Mcbride Plc · LSE:MCB
Mcbride — Investor Day (February 2021)
66 slides from Mcbride's investor day presentation, Feb 23, 2021
Slide 1: McBride plc Capital Markets Day
McBride plc Capital Markets Day Programme Compass Refocusing our business for long-term value creation 23rd February 2021
Slide 2: Agenda
13:30 Welcome and Introductions Chair, CEO 13:40 Introducing McBride Video Agenda 13:45 14:05 Company Vision The Divisions CEO MDs, CEO 14:55 Q&A #1: Focus on the Divisions 15:05 Financial outcomes CFO 15:25 Summary & Close CEO 15:30 Q&A #2: Compass Overall 2 everyday cleaning products, expertly mad
Slide 3: Our speakers today
Our speakers today Jeff Nodland Chris Smith Mark Strickland Chairman Chief Executive Officer Chief Financial Officer Tim Perman Lennard Henrik Aagaard Interim Managing Markestein Managing Director Director Liquids Managing Director Powders, Aerosols, Unit Dosing Asia Pacific 3 everyday cleaning prod
Slide 4: Programme Compass: Timeline of progress
Programme Compass Timeline of progress Mar 20 – May 20 Sept 20 Nov-Dec 20 Feb 21 Phase 1 Investor update Team Re-org Capital Market Study Senior recruitment Markets Day Jun-Aug 20 Phase 2 Sept – Nov 20 OD & Initial Strategy Phase 3 Jan 21 Formulation Strategy Development New Organisation Starts 4 ev
Slide 5: Our Compass vision
Our Compass vision EBITA margin ROCE Grow revenue increase improvement to €1 bn +2-4 ppts +5-10 ppts Liquids Unit Dosing Powders Aerosols Asia Pacific 5 everyday cleaning products, expertly made
Slide 6: Our approach and outcome in summary
Our approach and outcome in summary Strategy Restructure Outcomes formation to deliver 6 everyday cleaning products, expertly made
Slide 7: Recent history
Recent history Alert to our challenges Financial & Strategy Organisational non-financial delivery potential missed performance 7 everyday cleaning products, expertly made
Slide 8: Firm foundations
Firm foundations The fundamentals are strong Market McBride #1 in Operating outlook Europe platform Financial Refreshed stability team 8 everyday cleaning products, expertly made
Slide 9: Changing to deliver
Changing to deliver This is what we are doing and why What we are doing Why we are doing it ● De-centralise ● Focus, priorities ● Separate strategies ● Accountability ● Divisional management ● Speed, agility ● Delegated decisions ● Specialist ● Central teams for scale advantage ● Dependable ● Perfor
Slide 10: ESG ambition
ESG ambition Build on strong platform Extract of our 2025 Product Sustainability targets Environmental ● Product sustainability and safety 100% >50% PCR 100% ● Materials and ethical sourcing/disposal paper board plastic packaging in plastic ● Waste and pollution fully recyclable bottles FSC approved
Slide 11: One McBride, five divisions
One McBride, five divisions We will have common values and three core principles 11 everyday cleaning products, expertly made
Slide 12: Overall portfolio outcome
Overall portfolio outcome Asia Pacific Sales growth (CAGR %) GROWTH Aerosols Unit Dosing Liquids MATURE Powders * Circle size represents relative revenue Margin improvement (ppts) contribution 12 everyday cleaning products, expertly made
Slide 13: The divisional model works
The divisional model works Asia-Pacific and Aerosols prove the case • Revenue +14% CAGR • Growth journey started Asia Pacific • Double-digit margins Aerosols • Loss to profit Asia-Pacific Sales Aerosols – Operating Profit/(Loss) 27 3 2 25 1 23 0 £m 21 £m -1 -2 19 -3 17 -4 15 -5 2018 2019 2020 2018 2
Slide 14: Product Leadership: Aerosols
Product Leadership Develop to grow Aerosols Marc Marot | MD - Aerosols 14 everyday cleaning products, expertly made
Slide 15: Our vision
Product Leadership Our vision ● Focus on product innovation ● Expand revenues by targeting niches Aerosols ● Move to higher margin opportunities 15 everyday cleaning products, expertly made
Slide 16: Our journey
Product Leadership Our journey FY20 Sales £35.2m ● Significant transformation EBITA £2.3m ● Building a standalone division Aerosols ● Resetting relationships with existing customers ● New customers, channels and products 16 everyday cleaning products, expertly made
Slide 17: The Aerosols strategy
Product Leadership The Aerosols strategy Develop to Grow Aerosols Beyond Build on Capitalise on France Eco creds sanitisers 17 everyday cleaning products, expertly made
Slide 18: The strategic path to 10% p.a.
Product Leadership The strategic path 5 to 10% p.a. Growth target First 2 years Develop Next 3 years Grow • Expand hydro-alcoholic • Profitable growth from new based disinfectant range products and regions • Build market knowledge and presence in • Eco range an increasing new territories proportion
Slide 19: A winning formula
Product Leadership A winning formula ● New strategy delivering material improvement in performance ● Confident in growth opportunities Aerosols ● Continued strong focus on cost base ● Best-in-class commercial & technical approach ● A Team that is fast, agile & reliable 19 everyday cleaning products,
Slide 20: Cost & Value Leadership: Asia Pacific
Cost & Value Leadership Deliver to grow Adrian Gurney | MD – Asia Pacific 20 everyday cleaning products, expertly made
Slide 21: Our vision
Cost & Value Leadership Our vision FY20 Sales £26.1m ● Cost & value leadership EBITA £3.0m ● New capacity and scale ● Continue track record of growth ● Leverage Group expertise 21 everyday cleaning products, expertly made
Slide 22: The Asia Pacific strategy
Cost & Value Leadership The Asia Pacific strategy Deliver to Grow Regional & High Developing customer quality & relationships focus service Add growth Cost focus capacity 22 everyday cleaning products, expertly made
Slide 23: The Asia Pacific strategy
Cost & Value Leadership The Asia Pacific strategy 8-12% p.a. Growth target First 2 years Deliver Next 3 years Grow ● Establish new Malaysia facility ● Exploit new cost leading capacity ● Develop Household manufacturing ● Delivery of scale Contract ● Capacity investment in Vietnam Manufacturing oppor
Slide 24: A winning formula
Cost & Value Leadership A winning formula ● Fast-growing established business ● Compelling value proposition ● Developing consumer sophistication ● Best in class facilities ● Well positioned for growth 24 everyday cleaning products, expertly made
Slide 25: Cost Leadership: Liquids
Cost Leadership Cost Leadership Simplify to grow Tim Perman | Interim MD 25 everyday cleaning products, expertly made
Slide 26: Where we are
Cost Leadership Where we are FY20 Sales £383.2m EBITA £15.5m External View Internal View ● Large stable market ● Largest division ● Commoditised product ● Significant scale benefits categories ● Market share upside ● Quality & service important ● Complex portfolio ● Cost competitiveness paramount ●
Slide 27: The Liquids strategy
Cost Leadership The Liquids strategy Simplify to Grow Enhanced Simplified Lower costs customer European focus portfolio proposition 27 everyday cleaning products, expertly made
Slide 28: Strategic initiatives
Cost Leadership Strategic initiatives ● Prioritised product portfolio removing complexity Sales EBITA ● Transforming the cost base CAGR 1-3% +1-3 ppts in operations ● Optimise● overhead Large stablestructure market to service simplified business ● Commoditised product categories ● Partner ●asQuality
Slide 29: Strategic focus areas
Cost Leadership Strategic focus areas Regional growth Private Label cleaners and (Germany, UK, Laundry liquids Southern Europe) Further Contract Selective Manufacturing value brands development expansion 29 everyday cleaning products, expertly made
Slide 30: The strategic path
Cost Leadership The strategic path First 2 years Simplify Next 3 years Grow ● Refine portfolio and SKUs ● Competitive pricing delivery ● Category and customer ● New regional penetration segmentation ● Focused product offer ● Complexity reduction ● Sustainable packaging delivery ● Cost levers address
Slide 31: A winning formula
Cost Leadership A winning formula Customer Significant scale Local asset base, and market and presence cost effective focused Expertise Focused, throughout disciplined approach 31 everyday cleaning products, expertly made
Slide 32: Product Leadership: Unit Dosing
Product Leadership Product Leadership Accelerate to Grow Lennard Markestein MD – Unit Dosing 32 everyday cleaning products, expertly made
Slide 33: Where we are
Product Leadership Where we are FY20 Sales £183.5m EBITA £17.2m External View Internal View ● Fast paced growing market ● Leading position in P/L ● Brander led innovation ● Steady revenues ● Sustainability is a key driver ● Strong portfolio but slow to innovate ● E-commerce potential ● Early in e-co
Slide 34: The Unit Dosing strategy
Product Leadership The Unit Dosing strategy Accelerate to Grow Specialist Embedded in Efficient supplier industry innovator Cost competitive Right asset base by scale 34 everyday cleaning products, expertly made
Slide 35: Strategic initiatives
Product Leadership Strategic initiatives ● Strengthen innovation portfolio and delivery Sales EBITA ● Invest in capability and CAGR 4-8% +1-2 ppts flexibility of assets ● Manage●product lifecycle Large stable – market cost out●and complexityproduct Commoditised categories Turnover ● Capture ●select
Slide 36: Strategic focus areas
Product Leadership Strategic focus areas Soft Auto Sustainable Continued adaptation of Dishwash and Laundry packaging our core offering capsules development 36 everyday cleaning products, expertly made
Slide 37: The strategic path
Product Leadership The strategic path First 2 years Accelerate Next 3 years Grow ● Building industry depth ● Pace-setter in P/L ● New product launches ● Investment in new capacity ● New sustainable packaging offerings ● Delivering growth outside Europe ● Asset flexibility improvement ● Revenue from
Slide 38: A winning formula
Product Leadership A winning formula Strong position Specialised team with Strategic focus – in dynamic sector customer focus unit dosing Product plan with Investments near-term impact identified and funded 38 everyday cleaning products, expertly made
Slide 39: Cost Leadership: Powders
Cost Leadership Cost Leadership Revitalise to Grow Henrik Aagaard | MD – Powders 39 everyday cleaning products, expertly made
Slide 40: Where we are
Cost Leadership Where we are FY20 Sales £78.2m EBITA £(4.1)m External View Internal View ● Competitive market – Asset ● Relevant technology heavy ● Market reputation ● Market decline slowing ● Established manufacturing ● Consumer transitioning ● Strong ECO credentials ● Market consolidating ● Lack o
Slide 41: The Powders strategy
Cost Leadership The Powders strategy Revitalise to Grow Technical Targeted Low cost capability Asset utilisation markets/ upgrade opportunities 41 everyday cleaning products, expertly made
Slide 42: Strategic initiatives
Cost Leadership Strategic initiatives ● Cost optimisation ● Investing in tech team Sales EBITA CAGR 0-3% +3-5 ppts ● Reinvigorate market position ● Capitalise on ECO leadership ● Largest Division ● Significant Scale Benefits ● Complex Portfolio Manufacturing Savings ● Need for Agility & Responsivene
Slide 43: The strategic path
Cost Leadership The strategic path First 2 years Revitalise Next 3 years Grow ● Cost programmes ● Continued cost focus ● Product development ● Capacity utilisation ● Marketing ● Market share gains ● Targeted early volume wins ● Agile product development ● Deliver CoMan volumes 43 everyday cleaning p
Slide 44: A winning formula
Cost Leadership A winning formula Targeted asset Established Cost competitive Specialists fill technological platform options 44 everyday cleaning products, expertly made
Slide 45: Divisional Summary
Divisional Summary
Slide 46: 5 divisions, 5 strategies
5 divisions, 5 strategies Each division with its own strategy and role in the Group Liquids Unit Dosing Powders Aerosols Asia Pacific Cost Product Cost Product Cost & Value Leadership Leadership Leadership Leadership Leadership Cash Growth Cash Value Strategic generation engine generation optimisati
Slide 47: Phased delivery
Phased delivery Early years about reset and platforms First 2 years Next 3 years • Cost focus in mature businesses • Adding capacity in growth businesses • Platform acceleration in growth businesses • Sustained growth for Growth businesses • Enhance specialisms • Share gains and profit enrichment •
Slide 48: Financial outcomes
Financial Mark Strickland outcomes Chief Financial Officer Delivering shareholder value
Slide 49: Five divisions plus Corporate
Five divisions plus Corporate Tailored strategies in place to optimise performance for each division FY20 Liquids Unit Dosing Powders Asia Aerosols Corporate Total Group Revenue (£m) 383.2 183.5 78.2 26.1 35.2 706.2 Adjusted Operating Profit/(Loss) (£m) 15.5 17.2 (4.1) 3.0 2.3 (5.6) 28.3 Adjusted Op
Slide 50: Cost optimisation
Cost optimisation Cost optimisation is at the forefront of years 1 & 2 Programme to save £20m annualised by the end of FY23 ● Delivery across a number of well defined initiatives ● Clear accountability – “Nowhere to hide” ● Experienced delivery team ● Tracking in place with regular progress reviews
Slide 51: Dampening the impact of raw material input prices
Dampening the impact of raw material input prices Delivering margin growth through cycles Monthly Margin 12 Month Trailing Margin Inverted Input Costs ● Business always recovers ● Strategy delivers improved outcomes 51 everyday cleaning products, expertly made
Slide 52: Exceptional costs and pensions
Exceptional costs and pensions Focus respectively on payback and reduction Exceptional costs Pensions ● Historic, significant cash ● Cash deficit contribution of £4m p.a. costs not expected to repeat ● Triannual Valuation as at March 2021 ● Forwards cost will be directly associated to incremental op
Slide 53: Capital expenditure and depreciation
Capital expenditure and depreciation Compass strategy does not require excessive capital Average Capex per annum: More efficient purchasing of equipment via Asia allowing the business to buy “more” for “less” FY17-21 FY22-26 £21m £24m Supporting Key Strategic Projects ● Unit Dosing Innovation ● Asia
Slide 54: Cash and net debt
Cash and net debt Ability to deliver shareholder value enabled by strong cash generation Trade working capital Strong free at cash flows c.12% of sales 54 everyday cleaning products, expertly made
Slide 55: Capital allocation
Capital allocation Investing in profitable growth is key ● First priority is to invest in the business to drive profitable growth ● Target Net Debt to EBITDA leverage ratio of 2x or less ● Below 2x - flexible distribution policy ● Deviation from above only for exceptional value enhancing initiatives
Slide 56: Dividend policy
Dividend policy Retaining a flexible model, pay-outs when appropriate and affordable ● Move to Annual Dividend Payments ● Payable only when Net Debt to EBITDA leverage ratio is 2x or less ● Thereafter a progressive policy: 1.5x to 2x Base Dividend – EPS / 6 Cash 1.0x to 1.49x Additional Distribution
Slide 57: Shape of the plan
Shape of the plan Building blocks of revenue and margin growth Revenue growth over the plan Liquids Unit Dosing Powders Aerosols Asia-Pacific Current Growth 57 everyday cleaning products, expertly made
Slide 58: Shape of the plan
Shape of the plan The plan is split 2:3 and therefore not linear First two years Next three years 2 – 4% Sales Growth (CAGR) 4 – 6% High Single EBITDA (%) Low Double Δ 25 – 35% Adj PBT (£m) Δ 40 – 50% Δ 2 – 3% ROCE (ppts) Δ 3 – 4% N.B. Not intended to be profit projections or interpreted as a profit
Slide 59: Outlook
Outlook Measuring progress and success – Key metrics Margin ROCE Revenue growth Cost savings advances Free cash flow improvement 59 everyday cleaning products, expertly made
Slide 60: Summary
Summary 60 everyday cleaning products, expertly made
Slide 61: Compass is pointing the way to value creation
Compass is pointing the way to value creation Clear cost and revenue opportunities ● Separate divisional strategies: Ensures focus ● Accountable divisional teams: Improves execution ● Decentralised model: Rekindle specialisms, agility and speed ● Central core: Maintain scale advantage Revenue Margin
Slide 62: Positioned to succeed
Positioned to succeed Strategy preparation, better organised, simpler business ● Robust strategy process ● More effective organisation set-up, proven ● Broader senior management ● Improved customer proposition ● Competitive environment ● Business de-cluttered 62 everyday cleaning products, expertly
Slide 63: Our proposition
Our proposition A reset McBride will capitalise on firm foundations • #1 player • Cost optimisation • Revenue growth • Revenue diversification • Sustainability commitments • Innovation agenda • Solid financials • No significant additional capital / exceptionals everyday cleaning products, expertly m
Slide 64: Appendix
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Slide 65: Divisional revenue and profit/(loss)
Divisional revenue and profit/(loss) FY21 H1 Liquids Unit Dosing Powders Asia Aerosols Corporate Total Group Revenue (£m) 201.1 93.9 35.7 13.4 18.8 362.9 Adjusted Operating Profit/(Loss) (£m) 10.1 10.0 (1.0) 1.7 0.9 (2.7) 19.0 Adjusted Operating Profit/(Loss) % 5.0 10.6 (2.8) 12.7 4.8 n/a 5.2 65 eve
Slide 66: Return on capital employed (ROCE)
Return on capital employed (ROCE) Effect of changing company measurement of ROCE The original Return on Capital Employed (ROCE), per Page 26 of the Annual Report and Accounts FY20, was defined as Adjusted operating profit as a percentage of average year end net assets excluding net debt (pre IFRS16)