Kerry Group PLC · EURONEXT:KRZ
Kerry — H1 2004 Earnings Presentation
42 slides from Kerry's earnings presentation, Aug 31, 2004
Slide 1: Interim Results 2004
Interim Results 2004 31 August 2004 the science of food KERRY
Slide 2: Kerry - 2004 Interim Results Presentation
Kerry - 2004 Interim Results Presentation • Introduction and Overview Hugh Friel • Financial Review Brian Mehigan • Business Review Hugh Friel • Prospects and Future Development Hugh Friel • Q&A
Slide 3: 2004 Strategic Focus
2004 Strategic Focus • Continue to drive profitable growth • Deliver innovation – fufilling consumer nutritional, lifestyle and convenience expectations • Continue to expand technological and research base Ingredients - lead innovation and expand technology base Consumer foods - continued brand inve
Slide 4: H1 2004: Good Results and Business Development
H1 2004: Good Results and Business Development • Solid sales and profit growth across all businesses • High rate of innovation – all food and beverage categories • Record business development - €674m acquisition programme • Kerry Bio-Science – important science platform • Significant expansion of te
Slide 5: 2004 Performance Highlights
2004 Performance Highlights • Sales growth of 8.5% to €1,955m • Operating profit* growth of 10.2% to €147m • Operating margin* up 10bps • Earnings per share* up 10.4% to 50.9 cent • Interim dividend per share up 11.1% to 4.5 cent • Good cash flow generation Note: * before goodwill and exceptional it
Slide 6: Food Industry Update
Food Industry Update • ‘Wellness’ and dietary concerns – fuelling product re-formulations and new product introductions • ‘Foods Minus’ positioning – low fat, no additives, low calorie, low cholesterol, low-carb, low sodium • ‘Foods Plus’ positioning – organic, all-natural, high protein, functional,
Slide 7: Financial Review
Financial Review 2004.
Slide 8: 2004 Financial Highlights
2004 Financial Highlights Turnover €1,955m +8.5% +3.8% like-for-like Operating profit* €147m +10.2% +6.1% like-for-like Earnings* €95m +10.7% EPS* 50.9 cent +10.4% Free Cash Flow €85m +€74m Note: * before goodwill and exceptional items
Slide 9: Financial Comments
Financial Comments • Good organic trading performance • Good management of financial resources • Significant effort in acquisitions process - identification, execution and integration • Interest, taxation and insurance rates favourable • Currencies, pensions and energy inputs more expensive
Slide 10: Euro - US Dollar Trend
Euro - US Dollar Trend 1.40 H1 H2 1.35 1.30 1.26 1.25 2004 1.22 1.20 1.15 1.14 1.10 1.05 2003 1.00 0.95 0.90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg Fx Rate H1 % Change +8.0
Slide 11: Euro - Sterling Trend
Euro - Sterling Trend 0.72 H1 H2 0.71 2003 0.70 0.70 0.69 0.68 0.68 0.67 0.67 0.66 2004 0.65 0.64 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg Fx Rate H1 % Change -2.9%
Slide 12: Turnover Analysis H1 2003 H1 2004
Turnover Analysis H1 2003 H1 2004 €1,802m €1,955m +9% Currency Like-for-like Acquisition/Disposal -1% +4% +6%
Slide 13: Turnover : Geographical
Turnover : Geographical Geographic Analysis Half Year Growth % Like-for-like Reported Rest of Europe Ireland 1.6 2.2 36% Rest of Europe 3.5 11.6 Americas 6.1 11.2 Asia Pacific 11.0 22.0 Group 3.8 8.5 Ireland Asia Americas 34% Pacific 26% 4%
Slide 14: Turnover : Like-for-like
Turnover : Like-for-like Like-for-like Acquisition / Currency Reported Growth Disposal Growth Ireland 2% 0% 0% 2% Rest of Europe 4% 6% 2% 12% Americas 6% 14% (9%) 11% Asia Pacific 11% 8% 3% 22% Group 4% 6% (1%) 9%
Slide 15: Operating Profit* Growth
Operating Profit* Growth Geographic Analysis Half Year Growth % Like-for-like Reported Rest of Europe Ireland 0.1 1.7 36% Rest of Europe 6.1 10.9 Americas 9.0 13.0 Asia Pacific 16.7 28.3 Group 6.1 10.2 Ireland Asia Americas 22% Pacific 37% 5% Note: * before goodwill and exceptional items
Slide 16: Operating Margin* % by Region
Operating Margin* % by Region Ireland ROE Americas Asia Pacific Total 2003 margin reported 4.8% 7.6% 10.8% 7.5% 7.4% Acquisitions / disposals 0.0% (0.2%) (0.1%) 0.1% (0.1%) Currency 0.0% 0.0% 0.0% 0.0% 0.0% Like-for-like 0.0% 0.2% 0.3% 0.3% 0.2% 2004 margin reported 4.8% 7.6% 11.0% 7.9% 7.5% Note: *
Slide 17: Financial Ratios
Financial Ratios H1 2003 H1 2004 66% Debt : Equity 88% 26% Debt : EV 29% 2.3x Debt : EBITDA* 2.9x 8.6x EBITDA* : Net interest 12.0x 15.3% Return on average equity 15.0% Note: * Prepared in accordance with the provisions of the banking covenants
Slide 18: Return on Investment
Return on Investment H1 2004 FY 2003 FY 2002 FY 2001 ROAE 15.0% 15.2% 15.2% 14.8% ROACE 10.7% 11.4% 11.6% 11.8% CFROI 14.4% 12.5% 14.6% 9.6%
Slide 19: Exceptional Items
Exceptional Items • Plant rationalisation programme, particularly in the US costing €20m on track • Related taxation and asset disposal programme to offset the financial impact • Separate €15m to €20m integration programme relating to the Quest acquisition underway
Slide 20: Business Reviews
Business Reviews
Slide 21: H1 2004 Kerry Strategy: Performance
H1 2004 Kerry Strategy: Performance • Organisational entrepreneurial culture delivering strongly • Consistency of strategy - performance • Clarity of focus • Leveraging consumer awareness and technologies to meet customer - consumer requirements • Capability to consistently deliver innovation, busin
Slide 22: Business Review - Ireland
Business Review - Ireland Ireland 2004 Total Growth Like for Like Turnover €670m 2.2% +1.6% Operating Margin 4.8% +0bps +0bps • Speciality dairy and proteins – progress in functional and low-carb products • Foods’ brands – excellent performance • Denny, Cheestrings, Charleville out-performing market
Slide 23: Business Review – Rest of Europe
Business Review – Rest of Europe Rest of Europe 2004 Total Growth Like for Like Turnover €694m 11.6% +3.5% Operating Margin 7.6% +0bps +20bps • Good business development - particularly UK, Germany and EU accession countries • Prepared meals and convenience sector sustained growth • Food coatings sys
Slide 24: Business Review - Americas
Business Review - Americas Americas 2004 Total Growth Like for Like Turnover €504m 11.2% +6.1% Operating Margin 11.0% +20bps +30bps • Significant increase in new product introductions and recipe development • Sweet ingredients, specialty ingredients and Nutriant - progress through managed carb solut
Slide 25: Business Review – Asia Pacific
Business Review – Asia Pacific Asia Pacific 2004 Total Growth Like for Like Turnover €87m +22.0% +11.0% Operating Margin 7.9% +40bps +30bps • Strong performance in all regional markets • Australia / New Zealand sustained growth in all core categories • Asia - excellent growth through nutritional pro
Slide 26: Successful H1 Acquisition Programme
Successful H1 Acquisition Programme • Ingredients Businesses - Quest Food Ingredients - Cremo Ingredients • Foodservice Businesses - Oregon Chai - Extreme Foods • Flavour Businesses - Manheimer - Flavurence - Laboratorios Krauss - Fructamine • Fragrance Business - Manheimer Fragrances Total cost €67
Slide 27: Kerry Bio-Science Overview
Kerry Bio-Science Overview • Extending Kerry’s technological and research base – new science foundation – pharma-ingredients and bio-ingredients • Technologies – proteins, enzymes, fermented ingredients, yeast, emulsifiers and hydrocolloids • Applications – pharmaceutical, nutritional, beverage, bak
Slide 28: Current Trading and Outlook
Current Trading and Outlook • All core businesses performing well • Progressive business development and expansion driven by strong organisational innovation and entrepreneurial culture • Continuing NPD and brand development • Important new research and technology platforms • Expect good results for
Slide 29: Additional Information
Additional Information
Slide 30: Analysis of Results by Region (€m)
Analysis of Results by Region (€m) H1 2004 H1 2003 Operating Operating Turnover Profit* % Turnover Profit* % Group Ireland €670.0 €32.2 4.8% €655.6 €31.7 4.8% Rest of Europe €693.6 €52.4 7.6% €621.4 €47.2 7.6% Americas €504.4 €55.3 11.0% €453.5 €48.9 10.8% Asia Pacific €87.3 €6.9 7.9% €71.6 €5.4 7.5
Slide 31: Turnover : Like-for-like % Growth
Turnover : Like-for-like % Growth 2002 2003 2004 Ireland 2% 9% 2% Rest of Europe 5% 5% 4% Americas 5% 3% 6% Asia Pacific 6% 7% 11% Group 5% 6% 4%
Slide 32: Operating Profit* Margin
Operating Profit* Margin Geographic Analysis H1 2004 H1 2003 €m Margin% Margin% Rest of Europe Ireland 32 4.8 4.8 36% Rest of Europe 53 7.6 7.6 Americas 55 11.0 10.8 Asia Pacific 7 7.9 7.5 Group 147 7.5 7.4 Ireland Asia Americas 22% Pacific 37% 5% Note: * before goodwill and exceptional items
Slide 33: Adjusted EPS* Growth (cent)
Adjusted EPS* Growth (cent) 112.1 120 101.8 100 87.9 79.2 80 68.0 57.4 50.9 60 46.7 46.1 41.8 38.7 35.8 36.4 32.8 40 28.2 23.2 19.7 14.8 16.5 20 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Half Year Full Year Note: * before goodwill and exceptional items
Slide 34: EPS Reconciliation
EPS Reconciliation 2003 2004 Growth € cent € cent % 46.1 Adjusted EPS* 50.9 10.4% (13.3) Goodwill amortisation (16.3) 0.6 Exceptional items (net of tax) (1.5) 33.4 FRS3 EPS 33.1 -0.9% Note: * before goodwill and exceptional items
Slide 35: Interim Cash Flow (€m)
Interim Cash Flow (€m) 2004 2003 Cash from operations 193 97 Interest and taxation (44) (35) Capital expenditure (48) (36) Equity dividends (16) (15) Free cash flow 85 11 Acquisitions and disposals - Businesses acquired (698) (127) - Acquisitions restructuring (2) (9) (700) (136) Financing - issue o
Slide 36: Debt Profile (€m)
Debt Profile (€m) Net @ Floating @ Fixed Borrowings Rates Rates Euro 463 463 - Sterling 118 118 - US Dollar 703 603 100 Others 50 50 - 1,334 1,234 100 93% 7% Weighted average period for which rate is fixed: 2.3 years
Slide 37: Maturity Profile of Net Debt
Maturity Profile of Net Debt 30 June 2004 31 Dec 2003 €m €m Cash deposits (51) (57) Within one year 166 18 Between 1 and 2 years 7 142 Between 2 and 5 years 638 31 Between 5 and 10 years 316 321 After 10 years 258 250 1,334 705 Weighted average maturity in years: 6.2 7.8
Slide 38: Ingredients / Flavours / Bio-Science - Acquisitions
Ingredients / Flavours / Bio-Science - Acquisitions 2000 – 2004 Sweet Nutrition & Protein Savoury & Foodservice Mastertaste Bio-Science 2000 Shade Foods Solnuts Alferi Iowa Soy Creative San Giorgio SPI Demicombe 2001 SPI Geneva Siber Voyager Hickory Nutrir Aromont Corol Stearns & Lehman Ringger Ring
Slide 39: Consumer Foods Acquisitions 2000 - 2004
Consumer Foods Acquisitions 2000 - 2004 Convenience Savoury Cheese & Ready Foodservice Direct Snacking Products Spreads Meals Sales Golden Vale Platters Deli Products Northern Foods (Van Distribution) Freshways Hibernia / Diversity
Slide 40: EPS Broker Estimates - Full Year 2004
EPS Broker Estimates - Full Year 2004 2004 EPS % € Cent Growth Consensus 122.0 8.8 Davy 120.7 7.7 SSSB 120.8 7.8 ABN Amro 122.9 9.6 Goodbody 123.3 10.0 Merrion 123.6 10.3 NCB 122.8 9.5 Cazenove 119.6 6.7
Slide 41: Shareholder Analysis
Shareholder Analysis Foreign Ownership Irish Ownership 27% 73% North American Institutions 19% Kerry Co-op 31% UK Institutions 5% Irish Individuals 25% Continental Europe / Rest of World Irish Institutions 17% Institutions 3% Shares in issue: 186 million 30 April 2004
Slide 42: the science of food
the science of food KERRY