Greencore Group Plc · LSE:GNC
Greencore — FY2008 Earnings Presentation
30 slides from Greencore's earnings presentation, Nov 25, 2008
Slide 1: Preliminary Results for the year ended 26 September 2008
P r e l i m i n a r y R e s u lt s for the year ended 26 September 2008
Slide 2: Results Highlights
Results Highlights FINANCIAL BUSINESS n Constant currency growth n Portfolio: excellent Ingredients performance offsetting decline o Sales +13% in Convenience Foods o Operating profit +6% n Water cost concealment o Adjusted EPS +1% issue now fully resolved n Well-financed balance sheet n Significent
Slide 3: Agenda
Agenda Financial Review Good constant currency performance despite Water impact Business Review Resilient delivery across portfolio and positive momentum in development agenda Strategy & Outlook Clear plan for the future 2
Slide 4: Financial Summary
Financial Summary em FY08 FY07 Change Change Restated CC* Revenue 1,308.1 1,267.2 +3% +13% Operating profit 77.3 81.0 (5%) +6% Net finance before fair value (19.2) (17.9) Associates 1.3 0.7 PBT 59.4 63.8 Tax (9.2) (10.5) PAT (result) 50.2 53.3 Adjusted EPS (continuing) 24.1c 26.1c (+8%) +1% *Constan
Slide 5: Water Impact
Water Impact em FY08 operating profit (4.0) FY07 operating profit Restated (2.8) Reported 7.3 Adjustment (10.1) n After-tax amount of e5.2m restated through reserves for FY06 n Loss in FY08 incurred prior to discovery of the concealment in June n Substantial progress in recovery plan - business has
Slide 6: Convenience Foods
Convenience Foods (Excluding Water) FY08 FY07 Change n 8% constant currency (CC) sales growth em n Operating margin of 5.8%, Revenue 863.9 894.4 +8% with ROCE of 15% n Tough inflation and Operating 50.1 57.1 (1%) consumer conditions profit n Full recovery of input price inflation and continued deliv
Slide 7: Ingredients
Ingredients FY08 FY07 Change n Entire division performed well (CC) em n Continued excellent Malt performance accounting for Revenue 414.1 334.0 +30% 60% of divisional sales n Molasses, Edible Oils and Agri-trading businesses all Operating 31.1 26.6 +26% profit recorded strong performances n Contribu
Slide 8: Finance Costs
Finance Costs FY08 FY07 em Interest (29.2) (30.6) Pension credit 9.1 10.2 PV of receivables 0.9 2.5 Net finance costs before fair value (19.2) (17.9) Fair value of derivatives (3.4) 1.2 Net finance (22.6) (16.7) 7
Slide 9: Exceptional Credit
Exceptional Credit PROFIT/LOSS CASH em Sugar exit +18.9 +18.9 Business restructuring (8.9) (6.0) Water and associated financial review (0.8) (1.1) Net gain (post tax) +9.2 +11.8 8
Slide 10: Cashflow
Cashflow em FY08 Operating profit 76.6 Depreciation/Amortisation 28.4 Working capital (14.2) Maintenance capex (9.2) Pensions (6.4) Other (1.4) Free cashflow 73.8 Enhancement capex (30.9) Property/Remediation (4.7) Exceptionals 73.2 Interest, tax & dividends (48.5) Acquisitions/Disposals (47.3) Othe
Slide 11: Capital Structure & Dividend
Capital Structure & Dividend SEP 2008 SEP 2007 em Total equity 244 271 Net debt 283 321 Debt/Equity 1.16x 1.18x Net debt/EBITDA 2.70x 2.86x FY08 FY07 Total dividend (cent) 13.51 13.26 Final dividend (cent)11.6 8.21 8.21 10
Slide 12: Financial Control & Risk Review
Financial Control & Risk Review WHAT WAS DONE WHAT WAS ACHIEVED n Full analysis of all businesses n Determined there were no futher and key Group functions balance sheet or systemic control issues o Deep analysis and review of all balance sheet items n Delivered a comprehensive set of business by bu
Slide 13: Summary Financial Performance
Summary Financial Performance Good constant currency o Group sales up 13% performance across the portfolio o Operating profit up 6% Water issue fully resolved o Balance sheet restated with no further issues following extensive review o Financial control environment enhanced Resilient performance in
Slide 14: Agenda
Agenda Financial Review Good constant currency performance despite Water impact Business Review Resilient delivery across portfolio and positive momentum in development agenda Strategy & Outlook Clear plan for the future 13
Slide 15: Challenging Backdrop
Challenging Backdrop Significant price inflation 12% depreciation in across all key areas of sterling impacting ingredients & packaging translation of operating profit by e8m The discovery and Significant consumer management of the slowdown in the cost concealment second half issue at Water Group op
Slide 16: Portfolio Performance
Portfolio Performance operating profit (em) +6% +6.9 -2.5 85.4 81.0 77.3 FY07 Convenience Ingredients FY08 FY08 Restated Foods CC 15
Slide 17: Convenience Foods
Convenience Foods operating profit (em) -5% + Underlying sales and market 54.4 share momentum 51.9 + Price recovery across all 46.2 categories + Continued delivery of TLC + Positive international momentum – Double digit raw material inflation – Water impact – Consumer slowdown for final FY07 part of
Slide 18: Sales Growth Delivered and Market Shares Defended
Sales Growth Delivered and Market Shares Defended Greencore Greencore Market Greencore Position Share Share Growth Change FOOD-TO-GO Sandwiches No.1 28% Salads No.3 10% +1% +7% Sushi No.3 10% CHILLED MEAL SOLUTIONS Chilled Italian meals No.1 24% Chilled branded meals No.1 28% +1% +1% Quiche No.1 42%
Slide 19: Strong Price Recovery to Offset Inflation
Strong Price Recovery to Offset Inflation Price recovery across all categories Ingredients 11% n Moved quickly to address Packaging 3% inflation - very limited lag in recovery Labour 4% n Underpinned by good commercial relationships Utilities 47% with key customers n Supported by commitment to growt
Slide 20: Total Lowest Cost ('TLC')
Total Lowest Cost (‘TLC’) An essential platform in current environment WHY n Builds on our IN FY08 n Continued delivery of 2% of sales culture of continuous n More than 500 separate initiatives improvement across the Group n Critical for our n Nearly 1,000 colleagues through competiveness Lean Green
Slide 21: Convenience Foods
Convenience Foods International n 13% of divisional sales now outside the UK on a run-rate basis n Continued diversification of portfolio, with exposure to emerging chilled The Netherlands prepared food markets USA n Strategy underpinned by transfer of widely recognised chilled food manufacturing ex
Slide 22: Momentum in North America
Momentum in North America OPPORTUNITY GREENCORE VISION PROGRESS TO DATE n Strong double n Become the leading scale n Platform acquisition of HMBF digit growth in chilled food manufacturer o Key chilled product range: prepared meals chilled prepared o Regionally based and salads, sandwiches foods sec
Slide 23: Ingredients
Ingredients Strong operating performance operating profit (em) +26% 33.5 31.1 + Continued strong Malt 26.6 performance + Strong performances in Edible Oils, Molasses and Agri-trading – Reduction in profits from property disposals FY07 FY08 FY08 CC 22
Slide 24: Malt
Malt Demand still robust Supply in our markets constrained n Distilling demand fuelled n Recent capacity additions largely focused by global consumption of in Eastern Europe, South America and Asia whisky (2007: +7%) (only c.10% in Europe) n Global beer growth resilient in n Cost of new capacity (c.
Slide 25: Malt
Malt Excellent performance and medium-term earnings visibility Locking in future n Multi-year agreements covering c. 50% of contracts, eliminating barley risk in most cases returns in period of raw material volatility n Prudent raw material and energy buying policies Commercial and n Focus on strong
Slide 26: Other Ingredients/Property
Other Ingredients/Property INGREDIENTS PROPERTY n Portfolio (c. e160m of sales) n Bulk of Carlow Gateway containing strong market zoning achieved in FY08 positions in Ireland: n Planning permission received o Edible Oils in Athy for first 10 acre phase o Molasses o Agri-trading n Littlehampton progr
Slide 27: Agenda
Agenda Financial Review Good constant currency performance despite Water impact Business Review Resilient delivery across portfolio and positive momentum in development agenda Strategy & Outlook Clear plan for the future 26
Slide 28: Strategy for Long Term Growth
Strategy for Long Term Growth 1 Drive sustained sales and profit growth in European Convenience Foods 2 Build a business in North America of the same scale and returns as our UK business - doubling sales every year 3 Build further value in our Malt franchise 4 Realise value from property portfolio w
Slide 29: Outlook
Outlook n Consumer environment likely to remain challenging, especially in UK convenience food market n Anticipate excellent progress in US convenience food market n Ingredients on track for another strong year n Pension finance credit (non-cash item) will be significantly down on FY08 n Translation
Slide 30: Further Information
Further Information Patrick Coveney, Chief Executive Officer T: + 353 (0)1 6051045 E: [email protected] Geoff Doherty, Chief Financial Officer T: + 353 (0)1 6051018 E: [email protected] Eoin Tonge, Group Capital Markets Director T: + 353 (0)1 6051028 E: [email protected]