Kerry Group Plc · EURONEXT:KRZ
Kerry — Goodbody Conference 2010
45 slides from Kerry's conference presentation, October 2010
Slide 1: Goodbody Conference: Kerry Group in Changing Times
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Slide 2: Kerry Overview/History
Kerry Overview/History • Revenue (2009) ‐ €4.5 billion • Enterprise value ‐ €5.4 billion • Market capitalisation ‐ €4.3 billion • History of the organisation – 1972 Private Dairy Processing Company ‐ Co. Kerry – 1974 Dairy Co‐operative formed – 1986 Kerry Group launched as a public company • Sales t
Slide 3: Kerry: Our Business
Kerry: Our Business • The world leader in ingredients and flavours, Kerry develops, manufactures and delivers technology based ingredients, flavours and integrated solutions for the food and beverage industries • In the UK and Irish consumer foods markets, Kerry Foods is the leading supplier of bran
Slide 4: Kerry Story – Key Themes
Kerry Story – Key Themes 4
Slide 5: Consistency
Consistency • Consistent strategy • Long management tenure • Consistent and solid financial performance 5
Slide 6: Corporate Mission
Corporate Mission • Kerry Group will be – a world leader in food ingredients and flavours serving the food and beverage industry, and – a leading supplier of added value brands and customer branded foods to the Irish and UK markets • Through the skills and wholehearted commitment of our employees, w
Slide 7: Kerry Ingredients & Flavours – leveraging technology leadership
Kerry Ingredients & Flavours – leveraging technology leadership in global food and beverage markets Technology Region Functional Savoury & Dairy Asia‐Pacific 16% EMEA 38% Ingredients 10% Systems & Flavours 45% Americas 46% End Use Market Beverage 20% Meats 18% Pharma 4% Bakery 12% Beverage Systems C
Slide 8: Leading Ingredients and Flavours Companies
Leading Ingredients and Flavours Companies Revenue $m Most recently published results 8
Slide 9: Kerry Foods Technologies, Customers and Markets
Kerry Foods Technologies, Customers and Markets Technology Customers Meat & Savoury Dairy Products Provisions Private Label Brand Meal Solutions Food Service Geography IOI Other GB 9
Slide 10: We are a Leading Player in Food & Beverage and Leaders in Added Value Fridge Food
We are a Leading Player in Food & Beverage and the Leaders in Added Value Fridge Food Major added value chilled food companies (in GB/IOI) Added value fridge food: Chilled Ready Meals, Ready to Cook, Cooked Meats, Sausage, Rashers, Pastry, Yellow Fats, Cheese, Yogurts, Desserts, Pizza, Pasta, Sauce,
Slide 11: Consistency
Consistency • Consistent strategy • Long management tenure • Consistent and solid financial performance 11
Slide 12: Management
Management Stan McCarthy CEO, Kerry Group Gerry Behan Albert McQuaid Mark McCormack Flor Healy Brian Mehigan Kerry Ingredients Kerry Ingredients Kerry Ingredients Kerry Foods Chief Financial Officer & Flavours & Flavours & Flavours Americas Region EMEA Region Asia‐Pacific Region 12
Slide 13: Management
Management • Vast experience at all levels of management • Management training begins at graduate recruitment • In‐house further education programme • Culture of ‘growing our own’ • Outside experts recruited to fill the gaps 13
Slide 14: Consistency
Consistency • Consistent strategy • Long management tenure • Consistent and solid financial performance 14
Slide 15: Adjusted EPS 1986 - 2009 (cent)
Adjusted EPS* 1986 ‐ 2009 (cent) CAGR: 14.4% Note: * before intangible amortisation and non‐trading items (net of tax) 15
Slide 16: Diversity
Diversity • Diverse product range and exposure • Diverse customer base • Diverse geographical spread 16
Slide 17: Kerry's Strategic Positioning
Kerry’s Strategic Positioning Sodium reduction Formula optimisation Clean labels Value Speed‐to‐market Food safety Technology layering Health Indulgence Portability Fusion flavours Ready‐to‐use Sensory appeal Easy preparation Convenience Culinary touch 17
Slide 18: Value/Convenience Products
Value/Convenience Products Textural and Functional solutions that address customer and consumer needs in the marketplace Enzymes “Egg Replacement” “Dough Strength” Fermented Ingredients “Extended Shelf‐Life” “Dough development” “Freeze/Thaw Stability” Emulsifiers “Food Safety” “Artisanal Textures” T
Slide 19: Health Products
Health Products Ingredient solutions designed to meet consumers’ growing interest in healthy lifestyles Fruit Powders “High Protein” “Clean Label” “Gluten Free” Granola “Whole Grain” “Natural” “Sodium Reduction” “Pre/Probiotics” Salt Modulation Technology “Real Fruit” Flavour Modulation Technology F
Slide 20: Indulgence Products
Indulgence Products Ingredient solutions that enhance the consumer experience Culinary Ingredients through flavour, texture and appearance “Buttery Notes” “Crunch Bits” Savoury Flavours “Ethnic‐Inspired” “Rainbow Sprinkles” Dairy Flavours “Coffeehouse Indulgence” “Chocolate Drops” Dry Dairy Ingredie
Slide 21: Added Value Chilled Worth €18bn
Added Value Chilled Worth €18bn Food Markets €90bn -0.3% vol +2.1% vol Source: Kerry estimate for UK/ROI based on Kantar Worldpanel and Nielsen Scantrack (mid 2010) 21
Slide 22: Kerry Foods: Integrated Marketing Strategy
Kerry Foods: Integrated Marketing Strategy Top Tier Brands Plus selective support for our mid-tier brands 22
Slide 23: Diversity
Diversity • Diverse product range and exposure • Diverse customer base • Diverse geographical spread 23
Slide 24: Ingredients & Flavours: Our Customer Alliances
Ingredients & Flavours: Our Customer Alliances 24
Slide 25: Foods' Customers
Foods' Customers TESCO ASDA _Theco-operative M a a a a MORRISONS «chp Sainsburys 6@Ahold SUPERQUINN DUNNES STORES 3\\.S_ Waitrose [MUSGRAVE B e brakes fresh, leas
Slide 26: Diversity
Diversity • Diverse product range and exposure • Diverse customer base • Diverse geographical spread 26
Slide 27: Kerry Ingredients & Flavours Worldwide Locations
Kerry Ingredients & Flavours Worldwide Locations Manufacturing Plants Sales Offices 27
Slide 28: Manufacturing Locations
Manufacturing Locations Cheese & Spreads Charleville, Ireland Omagh, N. Ireland Coleraine, N. Ireland Ossett, UK Listowel, Ireland Portadown, N. Ireland 2 Dairies (Limerick, Killarney) Meat & Savoury Durham, UK Poole, UK Enniskillen, N. Ireland Shillelagh, Ireland Finglas, Ireland Spalding, UK Hyde,
Slide 29: Change
Change • Change in consumer taste • Change in commodity and economic inflation • Change in industry operating models 29
Slide 30: Kerry's Strategic Positioning
Kerry’s Strategic Positioning Sodium reduction Formula optimisation Clean labels Value Speed‐to‐market Food safety Technology layering Health Indulgence Portability Fusion flavours Ready‐to‐use Sensory appeal Easy preparation Convenience Culinary touch 30
Slide 31: R&D Expenditure
R&D Expenditure 3.1%* 3.3%* 3.0%* 3.0%* 2.8%* 2.7%* 2.4%* 2.1%* 2.0%* 2.0%* Note: * figures relate to R&D as a percentage of revenue 31
Slide 32: Kerry Foods' On-going Innovation Programme
Kerry Foods’ On‐going Innovation Programme 32
Slide 33: Change
Change • Change in consumer taste • Change in commodity and economic inflation • Change in industry operating models 33
Slide 34: Raw Material Cost % Change on Prior Year Spend
Raw Material Cost % Change on Prior Year Spend 34
Slide 35: Food & Beverage (non-alcoholic) Consumer Price Index
Food & Beverage (non‐alcoholic) Consumer Price Index 2009 c De UK IRL 35
Slide 36: Average Euro – Sterling Rate 2001-2010 ytd
Average Euro – Sterling Rate 2001‐2010 ytd 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 36
Slide 37: Average Euro – US Dollar Rate 2001-2010 ytd
Average Euro – US Dollar Rate 2001‐2010 ytd 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 37
Slide 38: Raw Materials - Price Trend for Crude Oil (1996-2010 ytd)
Raw Materials ‐ Price Trend for Crude Oil (1996 – 2010 ytd) $98.2 Avg Price ‘08 $73.6 Avg Price ‘07 $79.3 Avg Price ‘10 $67 Avg Price ‘06 $64.9 Avg Price ‘09 $56.3 Avg Price ‘05 $37.9 Avg Price ‘04 $24.9 Avg Price ‘03 38
Slide 39: Change
Change • Change in consumer taste • Change in commodity and economic inflation • Change in industry operating models 39
Slide 40: Industry Supply Chain
Industry Supply Chain Retail Functional Ingredients Brands Emulsifiers Enzymes Cultures Hydrocolloids Customised Ingredient & Colours Proteins Flavour Systems Flavours Kerry is the leader in the development of a new sector of the supply chain: supplying Customised Store Ingredient & Flavour Systems
Slide 41: 2001 – 2009 Acquisition and Development Strategy
2001 – 2009 Acquisition and Development Strategy Savoury & Dairy ‐ Beatreme ‐ DCA ‐ Dalgety ‐ Golden Vale ‐ Dera 41
Slide 42: The Future
Kerry Story – Key Themes The Future 42
Slide 43: Group Goals & Long Term Targets
Group Goals & Long Term Targets • Group revenue: +2% to +4% (LFL) volume growth • Margin: 10% Group margin in 5 years • Adjusted EPS* 10%+ • ROAE* 15%+ and CFROI 12%+ Note: * before intangible amortisation and non‐trading items 43
Slide 44: Future Prospects 2010
Future Prospects 2010 • Full year performance to exceed earlier guidance • Kerry business model delivering sustainable growth • ‘Go‐to‐market’ strengthening customer alliances • Solid innovation pipeline in key end‐use‐markets • Kerry Foods’ leading UK brands continue to outperform • Irish brands su
Slide 45: Goodbody Conference: Kerry Group in Changing Times
ie - P wd | Goodbody Conference ‘Kerry Group in Changing Times’ October 2010 KERRY @