Kerry Group Plc · EURONEXT:KRZ
Kerry — Investor Day (September 2010)
82 slides from Kerry's investor day presentation, Sep 8, 2010
Slide 1: Kerry Ingredients & Flavours Capital Markets Day
September 8, 2010 Kerry Ingredients & Flavours Capital Markets Day Beloit, Wisconsin
Slide 2: Today's Agenda
Today’s Agenda • Welcome Brian Mehigan • Opening Remarks Stan McCarthy • Kerry Ingredients & Flavours - Americas Gerry Behan – One Kerry – Market Overview Joe Borchardt – Kerry Technologies & End Use Markets Americas Executives • Kerry Center Tour • Lunch • Kerry Ingredients & Flavours - Asia Pacifi
Slide 3: Kerry Group Overview
Kerry Group Overview Stan McCarthy Chief Executive
Slide 4: 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 5: Kerry Group Divisional Breakdown 2009
Kerry Group Divisional Breakdown 2009 Revenue Trading Profit Consumer Foods 34% Consumer Foods 26% Ingredients & Ingredients & Flavours 66% Flavours 74% Ingredients & Flavours €3,261m Ingredients & Flavours €340m Consumer Foods €1,713m Consumer Foods €122m 5
Slide 6: Kerry Ingredients & Flavours – leveraging technology
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 7: Leading Ingredients and Flavours Companies
Leading Ingredients and Flavours Companies • Kerry is the largest player in the Revenue €m ingredients and flavours market • Highly fragmented, but growing market ($50bn) • Benefits to being a scale player • Consolidation potential Most recently published results 7
Slide 8: Kerry Business Model: Strategies – Consumer Foods
Kerry Business Model: Strategies – Consumer Foods • Positioning • Category leader chilled cabinet • Brand leaders in Irish & UK markets • Leader in selected customer branded growth categories • Unrivalled route to market including dedicated distribution network in Ireland & UK • Strategy • Continued
Slide 9: Leading UK/Ireland Consumer Food Groups
Leading UK/Ireland Consumer Food Groups The UK/Ireland food and drink market is worth circa €100bn Major food companies in GB/IOI Major added value chilled food companies in GB/IOI * * * * * Kerry chilled markets Source: OC&C Source: Nielsen, IGD Source: OC&C, Nielsen, TNS, Other 9
Slide 10: Kerry Foods: Market Positioning
Kerry Foods: Market Positioning #1 UK sausage (Richmond) #2 UK sausage (Wall’s) #1 UK chilled ready Biggest food brand in IRL (Denny) meals supplier #1 & 2 IRL cooked meats brands #1 UK frozen ready (Denny & Shaws) meals supplier #1 meat snacks (Mattessons) #1 UK cheese snack (Cheestrings) #1 IRL na
Slide 11: 1 Kerry Business Strategies
Business Strategies Defined Operating Kerryconnect Models 11
Slide 12: 1 Kerry Go to Market and Operational Strategies
1 Kerry Go to Market and Operational Strategies 12
Slide 13: Summary: Group Strategy
Summary: Group Strategy • Focus in ‘08 & ‘09 concentrated on • business realignment • 1 Kerry vision • efficiency improvements • 2010 and beyond • 1 Kerry programmes • strategic external growth focus • complementary acquisitions • continued focus on business efficiencies • excel in meeting customer
Slide 14: Kerry Group: Long Term Targets
Kerry Group: Long Term Targets • Group revenue: +2% to +4% (LFL) volume growth • Margin: 10% Group trading margin in 5 years • Adjusted EPS* 10%+ • ROAE* 15%+ and CFROI 12%+ Note: * before intangible asset amortisation and non-trading items 14
Slide 15: Future Prospects
Future Prospects • 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 success
Slide 16: Kerry Ingredients & Flavours
Kerry Ingredients & Flavours Gerry Behan President & CEO Americas Region
Slide 17: Business Definition
Business Definition Kerry Ingredients & Flavours develops, manufactures, and delivers technology-based ingredients, flavors, and integrated solutions for the Food & Beverage industry 17
Slide 18: Strategic Evolution
Strategic Evolution 2008 - 1 Kerry Strategy for KI&F Worldwide Disposal of Fragrance and Yog Fruit 2007 1 Kerry Strategy for the Americas Combined Functional Ingredients, Flavours and Ingredient Systems to Form Integrated Food & Beverage Platforms 2004 Developed Global Functional Bio-Ingredient Plat
Slide 19: 1 Kerry Go-to-Market Structure
1 Kerry Go-to-Market Structure 19
Slide 20: Executing 1 Kerry Go-to-Market Strategy
Executing 1 Kerry Go-to-Market Strategy • Global and Uniform Go-to-Market Strategy/Structure – Global Key Account strategy by channel – Business Executive Leadership and Key Account Management Structure – Alignment of Regional EUM Commercial teams – Sales Development and Training Plan • Research & D
Slide 21: 1 Kerry: Technology & Product Groups
1 Kerry Where It All Comes Together Technology & Product Groups Culinary Dairy Cereal Beverage Lipids Sweet Meat Functional Processing EUMs & By working together in the Applications 1 Kerry model, we are uniquely able to deliver a number of benefits to our customers… 21
Slide 22: 1 Kerry: Features and Customer Benefits
1 Kerry Where It All Comes Together Features Customer Benefits Ingredients & Flavour Technology Increased speed-to-market Breadth and Depth – Layering & Innovation Consumer-ready solutions Global Manufacturing Breadth – Collaborative brand innovation Layering & Innovation Synergistic benefits throug
Slide 23: Ingredients & Flavours: Growth Drivers
Ingredients & Flavours: Growth Drivers • Convenience, variety, enhanced nutrition / performance • Clean label, low-sodium, low-calorie, hi-fibre, fusion flavours • Digestive comfort, bone or heart health – wellbeing • Satiety control / weight management vs. affordable indulgence • Life-stage nutriti
Slide 24: Ingredients & Flavours Strategy
Ingredients & Flavours Strategy • Continue to maximise organic growth opportunity • Technology layering and cross-selling opportunities • Continue to expand geographic market base • Maximise opportunities through global customer alliances • Increase market focused innovation • Continuous efficiency
Slide 25: Market Overview
Market Overview Joe Borchardt Director of Market Research Americas Region
Slide 26: Introduction
Introduction • Economy remains a mixed bag of news, yet we continue to trudge along… • Consumer confidence still shaky as recovery has been slow Five year average prior to • Unemployment still high, and at record recession: 89 high amongst youths • Continue to spend on food, but the what and where h
Slide 27: Macro Trends
Macro Trends • New product development activity (U.S.) – 2009 showed decreases in CPG food and drink new product launches of 26% and 29% respectively, compared to 2008 – 2010 forecasted new product launch numbers look better than ‘09 • Global Consolidation continues on – Kraft/Cadbury – JBS SA/Pilgr
Slide 28: Macro Trends
Macro Trends • Food safety continues on in the news – Egg recall – Food safety legislation • Take it Out! – Continued growth in “clean label” – Sodium reduction – Removal of HFCS 28 Source: Chicago Tribune, Mintel, Mintel, Arizona Daily Star, LA Times
Slide 29: Foodservice
Foodservice • U.S. restaurant traffic continues to suffer RESTAURANT TRAFFIC CHANGES (%) • Slow rebound in recent months, but many chains still in the negative • Pockets of growth: • McDonald’s • Bakery Café • Fast Casual segment • Promotion still quite prominent 29 Source: The NPD Group
Slide 30: Retail Grocery
Retail Grocery • Store brand growth continues to trend strong in many areas • Aggressive promotional tactics from the branded players – Heavy promotion to stave off competition from store brands – Heavy promotion to stave off competition from key market players • The economy has effected categories
Slide 31: Conclusions
Conclusions • Stabilization, yet apprehension, amongst consumers – Consumers still cautious with their food spending and continue to chase value • Branded companies fighting back vs. store brands – Store brands still continuing strong – Aggressive promotional efforts – Stepping up new product develo
Slide 32: Kerry's Strategic Positioning
Kerry’s Strategic Positioning Formula optimization Sodium reduction Value Speed-to-market Clean labels Technology layering Food safety Health Indulgence Portability Fusion flavors Ready-to-use Sensory appeal Easy preparation Convenience Culinary touch 32
Slide 33: Products: Value/Convenience
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 34: Products: Health
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” Flavor Modulation Technology Fu
Slide 35: Products: Indulgence
Indulgence Products Ingredient solutions that enhance the consumer Culinary Ingredients experience through flavor, texture and appearance “Buttery Notes” “Crunch Bits” Savoury Flavours “Ethnic-Inspired” “Rainbow Sprinkles” Dairy Flavours “Coffeehouse Indulgence” “Chocolate Drops” Dry Dairy Ingredien
Slide 36: Kerry Technologies & End-Use Markets Overview
Kerry Technologies & End-Use Markets Overview
Slide 37: 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 38: Kerry Ingredients & Flavours – Today's Presenters
Kerry Ingredients & Flavours – leveraging technology leadership in global food and beverage markets KI & F Global Today’s Presenters Functional Savoury & Dairy • Savoury & Dairy Ingredients 10% Systems & Flavours 45% Daryl Adel & Eoin O’Connell • Cereal & Sweet Niall O’Leary • Beverage Andy Royston
Slide 39: Savoury & Dairy Sector
Savoury & Dairy Sector Daryl Adel & Eoin O’Connell Where It All Comes Together
Slide 40: Savoury & Dairy Technology Area Regional Review
Savoury & Dairy Technology Area Regional Review Kerry Sales by Region Kerry Locations Asia-Pacific EMEA Americas 40
Slide 41: Savoury & Dairy Technology Area Product Groups
Savoury & Dairy Technology Area Product Groups Culinary Systems & Flavours Lipid Systems Culinary Bases & Condiments Shortening & Whipping Powders Culinary Ingredients Nutritional & Other Lipids Complete Culinary Preparations Creaming Lipid Systems Culinary Sauces – Wet & Dry Savoury Flavours Snack
Slide 42: Savoury & Dairy Key Market Players
Savoury & Dairy Technology Area Key Market Players SAVOURY & DAIRY Key End Use Market Players Prepared Meals Soups, Sauces & Dressings Savoury Snacks Meats Appetisers & Side Dishes Dairy 42
Slide 43: Savoury & Dairy Key Competitors
Savoury & Dairy Technology Area Key Competitors SAVOURY & DAIRY Key Competitors (by product group) Culinary Systems & Flavours Dairy Systems & Flavours Meat Systems & Flavours Lipids 43
Slide 44: Cereal & Sweet Sector
Cereal & Sweet Sector Niall O’Leary Where It All Comes Together
Slide 45: Cereal & Sweet Technology Area Regional Review
Cereal & Sweet Technology Area Regional Review Kerry Sales by Region Kerry Locations EMEA Americas 45
Slide 46: Cereal & Sweet Technology Area Product Groups
Cereal & Sweet Technology Area Product Groups Agglomerates, Pieces and Sweet Fillings Application Flavours Flavours Fruit Fillings Baked Sweet Pieces Variegates Cereal Clusters & Granola Pieces Confections & Expanded Cereal Shapes Coated Sweets Cereal Crisps & Flakes Toffee Puffing Brittles Formed C
Slide 47: Cereal & Sweet Key Market Players
Cereal & Sweet Technology Area Key Market Players CEREAL & SWEET Key End Use Market Players Cereal Snack Bars Ice cream & Frozen Desserts Bakery Confectionery 47
Slide 48: Cereal & Sweet Key Competitors
Cereal & Sweet Technology Area Key Competitors CEREAL & SWEET Key Competitors (by product group) Cereal Systems & Flavours Sweet Systems & Flavours 48
Slide 49: Beverage Sector
Beverage Sector Andy Royston Where It All Comes Together
Slide 50: Beverage Technology Area Regional Review
Beverage Technology Area Regional Review Kerry Sales by Region Kerry Locations EMEA Asia-Pacific Americas 50
Slide 51: Beverage Technology Area Product Groups
Beverage Technology Area Product Groups Beverage Processing Aids Beverage Flavours & Bases Flavour Systems Natural Flavour Ingredients Modulators Extracts & Essential Oils Emulsions & Clouds Oleoresins, Essences & Distillates Coffee & Tea Extracts Natural Flavour Ingredients Complete Beverages Bever
Slide 52: Beverage Key Market Players
Beverage Technology Area Key Market Players BEVERAGE Key End Use Market Players Soft Drinks Alcoholic Beverages Nutritional Beverages / Tea & Coffee 52
Slide 53: Beverage Key Competitors
Beverage Technology Area Key Competitors BEVERAGE Key Competitors (by product group) Beverage Systems & Flavours 53
Slide 54: Functional Ingredients
Functional Ingredients Eoin O’Connell Where It All Comes Together
Slide 55: Functional Ingredients Regional Review
Functional Ingredients Technology Area Regional Review Kerry Sales by Region Kerry Locations EMEA Asia-Pacific Americas 55
Slide 56: Functional Ingredients Product Groups
Functional Ingredients Technology Area Product Groups Pharma Emulsifiers & Texturants Cell Nutrition Carrageenan Excipients Emulsifiers Texture & Stabiliser Systems Proteins Dairy Proteins Soy Proteins Specialised Functional Bio-ingredients Proteins Fermented Ingredients Enzymes Beverage Processing
Slide 57: Functional Ingredients Key Market Players
Functional Technology Area Key Market Players FUNCTIONAL INGREDIENTS Key End Use Market Players Meats Prepared Meals Dairy Frozen Desserts Bakery Nutritional Beverages 57
Slide 58: Functional Ingredients Key Competitors
Functional Technology Area Key Competitors FUNCTIONAL INGREDIENTS Key Competitors (by product group) Bio-ingredients Emulsifiers & Texturants Proteins 58
Slide 59: Pharma Ingredients & Flavours
Pharma Ingredients & Flavours Edmond Scanlon Where It All Comes Together
Slide 60: Sheffield Bio-Science Products and Market Applications
Sheffield Bio-Science Products and Market Applications Non active Ingredients to Hydrous or anhydrous Lactose, produce tablets, capsules, coatings, glycerides, ODT sachets, inhalation systems, Systems and flavors syrups, injectables and creams. Media ingredients to produce vaccines, therapeutic drug
Slide 61: Commercial Success
Commercial Success 5 of the top 10 blockbuster (>$1bn) biotech drugs in the world use Sheffield components. >30 of the ~ 125 Biotech drugs currently in the market are qualified using Sheffield components. More than 500 published scientific references of product use 61
Slide 62: Customer Awards
Customer Awards Lilly Global Supplier Award 2010 Sheffield Bio-Science selected out of 6500 companies Supplier of the Year Award 2010 Frost & Sullivan 2010 innovation award for LubriTose excipient 62
Slide 63: Latin America
Latin America Malcolm Sheil Where It All Comes Together
Slide 64: Strategy Evolution
Strategy Evolution 1994 - North Latam: Kerry acquired a processing facility in Irapuato, Mexico and invested US$30m in establishing a major ingredients manufacturing facility to Strategy Evolution supply Mexican and Central American markets. 1998 - South Latam: Kerry acquires Star & Arty Ingredients
Slide 65: LATAM Locations
LATAM Locations Tlahuac, D.F. MEXICO WTC, D.F. Irapuato, GTO. El Salvador Colombia San Juan del Río, QRO BRAZIL Campinas, S.P. San Jose, Costa Rica Pachuca, HGO. Chile Tres Coraçoes, MG Argentina Manufacturing Plants Commercial Offices Río Claro, S.P. Barueri, S.P.
Slide 66: Latin America
Latin America Population (millions) GDP per head The main food and Beverage companies, are located in Brazil, Mexico, Colombia and Argentina.
Slide 67: Low-income consumers make up the bulk of the LATAM population
Low-income consumers make up the bulk of the LATAM population Socio Economic Level by Country Chile 11 46 43 Argentina 8 40 52 Mexico 8 32 61 Brazil 6 23 71 Colombia 6 22 72 High Venezuela 4 15 81 Medium Low Source: Latin Focus - June 2006 and Local marketing associations
Slide 68: Emerging markets push the world economy
Emerging markets push the world economy, with 6.5% GDP growth in 2008 8.2 % 6.6 Argentina 8.6 4.9 4.5 3.7 Venezuela 8.4 2.7 2.6 8.3 % 1.7 2.1 Perú 1.1 Colombia 6.6 Chile 5.3 Sudeste LATAM Southeast LATAM Mundo Euro World Zona Zone EE.UU Asiatico Asian Euro Latam 4.5 Bolivia 3.8 2007 2008 Brasil 3.5
Slide 69: Key Strategies for Growth
Key Strategies for Growth • Transfer of proven Kerry EUM expertise •Transfer of proven Kerry technologies • Key account growth • Geographical expansion across LATAM • Acquisitions
Slide 70: Main Investment 2011 - Kerry Center México
Main Investment 2011 - Kerry Center México 9 San Juan del Río, 119km from Mexico City (Near to main customers) 9 Currently in construction – scheduled for completion in Q1 2011 9 To serve as innovation centre for México, Central America, Andean and Caribbean Region.
Slide 71: Kerry Ingredients & Flavours Asia-Pacific Region
Kerry Ingredients & Flavours Asia-Pacific Region
Slide 72: Strategy Evolution
Strategy Evolution 2009 Cookie Dough Co. Australia Strategy Evolution Acquisitions from 2001 - 2009 2008 PT Amita in Indonesia Danisco New Zealand Spray Drying Business 2005 Lanli Food Industry Company in China 2004 Ernst Food Ingredients in Penang, Malaysia Tensa, Australia 2003 Glenbrook in New Ze
Slide 73: APAC Introduction
APAC Introduction GDP per head: USD$5,446 vs USD$46,278 USA APAC Population 3.3 Billion 8 Time Zones 800 languages and dialects 23 countries Data Source: “Economist 2010” 73
Slide 74: The Big Countries Overview
KERRY The Big 3 Countries Overview
Slide 75: Food & Beverage Consumption by Countries in 2013
Food & Beverage Consumption by Countries in 2013-Top 13 Countries Unit: USD $ bn Population mn 0 50 100 150 200 250 300 350 1368 China 1253 India 240 Indonesia 127 Japan 93 Philippines 89 Vietnam 65 Thailand 49 S Korea 28 Malaysia 23 Taiwan 21 Australia 7 Hong Kong 5 Singapore Data Source: “BMI Repo
Slide 76: Food & Beverage Consumption Overview & Forecast
Food & Beverage Consumption Overview & Forecast by the Big 3 Unit: USD $ bn 250 200 150 100 50 0 China India Indonesia 2006 2010 2013 Data Source: “BMI Report 2010 Q1” 76
Slide 77: Food Consumption Comparison
Food Consumption Comparison – Top 10 Total & USA Unit: USD $ bn 1400 1200 1000 800 600 400 200 0 Top 10 USA 2006 2010 2013 Data Source: “BMI Report 2010 Q1” 77
Slide 78: China
China GDP (Us$bn) 2010f: Population mn 2010f: 4474.70 1368.20 Food Consumption GDP Per Capital (Us$) 2010f: 3270 (Us$bn) 2010f : 190.5 • China is the most populous country in the world •China’s food industry is among the country’s fastest-growing sectors, with output currently rising by over 20% ann
Slide 79: India
India GDP (Us$bn) 2010f: Population mn 2010f: 1534.16 1224.30 Food Consumption (Us$bn) GDP Per Capital (Us$) 2010f: 2010f : 166.0 1253 • India has the second-largest population in the world • Rising disposable incomes and increasing urbanisation mean higher-value processed foods should experience st
Slide 80: Indonesia
Indonesia GDP (Us$bn) 2010f: 574.1 Population mn 2010f: 240.00 GDP Per Capital (Us$) 2010f: 2392 Food Consumption (Us$bn) 2010f : 59.91 • The immense size of the population alone makes the food and drink sectors attractive • Consumers are highly susceptible to modern consumption trends • Economic gr
Slide 81: Future for Kerry in Asia
Future for Kerry in Asia • Continue to capitalize on population & GDP Growth and urbanization trend • Continue to make Value enhancing Acquisitions • Continue to Capitalize on the Globalisation of brands in the region • Continue to grow the business at double digits 81
Slide 82: Question & Answer Session
Kerry Ingredients & Flavours Question & Answer Session 82