Greencore Group PLC · LSE:GNC
Greencore — H1 FY2008 Earnings Presentation
29 slides from Greencore's earnings presentation, Mar 28, 2008
Slide 1: Interim Results for the half year ended 28 March 2008
Interim Results for the half year ended 28 March 2008
Slide 2: Introduction
INTRODUCTION “Balanced food portfolio progressing well in new food era” Patrick Coveney Chief Executive Officer 2
Slide 3: Results Highlights
RESULTS HIGHLIGHTS Adjusted EPS: +7% Constant Currency Performance: - Sales +10% - Operating profit +12% - Adjusted EPS +17% Exceptional gain: €18.1m Dividend: +5% 3
Slide 4: A New Era in Food
A NEW ERA IN FOOD What’s Happening Our Response BALANCE OUR FOOD 1 PORTFOLIO EXTEND ‘IN-CATEGORY’ 2 LEADERSHIP u r e r s eexppeecctt x t nufac turers flalatito nn STRENGTHEN GROUP maanuffraocm ffooooddin FFooooddm a n ific t h ignnifican ssig t hi t i t fr o m in f io 3 BALANCE SHEET 4
Slide 5: Financial Review
FINANCIAL REVIEW “Good performance in testing environment” Geoff Doherty Chief Financial Officer 5
Slide 6: Financial Summary
FINANCIAL SUMMARY €m H1 H1 % Change % Change FY07 FY08 CC* Revenue 632.7 648.7 +3% +10% Group operating profit 40.0 41.1 +3% +12% Net finance costs (9.0) (9.7) Share of associates 0.3 0.8 PBT 31.3 32.2 +3% +12% Tax (7.0) (5.3) Result from continuing operations 24.3 26.9 +11% +20% Adjusted EPS 12.1c
Slide 7: Currency Translation
CURRENCY TRANSLATION 0.8 EUR/GBP Adverse move in EUR/GBP rate 0.75 of 10% period on period 0.7 Approximately 80% of profits denominated in GBP 0.65 Impact in the first half of FY08 -€3.7m in operating profit -€2.7m in profit before tax 0.6 Oct-06 Sep-06 Apr-07 Mar-07 Oct-07 Sep-07 Mar-08 7
Slide 8: Convenience Foods - Overall Performance
CONVENIENCE FOODS - Overall Performance Effective Tax Rate* H1 H1 % % Division provided 68% of Group FY07 FY08 Change Change operating profit €m €m CC Constant currency sales growth of 7% excluding discontinued Revenue 477.8 451.2 -6% +3% ‘factored’ sales Operating Operating margin of 6.2% in profit
Slide 9: Convenience Foods - Momentum in Difficult Environment
CONVENIENCE FOODS - Momentum in Difficult Environment Operating Profit (€m) -4% 31.8 30.6 27.9 + Continued delivery of TLC + Price recovery across core chilled categories + Underlying sales momentum - Significant inflation across ingredients and packaging - Margin attrition in ambient cooking sauces
Slide 10: Convenience Foods - Input Price Inflation
CONVENIENCE FOODS - Input Price Inflation UK Wheat Division experienced c. €22m in cost of goods inflation in the first half Ingredients inflation was 10% Increase in both volatility and level Specific impact on the supply chain of our ambient cooking sauces & pickles business 10
Slide 11: Ingredients & Related Property - Overall Performance
INGREDIENTS & RELATED PROPERTY - Overall Performance H1 H1 % % FY07 FY08 Change Change Excellent Malt performance with €m €m CC increasing medium-term visibility Other ingredients businesses Revenue 154.9 197.4 27% 32% positioned well for this environment Operating profit 8.2 13.2 61% 72% Further zo
Slide 12: Finance Costs
FINANCE COSTS (€m) H1 FY07 H1 FY08 Interest (15.3) (15.6) Pension credit 5.1 4.5 PV of EU receivable 1.2 1.4 Net finance costs before fair value (9.0) (9.7) Fair value of derivatives and FX 3.6 (2.0) Net finance costs (5.4) (11.7) 12
Slide 13: Tax Charge
TAX CHARGE Effective Tax Rate 22.5% Consistent with change in mix of 18% 17% Group profits last year Rate sustainable with current business mix Cash tax remaining well below tax charge H1 FY07 FY07 H1 FY08 13
Slide 14: Exceptional
EXCEPTIONAL Exceptional credit of €18.1m Largely reflecting increase in EU restructuring aid • New Government decision to allocate 87.3% of EU aid to Greencore • Final instalment of €83.4m paid end of February 2008 14
Slide 15: EPS Performance
EPS PERFORMANCE EPS H1 FY07 H1 FY08 Basic EPS 15.4c 20.9c Adjusted EPS – continuing operations 11.8c 13.0c Adjusted EPS – discontinued operations 0.3c - Total adjusted EPS 12.1c 13.0c +7% Dividend H1 FY07 H1 FY08 Interim dividend per share 5.05c 5.30c +5% 15
Slide 16: Cashflow
CASHFLOW (€m) H1 FY08 Operating profit 40.9 Depreciation/Amortisation 14.7 Working capital (52.1) Maintenance capex (4.9) Pensions (3.4) Other 2.1 Free cashflow (2.7) Cashflow from discontinued operations - Enhancement capex (15.9) Exceptionals 81.8 Interest, tax & dividends (21.8) Acquisitions/Disp
Slide 17: Strong Balance Sheet
STRONG BALANCE SHEET (€m) Mar 2007 Mar 2008 Total equity 212.6 278.5 Comparable net debt 393.0 275.4 Debt/Equity 1.85x 0.99x Net debt/EBITDA 3.0x 2.3x 17
Slide 18: Summary Financial Performance
SUMMARY FINANCIAL PERFORMANCE • Group operating profit up 12% before Good performance currency across the portfolio impacted by currency • Adjusted EPS up 7% • Constant currency core sales up 7% Underlying momentum • Margin impacted by ambient cooking in Convenience Foods sauces and pickles business
Slide 19: A New Era in Food
A NEW ERA IN FOOD What’s Happening Our Response BALANCE OUR FOOD PORTFOLIO • Dramatic increases in food pricing • Value chain with more to come 1 • Customers and channels • Geography EXTEND ‘IN-CATEGORY’ LEADERSHIP • No.1 or 2 market share positions • Increasing connection between food and broader s
Slide 20: Food Portfolio Performance
FOOD PORTFOLIO PERFORMANCE Continuing Operating Profit (€m) +12% 5.9 44.4 40.0 -1.5 H1 FY07 Convenience Ingredients & H1 FY08 CC Foods Related Property 20
Slide 21: Customer & Channel Diversification
CUSTOMER & CHANNEL DIVERSIFICATION Major Multiple Retailers Small Outlets and Foodservice 68% 32% Share of Greencore revenues Strong underlying alternative broadly reflects relative market channel growth positions of customers ‘Category captaincy’ positions across Distinctive Direct Store Delivery m
Slide 22: Balance and Growth Through Acquisition
BALANCE AND GROWTH THROUGH ACQUISITION Recent Acquisitions MINISTRY OF CAKE BLAEN TWYNI Specialist supplier to Former Danone the foodservice sector flavoured-water Recognised expertise in facility in Wales cakes and desserts Produces both natural segment and flavoured waters Opportunities to Provide
Slide 23: Geographical Diversification
GEOGRAPHICAL DIVERSIFICATION Platform Acquisition for US Strategy GOAL GOAL STRATEGY STRATEGY ENTRY ENTRY Creation of a scale, Leverage Greencore Acquisition of Home regionally based US expertise in European Made Brand Foods business chilled manufacturing Significant capacity Comparable in Capitalis
Slide 24: Building Category Leadership and Scale
BUILDING CATEGORY LEADERSHIP AND SCALE Market Market Position Share FOOD-TO-GO Sandwiches No.1 26% Salads (new entrant) Sushi (new entrant) No.3 No.3 12% 12% © CHILLED MEAL SOLUTIONS Chilled Italian meals No.1 24% Chilled branded meals Quiche No.1 No.1 33% 40% © Chilled sauces No.2 32% OTHER MEAL OC
Slide 25: TLC and Price Recovery in Current Environment
TLC AND PRICE RECOVERY IN CURRENT ENVIRONMENT WHAT WHATWE WEARE ARE THE THE ENVIRONMENT PERFORMANCE THEENVIRONMENT ENVIRONMENT DOING DOING PERFORMANCE TLC across all areas of operational performance Continued TLC c. €22m of cost of More than 300 Group delivery of 2% of goods inflation in H1 initiati
Slide 26: Strong Balance Sheet
STRONG BALANCE SHEET Comparable Net Debt Total Equity 393 275 279 213 Mar 2007 Mar 2008 Mar 2007 Mar 2008 Facilitates: Management of risk Absorption of volatility Capture of growth opportunities 26
Slide 27: Outlook for H2 FY08
OUTLOOK FOR H2 FY08 Currency translation impact to continue and to be more pronounced in second half Convenience Foods to deliver a good second half driving modest constant currency profit growth for the full year Ingredients & Related Property to sustain its excellent first half performance Group w
Slide 28: Greencore Going Forward
GREENCORE GOING FORWARD A leading international convenience food business 1 – Sustained growth and leadership in core markets – Strong development in US market Supported by Malt and other cash generative 2 businesses Underpinned by a strong balance sheet, excellent 3 financial discipline and further
Slide 29: Further Information
FURTHER INFORMATION For additional information, please contact any of the following individuals: Patrick Coveney, Chief Executive Officer Tel: + 353 (0)1 6051045 Email: patrick.coveney@greencore.com Geoff Doherty, Chief Financial Officer Tel: + 353 (0)1 6051018 Email: geoff.doherty@greencore.com Eoi