Mcpherson's Limited · ASX:MCP

Mcpherson's — Investor Day (May 2019)

80 slides from Mcpherson's's investor day presentation, May 9, 2019

  1. Slide 1: McPherson's Limited 2019 Investor Day Presentation

    For personal use only McPHERSON’S LIMITED 2019 INVESTOR DAY PRESENTATION 9 May 2019 1

  2. Slide 2: Agenda and presenters

    Time Agenda Item MCP Presenter For personal use only 10.00am Registration & Coffee Senior Leadership Team M Introduction Laurie McAllister, MD Brands & Sales / Export Markets Donna Chan, Marketing Director Lori Pirozzi, National Sales Director Livia Wang, CEO ABM Q&A R&D, Supply Chain & Manufacturin

  3. Slide 3: Focus on core owned brands, drive value from geographic footprint

    For personal use only Explore new FOCUS ON CORE 6 OWNED product growth BRANDS platforms DRIVE VALUE FROM GEOGRAPHIC Move to strategic FOOTPRINT customer and supplier partnerships S T R AT E G I C E N A B L E R S End to end capability and capacity - Strong agency partners complement portfolio, supply

  4. Slide 4: Ten strategic priorities

    1 Refocus our business purely on Health, Wellness and Beauty For personal use only 2 Revitalise our own McPherson’s brands 3 Ensure a healthy balance sheet 4 Move from transactional to strategic partnerships with our top six customers 5 Integrate and grow acquired skincare brands; Dr. LeWinn’s and A

  5. Slide 5: Health, Wellness and Beauty market size

    For personal use only HEALTH WELLNESS BEAUTY ($4.6 Billion, +0.2% vs YA) ($5.7 Billion, +3.8% vs YA) ($3.0 Billion, +1.3% vs YA) Maintain the state of good health by pro- The subjective enhancement of physical The intent of enhancing and restoring health actively seeking to prevent the onset or perc

  6. Slide 6: Owned brand growth vs prior year

    +10% vs prior year (YTD Mar 19) For personal use only 6 Source: McPherson’s Ex-Factory

  7. Slide 7: FY19 guidance maintained

    For personal use only 1 FY19 GUIDANCE MAINTAINED 2 FY19 UNDERLYING PBT 10% - 15% ABOVE FY18 OF $16.3M (EXCLUDING FINE FRAGRANCES) 3 STRONG 2H19 CASH CONVERSION, FORECAST TO BE > 100% 4 FY19 CLOSING NET DEBT TO BE $17M TO $19M 5 FY19 CLOSING LEVERAGE IS MODEST AT < 1 TIMES 7

  8. Slide 8: Strategic customer partnership

    INNOVATION For personal use only STRATEGIC CUSTOMER PARTNERSHIP +65% increased participation +48000 incremental distribution points in FY +Category Captaincy PARTNERSHIPS • Top to top meetings • Joint Business Planning • Exclusive Offers • Trading Terms • Customer partnerships • Event Participation

  9. Slide 9: Domestic and export growth

    For personal use only +25% Domestic +15% Domestic +395% Export 9 Source: Domestic IRI Market Measurement – Scan, Data to: MAT Value To 31/03/19 Australian Pharmacy; Export – MCP Ex-Factory YTD Mar 19

  10. Slide 10: Dr. LeWinn's domestic vs export sales

    AUSTRALIA For personal use only LINE SMOOTHING COMPLEX 澳大利亚 Dr. LeWinn’s Domestic vs Export Sales Revenue #1 range for Dr.LeWinn’s driven by China demand CHINA 排名#1 莱文医生系列 10 中国 Source: MCP Ex. Factory Sales Revenue

  11. Slide 11: Leadership team and board

    For personal use only David Fielding Laurence McAllister Paul Witheridge Strategy, Planning & Donna Chan Managing Director Chief Financial Officer Innovation Director Marketing Director Sarah Tully Brett Owers Lori Pirozzi Mary Pearce Mark Brady HR Director Commercial Finance International Sales R&D

  12. Slide 12: Export markets by brand and country

    For personal use only Country A’kin Dr Lewinn’s Manicare Lady Jayne Swisspers Multix Brunei p p p p p Cambodia p China p p HK p p p +18% India p p p p Indonesia p p p Japan p p Korea p Lebanon p p p p Libya p Malaysia p p p p p Singapore p p p p p p Taiwan p Thailand p p p +11% UAE p p UK p p Vietna

  13. Slide 13: Supply chain capability and efficiency

    ADAPTABLE & AVAILABLE CAPACITY DAILY DELIVERIES STAFF RETENTION FLEXIBLE For personal use only +40% 5,000+ 80+ SIGNIFICANT HEADROOM 1,600 Australian Postcodes Tenure > 18 Years EFFICIENCY SUPPLY CHAIN COSTS HARD SAVINGS WORKING CAPITAL -40% -56% $7.5 Mill Last 2 Years Last 5 Years FUTURE TRUSTED PAR

  14. Slide 14: M&A growth remains a strategic priority

    For personal use only M&A growth remains a strategic priority M&A GROWTH Health, Wellness & Beauty focussed ORGANIC Have available balance sheet to fund acquisition GROWTH Rigorous process and criteria Have been actively approaching targets MCPHERSON’S Kōtia venture launched 14

  15. Slide 15: Marketing & Sales

    For personal use only MARKETING & SALES

  16. Slide 16: China demand, natural care, sustainable solutions

    For personal use only CHINA SUSTAINABLE DEMAND FOR NATURAL PROACTIVE CARE EXPORT SOLUTIONS China middle-class population Global Organic Personal Care Renew | Reuse | Recycle Global Face Mask Market projected to exceed 600M by Market projected to reach $25B Remove expected to reach $8.8B in 2021 2022

  17. Slide 17: Innovation, execution, partnerships, expansion

    For personal use only INNOVATION EXECUTION PARTNERSHIPS EXPANSION • +80% increased R&D • +45% increase in • Strategic alignment • 12 New Countries in FY19 investment to fuel merchandising investment differentiation • Trading Terms optimisation • +10% increase in A&P • Building category solutions in

  18. Slide 18: National grocery dollar growth

    For personal use only National Grocery Dollars Growth % YA Total Grocery excl. Tobacco Mcphersons Cons Prod 8.0 6.7 6.0 4.0 4.2 1.9 1.9 2.0 1.4 1.3 0.0 -2.0 -4.0 -6.0 -5.5 -6.6 -8.0 Qtr To 08/04/18 Qtr To 08/07/18 Qtr To 07/10/18 Qtr To 06/01/19 18 Source: IRI Grocery Scan Qtr to 06.01.19

  19. Slide 19: Australia pharmacy dollar growth

    For personal use only Australia Pharmacy Dollars Growth % YA Total Defined Pharmacy Total McP Core brands 10.0 8.7 7.6 8.0 6.0 5.0 3.9 4.0 4.0 2.4 2.0 0.0 -2.0 -3.0 -4.4 -4.0 -6.0 6mths To 27/08/17 6mths To 25/02/18 6mths To 26/08/18 6mths To 24/02/19 19 Source: IRI Pharmacy Scan 6mm to 24/02/2019

  20. Slide 20: #1 Australian cosmeceutical brand

    #1 Australian Cosmeceutical Brand Facial Skincare Pharmacy Channel For personal use only +107% Revenue Growth YTD 20 Source: IRI Market Measurement – Scan, Data to: MAT Value To 31/03/19 Australian Pharmacy: March YTD ex. Factory Sales Revenue

  21. Slide 21: Accelerating growth outpacing the category

    Accelerating Growth +25% (outpacing the category) For personal use only Core Rejuvenation Unique Innovation Superior Innovation Reversaderm range Vitamin Enriched Private Formula range Ultra R4 Range Sales 8x versus prior relaunch +23% growth +36% growth 21 Source: IRI Market Measurement – Scan, Dat

  22. Slide 22: Global and China face mask market

    For personal use only 2016 CAGR To 2021 Global Face Mask Market $5.7B +9.1% China Face Mask Market $2.7B +11.7% Dollars $000 Australia Pharmacy Total Treatments Masks Dr LeWinn's Ranked 450.0 top 10 400.0 Anti-aging 350.0 Masks since 300.0 launch 250.0 200.0 150.0 100.0 50.0 0.0 Quarter To 01/07/18

  23. Slide 23: Dr. LeWinn's domestic vs export sales

    LINE SMOOTHING AUSTRALIA For personal use only COMPLEX 澳大利亚 Dr. LeWinn’s Domestic vs Export Sales Revenue #1 range for Dr.LeWinn’s driven by China demand 排名#1 莱文医生系列 CHINA 23 中国 Source: MCP Ex. Factory Sales Revenue

  24. Slide 24: Access China forecast secured

    Access China’s Forecast Secured for $5m by year end For personal use only No. 2 in Natural Hair Care Growing +8% MAT vs LY No. 9 in Natural Skin Care 100,000 LSC 3pk MasksGrowing +17.5%7,000 Ageless Trinity Packs MAT vs LY 2424 Source: IRI Market Measurement - Scan, Pharmacy Data to: MAT Value To 31

  25. Slide 25: A'kin: Powerfully Kind

    A’KIN: POWERFULLY KIND For personal use only V V V HAIR CARE SKIN CARE PERSONAL CARE 2525

  26. Slide 26: A'kin: Powerfully Effective

    A’KIN: POWERFULLY EFFECTIVE For personal use only 2626

  27. Slide 27: Beauty and hair accessories leadership

    For personal use only #1 BEAUTY ACCESSORIES #2 BEAUTY ACCESSORIES #1 HAIR ACCESSORIES +$1M retail sales growth #1 Lash Brand during Party Season Extending Pharmacy leadership to 48% Extending market leadership to 25.4% +$870K incremental retail sales +4915 distribution points 27 Source: IRI Market M

  28. Slide 28: Multix and Swisspers market share

    For personal use only MULTIX #1 BAGS, WRAPS & FOIL SWISSPERS #1 COTTON 32.8% market share, up +1.7 share points 55% Market Share +10% Multix brand growth +9% quarter growth in cotton tips/buds 28 Source: IRI Market Measurement – Scan, Data to: MAT Value To 31/03/19 Australian Grocery

  29. Slide 29: Engage, amplify, convert

    For personal use only ENGAGE AMPLIFY CONVERT 2.5M consumers reached via 1.6M Video Views MCP online sales growing over influencer activity +70% 29M Ad Impressions 15M consumers reached on owned social media 29

  30. Slide 30: Best in class e-commerce solution

    BEST IN CLASS E-COMMERCE SOLUTION TOY | — — —_ S| 4) a Bw \ Die LI i) Ss [11 Ld |= soe F aS FREE SHIPPING ON ALL ORDERS OVER S80"

  31. Slide 31: SKU library and ratings & reviews

    SKULIBRARY: 800+ product images | 16 Brands |Domestic & International access |CWH, Coles, Woolies automated feed | Independent Pharmacies downloading data daily For personal use only RATINGS & REVIEWS: Syndicated to 6 retailers 31

  32. Slide 32: Channel performance: pharmacy, grocery, P&C

    CHANNEL PHARMACY GROCERY P&C PERFORMANCE For personal use only MARKET SHARE SHIFT - PHARMACY PRICING - GROCERY DRIVERS OF GROWTH DYNAMICS DISCOUNT FORMAT +3% OPPORTUNITIES STRATEGIC ALIGNMENT EXPANSION BRAND PENETRATION 32 Source: IRI Market Moves 2018 – MAT 07/10/18

  33. Slide 33: Strategic customer partnership

    STRATEGIC CUSTOMER PARTNERSHIP For personal use only +65% increased participation +48000 incremental distribution points +Category Captaincy • Top to top meetings • Joint Business Planning • Exclusive Offers • Trading Terms • Customer partnerships • Event Participation 33

  34. Slide 34: Key account customer engagement

    For personal use only McPherson’s Presence Key Account Customer Engagement Perception 34

  35. Slide 35: #1 Australian beauty supplier in pharmacy

    #1 AUSTRALIAN BEAUTY SUPPLIER IN PHARMACY For personal use only Fresh reaching 3.1M consumers Off location in 360 stores CHEMIST WAREHOUSE BEAUTY BREAK PRICELINE/MANICARE SPRING BEAUTY MULTIX XMAS ACTIVATION Highest Sales in history to 2015 +2.0 share points +2.9 share points gain +9.7 share points

  36. Slide 36: In-store real estate investment

    In Store Real Estate Investment For personal use only +45% INVESTMENT IN REAL ESTATE CHEMIST WAREHOUSE : REAL ESTATE OPTIMISATION NEW PRODUCT LAUNCHES 689 Stand in 281 Stores Assist shopper navigation High impact in high traffic areas +16% GROWTH 36

  37. Slide 37: Q&A

    For personal use only Q&A

  38. Slide 38: Lori Pirozzi, National Sales Director

    Lori Pirozzi Al nN jeuosied JoZ

  39. Slide 39: Drive value from geographic footprint

    For personal use only DRIVE VALUE FROM GEOGRAPHIC NORTH ASIA FOOTPRINT UNITED KINGDOM CHINA SOUTH-EAST ASIA AUSTRALIA NEW ZEALAND 39

  40. Slide 40: For personal use only

    For personal use only + 18 % + 11 % + 119 % 40

  41. Slide 41: Export markets by brand and country

    For personal use only Country A’kin Dr Lewinn’s Manicare Lady Jayne Swisspers Multix Brunei p p p p p Cambodia p China p p HK p p p India p p p p Indonesia p p p Japan p p Korea p Lebanon p p p p Libya p Malaysia p p p p p Singapore p p p p p p Taiwan p Thailand p p p UAE p p UK p p Vietnam p 41

  42. Slide 42: For personal use only

    42 For personal use only

  43. Slide 43: Australia and China partnership model

    For personal use only Trusted partnerships AUSTRALIA Speed to market 澳大利亚 Agreed business model Flexibility to react to change Appropriate pricing corridors Rigorous processes Continuity of supply CHINA Adaptable to market dynamics 中国 43

  44. Slide 44: Dr. LeWinn's Line Smoothing Complex growth

    For personal use only Australia Pharmacy Dr. LeWinn’s Line Smoothing Complex Value Growth % vs YA 53.8% Dr. LeWinn's Growth Ex Factory 7.1% -17.0% MAT To 02/04/17 MAT To 01/04/18 MAT To 31/03/19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2016 2017 2018 2018 Source: IRI Market Measurement – Pharmacy S

  45. Slide 45: Livia Wang

    Livia Wang Al nN jeuosied JoZ

  46. Slide 46: For personal use only

    For personal use only

  47. Slide 47: Traditional brand exposure to consumers

    Background- Traditional Brand Exposure to Consumers For personal use only The route to end consumer from a brand 12 month - 24 month

  48. Slide 48: ABM brand management model

    By Drawing Consumers Closer To Brands, ABM Has Created A New ‘Brand Management’ Model For personal use only

  49. Slide 49: ABM core business model

    ABM Core Business Model For personal use only ABM CORE BUSINESS MODEL ABM distributor Network Daigou Gift Shop Premium Taobao Shop / ABM Channel + Online And Offline Wechat Business / Internet Global Sales Network Transformation Franchising Celebrity Entering Omni-channel 0-1 1 -10 10 - 100 Stage 1

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    50 For personal use only

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    51 For personal use only

  52. Slide 52: Export capabilities and opportunities

    CAPABILITIES PEOPLE GLOBAL COVERAGE INNOVATION For personal use only 27 30 18 24+ NPD DEDICATED HEADCOUNT In 3 years Driven by export markets EXECUTION DISTRIBUTION IN MARKET TRADE EVENTS 2500+ 100+ 20 40 Distribution Points Achieved Merchandising Units Installed Global Events in FY20 Across Asia OP

  53. Slide 53: R&D

    R&D Dr. Mary Pearce A\S [CUOSIOd 10)

  54. Slide 54: Stage-gate NPD process

    Capability Efficiency Rigour For personal use only Design-based Role Clarity Portfolio Thinking balance Stage-Gate NPD Process H How do we do it? 54

  55. Slide 55: New product development by year

    FY20 FY19 Est 2x RSV on prior year For personal use only 10% Growth on Prior Year FY18 $8.5m RSV ~ 200 products 13 6 ~ 60 products 11 ~ 100 products 55

  56. Slide 56: Supply Chain

    For personal use only Supply Chain

  57. Slide 57: Supply chain capability and efficiency

    ADAPTABLE & AVAILABLE CAPACITY DAILY DELIVERIES STAFF RETENTION FLEXIBLE For personal use only +40% 5,000+ 80+ SIGNIFICANT HEADROOM 1,600 Australian Postcodes Tenure > 18 Years EFFICIENCY SUPPLY CHAIN COSTS HARD SAVINGS WORKING CAPITAL -40% -56% $7.5 Mill Last 2 Years Last 5 Years FUTURE TRUSTED PAR

  58. Slide 58: Hamond Road Facility - Dandenong

    Hamond Road Facility - Dandenong • Dedicated output • For personal use only One of the largest (22,000 sqm) manufacturing plants in Australia. With significant excess manufacturing • Prioritised work capacity • Confidence in supply/DIFOT • Largest and quickest laundry powder line in Australia • Shor

  59. Slide 59: New Business Update

    For personal use only NEW BUSINESS UPDATE

  60. Slide 60: M&A growth remains a strategic priority

    For personal use only M&A growth remains a strategic priority M&A Health, Wellness & Beauty focussed GROWTH Have available balance sheet to fund acquisition ORGANIC GROWTH Rigorous process and criteria Have been actively approaching targets MCPHERSON’S Kōtia venture launched 60

  61. Slide 61: Health, Wellness and Beauty market

    • Health, Wellness and Beauty a $13.2 billion For personal use only market in Australian Pharmacy and Grocery • Growing +2.3% YOY • Global market also in strong growth 61 IRI MarketEdge Scan Big Picture Data Pharmacy MAT 30/12/18 & Grocery MAT 06/01/19

  62. Slide 62: Health and wellness trends

    For personal use only Healthy Gut Reaches Brain Health Ageing Population New Heights Good For Me, Good Future of Sleep For The Planet 62 Source: Mintel The Future of Nutrition, Health and Wellness 2019; Mind Body Green 11 Wellness Trends to Watch In 2019

  63. Slide 63: M&A target criteria

    For personal use only Strategic Fit • Focussed on Health, Wellness & Beauty sector Complements • Able to leverage existing infrastructure/customer base • Complements existing brand portfolio Existing Business • Strong growth potential; complementary Geographies/Categories/Channels Growth Potential •

  64. Slide 64: Types of M&A transactions

    For personal use only • Strategic investments which enhance MCP’s capacity and capabilities Non-Controlling • E.g. recent investment in Aware Environmental Ltd (manufacturer) Strategic Investment • Smaller uncomplicated deals which leverage efficiencies of scale Smaller Bolt On • Add value through r

  65. Slide 65: Australia and NZ target opportunities

    For personal use only Australia and NZ Target Opportunities Health & Beauty in Australia andand NZ Pharmacy Top Manufacturers Actively seeking M&A opportunity Grocery (IRI DATA)in Health, Wellness & Beauty in Grocery and Pharmacy 350 300 Aus/NZ primary focus 80 250 IRI Retail Sales Value $M IRI Reta

  66. Slide 66: Experienced team and capabilities

    Highly experienced and capable team in sector For personal use only • 100+ years experience in major multinational HWB companies Dedicated New Business team • Actively engaged in pursuing M&A opportunities Strong brand building experience • Portfolio of category leading brands Business already servi

  67. Slide 67: New venture structure

    Day 1: Trusted Partner Unique For personal use only Majority Owned Win Domestically New Venture Co. Pre-Agreed Buyout Export (China) Facing 67

  68. Slide 68: Kōtia

    kotia UNIQUE SKIN NOURISHMENT FROM THE PUREST PLACE ON EARTH

  69. Slide 69: Kōtia launch

    LAUNCH EVENT NZ LAUNCH – MAR ‘19 AUSTRALIAN LAUNCH – APR ‘19 For personal use only 70+ MEDIA, KOL’S & CUSTOMERS EXCLUSIVE DRIVING LIKES SHARES COMMENTS STRONG IN STORE ACTIVATION WINNING WITH PRICELINE EARNED MEDIA WINNING WITH CUSTOMERS PRICELINE SUPPORT 40 Mill Social Impression • 100 Doors (Unich

  70. Slide 70: NZ launch and press coverage

    NZ LAUNCH – FEB 2019 SAMPLE PRESS COVERAGE For personal use only 70

  71. Slide 71: Igniting export opportunities - CIBE Hangzhou

    IGNITING EXPORT OPPORTUNITIES— CIBE HANZHOU

  72. Slide 72: For personal use only

    For personal use only 100% Trusted and Australian Experienced Owned Partners 100% Australian Tanning and Owned Millennial Beauty Focussed Enhancers High Growth Export Categories 72

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    For personal use only

  74. Slide 74: Financials

    74 For personal use only FINANCIALS

  75. Slide 75: FY19 guidance maintained

    1 FY19 GUIDANCE MAINTAINED For personal use only 2 FY19 UNDERLYING PBT 10% - 15% ABOVE FY18 OF $16.3M (EXCLUDING FINE FRAGRANCES) 3 STRONG 2H19 CASH CONVERSION, FORECAST TO BE > 100% 4 FY19 CLOSING NET DEBT TO BE $17M TO $19M 5 FY19 CLOSING LEVERAGE IS MODEST AT < 1 TIMES 6 STRONG GROWTH IN REVENUE

  76. Slide 76: Summary

    76 For personal use only SUMMARY

  77. Slide 77: Summary of strategic priorities

    Refocus our Business Revitalise own Brands Ensure Healthy Balance Sheet For personal use only Move from Transactional to Grow Acquired Skin Care Brands Create a China Facing Business Team Fit for the Future Strategic Partner +107% +11% Stop the Bleeding in NZ and Efficiencies and Savings across Crea

  78. Slide 78: For personal use only

    For personal use only

  79. Slide 79: Q&A

    79 For personal use only Q&A

  80. Slide 80: Warehouse Tour

    80 For personal use only WAREHOUSE TOUR

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