Kerry Group Plc · EURONEXT:KRZ
Kerry — FY2010 Earnings Presentation
46 slides from Kerry's earnings presentation, Feb 22, 2011
Slide 1: Preliminary Statement of Results
Preliminary Statement of Results 22 February 2011 RIGHMOND IRISH RECIPE | cere | Innecent’ ashy veg pol
Slide 2: Disclaimer: Forward Looking Statements
Disclaimer: Forward Looking Statements This presentation contains 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 fluct
Slide 3: 2010 Year End Results
2010 Year End Results » Review of Business Stan McCarthy CEO » Financial Review Brian Mehigan CFO » Outlook and Future Prospects Stan McCarthy CEO » Q&A
Slide 4: 2010 Full Year Results Highlights
2010 Full Year Results Highlights GROUP CONTINUING GROUP ADJUSTED TOTAL REVENUE OF VOLUMES TRADING MARGIN EPS* DIVIDEND €5bn +5.5% 9.5% +16.8% +15.2% » Strong Groupwide performance and business development » Group revenue increased by 9.7% to €5 billion (4.6% LFL) » Continuing business volume growth
Slide 5: 2010 Global Industry Overview
2010 Global Industry Overview » Global food & beverage key customer accounts performing well » innovation/renovation driving industry growth » increased demand for clean labelling, authentic recipes and all-natural solutions » health and wellness benefits driving category growth » continued strong g
Slide 6: Like-for-like Revenue Growth Analysis
Like-for-like Revenue Growth Analysis Group: €4,960m +4.6% LFL Vol (cont) +5.5% Ingredients & Consumer Flavours: €3,675m Foods: €1,768m +6.6% LFL +1.3% LFL Vol (cont) +6.8% Vol (cont) +3.0% Note: like-for-like represents revenue growth before subsidiary translation and acquisitions/disposals impact
Slide 7: Business Review – Ingredients & Flavours
Business Review – Ingredients & Flavours 2010 Like-for-like Revenue €3,675m 6.6% Trading profit €401m 12.8% Trading margin 10.9% +50bps » Strong performance in all technologies, end-use-markets and geographies » Enhanced reputation for integrated customer solutions – supported by Centres of Excellen
Slide 8: Ingredients & Flavours: End-use-market Development – Savoury & Dairy
Ingredients & Flavours: End-use-market Development – Savoury & Dairy » Growth through improved restaurant quality recipes Prepared Meals and ‘healthy’ ingredients/natural flavours » Benefited from new flavour development launches – Savoury Snacks spicy/bold/ethnic flavours » Growth through authentic
Slide 9: Ingredients & Flavours: End-use-market Development – Cereal & Sweet
Ingredients & Flavours: End-use-market Development – Cereal & Sweet » Benefit from reformulation to improve health/wellness products, growth of infant cereal Cereal & Bars category. Recovery of bar sector through NPD targeting weight management, added fibre and added protein » Strong growth through
Slide 10: Ingredients & Flavours: End-use-market Development – Beverage
Ingredients & Flavours: End-use-market Development – Beverage » Kerry recorded good growth through trends towards Soft Drinks natural flavours, calorie reduction benefiting sweet modulation systems, resurgence in cola category » Slow growth, Kerry performance assisted by new Alcoholic Beverages flav
Slide 11: Ingredients & Flavours: End-use-market Development – Pharma & Primary Dairy
Ingredients & Flavours: End-use-market Development – Pharma & Primary Dairy » Strong double digit growth in excipient products through new tabletting technologies and Pharma coating/flavour systems. Good growth in cell nutrition through hydrolysed proteins, recombinant proteins and yeast extracts. S
Slide 12: Business Review – Consumer Foods
Business Review – Consumer Foods 2010 Like-for-like Revenue €1,768m 1.3% Trading profit €132m 5.3% Trading margin 7.5% +40bps » Strong performance considering economic environment and consumer spending trends » 3% growth in continuing volumes (6% in the UK, -2% in Ireland) » Promotional activity rem
Slide 13: Kerry Foods Focus Brands
Kerry Foods Focus Brands Corporate Priorities Local Brands Others
Slide 14: Financial Review
Financial Review KERRY
Slide 15: 2010 Financial Highlights
2010 Financial Highlights Revenue > €4,960m +9.7% Trading profit > €470m +11.3% Trading margin > 9.5% +20bps Adjusted profit after tax* > €341m +17.0% Adjusted EPS* > 194.5 cent +16.8% Free cash flow > €305m 2009: €367m Note: * before intangible asset amortisation and non-trading items
Slide 16: Group Revenue Growth Components
9.7% Total Note: year on year % change 5.5% Continuing volume (0.5%) Rationalisation volume 4.6% (0.3%) Price/mix (0.1%) Trading currency Group Revenue Growth Components 4.5% Reporting currency 0.6% Acquisitions/disposals
Slide 17: Ingredients & Flavours Revenue Growth Components
Ingredients & Flavours Revenue Growth Components 6.6% 12.7% 6.8% (0.3%) 0.1% 0.0% 5.2% 0.9% Acquisitions/disposals Reporting currency Continuing volume Total Trading currency Price/mix Rationalisation volume Note: year on year % change
Slide 18: Consumer Foods Revenue Growth Components
3.2% Total Note: year on year % change 3.0% Consumer Foods Continuing volume Revenue Growth Components (0.7%) Rationalisation volume 1.3% (0.7%) Price/mix (0.3%) Trading currency 1.9% Reporting currency 0.0% Acquisitions/disposals
Slide 19: Trading Margin by Business
Trading Margin by Business 2010 2009 Revenue Trading Profit Revenue Trading Profit €m €m % €m €m % Ingredients & Flavours 3,675 401 10.9% 3,261 340 10.4% Consumer Foods 1,768 132 7.5% 1,713 122 7.1% Eliminations/unallocated (483) (63) - (453) (40) - Group 4,960 470 9.5% 4,521 422 9.3%
Slide 20: Trading Margin Progression
Trading Margin Progression €470m €422m Margin 9.3% +0.6% (0.3%) +0.0% (0.1%) +0.0% +0.0% 9.5%
Slide 21: 1 Kerry / Kerryconnect Impact
1 Kerry / Kerryconnect Impact » Significant benefits from 1 Kerry reorganisation in previous years delivering for the businesses » Reinvested in Kerryconnect (systems and processes) and shaping our new operating model » Software and other assets written off as non cash items » Similar progression ex
Slide 22: Raw Material Cost % Change on Prior Year Spend
Raw Material Cost % Change on Prior Year Spend Note: * at current levels
Slide 23: Free Cash Flow (€m)
Free Cash Flow (€m) 2010 2009 EBITDA* 618 519 Movement in working capital (21) 133 Pension contributions paid less pension expense (41) (42) Finance costs (58) (78) Taxation (54) (57) Free cash flow before capital expenditure 444 475 Capital expenditure (net) (139) (108) Free cash flow 305 367 Note:
Slide 24: Financial Ratios
Financial Ratios 2010 2009 EBITDA : net interest* 10.1x 7.8x Net debt : EBITDA* 1.8x 2.2x ROAE** 17.2% 16.7% ROACE** 12.9% 12.4% CFROI 11.6% 15.3% Note: * calculated in accordance with banking covenants ** before intangible asset amortisation and non-trading items
Slide 25: Maturity Profile of Net Debt (€m)
Maturity Profile of Net Debt (€m) 31 Dec 2010 31 Dec 2009 Within 1 year 31 (104) Between 1 and 2 years 261 604 Between 2 and 5 years 408 430 Over 5 years 412 229 1,112 1,159 Weighted average maturity (years) 4.8 2.8
Slide 26: Other Financial Matters
Other Financial Matters » Finance costs Down €9.3m – lower interest rates and strong cashflow partially offset by acquisitions and capital investment » Taxation Tax on normal trading activity 17.5% (2009: 18.2%) » Pension Net deficit at 31 December €145m (2009: €141m)
Slide 27: Outlook & Future Prospects
Outlook & Future Prospects KERRY
Slide 28: Kerry Group Outlook for 2011
Kerry Group Outlook for 2011 » Kerry customer centric model to maintain business development momentum » Pricing to reflect inflationary pressures and raw material cost increases » Good innovation pipeline with key accounts in developed markets » Strong growth to continue in emerging markets » Brand
Slide 29: Managing Cost Inflation
Managing Cost Inflation » Significant increases in input costs vs 2010 » As in prior inflationary years, Kerry is confident we can continue to manage cost recovery through our strong customer relationships » Group has global processes in place to manage raw material and input costs » Organisation we
Slide 30: Kerry Group Growth Strategy – 1 Kerry Positioning
Kerry Group Growth Strategy – 1 Kerry Positioning » 1 Kerry embraces Group’s ‘Dual Strategy for Growth’ - building on our global leadership in ingredients & flavours and our chilled foods’ leadership position in the UK and Irish markets. » All divisions are well advanced in the implementation of ‘go
Slide 31: 1 Kerry Business Transformation
1 Kerry Business Transformation
Slide 32: 1 Kerry Opportunity: Deliverables
1 Kerry Opportunity: Deliverables » Value realisation framework » Common Kerry ‘way of working’ » global execution » functional excellence » Leveraging scale and synergies Achievement of long-term » Enabling: growth and » Go-to-market strategies, technology financial targets development, end-use-mar
Slide 33: Performance v Long Term Targets
Performance v Long Term Targets Performance v Targets to Date KPI Target 2008 2009 2010 Revenue +2% to +4% LFL volume growth ✔ +3.4% ✔ +2.2% ✔ +5.5% Margin 10% trading margin ✔ 8.5% ✔ 9.3% ✔ 9.5% Adjusted EPS 153.9c 166.5c 194.5c 10%+ Growth +7.0%* +8.2%* ✔ +16.8%* ROAE 15%+ ✔ 15.7% ✔ 16.7% ✔ 17.2%
Slide 34: Future Prospects: Summary
Future Prospects: Summary » Good start to 2011 » Managing cost inflation » Strong focus on business efficiencies » Continued development of integrated solutions to meet customer requirements in global food & beverage markets » NPD, brand investment and efficiencies to overcome challenges in UK and I
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Slide 36: Business Review – Ingredients & Flavours: Americas
Business Review – Ingredients & Flavours Americas 2010 Like-for-like Revenue €1,479m 6.9% » Continuing business volumes +7.2% » Excellent performance in Q4 » Good progress in flavour integration » Savoury & Dairy – acquisition of US based CF Chefs, IPM Foods » Cereal & Sweet – acquisition of NutraCe
Slide 37: Business Review – Ingredients & Flavours: EMEA
Business Review – Ingredients & Flavours EMEA 2010 Like-for-like Revenue €1,218m 4.9% » Continuing business volumes grew by 4.8% » Savoury & Dairy systems and flavours outperformed sectoral growth rates » Expansion of culinary systems and flavours – acquisition of SpringThyme Oils Ltd (UK) » Good gr
Slide 38: Business Review – Ingredients & Flavours: Asia-Pacific
Business Review – Ingredients & Flavours Asia-Pacific 2010 Like-for-like Revenue €509m 12.2% » Excellent performance – continuing business volumes +14.3% » Savoury & Dairy systems and flavours solid growth in South East Asia – acquisition of Malaysia based KMC Foods » Significant growth in new menu
Slide 39: EPS Reconciliation
EPS Reconciliation 2009 2010 Growth € cent € cent % 166.5 Adjusted EPS* 194.5 16.8% (9.6) Intangible asset amortisation (9.1) (41.9) Non-trading items (net of tax) (0.4) 115.0 Basic EPS 185.0 60.9% Note: * before intangible asset amortisation and non-trading items
Slide 40: Net Debt Profile (€m) as at 31 Dec 2010
Net Debt Profile (€m) as at 31 Dec 2010 Net @ Floating @ Fixed debt rates rates Euro 470 402 68 US Dollar 540 92 448 Sterling 61 61 - Other 41 41 - 1,112 596 516 100% 54% 46% Weighted average period for which rate is fixed: 4.3 years
Slide 41: Exchange Impact
Exchange Impact USD GBP 2011 at today’s rate* 1.36 0.84 2010 average rate 1.33 0.86 2009 average rate 1.40 0.89 % change FY 2011 v FY 2010 (2.3%) +2.3% % change FY 2010 v FY 2009 +5.0% +3.4% % change FY 2009 v FY 2008 +4.8% (11.3%) % change FY 2008 v FY 2007 (6.5%) (16.6%) % change FY 2007 v FY 2006
Slide 42: 2010 Acquisitions by Technology & Region
2010 Acquisitions by Technology & Region Savoury & Dairy Cereal & Sweet Beverage Americas - IPM Foods - NutraCea - Agilex Flavors - CF Chefs - Caffe D’Amore - Teawave EMEA - Newmarket Creameries - SpringThyme Oils Asia-Pacific - KMC Foods - Van den Bergh’s and Croissant King branded lifestyle bakery
Slide 43: Shareholder Analysis
Shareholder Analysis Institutions 48% Kerry Co-op 24% Institutional Analysis UK 16% North America 14% Retail 28% Continental Europe / Rest of World 12% Ireland 6% Shares in issue at 31 December 2010 was 175,517,206
Slide 44: Revenues and Profitability
Revenues and Profitability Group Revenues (€bn) Group Trading Profit (€m) 10 Year CAGR 6.6% 10 Year CAGR 7.2% Ingredients & Flavours Trading Profit Consumer Foods Trading Profit Trading Profit Trading Margin Trading Profit Trading Margin
Slide 45: Cashflow & EPS
Cashflow & EPS* EBITDA (€m) Free Cash Flow (€m) EPS* & Dividends (cent) Dividend per share EPS* Note: * before intangible asset amortisation and non-trading items
Slide 46: Preliminary Statement of Results
Preliminary Statement of Results 22 February 2011 RIGHMOND IRISH RECIPE | cere | Innecent’ ashy veg pol