Slide 1: Preliminary Statement of Results
PRELIMINARY STATEMENT OF RESULTS 25 FEBRUARY 2014
Slide 2: Disclaimer: Forward Looking Statements
DISCLAIMER: FORWARD LOOKING STATEMENTS This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Company’s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow,
Slide 3: 2013 Preliminary Statement of Results
2013 PRELIMINARY STATEMENT OF RESULTS Review of Business Financial Review Outlook & Future Prospects Stan McCarthy, CEO Brian Mehigan, CFO 3
Slide 4: 2013 Full Year Highlights
2013 FULL YEAR HIGHLIGHTS CONTINUING GROUP ADJUSTED TOTAL VOLUMES PRICING TRADING MARGIN EPS* DIVIDEND +3.0% +1.6% 10.5% +10.2% +11.7% › Adjusted EPS* increased 10.2% to 257.9 cent › Group revenue at €5.8 billion reflecting 4.6% underlying sales growth (USG) › Continuing volume growth +3.0% and pric
Slide 5: 2013 Overview
2013 OVERVIEW › Relatively sluggish economic landscape › Economic pressures impacting consumer spending in developed and developing markets › Influencing shopper mission, retailer choice, convenience trends, channels › Trust and quality more important; brand/private label choice › A new reality in c
Slide 6: Revenue Growth Analysis and Trading Profit & Margin %
REVENUE GROWTH ANALYSIS AND TRADING PROFIT & MARGIN % REVENUE GROWTH ANALYSIS TRADING PROFIT & MARGIN % Underlying Sales Growth +4.6% 10.5% +1.6% 620 +90 €611m bps 600 +3.0% 9.6% 580 €559m 560 540 520 500 Continuing volumes Price 2012* 2013 Note: * prior year restated due to adoption of IAS 19 (2011
Slide 7: Business Review – Ingredients & Flavours
BUSINESS REVIEW – INGREDIENTS & FLAVOURS 2013 GROWTH Revenue €4,327m +5.9%* Trading profit €558m +10.0% Trading margin 12.9% +90bps › Good market development in all regions › Continuing volumes +4.1% and pricing +1.8% › Strong operational performance contributing 90bps margin improvement › Solid gro
Slide 8: Ingredients & Flavours Revenue Analysis
INGREDIENTS & FLAVOURS REVENUE ANALYSIS REVENUE BY TECHNOLOGY YEAR ON YEAR REPORTED GROWTH Savoury & Dairy +2.2% Beverage +7.4% Cereal & Sweet (2.4%) Ingredients & Taste Solutions Pharma/Functional Ingredients +5.2% Regional Technologies +1.2% Savoury & Dairy 44% Beverage 19% Cereal & Sweet 18% Tota
Slide 9: Business Review – Consumer Foods
BUSINESS REVIEW – CONSUMER FOODS 2013 GROWTH Revenue €1,601m 1.3%* Trading profit €129m (2.9%) Trading margin 8.0% +30bps › Continuing volumes +0.1% and pricing +1.2% › Ongoing restructuring programme to reconfigure business portfolio for sustainable growth › Operational improvement in 2013 contribu
Slide 10: Consumer Foods' Markets – 'A New Reality'
CONSUMER FOODS’ MARKETS – ‘A NEW REALITY’ ECONOMY IMPACTING SHOPPING BEHAVIOURS AND RETAILER CHOICE 35%-40% INCREASED MARKET ‘Little & sold on Own label POLARISATION Often’ promotion growth Growth of STRUCTURE Smaller online and Growth of ‘Click and CHANNELS formats mobile discounters collect’ shopp
Slide 11: Financial Highlights
FINANCIAL HIGHLIGHTS €5,837m REVENUE €611m TRADING PROFIT —— 257.9 cent ADJUSTED EPS —_ ese - ELE i ST
Slide 12: 2013 Financial Highlights
2013 FINANCIAL HIGHLIGHTS +4.6% Underlying Sales REVENUE €5,837m Growth +9.4% Reported TRADING PROFIT €611m +10.6% LFL TRADING MARGIN 10.5% +90bps ADJUSTED EPS* 257.9 cent +10.2% BASIC EPS 48.0 cent Impacted by NTIs Industry Leading FREE CASH FLOW €412m Cash Conversion Note: like-for-like represents
Slide 13: Revenue Growth Analysis
REVENUE GROWTH ANALYSIS Underlying Sales Growth +4.6% 1.6% 0.0% (3.1%) 6.1 3.0% (3.1%) 5.9 €5.8bn 1.4% €5.8bn 5.7 5.5 2012 Revenue Continuing volumes Price Transaction Rationalisation Reporting currency Acquisitions / 2013 Revenue currency volumes disposals 13
Slide 14: Underlying Sales Growth Across All Businesses
UNDERLYING SALES GROWTH ACROSS ALL BUSINESSES +4.6% Underlying Sales Growth Continuing Volumes Price +3.0% +5.9% +1.6% +4.1% 6,000 €5,837m 5,000 +1.8% +1.3% 4,000 €4,327m +0.1% 3,000 +1.2% 2,000 €1,601m 1,000 0 Group Ingredients & Flavours Consumer Foods 14
Slide 15: FY 2013 Quarterly Volumes
FY 2013 QUARTERLY VOLUMES GROUP CONTINUING VOLUME GROWTH 3.5% 3.1% 3.2% 3.2% 3.0% 2.5% 2.2% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 Q2 Q3 Q4 I&F CONTINUING VOLUME GROWTH FOODS CONTINUING VOLUME GROWTH 6.0% 1.5% 4.8% 1.1% 5.0% 4.3% 4.2% 1.0% 4.0% 3.1% 3.0% 0.5% 2.0% 0.1% 1.0% 0.0% Q1 Q2 Q3 Q4 0.0% (0.2%) Q1 Q2 Q
Slide 16: Trading Margin %
TRADING MARGIN % Trading Margin 10.5% Margin Progression 12.9% +90 bps +90 600 bps €611m €558m 500 400 8.0% 300 +30 200 bps 100 €129m 0 Group Ingredients & Flavours Consumer Foods 16
Slide 17: Acquisition and Restructuring Programme 2013
ACQUISITION AND RESTRUCTURING PROGRAMME 2013 ACQUISITION FOOTPRINT AND SUPPLY CHAIN TECHNOLOGY AND INNOVATION INTEGRATION RESTRUCTURING CENTRE INTEGRATION COST €83m €70m €36m (NET OF TAX) Implementation of the Group’s Integration of Group’s recently Establishment of the Group’s 1 Kerry Business Tran
Slide 18: Other Non-Trading Items
OTHER NON-TRADING ITEMS LOSS ON DISPOSAL OF BUSINESSES/ASSETS Action Benefit DISPOSAL OF CONSUMER FOODS BUSINESSES/ASSETS › Cost: €54m (net of tax) › More focused business › Primarily non-core low margin › Margin accretive businesses disposed IMPAIRMENT OF ASSETS HELD FOR SALE Action Benefit IMPAIRM
Slide 19: Improving the Quality of the Group's Business
IMPROVING THE QUALITY OF THE GROUP’S BUSINESS 630 €611m 610 590 570 €559m 550 530 510 490 470 450 2012 Trading profit Operating leverage Mix / efficiencies Net price Currency Acquisitions/ 2013 Trading profit disposals Margin 9.6% +0.2% +0.8% (0.2%) 0.0% +0.1% 10.5% 19
Slide 20: Free Cash Flow (€m)
FREE CASH FLOW (€M) 2013 2012* Trading profit 611 559 Depreciation (net) 109 114 Movement in average working capital (9) (41) Capital expenditure (excluding R&D centres) (156) (154) Business operating cash flow 555 478 Capital expenditure on R&D centres (21) (2) Pension contributions paid less pensi
Slide 21: Cash Generation and Dividend per Share
CASH GENERATION AND DIVIDEND PER SHARE Dividend per share trebled in 10 years (CAGR 12%) 40.0 Free cash flow of €3bn generated in 10 years 600 40.0 550 35.0 35.8 500 32.2 30.0 450 28.8 400 25.0 25.0 Dividend per share (cent) 350 Free Cash Flow (€m) 22.5 20.0 300 20.0 18.0 250 15.0 16.0 14.0 200 12.7
Slide 22: Financial Ratios
FINANCIAL RATIOS BANKING RATIOS 2013 2012 Net debt: EBITDA 1.5x 1.8x EBITDA: net interest 13.3x 13.9x RETURN RATIOS ROAE* 18.0% 17.0% ROACE* 14.2% 12.6% CFROI 12.6% 11.5% Note: * before brand related intangible asset amortisation and non-trading items (net of related tax) 22
Slide 23: Maturity Profile of Net Debt (€m)
MATURITY PROFILE OF NET DEBT (€M) 2013 2012 Weighted average maturity years 6.3 3.8 630 564 530 430 330 239 230 134 140 130 84 73 50 45 30 2014 2014 2015 2016 2017 2020 2022 2023 2025 (70) (170) (270) (246) The increase in the maturity profile of the Group’s net debt is primarily due to the Group su
Slide 24: Currency Basket
CURRENCY BASKET 2013 2014 1.54 1.52 1.50 1.48 1.46 1.44 1.42 2013 2012 Dec 2013 rates 1.40 1.38 1.36 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar April May June Jul Aug Sep Oct Nov Dec FY 2013 FY 2014 (est) % change (3%) (3%) 24
Slide 25: Other Financial Matters
OTHER FINANCIAL MATTERS FINANCE €67.6m – an increase of €5.5m, primarily due to higher COSTS interest rates. Fixed rate debt 72% (2012: 56%) TAXATION Tax on normal trading activity 15.3% (2012: 16.3%) Net deficit decreased by €41m to €207m due mainly to increased investment returns which outweighed
Slide 26: Outlook and Future Prospects
OUTLOOK AND FUTURE PROSPECTS
Slide 27: Kerry 'Strategic Readiness' for Next Growth Phase
KERRY ‘STRATEGIC READINESS’ FOR NEXT GROWTH PHASE › Stabilising consumer outlook › Increased demand for choice, convenience, quality › Increased demand for nutritional, health & wellness lines › Broader foodservice concepts – wider menu choice › Opportunities for Kerry Taste, General Wellness & Nutr
Slide 28: Ingredients & Flavours Growth Strategies
INGREDIENTS & FLAVOURS GROWTH STRATEGIES TASTE GENERAL DEVELOPING WELLNESS & MARKETS NUTRITION ORGANIC AND ACQUISITIVE GROWTH 28
Slide 29: Kerry's Taste Positioning
KERRY’S TASTE POSITIONING No.1 globally Food & for Taste & Beverage Ingredients focused EXTRACTS & solutions FLAVOURS DISTILLATES Leading Culinary, Top 5 Player CONSUMER Applications in global PREFERRED TASTE TASTE and Sensory flavours TEXTURE MODULATORS SYSTEMS expertise Well established CONCENTRAT
Slide 30: Kerry General Wellness & Nutrition Strategy
KERRY GENERAL WELLNESS & NUTRITION STRATEGY GENERAL WEIGHT SPORTS HEALTHCARE INFANT & TODDLER WELLNESS MANAGEMENT NUTRITION NUTRITION NUTRITION › Nutrients › Glycaemic › Recovery › Muscle › Digestive › Better for you management › Endurance health health › Food safety › Appetite › Vasodilation › Appe
Slide 31: Kerry Developing Markets Strategy
KERRY DEVELOPING MARKETS STRATEGY DEVELOPING MARKETS – DISTRIBUTION OF INGREDIENTS & FLAVOURS 2013 REVENUES 1 € BN REVENUE 2013 KERRY GROUP REVENUE IN 24% DEVELOPING MARKETS Asia-Pacific (Greater China, South East Asia 24% and South West Asia) REVENUE 2008 INGREDIENTS & FLAVOURS REVENUE 19% Middle E
Slide 32: Kerry Global Foodservice Strategy
KERRY GLOBAL FOODSERVICE STRATEGY DUAL STRATEGY CHARACTERISTICS GLOBAL FOODSERVICE › Deep relationship with focused chain operators CHAIN STRATEGY › Leveraging all Kerry technology and solutions (custom and brands) › Innovation focused menu applications; driven by chefs, mixologists and R&D › Insigh
Slide 33: Kerry Foods Growth Strategy
KERRY FOODS GROWTH STRATEGY › Portfolio investment for today’s consumer › Aligned to requirements for Snacking Healthy Home Trusted Convenience Cooking ‘on-the-go’ Lifestyles Needs Brands › Reconfigured Kerry Foods Model › Our brands: Kerry Foods leading brands are big and growing › Snacking lines:
Slide 34: Summary Kerry Growth Strategy – Next Phase
SUMMARY KERRY GROWTH STRATEGY – NEXT PHASE › 1 Kerry Model delivering – aligned and focused worldwide › Rationalisation complete › Kerryconnect on plan – optimising global scale and customer service › Continuous improvement focus › Integrated industry-leading technology framework – superior speedy i
Slide 35: 2014 Outlook: Summary
2014 OUTLOOK: SUMMARY › Good momentum into 2014 › Strong demand for Kerry technologies and innovation › Well positioned to capitalise on › Kerry Taste and Nutritional growth platforms › Developing market global and regional customer requirements › Significant foodservice channel opportunities › Esta
Slide 36: Questions and Answers
QUESTIONS AND ANSWERS aS
Slide 37: Additional Information
ADDITIONAL INFORMATION sae —
Slide 38: Business Review – Ingredients & Flavours Americas
BUSINESS REVIEW – INGREDIENTS & FLAVOURS AMERICAS 2013 GROWTH Revenue €1,882m 6.2%* › Continuing volumes +4.4%, pricing +1.8% › Solid development through key processor and foodservice accounts › Performance assisted by integration of recent acquisitions › Strong growth in beverage – assisted by Big
Slide 39: Business Review – Ingredients & Flavours EMEA
BUSINESS REVIEW – INGREDIENTS & FLAVOURS EMEA 2013 GROWTH Revenue €1,601m 4.0%* › Continuing volumes +2.0% and pricing +2.0% › Good progress through 1 Kerry Business Transformation Programme › Excellent development in regional developing markets › Good growth in Beverage Systems & Flavours – Big Tra
Slide 40: Business Review – Ingredients & Flavours Asia-Pacific
BUSINESS REVIEW – INGREDIENTS & FLAVOURS ASIA-PACIFIC 2013 GROWTH Revenue €765m +9.8%* › Continuing volumes +8.2%, pricing +1.6% › Strong development in Asia-Pacific developing markets despite relatively weaker economic growth › Strong growth in regional foodservice sector › Excellent performance in
Slide 41: Revenue Growth Components FY 2013
REVENUE GROWTH COMPONENTS FY 2013 VOLUMES VOLUMES LIKE-FOR- REPORTING ACQS/ PRICE USG** TOTAL (Continuing) (Rationalisation) LIKE CURRENCY DISPS Ingredients & Flavours 4.4% 1.8% 6.2% (1.6%) 4.6% (3.9%) 3.5% 4.2% Americas* Ingredients & Flavours 2.0% 2.0% 4.0% (4.0%) 0.0% (1.8%) 1.0% (0.8%) EMEA* Ing
Slide 42: Trading Margin by Business
TRADING MARGIN BY BUSINESS 2013 2012* REVENUE TRADING PROFIT REVENUE TRADING PROFIT €M €M % €M €M % Ingredients & Flavours 4,327 558 12.9% 4,225 508 12.0% Consumer Foods 1,601 129 8.0% 1,712 132 7.7% Eliminations/unallocated (91) (76) – (89) (81) – Group 5,837 611 10.5% 5,848 559 9.6% Note: * prior
Slide 43: EPS Reconciliation
EPS RECONCILIATION 2012** 2013 GROWTH € CENT € CENT % 234.0 Adjusted EPS* 257.9 +10.2% (8.4) Brand related intangible asset amortisation (9.4) (77.2) Non-trading items (net of tax) (200.5) 148.4 Basic EPS 48.0 (67.7%) Note: * before brand related intangible asset amortisation and non-trading items (
Slide 44: Net Debt Profile (€m) as at 31 Dec 2013
NET DEBT PROFILE (€M) AS AT 31 DEC 2013 NET @ FLOATING @ FIXED DEBT RATES RATES Euro 486 179 307 Sterling (59) (59) – US Dollar 682 211 471 Other (26) (26) – 1,083 305 778 2013 100% 28% 72% 2012 100% 44% 56% Weighted average period for which rate is fixed: 5.4 years (2012: 2.2 years) 44
Slide 45: Free Cash Flow (€m)
FREE CASH FLOW (€M) 450 5 Year Free Cash Flow €1.7bn 412 400 367 344 350 305 300 279 250 200 150 100 50 0 2009 2010 2011 2012** 2013 Cash conversion* 70.6% 49.3% 46.4% 51.2% 57.2% Note: * free cash flow as a % of EBITDA I ** prior year restated due to adoption of IAS 19 (2011) ‘Employee Benefits’ an
Slide 46: Exchange Rates Development
EXCHANGE RATES DEVELOPMENT AVERAGE EXCHANGE RATES – 2013 V 2012 3% 1% USD GBP MXN BRL MYR AUD CAD ZAR -2% (3%) (4%) (4%) -7% (7%) (11%) -12% (13%) -17% -22% (22%) 46
Slide 47: Shareholder Analysis
SHAREHOLDER ANALYSIS Institutions 54% Kerry Co-operative 14% Retail 32% INSTITUTIONAL ANALYSIS UK 17% North America 17% Continental Europe/Rest of World 16% Ireland 4% Shares in issue at 31 December 2013: 175,723,078 47
Slide 48: Revenues and Profitability
REVENUES AND PROFITABILITY GROUP REVENUES (€BN) GROUP TRADING PROFIT (€M) 10 Year CAGR 4.7% 10 Year CAGR 7.1% 7 5.8 5.8 700 611 6 5.3 600 559 4.8 4.8 5.0 470 501 4.4 4.6 4.5 5 4.1 500 401 409 422 356 380 384 4 400 3 300 2 200 1 100 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006
Slide 49: Cash Flow and Adjusted EPS
CASH FLOW AND ADJUSTED EPS* EBITDA (€M) FREE CASH FLOW (€M) 800 450 412 720 673 400 367 700 618 601 344 350 600 305 519 300 279 500 250 400 200 300 150 200 100 100 50 0 0 2009 2010 2011 2012** 2013 2009 2010 2011 2012** 2013 ADJUSTED EPS* AND DIVIDENDS (CENT) +11.7% +11.3% +10.2% +11.2% +11.1% +11.8
Slide 50: Reconciliation of Income Statement (IAS 19 2011)
RECONCILIATION OF INCOME STATEMENT (IAS 19 2011) – FROM REPORTED 2012 TO RESTATED 2012 (€M) EFFECT ON CONSOLIDATED INCOME STATEMENT 2012 Increase in pension cost included in finance costs (12.9) Decrease in pension cost included in trading profit 4.3 Decrease in profit before taxation (8.6) Decrease
Slide 51: Reconciliation of Trading Profit & Trading Margin (IAS 19 2011)
RECONCILIATION OF TRADING PROFIT & TRADING MARGIN (IAS 19 2011) – FROM REPORTED 2012 TO RESTATED 2012 (€M) RECONCILIATION OF BUSINESS SEGMENT TRADING PROFIT INGREDIENTS CONSUMER & FLAVOURS FOODS ELIMINATIONS TOTAL FY 2012 – reported 505.5 130.5 (81.3) 554.7 Decrease in pension costs included in staf
Slide 52: Preliminary Statement of Results
PRELIMINARY STATEMENT OF RESULTS 25 FEBRUARY 2014