Greencore Group Plc · LSE:GNC
Greencore — Investor Day (June 2017)
60 slides from Greencore's investor day presentation, June 2017
Slide 1: Greencore Capital Markets Day
Greencore Capital Markets Day Chicago – June 2017
Slide 2: Disclaimer
Disclaimer This presentation contains ‘forward-looking statements’ that are based on management’s beliefs and assumptions, and on information currently available to management. Such forward-looking statements may include, but are not limited to, information concerning the Company’s possible or assum
Slide 3: Today's agenda
Today’s agenda 08.30 Overview of day 08.35 Romeoville site tour 09.30 Transfer to Carol Stream 10.30 Investment case & strategy 11.10 Greencore USA ? 12.25 Innovation lunch & product showcase 12.55 Carol Stream site tour 13.50 Greencore UK 14.30 Our people ? 15.10 Break 15.45 Financial & economic mo
Slide 4: Our US business today
Our US business today • Food to go • Breakfast solutions £1.2bn* • Meal kits • Salad kits • Packaging solutions 14 sites 4 *Indicative FY18 revenue based on sell-side consensus estimates
Slide 5: Romeoville & Carol Stream
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Slide 6: Romeoville
Romeoville w greencore Investment history Key facts & capabilities m~ aaa == 0; Cin» | SQF level 3 certified, organic certification 12m sandwiches weekly Major investment in Snack Tray production started in 2016 Designed to expand product base & utilization of facility footprint
Slide 7: Carol Stream
Carol Stream w greencore ie, il Investment history Key facts & capabilities USDA operation Initially commissioned oo oe i G "kU'send 9. 361,000 ii it it it WIP items square foot
Slide 8: Vision, Strategy & Business Model
Vision, Strategy & Business Model
Slide 9: The senior leadership team presenting today
The senior leadership team presenting today Patrick Coveney Eoin Tonge Peter Haden Group CEO Group CFO Group COO Phil Taylor Kevin Moore Chris Kirke Group HR Director MD Food to Go USA CEO 9
Slide 10: A transformational period for the Group
A transformational period for the Group Peacock Foods Creation of strategic Investing in network, acquisition and supply relationships capacity & capability integration 10
Slide 11: Accelerating expansion to drive consistent long term returns
Accelerating expansion to drive consistent long term returns Group Revenue £bn 2.5 2.0 1.5 1.0 0.5 2012 2013 2014 2015 2016 2017* 2018* Convenience Foods UK & Ire Convenience Foods US 11 *Indicative FY17 and FY18 revenue based on sell-side consensus estimates
Slide 12: A snapshot of our business
A snapshot of our business UK & Ireland USA £1.5bn* £1.2bn* • Food to go • Food to go • Ready meals • Breakfast solutions • Cooking sauces • Meal kits • Cakes & desserts • Salad kits • Ingredients • Packaging solutions 16 facilities 14 facilities • Predominantly chilled • Mix of chilled, frozen • Di
Slide 13: Our vision
Our vision Fast Growing... International... HY17 growth Indicative FY18 sales* +9% +10.6% 46% 54% Convenience US (Peacock Foods only) Convenience UK & Ire (pro forma volume) (pro forma revenue) Convenience Food… Leader Market share UK pre-packed sandwiches** 39% Others 61% Greencore *Indicative FY18
Slide 14: The Greencore Way – who we are
The Greencore Way – who we are 14
Slide 15: The Greencore vision, strategy and business model
The Greencore vision, strategy and business model A clear vision to be a fast growing, international, convenience 1 food leader 2 Strong growth and returns from our integrated US business 3 UK growth and returns led by Food to Go 4 Ongoing investments in people and capability 5 Strong financial and
Slide 16: Our Vision – Where To Play & How We Win
Our Vision – Where To Play & How We Win
Slide 17: The external context for our strategy
The external context for our strategy Customers under Enduring consumer pressure need for convenience More relevant More valuable Better positioned Changing labour Fragmented markets competitor base 17
Slide 18: Where to play – our vision drives our strategic choices
Where to play – our vision drives our strategic choices Vision Where to play choices Category Fast growing categories… Choice Fast-growing • Convenience focus • On-trend (for long-term) • Locally relevant …leading consumer and retail customers… Customer Choice International • Largest local players •
Slide 19: How we win – where we are distinctive
How we win – where we are distinctive Customer Lean operations centricity Great Food People at the Core 19
Slide 20: Investment – how we bring our strategy to life
Investment – how we bring our strategy to life Organic investments M&A People & capabilities 20
Slide 21: Convenience Foods US
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Slide 22: The US team
The US team Chris Kirke Marty Kroll Chuck Metzger Andy Hearns CEO CFO COO SVP Food Safety & NBD Steve Katzenberger Steve Russell Patrick Bily Sandy Bury SVP Operations SVP Sales - CPG SVP Sales - Retail SVP HR 22
Slide 23: Today's discussion
Today’s discussion 1 Why we are excited by the opportunity in the US 2 How we apply our strategy in the US 3 How we see growth for the medium to long-term 4 How we drive profit growth and returns on capital 23
Slide 24: Our US business today
Our US business today • Food to go • Breakfast solutions £1.2bn* • Meal kits • Salad kits • Packaging solutions 14 sites 24 *Indicative FY18 revenue based on sell-side consensus estimates
Slide 25: US convenience foods market overview
US convenience foods market overview Retail breakfast Salad kits sandwiches +3% +15% • Convenience foods markets growing Meal kits Fresh sandwiches • CPG imperative for growth and returns +7% +7% • Demand for channel specific private label programmes • Fragmented competitor base 25 Data: Volume meas
Slide 26: Supplier excellence for our US business
Supplier excellence for our US business Unrivalled network Leading competencies • Geographic coverage • Product ideation and creation • Multi temperature • Market & consumer insight • Prep to assembly capability • Technical leadership • USDA & FDA conformance • Customer centricity • Flexibility arou
Slide 27: Customer centricity in US convenience foods
Customer centricity in US convenience foods Growth opportunities Growth from existing brands and categories that we serve Building share with existing customers across CPG, retail, foodservice channel Developing further outsourced solutions with existing customers New innovation (fresh) solutions wi
Slide 28: Attractive commercial model
Attractive commercial model • Profitable volume enables creation of efficient operational platform • Clarity on growth targets • Clear business planning • Capital sharing • Long-term agreements • Blend of part-share and complete outsourced model 28
Slide 29: Leveraging our network to drive profitable growth
Leveraging our network to drive profitable growth Woodridge Carol Stream Geneva 52k sq.ft. 361k sq.ft. 406k sq.ft. Itasca Romeoville Bolingbrook Seattle 113k sq.ft. 534k sq.ft. 443k sq.ft. 72k sq.ft. Salt Lake City Minneapolis 87k sq.ft. 100k sq.ft. Quonset 100k sq.ft. Anaheim Wilmington 100k sq.ft.
Slide 30: Principles on network optimisation
Principles on network optimisation • Greencore Production System • Leveraging the broader network • Matching capacity with pipeline • Some opportunistic short term projects can be delivered 30
Slide 31: Key elements of integration
Key elements of integration • One team • Combined culture • Focused commercial agenda • Consistent Greencore production system • Cost synergies in line with plan • Advisory Board in place by end of year 31
Slide 32: Financial delivery
Financial delivery Growth Profit delivery Capital • Category • Synergies • Capacity growth utilisation • Network • Business wins optimisation • Capital sharing 32
Slide 33: Food to Go UK
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Slide 34: Today's discussion
Today’s discussion 1 What is happening in UK retail The opportunity for food to go 2 3 The core elements of our model 4 Why we believe the model is sustainable 34
Slide 35: Our Food to Go business
Our Food to Go business Sandwiches Sushi Salads 7 facilities & 15 direct to store distribution centres 35
Slide 36: Strong underlying growth in a challenging market
Strong underlying growth in a challenging market Growth Retail customers 19.7% • Challenging and competitive environment 10.6% • Closer supplier partnerships 3.6% • Inflation mitigation • Growth of convenience formats, -1.2% particularly food to go Total Food Chilled Convenience GNC Convenience UK G
Slide 37: Food to go opportunity for Greencore
Food to go opportunity for Greencore • Attractive category dynamics • Resilient in tough economic times • High and growing market share • Long-term customer partnership model • Advantaged structural economics • Potential to expand consumption £1,293m 6.6% CAGR • Broadening channel mix £638m 37 2006
Slide 38: Our core focus is supermarket and convenience channels
Our core focus is supermarket and convenience channels £5.0bn £2.7bn £4.6bn £2.5bn £1.2bn QSRs (Quick Service Restaurants) Coffee specialists Food-to-go specialists £2.5bn Convenience, forecourt & other retailers £1.2bn Supermarkets & hypermarkets Convenience, forecourt Supermarkets & other retailer
Slide 39: High and growing share of sandwiches
High and growing share of sandwiches Greencore market share of grocery channel 2011 39
Slide 40: High and growing share of sandwiches
High and growing share of sandwiches Greencore market share of grocery channel 2017 40
Slide 41: Customer centricity in Food to Go
Customer centricity in Food to Go Characteristics of partnership model • Evolution to sole supply • Customer champion mind-set • Technical and innovation excellence • Investment in resource and capability • Aligned measures of success • Embedded in customers’ innovation/NPD agenda • Underpinned by l
Slide 42: Driving growth and returns in Food to Go
Driving growth and returns in Food to Go Category growth for our core grocery retail customers • Multi-channel approach • More & improved food to go space • Improving availability Supplemented by business wins in other channels 42
Slide 43: Well invested network in Food to Go
Well invested network in Food to Go 1 Manton Wood 5 Bow Sandwiches Sandwiches 2 Northampton 6 Crosby S/wiches & sushi Sushi 3 Atherstone 7 Spalding Sandwiches Salads 4 Park Royal Sandwiches 9 Hatfield Distribution Hub 8 Manton Wood Distribution Hub 6 1 8 7 3 2 9 4 5 43
Slide 44: Financial delivery
Financial delivery Growth Profit delivery Capital • Category growth • Reducing operational • Returns on existing disruption investment • Helping core customers outperform • Leveraging overheads & • Automation continuous improvement • Network capacity needs • Inflation mitigation 44
Slide 45: People at the Core
A People at the Core
Slide 46: Today's discussion
Today’s discussion 1 The critical nature of people to our model 2 The context for our people agenda 3 Our approach to People at the Core 46
Slide 47: The Greencore Way – who we are and how we win
The Greencore Way – who we are and how we win 47
Slide 48: People are excited to work for Greencore
People are excited to work for Greencore 48 * Less than a -3% difference year on year
Slide 49: An integrated approach to leadership development
An integrated approach to leadership development 49
Slide 50: Leadership in high definition
Leadership in high definition Greencore Leadership is described in our seven leadership competencies 50
Slide 51: Key frontline priorities
Key frontline priorities Engagement & Learning & Modernising pay retention development structures 51
Slide 52: Securing Profitable Growth
Securing Profitable Growth
Slide 53: Today's discussion
Today’s discussion Continue to generate value through careful category, customer 1 and business win choices Improve profit conversion by leveraging our recent substantial 2 investments Generate improved cash flow and manage capital structure 3 effectively 4 Enhance Group returns over the medium term
Slide 54: Revenue growth model
Revenue growth model Volume growth to continue to outperform total food UK: Mid single digit US: Mid to high single digit • Food to Go (mid to high single digit) • Category growth - outperforming category growth • Share gains with current with core customers customers • Other UK & Ireland (low singl
Slide 55: Profit conversion
Profit conversion Profit growth outperforming revenue growth in medium term • Operational disruption easing • Delivery of cost synergies • Leverage invested overhead • Network capacity more effectively • Improving product mix utilised • Effectively managing inflation • Effectively managing inflation
Slide 56: Focus on cash generation
Focus on cash generation Improved cash flow generation & conversion • Increasing EBITDA from profit growth • Tightly managed working capital • Normalising capex levels • Keeping pensions contributions constant • Cash tax outflows staying low in medium term 56
Slide 57: Effective capital structure
Effective capital structure • Leverage benchmark of c.2.0x • Strong debt profile • Progressive dividend policy with pay out ratio of 30-40% • Disciplined M&A and portfolio strategy 57
Slide 58: Focus on returns
Focus on returns Return on capital is a key internal measure of value creation Near term Group ROIC reduced by Peacock Foods acquisition Clear path to increased returns profile in medium term • Increased profit conversion from existing asset base • Moderating capital spend • Robust internal discipli
Slide 59: The Greencore vision, strategy and business model
The Greencore vision, strategy and business model A clear vision to be a fast growing, international, convenience 1 food leader 2 Strong growth and returns from our integrated US business 3 UK growth and returns led by Food to Go 4 Ongoing investments in people and capability 5 Strong financial and
Slide 60: greencore ~d
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