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8/14/2019 Achange - Presentation

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Thursday, 21 May 2009


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Rob CameronCameron Partners



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Surviving and Thriving in a RecessionPresentation to the Melbourne Junior Chamber of Commerce



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OutlineA tectonic shift has occurred in the economic

environment

We have now entered a recession and the recovery willtake time

It is possible to survive and thrive in a recession

Businesses will fail, survive and/or thrive depending on

their exposure to the recession and how they respond tothe changed environment

There is a real opportunity to leap frog competitors in a

recession



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Source: Bloomberg

A tectonic shift has occurred in

the global economic

environment



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Source: Bloomberg


the global economic

environment



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This will continue for the next several quarters:

Credit terms and conditions continue to tighten

Inter-bank lending iced up, thawed but it still at historically high premia

Credit rating agencies are tightening and more rigourously apply ratings

criteria

Banks will continue to monitor and actively reduce exposure tocompanies and their shareholders

Acceptable levels of leverage for any given level of cash flow/asset base

has reduced significantly

it continues to profoundly constrict global credit availability and cost


the global economic

environment



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It will impact on all asset prices and yields:Risk premiums are being radically revised

Assumptions about the capital appreciation component of total

return are being revised

Required cash yields will rise

Asset prices are adjusting to reflect fundamentals but nobody

knows what they are yet

it continues to profoundly constrict global credit availability and cost


the global economic

environment



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Source: Bloomberg


the global economic

environment



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We are now well into the

recession phase that follows a

financial crisis

Recession is the inevitable outcome of the adjustments that follow:

Consumer and business deleveraging

Realignment of asset prices and returns

Moderation of global imbalances

Impacts on wealth of property and sharemarket declines



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financial crisis

The length and depth of recession following crises have varied

significantly

Catastrophic recessions occur only when there is a prolongedblockage in the provision of capital to business and a long delay in

restoring confidence among consumers, companies, investors and

lenders.

The differences have been determined by how governments have

responded the quality of financial sector clean up and stimulus

packages.



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financial crisis

But we know that recovery will take time

On average, countries take two years to emerge from recessions that

following financial crises.On average, GDP and company earnings turning points lag

sharemarket turning points by 5-6 months and 10-12 months

respectively but there has been significant variation in the length of

these lags.

The IMF has substantially revised its view of the depth of the recession after only six months.



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financial crisis

IMFs forecast in Oct 08

IMFs forecast in Apr 09

Developing Nations

IMFs forecast in Oct 08

IMFs forecast in Apr 09

Developed Nations



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financial crisis

We should expect to be living with recession for a while

It is profoundly impacting the business environment creating:

Fundamental uncertainties and downside risks in the period ahead.

Unprecedented opportunities that could drive competitive advantage

for years ahead.



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The first step is to understand yourexposures in a recession

There are three steps to

surviving and thriving in a

recession



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The second step is to identify yourchoices for responding to

the new environment



recession



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The third step is to determine yourpriorities for action and implement

them



recession



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Businesses will fail,

survive and thrive

1. Road kill

Recession sensitive

Weak strategic position

Weak financial position

Failure to respond quickly and aggressively

2. Targets

Have a better recession exposure than road kill

Response is not sufficient to enable them to resist

strong acquirors

These businesses will fail

These businesses will beacquired and disappear



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survive and thrive

3. Survivors

Strong strategic and/or financial position.

Response ensures adequate financial

flexibility. Choose to hunker down and not

proactively pursue new opportunities.

4. Thrivers

Strong strategic and/or financial position

Response ensures adequate financialflexibility.

Choose to take aggressive marketinitiatives and make game changingacquisitions.

These businesses will survive the recession in

a strong financial position but lose theopportunity to achieve industry leadership and

risk slipping back in the pack.

These companies will exploit the outstanding

opportunities that exist in recessions,

strengthen their strategic position and may

become industry leaders.



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survive and thrive

but the opportunity to leap frog competitors is real

76%

24% 24% more firms moved from the back of

the pack to the front in the 2001 downturn

compared with the subsequent period of

economic calm



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survive and thrive

but the opportunity to leap frog competitors is real

20%

80% 20% of leadership companies fell to the

bottom quartile



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survive and thrive

Recession provides the opportunityto make bargain acquisitions to build

up the core even when it means

taking risks.



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Scott DelZoppoSustainability Manager Fosters Group



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Sustainability at Fosters



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Our approach to sustainability atFosters acknowledges the direct linkbetween effective management of ourenvironmental and social impacts and

our business success.



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Fosters Sustainability Strategy

Know ourbusiness

Understand ourimpacts

Establishpriorities

Communicateand leverage

Monitorperceptionsandperformance Growth

Efficiency

Capability

Engage ourStakeholders



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Governance

HIGHLIGHTS

Elevation of sustainability oversight

to Fosters Leadership TeamIncorporation of sustainability risksinto Enterprise Risk ManagementRegister

Sustainability reporting evolved tofocus more sharply on sustainabilitypriorities

Better business focus of allsustainability activities

Sustainability specialist roles addedto operating business units in keyareas



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2008 Sustainability Report



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Responsible consumption

HIGHLIGHTS

Voluntary withdrawal from manufactureand marketing of pre-mix drinks withenergy and higher ABV

Continued investment in lower alcohol,calorie and carbohydrate productinnovation

Improved Enjoy Responsiblytraining atemployee induction

Contributed more than $2.1m toresponsible consumption programs, suchas DrinkWise Australia



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HIGHLIGHTS

Released global wine data for first time Continued strong water performance at

Australian breweries

US wineries introduce solar energy andgeothermal

Improved biodiversity outcomesthroughout wine viticulture

Introduced Fosters Carbon ReductionProgram

Energy, water & climate change



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Product stewardship

HIGHLIGHTS

Established the Global QualityLeadership Team

23% reduction in productcomplaints globally

Released Cascade Green, a 100%carbon offset beer

Released Wolf Blass Green Label

wine in PET, reducing ghg by 29% vglass equivalent

Developed and rolled out GlobalFood Safety and Quality Manual



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Leadership & advocacy

HIGHLIGHTS

Achieved Gold Rating on CorporateResponsibility Index

Leadership, membership andsupport of industry and peak bodies

Sponsored major research projecton consumer attitudes to climatechange

Development of ProcurementSustainability Program

Launched Fosters SustainableLiving Guide for all employees



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Heather Le RoyVictorian General Manager The Smith Family



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Questions



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Nothing but Nets



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