Slide 1: McBride plc Interim Results Presentation: 22 February 2018
McBride plc Interim Results Presentation: 22 February 2018
Slide 2: Success in securing significant business wins validates our strategic direction
Success in securing significant business wins validates our strategic direction
Slide 3: Agenda
Agenda 1. Headlines 2. Commercial update 3. Financial results 4. Strategy actions 5. Outlook McBride plc 1 Interim Results Presentation: 22 February 2018
Slide 4: Headlines
Headlines • Revenues 2.2% higher at £368.4m • Disruptive industry dynamics: • Household +4.8%, including Danlind • rising costs in materials and labour • PCA Europe: lower by 9.6%, half from management actions • destabilising the supplier base, especially Germany • Adjusted operating profits £15.8m
Slide 5: Commercial update
Commercial update Rik De Vos McBride plc 3 Interim Results Presentation: 22 February 2018
Slide 6: Market development – Household
Market development – Household UK Germany France • Retail sales growth: food inflation • Favourable consumer sentiment, driving • Slight retail growth, food inflation • PL taking market share over brands PL market share gains in general • HH categories lower by 1%, with PL • HH categories in growth,
Slide 7: Market development – Personal Care & Aerosols
Market development – Personal Care & Aerosols UK France • Overall growth with PL taking market share from branders • Market under severe pressure across most categories: • Price deflation still present driving volume growth over value • Shave -6.2%, Deodorant -5.5% – price ahead of volume • Growth m
Slide 8: Competitive environment
Competitive environment • Sales price deflation still evident but signs • Some competitors struggling with of flattening out cost/price environment • Increasing cost pressures, leading to • Germany in particular has seen financial reduced customer offer: distress in HH suppliers • service levels • q
Slide 9: Performance – Household H1 revenues
Performance – Household H1 revenues Household • Household +1.8%, -3.4% excluding Danlind • Stronger Q2 – only one region not in growth 320 320 310 20.0 (23.3) (4.2) • Rate of sales weak in France (2.5) 300 15.2 and Poland 290 8.4 280 • Contract Manufacturing £m 270 260 284.4 292.8 298.0 +25% 250 240
Slide 10: Performance – PCA H1 revenues
Performance – PCA H1 revenues PCA • European PCA 12.1% lower, mostly volumes 90 • Includes 6% reduction from 85 80 1.8 3.4 deliberate ‘repair’ actions (7.0) 75 (3.9) (0.1) • Aerosols lower 17%, Liquids 70 £m 65 78.0 +5% 76.2 70.4 60 • Asia revenues +7.3%, mostly 55 50 Australia H1 FY17 Foreign H1 FY
Slide 11: Financial results
Financial results Chris Smith McBride plc 9 Interim Results Presentation: 22 February 2018
Slide 12: Financial headlines
Financial headlines • Revenues 2.2% higher at £368.4m • Exceptional items of £9.0m, mostly PCA • First half adjusted EBITA £15.8m, 31% • sale of Czech skincare business, lower than the strong first half of last net book loss £1.1m financial year, ROS lower by 2.0% • PCA asset impairments £6.2m • Gro
Slide 13: Income statement
Income statement Revenue Adjusted EBITA by segment Gross profit £m £m % 36.8% 35.8% 370.8 368.4 353.6 27.4 34.1% 24.6 22.0 1.0 2016/17 2017/18 -1.8 -2.3 H1 2016/17 FY 2016/17 H1 2017/18 -4.5 -3.6 -3.9 H1 2016/17 H2 2016/17 H1 2017/18 H1 H2 HH PCA Corporate (Constant currency) (Constant currency) • H
Slide 14: Income statement
Income statement Labour costs % of revenue Underlying finance charges Tax rate % Adjusted diluted earnings and overhead % of gross £m per share (p) profit 87.4% 85.2% 31.0% 31.0% 7.4 82.7% 30.0% 83.6% 5.7 3.4 3.5 5.2 19.9% 19.7% 2.2 19.0% 19.0% FY 2015/16 FY 2016/17 H1 2017/18 2016/17 2017/18 FY 201
Slide 15: Balance sheet and cash flow
Balance sheet and cash flow ROCE Cash flow from operations £m Net debt £m/debt cover x % 34.4 28.9 total 122.8 26.2 26.3 35.7 90.9 87.1 82.9 27.7% 75.7 2.3 14.3 1.7 1.6 24.0% 1.4 23.4% 20.6% 1.2 FY 2015/16 FY 2016/17 H1 2017/18 2015/16 2016/17 2017/18 Jun 16 Dec 16 Jun 17 Dec 17 ROCE H1 H2 Net debt
Slide 16: Other financials
Other financials Customer service levels Capex Group pension liability % £m £m 99.2% 98.8% 43.6 97.7% 97.8% 13.8 0.78 42.2 95.0% 0.77 10.6 0.77 37.2 7.7 6.8 0.74 4.5 32.9 0.73 32.3 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 2015/16 2016/17 2017/18 H1 H2 H1 H2 Funding ratio H1 H2 • Industry wide
Slide 17: Danlind a/s – post acquisition update
Danlind a/s – post acquisition update • Positive market and customer reaction • Broader product and technical impacts Q2 growth +20% – tablet volume +26% • Performance since acquisition on track, volumes better • Synergy expectations confirmed • Integration planning well advanced • Acquisition balan
Slide 18: Inflationary pressures
Inflationary pressures • Raw materials RM Index • feedstock trends Total • chemicals vs packaging HH PCA • UK and FX post Brexit Q4 Q1 Q2 Q3 Q4 Q1 Q2 • PCA vs HH FY16 FY17 FY17 FY17 FY17 FY18 FY18 • Labour inflation and shortage Oil – Brent $ Tin plate €/mt 70 1,400 • Distribution and freight 60 1,3
Slide 19: Strategy actions
Strategy actions Rik De Vos McBride plc 17 Interim Results Presentation: 22 February 2018
Slide 20: Reminder – Repair, Prepare, Grow
Reminder – Repair, Prepare, Grow Time horizon by calendar year • Strategy and objectives unchanged • Prepare phase in progress • Repair phase concluded • Accelerated Growth phase 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repair Prepare • Define and launch the five-year grow
Slide 21: Prepare phase… challenges
Prepare phase… challenges Prepare McBride will invest into its manufacturing assets and optimise its warehousing and distribution network. We will align the new organisational set-up aiming to institutionalise our new way of working with our people. We will provide a clear way forward for identified
Slide 22: Prepare phase – actions
Prepare phase – actions 1 Household and CoMan growth Household Contract Manufacturing • Growth evident from Q2, all but one region • Good traction on growing the CoMan business in growth (H1 HH +25%) • Competitive weakness resulting in structural • three new contracts/customers established growth in
Slide 23: Prepare phase – actions
Prepare phase – actions Key categories 2 • Auto Dishwash tablets Category • Laundry Capsules development • Fabric Conditioner Laundry Capsules Auto Dishwash Fabric Conditioner • Volumes +20% • Q2 +5%, H2 anticipated 23% • Volumes +16% • Production consolidation completed • Danlind impact positive •
Slide 24: Prepare phase – actions
Prepare phase – actions 3 Profitability: margin management • PCA business challenged by unequal cost pressures • Household margins: double impact of inflation and some price deflation • Four initiatives • cost efficiency projects, further simplification and production efficiency • structural improve
Slide 25: Prepare phase – diagnostic: PCA Europe
Prepare phase – diagnostic: PCA Europe 4 Underperforming businesses PCA Europe • Market development not supportive • flat to negative growth with some pockets of opportunity • increasing legal and environmental requirements • strong concentration of sales in UK and France • price deflation driven bo
Slide 26: Prepare phase – actions
Prepare phase – actions 4 Underperforming businesses PCA Europe 1. PCA “Repair phase” 2. PCA structural • In line with Household RPG strategy, parallel transformation plan programme was initiated in PCA • Since the Repair programme, now evident • Substantial reduction in customer, category that the
Slide 27: Outlook
Outlook Rik De Vos McBride plc 25 Interim Results Presentation: 22 February 2018
Slide 28: Outlook
Outlook 1. Second half focus on Household growth and PCA recovery 2. PCA Europe performance 3. PCA Europe – accelerated recovery plan 4. Danlind integration progressing well 5. Cost and margin pressures into H2 6. Investment programme on track 7. Medium-term financial target unchanged McBride plc 26
Slide 29: Appendices
Appendices 1. Income statement 2. Segmental reporting 3. Exceptional items 4. Balance sheet 5. Cash flow 6. Use of cash 7. Funding headroom McBride plc 27 Interim Results Presentation: 22 February 2018
Slide 30: Appendix 1: income statement
Appendix 1: income statement Constant currency(1) H1 2017/18 H1 2016/17 H1 2016/17 £m £m Y/Y £m Y/Y Revenue 368.4 360.6 2.2% 370.8 (0.6%) Gross profit 125.7 132.7 (5.3%) 136.5 (7.9%) Gross margin 34.1% 36.8% (2.7 ppts) 36.8% (2.7 ppts) Distribution costs (24.3) (23.8) 2.1% (24.6) (1.2%) Administrati
Slide 31: Appendix 2: segmental reporting
Appendix 2: segmental reporting Constant currency H1 2017/18 H1 2016/17 H1 2016/17 £m £m Y/Y £m Y/Y Revenue UK 80.6 79.7 1.1% 79.7 1.1% North 96.7 96.0 0.7% 99.9 (3.2%) South 40.8 39.2 4.1% 40.7 0.2% East 64.7 69.5 (6.9%) 72.5 (10.8%) Danlind 15.2 — n/a — n/a Household 298.0 284.4 4.8% 292.8 1.8% PC
Slide 32: Appendix 3: exceptional items
Appendix 3: exceptional items H1 2017/18 H1 2016/17 £m £m PCA strategic review 7.1 — Danlind acquisition costs 0.5 — Czech Republic based skincare business at Brno 1.1 — Total charged to operating profit 8.7 — Danlind banking refinancing 0.3 — Total charged to consolidated income statement 9.0 — McB
Slide 33: Appendix 4: balance sheet
Appendix 4: balance sheet 31 Dec 2017 31 Dec 2016 £m £m Y/Y Goodwill and other intangible assets 27.7 20.3 36.5% Property, plant and equipment 151.6 136.4 11.1% Other non-current assets 13.0 26.2 (50.4%) Working capital 50.1 26.2 91.2% Net other debtors/(creditors) (4.9) (4.8) 2.1% Provisions (4.3)
Slide 34: Appendix 5: cash flow
Appendix 5: cash flow H1 2017/18 H1 2016/17 Y/Y £m £m £m Adjusted operating profit 15.8 22.9 (7.1) Depreciation 9.7 9.7 — Share-based payments 0.7 1.2 (0.5) Additional cash funding of pension scheme (1.5) (1.5) — Operating cash flow before movements in working capital 24.7 32.3 (7.6) Movement in wor
Slide 35: Appendix 6: use of cash
Appendix 6: use of cash 70 Foreign Movement in Danlind acquisition exchange net debt £35.7 60 £1.1 £10.4 Acquisition of Danlind 50 40 Debt acquired £25.3 with Danlind £m £47.1 30 Cash utilisation total £24.6 £2.3 Exceptionals 20 £1.6 Financing cost Cash generated £2.6 Taxation from operations Capita
Slide 36: Appendix 7: funding headroom
Appendix 7: funding headroom 31 Dec Committed Facility 2017 headroom £m £m £m Committed facilities: – revolving facilities (June 2022) 155.3 (101.5) 53.8 – invoice discounting facilities 47.2 (34.9) 12.3 – other loans 1.7 (1.7) — 204.2 (138.1) 66.1 Uncommitted facilities 70.8 (15.2) (15.2) Total fac