Greencore Group Plc · LSE:GNC
Greencore — H1 FY2011 Earnings Presentation
24 slides from Greencore's earnings presentation, Jul 12, 2011
Slide 1: Interim Results for the half year ended 25 March 2011
INTERIM RESULTS for the half year ended 25 March 2011
Slide 2: Interim Results Agenda
INTERIM RESULTS Highlights Patrick Coveney, CEO Financial Review Alan Williams, CFO Operating Review Patrick Coveney, CEO Outlook Patrick Coveney, CEO Q&A Open to the Floor 2
Slide 3: Highlights
HIGHLIGHTS •Good Group H1 performance in challenging market conditions •Pursuit of Northern Foods combination did not distract from underlying performance and development of the Group in the UK and US •Completion of the refinancing of primary bank facility in May of £280m, pushing average debt matur
Slide 4: Financial Review
FINANCIAL REVIEW Alan Williams Chief Financial Officer
Slide 5: 2011 Financial Delivery
2011 FINANCIAL DELIVERY H1 FY11 Versus H1 FY10 CC*** vs H1 FY10 Revenue €442m +7.9% +4.4% Operating profit* €27m +1.7% -2.2% Operating margin* 6.1% -40bps -40bps Effective tax rate 18% - N/A Continuing adjusted EPS** 6.8c +41.7% +35.4% * before exceptional items and acquisition related amortisation
Slide 6: Convenience Foods
CONVENIENCE FOODS Continuing • Encouraging sales H1 FY11 €m H1 FY10 €m % Change % Change CC* performance • Challenging consumer & retail environment Revenue 402.4 372.0 +8.2% +4.3% • Significant weather disruption in UK and US Operating 26.0 24.8 +4.9% +0.7% profit** • Margin decline of 20bps in Mar
Slide 7: Ingredients & Property
INGREDIENTS & PROPERTY Continuing • Division represents less than 10% of H1 FY11 H1 FY10 % Change Group activity % Change €m €m CC* • Comprises edible oils, molasses and property trading Revenue 39.5 37.5 +5.3% +5.3% • Reduction in operating profit fully explained by year-on-year decrease Operating
Slide 8: Decreasing Finance Cost
DECREASING FINANCE COST €m H1 FY11 H1 FY10 Bank interest payable (9.2) (13.9) Unwind discount to present value 0.1 (0.2) Finance cost* (9.1) (14.1) Pension charge (0.7) (0.1) FX/Fair value of derivatives 4.0 (0.8) Net finance charge (5.8) (15.0) * before fair value, FX and pensions 8
Slide 9: EPS and Dividend
EPS AND DIVIDEND € cent H1 FY11 H1 FY10 • Continuing adjusted EPS up 41.7% (on a reported basis) Adjusted EPS - continuing EPS - discontinued EPS 6.8 - 4.8 3.7 • Total dividend for FY11 Total adjusted EPS 6.8 8.5 expected to be within the Dividend per share 40-50% of EPS payout policy - interim prop
Slide 10: Net Exceptional Costs
NET EXCEPTIONAL COSTS Income Statement H1 Cash Impact H1 FY11 Exceptionals €m €m Transaction costs (13.6) (7.7) Legal settlement (4.1) (3.2) Pre tax impact (17.7) (10.9) Tax on exceptional items 0.1 n/a Post tax impact (17.5) (10.9) Prior year items cash impact - (3.5) Total (17.5) (14.4) 10
Slide 11: Cashflow
CASHFLOW €m H1 FY11 EBITDA 37.7 Working capital movement (20.6) Net capex (15.2) Exceptional items (14.4) Acquisition/disposal of undertakings (12.6) Interest payments (10.6) Settlement of derivatives (4.6) Pension deficit funding (4.9) Dividends payable (4.8) Purchase of own shares, tax, other move
Slide 12: Refinancing
REFINANCING • In May 2011, a new primary bank facility of £280m was put in place for a five year term at improved rates • This extends our average debt maturity from 1.6 years to 4.6 years May 2011 €m 400 Amount to mature 300 200 318 100 49 70 0 October 2013 October 2015 May 2016 12
Slide 13: Summary
SUMMARY FINANCIAL PERFORMANCE • Good performance in Convenience Foods despite challenging market conditions • Ingredients & Property performance impacted by reduced property trading profits • Continuing adjusted EPS growth of 41.7% to 6.8 cent • Interim dividend of 3.0 cent with FY11 payout ratio ex
Slide 14: Operating Review, Strategy & Outlook
OPERATING REVIEW, STRATEGY & OUTLOOK Patrick Coveney Chief Executive Officer
Slide 15: Summary
SUMMARY 1.Drivers of H1 FY11 performance - Market factors impacting revenues and operating performance - Category scale driving strong performance in Food to Go and Prepared Meals - Emerging US business 2.Group strategic priorities - Group strategy - Corporate development 3.Outlook 15
Slide 16: 1. Our H1 FY11 Performance
1. OUR H1 FY11 PERFORMANCE Constant currency Convenience Foods business performance • Good performance in Convenience Foods despite market challenges Revenue growth +4.3% • Continued delivery of above market revenue and share gains across portfolio Operating profit +0.7% growth • Enhanced reputation
Slide 17: 1. Demand Volatility
1. DEMAND VOLATILITY Market Growth Inflation • Decline in consumer sentiment in 4.7% Jan-Mar 2011 impacted on grocery spend 3.9% 4.3% 3.7% 3.7% 4% • Severe weather disruption in Dec 3.3% 3.7% 2010 (& in US in Jan 2011) had a 3.2% significant impact on operations, 3% 3% 3.1% supply chain and shopper
Slide 18: 1. Input Price Volatility
1. INPUT PRICE VOLATILITY COMMODITY INFLATION •FY10 overall commodity price movements negligible • Despite consumer, weather and •FY11 overall inflation running at c. 4% to inflation impacts, our 5% Convenience Foods business has - Less pronounced in H1 delivered well: - More pronounced in H2 - Sign
Slide 19: 1. Key Performance Drivers
1. KEY PERFORMANCE DRIVERS At our largest businesses Sandwiches 8.4% • Strong overall category performance, share gains with core customers and significant new business wins sustained an above market trajectory • Trend indicates consumers trading up from value to core 2.6% • Customer focus, consumer
Slide 20: 1. Progress in the US
1. PROGRESS IN THE US • Newburyport re-fit and capacity upgrade completed in November 2010 • ‘On A Roll’ acquired to drive food to go sales, especially in convenience channels - already fully integrated and performing well • Weight Watchers customer footprint extended to Wal-Mart 20
Slide 21: 2. Group Strategy
2. GROUP STRATEGY Strategy Driver • A focused convenience foods business • Centred on chilled prepared foods capitalising on favourable, long-term consumer and retailer dynamics • Focused on private label • An industry leading UK business, • Market leading category scale supplemented by an emerging
Slide 22: 2. Corporate Development
2. CORPORATE DEVELOPMENT • Group strategy drives development agenda • Our team devoted considerable time and resources to a combination with Northern Foods - a combination that was fully aligned with our strategy • Although disappointed, we gained several important insights from the ‘Northern’ proce
Slide 23: 3. Outlook
3. OUTLOOK • Good trading in Convenience Foods in H1 FY11 • Seasonally more important second half has started well and we continue to experience strong demand for our convenience food offerings • Input price inflation is now running at more pronounced levels - managing its impact will remain a key a
Slide 24: Greencore: bringing convenience to good food
A green ol bringing convenience to good food