Kerry Group Plc · EURONEXT:KRZ
Kerry — FY2007 Earnings Presentation
40 slides from Kerry's earnings presentation, Feb 26, 2008
Slide 1: Preliminary Statement of Results 2007
Preliminary Statement of Results 2007 26 February 2008
Slide 2: Forward looking statements
This presentation will contain forward looking statements which reflect management expectations based on currently available data. However actual results will be influenced by macro economic conditions, food industry supply and demand issues, foreign exchange fluctuations and other, as of today unkn
Slide 3: 2007 Highlights
2007 Highlights • Solid all-round performance • Like-for-like sales revenue growth of 6.7% to 4.8 billion • EBITDA* a record 500m • Successful management of business environment • Trading profit up 7.4% (LFL) to 401m • Trading margin up 10 bps to 8.4% • Adjusted EPS* up 7.4% to 143.8 cent • Free cas
Slide 4: 2007: Good Growth in a Challenging Environment
2007: Good Growth in a Challenging Environment • Sustained energy and raw material cost inflation • Innovation and pricing actions delivered good results • Assisted by productivity gains and facility consolidations • ‘Go-to-market’ strategy initiated - customer focus • Success through premiumisation
Slide 5: Revenue Growth
Revenue Growth 2007 2006 2005 Like-for-like Like-for-like Like-for-like - Americas* 7.0% 4.9% 3.8% - Europe* 4.6% 3.2% 4.8% - Asia Pacific* 17.3% 10.1% 7.1% Ingredients & Flavours 7.8% 4.0% 4.5% Consumer Foods 5.6% 1.5% 2.0% Group 6.7% 3.6% 3.7% Note: * revenue by location of customers
Slide 6: Business Review - Ingredients & Flavours
Business Review - Ingredients & Flavours 2007 Like-for-like Revenue 3,310m 7.8% Trading profit 310m 7.6% • Good volume growth and cost recovery in all regions • Inflationary cost environment successfully managed through customer partnerships and business efficiency enhancements • Focused enterprise-
Slide 7: Ingredients & Flavours - Americas 2007
Ingredients & Flavours - Americas 2007 Americas 2007 Total Growth Like-for-like Revenue* 1,310m 2.6% 7.0% • Good results through more strategic approach to servicing customers and end-use markets • Cheese and dairy, culinary and savoury flavours - strong growth in prepared foods/sauces • Continued d
Slide 8: Ingredients & Flavours - Europe 2007
Ingredients & Flavours - Europe 2007 Europe 2007 Total Growth Like-for-like Revenue* 1,339m 3.5% 4.6% • Solid growth through culinary applications in chilled growth categories • Strong demand for solutions towards salt, fat, sugar and allergen reduction • Investment in technology development in Mens
Slide 9: Ingredients & Flavours - Asia Pacific 2007
Ingredients & Flavours - Asia Pacific 2007 Asia Pacific 2007 Total Growth Like-for-like Revenue* 425m 17.1% 17.3% • Strong regional performance and business development • Western trends and added-value offerings driving industrial development and retail/foodservice growth • Foodservice channels fuel
Slide 10: Business Review - Consumer Foods
Business Review - Consumer Foods 2007 Like-for-like Revenue 1,819m 5.6% Trading profit 119m 6.4% • Robust performance considering competitive cost environment • Cost recovery and efficiency programmes contribute to margin growth • Brand investment and category management expertise delivering excelle
Slide 11: Financial Review
KERRY Financial Review
Slide 12: 2007 Financial Highlights
2007 Financial Highlights Revenue 4,788m +6.7% like-for-like Trading profit 401m +7.4% like-for-like Trading margin 8.4% +10bps Profit before tax 298m +34.8% Adjusted EPS* 143.8 cent +7.4% Basic EPS 137.4 cent +43.7% Free cash flow 257m 2006: 241m Note: like-for-like represents growth before subsidi
Slide 13: Revenue Growth Analysis
Revenue Growth Analysis 2006 2007 4,646m 4,788m +3.1% FX Translation Like-for-like Acquisition/Disposal -2.1% +6.7% -1.5% Note: like-for-like represents revenue growth before subsidiary translation and acquisitions/disposals impact
Slide 14: Revenue: Like-for-like % Growth
Revenue: Like-for-like % Growth Like-for-like Acquisition/ Reporting Reported Growth Disposal Currency Growth Ingredients & Flavours 7.8% 0.8% (3.0%) 5.6% Consumer Foods 5.6% (5.4%) (0.2%) 0.0% Group 6.7% (1.5%) (2.1%) 3.1% Note: like-for-like represents revenue growth before subsidiary translation
Slide 15: Revenue Growth Components
Revenue Growth Components Like-for-like % Growth Like-for-like % Growth 8 6.7% 6 2007 2006 4 3.6% Volume 4.0% 3.0% Price 3.0% 1.0% 2 Trading currency (0.3%) (0.4%) Group 6.7% 3.6% 0 2007 2006 Note: like-for-like represents revenue growth before subsidiary translation and acquisitions/disposals impac
Slide 16: Margin By Business
Margin By Business 2007 2006 Trading Trading Revenue Profit Revenue Profit m m % m m % Ingredients & Flavours 3,310 310 9.4% 3,134 293 9.4% Consumer Foods 1,819 119 6.6% 1,819 118 6.5% Elimination/unallocated (341) (28) - (307) (27) - Group 4,788 401 8.4% 4,646 384 8.3%
Slide 17: Free Cash Flow
Free Cash Flow (m) 2007 2006 EBITDA* 500 487 Movement in working capital (38) (46) Capital expenditure (net) (89) (88) Interest (79) (77) Taxation (37) (35) Free cash flow 257 241 Dividends and share buy backs (266) (79) Acquisitions (79) (113) Note: * before non-trading items
Slide 18: Financial Ratios
Financial Ratios 2007 2006 Debt : EBITDA* 2.6x 2.5x Debt : market capitalisation 34% 35% EBITDA : net interest* 6.1x 6.2x CFROI 10.9% 10.4% ROAE** 14.0% 13.8% Note: * ratios calculated in accordance with financial covenants ** before intangible amortisation and non-trading items
Slide 19: 2007 Non-trading Items
2007 Non-trading Items (m) • 11 sites/businesses closed or sold across the Group (46.7) • Profit on sale of non-core assets/investments 35.6 • Tax on non-trading items 12.3 • Total non-trading items (net of tax) 1.2 • Net cash inflow from non-trading items (net of tax) 21.8
Slide 20: Other Financial Matters
Other Financial Matters • Finance costs Up 2.1m due mainly to impact of rate increases and share buy back offset by cash inflow. Average rate increase 0.8% v 2006 costing approximately 10m • Share buy back 10.8m shares acquired during the year at a cost of 232m and increasing interest by 7m • Taxati
Slide 21: Outlook 2008 and Future Prospects
Outlook 2008 and Future Prospects
Slide 22: Kerry's Business Focus
Kerry’s Business Focus ‘Capitalise on Group’s competitive advantages and unique strengths’ Global Leadership : Local Application • Ingredients & Flavours : Build new layers of advantage – leveraging Kerry’s global technology platforms in food and beverage growth markets – through re-alignment of the
Slide 23: Kerry's 'Go-to-market' Growth Model
Kerry’s ‘Go-to-market’ Growth Model Kerry Ingredients & Flavours
Slide 24: Kerry Ingredients & Flavours
Kerry Ingredients & Flavours
Slide 25: Kerry Foods' Strategy for Growth
Kerry Foods’ Strategy for Growth • Expand portfolio of strong chilled foods’ brands • Continue to build leadership in private label growth sectors • Leverage innovation expertise in further development of premium quality, convenient snack, prepared foods and food-to-go products • Enhancing productio
Slide 26: Kerry Foods' On-going Innovation Programmes
Kerry Foods’ On-going Innovation Programmes
Slide 27: Future Prospects: 2008 and Beyond
Future Prospects: 2008 and Beyond • Excellent prospects for sustainable organic growth – Exploiting Kerry Ingredients & Flavours Global Technology Platforms in food and beverage markets – Continuing to extend Kerry Foods’ brand portfolio, food-to-go offerings and expertise in selected private label
Slide 28: Additional Information
Additional Information
Slide 29: EPS Reconciliation
EPS Reconciliation 2006 2007 Growth cent cent % 133.9 Adjusted EPS* 143.8 7.4% (6.5) Intangible amortisation (7.1) (31.8) Non-trading items (net of tax) 0.7 95.6 Basic EPS 137.4 43.7% Note: * before intangible amortisation and non-trading items
Slide 30: Revenue Growth by Destination
Revenue Growth by Destination 18 17.3% 17.1% 16 14 12 10 8 7.0% 6.7% 6 5.3% 4 3.1% 2.6% 2 1.5% 0 Europe Americas Asia Pacific Group Total Like-for-like Note: like-for-like represents revenue growth before subsidiary translation and acquisitions/disposals impact
Slide 31: Trading Profit: Like-for-like % Growth
Trading Profit : Like-for-like % Growth Like-for-like Acquisition/ Reporting Reported Growth Disposal Currency Growth Ingredients & Flavours 7.6% 1.1% (2.8%) 5.9% Consumer Foods 6.4% (4.0%) (0.9%) 1.5% Group 7.4% (0.4%) (2.5%) 4.5% Note: like-for-like represents growth before subsidiary translation
Slide 32: Euro - US Dollar Trend
Euro - US Dollar Trend 1.50 1.47 1.47 1.47* 1.45 2008 1.40 1.35 1.35 1.30 1.32 1.30 2007 1.25 1.25 1.22 1.20 2006 1.15 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 Avg Fx Rate 1.378 % Change (9.4%) Note: * rate as at 20 February 2008
Slide 33: Euro - Sterling Trend
Euro - Sterling Trend 0.76 0.76* 0.75 0.74 2008 0.73 0.72 0.70 2006 0.69 0.68 0.68 0.67 0.67 0.66 0.66 2007 0.64 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2007 Avg Fx Rate 0.686 % Change (0.9%) Note: * rate as at 20 February 2008
Slide 34: Currency Profile of Net Debt
Currency Profile of Net Debt (m) Net @ Floating @ Fixed Debt Rates Rates Euro 465 74 391 Sterling 198 198 - US Dollar 514 58 456 Others 102 102 - 1,279 432 847 100% 34% 66% Weighted average period for which rate is fixed: 2.1 years
Slide 35: Maturity Profile of Net Debt
Maturity Profile of Net Debt (m) 31 Dec 2007 31 Dec 2006 Within one year (176) (162) Between 1 and 2 years 92 3 Between 2 and 5 years 693 745 Between 5 and 10 years 670 608 1,279 1,194 Weighted average maturity in years: 4.0 4.8
Slide 36: EPS Trend
EPS* Trend (cent) 150 143.8 131.6 133.9 122.9 125 112.1 101.8 100 87.9 79.2 75 68.0 57.4 50 25 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Note: EPS numbers for 1998 to 2003 are pre IFRS Note: * before intangible asset amortisation and non-trading items
Slide 37: R&D Expenditure
R&D Expenditure 150 3.0%* 3.0%* 140 130 2.8%* 145m 120 139m 2.7%* 110 100 125m 2.4%* 90 111m 2.1%* 80 70 2.0%* 60 2.0%* 88m 50 78m 40 59m 30 52m 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 Note: * figures relate to R&D as a percentage of revenue
Slide 38: Cash Flow
Cash Flow (m) 2007 2006 Cash from operations 462 440 Finance and taxation (116) (111) Capital expenditure (net) (89) (88) Free cash flow 257 241 Acquisitions and disposals - businesses acquired (83) (115) - businesses sold 1 17 - non-trading items (39) (31) (121) (129) Equity dividends paid (34) (31
Slide 39: Shareholder Analysis
Shareholder Analysis Institutions Kerry Co-op 44% 24% Institutional Analysis North America 20% Ireland 10% UK 8% Retail Continental Europe / Rest of World 6% 32% Shares in issue at 31 December 2007 was 174,689,635
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