Mcpherson's Limited · ASX:MCP
Mcpherson's — H1 FY2018 Earnings Presentation
30 slides from Mcpherson's's earnings presentation, Feb 21, 2018
Slide 1: 2018 Half Year Result Presentation
MCPHERSON’S LIMITED 2 01 8 H A L F Y E A R R E S U LT P R E S E N TAT I O N 21 FEBRUARY 2018 Presented by: Laurie McAllister, Managing Director Paul Witheridge, Chief Financial Officer
Slide 2: 1HFY18 Financial Highlights
1HFY18 FINANCIAL HIGHLIGHTS Headline earnings driven by execution of strategic initiatives and stronger owned brands performance • Underlying profit before tax maintained at $11.0m • Underlying profit before tax from continuing operations up 2.4% to $9.5m • Underlying cashflow conversion of 94% • 26
Slide 3: 1HFY18 Business Highlights
1HFY18 BUSINESS HIGHLIGHTS • Divestment of the home appliances business executed, on track for completion on 28 February • Transformation of MCP owned brands delivers strong performance: +4.1% vs 1HFY17 on core 5 • 3 out of 5 MCP brands are #1 in market share and continue to take further share in th
Slide 4: Financials
FINANCIALS 20/02/2018 2017 ANNUAL GENERAL MEETING 4
Slide 5: 1HFY18 Sales Revenue Breakdown
1HFY18 SALES REVENUE BREAKDOWN Sales revenue from continuing operations reduced by 7.4% to $106.1m. Owned brands: 1HFY18 $Am 1HFY17 $Am % change Comments Skin, Hair and Body 9.5 7.7 24% • Strong export and domestic sales of both Dr. LeWinn's and A'kin. • Growth in Manicare Essential Beauty 30.1 30.5
Slide 6: Underlying PBT - 1H FY17 to 1H FY18
U N D E R LY I N G P B T- 1 H F Y 17 t o 1 H F Y 1 8 1.5 1.5 (1.4) Decrease in Increase in Singapore & NZ (1.1) contribution from contribution (0.4) 2.0 owned brands Decrease in contribution from Decrease in Agency brands (0.8) contribution from FX hedge Private Label 0.3 0.8 book Additional (0.7) b
Slide 7: Balance Sheet & Cashflow Metrics
BALANCE SHEET & CASHFLOW METRICS $13.4m operating cash flow before interest and tax Underlying Cash Conversion* 94% payments Net Debt $30.4m 25.6% Strong operating cashflow Gearing 25.9% 4.5pp Strong financial platform ROFE ** (6 months) 10.8% 0.7pp Solid return on funds employed Normalised EB
Slide 8: Home Appliances Divestment
HOME APPLIANCES DIVESTMENT • Divestment of Home Appliances business to Glen Dimplex announced 14 December 17 • $28m in net proceeds equates to ~ 7 times FY18 EBIT • On track for completion on 28 February 18 • Outstanding $25m in outstanding Corporate notes to be bought back on 31 March 18 • Net debt
Slide 9: 1HFY18 Key Financials - Other Information
1 H F Y 1 8 K E Y F I N A N C I A L S – OT H E R I N F O R M AT I O N • Interim dividend of 6 cents per share fully franked payable 22 March 18 • DRP retained • Current FX hedging policy retained • Reduced exposure to FX risk, AUD purchases now >40% of total purchases 20/02/2018 2018 MCPHERSON’S HAL
Slide 10: Market Environment
MARKET ENVIRONMENT 20/02/2018 2017 ANNUAL GENERAL MEETING 10
Slide 11: Trading Environment
TRADING ENVIRONMENT MARKET CONDITIONS Pharmacy Sales slowed from Range rationalisation in both Rise of Private Label and Amazon launch. +5% to +0.2%. Grocery and Pharmacy. retailer exclusive brands. (Facial Skincare +6%) Grocery growth from +2% to 20% reduction in range in #1 & #2 brands expected to
Slide 12: Strategy Update
S T R AT E GY U P D AT E 20/02/2018 2017 ANNUAL GENERAL MEETING 12
Slide 13: 3 Year Strategy - To Grow in Health, Wellness and Beauty
3 Y E A R ST R AT E GY – TO G ROW I N H E A LT H , W E L L N E S S A N D B E AU T Y FOCUS ON CORE Explore new 6 OWNED product growth BRANDS platforms DRIVE VALUE Move to strategic FROM GEOGRAPHIC customer and supplier FOOTPRINT partnerships S T R AT E G I C E N A B L E R S End to end capability and
Slide 14: Dr. LeWinn's Experiencing Strong Domestic and Export Performance
Dr. LeWinn’s, EXPERIENCING STRONG DOMESTIC AND EXPORT PERFORMANCE • #1 Cosmeceutical facial skincare brand in Pharmacy • >20% revenue growth versus prior year • +20% increase in household penetration in Australia • +87% revenue growth for Eternal Youth driven by new product launches • +170% revenue
Slide 15: A'kin, One of the Fastest Growing Brands in the Naturals Space
A’ k i n , O N E O F T H E FA ST E ST G ROW I N G B R A N D I N T H E N AT U R A L S S PAC E • +38% annual retail sales growth • Achieved top 10 ranking in natural facial skincare & haircare, fastest growing in pharmacy, • New hair care packaging aligned with skincare to create one global brand TM •
Slide 16: Revamped Packaging and Interactive Digital Engagement Appealing to Youth
R E VA M P E D PAC K AG I N G A N D I N T E R AC T I V E D I G I TA L ENGAGEMENT APPEALING TO YOUTH Recruiting younger consumers to our brands: • Over 7 million consumers reached via Manicare, Glam, Lady Jayne and Fashion Collaboration campaigns • Our Glambassador, Pia Muehlenbeck driving brand awar
Slide 17: Multix Leading in Innovation with a First Mover Sustainability Drive
M U LT I X L E A D I N G I N N OVAT I O N W I T H A F I R ST M OV E R S U STA I N A B I L I T Y D R I V E • Multix market leadership with first to market innovation “Greener” supported by strong in-store activation 20/02/2018 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION 17
Slide 18: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Approach to strategic customer partnership delivering outcomes (channel expansion of Manicare into Grocery) • Formalised Top to Top Meetings with Customers and Suppliers • Structure and engaged joint business planning to drive mutual growth
Slide 19: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Incremental ranging and channel expansion in over 1000 doors across both Grocery and Pharmacy • 9,500 incremental distribution points • 6 SKUs in Priceline 131 doors • 3 SKUs in Chemist Warehouse +400 doors • 15 SKUs in Woolworths +500 doors
Slide 20: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Increased catalogue representation from 262 to 304 +16% 20/02/2018 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION 20
Slide 21: Move to Strategic Customer/Supplier Partnerships
M OV E TO ST R AT E G I C CUSTOMER/SUPPLIER PARTNERSHIPS • Consumer led exclusive retailer offers driven by category trends, insights and demand. 20/02/2018 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION 21
Slide 22: Export Channel Models
EXPORT CHANNEL MODELS China Nth Asia UK Dubai % Chg vs YA +600% 100% Incremental +27% Flat FY18 New Distribution Models • Exclusive High Penetration High Penetration Strategy Capture new export markets • TP / Trader Established Market Established Market • Domestic (Exporter/Gift Stores) • Dr LeWinn'
Slide 23: Outlook
OUTLOOK 20/02/2018 2017 ANNUAL GENERAL MEETING 23
Slide 24: Strategy Focus Areas - 2H FY18
ST R AT E GY F O C U S A R E A S – 2 H F Y 1 8 FOCUS ON CORE 6 OWNED Explore new BRANDS product growth platforms DRIVE VALUE Move to strategic FROM GEOGRAPHIC customer and supplier FOOTPRINT partnerships 20/02/2018 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION 24
Slide 25: Strategy Focus Areas - Focus on Core 6 Owned Brands
ST R AT E GY F O C U S A R E A S – 2 H 1 8 • Major new product launches for Dr. LeWinn's and A’kin to deliver $1.5m+ sales FOCUS ON CORE 6 • Power launch for Dr LeWinn’s Reversaderm secured across major Pharmacy Key Accounts OWNED BRANDS • Expand A’kin skincare range with double share of shelf • Lau
Slide 26: Explore New Product Growth Platforms
E X P LO R E N E W P R O D U C T G R O W T H P L AT F O R M S FINANCIAL HEALTH • Management balance sheet discipline/improvement & HAPL divestment • Leaving McPherson’s poised for new Health, Wellness and Beauty Investment Opportunities CAPABILITY & CAPACITY Consumer & Business Intel. R&D Sales & Ma
Slide 27: Drive Value from Geographic Footprint
DRIVE VALUE FROM GEOGRAPHIC FOOTPRINT DRIVE VALUE FROM GEOGRAPHIC FOOTPRINT CURRENT FOCUS 2H18 focus areas: MEDIUM TERM: <3 YEARS • Direct A&P investment in China to Drive Brand awareness NORTH ASIA UNITED KINGDOM CHINA • Adoption of Global strategy for Key Brands (A’kin/DRL) SOUTH-EAST ASIA AUSTRAL
Slide 28: Summary
SUMMARY • Exclusively focused on growing in $8.6B Health, Wellness and Beauty categories • Well positioned to deliver improvements in underlying PBT from continuous operations (excluding HAPL for the FY 2018) • Accelerating MCP growth brands & premium agency partnerships (Trilogy, Karen Murrell & Bo
Slide 29: Poised for Growth
Poised for Growth 2018 MCPHERSON’S HALF YEAR RESULT PRESENTATION
Slide 30: Non-IFRS Measures and Disclaimer
M c P h e r s o n ’ s L i m i te d Non-IFRS measures The non-IFRS measures used by the Company are relevant because they are consistent with measures used internally by management to assess the operating performance of the business. The non-IFRS measures have not been subject to audit or review. Dis