Slide 1: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 2: Safety briefing
Safety briefing Fire stairs Ballroom Assembly area is outside hotel entrance Fire stairs Fire exits 2
Slide 3: Event agenda
Event agenda 14 March 0830-0845 Welcome & Strategic Overview Graham Chipchase, CEO 0845-0915 Group financial overview + Q&A Nessa O’Sullivan, CFO 0915-1000 Global Supply Chain + Q&A Carmelo Alonso 1000-1030 BREAK River Room, first floor 1030-1115 CHEP Europe presentation + Q&A Mike Pooley, President
Slide 4: Event agenda
Event agenda 15 March 0800 Site tour Meet in hotel foyer 0815-0900 Outward coach transport to site tours Hangman's Wood Industrial Park Stifford 0915-1115 Visit to CHEP service centre, South Ockendon South Ockendon Essex RM15 6RL 1115-1245 Onward transport 1245-1430 Holiday Inn Maidenhead Manor Lane
Slide 5: Financial numbers and format
Financial numbers and format Unless otherwise stated: All currency amounts are in US dollars All dollar amounts are at actual foreign exchange (FX) rates Year-on-year percentage growth rates are in constant currency, as defined in the Glossary (see Appendix 1) All forward looking statements are subj
Slide 6: Disclaimer
Disclaimer The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe such restrictions. This
Slide 7: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 8: Strategic overview
Strategic overview Graham Chipchase Chief Executive Officer 8
Slide 9: Our purpose
Our purpose Our assets form the invisible backbone of the global Brambles’ purpose supply chain is to connect people The world’s biggest brands trust us with the products that matter with life’s essentials, Digitising our physical network will shine a light on invisible every day areas of the supply
Slide 10: Circular, sustainable business model
Circular, sustainable business model Share and reuse model delivering value to our key stakeholders Customers Employees Enhances operational efficiency ~14,000 employees in over 60 countries Frees up cash and resources = Developing our people with over 170,000 Supports sustainability objec
Slide 11: What is happening in the supply chain
What is happening in the supply chain The way the world makes, moves and sells goods is changing Evolution of retail Sustainability considerations Digitisation of physical supply chains Small store formats Elimination of empty transport miles and food & packaging waste Click & collect Visibi
Slide 12: Retail supply chain
Retail supply chain Moderate changes upstream, significant disruption downstream FMCG Retailers Channels Manufacturers Home delivery E-commerce pure-play fulfilment centre Click & Collect at new location Click & Collect at store Retailer DC Convenience and small format Consumers E-commerce divisions
Slide 13: E-commerce market
E-commerce market Working with market leaders as supply chain models evolve Servicing in-bound FMCG Proactively engaging with e-commerce flows to all large e-commerce retailers to help solve supply chain retailers globally challenges through pooling E-commerce supply chain: E-commerce supply chain c
Slide 14: Strategic priorities
Strategic priorities Deliver operational and Drive disciplined capital Grow and strengthen our Innovate to create organisational allocation and improved Develop world-class talent network advantage new value efficiencies cash generation Pursue significant growth Leverage global scale and Strik
Slide 15: Investor value proposition
Investor value proposition Delivering long-term value and attractive shareholder returns Brambles’ value creation model delivers through the cycle: Sustainable growth at returns well in excess of the cost of capital: Mid-single digit revenue growth1; Underlying Profit leverage1; and Return on Capita
Slide 16: Mid-single digit revenue growth
‘Mid-single digit revenue growth’ Growth to be driven by continuing conversion of customers to pooled solutions CHEP Americas CHEP EMEA Expected annual growth of 3-5% Expected annual growth of 4-7% Reflecting ongoing conversion of 40% Reflecting significant addressable customers away from alternativ
Slide 17: Underlying Profit leverage through the cycle
‘Underlying Profit leverage through the cycle’ …A multi-year process Deliver Invest for excellence Improved operational efficiency: Leverage global scale to reduce Address the fundamentals direct costs Increase level of automation in all regions to global best practice Increased network capaci
Slide 18: ROCI in the mid-teens
‘ROCI in the mid-teens’ Delivering attractive and sustainable returns Anticipated benefits of… …to enable investment in network advantage Improved asset efficiencies Growth in core developed markets across the Group Expansion into developing markets and new avenues Underlying Profit leverage
Slide 19: Summary
Summary Our sustainable model defines what we do and who we are Partnering with customers to navigate and capitalise on the evolving retail landscape Progress made against strategic priorities and clear plan to improve areas of underperformance Business well positioned to deliver long-term value and
Slide 20: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 21: Group financial overview
Group financial overview Nessa O’Sullivan Chief Financial Officer 21
Slide 22: Progress to date
Progress to date Increased cash flow, disciplined capital allocation and improved debt maturity profile Cash flow generation Capital allocation Balance sheet US$89m improvement in free cash Now refocused on core pooling Ongoing debt capital market flow in 1H18 businesses – away from adjacencies issu
Slide 23: Initiatives in place to deliver sustainable cash generation
Initiatives in place to deliver sustainable cash generation Objective to fully fund dividend payments and growth initiatives Area Opportunity vs. FY17 Initiatives 1H18 progress Capital efficiency ~US$50-100m Focus on asset efficiency to reduce pooling capital intensity Improved asset efficiency in k
Slide 24: Refocused capital allocation strategy
Refocused capital allocation strategy Disciplined investment in core businesses Historic focus on… Renewed focus on… Diversification into adjacent businesses through M&A Higher returning core businesses and related innovation Supporting top-line growth with pooling capex Disciplined capital allocati
Slide 25: Reducing pooling capital intensity
Reducing pooling capital intensity Progress made with further opportunities identified 1 Improved asset efficiency to be delivered through: Pooling capex/sales ratio % Cycle times FY14-16 +3pp increase driven by 1pp reduction 25.0% cycle time expansion 2 delivered Customer collaboration initiati
Slide 26: Investing in non-pooling capex to deliver efficiencies
Investing in non-pooling capex to deliver efficiencies USA accelerated automation project a material untapped opportunity Other PP&E capex USA accelerated automation project US$150-US$160m capital investment from FY19-FY21, 50 4-year payback First 2 years of investment to be funded by US$100m pr
Slide 27: Commitment to retaining strong balance sheet
Commitment to retaining strong balance sheet Conservative financial policies Net debt/EBITDA As at end of 1H18: Undrawn committed credit facilities US$1.8bn 1.73x 1.74x EBITDA/net finance cost cover strong at 14.7 times 1.70x 1.68x Refinanced €500m EMTN maturing in April 2018. New debt issued at sig
Slide 28: Dividends
Dividends Striking the right balance between growth and shareholder returns Progressive Australian dollar dividend policy The policy has been delivering a payout ratio of between 55-60%1 No anticipated impediments to continuing to payout within this range Franking expected to be 30% for the foreseea
Slide 29: Summary
Summary Clear plan to improve cash flow generation, meaningful progress in 1H18 Refocused capital allocation, asset efficiency plans already delivering results Opportunities identified to further strengthen operational performance including USA accelerated automation project Commitment to strong bal
Slide 30: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 31: Global Supply Chain
Global Supply Chain Carmelo Alonso-Bernaola Senior VP, Global Supply Chain 31
Slide 32: Our mission
Our mission “Standardise processes and enable best practice sharing to deliver improved safety, cost efficiencies and customer satisfaction” Optimise the supply chain and Deliver best in class customer service = = Transport costs Quality + + Plant costs Availability + + Capital expenditure Safety 32
Slide 33: Our approach
Our approach Global standardisation to local implementation Global Supply Chain Human Finance Resources Process and Strategic Supply chain Supply chain Supply chain Supply chain Supply chain Zero Harm product supply planning North America Europe LATAM AIME APAC Global standardisation Local implement
Slide 34: Lumber, labour and transport inflation
Lumber, labour and transport inflation Inflationary pressure increasing in most markets 12-month increase North America Latin America Europe AIME ANZ Asia Labour +3.0% +8.7% +2.0% +7.0% +3.0% +5.5% Lumber +9.0% +4.2% +7.1% +8.0% +2.7% +1.5% Transport +6.2% +6.2% +7.0% +5.5% +3.5% +2.2% Oil (Crude) +
Slide 35: Strategic priorities
Strategic priorities Deliver supply chain efficiencies through technological innovation Strategic priorities Programs Leverage global skills and Plant automation resources to drive Deliver best-in-class service standardisation Transport procurement/collaboration/orchestration Increase flexibility in
Slide 36: Plant automation strategy
Plant automation strategy Automated solutions to address key operating challenges Robotic Automated sort and repair Operating challenges: stacking Labour availability Repair capacity Plant flexibility Increasing demand for high-spec platforms Repair consistency Zero Harm Automated Integrated inspect
Slide 37: Automation levels vary across regions
Automation levels vary across regions Key areas of opportunity identified Europe North America Integrated lines/inspection systems: 85% Integrated lines/inspection systems: 25% Repair systems: 75% Repair systems: 10% Africa, India & Middle East Asia-Pacific Integrated lines/inspection systems: 25% I
Slide 38: Automation investment to drive operational efficiency
Automation investment to drive operational efficiency USA 3-year accelerated automation project: US$150-160m, 4-year payback USA Europe US$150-160m capital investment from FY19-FY21 US$33m capital investment 4-year payback period Automation penetration to reach 100% 50+ plants to be automated
Slide 39: Overview of automation technologies
Overview of automation technologies Proven technology already deployed across the European network G300/G350 Automated digital inspection (ADI) Penta Klippa & Klippa LC Automated infeed and outfeed with manual inspection and repair Robotic board removal B1208 Aqua Klippa Combo Aqua Klippa Autonailin
Slide 40: Plant automation technology journey
Plant automation technology journey 40
Slide 41: Assisted sortation/integrated lines
Assisted sortation/integrated lines Cost reductions, Zero Harm and standard quality G600/G300 inspection equipment Inspection equipment with automatic de-stacking of pallets and assisted pallet handling for ergonomic pallet inspection Benefits Cost reductions through productivity improvements in ins
Slide 42: Automated inspection
Automated inspection Cost reductions, repair efficiencies and standard quality Automated digital inspection (ADI) High speed and highly accurate vision- based digital inspection replacing human visual inspection Benefits Reduced pallet inspection costs by high speed process Repair efficiencies by en
Slide 43: Robotic sort and stack system
Robotic sort and stack system Lower capex, increased reliability and space efficiency Robotic sorting and stacking of pallets to replace traditional pallet stackers and de-stackers Benefits: Lower capex by deploying one robot to replace multiple outfeeds/stackers Higher reliability by avoiding jams/
Slide 44: Automated repair
Automated repair Cost efficiencies, Zero Harm Automatic board removal systems replacing manual processes Benefits: Reduced reliance on manual labour Increased repairs per hour Ergonomic benefits and reduced employee exposure to vibration from handheld tools For aqua units, elimination of fire risk,
Slide 45: Transport procurement strategy
Transport procurement strategy Reducing exposure to high inflation Leverage transport density, flows visibility and technology to find synergies in transportation routes Transport collaboration – Brambles and customers Transport orchestration – between customers enabled by Brambles Transport procure
Slide 46: Transport optimisation
Transport optimisation Using our unique transport expertise to optimise customer supply chains A range of logistics services to support customers build more sustainable and cost effective supply chains Transport collaboration Ready Transport orchestration Ready Transport procurement Ready Combine ou
Slide 47: Lumber procurement strategy
Lumber procurement strategy Leverage global expertise in lumber procurement and sawmilling technology Balancing local supply in the USA with imports from Latin America Increase automation in USA sawmills and benchmark with European automation to reduce re-work Expand to new geographies, e.g. Russia
Slide 48: Platform Durability
Platform Durability Ongoing program leveraging global insights Initiatives in production: USA: nail plate and clinched nails Europe: use of hardwood on leading structural boards Canada: use different timber densities Initiatives under review: Australia: change fasteners pattern on new and pool palle
Slide 49: Materials science
Materials science Trials with different materials to reduce total pallet lifecycle costs Full-size plastic pallet design innovation Plastic/wood combination block replacement for wood (Global) Hollow composite blocks Block coatings and high density composite blocks Plastic/wood composite replacement
Slide 50: Supply Chain Information Technology
Supply Chain Information Technology Technology solutions for all aspects of supply chain management Sales and operations planning – Active in Europe, North America, ANZ Demand planning – Active in Europe, USA, South Africa, ANZ, Latin America Planning Supply chain planning Production sourcing optimi
Slide 51: Supply Chain Information Technology
Supply Chain Information Technology Examples Planning/Flow optimisation Collections Problem: scheduling multiple, complex supply chains with Problem: co-ordination of uncertain collections with ever-changing supply and demand requirements hauliers Solution: advanced forecasting and optimisation Solu
Slide 52: Supply chain information technology
Supply chain information technology Examples Service Centre Operations Fulfilment Problem: plant efficiencies are critical to reducing our Problem: pallet availability is critical to our customers’ costs, and achieving committed service levels operations, requiring very high service reliability Solu
Slide 53: Summary
Summary Supply chain agenda to deliver cost savings Established areas of operational excellence providing opportunities to leverage expertise across the portfolio Expansion of proven technology in all supply chain processes Automation Transport optimisation Planning and logistics execution Procureme
Slide 54: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 55: CHEP Europe
CHEP Europe Mike Pooley President, CHEP Pallets Europe, Middle East & Africa 55
Slide 56: The largest pooling network in Europe
The largest pooling network in Europe Moving more product to more places, more efficiently and sustainably CHEP Europe Nearest competitor Pallets in 115 million pallets 18 million pallets circulation Delivery 315,000 23,000 points delivery points delivery points Service 260+ service centres 100+ ser
Slide 57: CHEP is the market leader in Europe
CHEP is the market leader in Europe Significant growth opportunities within existing markets Pallet 166m 500m 1.5b 180m 163m 80m 181m 79m 111m units1 17% 30% 29% 49% 13% 62% 78% 71% 15% 88% 23% 89% 21% 70% 10% 1% 56% 2% 47% 1% 28% 30% 28% 20% 11% 11% Germany Italy Poland France BeNeLux Spain UK EU O
Slide 58: Revenue growth expectations
Revenue growth expectations Expansion with new and existing customers to be key driver of growth CHEP Europe pallets: components of revenue growth 5-year Expectation Key drivers average Organic 1% 1% - 2% Net disposable income (largely reflecting impact of fuel prices and wage inflation) Net new w
Slide 59: Retail dynamic
Retail dynamic Traditional retailers facing increasing pressure, complexity and costs Convenience Stores Premium Food Retail, e.g. M&S Food Department Stores HIGH e.g. Waitrose, El Corte Ingles Traditional Big Box Retailers selling high % branded goods PRICE e.g. Tesco, Carrefour, REWE Hard Discount
Slide 60: Key drivers of network advantage
Key drivers of network advantage Partnering to drive efficiency, sustainability, and increased visibility Supply Chain Collaboration Customer First Mile Integration Solutions Growing and optimising our core Geographic Last Mile Expansion Solutions People Development 60
Slide 61: First Mile Solutions (FMS)
First Mile Solutions (FMS) Act as thought leader on inbound packaging flows Solutions and platforms... …Successfully reducing Progress to date: Health and safety food risks +30% growth in full-size plastic pallets Inbound complexity Major contract wins in Raw Manufacturer/ Retailer/Distribution Reta
Slide 62: Last Mile Solutions (LMS)
Last Mile Solutions (LMS) Helping customers sell more and spend less Solutions and platforms... …Adding value to customers Progress to date: Increase consumer sales by up to 30% +10% YoY growth and accelerating Lower replenishment time by up to 60% Raw Manufacturer/ Retailer/Distribution Retailer Co
Slide 63: Transport collaboration
Transport collaboration Leveraging our network and expertise to create new solutions Between Brambles and customer Launched in Europe in 2010 135 collaborating CHEP customers 404 transport lanes 72,000 shipments per year reduced empty truck journeys by 4.5 million km reduced CO2 emissions by 4,477 t
Slide 64: Transport orchestration
Transport orchestration Leveraging our network and expertise to create new solutions Between customers, enabled by Brambles 2015: Launched in Spain 2017: Expansion into other European countries 21 collaborating CHEP customers up 45% in FY17 28 transport lanes up 50% in FY17 7,900 shipments per year
Slide 65: Transport orchestration
Transport orchestration Leveraging our network and expertise to create new solutions 65
Slide 66: Customer integration
Customer integration Simplify customer experience and improve CHEP processes Pricing management Interactive invoicing Self service Seamless integration Develop flexible, Transform the invoice into a Transform CHEP’s online Automate customer customer-centric and value-add tool with self-service porta
Slide 67: Geographic expansion
Geographic expansion Unlocking further potential in existing CEE markets Nordics CHEP market share 10% Unserved: 90% Germany Poland CHEP market share CHEP market 28% Russia share Full-size pallet 11% Unserved: 100% Unserved: 71% Half pallet 16% Central Europe Quarter pallet 87% CHEP market share 12%
Slide 68: Step change in people capability
Step change in people capability Investing in our people in order to better support future growth Talent Commercial Leadership External partnership development development development and awards Launch of Brambles’ Immersive retail customer Suite of online and A dedicated focus on graduate programme
Slide 69: Sustainability as a competitive advantage
Sustainability as a competitive advantage Providing tangible benefits to our customers 1 Intrinsically sustainable 2 Award-winning program to 3 Helping customers meet business model ensure we are the most their goals and become sustainable choice more sustainable FY17 5.4 million km savings: 5,654 t
Slide 70: Margin profile drivers
Margin profile drivers Strong and sustainable margins 5-year margin performance Structural drivers CHEP Europe pallets First-mover advantage Economies of scale Complexity and fragmentation of the manufacturing and retailing environment Economic/operating drivers Low-inflation environment Strong deli
Slide 71: Margin initiatives
Margin initiatives Continuous cost and asset productivity improvements to support margins Plant automation Asset Transport Overhead Indexation clauses and asset durability productivity efficiency reduction in contracts Ongoing investment in Cycle time is monitored Manage relationship Efficie
Slide 72: Summary
Summary Strong momentum with further growth opportunities Significant growth opportunities in both pallets and containers Superior network advantage in established markets combined with automation investments provides competitive cost advantage Progress in building network advantage in emerging mark
Slide 73: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 74: CHEP USA
CHEP USA Laura Nador President, CHEP North America 74
Slide 75: Largest pooling network in USA
Largest pooling network in USA Providing superior scale and network efficiency advantages ~100m pallets ~1m loads on 23,000 lanes ~300m pallet issues 45 of top 50 FMCG manufacturers served 45,000+ customer sites 19,000 retail locations, 200+ on-site facilities Manufacturers Retailers CHEP locations
Slide 76: CHEP USA is the market leader
CHEP USA is the market leader Significant opportunity remains within a fragmented industry Market size1: 770m pallet units 10+ regional/2,500+ local players: Small and medium account focused Pricing by regional supply/demand Unserved2 Ongoing collaboration (~50%) Other poolers (~10%) National player
Slide 77: CHEP value proposition
CHEP value proposition Superior offering versus whitewood recycled pallets and other poolers Advantage vs. Advantage vs. whitewood recycled pallets other poolers 4-way entry transportation and handling efficiencies Reduced product damage Elimination of equipment purchases and repair costs Cons
Slide 78: Sustainability underpins our value proposition
Sustainability underpins our value proposition Creating real value through our ‘share & reuse’ model and expertise Key benefits: Eliminating Unlocking 880,000 empty miles Sustainability Elimination of empty miles and and reducing CO2 footprint reduction through through product 3m pounds of CO2 trans
Slide 79: Revenue growth expectations
Revenue growth expectations Expansion with new and existing customers key driver of growth CHEP USA pallets: growth components 5-year Medium-term Initiatives average expectations Deepen customer engagements Organic 1% ~1% Capture new lanes Target growth categories Net new wins 3% 1% - 3% Aligned go-
Slide 80: USA market size of ~770m pallet units
USA market size of ~770m pallet units Four focus categories to grow and protect Four key Total Unserved market addressability focus categories market1 ~50% Longer-term 52% Near to 48% medium term ~10% ~40% Near to medium term: addressable with standard 48x40 wooden pallet, conversion to a 48x40 foot
Slide 81: Go-to-market strategy
Go-to-market strategy Aligned to financial expectations Segment Share of Growth CHEP’s Segment characteristics, requirements definition sales potential competitive position Lane expansion opportunity Retain existing business Strategic Enables scale Grow by converting new lanes Primary competitor: ot
Slide 82: Direct cost pressures impacting margins
Direct cost pressures impacting margins Customer, competitive and market cost pressures Year-on-year Underlying Profit margin decline Key drivers of 2.9pp margin decline: Increased transport moves, pallet repairs and handling costs due to capacity constraints and changing retailer and customer behav
Slide 83: Mid-term Underlying Profit margin improvements
Mid-term Underlying Profit margin improvements Initiatives to mitigate cost pressures and fund strategic investments ~2-3pp improvement in Underlying Profit margin through FY21 Mitigating actions: Supply chain cost-out initiatives include Transport optimisation Network optimisation Procurement inclu
Slide 84: Retailer driven network costs increasing
Retailer driven network costs increasing Solutions are helping to both mitigate cost and create value Network/asset Solutions Revenue efficiencies Onsite service offerings Pressures DC or store direct returns Retailer needs Recycler tactics Freight collaboration Competitor models Enhanced reus
Slide 85: Transport inflation accelerating
Transport inflation accelerating Delivering efficiencies and enforcing appropriate charges to offset impact Supply Chain optimisation CHEP performing better than market in 1H18 Network design to lower length of haul and improve 8% US Transport Inflation y-o-y on-time performance 6% Inventory optimis
Slide 86: Lumber inflation
Lumber inflation Sourcing strategies help to reduce cost pressures $420 Lumber market inflation Mitigating strategies Optimising Mix $/1,000 Board Feet (MBF) Import/Domestic US Tariffs imposed upon Canadian softwood Regional suppliers $390 Leveraging our global scale and experience with sawmilling t
Slide 87: Automation: US$150-160m investment over 3-years
Automation: US$150-160m investment over 3-years US$40-45m annual operational expense savings by 2021 Project to automate ~85% of the service center network by 2021 2019 2020 2021 Total - 3 yrs 4-year payback and significant benefits: Installations 15 20 18 50+ 30% increase in capacity, driving signi
Slide 88: Pricing and surcharges
Pricing and surcharges Disciplined approach to mitigate constraints Constraints to pricing growth Pricing initiatives Margin compression from manufacturers and retailers 1 Market-based pricing CHEP issue volume mix 2 Inflationary cost mitigation (surcharges) Competitive environment 3 Contractual con
Slide 89: Capital efficiency and cycle time improvements
Capital efficiency and cycle time improvements Key driver of increased cash flow generation US pooling capital expenditure (US$m) Cycle times improving Initiatives to improve efficiency Near to mid-term actions 350.0 20.5% FY14-FY16 cycle times: Enhanced retail reuse programs 17.4% 20.0% 300.0 17.4%
Slide 90: Asset efficiency improving
Asset efficiency improving Balanced approach to asset efficiency and pool health Disciplined capital allocation approach Reduce losses and improve cycle time: Grow the recycler network Strengthen our retail value proposition Maintain pool Reduce losses health Deploy tracking technology (BXB Digital)
Slide 91: Innovating for customer value
Innovating for customer value Industry looking for solutions to address inefficiencies and cost On-shelf availability and Increasing automation labour efficiencies Platform Replenishment requirements solutions 91
Slide 92: Innovating for automation
Innovating for automation Customers investing in automation to address labour constraints Pallet quality needs are changing Consistent unit loads are required to minimise system disruptions Platform, packaging, unit-load stability critical Proactively engaging with customers to enhance offering and
Slide 93: Innovating for replenishment
Innovating for replenishment Reflecting customer focus on on-shelf availability and labour efficiencies Replenishment solution: Half pallet Major pilots underway Scope >100 retail stores 10 SKUs across USA and Canada Expanding in 2018 Positive results Improved sales Increased on-shelf availability I
Slide 94: Innovating beyond the pallet
Innovating beyond the pallet BXB Digital provides new opportunities to unlock value Areas of opportunity 1 Track and Trace The BXB Digital platform can enhance our efforts to: 2 Simplify the business Enable profitable growth Drive capital efficiency 3 Business model transformation 4 Enhanced custome
Slide 95: Leadership and talent development are key
Leadership and talent development are key Our global network advantage supports our market needs Talent development Commercial development Leadership development Cross-pollinating of people across Talent Development Centers at all NA20 Leaders Developing Leaders markets levels Strategic Workforce Pl
Slide 96: Summary
Summary Momentum back in the business, with ongoing opportunities Leveraging scale to deliver productivity improvements and cost efficiencies Investing in automation to increase efficiency and plant capacity Plans in place to address external market and customer cost pressures Improving cash generat
Slide 97: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 98: CHEP Asia-Pacific
CHEP Asia-Pacific Phillip Austin President, CHEP Asia-Pacific 98
Slide 99: Overview
Overview Diverse business covering developed and developing markets Asia 11% of Asia-Pacific revenue China - Entered 2006 Established framework and model that is well-positioned to ANZ 89% of Asia-Pacific revenue evolve with the physical supply Australia - Commenced 1958 chain Maintaining a strong m
Slide 100: Developed markets
Developed markets Australia and New Zealand – 89% of Asia-Pacific revenue Australia New Zealand Depth and breadth of physical and Depth and breadth of physical and customer network customer network Full portfolio of Brambles products and Leading portfolio of Brambles products services delivered from
Slide 101: Australia – Pallets
Australia – Pallets Established and resilient business Pallet pooling segment Consistent low to mid-single digit revenue growth, Market share by unit volume1 leveraged to the bottom line 2% Stable and rational competitor 24% Dynamic and evolving customer supply chains 2 Addressable Ongoing investmen
Slide 102: Australia - RPCs
Australia - RPCs Significant growth opportunities despite loss of large contract Australia RPC pooling segment Market share by units % Markets: ~25% of addressable opportunity Leveraging current scale Clear first-mover advantage 51% Innovative offer 1 Addressable Signed national framework agreement
Slide 103: Creating new value
Creating new value Innovative products for evolving supply chains Significant opportunities being created by new retail dynamics Well-positioned through engagement with customer network as the supply chain evolves Smaller fractional pallets Totes for online delivery Special purpose RPCs Digital valu
Slide 104: Developing markets
Developing markets China and South-East Asia – 11% of Asia-Pacific revenue China South-East Asia Market evolving in line with supply chain Primary focus in Malaysia and Thailand modernisation where supply chain maturity and potential Portfolio of local and multi-national are appropriate for pooling
Slide 105: China
China Evolution of pallet usage and supply chain modernisation Market is currently here… Use Move Share Scope: In the warehouse Between sites Ecosystem Current No pallets Hand loading Pallet ownership alternative: Regulation: Pallet size standards Logistics standards Supply chain TCO efficiency Pool
Slide 106: China
China Strategic activities of a “patient market maker” 2 China pallet market volume 2012-20201 Estimated market share by unit volume Billion units 1.3b Addressable 1.6 1.7 Other Rental 3 1.3 1.4 1.1 1.2 0.8 0.9 1.0 Loscam CHEP 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E <1% Economic Physical R
Slide 107: Revenue Growth Expectations
Revenue Growth Expectations Continuation of current trends Developed markets: Developing markets: Pallets: low single-digit price and volume Pallets: ongoing double-digit growth in growth volumes, price growth remaining low RPC: targeting double-digit volume growth Containers: from lower base Explor
Slide 108: Disciplined capital allocation
Disciplined capital allocation Protect and grow responsibly Asia-Pacific capex FY17 Australia and New Zealand Focus on steady and disciplined replacement capex Capital Allocation 38% Ongoing investment in growth products and services at appropriate margins Growth 60% Asia 62% Majority growth c
Slide 109: Strong financial position
Strong financial position Portfolio returns remain strong Return On Capital Invested Returns reflect balance between: CHEP Asia-Pacific Increasing yield from developed markets and core 26.2% 26.9% products: 24.4% 22.0% Organic volume and price growth; 21.1% Improved asset efficiency; and Operational
Slide 110: Operational and organisational efficiencies
Operational and organisational efficiencies Focus areas in Australia Network and overheads Input costs Network efficiencies Labour Rationalise Australian sites while ensuring scale capacity is Below benchmark increases for past 4 years, forward maintained forecasts similar Implement global best prac
Slide 111: Operational and organisational efficiencies
Operational and organisational efficiencies Optimising asset efficiency In the APAC business model, the Field Stock FSR comparison to historical average Ratio (FSR) is the key asset efficiency metric FY13-16 vs FY17-1H18 FSR: number of assets on hire/total asset pool Developed markets: Improved plan
Slide 112: People
People Safety Engagement Talent External awards Significant and sustained Significant and sustained Active program of moving Korn Ferry Outstanding improvements in employee improvements in employee people across the region and the Employers Award safety. Well above the average engagement. Top quarti
Slide 113: Summary
Summary A diverse business covering developed and developing markets across the Brambles portfolio of products and services Australia: Established and resilient business with consistent low to mid single digit revenue growth, leveraged to the bottom line Dynamic and evolving customer supply chains p
Slide 114: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 115: IFCO
IFCO Wolfgang Orgeldinger Group President, RPCs 115
Slide 116: World-leading provider of RPC solutions
World-leading provider of RPC solutions Unmatched network and capabilities Serving 330+ retailers and 13,500+ producers 35+ countries 75+ service centres 1.5 billion trips per annum 280 million+ RPCs 1,200 employees IFCO service centres Countries of operations Supporting export business
Slide 117: Largest suite of products
Largest suite of products Trusted by the world’s largest retailers and producers Europe North Asia America Products South America 117
Slide 118: Key customer trends
Key customer trends Challenging retail environment Consolidation and margin pressure in the retail industry Hard discounters taking share from traditional retailers Continuation of omni channel penetration Vertical integration of fresh produce procurement Increasing automation of warehouses Retailer
Slide 119: IFCO's value proposition
IFCO’s value proposition How we bring value to our customers Retailers Growers Supply chain cost reduction Track record of rapid, customer-centric Packaging standardisation expansion Less product damage Unique supply-chain view used to anticipate trends and solve problems Effective merch
Slide 120: Tangible cost and sustainability benefits
Tangible cost and sustainability benefits Significant benefits relative to one-way packaging Total packaging cost savings Significantly reduced of up to 231-27%2 environmental footprint 70% Total packaging Handling, transport, damage Compared to cardboard boxes: 30% costs Platform Up to 60% less C
Slide 121: Strong revenue growth
Strong revenue growth Driven by expansion with new and existing customers Sales revenue growth – constant currency Regional contributions to sales revenue Asia, 3% 17%1 South America, 5% 13% 12% 9% 9% North America, 21% FY14 FY15 FY16 FY17 1H18 Europe, 71% Volume growth Price growth 1 Acquisitions c
Slide 122: Significant growth potential
Significant growth potential Large addressable opportunities in all markets Market share – fresh produce ‘White space’ opportunity: Total Ongoing conversion of commodities at existing retailers packaging 4.8b 1.9b 249m 809m units Winning and expanding with new retail customers 41% 40% Take ove
Slide 123: Revenue growth expectations
Revenue growth expectations Expansion with new and existing customers key driver of growth IFCO: components of revenue growth 5-year Medium-term Key drivers average expectations Volume growth supported by significant addressable opportunities in all Volume 12% 6-8% markets Pricing reflects strat
Slide 124: Profitability Development
Profitability Development Portfolio of businesses at various stages of maturity Underlying Profit and margins 15% 200 Europe 12.1% 12.0% 12.2% 11.8% Continued growth as retailers increase RPC usage 11.0% 10% 100 Continued focus on cost reduction and maintaining asset efficiency North America
Slide 125: Operating efficiencies
Operating efficiencies Ongoing focus on improving operational efficiency Network optimisation to save wash and transportation costs Optimisation Process optimisation and best practice sharing RPC flow optimisation project in North America Continuing automation of wash processes in countries
Slide 126: Input cost inflation
Input cost inflation Transport and wash cost improvement over the past 3 years Trip wash and transport costs Wash cost reductions reflect: (YoY % change) 2% Volume-related efficiencies and cost reductions 1% 0% Wash network optimisation Long-term supplier contracts with fixed rates Transport c
Slide 127: Asset efficiency
Asset efficiency Key to improving cash flow and profitability IFCO turn rates Key drivers of asset efficiency Seasonal vs. year-round business Domestic vs. cross boarder business Number of RPC pools and crate sizes/variants Cycle/dwell times FY14 FY15 FY16 FY17 1H18 Asset efficiency is ref
Slide 128: IFCO Europe
IFCO Europe Market characteristics Produce Diversified growing regions sourcing Low impact of concentrated crop issues Fragmented retail market Retailer Retailers have exclusive relationships with poolers Dynamics IFCO reimburse retailers for logistics services and shares volume-related ef
Slide 129: IFCO Europe
IFCO Europe Developed market with strong growth potential Market share – fresh produce Total Strategy to strengthen network advantage packaging 3.4b 1.4b units Ongoing commodity conversions away from cardboard Entry into new verticals e.g. meat, fish, eggs 42% 38% New retailer wins from poolin
Slide 130: IFCO North America
IFCO North America Market characteristics Produce Concentrated growing regions sourcing High potential impact from crop failures Retailer High share of national retailers dynamics Retailers do not work exclusively with one pooler Large growers with significant negotiating power Producer dy
Slide 131: North America
North America Market remains significantly under-penetrated Market share – fresh produce Focus on: Total packaging 181m 1.7b Strengthening and growing the core fresh produce units business Continue category conversions with current retailers Win new retail customers with a focus on West Coast
Slide 132: North America challenges
North America challenges Strategy to improve profitability and asset efficiency Contribution to ROCI improvement over next 2 years Transport Move to dedicated fleets and fixed contracted lane rates ~30% procurement Reduce reliance on spot market transport Key challenges Implement new pricing s
Slide 133: South America
South America IFCO is the clear market leader Market share – Modern retail fresh produce South America – market leader Implementation of new verticals (e.g. meat, bread, eggs) Total packaging 249m 809m New retail wins (primarily in Brazil and Colombia) units Organic growth linked to modernisat
Slide 134: Innovate to create new value
Innovate to create new value Product development Phase out old generation pools to provide more ergonomic products for customers, reduce complexity and gain efficiency for IFCO Limit the trend to retail-specific new pools for fresh produce by offering alternative customising solutions for standa
Slide 135: Innovate to create new value
Innovate to create new value Technology and digital innovation Tracking flows and monitoring BXB Digital collaboration stock levels across the supply chain Supports all RPC-related transactions and customer Pilot with leading IFCO retail customer to information requests digitise the supply chain
Slide 136: Innovate to create new value
Innovate to create new value Proactively responding to e-commerce and omni channel trends Developing solutions to extend the Case study: Qool Collect usage of RPCs towards end consumers Offering consumers a shared collection point for and to provide additional value added orders from multiple online
Slide 137: Qool Collect video
Qool Collect video >| 137 Brambles
Slide 138: Succession and talent management
Succession and talent management Strengthen and develop new talent Talent Commercial development Leadership development development Recruit new talent: leverage Strengthen sales capabilities Develop new talent: active capabilities from the Brambles Negotiation training participation in Bramb
Slide 139: Summary
Summary IFCO is the clear global market leader with significant growth potential in all markets Excellent growth rates and solid profit margins delivered in a very challenging and competitive environment Strong performance of Europe and South America with promising development in Asia Clear
Slide 140: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 141: Path to digital leadership
Path to digital leadership Prasad Srinivasamurthy President, BXB Digital 141
Slide 142: The pace of technology is increasing
The pace of technology is increasing, and impacting business exponentially Everything that can remotely become digital is becoming or will be digital! * Internet & Enterprise Industrial Disruptors Sensor and Specialised Cloud Software & Technology leading with Connectivity Start-Ups Providers Servic
Slide 143: Our opportunity to innovate with BXB Digital
Our opportunity to innovate with BXB Digital Our market leadership Advancements in technology Large pools of physical assets Global scale of Edge devices with Big data cloud with trusted brands operations embedded intelligence Computing capabilities Relationships across Supply chain & Telecommunicat
Slide 144: Questions only we can answer
Questions only we can answer Digital supply chain Smart pool Apps, Supply chain visibility algorithms sensors, data Goods movement Smart assets Brambles: Where are my assets? Where do they flow? Pool Who is using it? In what condition? Apps, Algorithms Customers: Sensors, Where are my goods? Value D
Slide 145: Questions only we can answer
Questions only we can answer Physical Physical + Digital Linear Exponential value potential 145
Slide 146: Powering digital supply chains
Powering digital supply chains Transform Reimagine Illuminate Create new markets Remake existing markets Enhance asset efficiency in our core business 146
Slide 147: Our approach
Our approach Desirability Establishing the need and value Feasibility Viability Ensuring it can Confirming the be used and business operationalised opportunity Current focus Step 1: Build Step 2: Validate Step 3: Scale Research and development Business units/customer validation New solutions Team, o
Slide 148: Step 1: Build an A-team
Step 1: Build an A-team Technology and domain experience in supply chain, data science, IoT, CRM, aerospace, telecom, mobile and gaming industries Recruited from Silicon Valley and other tech hot spots, solving problems for some of the largest companies in the world, across multiple verticals Busine
Slide 149: Step 1: Build core technology
Step 1: Build core technology Brambles Intelligence Exchange (BRIX) Intelligent edge Software engine Supply chain applications in devices and algorithms Asset tracking Cellular Wi-Fi Bluetooth Geo Goods visibility and quality Gyro Temp Accel Magnet Connectivity services Intelligent models and algori
Slide 150: Differentiate: Only Brambles can offer
Differentiate: Only Brambles can offer Repeatable across our Seamless physical and digital At scale global network 1 Cutting edge IoT devices with multiple 1 Repeatable blueprint across our 1 Purpose built scalable and extensible sensors designed to fit platforms and network software engine and work
Slide 151: Step 2: Validate
Step 2: Validate Value through pilots Laura Nador Illuminate asset efficiency and velocity Reimagine customer value 151
Slide 152: Pilots – North America
Pilots – North America The challenge The approach The findings The opportunity Create visibility of Measure flows of Unanticipated flows Enhanced collection pallet flows within tagged pallets and behaviours and cost mitigating channels that are injected at targeted strategies, new Illuminate less ef
Slide 153: Strategic Benefits
Strategic Benefits Greater asset efficiency, ease of doing business and customer value creation Improve Simplify Business model Deliver more asset efficiency the business transformation customer value Track & trace Ease of doing Introduce Enhanced business new services customer value Expand track an
Slide 154: Step 2: Validate
Step 2: Validate Value through pilots Mike Pooley Illuminate asset efficiency and velocity Transform value to customers 154
Slide 155: Pilots - Europe
Pilots - Europe Spain Track and Trace Pilot Downstream transfers to Non-Cooperating Distributers (NCD) in the Beverage sector are a source of loss to CHEP in Spain Illuminate Pilot injected pallets with tracking devices at NCDs via specific manufacturers in the beverage sector the network Pilot conf
Slide 156: Strategic benefits
Strategic benefits Greater asset efficiency, ease of doing business and customer value creation Improve Grow Innovate Deliver more asset efficiency market share faster, bigger customer value Visible supply Competitive Introduce Enhanced chain network differentiation new services customer value Expan
Slide 157: Our journey so far
Our journey so far Step 1: Build Step 2: Validate Step 3: Scale Research and development Business units/customer validation New solutions 1-2 years 2-3 years 3-5 years Strong foundation of people and capabilities Codify Brambles expertise in BRIX Build new repeatable and scalable offerings Pilot cap
Slide 158: Challenges and pitfalls
Challenges and pitfalls Digital is not just technology Successful adoption needs a new digital value lens across the organisation Acknowledge unknowns Cutting edge technology is still maturing; not everything will work or succeed Iterate and pivot Validate business value and adjust based on learning
Slide 159: Pathway to digital leadership
Pathway to digital leadership Intelligent edge A digital fabric over a physical network Software engine and algorithms Transform existing and sensor data to insights Core pooling Applications business Applications to leverage insights into action Digital supply chain Collaboration and information ex
Slide 160: 2018 Investor Day
2018 Investor Day 14 March 2018
Slide 161: Appendix
Appendix Brambles
Slide 162: Glossary of terms and measures
Appendix 1 Glossary of terms and measures Except where noted, common terms and measures used in this document are based upon the following definitions: Actual currency/FX Results translated into US dollars at the applicable actual monthly exchange rates ruling in each period. Average Capital Investe
Slide 163: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Constant currency/FX Current period results translated into US dollars at the actual monthly exchange rates applicable in the comparable
Slide 164: Glossary of terms and measures (continued)
Appendix 1 Glossary of terms and measures (continued) Except where noted, common terms and measures used in this document are based upon the following definitions: Net new business The sales revenue impact in the reporting period from business won or lost in that period and over the previous financi