Slide 1: Results for the half year ended March 2018
Results For the half year ended 30 March 2018
Slide 2: Disclaimer – Forward Looking Statements
DISCLAIMER – FORWARD LOOKING STATEMENTS Certain statements made in this document are forward‐looking. These represent expectations for the Group’s business, and involve risks and uncertainties. The Group has based these forward‐looking statements on current expectations and projections about future
Slide 3: Agenda
AGENDA OVERVIEW Patrick Coveney, CEO FINANCIAL REVIEW Eoin Tonge, CFO STRATEGIC & OPERATING UPDATE Patrick Coveney, CEO Q&A 3
Slide 4: Overview
OVERVIEW Patrick Coveney, CEO
Slide 5: Key Messages
KEY MESSAGES Challenging first half for the company and shareholders Strong underlying revenue growth across the Group Reviewed and refined US strategy and organisation Improving cash generation as strategic capex normalises FY18 EPS guidance reiterated 5
Slide 6: Summary H1 Performance (1/2): US Division
SUMMARY H1 PERFORMANCE (1/2): US DIVISION Features Actions Good growth, but 1 Refined strategy to capture Branded profitability behind Food Partner opportunities expectations 2 Delivered new business wins 3 Tightened commercial development Strong momentum in pipeline former Peacock Foods busi
Slide 7: Summary H1 Performance (2/2): UK Division
SUMMARY H1 PERFORMANCE (2/2): UK DIVISION Features Actions Strong growth, especially 1 Deepened leadership in food to go in Food to Go market Challenging market 2 Delivered demanding manufacturing conditions in Q2 network investment programme Mitigating cost inflation 3 Deployed productivit
Slide 8: Financial Review
FINANCIAL REVIEW Eoin Tonge, CFO
Slide 9: P&L Summary
P&L SUMMARY1 Change £m H1 18 H1 17 (as reported) Group Revenue 1,238.5 1,010.3 +22.6% (pro forma +7.1%) Adjusted Operating Profit 59.7 55.3 +8.0% Adjusted Operating Margin 4.8% 5.5% -70bps Adjusted Profit Before Tax 47.2 44.7 +5.6% Adjusted EPS (pence) 5.5 6.3 -12.7% Basic EPS (pence) 0.3 1.7 -82.4%
Slide 10: Convenience Foods US
CONVENIENCE FOODS US Change Change £m H1 18 H1 17 (as reported) (pro forma) Revenue 503.6 324.6 +55.1% +5.8% Adjusted Operating Profit 12.6 8.5 +48.2% Adjusted Operating Margin 2.5% 2.6% -10bps Good overall revenue growth despite declines in original part of the business Adjusted Operating Profi
Slide 11: Convenience Foods US
CONVENIENCE FOODS US Share of US revenue Pro Forma Volume Growth components % % Former Peacock Foods Original Greencore Convenience Foods US 18% 82% +c.12% -c.25% +c.6% Former Peacock Original Blended Foods Greencore growth rate Adjusted Operating Profit bridge £m ~1 ~6 12.6 ~9 ~2 8.5 H1 17 Q1 FY17
Slide 12: Convenience Foods UK & Ireland
CONVENIENCE FOODS UK & IRELAND Change Change £m H1 18 H1 17 (as reported) (pro forma) Revenue 734.9 685.7 +7.2% +8.2% Adjusted Operating Profit 47.1 46.8 +0.6% Adjusted Operating Margin 6.4% 6.8% -40bps Strong revenue growth with Food to Go pro forma growth of 9.5% Conversion of volume growth of
Slide 13: Exceptional Items
EXCEPTIONAL ITEMS Cashflow* £m H1 18 H1 18 US network rationalisation (25.8) (0.2) Exit from cakes & desserts (15.0) (1.1) Integration and reorganisation (11.6) (8.7) Pre-commissioning / Start up costs (0.7) (0.7) Total pre-tax (53.1) (10.7) Tax credit on exceptional items 4.3 - Tax credit on US rat
Slide 14: Cash Flow
CASH FLOW £m H1 18 H1 17 EBITDA 86.5 79.1 Working capital (26.2) (20.2) Maintenance Capital Expenditure (15.5) (17.1) Exceptional cash flow (13.3) (19.5) Other 1.2 2.0 Operating Cash Flow 32.7 24.3 Strategic Capital Expenditure (14.5) (43.2) Pension, Tax & Interest (21.2) (15.3) Acquisitions & Dispo
Slide 15: Capital Expenditure
CAPITAL EXPENDITURE Normalised level of expenditure FY16-FY18 strategic £m H1 17 H1 18 investments Food to Go capacity 43.2 - Northampton - Park Royal - Bow Direct to Store infrastructure and systems 17.1 Ready meals expansion 15.5 14.5 - Warrington (ongoing) - Wisbech Carol Stream expansion
Slide 16: Balance Sheet
BALANCE SHEET £m H1 18 H1 17 Change Net Debt (522.2) (556.6) +34.4 Net Debt:EBITDA (x)* 2.5 2.7 Pension deficit (after tax) (89.0) (109.9) +20.9 Continued focus on cash generation Committed debt facilities of £707m, weighted average maturity of 4.1 years Pension contributions stable after comp
Slide 17: FY18 Outlook
FY18 OUTLOOK Convenience foods UK & I Convenience foods US H2 17 Adjusted Operating Profit of H2 17 Adjusted Operating Profit of £60.0m £24.8m H2 18 drivers H2 18 drivers Strong Food to Go volume growth Strong growth in Peacock Foods - Underlying category growth Phased impact of operational -
Slide 18: Strategic & Operating Update
STRATEGIC & OPERATING UPDATE Patrick Coveney, CEO
Slide 19: Strategic & Operating Update: US and UK
STRATEGIC & OPERATING UPDATE Core strategic choice Our execution 1 Capitalise on 2 Reviewed and refined US structural growth in food industry outsourcing US strategy to deliver on this growth 3 Extend leading 4 Deepen commercial position in profitable fast- relationships and drive UK growing food to
Slide 20: Strong Structural Growth in US Food Industry Outsourcing
THERE IS STRONG STRUCTURAL GROWTH IN US 1 FOOD INDUSTRY OUTSOURCING Driver of 47 CPG companies surveyed… There is a large, accessible >90% currently outsource >20% of their outsourcing market in the US production or packaging This level of outsourcing is >80% expect outsourcing to grow over expected
Slide 21: US Business Set Up for Growth and Returns
1 US BUSINESS SET UP FOR GROWTH AND RETURNS Share of US revenue Key features % Original Long-standing outsourcing partner to Greencore Branded Food Partners and selected Retail Former Partners 18% Peacock Foods Proven track record of growth with Branded Food Partners Deepening positions in gro
Slide 22: Refined US Strategy
2 REFINED US STRATEGY What’s consistent What’s reset Participate in growing convenience Focus on large, structurally food categories growing Branded Food Partner Where we Deliver value-added, assembly-led channel compete manufacturing solutions Selectively participate in ‘fresh’, Offer sup
Slide 23: Rightsized US Network
2 RIGHTSIZED US NETWORK Priority Selected customers Facility footprint, by size (‘000 sq. ft) Romeoville 534 Bolingbrook 443 Geneva 406 Drive strong Carol Stream 361 growth with Total footprint Branded Food Anaheim 200 ~2.3m sq. ft Partners Itasca 113 Wilmington 100 Minneapolis 100 Jacksonville 62 S
Slide 24: We Are Playing in Attractive UK Food Categories
WE ARE PLAYING IN ATTRACTIVE UK FOOD 3 CATEGORIES UK&I revenue, by category £m CAGR Food to Go Other UK&I H1 2015-H1 2018 686 735 10% 554 590 380 418 17% 258 292 295 298 306 317 2% H1 15 H1 16 H1 17 H1 18 Food to go remains exciting part of the food market Consumer and channel dynamics continue to
Slide 25: We Have Strengthened UK Commercial Relationships
WE HAVE STRENGTHENED UK COMMERCIAL 4 RELATIONSHIPS Expanded depth and scope of Share of UK net sandwich several sole supply arrangements sales in 3-year + contracts % Extended contracts with 3 of our 90% 5 largest customers in H1 58% Added several new Food to Go customers in new channels 23%
Slide 26: Plan to Drive Profit Progression in the UK
WE HAVE A PLAN IN PLACE TO DRIVE PROFIT 4 PROGRESSION IN THE UK STREAMLINING STRUCTURES Simplified UK organisation More compact divisional structure Greater consistency of support functions Combined annual gross benefits projected of up to £15m GREENCORE PRODUCTION SYSTEM Deploying a common prog
Slide 27: Concluding Remarks
CONCLUDING REMARKS Diversified convenience foods model; leveraging common skillsets Structural growth in underlying UK food to go and US outsourcing markets Long-standing and deep customer relationships, validated by multiple ongoing business wins Well-invested networks, leading capabilities
Slide 28: Q&A
Q&A Patrick Coveney, CEO Eoin Tonge, CFO
Slide 29: Appendix
by greencore J group APPENDIX 29
Slide 30: Definitions of APMs
DEFINITIONS OF APMS The Group uses the following Alternative Performance Measures ('APMs') which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole Pro Forma Revenue Growth • Pro Forma Revenue Growth adjusts H1 17 reported revenue to reflect ownership of P
Slide 31: Definitions of APMs
DEFINITIONS OF APMS Capital Expenditure • The Group defines Maintenance Capital Expenditure as the expenditure required for the purpose of sustaining the operating capacity and asset base of the Group, and of complying with applicable laws and regulations. It includes continuous improvement projects
Slide 32: Tax Rate Reconciliation
TAX RATE RECONCILIATION H1 18 H1 17 Pre Adjusted Pre Adjusted Adjustments Adjustments Exceptional Earnings Exceptional Earnings Adjusted Operating Profit 59.7 - 59.7 55.3 - 55.3 Amortisation of intangibles (11.0) 11.0 - (7.9) 7.9 - Finance costs1 (13.1) - (13.1) (11.2) - (11.2) Pension financing (1.
Slide 33: The Greencore Way Describes Who We Are and How We Succeed
THE GREENCORE WAY DESCRIBES WHO WE ARE AND HOW WE SUCCEED 33
Slide 34: IR Calendar & Contact
IR CALENDAR & CONTACT Q3 Trading Update 31 July 2018 FY18 Financial Year End 28 September 2018 FY18 Full Year Results 4 December 2018 Q1 Trading Update 29 January 2019 Annual General Meeting 29 January 2019 Jack Gorman Head of Investor Relations investor.relations@greencore.com Tel. +353 1 605 1000