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McBride plc Preliminary Results Presentation 3 September 2013

McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Page 1: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

Passionate about Private Label

McBride plc Preliminary Results Presentation

3 September 2013

Page 2: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

Passionate about Private Label

Summary Chris Bull – Chief Executive Officer

2

Page 3: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Introduction • A challenging year with a revenue decline in contract manufacturing as

expected and intensified branded competition

• Product launch programme successfully executed with Private Label

revenue returning to growth in the second half

• Adjusted operating profit(1) down 19%

• Net debt of 1.7 x adjusted EBITDA(1)

• Dividend maintained

• Executive responsibilities re-focused to drive the growth and cost-

competitiveness agendas

3

(1) Certain of these KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustment is made for specific items that are considered to hinder comparison of the trading performance of the Group’s businesses either year-on-year or with other businesses. During the periods under review, adjustment was made for the amortisation of intangible assets recognised in business combinations, changes in the estimate of contingent consideration arising in business combinations and the related interest expense, and exceptional items.

Page 4: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Financial review Richard Armitage - Chief Finance Officer

4

Page 5: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Financial headlines

2012-13 2011-12 Y/Y 2011-12 Y/Y

Revenue (£m) 761.4 813.9 -6% 803.0 -5%

EBITA (£m) 24.0 29.5 -19%

EBITA margin 3.2% 3.6% -0.4 pts

Profit before tax (£m) 18.4 23.7 -22%

Diluted earnings per share (p) 7.5 9.7 -23%

Payments to shareholders per share (p) 5.0 5.0 +0%

Cash generated from operations (£m) 39.3 39.5 -1%

Net debt (£m) 86.8 81.2 +7%

Financial KPIsROCE 12.4% 14.7%

EBITA margin 3.2% 3.6%

Asset turnover 3.7 4.1

Constant Currency

5

(1) Certain of these KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustment is made for specific items that are considered to hinder comparison of the trading performance of the Group’s businesses either year-on-year or with other businesses. During the periods under review, adjustment was made for the amortisation of intangible assets recognised in business combinations, changes in the estimate of contingent consideration arising in business combinations and the related interest expense, and exceptional items.

Page 6: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Income statement

2012-13 2011-12 Y/Y

£m £m

Revenue 761.4 813.9 -6%

Gross profit 247.1 255.6 -3%

Gross margin 32.5% 31.4% 1.1pts

Distribution costs (51.4) (52.4) -2%

Administrative costs (171.7) (173.7) -1%

EBIT 24.0 29.5 -19%

Net financing costs (5.6) (5.8) -3%

Profit before taxation 18.4 23.7 -22%

6

(1) Certain of these KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustment is made for specific items that are considered to hinder comparison of the trading performance of the Group’s businesses either year-on-year or with other businesses. During the periods under review, adjustment was made for the amortisation of intangible assets recognised in business combinations, changes in the estimate of contingent consideration arising in business combinations and the related interest expense, and exceptional items.

Page 7: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Regional performance – Revenue (1)

2012-13 2011-12 Y/Y 2011-12 Y/YRe-presented

£m £m £m

UK 286.3 309.0 -7% 309.0 -7%

Western Europe 409.9 448.7 -9% 438.0 -6%

Rest of the World 65.2 56.2 +16% 56.0 +16%

Total 761.4 813.9 -6% 803.0 -5%

(1) Revenue is by geographic origin

Constant Currency

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Page 8: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Regional performance – Operating profit

£m £m

UK 14.9 20.1 -26%

Western Europe 14.3 16.5 -13%

Rest of the World 2.0 0.3 +567%

Total segments 31.2 36.9 -15%

Corporate (7.2) (7.4) +3%

Total 24.0 29.5 -19%

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(1) Certain of these KPIs reflect adjustments to amounts determined in accordance with IFRSs. Adjustment is made for specific items that are considered to hinder comparison of the trading performance of the Group’s businesses either year-on-year or with other businesses. During the periods under review, adjustment was made for the amortisation of intangible assets recognised in business combinations, changes in the estimate of contingent consideration arising in business combinations and the related interest expense, and exceptional items.

Page 9: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Movement in net debt June 2012 to June 2013

(1) Other includes finance costs, foreign exchange, proceeds from the sale of non-current assets and net receipts from issue of share capital

-90.0

-65.0

-40.0

-15.0

Opening net

debt

Net cash

generated from

operations Other

Capital

expenditure

Payments to

shareholders

Exceptional

items Acquisitions

Closing net

debt

£m

(81.2) 39.3 (8.4)

(8.7) (86.8)

(16.2)

(0.5)

(1)

9

(11.1)

Page 10: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Oil and oil derivatives

Oil in €/barrel has dipped slightly through the year as a consequence of a declining US$ oil price and stronger Euro ….

… Ethylene has followed in recent months but remains around the average for the last two years

50

60

70

80

90

100

110

120

130

Oil

€ per Barrel Act/F'cast $ per Barrel Act/F'cast

800

900

1,000

1,100

1,200

1,300

1,400

€ /

MT

Ethylene

Actual FY11 Average FY12 Average FY13 Average

10

Page 11: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Key feed-stocks

Sustained Ethylene and plastics prices are offsetting modest reductions in natural oil and paper to leave material costs stable year-on-year

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

€ /

MT

PET

Actual FY11 Average FY12 Average FY13 Average

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

€ /

MT

HDPE

Actual FY11 Average FY12 Average FY13 Average

700

900

1,100

1,300

1,500

1,700

1,900

2,100

2,300

2,500

$ /

MT

PKO

Actual FY11 Average FY12 Average FY13 Average

400

420

440

460

480

500

520

540

560

€ /

MT

Testliner

Actual FY11 Average FY12 Average FY13 Average

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Page 12: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Cost management to accelerate

• A wide range of projects will underpin the delivery of 2013/14 results:

• Optimisation of the Supply Chain for Western Continental Europe

• The first phase of a programme to reduce Group distribution costs

• Significant savings from the consolidation of Group functions carried out in 2012/13

• Year three savings from our Operational Excellence programme

• New Group structure will allow us to realise substantial synergies:

• Growth in Central and Eastern Europe creates the imperative to build capacity and support growth in those markets

• Availability of resource in mature Western European markets that can be re-focused to meet those needs

• We will achieve the lowest imaginable cost in:

• Manufacturing

• Distribution

• Back-office processes

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Page 13: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Summary Chris Bull – Chief Executive Officer

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Page 14: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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What we have achieved so far

• Successful delivery of our product launch programme;

Core and Future Growth categories up to 49% of Private Label sales (2012:47%)

• Strong growth in Germany and Poland;

• Year two Operational Excellence savings achieved and restructuring savings

targets delivered;

• Reorganisation completed and working well;

Establishment of a Group-led R&D function

• Strengthened our capability in our Asia Pacific business ;

Developing & Emerging markets up from 9% to 11% of Group revenues

• Substantial new contracts won in Germany in the pipeline.

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Page 15: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Tough trading conditions across Europe in the Household sector

-7

-6

-5

-4

-3

-2

-1

0

1

2

UK France Italy Germany Spain

Market volume Private Label volume

UK, France, Italy, Germany, data 52 weeks to June 2013 Spain 52 weeks to Dec 2012 Sources: Kantar Worldpanel (UK) , Symphony IRI, GfK

% change vs prior year

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Page 16: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Private Label Household volume shares 2013 vs 2012

28.9

32.2

24.3

41.6

31.7

28.8

32.1

23.9

42.4

31.8

20

25

30

35

40

45

UK France Italy Germany Big 4 avg

2012 2013

UK, France, Italy, Germany, data 52 weeks to June 2013 Sources: Kantar Worldpanel (UK) , Symphony IRI, GfK

% volume share

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Page 17: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Household and Personal Care products on promotion to end March 2013

58.5%

21.0%

12.7%

30.6%

19.9%

64.1%

20.3%

9.8%

28.3%

18.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

UK France Germany Italy Spain

Household Personal Care

Source: IRI July 2013 Special report: Pricing and Promotion in Europe - Data to March 2013

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+2% +2%

+5% -2% +8% +18%

+5% +6%

-1% +10%

% Volume on deal latest year

Volume on Promotion % change year on year

Page 18: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Where we are achieving growth

France -1%

Italy -4%

Spain -6%

Germany +42%

Poland +24%

UK -9%

Other WE +1%

Private Label year on year sales

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Total D&E +16% of which: Australia +58% Asia Pacific D&E +11% Poland +24% Other D&E + 6%

Page 19: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Growth through NPD • Extensive product launches

• All Categories

• All key markets

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Page 20: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Driving EDLP In Asda Laundry powders

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

Jun

10

20

12

Jul 0

8 2

01

2

Au

g 0

5 2

01

2

Sep

02

20

12

Sep

30

20

12

Oct

28

20

12

No

v 2

5 2

01

2

Dec

23

20

12

Jan

20

20

13

Feb

17

20

13

Mar

17

20

13

Ap

r 1

4 2

01

3

May

12

20

13

Jun

09

20

13

Jul 0

7 2

01

3

Asda introduced EDLP across the Laundry powder category

% PL volume share

Asda Private Label Volume share in store

UK Laundry Private Label Volume share

Asda Tropicals launched

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Page 21: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Investment Plans

Capacity 32%

Product 25%

Operational Excellence

17%

Compliance 26%

Total FY14 spend £27.5m

Maintenance and Compliance

£7.1m

Profit generating

£20.4m

Product

£7.0m

• New packaging formats

• Product launch pipeline

• Safety enhancements

Operational Excellence £4.7m

• End of line packing

• Waste recycling

• Automation

• Materials handling

• Machine efficiency

Capacity £8.7m

• Machine dishwashing growth

• Laundry liquids growth

• Eastern European expansion

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Page 22: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Key Priorities for 2014

• Drive Group revenue by building our new product launch pipeline

• Leverage our unique capabilities to grow substantially in the mass markets of Central and Eastern Europe; and build for the future in Asia Pacific

• Restore profitability in UK and Western Europe through selective category growth and re-shaping of the cost base

• Drive the substantial Supply Synergies made possible through the Group reorganisation

• Utilise our well-developed competences in operational excellence, back-office processes and logistics management to drive ongoing and challenging cost reduction programmes

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Page 23: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Page 24: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Q&A

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Page 25: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Appendix

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Page 26: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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UK Household Private label Value and Volume share Jan – June 2013

Private label momentum regained in Q4 following flat Q3 impacted by branded ‘Spring clean’ promotional activity

Source: Kantar Worldpanel

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Jan 20 2013 Feb 17 2013 Mar 17 2013 Apr 14 2013 May 12 2013 Jun 09 2013

Volume Share 2012

Volume Share 2013

26

% Private Label

Page 27: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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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

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Plus:

A rationalised and enhanced operating platform

Increased customer responsiveness and flexibility

Solid architecture for product and geographic expansion

Page 28: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Business model

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Page 29: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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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

Private Label forecast to grow in all markets

29 29

Page 30: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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30

15

20

25

30

35

40

45

79 80 81 82 89 90 91 92 93 06 07 08 09% P

riva

te L

abel sh

are

of

UK p

ack

aged g

roce

ries

Private Labels benefit in times of recession

Source Kantar, Datamonitor

Private Labels gain and continue to grow share during and after recessions

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Page 31: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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Personal care Private Label share

UK

Source: UK Kantar Worldpanel, France IRI

31

0

5

10

15

20

25

2010/11 2011/12

Value share Volume share

• Total UK Personal Care market grew 1.8% in volume terms with Private Labels down 3.5% due to high levels of promotions. • Private Label skincare demand remained strong with a 33% volume share of the category. • Mens shaving products gained share to reach 28% • The Mouthwash market was flat overall with Private Label volume share of 20%

France

0

5

10

15

20

25

30

2010/11 2011/12

Value share Volume share

• Total France Private Label Personal Care market was flat in volume terms with Private Labels down 3.9%. • Private Label skincare products performed well with body care at 13%, hand care products at 25% and Private Label facial care holding a 31% volume share • Total demand for mens shaving products fell with Private label holding a 27% volume share. • Private Label liquid soap in France remains strong with over 50% share in volume terms

% Private Label share % Private Label share

Page 32: McBride plc Preliminary Results Presentation 3 September … · McBride plc Preliminary Results Presentation ... • A challenging year with a revenue decline in contract manufacturing

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The Private Label opportunity

Private Label Growth Drivers Private Label share

Western European markets

Source: Euromonitor International

% Value Share

0

2

4

6

8

10

12

14

16

18

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Home care Personal care

Demand for Private Label products

Consumers seek value for money

Major retailers require price-competitive products to improve value stream

Private Label manufacturers developing innovative products

Retailers continually looking to differentiate offer and build loyalty

Retail concentration & globalisation

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