Mcbride Plc · LSE:MCB
Mcbride — FY2011 Earnings Presentation
46 slides from Mcbride's earnings presentation, Sep 6, 2011
Slide 1: Preliminary Results Presentation 6 September 2011
Preliminary Results Presentation 6 September 2011
Slide 2: Introduction
Introduction Iain Napier - Chairman 2
Slide 3: Introduction
Introduction • A creditable performance in a highly challenging environment • A year of sustained material cost inflation • Full year dividend maintained at 6.8p per share • Refresh strategy review confirmed the opportunity for delivering further value from Private Label growth • Board changes annou
Slide 4: Summary
Summary Chris Bull 4
Slide 5: Summary
Summary • Revenue growth of 1% on a constant currency basis • Adjusted operating profit1 down 42% driven by the time-lag in recovering raw material cost increases • Recovery of 2010 and 2011 material cost increases continues • Refresh strategy being implemented to plan • Supply chain re-structuring
Slide 6: Financial review
Financial review Richard Armitage - Finance Director 6
Slide 7: Financial headlines
Financial headlines Constant Currency 2010-11 2009-10 Y/Y 2009-10 Y/Y Revenue (£m) 812.4 812.2 +0% 800.7 +1% EBITA (£m) 29.0 50.0 -42% EBITA margin 3.6% 6.2% -2.6pts Profit before tax (£m) 22.5 44.4 -49% Diluted earnings per share (p) 9.3 18.1 -49% Payments to shareholders per share (p) 6.8 6.8 +0%
Slide 8: Income statement
Income statement 2010-11 2009-10 Y/Y £m £m Revenue 812.4 812.2 +0% Gross profit 264.8 296.8 -11% Gross margin 32.6% 36.5% -3.9pts Distribution costs (54.3) (54.0) +1% Administrative costs (181.5) (192.8) -6% EBIT 29.0 50.0 -42% Net financing costs (6.5) (5.6) +16% Profit before taxation 22.5 44.4 -4
Slide 9: Regional performance - Revenue
Regional performance - Revenue Constant Currency 2010-11 2009-10 Y/Y 2009-10 Y/Y £m £m £m UK 310.7 320.3 -3% 320.3 -3% Western Continental Europe 405.7 414.0 -2% 403.7 +0% Central and Eastern Europe 139.7 118.4 +18% 116.3 +20% Asia 9.3 1.0 n/a 1.0 n/a Sub-total 865.4 853.7 +1% 841.3 +3% Eliminations
Slide 10: Private Label share performance in UK
Private Label share performance in UK Q4 2009 to Q2 2011 Household Cleaners Personal Care 35 25 30 20 25 15 20 10 15 10 5 5 0 0 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q42010 Q1 2011 Q2 2011 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q42010 Q1 2011 Q2 2011 Value share Volume share Value Share Volume share • Private La
Slide 11: Private Label share performance in France
Private Label share performance in France 2009 to 2011 Household Cleaners Personal Care 40 40 35 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q2 2011 Value share Volume share Va l ue share Vol ume share • Pri
Slide 12: Private Label share performance: Italy and Germany
Private Label share performance: Italy and Germany Italy: Household and Personal Care Germany: Household MAT to Q1 2011 MAT to June 2011 25 35 30 20 25 15 20 15 10 10 5 5 0 0 2009 2010 2011 2008 2009 2010 Q1 2011 Household Personal Care Value share Value share • Continuing growth of Private Label sh
Slide 13: Regional performance – Operating profit
Regional performance – Operating profit 2010-11 2009-10 Y/Y £m £m UK 11.9 22.1 -46% Western Continental Europe 15.4 28.2 -45% Central and Eastern Europe 8.9 8.9 +0% Asia 0.0 (0.4) n/a Corporate costs (7.2) (8.8) +18% Total 29.0 50.0 -42% (1) All figures are before adjusting items. Adjusting items in
Slide 14: Movement in net debt June 2010 to June 2011
Movement in net debt June 2010 to June 2011 Net cash generated Opening net from Capital Payments to Exceptional (1) (2) Closing net debt operations expenditure shareholders Tax items Acquisitions Other debt -15.0 £m -40.0 (24.8) -65.0 (12.2) (60.0) 42.6 (7.6) (7.4) (3.1) -90.0 (11.2) (83.7) (1) Acqu
Slide 15: Material cost environment - continuing as expected
Material cost environment - continuing as expected Oil 130 Brent Crude $ / MT 120 110 100 • Oil dipped in May/June but has since recovered 90 closer to $120/barrel 80 70 • Ethylene dipped temporarily as a consequence Monthly Price FY11 Average bringing some short term benefit to Q1 surfactant and pl
Slide 16: Some feedstock prices have declined …
Some feedstock prices have declined … PKO HDPE 2,400 1,600 2,200 1,500 2,000 1,800 1,400 € / MT $ / MT 1,600 1,300 1,400 1,200 1,200 1,000 1,100 800 1,000 Monthly Price FY11 Average Monthly Price FY11 Average CNO PET 2,400 2,200 2,200 2,100 2,000 2,000 1,900 € / MT 1,800 $ / MT 1,600 1,800 1,400 1,7
Slide 17: … while others continue to rise
… while others continue to rise Aluminium Tinplate 2,800 1,650 2,600 1,600 1,550 2,400 $ / MT $ / MT 1,500 2,200 1,450 1,400 2,000 1,350 1,800 1,300 Monthly Price FY11 Average Monthly Price FY11 Average Testliner 560 540 520 500 € / MT 480 460 440 420 400 Monthly Price FY11 Average Market price sour
Slide 18: Re-structuring
Re-structuring • Total exceptional charge of £12.3m comprises: • Final elements of previously announced re-structuring in Italy: – Cost £2.8m including asset write-down of £1.6m – 2010/11 projects delivered to plan and benefits ahead • Refresh re-structuring announced in UK: – Cost £9.2m including a
Slide 19: Project ‘Refresh’ update
Project ‘Refresh’ update Chris Bull 19
Slide 20: Agenda
Agenda • Positioning McBride to maximise the potential • Project ‘Refresh’ – Progress to date • Summary • Q&A 20
Slide 21: Positioning McBride to maximise the potential
Positioning McBride to maximise the potential 21
Slide 22: Private Label dynamics
Private Label dynamics • Attraction of lower prices and value for money for consumers • Attraction of higher margin products for our retail customers • Retailer differentiation and loyalty building remains key • Private Label and A Brands gain share at the expense of secondary and tertiary brands •
Slide 23: Project “Refresh”: From Good to Great
Project “Refresh”: From Good to Great A Fundamental Business Review... Key Strategic Actions Competitive Competitive advantage & advantage & Acquisitions growth potential growth by category potential by • Organisational Change category Supply chain Acquisitions efficiency & • Category review footpri
Slide 24: Our planned business
Our planned business Growth markets with scope for market share gain Robust business model with strong product offerings and expertise Strong balance sheet enabling acquisitions and geographic expansion Plus: A rationalised and enhanced operating platform Increased customer responsiveness and flexib
Slide 25: Implementation roadmap: What we said
Implementation roadmap : What we said Within 12 months: Complete organisational changes Implement first Group-wide category investments Complete next phase of manufacturing rationalisation Perform Lean Manufacturing assessment at key sites Continue expansion in Developing and Emerging mark
Slide 26: Project ‘Refresh’ – progress to date
Project ‘Refresh’ – progress to date 26
Slide 27: What we have done: Organisational change
What we have done: Organisational change Customers Product Development Supply Chain Top to Top meetings Group leader Group Head of Supply held with 25 + leading of R & D appointed Chain programme retailers in UK, Europe appointed 4 Categories Leaders and the Asia and 4 Category Rationalisa
Slide 28: What we have done: Category review
What we have done: Category review Focus on Growth Categories • 3 Core Growth Categories (characterised by market position, growth, technology and margin potential) – Laundry liquids – Machine dishwashing – Specialist cleaners • Future Growth Categories (offering broader product range and increasing
Slide 29: What we have done: New product development
What we have done: New product development Laundry Liquids • Concentrated laundry liquids new bottle concept launched in UK • Laundry Liquid sachets launched into the French and Italian markets Machine Dishwashing • Europe’s first triple layer ‘tab in tab’ format • Dishwashing Gel launched in Italy
Slide 30: What we have done: New product development
What we have done: New product development Speciality Cleaners • 24 hour germ kill anti – bacterial trigger cleaner launched in UK using Byotrol™ technology Air Care • Nitrogen based fresheners now account for 30% of air freshener sales • Launch of Trigger freshener in Germany Skin Care • New skin c
Slide 31: What we have done: Manufacturing rationalisation
What we have done: Manufacturing rationalisation UK Liquids Machine Dishwashing Europe Summary of Project economics Consultation on Focusing of Machine closure of UK Dishwashing Household liquids site production in Europe One-off pre-tax exceptional announced Impacted sites: charges £21m Moyau
Slide 32: What we have done: Lean manufacturing
What we have done: Lean manufacturing Lean Manufacturing Reviewing • Direct labour improvements • Material usage improvement Lean assessments completed • Overhead savings at all sites Year 1 target savings of £1m Estimated cumulative benefit of £6.0m confirmed with action plan Lean examples: •
Slide 33: What we have done: Geographic expansion CEE
What we have done: Geographic expansion CEE BU Germany, Central Eastern Europe CEE Austria, Switzerland • CEE Division scale and commercial activities strengthened BU Poland, – Integration of Germany, Austria, Switzerland Czech, Slovakia, Business units into McBride CEE Hungary – Integration of Brno
Slide 34: What we have done: Geographic expansion Asia
What we have done: Geographic expansion Asia Integration and growing scale • Integration of Fortlab (Malaysia) and Newlane Cosmetics (Vietnam) into McBride Asia • China factory expanded to include Household liquids • Key Top to Top customer meetings with Multinational retailers in the region • Priva
Slide 35: KPIs
KPIs 2009-10 2010 -11 Organic revenue growth 0% 0% Private Label Penetration (1) 22.9% 22.9% Growth % Revenue from D&E Geographies 7.2% 9.1% % Revenue from Core Categories 46.0% 47.8% Overheads % Sales 23.7% 22.3% Efficiency Fixed Asset Turnover 4.4 4.4 Operating Margin 6.2% 3.6% Cash Conversion (Fr
Slide 36: Summary
Summary 36
Slide 37: Summary
Summary • Results in line with expectations • Project Refresh is fully on track and starting to deliver • Trading since the year end has been in line with expectations • We remain totally convinced by the long term attractiveness of Private Label as a growth consumer market • Full year dividend main
Slide 38: Q&A
Q&A 38
Slide 39: Appendices
Appendices 39
Slide 40: The Private Label opportunity
The Private Label opportunity Private Label share Private Label Growth Drivers Western European markets % Value Share Consumers seek value for money 18 16 14 Retailers continually looking to differentiate offer and build loyalty 12 10 Major retailers require price-competitive 8 products to improve v
Slide 41: Household Private Label growth spreading across Europe
Household Private Label growth spreading across Europe Western Europe Eastern Europe Value growth trends % 5.0% 25.0% 4.0% 20.0% 3.0% 2.0% 15.0% 1.0% 10.0% 0.0% 2005-06 2006-07 2007-08 2008-09 2009-10 -1.0% 5.0% -2.0% 0.0% -3.0% 2005-06 2006-07 2007-08 2008-09 2009-10 -4.0% -5.0% Market Western Euro
Slide 42: Private Label forecast to grow in all markets
Private Label forecast to grow in all markets Note: Based on selected mature and emerging markets; f - forecast. Estimated shares of MGD sales; may exclude fresh produce. Source: Planet Retail Ltd - www.planetretail.net; partly based on Nielsen and GfK 42
Slide 43: Private Label Category development Machine Dishwashing
Private Label Category development Machine Dishwashing Achieved through the application of: - Category understanding - R&D - Product development - Manufacturing capability Triple Layer Dual Layer with core in with core soluble Single Layer wrapper with core “All in 1” system Delivering : Triple Laye
Slide 44: Category review – Core growth categories
Category review – Core growth categories • Laundry liquids – c €3bn pa market - category growing at the expense of powders and tablets – Expected to overtake Powder sales by 2012 – McBride has established position in gels and sachets – Opportunity to leverage scale and grow Private Label share • Mac
Slide 45: Category review – Future growth categories
Category review – Future growth categories • Skin care – c€15bn pa market driven by growth of facial skincare – Exploit Brno skincare capability into core UK and European customers • Air care (non aerosol) – Total air care market worth €1.9bn pa but very fragmented – Overall category most impacted b
Slide 46: Material purchases
Material purchases Based on April Budget FY11/12 46