Slide 1: Amcor 2014 Asia analyst trip - Flexibles Asia Pacific
Amcor 2014 Asia analyst trip Singapore Monday 19 May 2014 Flexibles Asia Pacific
Slide 2: Key messages
Key messages • Regional leader • Profitable business with strong returns • Successful business model – The Amcor Way • Unique customer value proposition within the markets we have chosen to participate • Operating in diverse, high growth markets • Very well placed to deliver strong profitable growth
Slide 3: Amcor Flexibles Asia Pacific Leadership Team
Amcor Flexibles Asia Pacific Leadership Team Ralf Wunderlich President Amcor Flexibles Asia Pacific Andrew Terry Anthony Wong Gavin Barris Nathalie Ahlström Palit Limpiti Vice President & Vice President & Vice President & Vice President & Vice President General Manager General Manager General Manage
Slide 4: Agenda
Agenda I. Asia Pacific Flexibles packaging market II. Amcor Flexibles Asia Pacific overview III. Amcor Flexibles Asia Pacific (AFAP) – Driving profitable growth IV. Australasia, China and Thailand V. Indonesia introduction VI. India introduction VII. Summary 4
Slide 5: Asia Pacific Flexibles packaging market
Asia Pacific Flexibles packaging market
Slide 6: The Global Packaging Market
The Global Packaging Market By substrate Flexible packaging by region 695 Others 33 Glass 47 Metal 107 Australasia Africa Flexible Middle East 138 packaging South America Eastern Europe Rigid plastic 153 North America Western Europe Asia Board 217 USD Billion 2011 Estimate | Source: Pira Internation
Slide 7: The Global Flexible Packaging Market
The Global Flexible Packaging Market Developed economies1 Developing economies2 Global flexible packaging consumption USD bn CAGR 164 2006-11 Included +4% p.a. • Flexible plastics 134 138 (bags, pouches, 125 129 113 117 films etc) 83 2% 80 72 76 • Flexible papers 70 77 67 (bags, wraps etc) 8% • Flex
Slide 8: Asia Pacific population
Asia Pacific population Population AFAP Country millions presence 1 China 1,351.0 2 India 1,237.0 3 Philippines 96.7 4 Vietnam 88.8 5 Thailand 66.8 6 Malaysia 29.2 7 Indonesia 248.2 8 Australia 22.7 9 New Zealand 4.4 AFAP footprint covers 93% of the regional population SOU
Slide 9: Population distribution by income – China
Population distribution by income – China Family income People US Dollar1 Percentage of population Millions More than 75,000 0.3 4.1 50,000-75,000 0.4 5.4 35,000-50,000 0.8 10.8 25,000-35,000 2.0 27.0 15,000-25,000 8.9 120.2 10,000-15,000 18.6 251.3 5,000-10,000 36.7 495.8 3,000-5,000 19.5 263.4 Les
Slide 10: Population distribution by income – India
Population distribution by income – India Family income People US Dollar1 Percentage of population Millions More than 75,000 0 0.0 50,000-75,000 0.1 1.2 35,000-50,000 0.3 3.7 25,000-35,000 0.7 8.7 15,000-25,000 2.5 30.9 10,000-15,000 5.0 61.9 5,000-10,000 23.3 288.2 3,000-5,000 30.3 374.8 Less than
Slide 11: Population distribution by income – Thailand
Population distribution by income – Thailand Family income People US Dollar1 Percentage of population Millions More than 75,000 0.4 0.3 50,000-75,000 0.7 0.5 35,000-50,000 1.5 1.0 25,000-35,000 2.6 1.7 15,000-25,000 9.0 6.0 10,000-15,000 14.0 9.4 5,000-10,000 35.4 23.6 3,000-5,000 23.5 15.7 Less tha
Slide 12: Population distribution by income – Indonesia
Population distribution by income – Indonesia Family income People US Dollar1 Percentage of population Millions More than 75,000 0.1 0.3 50,000-75,000 0.4 1.0 35,000-50,000 0.7 1.7 25,000-35,000 1.4 3.5 15,000-25,000 6.1 15.1 10,000-15,000 13.2 32.8 5,000-10,000 46.3 114.9 3,000-5,000 28.7 71.2 Less
Slide 13: Population distribution by income – Australia
Population distribution by income – Australia Family income People US Dollar1 Percentage of population Millions More than 75,000 53.4 12.1 50,000-75,000 15.6 3.5 35,000-50,000 10.6 2.4 25,000-35,000 7.2 1.6 15,000-25,000 7.4 1.7 10,000-15,000 3.6 0.8 5,000-10,000 2.2 0.5 3,000-5,000 0 0 Less than 3,
Slide 14: Market evolution – Packaging intensity of use - Asia
Market evolution – Consumers Packaging intensity of use - Asia NZ Mature Aust (low-single digit growth) Packaging spend per capita Thailand Late stage developing Malaysia (mid-single digit growth) Indonesia China coastal2 Philippines China overall1 Developing Vietnam China inland3 (mid / high-single
Slide 15: Market evolution – Consumers
Market evolution – Consumers Growing consumer base although disparity remains The global consumer pyramid (7 billion population) • 200 million people • 3% of world’s population Affluent • Earning >$20,000 per year • 1.4 billion people Middle • 21% of world’s population Observations Income • Earning
Slide 16: Market evolution – Consumers
Market evolution – Consumers Level of income driving dual packaging options 16
Slide 17: Market evolution – Consumers
Market evolution – Consumers Evolution of retailing format Source: BMI 17
Slide 18: AFAP Top 20 Regional Competitors
Asia Pacific Top 20 competitors Asia Pacific Sales by Regional Competitor* (AUD’m) Amcor 2 3 AFAP Top 20 Regional Competitors 4 Overview 5 • AFAP’s key competitors differ 6 7 regionally both in scale and 8 breadth, ranging from large 9 MNCs to regionally-focused to 10 local companies 11 12 13 14 15
Slide 19: AFAP overview
AFAP overview
Slide 20: Amcor Flexibles Asia Pacific
Amcor Flexibles Asia Pacific Sales Beverage Food Medical & Pharma HPC Other 20
Slide 21: The Flexibles Asia Pacific Journey So Far
The Flexibles Asia Pacific Journey So Far Sales(1) Acquisitions A$1.5bn Alcan TCA VPS minorities Chengdu minorities Aperio Uniglobe Sales Shenda A$330 Parry Enterprises Detmold Bella Prima(2) 2009 2010 2011 2012 2013 2014* 8 plants 37 plants 1) FY2014 proforma sales (Inclusive of annualised sales fo
Slide 22: Amcor shareholder value creation model
Amcor shareholder value creation model Progressive growth in Dividend yield ~4% line with EPS Dividend ~A$500m Emerging markets 30% of sales @ ~10% Weighted average Total TSR between Capex organic growth ~4% 10% & 15% per ~A$400- Developed markets A$450m to 70% of sales @ 1-2% annum with low deliver
Slide 23: Significant growth opportunity in emerging markets
Significant growth opportunity in emerging markets 100% 90% 80% 70% Developed markets 60% 46% 50% 60% 40% 69% 30% 20% Emerging markets 10% 54% 40% 31% 0% Global packaging Amcor customers Amcor market 23
Slide 24: How AFAP will deliver growth
How AFAP will deliver growth • Bolt-on acquisition • Organic growth above market, Outcomes (consolidation, footprint, across all BUs technologies, segments) • Focus on core segments and winning customers • Value proposition that advantages Enablers Amcor against competitors • Strategic partnership (
Slide 25: AFAP – Driving profitable growth
AFAP – Driving profitable growth
Slide 26: The Amcor Way
The Amcor Way The Amcor Way GPOAAWO® Customer Talent Capital Low Cost Discipline Outperformance Q amcor 2
Slide 27: Safety Performance
Safety Performance Safety Performance – KPI Trends • Substantial Improvement in both LTIFR and RCFR • Programs that improved the results; LTIFR • Visual leadership - SLT focus and increasing this area 2.55 with targets established for each BU 1.54 • Focus on key risk areas where high incident report
Slide 28: Customer Focus: Value Proposition to Customers / Competitive Advantage
Customer Focus Value Proposition to Customers / Competitive Advantage Value Proposition to AFAP’s Competitive Advantage Key Enabler Customers Innovation Great products & Product Safety service at low cost Total Cost of Ownership Customer Intimacy Speed to Market Unique value to customers leveraging
Slide 29: Segment Attractiveness
End Use Applications Attractive Participation strategy is Segment Attractiveness developed for each country Typically 25% to 50% of the market is considered attractive Unattractive Average Weak Avg Strong Amcor Competitive Position Strong underlying value proposition coupled with focused participati
Slide 30: Packaging industry leadership in Product safety
Packaging industry leadership in Product safety We lead the We look way in the beyond food region by safety to all adopting food contact highest (EU) materials standards We take our We have a customers' dedicated responsibility team of Talent to consumers focused on seriously Product Safety Amcor We
Slide 31: Labour Market Trend
Labour Market Trend Talent attraction and retention continues to be a challenge in emerging markets • Companies are recruiting and unemployment rate is generally low across Asia compared with other regions (China 4.1%, India 3.8%, Indonesia 5.8%, Thailand 1%) • Employees intent to stay with their cu
Slide 32: Labour Market Trend
Labour Market Trend Rising Labour Cost • Labour costs are expected to continue to increase partly due to the rising minimum wage in various countries such as China, Thailand and Indonesia • Switching premium expectations by employees continue to remain high • Employees have higher merit increase exp
Slide 33: Labour Market Trend
Labour Market Trend Asia labour market is hot, flat and crowded Hot Market with plenty opportunities Flat Market which is very dynamic & competitive Crowded Market with lots of poachers Engaging and retaining talent is key 33
Slide 34: Playing to Win
Playing to Win Vision – Strategic Intent – Winning Aspiration Where We Play Short Term to Medium Term: Employer of Choice with • Build Key Capabilities sustainable competitive • Effective Labour Cost Management advantage through a robust • Workforce Optimisation pipeline of best talent in the packag
Slide 35: Talent as our Differentiating Factor
Talent as our Differentiating Factor • Continuous effort to develop local talent and gender diversity Day 1 Current • 2 Asian L3s • 6 Asian L3s • 22% Female L3s • 30% Female L3s • 9 Asian L4s • 20 Asian L4s • 19% Female L4s • 24% Female L4s In tandem with our growth trajectory in China, we have hire
Slide 36: Talent as our Differentiating Factor
Talent as our Differentiating Factor AFAP Innovation Flexible Packaging Contest Strengths & - Build a reputation for excellence; innovative; a Opportunities Branding ticket to future success - Attract young and talented people to join the - Strong talent Company pipeline at each level - Accelerate B
Slide 37: Talent as our Differentiating Factor
Talent as our Differentiating Factor AFAP Talent Development Programs Strengths & - Essential Leadership Program (for frontline leaders) - GMLDP (grooms GM capabilities) Opportunities - CLDP (develop Sales & Marketing talent) - Talent exchange (develops new skills, experiences, - Good relationships
Slide 38: Capital discipline - acquisitions
Capital discipline - acquisitions Business group Completion date Alcan Packaging Flexibles H2 2010 Alcan Medical Flexibles Flexibles Europe & Americas H1 2011 Ball Plastics Packaging Rigid Plastics H1 2011 B-Pack Due Flexibles Europe & Americas H1 2011 Techni-Chem Flexibles Asia Pacific H1 2011 Beij
Slide 39: Systematic approach to selecting and prioritising targets
Systematic approach to selecting and prioritising targets Growth execution pipeline Strategic Project Risk Ideation Ranking positioning classification assessment Growth strategy Track and prioritise Phasing of capital REF Priority / CODE NAME ACTUAL NAME SEGMENT OR GEO- SALES (AUD DEAL SIZE SCOPE OF
Slide 40: How we execute M&A: five stage process
How we execute M&A: five stage process • Best practices tools and Initial scope Non-binding offer Commercial DD Confirmatory DD Execution & documentation methodologies: analysis, valuation, documentation Target identification High level commercial data Commercial DD Due diligence Communication Post
Slide 41: How we integrate: The Amcor Way
How we integrate: The Amcor Way The Amcor Way Pre-merger planning operating model Post-merger planning Topic First 100 Days 100 Days + Campaigns • “My Safety Pledge” Programs • SLT (Safety Leadership Tours) • COMMS 5 “Safety Awareness • Weekly Toolbox Mtg with Safety Blitz” Topic • “Think 5” persona
Slide 42: Suitcase improving our competitive advantage
Suitcase improving our competitive advantage 42
Slide 43: Low cost – Procure +
Low cost – Procure + “GETTING STARTED” “GETTING FIT” “TRANSFORMED” 2012-2014 Today Procure + vision Building world class capabilities is a multi year journey • P+ Handbook / Category Strategy • Simplification & Innovation • Sustainable savings • Global Supply Database • Global Savings Tracking Tool
Slide 44: Australasia, China and Thailand
Australasia, China and Thailand
Slide 45: Amcor Australia and New Zealand overview
Amcor Australia and New Zealand overview Overview • 15 plants located in close proximity to customers • 1,500 co-workers • Preferred supplier status from customers • Hybrid model with Asia AFAP to support high labour cost products via import • Centres of Excellence that are efficient, fast and high
Slide 46: Amcor's Australasia Journey So Far
Amcor’s Australasia Journey So Far Sales growth – 100% since Acquisitions 2009 Sales Alcan TCA Aperio Detmold 2009 2010 2011 2012 2013 2014 6 plants 15 plants 46
Slide 47: Detmold acquisition
Detmold acquisition Key acquisition metrics: • Completed 1 April 2014 • Sales A$55m • 2 sites in Melbourne • Operating in food end markets servicing AFAP’s large customers Integration over next 18 months. Update to be provided in June 2014 half 47
Slide 48: Amcor Flexibles Australasia sales by Market Segment
Amcor Flexibles Australasia sales by Market Segment Market Served | Business Portfolio Food Household and Personal Care Snack foods Nappy bags Dairy Confectionary Dried groceries Medical & other products Bakery Small goods Medical Pharmaceutical Beverage Food Protective film Medi
Slide 49: Amcor Flexibles China overview
Amcor Flexibles China overview Overview North China • Currently 9 factories in China, 8 covering the coastal region and 1 covering the west Beijing VPS Beijing Amcor • 2,600 co-workers West China • Leader in flexible packaging in China • Due to dialect/cultural disparity and the need Jiangyin Shangh
Slide 50: Amcor's China Journey So Far
Amcor’s China Journey So Far Sales 2014 sales >11x higher Acquisitions than 2009 VPS minorities Chengdu minorities Shenda Sales 2009 2010 2011 2012 2013 2014* 2 plants 9 plants 50
Slide 51: Shenda acquisition
Shenda acquisition Key acquisition metrics: • Completed October 2013 • Sales RMB 440m • 2 sites in Jiangsu Province • Operating in pharma, snacks and culinary end markets Acquisition rationale: • Establishes AFAP as the market leader in Eastern China • Strong fit with existing operations and offers
Slide 52: Amcor Flexibles China sales by Market Segment
Amcor Flexibles China sales by Market Segment Amcor is a leading supplier of flexible packaging in China Market Served | Business Portfolio Food Household and Personal Care •Dairy, milk powder products •Personal Care •Snacks/Biscuits •Hygiene products •Confectionary •Household Products •Noodle •Cosm
Slide 53: Amcor Flexibles Thailand overview
Amcor Flexibles Thailand overview Overview • 4 plants • 1,200 employees • Leader in flexible packaging in Thailand • Set the industry standard for Thailand AF Bangkok - Quality - Innovation AF Phetchaburi AF Rayong - Upstream capabilities AF Chonburi • Best plant footprint - Specialised to core cust
Slide 54: Amcor's Thailand Journey So Far
Amcor’s Thailand Journey So Far Sales Acquisitions Alcan Aperio Sales A$0m 2009 2010 2011 2012 2013 2014* 0 plants 4 plants 54
Slide 55: Amcor Flexibles Thailand sales by Market Segment
Amcor Flexibles Thailand sales by Market Segment The largest flexibles manufacturer in Thailand Market Served | Business Portfolio Food Household and Personal Care Instant beverage Fabric care Snack Hair & skin care Retort food Floor cleaner Fresh dairy Pharma & Industrial products I
Slide 56: Summary
Summary
Slide 57: Key messages
Key messages • Regional leader • Profitable business with strong returns • Unique customer value proposition within the markets we have chosen to participate • Operating in diverse, high growth markets • Very well placed to deliver strong profitable growth • Best in industry talent 57