Brambles Limited · ASX:BXB
Brambles — Investor Day (September 2021)
82 slides from Brambles's investor day presentation, Sep 14, 2021
Slide 1: Day 2 Investor Day
Day 2 Investor Day 14 September 2021 2021
Slide 2: Day 2 agenda
2 Sydney London Presentation Presenter Day 2 18:00 9:00 CHEP Europe David Cuenca, President CHEP Europe agenda 18:40 9:40 Q&A CHEP Latin America Paola Floris, President CHEP Latin America Q&A 19:15 10:15 BREAK 19:20 10:20 CHEP North America Laura Nador, President CHEP North America Laura Nador Joaqu
Slide 3: Financial numbers and format
3 Financial numbers and Unless otherwise stated: format • All currency amounts are in US dollars • All historical dollar amounts are at actual foreign exchange (FX) rates • All outlook statements are at fixed 30 June 2021 FX rates • Year-on-year percentage growth rates are in constant currency, as d
Slide 4: Disclaimer
4 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. Th
Slide 5: CHEP Europe Investor Day
CHEP Europe Investor Day David Cuenca 2021 President, CHEP Europe
Slide 6: CHEP Europe overview
6 CHEP Europe overview ~US$1.8b revenue Network advantage underpins the strength of the European business CHEP Nearest Europe competitor FY21 revenue US$1.8bn ~US$290m 3% 10% Employees ~3,100 ~300 Delivery Revenue by ~315,000 ~28,000 product line points Service centres ~300 ~130 87% 33% market Count
Slide 7: CHEP is the market leader in Europe
7 CHEP is the market European pallets markets competitive maturity leader in Europe Significant growth opportunities within existing markets European Pallets Market Share Pallet 178m 159m 82m 179m 79m 110m 165m 539m 1.5b Units1 14% 6% 21% 40% 24% 57% 21% 56% 69% 67% 20% 84% 1% 27% 70% 11% Pooling Co
Slide 8: FY21 Performance
8 FY21 Performance • COVID-19 and Brexit created disruptions in supply chain with elevated and Proven business resilience with unpredictable demand patterns and higher inventory balances to de-risk supply chains strong financial and business – Supported our customers to keep their businesses going a
Slide 9: Sales performance and outlook
9 Sales performance and outlook History of resilient sales performance driven by mix of portfolio, pricing mechanisms and multiple avenues for growth Add a graphic / photo: Ideally something on customer or a History of resilient sales performance CHEP Europe sales growth outlook: service centre Medi
Slide 10: Growth in Central Eastern Europe
10 Growth in Germany Market Position and Growth Objectives Central Eastern Product Revenue (US$m) Market Share % Objective Europe Full-size ~110 27 Grow at double-digits each year, through segmented pricing A clear strategy to drive Grow and defend through best- Half Display ~25 20 continued high gr
Slide 11: Automotive
11 Automotive Electric vehicles (EV) and supply chain visibility are key customer priorities we are addressing CHEP Auto Strategic Response • CHEP’s electric vehicle programme launched three years ago Original Equipment Manufacturer (OEM) Opportunities and Challenges and currently working with key b
Slide 12: Focus on transformation
12 Focus on transformation European priorities to build on our competitive advantage to underpin future growth and sustain strong margin levels Customer Asset Efficiency & Digital Business Value Network Productivity Transformation Excellence
Slide 13: Unrivalled Customer Value
13 Unrivalled Customer Value Extending our competitive advantage by improving the customer experience, differentiating service and leading on sustainability Customer experience Service differentiation Sustainability leadership • Reorganising customer service structure • ETA notifications roll out •
Slide 14: Network Productivity
14 Network Productivity A range of cost and efficiency initiatives underpin sustainability of margins Plant automation Transport efficiency Agile networks • Ongoing investment in service • Manage relationship with • Addition of manufacturer and centre automation to improve 1,000+ carriers to ensure
Slide 15: Asset Efficiency
15 Asset Asset Efficiency Control & Productivity Asset productivity ecosystem to drive improved cash flow and ROCI outcomes Asset Use of advanced data analytics to improve customer account productivity health and anomaly detection to proactively address potential Asset Digitising ecosystem points of
Slide 16: Business Transformation enabled by digital
16 Business Transformation Ireland Targeted Field Diagnostics Northern Europe Continuous Field Diagnostics enabled by 5,000 tagged pallets 100,000 tagged pallets digital Data Analytics Data Analytics Driving real business benefits in Europe through supply Optimised service Customer Partnership chain
Slide 17: Business Excellence
17 Business Excellence Investing in our people in order to better support future growth Health & Safety Future Skills & Talent Amazing Place to Work Effective Organisation • Safety Differently promotes a • Suite of learning and talent • Specific 2025 targets for Inclusion • Organisational effectiven
Slide 18: Summary
18 Summary CHEP Europe well placed to create • Strong FY21 revenue growth with Underlying Profit shareholder value through leverage and improvement in ROCI demonstrating customer focus and growth, resilience of business digital transformation and cost • Operating environment and inflation headwinds
Slide 19: Investor Day
14 September 2021 Investor Day 2021
Slide 20: CHEP Latin America Investor Day
CHEP Latin America Investor Day Paola Floris 2021 President, CHEP Latin America
Slide 21: CHEP's evolution in Latin America
21 Market entry Developing CHEP’s evolution 2018 Markets: 25% in Latin America Colombia and of LATAM Peru revenue Diverse businesses at various points of maturity 2010 Central America Mature markets: CHEP LATAM 74% of LATAM FY21 revenue US$353m revenue 1998-1999 Employees ~700 Brazil and Argentina D
Slide 22: CHEP is the market leader in Latin America
22 CHEP is the market Latin America Pallets markets competitive maturity leader in Latin America Significant growth opportunities across the region Market pallet 57m 12m 75m 206m units1 29% 28% 1% 59% 9% 76% 70% 6% 63% <1% CHEP Pooling Modern trade CHEP growth Whitewood 35% market Competition penetr
Slide 23: Established strong foundations for future growth
23 Established strong Improved financial outcomes… foundations CAGR +14% Revenue momentum for future growth market share expansion and increased price realisation in 353 line with cost-to-serve and 327 314 inflationary pressures 295 Focus on asset control and pricing reflecting cost-to-serve support
Slide 24: Transformation in Latin America
24 Transformation in Latin America Improving the customer experience and driving further asset and network efficiencies to support revenue growth, margin improvement and cash flow generation Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Productivity • Customer
Slide 25: Sales performance and outlook
25 Sales performance and outlook Enhanced Customer Value… • Commercial reorganisation to improve customers’ experience Ongoing revenue momentum driven by market share with a focus on value creation expansion and price realisation supported by an enhanced customer value proposition • Customer process
Slide 26: Growth: double market share in Brazil by FY25
26 Growth: double market share in Brazil by FY25 Market overview • Largest, most populated country Strategy to double market share in Latin America • Strong value proposition for Grow market share through expansion with major local (+200m inhabitants) manufacturers and retailers: and international F
Slide 27: Growth: increasing export volume
27 Growth: increasing export volume Strategy to accelerate growth • Leverage superior value proposition: Increase fresh produce exports into North America, expand into other regions – expertise across borders within fresh and assess diversification into other export categories categories – network s
Slide 28: Growth: Last Mile Solutions
28 Growth: Last Mile Solutions CHEP is well positioned to capitalise on increasing demand for in-store solutions across Latin America Market pallet 7.4m Opportunity Point-of-sale platform Strategy to service market demand flows for point-of-sale solutions • Manufacturers seeking innovative point-of-
Slide 29: Strengthening asset efficiency
29 Strengthening asset efficiency Digitising assets and data Asset Control & Productivity: Changing customer behaviour: Through digital, advanced data analytics: • Improved customer declaration • Legal action to enforce legal title analytics and enforcing legal title • Stray pool illumination to and
Slide 30: Excellence in supply chain
30 Excellence in supply chain Strategic initiatives to improve network capacity and capabilities, optimise transport and increase automation San Martin Obispo Plant in Mexico • Automation and network expansion – Reduce manual interventions/labour dependence through • Largest service centre in Latin
Slide 31: Summary
31 Summary Transformation to support • Consistent delivery of double-digit revenue growth over the past four years sustainable profitable growth, with material opportunities for further growth in the region improved customer service and increased financial returns • Actions taken to improve commerci
Slide 32: Investor Day
14 September 2021 Investor Day 2021
Slide 33: CHEP North America Investor Day
CHEP North America Investor Day Laura Nador 2021 President, CHEP North America
Slide 34: CHEP North America Overview
34 ~4,000 CHEP North America employees Overview US$2.3b revenue Our scale and efficiency advantages enable us to serve most customers within 50 miles CHEP North America 2% FY21 revenue ~US$2.3b Employees ~4,000 Revenue Delivery points ~60,000 by product 45% line market share Service centres ~350 98%
Slide 35: Ongoing market volatility in FY22
35 Ongoing market volatility in FY22 Lumber inflation Transportation shortages • Lumber surcharges • Deployed technological enhancements • Optimised sourcing strategies • Rationalised carrier base Range of pricing mechanisms and • Expansion of North American • Updated commercial agreements other ini
Slide 36: Pallet availability challenges
36 Market Dynamics: Pallet • COVID-19 driven demand volatility • Severe labour shortages and transport capacity issues availability • Lumber inflation and supply challenges driving pallet shortages across the market • Increased unauthorised reuse and sale of pallets driven by scarcity of pallets in
Slide 37: CHEP US margin improvement
37 CHEP US margin improvement Initiatives CHEP US targeting to Supply chain cost out • Annual transport and network optimisation deliver ~0.5pt margin exercise undertaken US margins increased ~2 pts improvement in FY22 • Productivity cost improvements from FY19 to FY21 with noting market foundations
Slide 38: Market leadership with enhanced capabilities to support future growth
38 Market leadership Unserved market addressability with enhanced capabilities Near to medium-term Near to medium term: addressable with standard 48x40 wooden pallet, conversion to support future growth 37% to a 48x40 footprint, introduction of an 63% alternative 48x40 platform or expansion into und
Slide 39: Differentiated customer value proposition
39 Differentiated Trusted Partnership customer value • Responsive during volatile market conditions (like COVID-19) via our advantaged network size and density proposition • Continued value creation for manufacturers and retailers, i.e. freight collaboration, empty mile reduction, elimination of sin
Slide 40: A model positioned to deliver profitable volume growth
40 A model positioned to deliver profitable volume growth Leveraging our pipeline of whitespace and expansion opportunities to grow our portfolio based on market attractiveness Protect Improve Grow Strategic partnerships Higher potential markets Higher value segments • Target manufacturers and retai
Slide 41: Pricing transformation to deliver customer value and profitable growth
41 Pricing transformation FY19 FY22 FY25 to deliver customer value Cost-to-serve analysis and ideal customer profiling and profitable growth Customer portfolio management Leveraging customer and market insights Surcharges to cover inflationary costs (lumber, transport, fuel) into pricing decisions t
Slide 42: Ongoing revenue growth balancing volume and price
42 Ongoing CHEP North America Pallet Growth Opportunities revenue growth Product Historical 4- year average Medium-term expectations Initiatives balancing Like-for-Like 2% ~1-2% • Strong partnerships with strategic customers through joint value creation volume and • Medium-term expectation reflects
Slide 43: North America Transformation initiatives
43 North America Transformation initiatives Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Productivity • Customer collaboration • Asset productivity initiatives • Asset digitisation and • People, safety and sustainability productivity • Best-in-class customer •
Slide 44: Automation building on success of Phase 1
44 Automation Continue automation programme to achieve further capacity and agility gains building on FY22 FY24 FY25+ success of Phase 1 1 Further rollout current 2 Reducing Manual Effort 3 Minimal human touch FY18-FY21 investments supported technologies • Eliminates physically • Rollout global volu
Slide 45: Asset productivity
45 Asset productivity Initiatives Transforming North America Changing • Targeted smart asset deployments by channel/customer Asset Productivity through customer • Channel pricing to cover higher costs and losses • Increase compensation for lost assets technology, process redesign and behaviour • Inc
Slide 46: Enhanced customer value through digitisation
46 Enhanced customer value through digitisation Leveraging data analytics and automation to enhance customer insights and value creation Digitise the Customer Experience Process automation Customer centric organisation New value creation optimisation myCHEP portal and process automation New process
Slide 47: Summary
47 Summary CHEP US delivering margin improvement despite significant challenges • CHEP North America largest contributor to Group growth • Organisational focus on asset productivity • Continued investment in automation and quality to improve safety, increase capacity, deliver cost efficiencies and c
Slide 48: Plastic pallets Investor Day
Plastic pallets Investor Day Laura Nador 2021 President, CHEP North America Joaquin Gil Senior Vice President, FP&A
Slide 49: Costco and CHEP: A history of collaboration and partnership
49 Costco and CHEP A history of collaboration and partnership Costco Pallet History The Beginning 2019-2021 Costco is one of our fastest-growing retail customers, Exclusive Plastic Pallets Stringer & Pooled Pallets and represents ~10% of our volume in the US Pallet Exchange Pooled Block Development
Slide 50: Why Costco's supply chain is different to other retailers
50 Why Costco’s supply chain is different to other retailers Pallets play an important role in Costco’s business given Out In their fast-moving, cross dock-based supply chain and their warehouse-style stores, where consumers shop directly from the pallet Costco’s decision to move to plastic pallets
Slide 51: Trialling new operating model for CHEP plastic vs. wood
51 Trialling new operating model for CHEP plastic vs. wood Testing Costco on-site pallet sortation and digital operating model to drive supply chain synergies, reduce risk and support enhanced customer value Expected low damage rate on plastic pallets enables a retail sort-based operating model that
Slide 52: The UL approved, repairable CHEP plastic pallet
52 The UL approved, repairable CHEP plastic pallet
Slide 53: Development of our plastic pallet
53 Development of our plastic pallet Costco was a partner during every step of the product development journey. The pallet meets all Costco and regulatory requirements while being positioned for long term success 1 Pallet developed with Costco for their 2 We believe our plastic pallet is the only 3
Slide 54: Large-scale pilot in progress
54 Large-scale pilot in progress Pilot with multiple manufacturers and Costco to test key operating and economic model assumptions and inform final recommendation Categories Fresh Sundries Hardlines Softline Other Pilot testing key variables of plastic pallet Food economics: Depot- Depot- Direct fro
Slide 55: Pricing and returns on plastic pallets dependent on key variables
55 Pricing and returns on plastic pallets dependent on key variables Given the high capital cost of plastic pallets, low loss rates and driving operational costs savings are essential for a viable business case. Hence, plastic pallets are only suited to more closed loop, low loss supply chains and r
Slide 56: Decision criteria
56 Decision If returns are: criteria • >15% ROCI - Proceed Forecast returns (ROCI) post roll-out • Single-digit ROCI - Don’t proceed (steady state, ~year 5) • ROCI between these two ranges, requires assessment of further opportunities to improve returns over the longer term For Brambles to proceed w
Slide 57: Decision criteria
57 Decision criteria ROCI is one of the key variables in Brambles’ decision criteria Key variables of expected return on investment in Costco plastic pallets are asset cost, loss rate and pricing Costco plastic pallet (at ~mid-point of unit cost1) Steady State (~year 5) ROCI sensitivity to issue fee
Slide 58: "What if"
58 “What if“ Costco proceeds with plastic pallets • Conversion to plastic pallets would be phased. Most likely over ~3 years • Short-term transition costs (for example pallet relocation costs) and and Brambles inefficiencies in the wood pool due to loss of Costco volume decides not to • Expect to re
Slide 59: Decision on investment in Costco plastic pallets expected in H2 FY22
59 Decision on investment in Costco plastic • We are proud of our long and mutually successful partnership with Costco pallets expected • While we strive to meet our customers’ needs it is also important that we continue with a disciplined approach to capital allocation. Consistent with this, in H2
Slide 60: Investor Day
14 September 2021 Investor Day 2021
Slide 61: CHEP Asia-Pacific Investor Day
CHEP Asia-Pacific Investor Day Phillip Austin 2021 President, CHEP Asia-Pacific
Slide 62: CHEP Asia-Pacific Overview
62 CHEP Asia-Pacific Overview Developing markets: 13% Performance and potential across the portfolio of CHEP APAC revenue Developed Markets: ANZ • Strong and stable competitive market positions Mature • Ongoing system growth and attractive markets: incremental growth opportunities that leverage 87%
Slide 63: Developed markets: Australia & New Zealand
63 Developed markets: Australia & New Zealand Australia New Zealand Add a graphic /Products photo: • Multi product service offering driving • Multi product service offering driving <1% opportunities for accretive growth opportunities for accretive growth Ideally something on customer8% or a • Innova
Slide 64: RPCs: developed markets
64 RPCs: developed markets Retained and rebuilt a strong Improving performance and foundation for growth exploring potential • Retention of key long-term • Considerable category volume contracts in New Zealand remains unserved in existing Significant incremental growth opportunity underpinned • Good
Slide 65: Operational focus: Australia
65 Operational focus: Australia Delivering ongoing competitive advantage and growth through relentless evolution and renewal Customer Value Asset Efficiency & Digital Transformation Business Excellence Network Productivity • New and improved products • Collaborative customer asset • Sustained high e
Slide 66: Developing markets: South East Asia
66 Developing markets: South East Asia Add a graphic / photo: Strengthening the foundations for ongoing growth Ideally something on customer or a Progress Performance service centre Products • Ensuring high customer retention • Mid to high single-digit revenue growth rates Wood • Investing in plant
Slide 67: Developing markets: China
67 Developing markets: Building foundations and options for investment- China worthy growth • Targeted growth with key retail, Market progressing on the path to pooling e-commerce, FMCG and logistics sectors • New leadership with entrepreneurial • Established pallet and supporting Disciplined approa
Slide 68: CHEP Asia-Pacific summary
68 CHEP Asia-Pacific summary • Protect and grow our strong market positions in developed markets and Well positioned to deliver profitable growth and strong unlock further value in developing markets returns with ongoing disciplined • Investments in optimisation of growing base business and foundati
Slide 69: CHEP IMETA Investor Day
CHEP IMETA Investor Day Phillip Austin 2021 President, IMETA
Slide 70: CHEP in IMETA
70 CHEP in IMETA 2010 Turkey US$263m market entry Revenue A broad regional portfolio reflecting diverse business and market maturities generating profitable growth and sustained growth opportunities across the portfolio 2008 India market entry CHEP IMETA 1% FY21 revenue US$263m 8% 11% Employees ~2,3
Slide 71: Growth Environment in IMETA
71 Favourable market structures with increased modern trade Growth Environment Grocery sales by type of trade (2020, based on Retail Value) in IMETA 34% 43% 40% Traditional Trade Modern Trade 98% Increasing growth momentum and further potential… 66% 57% 60% 2% FY21-FY25 South Africa Turkey Middle Ea
Slide 72: IMETA: developing markets
72 IMETA: Turkey Middle East India developing • Leverage standardisation trend with key retailers to • Grow core business and markets as industries • Selectively target core business growth assuming markets grow core business solutions continue to mature appropriate commercial and macro-economic env
Slide 73: Developed markets: Sub-Saharan Africa
73 CHEP SSA Value chain Developed markets: Sub-Saharan Africa Forestry Milling Manufacturing Distribution Service centres Industry supply chain Continued profitable growth opportunities in First mile Mid mile Last mile Sub-Saharan Africa by leveraging strong position and expertise in market both wit
Slide 74: Developed markets: Sub-Saharan Africa
74 Developed markets: Sub-Saharan Africa Relentless continuous improvement, Close partnerships and continuous Mitigating forward supply and cost risk to innovation and optimisation across the development with decision making maximise shareholder and customer value business drives profitable growth r
Slide 75: CHEP IMETA summary
75 CHEP IMETA summary • Strong foundation for sustained performance and potential for ongoing growth A broad portfolio of diverse with a broad portfolio in developed and developing markets businesses and market maturities • CHEP's strong network in key markets gives a clear competitive advantage, en
Slide 76: Investor Day
14 September 2021 Investor Day 2021
Slide 77: Appendix
77 Appendix Brambles
Slide 78: Glossary
78 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: ACI Average Capital Invested (ACI) is a twelve-month average of capital invested. (Average Capital Invested) Capital invested is calculated as net assets before tax balances, c
Slide 79: Glossary
79 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: Cobots Collaborative robot COLT CHEP Operations and Logistics Technology Constant currency/constant FX Current period results translated into US dollars at the actual monthly ex
Slide 80: Glossary
80 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: FSC Forest Stewardship Council IBC Palletised containers used for the transport and storage of bulk products in a variety (Intermediate Bulk Container) of industries, includin
Slide 81: Glossary
81 Glossary Except where noted, common terms and measures used in this document are based upon the following definitions: NPS Net Promoter Score OEM Original Equipment Manufacturer RFID Radio Frequency Identification Device ROCI Underlying Profit divided by Average Capital Invested (Return on
Slide 82: Investor Relations contact
82 Investor Relations contact Raluca Chiriacescu Vice President, Investor Relations raluca.chiriacescu@brambles.com +44 7810 658044