Kerry Group Plc · EURONEXT:KRZ
Kerry — H1 2007 Earnings Presentation
38 slides from Kerry's earnings presentation, 2007
Slide 1: the science of food
the science of food
Slide 2: Kerry - 2007 Interim Results Presentation
Kerry - 2007 Interim Results Presentation • Review of Business Hugh Friel • Financial Review Brian Mehigan • Business Growth Prospects Hugh Friel • Q&A
Slide 3: H1 2007: Performance Highlights
H1 2007: Performance Highlights • Like-for-like revenue growth of 5.6% • Trading margin increased by 20bps to 7.4% • Successful management of sustained input cost inflation • Trading profit growth of 6.2% to €172m • Adjusted EPS* up 7.1% to 58.8 cent • Interim dividend per share up 10.9% to 6.1 cent
Slide 4: Kerry Management of Food Industry Environment in 2007
Kerry Management of Food Industry Environment in 2007 • Sustained energy driven input cost increases • Focus on production / supply chain efficiencies • Cost recovery / pricing actions • Successful innovation / technology development • Product range optimisation • Continued industry leadership in he
Slide 5: H1 Business Review - Ingredients
H1 Business Review - Ingredients H1 2007 Like-for-like Revenue €1,611m 5.9% Trading profit €130m 7.8% • Like-for-like revenue growth +5.9% • Continued advantage through innovation across broad science and technology platforms • Margin improved by 10bps to 8.1% • 'Go-to-market' strategy sustained pro
Slide 6: H1 Business Review - Ingredients Americas
H1 Business Review - Ingredients Americas Americas H1 2007 Like-for-like Revenue* €644m 6.0% • Good cost recovery • Progress in simplifying business structure • Savoury technologies: good growth • Building on strong heritage in cheese and dairy flavour technologies • Nutrition NPD pipeline encouragi
Slide 7: H1 Business Review - Ingredients Europe
H1 Business Review - Ingredients Europe Europe H1 2007 Like-for-like Revenue* €656m 3.6% • Good performance but slower cost recovery • Progress through business efficiency programmes in UK, Germany and Italy • French savoury sector challenging • Dairy margin recovery • Fruit and sweet strong H1 perf
Slide 8: H1 Business Review - Ingredients Asia Pacific
H1 Business Review - Ingredients Asia Pacific Asia Pacific H1 2007 Like-for-like Revenue* €199m 14.6% • Strong business and regional market development • Growing demand for speciality nutritional products • Good performance through branded flavoured beverage products • Malaysia emulsifiers good grow
Slide 9: H1 Business Review - Consumer Foods
H1 Business Review - Consumer Foods H1 2007 Like-for-like Revenue €882m 4.5% Trading profit €56m 8.5% • Like-for-like revenue growth +4.5% • Good margin recovery • Key brands deliver above market growth • Successful NPD in premium categories • Chilled ready meals good growth year-on-year • Growing m
Slide 10: Financial Review
KERRY Financial Review
Slide 11: H1 2007 Financial Highlights
H1 2007 Financial Highlights Revenue €2,332m +2.9% Like-for-like revenue +€126m +5.6% Trading profit €172m +6.2% Trading margin 7.4% +20bps Adjusted EPS* 58.8 cent +7.1% Basic EPS 57.6 cent +7.1% Free cash flow €75m H1 2006: €20m Note: * before intangible asset amortisation and non-trading items
Slide 12: Revenue Analysis
Revenue Analysis H1 2006 H1 2007 €2,265m €2,332m +2.9% FX Translation Like-for-like Acquisition/Disposal (1.5%) +5.6% (1.2%) Note: like-for-like represents revenue growth before subsidiary translation and acquisitions / disposals impact
Slide 13: H1 2007 Revenue: Like-for-like % Growth
H1 2007 Revenue: Like-for-like % Growth Like-for-like Acquisition / Reporting Reported Growth Disposal Currency Growth Ingredients 5.9% 1.3% (3.1%) 4.1% Consumer Foods 4.5% (5.3%) 1.7% 0.9% Group 5.6% (1.2%) (1.5%) 2.9%
Slide 14: Revenue Growth by Business
Revenue Growth by Business H1 2007 H1 2006 Revenue Revenue Total Like-for-like Total Like-for-like Growth Growth Growth Growth - Europe* 4.0% 3.6% 2.8% 4.2% - Americas* 1.4% 6.0% 10.9% 5.5% - Asia Pacific* 14.3% 14.6% 9.1% 9.4% Ingredients 4.1% 5.9% 6.5% 5.0% Consumer Foods 0.9% 4.5% 6.6% 0.2% Group
Slide 15: Revenue Growth Components
Revenue Growth Components Like-for-like % Growth Like-for-like % Growth 6 5.6% H1 H1 FY 5 2007 2006 2006 4 3.5% 3.6% Volume 4% 3% 3% 3 2 Price 2% 1% 1% 1 Group 5.6% 3.5% 3.6% 0 H1 2007 H1 2006 FY 2006 Note: Like-for-like represents revenue growth before subsidiary translation and acquisitions / disp
Slide 16: H1 2007 Trading Profit: Like-for-like % Growth
H1 2007 Trading Profit : Like-for-like % Growth Like-for-like Acquisition / Reporting Reported Growth Disposal Currency Growth Ingredients 7.8% 1.1% (3.1%) 5.8% Consumer Foods 8.5% (3.4%) 1.5% 6.6% Group 8.4% (0.3%) (1.9%) 6.2%
Slide 17: Margin by Business
Margin by Business H1 2007 H1 2006 Trading Trading Revenue Profit Revenue Profit €m €m % €m €m % Ingredients 1,611 130 8.1% 1,547 123 8.0% Consumer Foods 882 56 6.3% 875 52 6.0% Eliminations / Unallocated (161) (14) - (157) (13) - Group 2,332 172 7.4% 2,265 162 7.2%
Slide 18: Interim Free Cash Flow
Interim Free Cash Flow 2007 2006 €m €m EBITDA* 225 216 Movement in working capital (64) (100) Capital expenditure (net) (39) (48) Finance costs (35) (35) Taxation (12) (13) Free cash flow 75 20 Dividends and share buy backs (230) (25) Acquisitions (13) (88) Note: * before non-trading items
Slide 19: Financial Ratios
Financial Ratios H1 2007 H1 2006 Debt : market capitalisation 38% 44% EBITDA : net interest* 6.0x 7.0x Debt : EBITDA* 2.8x 2.8x CFROI 11.8% 10.4% Note: * calculated in accordance with banking covenants
Slide 20: Other Financial Matters
Other Financial Matters • Finance costs Up €3m due to impact of rate increases and share buy back offset by cash flow impact. Average rate increase 1.2% v H1 2006 • Taxation Tax charge on continuing operations up to 20.8% (H1 2006: 20.2%) • Share buy back 10.8m shares acquired during the period at a
Slide 21: Outlook and Future Prospects
Outlook and Future Prospects
Slide 22: Ingredients Market Development
Ingredients Market Development • Development of Kerry's broad science, technology and applications capability to generate solid organic growth • Value creation through strong innovation platforms • Kerry best positioned for natural, health, nutrition, food safety and convenience trends • Asian marke
Slide 23: Consumer Foods Development
Consumer Foods Development • Key brands leading category growth • Underperforming non-core activities eliminated • Increased investment in NPD and brands • Business efficiency programmes and pricing actions to manage cost inflation • Continue to build on strong customer relationships and national di
Slide 24: Outlook: Future Prospects
Outlook: Future Prospects • Expect good outturn for full year • Build on H1 organic growth achievement • Continue to manage input cost increases • Maintain focus on business efficiencies • Strong financial base to capitalise on value enhancing business growth opportunities • EPS momentum to be maint
Slide 25: Board and Management Changes
Board and Management Changes • Hugh Friel - to retire as Director and Chief Executive 31 December 2007 • Stan McCarthy - appointed Chief Executive Designate - to succeed Hugh Friel as Chief Executive on 1 January 2008
Slide 26: Additional Information
KERRY Additional Information
Slide 27: Revenue Growth: Like-for-like
Revenue Growth: Like-for-like H1 2007 H1 2006 H1 2005 Like-for-like Like-for-like Like-for-like - Europe* 3.6% 4.2% 3.1% - Americas* 6.0% 5.5% 2.6% - Asia Pacific* 14.6% 9.4% 10.5% Ingredients 5.9% 5.0% 3.8% Consumer Foods 4.5% 0.2% 3.1% Group 5.6% 3.5% 3.4% Note: * revenue by location of customers
Slide 28: H1 2007 Revenue Growth by Destination
H1 2007 Revenue Growth by Destination 16 14.6% 14.3% 14 12 10 8 6.0% 6 5.6% 4.3% 4 2.9% 2.2% 2 1.4% 0 Europe Americas Asia Pacific Group Total Like-for-like Note: like-for-like represents revenue growth before subsidiary translation and acquisitions / disposals impact
Slide 29: Euro - US Dollar Trend
Euro - US Dollar Trend 1.38 H1 H2 1.36 1.35 1.34 2007 1.32 1.32 1.30 1.30 1.28 1.25 1.26 2006 1.24 1.22 1.22 1.20 1.18 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec H1 2007 H1 2006 Avg fx rate 1.34 1.23 % change (8.9%)
Slide 30: Euro - Sterling Trend
Euro - Sterling Trend 0.71 H1 H2 0.70 2006 0.69 0.69 0.68 0.68 0.67 2007 0.67 0.67 0.66 0.66 0.65 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec H1 2007 H1 2006 Avg fx rate 0.67 0.69 % change +2.9%
Slide 31: Interim Five Year Free Cash Flow
Interim Five Year Free Cash Flow 2007 2006 2005 2004 2003 €m €m €m €m €m EBITDA* 225 216 212 197 176 Movement in working capital (64) (100) (77) (4) (79) Capital expenditure (net) (39) (48) (59) (48) (37) Finance costs (35) (35) (29) (21) (22) Taxation (12) (13) (23) (23) (14) Free cash flow 75 20 2
Slide 32: Debt Profile (€m)
Debt Profile (€m) Net @ Floating @ Fixed Borrowings Rates Rates Euro 488 288 200 Sterling 263 263 - US Dollar 486 93 393 Other 120 120 - 1,357 764 593 100% 56% 44% Weighted average period for which rate is fixed: 3.2 years
Slide 33: Maturity Profile of Net Debt
Maturity Profile of Net Debt 30 June 2007 30 June 2006 €m €m Within one year (88) 104 Between 1 and 2 years 4 108 Between 2 and 5 years 733 689 Between 5 and 10 years 708 437 1,357 1,338 Weighted average maturity in years: 4.9 4.6
Slide 34: EPS Reconciliation
EPS Reconciliation H1 2006 H1 2007 Growth € cent € cent % 54.9 Adjusted EPS* 58.8 7.1% (2.9) Intangible asset amortisation (3.4) 1.8 Non-trading items (net of tax) 2.2 53.8 Basic EPS 57.6 7.1% Note: * before intangible asset amortisation and non-trading items
Slide 35: EPS Growth (cent)
EPS* Growth (cent) 140 133.9 131.6 122.9 120 112.1 101.8 100 87.9 79.2 80 68.0 57.4 58.8 60 53.8 54.9 50.5 46.7 46.1 41.8 40 36.4 32.8 28.2 23.2 19.7 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Full Year Half Year Note: EPS numbers for 1997 to 2003 are pre IFRS Note: * before intangi
Slide 36: EPS Broker Estimates 2007 / 2008
EPS* Broker Estimates 2007 / 2008 High Low Consensus % 2007 estimate 141.1 138.9 140.2 4.7 2008 estimate 151.5 148.0 149.8 6.8 Note: * before intangible asset amortisation and non-trading items
Slide 37: Shareholder Analysis
Shareholder Analysis June 2007 October 2007 (Post Buy Back) (After Co-op Share Exchange) Institutions Kerry Co-op Institutions Kerry Co-op 44% 30% 44% 24% Retail Retail 26% 32% Institutional Analysis Institutional Analysis North America 20% North America 20% Ireland 11% Ireland 11% UK 8% UK 8% Conti
Slide 38: the science of food
the science of food