Mcpherson's Limited · ASX:MCP
Mcpherson's — Investor Day (May 2018)
65 slides from Mcpherson's's investor day presentation, May 10, 2018
Slide 1: McPherson's Limited 2018 Investors Day Presentation
For personal use only MCPHERSON’S LIMITED 2 01 8 I N V E STO R S DAY P R E S E N TAT I O N 10 MAY 2018 Today’s Presenters are Laurie McAllister, Managing Director David Fielding, Strategy Director Paul Witheridge, Chief Financial Officer Brett Owers, Finance Director Donna Chan, Marketing Director M
Slide 2: Our strategy is to grow in Health, Wellness and Beauty
O U R ST R AT E GY I S TO G R O W I N H E A LT H , W E L L N E S S A N D B E AU T Y For personal use only FOCUS ON CORE 6 Explore new OWNED DRIVE VALUE product growth BRANDS Move to strategic FROM platforms GEOGRAPHIC customer and supplier FOOTPRINT partnerships S T R AT E G I C E N A B L E R S End
Slide 3: Desired outcomes from today
D E S I R E D O U TC O M E S F RO M TO DAY ! For personal use only Why a Health, Wellness and Beauty strategy ? What is the status of MCP’s structure and capacity to support the H,W & B strategy? How are MCP’s core brands PERFORMING in 2018 versus prior year…are you GROWING them? Has MCP de-risked i
Slide 4: MCP is progressing at an assertive pace
M C P I S P R O G R E S S I N G AT A N A S S E R T I V E PAC E For personal use only Now exclusively focused on fast growing $13.0 B Health, Wellness and Beauty categories Reinvigorating MCP core growth brands & selectively participating in premium agency partners Winning in Pharmacy and key segment
Slide 5: Financials
For personal use only FINANCIALS 10/05/2018 2017 ANNUAL GENERAL MEETING 5
Slide 6: Broad financial metrics ex Home Appliances
BROAD FINANCIAL METRICS ex HOME APPLIANCES For personal use only Sales Revenue ~ $210m EBIT ~ $21m PBT ~ $19m EPS ~ 12cps Net Debt ~ $15m Market Cap ($1.30 / share) ~$136m EV / EBIT 7.2 times Figures stated are approximate, underlying from continuing operations on an annualised basis. These figures
Slide 7: Current sales mix and anticipated growth profiles
C U R R E N T S A L E S M I X & A N T I C I PAT E D G R O W T H P R O F I L E S For personal use only Owned brands: 1HFY18 $Am % TOTAL 1H FY18 vs 1H FY17 Anticipated growth profiles Skin, Hair and Body 9.5 9% 24% • Strong export and domestic sales of both Dr. LeWinn's and A'kin. Essential Beauty 30.
Slide 8: Cashflow & balance sheet metrics
CASHFLOW & BALANCE SHEET METRICS For personal use only 1H FY18 Underlying Cash Conversion* 94% Follows FY17 Cash conversion of 113% 1H FY18 ROFE ** (6 months) 10.8% Solid return on funds employed Current underlying EBIT Interest Cover > 20 times EBIT*** / Interest† * Operating cashflow / Underlying
Slide 9: Transformation to a lower risk profile
T R A N S F O R M AT I O N TO A LO W E R R I S K P R O F I L E For personal use only • DEBT REDUCTION - from $93m January 2016 to $14m at end April 2018. • REDUCED CHANNEL CONCENTRATION - In FY14 the Grocery channel comprised ~63% & Pharmacy ~20% of total sales. 1H FY18 was ~45% Pharmacy & ~43% Groc
Slide 10: Anticipated medium term growth profiles
A N T I C I PAT E D M E D I U M T E R M G R O W T H P R O F I L E S For personal use only • ORGANIC growth. Build our own brands & stretch existing in to new categories & Segments. • SMALL “BOLT ON ACQUISITIONS” - < $10m revenue, uncomplicated, leverage capacity, compelling multiples. • JOINT VENTUR
Slide 11: Other information
OT H E R I N F O R M AT I O N For personal use only • Retention of FY18 Guidance provided at 1H results release being: “For the full 2018 financial year, subject to continuation of current trading conditions, we expect to deliver an improvement in underlying profit before tax from continuing operati
Slide 12: Marketing Core & Key Accounts
For personal use only MARKETING CORE 6 & KEY ACCOUNTS 10/05/2018 2017 ANNUAL GENERAL MEETING 12
Slide 13: Core brands: play to win mindset
C O R E 6 B R A N D S : P L AY TO W I N M I N D S E T For personal use only BUILD THE CORE INNOVATION BRAND INVESTMENT Strategic Partnerships • Packaging refresh • Building brands in partnership • Consumer Led • Building brand equity • Tailored Channel Plans • Trading Terms optimisation • Market lea
Slide 14: #1 Australian Cosmeceutical Brand
#1 Australian Cosmeceutical Brand For personal use only Facial Skincare Pharmacy Channel Fastest Growing MCP Brand in FY18 14
Slide 15: Dr. LeWinn's Eternal Youth
For personal use only Dr. LeWinn’s Eternal Youth • #2 sub brand launched by McPherson’s in 2014 • +30% growth in both Priceline and Chemist Warehouse • Innovation and ATL support fuels continued growth 15 Source: IRI Market Measurement - Scan, Data to: MAT Value To 01/04/18
Slide 16: Dr. LeWinn's Line Smoothing Complex
For personal use only Dr. LeWinn’s Line Smoothing Complex • Export demand fuels domestic sales • Growth accelerating in latest quarter +45% across Chemist Warehouse and Priceline • Hero products include the Trinity Pack and Mask 16 Source: IRI Market Measurement - Scan, Data to: MAT Value To 01/04/1
Slide 17: For personal use only
9 weeks post launch: For personal use only • Reversaderm sales 5X following re-launch • Cleansers growing +57% 17 Source: IRI Market Measurement - Scan, Data to: MAT Units To 01/04/18
Slide 18: Access China's forecast
Access China’s Forecast Secured for $5m by year end For personal use only No. 2 in Natural Hair Care No.Masks 100,000 LSC 3pk 9 in Natural Skin 7,000 Care Ageless Trinity Packs Growing +47% MAT vs LY in Natural Skin Care 18 18 Source: IRI Market Measurement - Scan, Pharmacy Data to: MAT Value To 01/
Slide 19: A'kin: One Global Skin and Hair Care Brand
For personal use only A’kin: One Global Skin and Hair Care Brand 19 19
Slide 20: Growth through Innovation
Growth through Innovation Natural Deodorant, Micellar Water and Facial Lotion Incremental Ranging - Shelf Expansion For personal use only +47% growth (outpacing 4% category growth) 20 20 Source: IRI Market Measurement - Scan, Data to: MAT Value To 01/04/18
Slide 21: Introducing A'kin Oil Control Range
Introducing A’kin Oil Control Range For personal use only 21 21
Slide 22: Essential Beauty Portfolio
ESSENTIAL BEAUTY PORTFOLIO For personal use only #1 Beauty Tools & #1 Pharmacy Lashes #1 Hair Tools & Accessories Youth Destination Accessories +$6.7M Retail Sales Growth over last 2 years 22 Source: IRI Market Measurement - Scan, Data to: MAT Value To 18/03/18
Slide 23: For personal use only
Attract Younger Consumer Renovate the Users Engagement Core For personal use only New Innovation Glambassador Packaging Refresh Est. $2M retail sales 3.5M followers +2ppt Sophistication 23
Slide 24: Beauty & Hair Destination
BEAUTY & HAIR DESTINATION For personal use only 24
Slide 25: Swisspers Transformation: A catalyst for growth
SWISSPERS TRANSFORMATION: A catalyst for growth For personal use only 25
Slide 26: Strong shelf presence: Iconic, Premium & Modern
STRONG SHELF PRESENCE: Iconic, Premium & Modern For personal use only 26
Slide 27: For personal use only
For personal use only • Market Leader in Cotton with 56% market share • Innovating Facial Wipes – Micellar & Coconut • Incremental Wipes ranging in Chemist Warehouse & Coles • Driving growth in a flat category with 0.2 share point gains 27 Source: IRI Market Measurement - Scan, Data to: MAT Value To
Slide 28: Market leader with 31% share in bags, wraps and foil
For personal use only Market Leader with 31% Share in Bags Wraps and Foil $112M 51% #1 of Australian Households have Foil, Kitchen Tidy, Garbage Bags, Retail Sales Value purchased a Multix product Baking Paper within the last year and Freezer Bags 28
Slide 29: Multix
\ Multix:/ At Multix we want to make it easy to choose household products that reduce the impact on the environment.
Slide 30: New Environmentally Friendly Food Wraps
New Environmentally Friendly Food Wraps For personal use only 30
Slide 31: New Compostable Tidy Bags
New Compostable Tidy Bags For personal use only A full range solution to Made from GMO free support Ban the Bag Corn Starch… even the worms can eat them! Degradable & Compostable Home Compostable to solutions Australian Standards No compromise on performance 31
Slide 32: Building a Brighter and Greener Future
Building a Brighter and Greener Future For personal use only • Greener Innovation • Incremental Core Ranging • Ban the Bag • TV Brand Campaign • Christmas Activation • Monash University Partnership 32
Slide 33: Move to strategic customer partnerships
M O V E TO S T R AT E G I C C U S TO M E R PA R T N E R S H I P S For personal use only • Tangible benefits realised from strategic customer partnerships • #1 Australian beauty supplier within pharmacy • New trading terms with key Pharmacy customers and category approach in grocery have lead to • In
Slide 34: Increased catalogue participation
I N C R E A S E D C ATA LO G U E PA R T I C I PAT I O N For personal use only • Increased catalogue representation +5 % MAT I N C R E M E N TA L R A N G I N G I N P H A R M AC Y & G RO C E RY • Incremental ranging in over 3,000 doors across all channels • 81 incremental SKUs accepted – 29,779 distri
Slide 35: In store presence: increased share of shelf
IN STORE PRESENCE For personal use only INCREASED SHARE OF SHELF 35
Slide 36: Tailored & differentiated activations
TA I LO R E D & D I F F E R E N T I AT E D AC T I VAT I O N S For personal use only Differentiated Mother’s Day Packs Personalised Xmas 2018 Exclusive Pack Sizes and First to market retailer offers 36
Slide 37: Fully integrated plans
F U L LY I N T E G R AT E D P L A N S For personal use only Retailer Floor stands tagged Catalogue Launch ATL Panels Field team & Store take- Customer Asset overs Digital Integration 37
Slide 38: Digital amplification
D I G I T I A L A M P L I F I C AT I O N For personal use only Platforms / Technology Syndication Marketing Customer & Consumer Big Data Relationships Product 38
Slide 39: Platform / Technology
P L AT F O R M / T E C H N O LO GY Best In Class eCommerce Solution Mobile First For personal use only 39
Slide 40: Syndication
SY N D I C AT I O N For personal use only • SKU Library – 600+ product images | 7 Brands |Domestic & International access • Retailers downloading daily with over 4000 downloads since October 2017 40
Slide 41: Syndication - digital assets amplification packages
SY N D I C AT I O N – D I G I TA L A S S E T S A M P L I F I C AT I O N PAC K AG E S For personal use only 41
Slide 42: Marketing
MARKETING Google Network | Stackla | Influencer Campaigns | How To Tutorials For personal use only • +200% increase in digital presence & media; Tutorials viewed +350k; Social Community 780k 42
Slide 43: Customer Partnerships
CUSTOMER PARTNERSHIPS For personal use only 43
Slide 44: Core brands: play to win mindset
C O R E 6 B R A N D S : P L AY TO W I N M I N D S E T For personal use only BUILD THE CORE INNOVATION BRAND INVESTMENT Strategic Partnerships • Packaging refresh • Building brands in partnership • Consumer Led • Building brand equity • Tailored Channel Plans • Trading Terms optimisation • Market lea
Slide 45: Export
For personal use only EXPORT 10/05/2018 2017 ANNUAL GENERAL MEETING 45
Slide 46: International key focus areas
I N T E R N AT I O N A L K E Y F O C U S A R E A S F Y 1 8 CURRENT FOCUS MEDIUM TERM: • Stabilise NZ business For personal use only <3 YEARS • Singapore • Reshape for growth NORTH ASIA domestically UNITED KINGDOM CHINA • eCommerce • Drive Regional expansion • Online SOUTH-EAST ASIA • Establish partn
Slide 47: Export performance overview FY18
EXPORT PERFORMANCE OVERVIEW FY18 China Nth Asia/Malaysia and India Dubai UK For personal use only % Chg vs YA +716% 100% Incremental Flat +22% FY18 New Distribution Models • Exclusive High Penetration High Penetration Strategy Capture new export markets • TP / Trader Established Market Established M
Slide 48: Continue step change in geographic footprint
CONTINUE STEP CHANGE IN GEOGRAPHIC FOOTPRINT MEDIUM TERM: FY19 focus areas: For personal use only CURRENT FOCUS <3 YEARS • NZ and Singapore Domestic Health NORTH ASIA • NZ profit UNITED KINGDOM • Singapore Sales Growth CHINA • Grow UK through new channels • Explore other regions, SOUTH-EAST ASIA con
Slide 49: China skin care market overview
CHINA SKIN CARE MARKET OVERVIEW For personal use only • Skincare is a $29B category (22B US) growing at 5% • Key trends • KOL’s driving behaviour • Organics • Switch from mainstream to Prestige brands • Masks • Ecommerce platforms gaining share in skincare and cosmetics 49
Slide 50: Building brands in China
BUILDING BRANDS IN CHINA For personal use only BRAND BUILDING BRAND PRESENCE BRAND ENDORSEMENT BRAND ACTIVITY • Flagship • Australia and China Facing • Campaigns • KOL engagement • Weechat • Platform activity • Engagement • Live streaming • Differentiated Offers • Weibou • Brand Values • Baidu Searc
Slide 51: Brand presence
BRAND PRESENCE For personal use only Key messaging and Hero SKUs Weechat /Weibo Flagship Store BRAND ENDORSEMENT • Selection of right KOL’s • Sampling • Event invitations Live streaming 51
Slide 52: Brand activity
BRAND ACTIVIT Y For personal use only Australia Facing China Facing • Key Platform promotion • Differentiated Value Offers • Key partner collaboration • Integrated plans • Shopping festival campaigns • Diagou education • Diagou Events • Gift Store Promotions through key partners • Targeted Retailer
Slide 53: Summary
SUMMARY For personal use only Reset New Zealand and Singapore for profitable growth •Domestic and Export Strong strategic partners in Export •Routines •Strategic alignment •Collaborative planning •Regular joint visits Investment in Brand Awareness Brands that resonate in multiple markets •Relevance
Slide 54: Project Landscape / Innovation / R&D
For personal use only P R O J E C T L A N D S C A P E / I N N O VAT I O N / R & D 10/05/2018 2017 ANNUAL GENERAL MEETING 54
Slide 55: Health, Wellness & Beauty: a $13 billion market
H E A LT H , W E L L N E S S & B E AU T Y: A $13 BILLION MARKET For personal use only Wellness Beauty ($4.6 Billion, 0.2% vs YA) ($5.7 Billion, +3.8% vs YA) ($3.0 Billion +1.3% vs YA) The intent of enhancing and restoring Maintain the state of good health by pro- The subjective enhancement of health
Slide 56: Wellness trends relevant to MCP
5 WELLNESS TRENDS RELEVANT TO MCP For personal use only • Boutique to Mass • From probiotics, i.e. • Collagen: The ultimate gut- • Driven by Millennials, with • Mitochondria are “power balancing good & bad healing superfood. an estimated $1 trillion of plants” in the cells that • Ingredient transpar
Slide 57: 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 For personal use only • Management balance sheet discipline/improvement & HAPL divestment • Leaving McPherson’s poised for new Health, Wellness and Beauty Investment Opportunities CAPABILITY & CAPACITY Consumer & Business
Slide 58: New Business / M&A
NEW BUSINESS / M&A For personal use only Organically Build New Brand(s) • Capability to enter new exciting spaces through internal development – not just via M&A Small Bolt-on Acquisitions • Smaller uncomplicated deals • Add value through our relationships, infrastructure, sales, marketing and execu
Slide 59: Key M&A criteria
KEY M&A CRITERIA HW&B focused For personal use only • Strategic fit within HW&B sector Fit with existing business • Fit with existing brand portfolio • Fit with existing customer base • Fit with distribution infrastructure Competitive landscape • Size of market • Competitive position and strength of
Slide 60: Rebuilding R&D to be Health, Wellness and Beauty focused
REBUILDING R&D TO BE H E A LT H , W E L L N E S S A N D B E AU T Y F O C U S S E D Formulation Product Strategic Sourcing Project Management Supplier Alliances Insights, Research & For personal use only Expertise Development Expertise Expertise Education 40+ yrs Expertise 30+ yrs 15+ yrs 20+ yrs Exp
Slide 61: Building tomorrow's supply chain today
B U I L D I N G TO M O R R O W ’ S S U P P LY C H A I N TO D AY For personal use only Kingsgrove Warehouse 66% Distribution Capacity Strong Supplier Alliance Cartons Per Day Capacity: 12,500 5,000 Flexible: 40% 24 hr Delivery Melbourne 3PL 1,600 postcodes Capacity: 10,000 SKU Rationalisation Direct
Slide 62: Summary
SUMMARY Exclusively focused on growing in $13.0B Health, Wellness and Beauty categories For personal use only •Well positioned to deliver improvements in underlying PBT from continuous operations GROUP Accelerating MCP growth brands & premium agency partnerships (Trilogy, Karen Murrell & Bondi Perf)
Slide 63: Senior Leadership Team
SENIOR LEADERSHIP TEAM For personal use only Paul Witheridge David Fielding David Smith Laurence McAllister Lori Pirozzi Chief Financial Strategy, Planning & Business Development Managing Director International Sales Director Officer Innovation Director Manager Brett Owers Sarah Tully Donna Chan Mar
Slide 64: For personal use only
For personal use only 64
Slide 65: Poised for Growth
For personal use only Poised for Growth