Greencore Group Plc · LSE:GNC
Greencore — H1 2019 Earnings Presentation
34 slides from Greencore's earnings presentation, May 21, 2019
Slide 1: Results for the half year ended 29 March 2019
Results For the half year ended 29 March 2019
Slide 2: Disclaimer – Forward Looking Statements
DISCLAIMER – FORWARD LOOKING STATEMENTS Certain statements made in this document are forward‐looking. These represent expectations for the Group’s business, and involve known and unknown risks and uncertainties, many of which are beyond the Group’s control. The Group has based these forward‐looking
Slide 3: Agenda
AGENDA H1 19 HIGHLIGHTS Patrick Coveney, CEO FINANCIAL REVIEW Eoin Tonge, CFO OPERATING & STRATEGIC UPDATE Patrick Coveney, CEO Q&A 3
Slide 4: H1 Highlights
H1 19 HIGHLIGHTS Patrick Coveney, CEO
Slide 5: Key Messages
KEY MESSAGES GOOD PERFORMANCE IN H1* ▪ Strong Pro Forma revenue growth driven by food to go categories ▪ Modest growth in Adjusted Operating Profit with improved margin mix ▪ Full reset of Group capital structure FOCUSED STRATEGY ▪ Leading in structurally advantaged parts of UK food market ▪ Winning
Slide 6: Financial Review
FINANCIAL REVIEW Eoin Tonge, CFO
Slide 7: H1 Financial Highlights
H1 19 FINANCIAL HIGHLIGHTS STRONG PRO FORMA REVENUE GROWTH ▪ Good growth in food to go categories ▪ Solid growth in other categories PROFIT PROGRESSION ON TRACK ▪ Modest advance in Adjusted Operating Profit ▪ Improved margin mix ▪ Embedding excellence and efficiency programmes RESET BALANCE SHEET ▪
Slide 8: H1 P&L Summary
H1 19 P&L SUMMARY* £m H1 19 H1 18 Change Group Revenue 701.4 734.9 -4.6% Pro Forma Revenue Growth +5.4% Adjusted Operating Profit 44.7 44.3 +0.9% Adjusted Operating Margin 6.4% 6.0% +40 bps Group Operating Profit 41.3 16.9 +144.4% Adjusted EPS (pence) 6.4 5.5 +16.4% Group Exceptional Items (after ta
Slide 9: Strong Pro Forma Revenue Growth
STRONG PRO FORMA REVENUE GROWTH FTG categories Other convenience categories £254m £258m ▪ Pro Forma Revenue +5.4% +5.4% £447m Pro Forma ▪ 7.0% pro forma growth in food to £447m go categories – Product revenue outperformed the market, rate of growth improved Pro Forma revenue growth composition – Thi
Slide 10: Profit Progression
PROFIT PROGRESSION Profit performance £m H1 18 H1 19 80 +0.2% ▪ Growth in food to go categories 60 +0.9% driven by volume growth, 40 strong operational performance 20 ▪ Ready meals network reset 0 Adj EBITDA Adj Op Profit ▪ Inflation broadly as anticipated ▪ Excellence and efficiency Margin performa
Slide 11: Normal H1 Free Cash Flow Also Impacted by US Disposal
NORMAL H1 FREE CASH FLOW ALSO IMPACTED BY US DISPOSAL Free Cash Flow £m 70 62.5 60 50 -12.2 40 30 20 -30.0 10 0 -12.8 -7.7 -10 -10.7 -20 -8.0 -0.5 -19.4 Adj EBITDA Discont ops Net WC Maintenance Exceptional Interest/tax Pension Other Free Cash (cont ops) (cont ops) Capex Cashflows Flow ▪ Working cap
Slide 12: Net Debt Reduced Significantly
NET DEBT REDUCED SIGNIFICANTLY Net debt, FY18 – H1 19 £m 400 0 521.6 -200 810.4 6.9 -400 -284.1 19.4 39.4 -600 -501.1 6.1 FY18 Net Free Cash Dividends Strategic US proceeds Capital reset FX/Other H1 19 Debt Flow Capex Net Debt ▪ Two dividend payments in H1 ▪ US disposal and reset capital structure G
Slide 13: On Track to Deliver FY19 Objectives
ON TRACK TO DELIVER FY19 OBJECTIVES ▪ Group performed well in H1 ▪ Positioned well for H2, driven by: – Underlying revenue growth – Adjusted Operating Profit growth underpinned by revenue growth and improved operational performance – Significantly improved cashflow in H2 – Strong ROIC 13
Slide 14: Operating & Strategic Update
OPERATING & STRATEGIC UPDATE Patrick Coveney, CEO
Slide 15: Achieving Our Strategic Priorities
ACHIEVING OUR STRATEGIC PRIORITIES 1▪ Leading in structurally advantaged parts of UK food market 2▪ Winning with a differentiated model 3▪ Broadening proposition to drive growth and value 15
Slide 16: A Dynamic UK Food Market
1 A DYNAMIC UK FOOD MARKET CAGR in UK food vs CAGR in food to go Market developments FY14-FY18* ▪ Growth in structurally advantaged 10 categories outpacing wider UK food 5.1% market 5 2.2% ▪ Critical role for customers, driving footfall, margin and differentiation 0 UK food market UK food to ▪ Innov
Slide 17: Winning…
2 WINNING… Market-leading positions* H1 highlights ▪ Strong growth in food to go categories #1 #1 #1 #2 (7.0% pro forma revenue growth) Sandwiches Sushi Italian CRM Wet Salads ▪ Award-winning, innovative product development ▪ Contract extensions with several grocery customers ▪ Enhanced relationship
Slide 18: …With a Differentiated Model
2 …WITH A DIFFERENTIATED MODEL Greencore Excellence H1 highlights Programme ▪ Leveraging single Group leadership structure ▪ Embedded Greencore manufacturing excellence across sites ▪ Extending methodology to purchasing and commercial functions 18
Slide 19: Broadening Proposition to Drive Growth and Value
BROADENING PROPOSITION TO DRIVE 3 GROWTH AND VALUE Strategy Current initiatives ▪ Extend leadership across ▪ Enhanced FTG salad categories, channels and capabilities capabilities ▪ New raw sushi capabilities ▪ Leverage repeatable ▪ Channel extension with operational and commercial existing grocery c
Slide 20: Conclusion
CONCLUSION ▪ Good H1 performance ▪ On track to achieve strategic and financial objectives for FY19 ▪ Strengthening our proposition across categories, channels and capabilities ▪ Driving improved returns and enhanced value for shareholders 20
Slide 21: Q&A
’y J Q&A
Slide 22: Appendix
’y J APPENDIX 1
Slide 23: P&L: Other Financial Items
P&L: OTHER FINANCIAL ITEMS £m H1 19 H1 18 Net interest payable (7.7) (12.7) Tax* (5.4) (3.8) Discontinued operations* 8.9 12.3 Group exceptional items (post tax) 28.8 (28.2) * Before exceptional items Pence per share H1 19 H1 18 Adjusted EPS 6.4 5.5 Basic EPS 10.5 0.3 DPS 2.45 2.20 23
Slide 24: H1 19 Cashflow
H1 19 CASHFLOW £m H1 19 H1 18 EBITDA 71.6 86.5 Working capital (51.2) (26.2) Maintenance capex (12.8) (15.5) Exceptional cashflows (7.7) (13.3) Interest/tax/pension/other (19.3) (20.0) Free Cash Flow (19.4) 11.5 Strategic capex (6.1) (14.5) Dividends (39.4) (13.0) M&A 811.4 - Tender offer (509.0) -
Slide 25: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS £m H1 19 H1 18 Net Debt 284.1 522.2 Net Debt:EBITDA (x)* 1.9 2.5 Pension deficit (net of deferred tax) 79.9 89.0 Average Invested Capital 628.2 626.0 ROIC (%) – continuing operations 14.6% 14.9% *Net Debt:EBITDA leverage as measured under financing agreements 25
Slide 26: Definitions of APMs
DEFINITIONS OF APMS The Group uses the following Alternative Performance Measures ('APMs') which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole Pro Forma Revenue Growth • Pro Forma Revenue Growth adjusts H1 19 reported revenue to exclude the impact on
Slide 27: Definitions of APMs (cont)
DEFINITIONS OF APMS (cont) Capital Expenditure • The Group defines Maintenance Capital Expenditure as the expenditure required for the purpose of sustaining the operating capacity and asset base of the Group, and of complying with applicable laws and regulations. It includes continuous improvement p
Slide 28: IR Calendar & Contact
IR CALENDAR & CONTACT Q3 Trading Update 30 July 2019 Jack Gorman Capital Markets Day 26 September 2019 Head of Investor Relations FY19 Period End 27 September 2019 FY19 Results 26 November 2019 investor.relations@greencore.com Q1 Trading Update 28 January 2020 +353 1 605 1000 Annual General Meeting
Slide 29: Appendix
’y J APPENDIX 2
Slide 30: Greencore at a Glance
GREENCORE AT A GLANCE* A leading manufacturer of convenience food in the UK £1.5bn £104.6m £1.0bn Revenues FY18 Adjusted Operating Profit FY18 Market Cap FTSE 250 11,300 15.6% Constituent Employees ROIC FY18 * The Group uses Alternative Performance Measures ('APMs') which are non-IFRS measures to mo
Slide 31: Our Product Range
OUR PRODUCT RANGE SANDWICHES Standard Wraps Baguettes Rolls SUSHI SALADS Snack Side of plate CHILLED READY MEALS Italian Asian Traditional QUICHE & TARTS CHILLED SOUPS & SAUCES AMBIENT COOKING SAUCES & DIPS PICKLES FROZEN YORKSHIRE PUDDINGS
Slide 32: Our Network
OUR NETWORK ¢ , greencore ~ group @ Manufacturing @ opts e facilities Depots Atherstone Carmarthen e Bow Dundee Bristol Glasgow Consett Hatfield Crosby Manton Wood Heathrow: Newtown e e Kiveton Peterborough Leeds Peterlee Manton Wood Plymouth Northampton, Sittingbourne Park Royal Smethwick e Selby S
Slide 33: Our Investment Case
OUR INVESTMENT CASE We operate in a dynamic consumer market in the UK We are a leader in structurally advantaged food categories We have enduring and valued customer relationships We strive for excellence in what we do – The Greencore Way We have a strong financial and economic model that allows us
Slide 34: The Greencore Way
THE GREENCORE WAY… DESCRIBES WHO WE ARE AND HOW WE SUCCEED