Kerry Group Plc · EURONEXT:KRZ
Kerry — FY2006 Earnings Presentation
36 slides from Kerry's earnings presentation, 2007
Slide 1: Preliminary Statement of Results 2006
ia , Preliminary Statement of Results 2006 J KERRY the science of food
Slide 2: Kerry - 2006 Preliminary Results Presentation
Kerry - 2006 Preliminary Results Presentation • Review of Business Hugh Friel • Financial Review Brian Mehigan • Business Growth Prospects Hugh Friel • Q&A
Slide 3: 2006 Performance Highlights
2006 Performance Highlights • Revenue growth of 4.9% to €4,646m • Like-for-like revenue growth of 3.6% • Trading profit increased to €384m • Adjusted EPS* up 1.7% to 133.9 cent • Final dividend per share up 13.6% to 12.5 cent • Free cash flow of €241m • R&D investment of €139m Note: * before intangi
Slide 4: Kerry Response to Challenging Environment in 2006
Kerry Response to Challenging Environment in 2006 • Good organic growth • Good results through innovation in nutritional and wellness categories • Divestment of underperforming businesses • Restructuring programme for optimal asset utilization • Continuing focus on cost recovery and savings programm
Slide 5: Business Review - Ingredients 2006
Business Review - Ingredients 2006 2006 Total Growth Revenue €3,134m 3.7% Trading Profit €293m 3.3% • Good top-line growth (4% like-for-like) • Margin held at 9.4% • Strong H2 • Americas - good performance in nutritional, organics and beverage categories • Europe - cost recovery continuing • Asia Pa
Slide 6: Business Review - Ingredients Americas
Business Review - Ingredients Americas Americas 2006 Total Growth Like-for-like Revenue* €1,276m 5.2% 4.9% • Good results through ‘Go to Market’ strategy • Like-for-like growth of 4.9% achieved through innovative nutritional and convenience offerings • Encouraging growth across sweet and savoury sec
Slide 7: Business Review - Ingredients Europe
Business Review - Ingredients Europe Europe 2006 Total Growth Like-for-like Revenue* €1,294m 2.3% 3.2% • Like-for-like revenue growth of 3.2% • Profit margins held despite delay in cost recovery • Good growth through culinary systems • Seasonings and coatings difficult year in France and UK but good
Slide 8: Business Review - Ingredients Asia Pacific
Business Review - Ingredients Asia Pacific Asia Pacific 2006 Total Growth Like-for-like Revenue* €363m 9.2% 10.1% • Strong top-line and margin growth • Significant growth through nutritional, savoury and beverage offerings • Branded beverage flavourings up 32% • Esterol emulsifiers double digit grow
Slide 9: Business Review - Consumer Foods 2006
Business Review - Consumer Foods 2006 2006 Total Growth Revenue €1,819m 5.4% Trading Profit €118m (4.5%) • Like-for-like revenue growth of 1.5% (H2: 2.6%) • Difficulties in primary poultry and frozen meals adversly impacted trading performance • Good recovery in chilled ready meals - quarter by quar
Slide 10: Financial Review
KERRY Financial Review
Slide 11: 2006 Financial Highlights
2006 Financial Highlights Revenue €4,646m 4.9% Trading profit €384m 1% Adjusted EPS* 133.9 cent 1.7% Free cash flow €241m 2005: €248m Acquisition programme €113m 2005: €238m Note: * before intangible amortisation and non-trading items
Slide 12: Revenue Growth Analysis
Revenue Growth Analysis 2005 2006 €4,430m €4,646m 4.9% FX Translation Like-for-like Acquisition/Disposal -0.4% +3.6% +1.7% Note: Like-for-like represents revenue growth before subsidiary translation and acquisitions / disposals impact
Slide 13: Revenue Growth by Business
Revenue Growth by Business 2006 2005 Revenue Revenue Total Like-for-like Total Like-for-like Growth Growth Growth Growth - Europe* 2.3% 3.2% 8.5% 4.8% - Americas* 5.2% 4.9% 8.2% 3.8% - Asia Pacific* 9.2% 10.1% 15.7% 7.1% Ingredients 3.7% 4.0% 8.7% 4.5% Consumer Foods 5.4% 1.5% 3.9% 2.0% Group 4.9% 3
Slide 14: Revenue Growth Components
Revenue Growth Components Like-for-like % Growth Like-for-like % Growth 6 2006 2005 5 4% 4% 4 Volume 3% 4% 3 Price 1% 1% 2 1 Trading currency 0% (1%) 0 Group 4% 4% 2006 2005 Note: Like-for-like represents revenue growth before subsidiary translation and acquisitions / disposals impact
Slide 15: Margin by Business
Margin by Business 2006 2005 Trading Trading Revenue Profit Revenue Profit €m €m % €m €m % Ingredients 3,134 293 9.4% 3,022 284 9.4% Consumer Foods 1,819 118 6.5% 1,726 123 7.1% Elimination / Unallocated (307) (27) - (318) (27) - Group 4,646 384 8.3% 4,430 380 8.6%
Slide 16: Trading Margin Progression
Trading Margin Progression €9m (€2m) (€14m) 420 €31m Currency 410 (€80m) Acquisitions / Disposals R&D 400 390 €60m €384m €380m 380 Underlying 370 Growth 360 350 340 330 320 Energy Margin Related Recovery 310 Cost Programme Increases 300 2005 2006 Margin 8.6% +0.4% +0.1% 0.0% -0.2% -1.8% +1.2% 8.3%
Slide 17: Free Cash Flow
Free Cash Flow 2006 2005 €m €m EBITDA* 487 482 Movement in working capital (46) 1 Capital expenditure (net) (88) (120) Interest (77) (64) Taxation (35) (51) Free cash flow 241 248 Dividends and share buybacks (79) (27) Acquisitions (113) (234) Note: * before intangible amortisation and non-trading i
Slide 18: Financial Ratios
Financial Ratios 2006 2005 Debt : EBITDA* 2.5x 2.6x Debt : Market capitalisation 35% 37% EBITDA : Net interest* 6.2x 8.0x CFROI 10.4% 11.0% Note: * ratios calculated in accordance with financial covenants
Slide 19: Restructuring Programme Update
Restructuring Programme Update • 2006 charge €59.2m net of tax • Net positive cash contribution • Disposed of : – Irish & UK poultry businesses – UK chilled desserts business – St. Brendan’s cream liqueur business • Programme well advanced
Slide 20: Other Financial Matters
Other Financial Matters • Finance costs Up €8.6m due mainly to increase in average interest rates • Taxation Tax charge on continuing operations down to 19.6% due to acquisition integration and the benefit of increased R&D tax credits • Pensions Pension charge for the year amounted to €39m and the n
Slide 21: Outlook 2007 and Future Prospects
Outlook 2007 and Future Prospects
Slide 22: Ingredients Markets Growth Strategy
Ingredients Markets Growth Strategy • ‘Go to Market’ - focused enterprise selling • Increased leverage of ingredients, flavours and bio-science technologies across food and beverage growth categories • Enhance product mix in mature sectors • Increased investment in innovation • Expand development in
Slide 23: Consumer Foods Growth Strategy
Consumer Foods Growth Strategy • Foods margin recovery well underway • Strong category positioning and encouraging leading brands growth – Cheese and spreads – Chilled ready meals – Sausage and premium meats • Continuing leadership through premiumisation and convenient food- to-go offerings • Valuab
Slide 24: Outlook: Future Prospects
Outlook: Future Prospects • Good start to 2007 • Solid organic growth prospects in ingredients markets • Encouraging profitable growth in Kerry’s core consumer foods categories • Continuing focus on cost recovery / savings • Restructuring programme well advanced – on completion will generate 25bps m
Slide 25: Additional Information
KERRY Additional Information
Slide 26: EPS Growth (cent)
EPS* Growth (cent) 140 133.9 131.6 122.9 120 112.1 101.8 100 87.9 79.2 80 68.0 60 57.4 46.7 40 20 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Note: numbers for 1997 to 2003 are pre IFRS Note: * before intangible amortisation and non-trading items
Slide 27: EPS Reconciliation
EPS Reconciliation 2005 2006 Growth € cent € cent % 131.6 Adjusted EPS* 133.9 1.7% (5.5) Intangible amortisation (6.5) 0.0 Non-trading items (net of tax) (31.8) 126.1 Basic EPS 95.6 (24.2%) Note: * before intangible amortisation and non-trading items
Slide 28: Euro - US Dollar Trend
Euro - US Dollar Trend 1.35 H1 H2 1.30 1.32 1.30 2006 1.25 1.25 1.22 1.22 2005 1.20 1.18 1.15 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 29: Euro - Sterling Trend
Euro - Sterling Trend 0.71 H1 H2 0.70 2006 0.69 0.69 0.69 0.69 0.68 0.68 0.68 2005 0.67 0.67 0.66 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Slide 30: Cash Flow (€m)
Cash Flow (€m) 2006 2005 Cash from operations 440 483 Finance and taxation (111) (115) Capital expenditure (net) (88) (120) Free cash flow 241 248 Acquisitions and disposals - Businesses acquired (115) (246) - Businesses sold 17 3 - Non-trading items (31) (15) (129) (258) Equity dividends paid (31)
Slide 31: Debt Profile (€m)
Debt Profile (€m) Net @ Floating @ Fixed Borrowings Rates Rates Euro 369 169 200 Sterling 249 249 - US Dollar 473 49 424 Others 103 103 - 1,194 570 624 100% 48% 52% Weighted average period for which rate is fixed: 3.5 years
Slide 32: Maturity Profile of Net Debt
Maturity Profile of Net Debt 31 Dec 2006 31 Dec 2005 €m €m Within one year (162) (22) Between 1 and 2 years 3 136 Between 2 and 5 years 745 702 Between 5 and 10 years 608 459 1,194 1,275 Weighted average maturity in years: 4.8 5.1
Slide 33: R&D Expenditure
R&D Expenditure 3.0%* 140 130 2.8%* 120 €139m 2.7%* 110 100 €125m 2.4%* €111m 90 2.1%* 80 70 2.0%* 60 €88m 2.0%* 50 €78m 40 €59m 30 €52m 20 10 0 2000 2001 2002 2003 2004 2005 2006 Note: * figures relate to R&D as a percentage of revenue
Slide 34: EPS Broker Estimates
EPS* Broker Estimates 2007 EPS* % 2008 EPS* % € Cent Growth € Cent Growth Consensus 138.3 5.1 147.8 6.9 Davy 138.3 5.1 146.1 5.6 ABN Amro 138.5 4.8 150.8 8.9 Goodbody 139.2 5.8 149.2 7.2 Merrion 138.7 5.4 148.3 6.9 NCB 138.6 5.3 146.0 5.3 Soc Gen 136.2 4.1 146.4 7.5 Growth % for 2007 is based on bro
Slide 35: Shareholder Analysis
Shareholder Analysis Institutions Kerry Co-op 47% 28% Institutional Analysis North America 21% Ireland 11% UK 9% Retail Continental Europe / Rest of World 6% 25% The shareholder analysis is calculated based on the number of shares in issue excluding treasury shares
Slide 36: KERRY the science of food
KERRY the science of food