Slide 1: 2017 Preliminary Statement of Results
KERRY Leading to Better 2017 Preliminary Statement of Results 20 February 2018 kerry group “com
Slide 2: Disclaimer: Forward Looking Statements
Disclaimer: Forward Looking Statements This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Group’s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow, n
Slide 3: 2017 Preliminary Statement of Results
2017 Preliminary Statement of Results Review of Business Financial Review Outlook & Future Prospects Edmond Scanlon, CEO Brian Mehigan, CFO Kerry 2018 | 3
Slide 4: 2017 Highlights
2017 Highlights Strong volume driven R&D, Capital and M&A enhancing Strategy & Business Model performance ahead of our foundational technologies for growth our markets and expanding our routes to market 4.3% Taste Master Tianning Ben Alimentos 1.3% Ganeden Dottley Spice Kettle (Tyson
Slide 5: 2017 Performance – Delivering Growth & Return
2017 Performance – Delivering Growth & Return Volume (LFL) Trading Margin Adjusted EPS* (CCY) Volume (LFL) Trading Margin Adjusted EPS (CCY) +4.3% 12.2% +9.4% ROACE* Free Cash Flow Dividends Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) | 1 exp
Slide 6: Market Overview
Market Overview • Consumer revolution • Varied economic growth and • Developing markets represent continues currency volatility 97% of global population • Growth in out-of-home • Health & wellness drives growth consumption growth of clean label • Increased middle class • Geopolitical and • Elevated
Slide 7: Revenue and Margin Growth
Revenue and Margin Growth €6,408m Volume +4.3% Margin +0bps €5,159m €1,331m Volume +4.7% Volume +2.4% Margin +20bps Margin (70bps) © Kerry 2018 | 7
Slide 8: Business Review – Taste & Nutrition
Business Review – Taste & Nutrition Revenue €5,159m +4.7%* Trading profit €767m +7.1% Trading margin 14.9% +20bps • Volume growth ahead of our markets: 5.4% – continued development through global, regional and local customer 5.1% engagement 4.2% 4.1% – strong growth in clean label, natural extracts
Slide 9: Business Review – Taste & Nutrition: Growth by Region
Business Review – Taste & Nutrition Business Growth by Region 11.1% • Developed – clean label and • Developed – good growth through • Regional developing markets – elevated taste, strong catalysts for Authentic Taste into Beverage, excellent growth and development innovation Meat and Dairy EUMs • Re
Slide 10: Our Taste & Nutrition Business Today
Our Taste & Nutrition Business Today 16% Meat 13% Bakery & Confectionery +6.2% Savoury & Dairy Systems & Flavours 12% Cereal, Sweet & Other +4.8% Beverage Systems & Flavours 11% Meals +7.9% Pharma/Functional Ingredients 10% Dairy (1.3%) 7% Snacks Cereal & Sweet Systems & Flavours Regional Ingredient
Slide 11: Business Review – Consumer Foods
Business Review – Consumer Foods Revenue €1,331m +2.4%* Trading profit €108m (8.1%) Trading margin 8.1% (70bps) • Innovations – good performance with better-for- • Volume growth led by strong you, authentic meals growth in ‘food-to-go’ and • Frozen – retail category remains challenged 2.8% snacking
Slide 12: Financial Highlights
KERRY Leading to Better Financial Highlights €6,408m €/81lm 341.2c Revenue Trading Adjusted Profit EPS
Slide 13: Strong Underlying Financial Performance
Strong Underlying Financial Performance • Developing Kerry’s business model for tomorrow’s world • Delivering continued strong volume growth • Managing input cost environment • Working through currency volatility • Generating cash for growth 4.8% 4.7% 501m 3.8% 3.9% STG USD 2015 2016 2017 2013 2017
Slide 14: 2017 Financial Highlights
2017 Financial Highlights Revenue +4.3% volume growth Trading profit Growth of €31m Trading margin Flat year on year Adjusted EPS* +5.5% equating +9.4% CCY Basic EPS +10.1% Free cash flow 83% conversion1 Note: * before brand related intangible asset amortisation and non-trading items (net of related
Slide 15: FY 2017 Currency Dynamics
FY 2017 Currency Dynamics 3-4% of Group Revenue net euro – sterling exposure Group Revenue 2017 2016 © Kerry 2018 | 15
Slide 16: Revenue Growth Analysis
Revenue Growth Analysis 2016 2017 €6,131m €6,408m 4.5% Volume Volume 4.3% 3.6% Translation Transaction Acquisition/ Price currency currency disposal (2.4%) (0.2%) 2.0% 0.8% © Kerry 2018 | 16
Slide 17: Revenue – Continued Volume Growth Ahead of Markets
Revenue – Continued Volume Growth Ahead of Markets +4.3% +1.3% 4.3% +4.7% €6.4b +1.4% 3.6% €5.2b 3.8% 2.4% +2.4% +0.8% 3.0% €1.3b 2013 2014 2015 2016 2017 Group Taste & Nutrition Consumer Foods Kerry volume growth Market volume growth* * Kerry market estimates based on published data and company vol
Slide 18: Trading Margin – Achieved Expansion as per Plan
Trading Margin – Achieved Expansion as per Plan 12.2% 14.9% 12.2% 12.2% 0 bps €781m +20bps 11.5% €750m €781m €767m 11.1% €700m 8.1% 10.5% €636m -70bps 9.6% €611m €108m 2012* 2013 2014 2015 2016 2017 Group Taste & Nutrition Consumer Foods 2017 Trading margin % 2017 Margin progression Note: * base yea
Slide 19: Trading Margin Breakdown
Trading Margin Breakdown 2016 Operating leverage Net price Efficiencies R&D Currency Acquisitions 2017 / Portfolio mix Kerryconnect © Kerry 2018 | 19
Slide 20: Free Cash Flow – Strong Performance
Free Cash Flow – Strong Performance Trading profit 781 750 Depreciation (net) 134 130 Movement in average working capital 93 137 Pension contributions paid less pension expense (95) (118) Cash inflow from operations 913 899 Finance costs (60) (62) Taxation (55) (57) Capital expenditure (net) (297) (
Slide 21: Financial Ratios
Financial Ratios Net debt: EBITDA* Max 3.5x 1.4x 1.5x EBITDA: net interest* Min 4.75x 16.2x 14.0x ROACE¹ 12% 13.0% 12.9% ROAE¹ 15% 15.7% 16.5% CFROI 12% 10.9% 12.8% Note: * calculated in accordance with lender covenants | ¹ before brand related intangible asset amortisation and non-trading items (ne
Slide 22: Non-Trading Items – Net Credit of €10m
Non-Trading Items – Net Credit of €10m Charge of €12m – Brexit mitigation plan progressing • reducing sterling transaction currency exposure Charge of €36m – integration of 2017 acquisitions, along • restructuring less profitable businesses with other recent major acquisitions, particularly Red Arro
Slide 23: Other Financial Matters
Other Financial Matters Decrease of €4.8m to €65.6m principally due to cash generation and bond repayment Cash contributions made to de-risk pension plans Deficit down to €102m at year end 2017 ETR of 13.4% | maintain expectation of similar rate post US tax reform 2017 inflationary effect, with mark
Slide 24: Performance Versus 5 Year Group Targets (2013-2017)
Performance Versus 5 Year Group Targets (2013-2017) Volume Growth Trading Margin Expansion Adjusted* EPS Growth 4.3% Total +70 bps +260bps 341 3.6% 2.4% 3.8% + +90 bps +60 bps +40 bps = 279 302 323 3.0% 258 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 ROACE* ROA
Slide 25: Edmond Scanlon, CEO
KERRY Leading to Better =..4 Edmond Scanlon, CEO
Slide 26: Consumer Revolution: Unprecedented Change & Opportunity
Consumer Revolution: Unprecedented Change & Opportunity Source: Kerry analysis & insight, The Brookings Institution © Kerry 2018 | 26
Slide 27: Kerry – Positioned to Win Across the Global Marketplace
Kerry – Positioned to Win Across the Global Marketplace • Profound consumer led food revolution at unprecedented pace Top 10 Top 10 Top 10 Globals Globals Globals • Highly fragmented Smaller marketplace Local Local Globals Local Smaller Smaller Globals Globals • Projected short to medium term market
Slide 28: Taste & Nutrition
Taste & Nutrition © Kerry 2018 | 28
Slide 29: Consumer Foods
Consumer Foods © Kerry 2018 | 29
Slide 30: Drivers of Margin Expansion
Drivers of Margin Expansion • Leverage 1 Kerry platform • New foundation technologies • Manufacturing excellence • Fragmentation response • Leverage routes to market • New markets • Supply chain excellence • Localisation of footprint • Leverage customer centres • New channels / geographies • Commerc
Slide 31: Scalable Business Model: Acquisitions Update
Scalable Business Model: Acquisitions Update Taste Master Tianning Ben Alimentos Ganeden Dottley Spice Kettle (Tyson) Hasenosa Oakhouse Hangman SIAS Season to Season © Kerry 2018 | 31
Slide 32: Outlook 2018
Outlook 2018 • Continued performance ahead of our markets – Taste & Nutrition: good growth prospects, in particular in developing markets, while bearing in mind strong EMEA comparatives in 2017 – Kerry Foods: new strategies & structures to deliver growth against the backdrop of a cautious consumer a
Slide 33: Questions & Answers
KERRY Leading to Better Questions & Answers
Slide 34: rE ¢| E o|
rE ¢| E o|
Slide 35: Exchange Rate Movements
Exchange Rate Movements 3% USD CAD MXN BRL CNY MYR AUD GBP ZAR RUB (0%) (1%) (4%) (5%) (7%) (7%) (8%) (10%) (11%) * Spot exchange rates as of 16 February 2018 © Kerry 2018 | 35
Slide 36: Revenue Growth Components FY 2017
Revenue Growth Components FY 2017 Taste & Nutrition 4.7% 2.0% 0.0% (1.9%) 0.9% 5.7% Consumer Foods 2.4% 2.0% (0.9%) (3.8%) 0.2% (0.1%) Group 4.3% 2.0% (0.2%) (2.4%) 0.8% 4.5% © Kerry 2018 | 36
Slide 37: Trading Margin by Business
Trading Margin by Business Taste & Nutrition 5,159 767 14.9% 4,880 716 14.7% Consumer Foods 1,331 108 8.1% 1,333 117 8.8% Eliminations/unallocated (82) (94) – (82) (83) – Group 6,408 781 12.2% 6,131 750 12.2% © Kerry 2018 | 37
Slide 38: EPS Reconciliation
EPS Reconciliation Adjusted EPS* 341.2 323.4 5.5% Brand related intangible asset amortisation (13.4) (13.1) – Non-trading items (net of related tax) 5.8 (7.4) – Basic EPS 333.6 302.9 10.1% Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) © Kerry 2
Slide 39: Free Cash Flow – 5 Year History
Free Cash Flow – 5 Year History Trading profit 781 750 700 636 611 Depreciation (net) and impairment 134 130 126 104 109 Movement in average working capital 93 137 (2) (59) (9) Pension contribution paid less pension expense (95) (118) (57) (48) (36) Capital expenditure (net) (297) (210) (229) (257)
Slide 40: Net Debt (€m) as at 31 December 2017
Net Debt (€m) as at 31 December 2017 Euro 1,062 279 783 Sterling 1 1 – US dollar 582 373 209 Other 10 10 – Gross debt 1,655 663 992 Cash (313) (313) – Net debt 1,342 350 992 Gross debt 2017 40% 60% Gross debt 2016 35% 65% © Kerry 2018 | 40
Slide 41: Maturity Profile of Net Debt – Strong Balance Sheet Position
Maturity Profile of Net Debt – Strong Balance Sheet Position 787 627 141 86 2017 2020 2022 2023 2025 -299 © Kerry 2018 | 41
Slide 42: Strong Earnings Growth While Maintaining Return on Capital Employed
Strong Earnings Growth While Maintaining Return on Capital Employed ROACE* % EPS* Cent 400 14% 350 12% 341.2 323.4 300 301.9 10% 278.9 250 257.9 8% 234.0 213.4 200 192.1 6% 163.9 150 151.8 4% 100 2% 50 0% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EPS* ROACE* Note: * before brand related in
Slide 43: Leader in R&D and No. 1 in Developing Markets
Leader in R&D and No. 1 in Developing Markets 259 194 143 139 105 102 75 71 37 34 21 15 4 4 Kerry Peer 2 Peer 3 Peer 1 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 1,347 1,222 995 732 716 624 392 303 298 264 190 155 141 135 Kerry Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6
Slide 44: Shareholder Analysis
Shareholder Analysis North America 19% UK 14% Continental Europe | Rest of World 22% Ireland 3% Shares in issue at 31 December 2017: 176,182,405 © Kerry 2018 | 44
Slide 45: 2017 Preliminary Statement of Results
KERRY Leading to Better 2017 Preliminary Statement of Results 20 February 2018 kerry group “com