Kerry Group Plc · EURONEXT:KRZ
Kerry — H1 2002 Earnings Presentation
30 slides from Kerry's earnings presentation, Sep 3, 2002
Slide 1: Interim Results 2002
Interim Results 2002 3 September 2002
Slide 2: 2002 Interim Results Presentation
2002 Interim Results Presentation • Introduction and H1 2002 Overview Hugh Friel • Financial Review Brian Mehigan • Business Reviews Hugh Friel • Prospects and Future Development Hugh Friel • Q&A
Slide 3: 2002 Strategy
2002 Strategy • To maintain earnings momentum • Efficient integration of ’01 acquisitions – growth and development through Kerry global operations • To continue to develop ingredients technologies portfolio and global market base • Launch Nutriant™ division – exploit unique technologies in high valu
Slide 4: Performance Review
Performance Review • Adjusted earnings per share increased by 14.8% • Organic growth remains robust despite difficult international market conditions in some sectors • Acquisition integration programme on track across the Group • Product development resumes in ingredient markets following unpreceden
Slide 5: Financial Highlights (€) – Interim Results
Financial Highlights (€) – Interim Results 2001 2002 Growth €1,339.7m Turnover €1,799.8m 34.3% €107.8m Operating profit* €128.0m 18.7% 8.1% Operating profit % 7.1% €62.7m Adjusted profit after tax* €77.4m 23.4% 3.25 cent Interim dividend per share 3.65 cent 12.3% 36.4 cent Adjusted EPS* 41.8 cent 14
Slide 6: Financial Review
Financial Review • Strong top line and trading performance • Inclusion of Golden Vale and bolt-on acquisitions for the first time • Acquisition integration activity • Cash flow and financing costs • Deferred taxation • EPS track record continues
Slide 7: Geographical Analysis of Turnover
Geographical Analysis of Turnover Geographic Split Half Year Growth % Rest of Europe Ireland 96.9 35% Rest of Europe 10.5 Americas 22.0 Asia Pacific 9.9 Group 34.3 Ireland Asia Americas 35% Pacific 26% 4%
Slide 8: Turnover Analysis – Total Growth
Turnover Analysis – Total Growth Growth Acquisition / Currency Like-for-like Disposal Growth Ireland 97% 95% 0% 2% Rest of Europe 10% 6% (1%) 5% Americas 22% 19% (2%) 5% Asia Pacific 10% 4% 0% 6% Group 34% 30% (1%) 5%
Slide 9: Geographical Analysis of Operating Profit
Geographical Analysis of Operating Profit Geographic Split Half Year Growth % Rest of Europe 34% Ireland 42.5 Rest of Europe 8.7 Americas 18.1 Asia Pacific 13.4 Group 18.7 Ireland Asia Americas 21% Pacific 41% 4%
Slide 10: Turnover Growth
Turnover Growth 3003 3000 2622 2456 2500 2200 1800 2000 1707 1523 1566 1340 1265 1500 1121 1147 988 748 794 1000 737 533 500 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 Half Year Full Year
Slide 11: Cash (EBITDA*) Per Share (cent)
Cash (EBITDA*) Per Share (cent) 188.3 200 172.0 180 150.4 160 130.8 140 103.6 120 93.4 90.1 84.0 82.7 100 77.9 68.3 80 58.7 57.3 41.1 46.2 60 37.8 25.8 40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 Half Year Full Year Note: * before exceptional items
Slide 12: Interim Cash Flow (€m)
Interim Cash Flow (€m) 2002 2001 Cash from operations 76 30 Financing and tax (53) (50) Investing activities - Capital expenditure (48) (46) - Businesses acquired (125) (71) - Businesses sold 34 - - Exceptional restructuring (14) - (153) (117) (130) (137) Exchange adjustment 51 (44) (Increase) in bo
Slide 13: Interim Exceptional Items
Interim Exceptional Items 2002 €m Costs Redundancies and contract compensation 14.4 Plant closure and relocation expenses 4.0 Plant and other assets written off 5.9 Other 1.2 25.5 Less Profit on disposal of businesses (1.8) Current tax on exceptional items (2.1) Deferred tax on exceptional items (1.
Slide 14: Financial Ratios
Financial Ratios 2001 2002 69% Debt : Equity 73% 28% Debt : Market capitalisation 32% 2.2x Debt : EBITDA* 2.5x 6.8x EBITDA* : net interest 6.9x Note: * before exceptional items
Slide 15: FRS19 - Deferred Tax
FRS19 - Deferred Tax • Reported tax charge increased by 4% - 5% per annum • Previous periods, including full year 2001, adjusted to adopt new treatment • Balance sheet provision for ‘potential’ tax payments reduces net assets by €36m as at 31 December 2001 to €794m • Earnings per share adjusted acco
Slide 16: EPS Reconciliation
EPS Reconciliation 2002 2001 Growth € cent € cent % Adjusted EPS before FRS19* 43.9 38.7 13.4% Deferred tax – FRS19 adjustment 2.1 2.3 Adjusted EPS* 41.8 36.4 14.8% Goodwill amortisation 10.9 5.1 Exceptional items (net of tax) 10.7 (0.5) FRS3 EPS 20.2 31.8 Note: * before goodwill and exceptional ite
Slide 17: Business Reviews
Business Reviews
Slide 18: Analysis of Results by Region (€m)
Analysis of Results by Region (€m) 2002 2001 Operating Operating Turnover Profit % Turnover Profit % Group Ireland €627.1 €26.9 4.3% €318.6 €18.8 5.9% Rest of Europe €628.3 €43.9 7.0% €568.5 €40.4 7.1% Americas €473.5 €52.8 11.1% €388.1 €44.7 11.5% Asia Pacific €70.9 €4.4 6.2% €64.5 €3.9 6.0% Total
Slide 19: Business Review - Ireland
Business Review - Ireland • Effective doubling of turnover and scale of business • Major integration / restructuring of businesses connected with Golden Vale acquisition • Sale of Bailieboro and Artigarvan dairy processing operations • Dairy markets: input pricing lagging reduced output prices • Sol
Slide 20: Business Review - Ingredients Europe
Business Review - Ingredients Europe • Encouraging organic growth in core business • Prepared foods – continued expansion throughout Europe • Difficult market conditions: fish and poultry industries – impact on coatings • Snack sector – good industry growth • Focus on culinary opportunities – Voyage
Slide 21: Business Review – Foods UK
Business Review – Foods UK • Mattessons, Walls, Richmond – further brand value growth • Addition of Porkinsons and Bowyers brands • Shrinkage of ambient / frozen shelf space – expansion of chilled cabinet • Ready meals double digit growth continues • Microwaveable snacks – encouraging growth • Acqui
Slide 22: Business Review - Americas
Business Review - Americas • Good performance through core technologies and acquisitions • Post industry consolidation – some businesses re-engaged in NPD • 20%+ growth in nutritional, energy, value-added ready-to-eat cereals • 10%+ growth in natural foods / organic sectors • Launch of Nutriant™ div
Slide 23: Business Review - Asia Pacific
Business Review - Asia Pacific • Good recovery in Australia – seasonings and bakery ingredients • QSR’s in Australia and New Zealand performing well • QSR’s in Malaysia and Singapore good performance but struggling in other Asian markets • WTO changes – encouraging prospects in China from low base •
Slide 24: Business Review - Flavours
Business Review - Flavours • Launch of Mastertaste global flavour division • Strategy to become a premier flavour supplier to global food and beverage industries • Platform for growth – Mastertaste (UK) – SGF (Italy) – Former Burns Philp flavours (Australia) – Geneva Group (USA) – Hickory Specialtie
Slide 25: Acquisitions To Date in 2002
Acquisitions To Date in 2002 • IDSA Mexico Convenience blends • Ringger Foods USA Extruded ingredients • Roskam USA Cereal agglomerates • Stearns & Lehman USA Foodservice • Deli Products Ireland Chilled convenience ‘food-to-go’ • Northern Foods Van Sales UK Consumer foods • Total cost €125m
Slide 26: Adjusted EPS* Growth - Pre FRS19
Adjusted EPS* Growth - Pre FRS19 94.6 100 85.6 73.6 80 61.1 60 50.0 43.0 43.9 38.2 38.7 35.1 40 29.8 29.9 24.8 20.8 18.0 15.5 11.9 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 Half Year Full Year Note: * before goodwill and exceptional items
Slide 27: EPS Broker Estimates 2002
EPS Broker Estimates 2002 2002 EPS % 2001 EPS 2002 EPS € Cent* Growth € Cent** € Cent** (Restated) Implied Consensus 106.5 12.6 87.9 98.9 Davy 107.6 13.7 87.9 99.9 SSSB 104.5 10.5 87.9 97.1 ABN Amro 105.5 11.5 87.9 98.0 Goodbody 107.2 13.3 87.9 99.6 Merrion 106.6 12.7 87.9 99.1 NCB 107.4 13.5 87.9 9
Slide 28: Shareholder Analysis
Shareholder Analysis Foreign Ownership Irish Ownership 25% 75% North American Institutions 13% Kerry Co-op 31% UK Institutions 9% Irish Individuals 28% Continental Europe / Rest of World Irish Institutions 16% Institutions 3% Shares in issue: 186 million
Slide 29: Current Trading and Outlook
Current Trading and Outlook • Current trading in line with Group budgets • Comfortable with ’02 consensus • Integration of acquired businesses – well advanced • Input / output pricing realignment in some sectors • Strategic development – Ingredients: core technologies, nutrition, culinary – Flavours
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