Slide 1: Interim Management Report 2017
Interim Management Report 2017 August 2017
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 Group’s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow, n
Slide 3: Interim Management Report 2017
Interim Management Report 2017 1 Review of Business 2 Stan McCarthy, CEO Financial Review 3 Brian Mehigan, CFO Outlook and Future Prospects Stan McCarthy, CEO 3
Slide 4: H1 2017 – Strong Organic Performance
REVIEW OF BUSINESS HIGHLIGHTS GROWTH RETURNS H1 2017 – • Good business volume Adjusted* EPS ROACE* Strong growth in all regions +7.5% +13.2% Organic • Consumer trends driving Strong underlying result Ahead of target Performance innovation • Solid foodservice growth Volume Free Cash Flow Outperformin
Slide 5: H1 2017 Market Overview
REVIEW OF BUSINESS MARKETPLACE DEVELOPED MARKETS DEVELOPING MARKETS H1 2017 • Increasingly fragmented • Stable economic conditions • Urbanisation – growth of tier marketplace and consumer but currency volatility and 2/3 cities Market demand increased raw material • Growth of middle class pricing lim
Slide 6: Strong Underlying Growth
REVIEW OF Strong Underlying Growth BUSINESS GROUP €3,181m Volume +3.8% Margin maintained TASTE & NUTRITION CONSUMER FOODS €2,543m €677m Volume +4.2% Volume +2.3% Margin +20bps Margin (70bps) 6
Slide 7: Business Review – Taste & Nutrition
REVIEW OF Business Review – Taste & Nutrition BUSINESS H1 2017 GROWTH Revenue €2,543m +4.2%* Trading profit €331m +8.8% Trading margin 13.0% +20bps • Solid Kerry volume growth across global marketplace • Holistic business model delivering • Good growth in Americas; improved performance in Europe; ex
Slide 8: Business Review – Taste & Nutrition: Business Growth By Region
Business Review – Taste & Nutrition REVIEW OF BUSINESS Business Growth By Region VOLUME GROWTH BY REGION AMERICAS EMEA ASIA-PACIFIC • North America delivering • Improved regional business • Strong growth across all core strong performance through performance – driven by Taste technologies and region
Slide 9: Business Review – Consumer Foods
REVIEW OF Business Review – Consumer Foods BUSINESS H1 2017 GROWTH Revenue €677m +2.3%* Trading profit €51m (11.1%) Trading margin 7.6% (70bps) • Good volume growth in meat and dairy snacking, DAIRY and meal solutions • Cheese snacking – ‘Cheestrings’ good growth – ‘Attack-A-Snack’ double digit grow
Slide 10: Financial Highlights
FINANCIAL Financial Highlights REVIEW €3,181m €338m 143.8c Revenue Trading Profit Adjusted EPS Brian Mehigan, CFO 10
Slide 11: Strong Underlying Financial Performance
FINANCIAL Strong Underlying Financial Performance REVIEW • Evolving our model for increasingly fragmented marketplace • Managing inflationary input environment • Working through currency volatility • Strong cash generation • Delivering growth ahead of our markets RAW MATERIAL PRICES CURRENCY VOLATIL
Slide 12: H1 2017 Financial Highlights
FINANCIAL H1 2017 Financial Highlights REVIEW REVENUE €3,181m +3.8% volume growth TRADING PROFIT €338m +5.2% TRADING MARGIN 10.6% Good underlying performance ADJUSTED EPS* 143.8c +7.5% BASIC EPS 127.6c +0.9% Acquisition integration investment FREE CASH FLOW €357m 141% conversion** Note: * before bra
Slide 13: Revenue Analysis
FINANCIAL Revenue Analysis REVIEW H1 2016 H1 2017 €3,037m €3,181m 4.8% Volume Volume 3.8% 3.6% Translation Transaction Price Acquisitions currency currency (1.0%) (0.4%) 1.8% 0.6% 13
Slide 14: Revenue – Volume Growth Ahead of Markets
FINANCIAL Revenue – Volume Growth Ahead of Markets REVIEW €m +3.8% 3,500 +1.1% 3,000 €3,181 +4.2% +1.1% 2,500 €2,543 2,000 1,500 +2.3% 1,000 +1.0% 500 €677 0 Group Taste & Nutrition Consumer Foods Kerry volume growth Market volume growth* * Kerry estimates 14
Slide 15: Group Trading Margin – Underlying Progression
FINANCIAL Group Trading Margin – Underlying Progression REVIEW €338m €322m H1 2016 Portfolio mix Net price Kerryconnect Currency Acquisitions H1 2017 operating leverage/ efficiencies Margin 10.6% +0.6% (0.2%) (0.1%) (0.3%) +0.0% +10.6% 15
Slide 16: Trading Margin – Business Breakdown
FINANCIAL Trading Margin – Business Breakdown REVIEW 0 +20 bps bps €m 400 10.6% 13.0% 350 300 €338 €331 CONSUMER FOODS 250 (70 H1 2017 MARGIN 200 bps) +30bps (100bps) €58m 150 €51m 100 7.6% 50 €51 0 Group Taste & Nutrition Consumer Foods H1 2016 Underlying FX H1 2017 Margin progression Trading margi
Slide 17: Free Cash Flow – Strong Performance
FINANCIAL Free Cash Flow – Strong Performance REVIEW H1 2017 H1 2016 €m €m Trading profit 338 322 Depreciation (net) 69 67 Movement in average working capital 118 120 Pension contributions paid less pension expense (23) (20) Cash inflow from operations 502 489 Finance costs (net) (21) (24) Taxation
Slide 18: Financial Ratios – Disciplined Growth
FINANCIAL Financial Ratios – Disciplined Growth REVIEW Banking Ratios Covenant H1 2017 H1 2016 Net debt: EBITDA* Max 3.5x 1.3x 1.7x EBITDA: net interest* Min 4.75x 14.9x 15.7x Return Ratios Target ROACE** 12% 13.2% 13.1% ROAE** 15% 16.3% 16.8% CFROI 12% 12.2% 14.5% Note: * calculated in accordance w
Slide 19: Other Financial Matters
FINANCIAL Other Financial Matters REVIEW Finance Costs Decrease of €4.7m to €34.4m principally due to strong cash generation in the period Deficit €186m – down €106m from year end position due to good investment returns, favourable discount Pension and inflation rates and a liability management prog
Slide 20: Translation Currency – Significant Volatility
FINANCIAL Translation Currency – Significant Volatility REVIEW TRANSLATION CURRENCIES: TRANSLATION CURRENCY MOVE SINCE FEB 2017 BASKET Headwind 2% AUD BRL STG CAD MYR MXN RUB ZAR USD (7%) (8%) (8%) (8%) (12%) (12%) (13%) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (17%) 2017 2016 c. 4% EPS headw
Slide 21: Outlook and Future Prospects
Outlook and Future Prospects Stan McCarthy, CEO
Slide 22: Holistic Kerry Business Model: Well Positioned for Growth
OUTLOOK Holistic Kerry Business Model: AND FUTURE PROSPECTS Well Positioned for Growth • Globally connected Taste & Nutrition business • delivering superior customer service • delivering consumer-preferred local taste • Focused on Developed and Developing growth markets • Responding to market fragme
Slide 23: Kerry Foods: Growth Through Snacking & Meal Solutions
OUTLOOK Kerry Foods: Growth Through Snacking AND FUTURE PROSPECTS & Meal Solutions MEAT SNACKING DAIRY SNACKING MEAL SOLUTIONS + Channel Delivery: E-tail +13% in H1 2017 23
Slide 24: Kerry Strategic Advantage
OUTLOOK AND FUTURE PROSPECTS TECHNOLOGY LEADER MARKET LEADER PROVEN SUCCESS • Unrivalled technology breadth • #1 in America, Europe and ROW for • Consistent delivery of targets since • Fundamental science and research Savoury, Dairy & Beverage 1986 capability • #1 in America, Europe for Cereal & • 1
Slide 25: Capital Markets Day
OUTLOOK AND FUTURE PROSPECTS 1 Capital Markets Day 11 October 2017, Global Technology & Innovation Centre, Naas, Ireland 25
Slide 26: Future Prospects: Sustained Underlying Growth
OUTLOOK AND FUTURE Future Prospects: Sustained Underlying Growth PROSPECTS • Challenging currency headwinds and raw material price increases • Unique Taste & Nutrition model delivering solid innovation • responding to consumer trends • delivering across channels • speedy differentiated innovation fo
Slide 27: Additional Information
Additional Information
Slide 28: Revenue Growth Components H1 2017
ADDITIONAL Revenue Growth Components H1 2017 INFORMATION Transaction Translation Volumes Price Currency Currency Acquisitions Total Taste & Nutrition 4.2% 1.7% (0.1%) 0.4% 0.7% 6.9% Consumer Foods 2.3% 1.9% (1.4%) (5.6%) 0.0% (2.8%) Group 3.8% 1.8% (0.4%) (1.0%) 0.6% 4.8% 28
Slide 29: Trading Margin by Business
ADDITIONAL Trading Margin by Business INFORMATION H1 2017 H1 2016 Revenue Trading Profit Revenue Trading Profit €m €m % €m €m % Taste & Nutrition 2,543 331 13.0% 2,379 304 12.8% Consumer Foods 677 51 7.6% 697 58 8.3% Eliminations/unallocated (39) (44) (39) (40) Group 3,181 338 10.6% 3,037 322 10.6%
Slide 30: EPS Reconciliation
ADDITIONAL EPS Reconciliation INFORMATION H1 2017 H1 2016 Growth € cent € cent % Adjusted EPS* 143.8 133.8 7.5% Brand related intangible asset amortisation (6.1) (5.8) Non-trading items (net of related tax) (10.1) (1.6) Basic EPS 127.6 126.4 0.9% Note: * before brand related intangible asset amortis
Slide 31: Maturity Profile of Net Debt
ADDITIONAL INFORMATION Maturity Profile of Net Debt 792 649 145 86 2017 2018 2019 2020 2021 2022 2023 2024 2025 (450) H1 2017 H1 2016 Weighted average maturity years 6.5 7.0 31
Slide 32: Net Debt (€m) as at 30 June 2017
ADDITIONAL Net Debt (€m) as at 30 June 2017 INFORMATION @ Floating @ Fixed Debt Rates Rates Euro 1,066 272 794 Sterling – – – US Dollar 606 387 219 Other 7 7 – Gross Debt 1,679 666 1,013 Cash (457) (457) - Net debt 1,222 209 1,013 Gross Debt 100% 40% 60% Net Debt 100% 17% 83% Weighted average period
Slide 33: Group Long Term Targets (5 Years 2013-2017)
ADDITIONAL INFORMATION Group Long Term Targets (5 Years 2013-2017) GROWTH Adjusted EPS* +10% p.a. by: Volume Growth Margin Expansion Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 50 bps p.a. Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a. Group 3% to 5% p.a. Group 30 bps p.a. (assumes ma
Slide 34: Shareholder Analysis
ADDITIONAL INFORMATION Shareholder Analysis Institutions 59% Kerry Co-operative 14% INSTITUTIONAL ANALYSIS North America 20% UK 16% Europe (excluding UK & Ireland) 15% Rest of World 5% Retail 27% Ireland 3% Shares in issue at 30 June 2017: 176,114,006 34
Slide 35: Interim Management Report 2017
Interim Management Report 2017 August 2017