Kerry Group Plc · EURONEXT:KRZ
Kerry — H1 2020 Earnings Presentation
28 slides from Kerry's earnings presentation, Jul 31, 2020
Slide 1: Interim Management Report 2020
Interim Management Report 2020 31 July 2020
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,
Slide 3: Interim Management Report 2020
Interim Management Report 2020 1 Business Update Performance 2 Review 3 Future Prospects Edmond Scanlon, Marguerite Larkin, Chief Executive Officer Chief Financial Officer © Kerry 2020 | 3 |
Slide 4: H1 Overview – Managing Through Unprecedented Times
H1 Overview – Managing Through Unprecedented Times COVID-19 Response Foodservice Recovering Retail Performance Supporting people, customers, Recovery of foodservice Q2 growth driven by increased community and all stakeholders channel aligned to easing demand for health & wellness and through period
Slide 5: COVID-19 Update
COVID-19 Update Priorities Impact & Status Actions Impact on Industry T&N Americas: Strong retail Our performance, with foodservice channel People recovering well in North America Employee Safety & Importance of Security of Supply Supply Chains T&N Europe: Most impacted from restrictions Our T&N APM
Slide 6: Business Review – Taste & Nutrition
Business Review – Taste & Nutrition H1 2020 Revenue €2,799m Trading margin 11.6% Foodservice Channel Volumes • Overall volume reduction of 5.6% in H1 driven by Q2 decline of 11.8%, where the 10% impact from COVID-19 was most pronounced in April • Foodservice channel volumes declined 27% in the perio
Slide 7: Taste & Nutrition – Business Performance by Region
Taste & Nutrition – Business Performance by Region Americas Europe APMEA €1,547m €657m €566m H1: (3.9%) | Q2: (10.6%) H1: (8.8%) | Q2: (17.0%) H1: (5.9%) | Q2: (7.9%) • North America foodservice • Foodservice recovery slower, • China performance continued to recover recovering well aligned to liftin
Slide 8: Business Review – Consumer Foods
Business Review – Consumer Foods H1 2020 Revenue €647m Trading margin 7.0% • Volume decline of 7.8% reflecting ready meals contract exit in prior year 1 Everyday Fresh • Richmond – strong performance • Positive impact from COVID-19 in Q1 was more than offset in Q2 • Sliced meats impacted by reduced
Slide 9: H1 2020 Financial Review
Revenue €3.4bn Trading Profit €316m H1 2020 Financial Review Adjusted Marguerite Larkin, Chief Financial Officer EPS 132.1c © Kerry 2020 | 9 |
Slide 10: H1 2020 Financial Overview
H1 2020 Financial Overview Revenue €3.4bn -4.3% reported Trading profit €316m H1 2019: €383m Trading margin 9.3% H1 2019: 10.7% Adjusted EPS 132.1c -19.8% constant currency Basic EPS 120.4c -11.1% reported ROACE 10.5% H1 2019: 11.9% Free cash flow €107m 46% cash conversion © Kerry 2020 | 10 | Note:
Slide 11: Group Revenue Analysis
Group Revenue Analysis H1 2019 H1 2020 €3,569m €3,414m -4.3% Volume Volume Translation Acquisitions currency 3.6% -6.0% / disposals 0.1% 1.2% Price 0.4% © Kerry 2020 | 11 |
Slide 12: Group Revenue Breakdown
Group Revenue Breakdown Group Revenue H1 2020 Taste & Nutrition Volume Trend -6.0% Recovering well through Q2 -5.6% €3.4bn 5% €2.8bn (5%) 1 -7.8% (17%) €0.6bn Group Consumer Taste & Jan Feb Mar Apr May Jun Foods Nutrition Reported Revenue Volume Performance H1: (5.6%) © Kerry 2020 | 12 | 1 Includes
Slide 13: Group Trading Margin Breakdown
Group Trading Margin Breakdown Significant impact within from COVID-19 €383m €316m H1 2019 Operating Deleverage Net COVID-19 Net Price KerryExcel - Currency Acquisitions H1 2020 / Portfolio Mix Costs / Initiatives Net Efficiencies / Investments Trading 10.7% (1.1%) (0.3%) (0.1%) 0.1% 0.0% 0.0% 9.3%
Slide 14: Free Cash Flow
Free Cash Flow H1 2020 H1 2019 €m €m Trading profit 316 383 Depreciation (net) 101 94 Movement in average working capital (116) (77) Pension contributions paid less pension expense (4) (11) Cash flow from operations 297 389 Finance costs paid (net) (25) (30) Income taxes paid (36) (29) Purchase of n
Slide 15: Strong Credit Metrics with Long Maturity Profile
Strong Credit Metrics with Long Maturity Profile Maturity Profile of Net Debt Undrawn €850m RCF 2020 2021 2022 2023 2024 2025 2029 Net Debt of €2.0bn On demand & up to 1 year < 2 years 2 to 5 years > 5 years (€732m) €85m €945m €1,698m Strong Credit Metrics H1 2020 H1 2019 Net debt: EBITDA* 2.0x 1.9x
Slide 16: Other Matters
Other Matters Kerryconnect North America deployment progressing well Pension Net deficit of €79m – increase due to asset valuations and discount rates Dividends Interim dividend of 25.9 cent proposed Raw materials Minor input cost inflation driven by Consumer Foods Currency Current outlook of 2-3% t
Slide 17: Future Prospects
Future Prospects Edmond Scanlon, Chief Executive Officer © Kerry 2020 | 17 |
Slide 18: Rapidly Evolving Market Dynamics Across the Supply Chain
Rapidly Evolving Market Dynamics Across the Supply Chain Consumer Customer Industry DEMANDS RESPONSE OPPORTUNITY Sustainability Now a Primary Factor Online & Food Delivery New menus and infrastructure Replicating taste experience at home Plant-based Options Expanding ranges New innovative solutions
Slide 19: Online and Food Delivery – Experiencing a Step Change in Consumer Demand
Online and Food Delivery – Experiencing a Step Change in Consumer Demand Customers Challenges & Solutions Kerry Investing in growth opportunity Meeting consumer needs Leading foodservice partner New footprint strategies Flavoured Oolong Cream Tea Largest technology portfolio Delivery Challenge Kerry
Slide 20: The Broadest and Deepest Clean Label Food Protection Portfolio
The Broadest and Deepest Clean Label Food Protection Portfolio We have an unrivalled ability to develop innovative integrated solutions that solve complex food protection needs Increasing Importance Food Safety Clean Label / Natural Transparency Food Waste Sustainable Up Dura UC Rochester, MN Kerry’
Slide 21: Future Prospects
Future Prospects • Taste & Nutrition: managing through the short term challenges to emerge an even stronger customer partner • The foodservice channel continues to recover well. We are focusing on particular growth areas in the channel, while continuing to partner with customers on new menu developm
Slide 22: Appendix
KERRY Appendix
Slide 23: H1 2020 Revenue Components
H1 2020 Revenue Components Transaction Translation Volumes Price Currency Currency Acquisitions Total Taste & Nutrition (5.6%) 0.1% 0.0% 0.1% 1.4% (4.0%) Consumer Foods (7.8%) 1.7% (0.1%) 0.0% 0.0% (6.2%) Group (6.0%) 0.4% 0.0% 0.1% 1.2% (4.3%) © Kerry 2020 | 23 |
Slide 24: H1 2020 Trading Profit by Business
H1 2020 Trading Profit by Business Trading Trading Revenue Profit Revenue Profit €m €m % €m €m % Taste & Nutrition 2,799 325 11.6% 2,915 388 13.3% Consumer Foods 647 45 7.0% 689 48 7.0% Eliminations / unallocated (32) (54) – (35) (53) – Group 3,414 316 9.3% 3,569 383 10.7% © Kerry 2020 | 24 |
Slide 25: EPS Reconciliation
EPS Reconciliation H1 2020 H1 2019 € cent € cent Basic EPS 120.4 135.5 Brand related intangible asset amortisation 11.7 9.3 Non-trading items (net of related tax) – 19.3 Adjusted EPS 132.1 164.1 Retranslating PY adjusted EPS at current year average fx rates 0.6 Adjusted EPS in constant currency 132.
Slide 26: Net Debt (€m) as at June 2020
Net Debt (€m) as at June 2020 Debt @ Floating Rates @ Fixed Rates Euro 2,108 347 1,761 Sterling – – – US Dollar 621 398 223 Other 3 3 – Gross Debt 2,732 748 1,984 Cash (736) (736) Net Debt 1,996 12 1,984 Gross Debt 100% 27% 73% Net Debt 100% 1% 99% © Kerry 2020 | 26 |
Slide 27: Shareholder Analysis
Shareholder Analysis Institutional Analysis Institutions 58% Kerry Co-operative 12% North America 20% UK 13% Continental Europe | Rest of World 23% Ireland 2% Retail 30% © Kerry 2020 | 27 | Shares in issue at 30 June 2020: 176,681,437
Slide 28: Interim Management Report 2020
Interim Management Report 2020 31 July 2020