Greencore Group Plc · LSE:GNC
Greencore — H1 FY2010 Earnings Presentation
27 slides from Greencore's earnings presentation, Mar 26, 2010
Slide 1: Interim Results for the half year ended 26 March 2010
Interim Results for the half year ended 26 March 2010
Slide 2: 2010 interim highlights
2010 interim highlights Highlights Patrick Coveney, CEO Financial Review Geoff Doherty, CFO Operating Review Patrick Coveney, CEO Outlook Patrick Coveney, CEO Q&A Open to the floor 2
Slide 3: Highlights
Highlights FINANCIAL BUSINESS • Strong Group performance* • Portfolio now focused on - Operating profit growth +43.0% Convenience Foods - Adjusted EPS growth +14.9% • Market growth and excellent • Strong margin accretion delivery underpinning strong sales and margin performance across • 41.6% reduct
Slide 4: Financial Review
Financial Review Geoff Doherty Chief Financial Officer 4
Slide 5: 2010 interim highlights
2010 interim highlights Versus H1 FY09 Revenue €434.5m +2.1% Operating profit* €27.7m +43% Operating margin* 6.4% +190bps Effective tax rate 18% +2% Adjusted EPS** 8.5c +14.9% Net debt €194.2m -41.6% * before exceptional items and acquisition related amortisation ** before exceptional items, acquisi
Slide 6: Convenience Foods
Convenience Foods Continuing €m H1 FY10 H1 FY09 %Change • Good sales growth - volume rather Revenue 397.0 374.0 +6% than price led Operating 25.9 19.6 +32% • 130 bps improvement in operating profit* margin driven by volume, Margin 6.5% 5.2% efficiency and productivity gains Discontinued €m H1 FY10 H
Slide 7: Malt
Malt Discontinued • Malt business disposed for total consideration of up to €116m €m H1 FY10 H1 FY09 %Change • Sharp decrease in year on year sales and operating profit Revenue 90.6 112.9 -20% Operating 9.6 11.7 -18% • Spot malt margins in decline, profit* indicative of malt earnings returning to lo
Slide 8: Ingredients & Property
Ingredients & Property Continuing • Represents a modest part of the Group, post Malt €m H1 FY10 H1 FY09 % Change • Comprises edible oils, molasses Revenue 37.5 51.4 -27% and surplus property trading Operating 1.8 (0.3) • Growth in operating profit driven profit/(loss)* by modest improvement in prope
Slide 9: Finance costs
Finance costs €m H1 FY10 H1 FY09 Interest (13.9) (12.3) Unwind discount to present value (0.1) (0.1) Finance cost* (14.0) (12.4) Pension (charge)/credit (0.1) 0.6 FX/fair value of derivatives (0.9) (22.2) Net finance (15.0) (34.0) * before fair value and pensions 9
Slide 10: Net exceptional gain from Malt & Water disposals
Net exceptional gain from Malt & Water disposals H1 FY10 exceptionals Profit/(Loss)* H1 Cash €m impact* Malt disposal 18.5 93.6 Water disposal (2.7) 14.1 Net increase in equity / cash 15.8 107.7 Recycling of FX** (7.3) n/a Net profit / cash 8.5 107.7 * Subject to adjustment in H2 in respect of compl
Slide 11: EPS and dividend
EPS and dividend €cent H1 H1 FY10 FY09 • Adjusted EPS up 14.9% Adjusted EPS 8.5 7.4 • Total dividend for FY10 expected Dividend per share to be within the 40 - 50% policy Interim proposed 3.0 3.0 range 11
Slide 12: Improving balance sheet
Improving balance sheet March March % • Strong operating profit 2010 2009 Change • Avoidance of exceptional Group net ‘hits’ 199.5 144.6 +38% assets (€m) • Reducing pensions deficit Net debt: 2.30 3.35 EDITDA (times) • Surplus on disposals 12
Slide 13: Cashflow
Cashflow €m H1 FY10 H1 FY09 EBITDA - continuing 38.3 30.0 Movement in working capital - continuing 3.8 (15.0) Payments into pension plans (net) (2.9) (2.5) Finance costs (net) (14.1) (13.6) Operating cashflow 25.1 (1.1) Capital expenditure (14.0) (13.1) Free cashflow 11.1 (14.2) Closing net debt 194
Slide 14: Action on pensions
Action on pensions Pension deficit • 17.6% year on year decline in net pension €m deficit 84.1 • A series of actions taken to address: • All pension provision is now via defined contribution arrangements 75.5 • All Defined Benefit schemes closed to future accrual with effect from 31 December 2009 69
Slide 15: Group return on capital employed
Group return on capital employed ROCE % 15.2% • Operating profit*/capital employed 14.8% • Capital employed is: - book value of shareholders equity 14.1% - net debt - exclude pension balances - exclude development land H1FY09 FY09 H1FY10 * calculated as total operating profit based on a 12 month rol
Slide 16: Summary - financial performance
Summary - financial performance • Strong performance in Convenience Foods • Solid Ingredients & Property performance • Adjusted EPS growth of 14.9% to 8.5 cent • Pension strategy demonstrating progress • 41.6% reduction in net debt • Improving return on capital employed 16
Slide 17: Operating Review & Outlook
Operating Review & Outlook Patrick Coveney Chief Executive Officer 17
Slide 18: Operating review
Operating review 1 Portfolio focused on Convenience Foods Excellent performance across 2 Convenience Foods business - Consumer recovery and growth - Industry capacity tightening - Greencore performance Sustained growth and investment in 3 Greencore USA 18
Slide 19: Our portfolio
1 Our portfolio • Transformation to a focused Convenience Foods business complete • Industry leading position in the UK, supplemented by emerging US business • Absolute clarity on what we do (and don’t do!) underpins all aspects of strategic, operational and commercial delivery • Chilled foods • Pri
Slide 20: Excellent performance across Convenience Foods business
Excellent performance 2 across Convenience Foods business • Consumers driving both volume and value growth Continuing business • Sales growth +6.1% • Industry capacity tightening • Operating profit growth +31.8% • Operating margin +130bps • Greencore gaining market shares and enhancing margins 20
Slide 21: Consumers driving growth
2a Consumers driving growth Accelerating market growth* 7.3% Driven by 6.9% • Consumers still demand convenience 5.4% • Increased ‘at-home’ eating • Out-performance by top 5 retailers and ‘out of town’ formats • Promotional intensity and ‘value innovation’ sustaining volumes - both are here to stay
Slide 22: Industry capacity tightening
2b Industry capacity tightening Ready meals market • Large players reshaping landscape • At least six facilities closed • More than 15% of industry Impact capacity removed* 1. Tight credit environment has curtailed capacity additions 2. Recent market growth has absorbed much of the available Food to
Slide 23: Greencore performance - sales
2c Greencore performance - sales Sandwiches +7.0% • Strong category performance in all core customers - extending number 1 position +5.5% • Drove up our share of Sainbury’s business by c.10% through category expansion and new delivery formats • New business wins including Dunnes Stores (Ireland) and
Slide 24: Greencore performance - margin
Greencore performance 2d - margin • Overhead costs rebased in all areas Benefit of FY09 • 5% indirect labour saving efficiency initiatives • Pay freeze across our factories, with senior management team taking 5% pay cut • Market growth and Greencore share gains have had positive impact Operational l
Slide 25: Sustained growth and investment in USA
Sustained growth and 3 investment in USA • Strong sales momentum sustained with underlying sales 27% ahead of the previous year • Food to Go represents a key growth driver, with fresh manufactured sandwiches replacing ‘made in store’ lines at two core customers • Broadening of relationships with our
Slide 26: Outlook
Outlook • Very strong trading in Convenience Foods in the first half of FY10 • The second half has started well and we remain on track to deliver good operating profit growth in FY10 in Convenience Foods • Reduction in Group interest expense following Malt and Water disposals • On track to deliver a
Slide 27: bringing convenience to good food
bringing convenience to good food. a 7 27