october 2017 afternoon session - kerry groupweb)-afternoon.pdf · 2017. 10. 11. · afternoon...

October 2017

Afternoon Session

Chief Financial Officer

Consistent Delivery in a Volatile and Changing Environment

• Delivering growth AND margin expansion

• Developing business portfolio

• Leading in managing change

• Working through currency volatility

• Managing raw material volatility

• Increasing consumer fragmentation

Market Kerry 2012 2013 2014 2015 2016

AUD BRL GBP CAD MYR MXN RUB ZAR USD

2012 2016

Sources: Kerry estimates, ECB FX rates, FAO annual food price index © Kerry 2017 | 3

Progress vs Current Strategic Plan

© Kerry 2017 | 4

Adjusted EPS growth 10%+ +8.4% +9.8%constant currency

Volume growth 3% to 5%** +3.2% ✓

Margin expansion +50 bps*** +70 bps ✓

ROACE 12%+ 13.8% ✓

ROAE 15%+ 17.7% ✓

CFROI 12%+ 11.5% –

Realising Group Targets

* Assumes neutral currency and raw materials | ** Assumes market growth of 2% - 3% p.a. | *** Includes 100 bps benefit arising from the Kerryconnect project

Adjusted EPS, ROACE & ROAE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)

Consistent Delivery: Growth AND Return

* Before brand related intangible asset amortisation and non-trading items (net of related tax) © Kerry 2017 | 5

142.4 151.8163.9

192.1213.4

234.0257.9

278.9301.9

323.4

0

50

100

150

200

250

300

350

400

0%

2%

4%

6%

8%

10%

12%

14%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EPS* ROACE*

ROACE* % EPS* CENT

2018 - 2022

© Kerry 2017 | 7

• Authentic taste• Nutrition, Wellness

& Functionality• Foodservice• Developing markets

• Operating leverage• Portfolio evolution• KerryExcel

• Consistent returns• Strong cash conversion• Disciplined capital

allocation

Strategic Targets (2018 – 2022)On average across the 5 years

© Kerry 2017 | 8

Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 40 bps p.a.

Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a.

Group 3% to 5% p.a.** Group 30 bps p.a.** Assumes 2% above market growth

Adjusted EPS Growth* 10%+ p.a.

ROACE 12%+ Cash Conversion > 80%

Relative TSR – Outperforming Peers

*Assumes constant currency I TSR = Total Shareholder Return I Cash conversion is expressed as a percentage of adjusted earnings after tax

Adjusted EPS and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)

© Kerry 2017 | 9

• Authentic taste• Nutrition, Wellness

& Functionality• Foodservice• Developing markets

• Operating leverage• Portfolio evolution• KerryExcel

• Consistent returns• Strong cash conversion• Disciplined capital

allocation

Strategic Targets (2018 – 2022)On average across the 5 years

© Kerry 2017 | 10

Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 40 bps p.a.

Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a.

Group 3% to 5% p.a.** Group 30 bps p.a.

** Assumes 2% above market growth

Adjusted EPS Growth* 10%+ p.a.

ROACE 12%+ Cash Conversion > 80%

Relative TSR – Outperforming Peers

4% to 6% p.a.

2% to 3% p.a.

3% to 5% p.a.**

*Assumes constant currency I TSR = Total Shareholder Return I Cash conversion is expressed as a percentage of adjusted earnings after tax

Adjusted EPS and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)

Taste & Nutrition - Strategic Priorities for Growth

© Kerry 2017 | 11

Kerry Business Model – Delivering Above Market Growth Rates

© Kerry 2017 | 12* On average across the 5 years

© Kerry 2017 | 13

Consumer Foods: Strategic Priorities for GrowthOn average volume growth across the 5 years

© Kerry 2017 | 14

• Authentic taste• Nutrition, Wellness

& Functionality• Foodservice• Developing markets

• Operating leverage• Portfolio evolution• KerryExcel

• Consistent returns• Strong cash conversion• Disciplined capital

allocation

Strategic Targets (2018 – 2022)On average across the 5 years

© Kerry 2017 | 15

Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 40 bps p.a.

Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a.

Group 3% to 5% p.a.** Group 40 bps p.a.

** Assumes 2% above market growth

Adjusted EPS Growth* 10%+ p.a.

ROACE 12%+ Cash Conversion > 80%

Relative TSR – Outperforming Peers

40 bps p.a.

20 bps p.a.

30 bps p.a.

*Assumes constant currency I TSR = Total Shareholder Return I Cash conversion is expressed as a percentage of adjusted earnings after tax

Adjusted EPS and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)

Margin Drivers

© Kerry 2017 | 16

• Manufacturing excellence

• Supply chain excellence

• Commercial excellence

• Service excellence

• New foundation technologies

• New markets

• New channels / geographies

• Manage churn with agility

• Fragmentation response

• Localisation of footprint

• Increased R&D

• Kerryconnect/Business Services

• Leverage 1 Kerry platform

• Leverage routes to market

• Leverage customer centres

• Leverage footprint

Kerryconnect Programme – Built for Scale

* ICT cost expressed as a % of revenue © Kerry 2017 | 17

T&N EMEA

T&N Asia-Pacific

Foods (phase 1)

Corporate

2015 – 2017 acquisitions

New cloud platform

Foods (phase 2)

Cloud migration

T&N Latin America

T&N North America

Foods (phase 2)

© Kerry 2017 | 18

• Authentic taste• Nutrition, Wellness

& Functionality• Foodservice• Developing markets

• Operating leverage• Portfolio evolution• KerryExcel

• Consistent returns• Strong cash

conversion• Disciplined capital

allocation

Cash Conversion Target > 80% On average across the 5 years

* Expressed as a percentage of adjusted earnings after tax © Kerry 2017 | 19

© Kerry 2017 | 20

3%-5% of revenue

Continuing to lead industry consolidation

Double digit growth in dividends

Capital Allocation Decision Framework

Reinvestment Returning cash to shareholders

Grow in line with revenue

Disciplined M&A

© Kerry 2017 | 21

Consumer, Customer, Sensory & Analytical, Market and Regulation

© Kerry 2017 | 22

Other Matters

Other Matters

© Kerry 2017 | 23

Brexit – Sterling Mitigation Plans Well Progressed

© Kerry 2017 | 24

Structure Change – Taste & Nutrition

© Kerry 2017 | 25

Strategic Targets (2018 – 2022)On average across the 5 years

© Kerry 2017 | 26

Taste & Nutrition 4% to 6% p.a. Taste & Nutrition 40 bps p.a.

Consumer Foods 2% to 3% p.a. Consumer Foods 20 bps p.a.

Group 3% to 5% p.a.** Group 30 bps p.a.** Assumes 2% above market growth

Adjusted EPS Growth* 10%+ p.a.

ROACE 12%+ Cash Conversion > 80%

Relative TSR – Outperforming Peers

*Assumes constant currency I TSR = Total Shareholder Return I Cash conversion is expressed as a percentage of adjusted earnings after tax

Adjusted EPS and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)

© Kerry 2017 | 27

Leading to Better

© Kerry 2017 | 28

October 2017