Bega Cheese Limited · ASX:BGA
Bega Cheese — Investor Day (November 2023)
63 slides from Bega Cheese's investor day presentation, Nov 30, 2023
Slide 1: Bega Group Investor Day presentation
ASX ANNOUNCEMENT Bega Group Investor Day presentation For personal use only Bega Cheese Limited (ASX:BGA]) (“Bega Group”) is holding an Investor Day at its Wetherill Park facility in Sydney today. A copy of the presentation to be given at the Bega Group Investor Day is attached. 30 November 2023 For
Slide 2: Investor Presentation 30 November 2023
For personal use only Investor Presentation 30 November 2023
Slide 3: Site Welcome & Safety Briefing
For personal use only Site Welcome & Safety Briefing Andrew Harris General Manager - Milk Based Beverage Operations
Slide 4: Acknowledgment of Country
For personal use only Acknowledgment of Country I would like to acknowledge the Cabrogal people of the Darug Nation as the traditional custodians of the land on which we meet today and to pay my respects to elders past and present.
Slide 5: Site map & evacuation point
Site map & evacuation point For personal use only In the event of an emergency situation: 1. Stay calm and stay with your host 1 – Green Evacuation 2. If there is immediate danger - alert your host to the situation Point 3. Site wardens will take control and direct all personnel to safety Invacuatio
Slide 6: Welcome
For personal use only BUILD EXPAND BALANCE Barry Irvin Executive Chairman Welcome STRENGTH
Slide 7: For personal use only
For personal use only 6
Slide 8: Welcome
For personal use only Pete Findlay Chief Executive Officer Welcome
Slide 9: The Bega Group Executive Team
The Bega Group Executive Team For personal use only Pete Findlay Gunther Burghardt Darryn Wallace Adam McNamara Antonietta Timms CEO CFO EGM – Retail Sales, EGM – Growth Channels & EGM – Branded Business Marketing & Partnerships Customer Supply Chain Operations Hamish Reid Jac Scarlett Rob Grima Dav
Slide 10: Overview of Investor Day
Overview of Investor Day For personal use only • Our transition from a commodity-led to brand-led company generating higher and more consistent earnings • Demonstrate the important role the Bulk business plays for the Group • Channel / market opportunities to propel net revenue and profit growth • D
Slide 11: Our purpose is creating great food for a better future
OUR PURPOSE IS... CREATING GREAT FOOD FORA HE GREAT AUSTRALIAN FOOD COMPANY be OY “ALS ue ny = AAAs Grow PasSsIO INVEST SUPPORT our people for the customer and consumer in our future each other OUR BEHAVIOURS ARE OUR VALUES IN ACTION BE CARING BE INCLUSIVE BE OPEN “We look out for each other” “We al
Slide 12: Our purpose
For personal use only Our purpose 11
Slide 13: The Bega Group's unique capabilities
The Bega Group’s unique capabilities For personal use only Market leading portfolio of brands • Number #1-3 in our key categories DIVERSIFIED • Bega products are present in ~95% of Australian households PORTFOLIO OF • ~$2b net branded sales revenue across all channels MARKET LEADING BRANDS Extensive
Slide 14: Vision: The Great Australian Food Company
For personal use only VISION: To become ‘The Great Australian Food Company’ PURPOSE: Creating great food for a better future 5-YEAR HORIZON: Focus & Simplify Secure solids Protect and grow Win on the street Streamline our Sustainability International Grow and diversify the the core Improve our sites
Slide 15: Structured for strategy
Structured for strategy For personal use only CEO – Pete Findlay Branded Business Bulk Business Growth Channels Retail Sales, Marketing & Partnerships & Customer Supply Chain Bulk, Nutritionals DARRYN WALLACE ADAM MCNAMARA & Ingredients HAMISH REID Branded Business Operations ANTONIETTA TIMMS Centra
Slide 16: Macro consumer trends
Macro consumer trends Sources: Australian Bureau of Statistics, 2021 Census results; Australian Institute of Family Studies (AIFS), Families Then & Now: Households and families report; Australian Institute of Health and Welfare. Demographics are changing Food needs are changing For personal use only
Slide 17: Macro consumer trends
Macro consumer trends Sources: Australian Bureau of Statistics, 2021 Census results; Australian Institute of Family Studies (AIFS), Families Then & Now: Households and families report; Australian Institute of Health and Welfare. What is important is changing Lifestyles are changing For personal use
Slide 18: Great categories
Great categories For personal use only Category Total Retail In growing categories bought by all Grocery Category Growth household Sales Value Australian families annual value penetration • Everyday categories Milk Based Beverages $918m 13% 54.3% • Defensive characteristics with Yoghurt $1,780m 11%
Slide 19: Great brands
Great brands For personal use only Milk Based Juice and Spreads and Beverages White Milk Yoghurt Drinks WaterIce Dairy Foods condiments Culinary Ingredients 30+ Plant-based iconic brands 18
Slide 20: Our power brands
Our power brands For personal use only • Founded in 1900, the Dairy Farmers brand is our largest trademark with over $700m RSV, playing across white milk, yoghurt and culinary. Our top 8 brands contribute 72% • Providing ultimate mental clarity, Dare is almost a half a billion-dollar RSV brand of br
Slide 21: Market leading brands
Market leading brands Grocery Bega Market Bega Market For personal use only Bega Brands Category Share Position Milk Based • Iconic Australian Brands Beverages 52% 1 with enduring appeal Yoghurt 26% 1 • Strong market positions Spreads 31% 1 • Covering essential consumer items to Fresh White Milk 12%
Slide 22: Multichannel strategy
Multichannel strategy Grocery Non-Grocery For personal use only Supermarkets Convenience Foodservice and Local Trade 21
Slide 23: Our Bulk business overview
Our Bulk business overview For personal use only Our Bulk business has been a strong contributor • Invested in capability to offset decline in Chinese infant formula sales • Product mix is focused on higher returning commodity streams • Milk volume on track to stabilise in FY2024 • Optimise cost str
Slide 24: Our strategy is to 'focus & simplify'
Our strategy is to ‘focus & simplify’ For personal use only Branded business • Grow and protect our core • Win on the street • International opportunity • Streamlined sites Bulk business • Maximise milk solids returns Sustainability • Meet our customer, consumer and community sustainability expectat
Slide 25: Sustainability
Sustainability For personal use only Our Approach: Greater Good The Bega Group Greater Good strategy is aligned to the United Nations Sustainable Development Goals with a focus on addressing the impacts of our business and where we can contribute to sustainable development – our products, our people
Slide 26: Site Overview Site Tour
For personal use only Site Overview Site Tour
Slide 27: Wetherill Park
Wetherill Park For personal use only • Site constructed in 1986 and upgraded in 2017 • Flavoured milk, iced coffee, modified white milk, UHT portions, custard, extended shelf-life milk • Processing and packing of 70 million litres of milk annually • 160 staff, working 24/6 hr roster • Six packing li
Slide 28: What is produced on site?
What is produced on site? For personal use only Dare Iced Flavoured Culinary Specialty Coffee milk milk 27
Slide 29: Lunch
For personal use only LUNCH 28
Slide 30: Branded Business
For personal use only Darryn Wallace Adam McNamara Antonietta Timms EGM – Retail Sales, EGM – Growth Channels EGM – Branded Marketing and Partnerships and Customer Supply Chain Business Operations Branded Business
Slide 31: Our Branded Business Strategy
Our Branded Business Strategy For personal use only • Protect and grow our core • Win on the street • International opportunity • Streamline our sites 30
Slide 32: Protect and grow our core
Protect and grow our core For personal use only Maximising our core brands with our key customers Capitalising on our More from Extend leadership Build diversified #1 milk-based the core In yoghurt beverage portfolio beverages position 31
Slide 33: Protect and grow our core: We're local
Protect and grow our core For personal use only Investing behind our core We’re local 32
Slide 34: Protect and grow our core: Provide trusted value
Protect and grow our core For personal use only Investing behind our core Provide trusted value 33
Slide 35: Protect and grow our core: Engage shoppers
Protect and grow our core For personal use only Investing behind our core Engage shoppers 34
Slide 36: Protect and grow our core: Integrated customer experience
Protect and grow our core For personal use only pre-shop AWARENESS Investing behind our core physical & online shop CONSIDERATION Integrated customer experience post shop RE-ENGAGE 35
Slide 37: Innovation through trends: Better for you
Protect and grow our core For personal use only Innovation through trends Better for you 36
Slide 38: Innovation through trends: Taste
Protect and grow our core For personal use only Innovation through trends Taste 37
Slide 39: Innovation through trends: Tread lightly
Protect and grow our core For personal use only Innovation All yoghurt single serve tubs 100% rPET TJB Bottle 1.5L/500mL Nude caps 30% rPET in core Peanut through trends Oct/Nov ‘22 Butter range now recyclable To tread lightly RFA approved coffee beans 38 RPET National Roll out commences
Slide 40: Win on the street
Win on the street Accelerating growth outside of core grocery For personal use only Grow independent grocery Expand Maximise reach of and convenience food service cold chain distribution network 39
Slide 41: Grow independents and convenience
Grow independents and convenience For personal use only We benefit from a change in shopper habits Basket size is decreasing, whilst frequency of shop including top up shop and eat-now missions is on the rise. • Bega delivers to ~17k independent grocery and convenience stores – we’re targeting 20k •
Slide 42: Expand Foodservice
Win on the Street For personal use only Restaurants &Caterers Expand Foodservice Food service is a $60b market Hospitals & Aged Care Airlines & Hotels 41 RPET National Roll out commences
Slide 43: Expand foodservice
Win on the Street Expand foodservice For personal use only • Growing in share - currently 25% of wholesale supply and growing • Rising out of home spend – Australians spend over 37% on average of the food and non- alcoholic beverage budget on eating out of home. • Dairy is the second largest categor
Slide 44: Expand foodservice: advantaged portfolio and route to market
Win on the Street Expand foodservice For personal use only Advantaged portfolio Expansive route to market Product breadth for multiple customer needs Range of service models achieving vast reach Multi-Category; Multi-Format Bega’s Direct Model; Wholesale Partnerships 43
Slide 45: Market leading distribution network
Win on the Street Market leading distribution network For personal use only Scale – ~3,200 truck loads per week and ~850 mil Bega litres annually Network – Unparalleled connectivity between metropolitan, NT satellite and regional Australia with 133 chilled depots and distribution centres Reach – Cap
Slide 46: Optimise our network
Win on the Street For personal use only Optimise our network Invest in digital Data-backed Network automation decisions Enhance Customer Improve utilisation and Continue to modernise Experience efficiency network Build engagement with Systems management Investing in service, safety, broader portfoli
Slide 47: International opportunity
International opportunity For personal use only International opportunity 46
Slide 48: International Strategy
International Strategy For personal use only 47
Slide 49: Streamline our sites
Streamline our sites For personal use only National footprint with overlapping capabilities across white milk, milk-based beverages, cream and cheese. Opportunities: • Consolidation – remove excess capacity • Strategic partnerships – avoid investment in assets and improve efficiency and cost • Strat
Slide 50: Streamline our sites
Streamline our sites Focus and invest in manufacturing capability across For personal use only priority categories: • Yoghurt – Morwell, VIC • Milk based beverages – Wetherill Park, NSW • Spreads – Port Melbourne, VIC Streamline and cost out focus with simplification: • Improve plant efficiency and
Slide 51: Bulk Business
For personal use only Hamish Reid EGM – Bulk, Nutritionals and Ingredients Bulk Business
Slide 52: Our bulk assets
For personal use only Our bulk assets optimises the value of our national milk pool, and produces unique Bega branded products 51
Slide 53: Bulk assets benefit Bega's brands
Bulk assets benefit Bega’s brands For personal use only The majority of the milk processed by our Bulk assets are for branded products. These assets also: 1. Optimise value from the protein surplus generated by the branded business 2. Enable the purchase of lower cost seasonal milk 3. Balance season
Slide 54: Maximising component value
Maximising component value For personal use only The Bulk business separates milk components and recombines these into an optimal product mix for our branded business 800 million litres of milk are processed by our fresh branded business 550 million litres of milk are processed in our bulk business
Slide 55: Australian milk is seasonal
Australian milk is seasonal For personal use only • Victorian bulk assets enable the purchase of lower cost Victorian seasonal milk at scale • Bulk assets balance seasonal milk to meet the need of our branded business • Bulk assets enables white milk facilities to operate optimal cost structures • A
Slide 56: Milk price follows commodities
Milk price follows commodities Milk prices and commodity prices correlate over time and we expect For personal use only greater alignment in the coming years • 30% of Australian milk is exported and >60% is exposed to global commodities through direct imports into Australia of cheese and butter • Th
Slide 57: Our strategy is to 'secure milk solids'
Our strategy is to ‘secure milk solids’ 1. Generate more value from protein investments, For personal use only increasing margins beyond skim milk powder Milk Protein Concentrate 85% capacity increase 2. Securing international solids to support brands Creating more options for buyers in selected cha
Slide 58: Financial Overview
For personal use only Gunther Burghardt CFO Financial Overview
Slide 59: Driving margin expansion
Driving margin expansion For personal use only Bega’s strategic plan is focused on transition to a branded business and gross margin/EBIT margin expansion Revenue management • Advanced promotional analytics • Mix management – investment, resources and innovation focus on our advantaged categories •
Slide 60: Capital management
Capital management For personal use only Ensuring a strong and resilient balance sheet through focus on cash flow optimisation Target consistent strong operating cash conversion • Our Integrated Business Planning (IBP) processes are vital in optimising inventory levels • Portfolio simplification; ‘f
Slide 61: Strategic plan financials
Strategic plan financials For personal use only F18 FY23 CAGR FY24 FY24* FY28 Actual Actual to FY28 Revenue ($b) 1.25 3.37 3.4 – 3.55 3.9 – 4.2 3 – 5% Average > +1 pt Gross Margin (% Revenue) 26% 19% 19 – 20% 23 – 26% increase per year Branded EBITDA ($m) 48 144 200 – 210 250+ Bulk EBITDA ($m) 73 43
Slide 62: Panel Q&A
Panel Q&A For personal use only Barry Irvin Pete Findlay Gunther Burghardt Executive Chairman CEO CFO Antonietta Timms Hamish Reid Adam McNamara EGM – Branded Business EGM – Bulk, Nutritionals EGM – Growth Channels and Operations and Ingredients Customer Supply Chain
Slide 63: Thank you
For personal use only YOU THANK