Mcbride Plc · LSE:MCB
Mcbride — Investor Day (March 2024)
53 slides from Mcbride's investor day presentation, Mar 13, 2024
Slide 1: McBride plc Capital Markets Day
McBride plc Capital Markets Day Winning in a growing market 13 March 2024
Slide 2: Today's agenda
Today’s agenda 11:00 Welcome CEO 11:05 McBride and its markets CEO 11:20 Focus on divisions: MDs Liquids Unit Dosing Powders Aerosols Asia Pacific 12:00 Q&A #1: Focus on divisions 12:30 Transformation agenda CTO 12:40 Financial outcomes CFO 12:50 Summary CEO 12:55 Q&A #2 All 2 Capital Markets Day –
Slide 3: Our speakers today
Our speakers today Chris Smith Mark Strickland Chris Ward Chief Executive Officer Chief Financial Officer Chief Transformation Officer Peter Ingelse Lennard Markestein Marielle Claudon Managing Director Managing Director Managing Director Liquids Unit Dosing Powders, Aerosols & Asia Pacific 3 Capita
Slide 4: McBride overview
McBride overview Chris Smith Chief Executive Officer 4 Capital Markets Day – 13 March 2024
Slide 5: What you will hear today
What you will hear today Reminder McBride plc – the industry leader Reflection Emerging stronger post inflation Update Our growing markets Update The strengthened business resulting from our Compass strategy Highlight Value creation beyond core plan Reiterate Latest financials and targets 5 Capital
Slide 6: McBride – leading the industry
McBride – leading the industry Everyday value cleaning products so every home can be clean and hygienic • The #1 European private label producer of everyday household cleaning products • Pan-European: significant presence in all key markets • Partnered with >90% of Europe’s top retailers • Broadest
Slide 7: McBride operating model
McBride operating model Revised Compass operating model delivering divisional focus and specialism supported by scale shared services • Divisional strategies and Group strategy • Building on initial three-year phase One • Focus and accountability • Responsiveness • Scale benefits from shared service
Slide 8: Reflections on inflationary period of past two years
Reflections on inflationary period of past two years McBride has emerged stronger from the crisis Symptoms Unprecedented increase in long term RMPI • Size and frequency of input cost rises • Customer responses to requests for mitigation • Price rise lag vs input cost rises Mar Mar Mar Mar Mar Mar Ma
Slide 9: Competitive landscape
Competitive landscape How McBride compares with other European players • Top six nearly two thirds of the market European Household private label producers by revenue • Long tail of smaller producers 50% • Spain: producer / retailer dynamic • Germany: local supply reduction • Predominantly family ow
Slide 10: Our markets
Our markets Private label household has plenty of scope to grow Total market (€’bn 2023) Cleaners 19% 4.00 Private 3.50 Private label label volume volume share share ~40% 3.00 ~25% 2.50 2.00 Private label volume 1.50 share Laundry ~40% 1.00 59% Dishwash 22% 0.50 0.00 UK France Germany Italy Spain Pr
Slide 11: Our markets
Our markets Consumers seeking value are continuing to switch to private label Market volume growth since 2019 Private label share (volume) +5ppts private label -7% +8% share growth since June 22 branded private label Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 Brands Privat
Slide 12: McBride's market position
McBride’s market position Taking share in a growing private label market Private label McBride Private label McBride volume volume volume volume Household +7% +11% GB +3% +8% Laundry +8% +14% France +15% +15% Germany +7% +15% Cleaners +3% +6% Italy +8% +5% Dishwash +11% +17% Spain +5% +20% * Kantar
Slide 13: We have clear sight on future growth
We have clear sight on future growth Where we see the opportunities and priorities Categories: Laundry • Private label share of total market • McBride under indexes Geography • #1 in three of top five European markets – extend to other two Channels • Lead with the leading retailers • McBride under i
Slide 14: Value creation
Value creation Further value opportunities beyond the core plan • Step change current platforms • Buy & build, strategic consolidation Buy & build Core plan “plus” Core plan 14 Capital Markets Day – 13 March 2024
Slide 15: McBride – consolidating and expanding our leadership
McBride – consolidating and expanding our leadership Everyday value cleaning products so every home can be clean and hygienic • Expand our position as the #1 European private label producer of everyday household cleaning products • Capitalise on the consumer shift to private label • As the preferred
Slide 16: Building customer partnerships to grow
Cost Leadership Building customer partnerships to grow Peter Ingelse MD Liquids 16 Capital Markets Day – 13 March 2024
Slide 17: Liquids overview
Overview Europe’s largest supplier of private label liquids Our market • All categories supplied in liquids form • Regional business • Innovation focus driven by sustainability • Private label share gain, cost of living challenge Our business • Leading position in UK, France, Germany and Italy H1 FY
Slide 18: Compass progress
Compass progress We set four strategic priorities 1. Simplified portfolio, increasing competitiveness 2. Lower cost 3. Enhanced customer proposition 4. Focused growth ~30% ~5% +12%* reduction in capacity McBride formulations increase private label and through Lean volume YoY * McBride data FY21 - 23
Slide 19: Compass next phase
Compass next phase Continuous improvement and driving innovation • Product sustainability to drive value growth in Liquids • Generate value at competitive price • Build valuable customer relationships • Focused growth 10% 1st +5% of revenue to market capacity from contract with laundry increase manu
Slide 20: Summary
Summary Our winning formula • Superior local market expertise • Innovative and sustainable products • Reliable and trustworthy • Competitive on price, strong on value 4% 7-10% volume CAGR Return on FY23-27 sales FY27 20 Capital Markets Day – 13 March 2024
Slide 21: Product leadership
Product leadership Sustainable innovation for our customers Lennard Markestein MD – Unit Dosing 21 Capital Markets Day – 13 March 2024
Slide 22: Unit Dosing overview
Overview Leading private label supplier in top three European economies Our market • Convenient and sustainable format • European business • High pace of innovation Our business • Well-invested asset base • Portfolio strength in private label H1-FY24 • Long established, expert team Private label 85%
Slide 23: Compass progress
Compass progress We set five strategic priorities 1. Become specialist supplier 2. Be embedded in the industry 3. Accelerate efficient innovation 4. Invest behind right asset base 5. Be more cost competitive Private label 30+% Private label doses sold up share gain in of SKUs 3 of 5 * ** McBride dat
Slide 24: Compass progress next phase
Compass progress next phase Introduce the concept of ‘FleXellence’ • Lead as the specialist supplier • Be ever closer to customers and suppliers • High pace innovation – sustainable and compact • Refine our asset base • ‘FleXellence’ Private label Top 20 soft dishwash market Over 70% customers * **
Slide 25: Summary
Summary Our winning formula • Widest supply position in Europe • Partnering with suppliers and customers • Leading innovation and sustainability • Fast portfolio evolution • ‘FleXellence’, leading through agility 3-4%* 8-11% Volume CAGR Return on sales FY23–27 FY27 * In doses 25 Capital Markets Day
Slide 26: Cost leadership
Cost leadership Becoming the ‘go-to’ Powder specialist Marielle Claudon MD – Powders 26 Capital Markets Day – 13 March 2024
Slide 27: Powders overview
Overview Emerging as the ‘go-to’ powder specialist Our market • Declining market overall in Europe • Private label gaining share over brands • Germany and UK still heavy powder users • Surplus industry capacity Our business • Balanced between private label, contract manufacturing and professional (I
Slide 28: Compass progress
Compass progress We set four strategic priorities 1. Low cost 2. Asset utilisation 3. Technical capability upgrade 4. Targeted market opportunities 13% +13% 11 efficiency product revenue CAGR improvement awards in two FY21–23 FY21–23 years 28 Capital Markets Day – 13 March 2024
Slide 29: Compass progress next phase
Compass progress next phase Greater ambition as we become the ‘go-to’ powder specialist • Be the clear low-cost leader • Improved asset utilisation for cost and capacity • Continued technical capability upgrade, sustainability-led • Targeted geography and channel opportunities 25% 46 tonnes 3 plasti
Slide 30: Summary
Summary Our winning formula • Efficient powder specialist • Broad scope: from low-cost to premium winners • Two complementary manufacturing platforms • Core part of McBride laundry offer • Strong insight into contact manufacturing and private label needs 0% 4-7% volume CAGR Return on FY23–27 sales F
Slide 31: Q&A #1 Focus on divisions
Q&A #1 Focus on divisions 41 Capital Markets Day – 13 March 2024
Slide 32: Welcome back
Welcome back 42 Capital Markets Day – 13 March 2024
Slide 33: Transformation agenda
Transformation agenda Chris Ward Chief Transformation Officer 43 Capital Markets Day – 13 March 2024
Slide 34: Our transformation journey
Our transformation journey Building centres of excellence and best in class processes Investment: £13m opex Context • Need for change consistent vs original hypothesis £15m capex • CTO joined in October 2022 • Line of sight to £50m of net benefits, annualising at £17m EBITA in year 5 (FY28) Margin:
Slide 35: Transformation scope: Gold programmes
Transformation scope Gold programmes Implement a core operating model across Europe • Deployment of SAP S/4 HANA Enterprise Resource Planning platform • First deployment in spring 2025 (UK) and completed by autumn 2027 Build a sales and marketing centre of excellence • Specialist training and develo
Slide 36: Transformation scope: Silver programmes
Transformation scope Silver programmes Digital transformation in Human Resources Management • Core HR platform modernisation programme • Digitisation of payroll operations • Modernise employee time and attendance solutions Build out contract manufacturing strategic partnerships • Thought leadership
Slide 37: Gold programme example
Gold programme example Implementing a world class ERP platform across Europe Speeding up Reduced Improved our processes manual intervention data quality and insight Accelerating our internal processes optimising Automation capabilities will significantly Enhancing data quality and gaining deeper eff
Slide 38: Financial outcomes
Financial outcomes Delivering shareholder value Mark Strickland Chief Financial Officer 48 Capital Markets Day – 13 March 2024
Slide 39: Five divisions plus Corporate
Five divisions plus Corporate Tailored strategies in place to optimise the performance of each division FY23 Full Year Liquids Unit Dosing Powders Aerosols Asia Pacific Corporate Total Group Revenue (£m) 497.9 234.2 85.9 46.2 24.8 n/a 889.0 Adjusted Operating Profit/(Loss) (£m) 10.5 10.0 (0.7) 0.3 1
Slide 40: Concentration on cost and margin enhancement
Concentration on cost and margin enhancement Transformation FY24 to FY28 is at the forefront of our plans Transformation agenda delivers net £50m benefit • Six well-defined programmes • Clear accountability • Experienced and well-resourced teams • Tracking and regular progress reviews • Matures at c
Slide 41: Historically stable financial performance
Historically stable financial performance Recovery following exceptional inflation in FY22 Resilience – business always recovers Strategy delivers improved outcomes • Purchase contract layering • Hedging for purchases • New customer pricing approach FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Slide 42: Exceptional costs and pensions
Exceptional costs and pensions Focus on stability Exceptional costs Pensions • No significant cash costs currently envisaged • Move to “Enplan” • Forwards costs will predominantly arise from • Enhanced professional management transformation activities of scheme • Triennial valuation as at 31 March 2
Slide 43: Capital expenditure and depreciation
Capital expenditure and depreciation Future plans do not require excessive capital Average Capex per annum Key points • FY17 – FY21 • Co-investing for capacity • Average £21.2m • Utilising low-cost Asian suppliers • FY22 to FY23 • Delivering more for less • Average £13.7m • Selective refresh program
Slide 44: Cash and net debt
Cash and net debt Ability to deliver shareholder value enabled by strong cash generation Strong cash inflows Trade working capital c.10% of sales • H1 FY24 free cash flow £48.6m • H1 FY24 cash conversion strong at 119% Main underlying cash outflows: • Capital expenditure Significant debt reduction •
Slide 45: Capital allocation
Capital allocation Investing in sustainable profitable growth is key Priority is investment which drives further profitable growth Debt reduction - mid-term target for net debt to adjusted EBITDA of 1.5x • Below 2x - flexible dividend policy at Board’s discretion Deviation from above only for except
Slide 46: Dividend policy
Dividend policy Flexible model delivers pay-outs when appropriate and affordable Refinancing required to remove dividend block Then: • At Board’s discretion • Only considered if net debt to EBITDA leverage ratio is 2x or less • Dividends paid annually Leverage 1.5x to 2x Base dividend Cash 1.0x to 1
Slide 47: Measuring progress and success
Measuring progress and success Key milestone metrics over the next five years Revenue Transformation growth net benefit EBITDA Net debt ROCE +2% £50m >10% <1.5x >25% per annum over five years of sales EBITDA 57 Capital Markets Day – 13 March 2024
Slide 48: Additional shareholder value could be created
Additional shareholder value could be created Opportunities to upscale Opportunities / options exist McBride’s share price is trading at less to further enhance returns than its five-year and 10-year average EV/EBITDA 14x 12x Buy & build 10x 8x Core plan 6x “plus” 4x Core 2x plan 0x Jul-11 Mar-14 De
Slide 49: Summary
Summary Chris Smith Chief Executive Officer 59 Capital Markets Day – 13 March 2024
Slide 50: The divisional strategies have consistent themes
The divisional strategies have consistent themes Our platforms to deliver sustainable, profitable growth Cost Product Cost Product Cost and value leadership leadership leadership leadership leadership Customer Contract Laundry partnerships manufacturing growth Sustainability-led Geographic Cost inno
Slide 51: Why we'll continue to win
Why we’ll continue to win Strong momentum – consolidating and strengthening our leading position • Customer and consumer at the centre of everything we do • The leading experts and specialists in the sector with pan- European presence • Economies of scale: the best value and cost proposition • Stron
Slide 52: Our strategy and targets are clear
Our strategy and targets are clear Key takeaways • Markets shifting to private label. McBride gaining share Revenue EBITDA growth • McBride the clear leader: delivering the expertise, specialism and focus to win +2% >10% • Earnings resilience actions per annum of sales • Core plan delivering attract
Slide 53: Q&A #2
Q&A #2 63 Capital Markets Day – 13 March 2024