 2011
UK Household Private label Value and Volume share July – Dec 2011 Volume share highest since July 2010 and value share highest since July 2009 35.0% Value Share Volume Share 30.0% 25.0% 20.0% 15.0% 10.0% Jul 10 2011 Aug 07 2011 Sep 04 2011 Oct 02 2011 Oct 30 2011 Nov 27 2011 Dec 25 2011 Source: Kant
Slide 11: Good Private Label momentum maintained in Household products across Europe
Good Private Label momentum maintained in Household products across Europe % change vs 2010 UK data 26 weeks to Dec 2011 France, Italy, Germany, Spain 52 weeks to Dec 2011 Sources: Kantar Worldpanel (UK) , Symphony IRI, GfK
Slide 12: Regional performance – Operating profit
Regional performance – Operating profit 2011-12 2010-11 Y/Y £m £m UK 5.4 8.3 -35% Western Continental Europe 6.2 12.8 -52% Central and Eastern Europe 2.3 3.4 -32% Asia 0.1 0.1 n/a Corporate costs (3.7) (4.4) +16% Total 10.3 20.2 -49% (1) Figures do not include adjusting items. Adjusting items includ
Slide 13: Movement in net debt June 2011 to December 2011
Movement in net debt June 2011 to December 2011 Net cash generated from Capital Payment to £m Opening net debt operations Other (1) expenditure Shareholders Acquisitions Closing net debt -50.0 -60.0 -70.0 2.2 -80.0 (10.8) -90.0 17.3 (8.3) (1.9) (83.7) (85.2) (1) Other includes tax, finance costs, pa
Slide 14: Material cost environment – stable for now
Material cost environment – stable for now Oil 130 120 110 100 90 • Oil dipped in May/June and has then remained 80 70 at around €110/barrel 60 50 • Ethylene dipped temporarily in July then has €/Barrel Act $/Barrel Act remained stable at around €1,100 per MT Ethylene • Euro has weakened from $1.43
Slide 15: ... our strategic sourcing is delivering real value
... our strategic sourcing is delivering real value PKO 250 • Strong negotiation and careful application of Index - July 2010 = 100 200 long contracts used to smooth feedstock 150 volatility creating some stability 100 50 • McBride scale enables long-term relationships with large-scale suppliers; 20
Slide 16: “Refresh” on track, additional benefits identified
“Refresh” on track, additional benefits identified • Supply Chain re-structuring delivering £7m annualised savings by FY14 • Operational Excellence programme implemented at all sites, with projects £5m gross savings (£1m net) identified identified and savings delivering ahead for FY12, on track
Slide 17: Refresh Strategy Implementation – Chris Bull
Refresh Strategy Implementation Chris Bull 17 17
Slide 18: Implementation roadmap: What we said
Implementation roadmap : What we said Within 12 months: Complete organisational changes Implement first Group-wide category investments Complete next phase of manufacturing rationalisation Perform Lean Manufacturing assessment at key sites Continue expansion in Developing and Emerging mark
Slide 19: Getting the cost base right!
Refresh Strategy Implementation - Getting the cost base right ! 19
Slide 20: What we have done: Manufacturing rationalisation
What we have done: Manufacturing rationalisation UK Liquids Machine Dishwashing Europe Summary of Project economics Consultation on Focusing of Machine closure of UK Dishwashing Household liquids site production in Europe One-off pre-tax exceptional concluded 19/10/2011 Impacted sites: charges
Slide 21: What we have done: Lean manufacturing
What we have done: Lean manufacturing Lean Manufacturing Reviewed Lean assessments completed • Direct labour improvements at all sites • Material usage improvement • Overhead savings Year 1 target savings of £1m confirmed with action plan Lean examples: Estimated cumulative benefit o
Slide 22: Winning in the marketplace!
Refresh Strategy Implementation - Winning in the marketplace ! 22
Slide 23: Private Label Trends: 2012
Private Label Trends: 2012 “Private labels are well positioned for future growth due to continued consumer quest for value, improved quality perception and – crucially for retailers – a means of avoiding direct price comparisons. Opportunities for additional investment in premium and niche range
Slide 24: UK Consumers are expecting to purchase more Private Label products
UK Consumers are expecting to purchase more Private Label products over the next 12 months Shopper intentions Dec 2011 Lowest price private label Standard private label Premium private label IGD ShopperTrack, base: all main shoppers, fieldwork Dec’11 24
Slide 25: Consumers are increasingly looking for value as part of weekly shopping
Consumers are increasingly looking for value as part of their weekly shopping strategies net % = expect to buy more in next 12 months - expect to buy less among past month users Shopper intentions Dec 2011 Lowest price Standard Premium Private Label Private Label Private Label IGD ShopperTrack, base
Slide 26: Winning in Core Growth Categories: J Sainsbury’s Trigger Cleaners
Winning in Core Growth Categories: J Sainsbury’s : Trigger Cleaners Category Growth Plan From To Merchandising, Promotion & Channel Plans Relaunch 26
Slide 27: Winning in mature Categories through category segmentation
Winning in mature Categories : through category segmentation Efficacy - Functionality Hand care Antibacterial Power degreasers Hand renewal Nail protection Vitamins Hypo allergenic Ecology Scent-sations 100% natural New brands Refills Floral secrets Destinations 27 27
Slide 28: Winning in Central and Eastern Europe
Winning in Central and Eastern Europe Dynamic expansion of discount and supermarket channels in the region: 450 Kaufland 375 Planned openings Current stores 1185 Lidl 880 1350 Tesco 1000 3000 Biedronka 1873 • In Central Europe: Forecast for Private Label to double by 2013 vs. 2010 base • Double digi
Slide 29: Winning in Central and Eastern Europe: Private Label +31%
Winning in Central and Eastern Europe Consumers buying into improved Private Label offer: Focused collaboration with top retailers Portfolio management based on Category Management Category based product innovations and extension Over 30 new references launched in FY 2011 McBride CEE Perform
Slide 30: Winning in new geography - Vietnam
Winning in new geography - Vietnam Big C Private Label personal care launch 30
Slide 31: Underpinned by a leaner, smarter and more connected organisation
And all underpinned by a leaner, smarter and more connected organisation Customers Product Development Supply Chain Building stronger Group leader Group leader of Supply strategic relationships of R & D appointed Chain Effectiveness at senior level and Footprint Categories identified appoint
Slide 32: KPIs
KPIs H1 H1 Dec 10 Dec 11 Organic revenue growth 0% 2% Private Label Penetration (1) 22.9% 23.1% Growth % Revenue D&E Geographies 9% 9% % Revenue Core & Future Growth Categories 45% 48% H2 2011 Overheads % Sales 22.5% 21.3% Margin Efficiency Fixed Asset Turnover 4.3 4.6 2.2% (2) Operating Margin 5.0%
Slide 33: Summary
Summary • Revenue growth of 2% on a constant currency basis • Private Label market shares growing across Europe • “Refresh” initiatives delivering • H1 FY12 v H2 FY11 adjusted operating profit growth of 17% • Expect to see continuing progress for remainder of the year (1) Figures do not include adju
Slide 34: Appendices
Appendices 34
Slide 35: Project “Refresh”: From Good to Great
Project “Refresh”: From Good to Great A Fundamental Business Review... Key Strategic Actions Competitive Competitive advantage & advantage & Acquisitions growth potential growth by category potential by • Organisational Change category Supply chain Acquisitions efficiency & • Category review footpri
Slide 36: The Private Label opportunity
The Private Label opportunity Private Label share Private Label Growth Drivers Western European markets % Value Share 18 Consumers seek value for money 16 14 Retailers continually looking to 12 differentiate offer and build loyalty 10 Demand for Private Major retailers require price-competitive Labe
Slide 37: Private Labels benefit in times of recession
Private Labels benefit in times of recession Private Labels gain and continue to grow share during and after recessions % Private Label share of UK packaged groceries 45 40 35 30 25 20 15 79 80 81 82 89 90 91 92 93 06 07 08 09 Source Kantar, Datamonitor 37
Slide 38: Private Label growth outperforming the market
Private Label growth outperforming the market Household Private Label vs TOTAL Household Market Growth 2002-2009 Poland Private Label Poland Household 60 West Europe Private Label West Europe Household % value growth 40 20 0 -20 2004 2005 2006 2007 2008 2009 2010 Source: Euromonitor International
Slide 39: Private Label is forecast to grow in all markets
Private Label is forecast to grow in all markets Note: Based on selected mature and emerging markets; f - forecast. Estimated shares of MGD sales; may exclude fresh produce. Source: Planet Retail Ltd - www.planetretail.net; partly based on Nielsen and GfK 39
Slide 40: The Private Label Business Model
The Private Label Business Model Consumers seek value for money Retailers continually looking to differentiate offer and build loyalty Demand for Private Label Opportunity to tender for Major retailers require price-competitive products retailer supply products to improve value stream Private Label
Slide 41: Cash Generation 2011
Cash Generation 2011 2011-12 2010-11 H1 H1 £m £m Cash generated from operations (1) 17.3 27.2 Other net outflows (10.8) (21.7) Free cash flow 6.5 5.5 Acquisitions (1.9) (3.1) Repurchase of own shares (1.1) - Payments to shareholders (8.3) (8.7) Exceptional items (2.3) (3.5) Exchange 5.6 (2.4) Debt i