Kerry Group Plc · EURONEXT:KRZ
Kerry — H1 2005 Earnings Presentation
44 slides from Kerry's earnings presentation, 2005
Slide 1: Interim Results 2005
Interim Results 2005 the science of food
Slide 2: Kerry - 2005 Interim Results Presentation
Kerry - 2005 Interim Results Presentation • Introduction and Overview Hugh Friel • Financial Review Brian Mehigan • Business Review Hugh Friel • Prospects and Future Development Hugh Friel • Q&A
Slide 3: H1 2005: Solid Performance in Difficult Business Environment
H1 2005: Solid Performance in Difficult Business Environment • Strong Kerry financial and business performance • Good organic growth and contribution from acquisitions • Food industry challenging environment • Significant energy cost increases • Adverse currency impact • Kerry performance driven by
Slide 4: H1 2005: Performance Highlights
H1 2005: Performance Highlights • Sales revenue growth of 8.3% to €2,117m • Like-for-like sales revenue growth of 3.4% • Trading profit growth of 6.2% to €160m • Earnings* increased by 7.1% to €101m • Interim dividend per share up 11.1% to 5 cent (Group accounts reported under IFRS) Note: * before i
Slide 5: Food Industry: Challenging Environment
Food Industry: Challenging Environment • Fusing good flavour, taste, variety, convenience with enhanced nutrition and highest food safety standards • Rising costs versus increasing retail competition • Foods ‘Minus’ trends – Lower calorie, fat, cholesterol, sugar, sodium, preservatives • Foods ‘Plus
Slide 6: Kerry Development and Strategic Focus
Kerry Development and Strategic Focus • Focus on science, nutrition, wellness and convenience • Innovation in market growth sectors • Strong global customer relationships • Strong brands and market positioning • Continued investment in growth categories • Capability to efficiently integrate acquisit
Slide 7: Financial Review
Financial Review
Slide 8: H1 2005 Financial Highlights
H1 2005 Financial Highlights Revenue €2,117m +8.3% Trading profit €160m +6.2% Trading margin 7.6% 7.7% (PY) Adjusted earnings* €101m +7.1% Adjusted EPS* 53.8 cent +6.5% Note: * before intangible amortisation and non trading items
Slide 9: H1 2005: Financial Comments
H1 2005: Financial Comments • Good organic growth in sales revenue and trading profit • Margins resilient against significant currency (c. €12m) and energy (c. €8m) headwind • Positive contribution from acquisitions • Positive cash flow across peak period • Increased financing costs due to acquisiti
Slide 10: Currency Exposure Management
Currency Exposure Management • Reporting currency translation impact – 4.9% depreciation Dollar v Euro – 3% depreciation Sterling v Euro – Impact -2% on revenue – Impact -3% on trading profit – Impact -3% on earnings • Trading currency impact on trading profit – Cost of €12m in H1
Slide 11: Revenue Analysis
Revenue Analysis H1 2004 H1 2005 €1,955m €2,117m +8% Currency Like-for-like Acquisition/Disposal -2% +3% +7%
Slide 12: H1 Revenue: Like-for-like % Growth
H1 Revenue: Like-for-like % Growth Reported Acquisition / Reporting Like-for-like Growth Disposal Currency Growth Ingredients 12% 10% (2%) 3.8% Consumer Foods 2% 0% (1%) 3.1% Group 8% 7% (2%) 3.4%
Slide 13: Revenue: Like-for-like % Growth
Revenue: Like-for-like % Growth H1 H1 Full Year 2005 2004 2004 Ingredients 4% 5% 5% Consumer Foods 3% 2% 2% Group 3% 4% 4%
Slide 14: H1 Revenue Growth % - by Destination
H1 Revenue Growth % - by Destination (Total and Like-for-like) 28% 26.5% 24% 20% 16% 12% 10.5% 8.3% 8% 7.2% 6.5% 4% 3.1% 3.4% 2.6% 0% Europe Americas Asia Pacific Group Total Like-for-like
Slide 15: Revenue Growth
Revenue Growth Like-for-like % Growth Like-for-like % Growth 6 H1 H1 Full Year 5 2005 2004 2004 4% 4% 4 3% 3 Volume 3% 4% 4% 2 Price 1% 1% 1% 1 Trading currency (1%) (1%) (1%) 0 H1 2005 H1 2004 FY 2004 Group 3% 4% 4%
Slide 16: Trading Margin Change
Trading Margin Change H1 2004 H1 2005 Trading margin 7.7% 7.6% • Positive impact of acquisitions, organic growth and pricing not enough to offset negative currency and energy impact
Slide 17: Interim Five Year Free Cash Flow
Interim Five Year Free Cash Flow 2001 2002 2003 2004 2005 €m €m €m €m €m EBITDA* 143 173 176 197 212 Movement in working capital (112) (97) (79) (4) (77) Capital expenditure (net) (46) (48) (37) (48) (59) Interest (21) (25) (22) (21) (29) Taxation (18) (16) (14) (23) (23) Free Cash Flow (54) (13) 24
Slide 18: Financial Ratios
Financial Ratios H1 2005 H1 2004 Debt : Market capitalisation 34% 42% EBITDA* : Net interest 7.9x 11.2x Debt : EBITDA* 2.8x 2.9x Note: * calculated in accordance with banking covenants
Slide 19: Non Trading Items
Non Trading Items • 2004 acquisition integration programme substantially completed • €9.0m profit from disposal of non-current assets (2004: €15.6m) • €2.8m loss arising from sale of business • Further minor non performing business sales/closures likely in H2 • Likely impact of non trading items in
Slide 20: International Financial Reporting Standards
International Financial Reporting Standards • Kerry reports its results under IFRS for all accounting periods beginning from 1 January 2005 • Impact of the adoption of IFRS on full year 2004 results announced in May 2005 • Impact on accounts: Interim 2004 Full Year 2004 – Revenue no change no change
Slide 21: EPS Reconciliation
EPS Reconciliation 2004 2005 Growth € cent € cent % 50.5 Adjusted EPS* 53.8 6.5% (2.6) Intangible amortisation (2.6) (1.6) Non trading items 2.6 46.3 Basic EPS 53.8 16.2% Note: * before intangible amortisation and non trading items
Slide 22: Business Review
Business Review
Slide 23: Kerry's Food Ingredients Positioning
Kerry’s Food Ingredients Positioning Ingredients A world leader in application specific food ingredients markets. Bio-Science A leader in innovation and application of bio-ingredients and pharma-ingredients Mastertaste The Group’s flavours and fragrance division, focused on sweet, savoury, dairy and
Slide 24: Kerry Foods' Positioning
Kerry Foods’ Positioning • A strong focus on retailer relationships and a leader in category management • A strong portfolio of consistently supported brands • A leader in growth markets including ready meals and convenience snacks • Continuous investment in product innovation • An unrivalled nation
Slide 25: Business Review - Ingredients
Business Review - Ingredients H1 2005 Total Growth Like-for-like Revenue €1,453m +12.1% +3.8% • Trading profit €118m (+10.1%) • Good growth in all regions • Positive contribution from acquisitions • New product developments increasing • Time lag in recovering input cost increases • Strong developmen
Slide 26: Business Review - Ingredients Europe
Business Review - Ingredients Europe Europe H1 2005 Total Growth Like-for-like Revenue* €614m +15.2% +3.1% • Strong performance in prepared meals, culinary and foodservice sectors • Germany, UK, Italy and Russia strong underlying growth • Fruit preparations in France highly competitive • Dairy prote
Slide 27: Business Review - Ingredients Americas
Business Review - Ingredients Americas Americas H1 2005 Total Growth Like-for-like Revenue* €573m +6.5% +2.6% • Encouraging development in nutritional / wellness lines • US specialty ingredients slow recovery • Good growth through specialist foodservice menu items and brands • Roll-out of new Sheffi
Slide 28: Business Review - Ingredients Asia Pacific
Business Review - Ingredients Asia Pacific Asia Pacific H1 2005 Total Growth Like-for-like Revenue* €160m +26.5% +10.5% • Strong performance throughout region • Growth through foodservice and prepared foods in Aus / NZ • Progress through nutritional lines in Asia • Roll-out of specialist flavoured b
Slide 29: Business Review - Consumer Foods
Business Review - Consumer Foods H1 2005 Total Growth Like-for-like Revenue €820m +1.5% +3.1% • Trading profit of €55m in line with H1 2004 notwithstanding the impact of currency and input cost inflation • Competitive retail environment in UK and Ireland • Raw material and energy cost increases • Br
Slide 30: Acquisition of Noon Group
Acquisition of Noon Group • Leader in authentic Asian chilled ready meals category in the UK • Produces 250 different Indian, Thai and Oriental recipes • Founded by Sir Gulam Noon in 1989 • State-of-the-art production and innovation facilities in London • Consideration Stg £124m • UK chilled ready m
Slide 31: Trading Prospects and Outlook
Trading Prospects and Outlook • Group’s core businesses performing well • Strong market positioning and customer base • Ingredients, flavours and foods focused on food and beverage growth categories • Bolt-on acquisition opportunities • Outcome for 2005 in line with market expectations
Slide 32: the science of food
the science of food
Slide 33: Additional Information
Additional Information
Slide 34: Analysis of Results by Business
Analysis of Results by Business H1 2005 H1 2004 Trading Trading Revenue Profit % Revenue Profit % €m €m €m €m Ingredients 1,453 118 8.2% 1,296 108 8.3% Consumer Foods 820 55 6.7% 808 55 6.8% Elimination / Unallocated (156) (13) - (149) (12) - Group 2,117 160 7.6% 1,955 151 7.7%
Slide 35: Analysis of Results by Business
Analysis of Results by Business H1 2005 H1 2004 Revenue Revenue Like-for-like Like-for-like €m Growth €m Growth Ingredients 1,453 3.8% 1,296 5.0% Consumer Foods 820 3.1% 808 1.5% Elimination / Unallocated (156) - (149) - Group 2,117 3.4% 1,955 3.8%
Slide 36: Trading Margin Trend
Trading Margin Trend H1 2005 H1 2004 Full Year 2004 Ingredients 8.2% 8.3% 9.4% Consumer Foods 6.7% 6.8% 7.1% Group 7.6% 7.7% 8.6%
Slide 37: Revenue by Destination: Like-for-like % Growth
Revenue by Destination : Like-for-like % Growth H1 2005 H1 2004 Full Year 2004 Europe 3% 2% 3% Americas 3% 5% 6% Asia Pacific 11% 14% 15% Group 3% 4% 4%
Slide 38: EPS* Growth (cent)
EPS* Growth (cent) 140 122.9 120 112.1 101.8 100 87.9 79.2 80 68.0 60 57.4 53.8 50.5 46.7 46.1 41.8 38.7 40 35.8 36.4 32.8 28.2 23.2 19.7 20 14.8 16.5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Full Year Half Year Note: EPS numbers for 1995 to 2003 are pre IFRS Note: * before intangibl
Slide 39: Interim Cash Flow (€m)
Interim Cash Flow (€m) 2005 2004 Cash from operations 135 193 Interest and taxation (52) (44) Capital expenditure (59) (48) Free cash flow 24 101 Acquisitions and disposals - Businesses acquired (45) (698) - Businesses sold (3) - - Acquisitions restructuring (6) (2) (54) (700) Financing - issue of s
Slide 40: Euro - US Dollar Trend
Euro - US Dollar Trend 1.40 H1 H2 1.35 1.36 2005 1.30 1.30 1.25 1.27 1.22 1.20 1.21 2004 1.15 1.10 1.05 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 Avg Fx Rate H1 % Change +4.9%
Slide 41: Euro - Sterling Trend
Euro - Sterling Trend 0.74 H1 H2 0.72 0.70 2005 0.71 0.69 0.68 0.68 0.68 0.66 0.67 2004 0.64 0.62 0.60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2005 Avg Fx Rate H1 % Change +3.0%
Slide 42: Debt Profile (€m)
Debt Profile (€m) Net @ Floating @ Fixed Borrowings Rates Rates Euro 328 328 - Sterling 150 150 - US Dollar 691 232 459 Canadian Dollar 33 33 - Others 63 63 - 1,265 806 459 64% 36% Weighted average period for which rate is fixed: 0.8 years
Slide 43: Maturity Profile of Net Debt
Maturity Profile of Net Debt 30 June 2005 31 Dec 2004 €m €m Within one year 112 (1) Between 1 and 2 years 136 176 Between 2 and 5 years 572 432 Between 5 and 10 years 445 294 After 10 years - 236 1,265 1,137 Weighted average maturity in years: 5.9 5.4
Slide 44: the science of food
the science of food