Interim Management Statement November 2017 Disclaimer: Forward - - PowerPoint PPT Presentation

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Interim Management Statement November 2017 Disclaimer: Forward - - PowerPoint PPT Presentation

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Q3 2017 Interim Management Statement November 2017 Disclaimer: Forward Looking Statements This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Groups strategy, revenues,

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Q3 2017 Interim Management Statement

November 2017

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Disclaimer: Forward Looking Statements

This presentation/announcement may contain forward looking statements with projections regarding, among other things, the Group’s strategy, revenues, earnings, trading profit, trading margin, finance costs, tax rate, capital expenditure, dividends, cash flow, net debt or other financial measures, the impact of foreign exchange fluctuations, the impact of raw material fluctuations and other competitive pressures. These and other forward looking statements reflect management expectations based on currently available data. However, actual results will be influenced by, among other things, macro-economic conditions, food industry supply and demand issues, foreign exchange fluctuations, raw material and commodity fluctuations, the successful acquisition and integration of new businesses, the successful execution of business transformation programmes and other, as of today, unknown factors. Therefore actual results may differ materially from these projections. These forward looking statements speak only as of the date they were made and the Group undertakes no obligation to publicly update any forward looking statement, whether as a result of new information, future events or otherwise.

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Performance Overview

Brian Mehigan Chief Financial Officer

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  • Volume growth +4.2%
  • Taste & Nutrition +4.6%
  • Consumer Foods +2.5%
  • Pricing +2.0%
  • Group trading margin maintained
  • Underlying margin expansion offset by transaction currency headwind
  • Taste & Nutrition +20bps
  • Consumer Foods (70bps)
  • Strong cash flow delivery
  • Confident of delivering good revenue growth and earnings guidance

4.6% 2.5% 4.2%

Taste & Nutrition Consumer Foods Group

VOLUME GROWTH

Strong Underlying Performance

Q3 YTD 2017 HIGHLIGHTS

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REVIEW OF BUSINESS

  • Developed – overall stable while consumer trends driving major disruption and fragmentation
  • Developing – general improvement in market dynamics
  • Strong volume growth – continued growth ahead of our markets
  • Inflationary input costs – continuing to manage via partnership pricing model
  • Acquisitions – Ganeden, Dottley Spice & Kettle business of Tyson Foods announced since interim
  • Taste & Nutrition – Kerry business model providing platform for growth
  • Consumer Foods – good volume growth via innovation in snacking and convenience

Q3 YTD 2017 Business Overview

BUSINESS PERFORMANCE HIGHLIGHTS MARKETS

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Q3 YTD Revenue Growth Analysis

4.5% 3.6%

Volume

Q3 YTD 2016 4.2%

Volume

(0.3%)

Transaction currency

2.0%

Price

0.5%

Acquisition/ disposal

(1.9%)

Translation currency

REVIEW OF BUSINESS

Q3 YTD 2017

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Taste & Nutrition

YT YTD GROWTH Revenue +4.6%* Trading margin +20bps

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REVIEW OF BUSINESS

  • Volume growth ahead of our markets:
  • Good growth across global, regional & local customers
  • Strong growth in clean label, natural extracts & our nutritional portfolio
  • Foodservice & C-store – strong performance globally driven by Beverage systems & Meat systems
  • Price inflation of 2.0% reflecting our customer pricing pass-through model
  • Margin progression – underlying growth driven by operating leverage, product mix & efficiencies

3.4% 3.7% 10.9% 4.6%

AMERICAS EMEA APAC T&N

ASIA-PACIFIC EMEA AMERICAS

  • Developed – strong

performance in Meat and Beverage EUMs

  • Developing – Brazil delivering

good growth, Mexico and Central America softer

  • Good growth across all regional

developing markets

  • Strong growth in Beverage, Dairy and

Meat EUMs

  • Acquisition integration and footprint

expansion progressing well

  • Developed – Good growth through Authentic

Taste into Beverage, Snacks and Dairy EUMs

  • Developing – Russia performing well with

improved performance in Sub-Saharan Africa and MENAT

  • Foodservice - strong Q3 volumes from seasonal

products / LTOs

REVENUE GROWTH BY REGION*

Note: * volume growth

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Consumer Foods

YT YTD GROWTH Revenue +2.5%* Trading margin (70bps)

Note: * volume growth 8

REVIEW OF BUSINESS

FOOD-TO-GO

CONVENIENCE MEAL SOLUTIONS

EVERYDAY FRESH

  • Richmond’s recent relaunch delivering

solid performance

  • Spreads – traditional category decline,

good growth in softer butter technology

  • fferings
  • Fire & Smoke deli & sliced meats rollout

delivering good growth

  • Meat snacking – strong growth in

Fridge Raiders and Fire & Smoke

  • Food-to-go Solutions – Rollover and

Wall’s driving growth with new listings

  • Strong growth through out-of-home

channel

  • Chilled category – solid

performance via innovations with better-for-you, authentic meals

  • Frozen retail category remains

challenged

  • Volume growth led by good growth in Food-to-go and Convenience Meal Solutions
  • Inflationary environment with 1.9% average pricing across the period
  • Innovations performing well – e.g. Fire & Smoke meat snacking & new out-of-home meal solutions
  • Underlying margin improvement of 30bps more than offset by transaction currency headwind of 100bps
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Taste Master

Tianning

 

Hangman

 

Ben Alimentos

 

Ganeden

Dottley Spice

 

Kettle (Tyson)

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M&A Update

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M&A UPDATE

AUTHENTIC TASTE NUTRITION, WELLNESS & FUNCTIONALITY DEVELOPING MARKETS FOODSERVICE

Consideration of €420m

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Other Financial Matters

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Progressing as planned, new acquisitions to be incorporated Inflation continues – increases in dairy, protein, naturals and vanilla Continued translation and transaction headwinds Raw Materials Acquisition Integration FX Action plan progressing – restructuring unprofitable businesses, cost optimisation programme and reducing transaction currency exposure Brexit

FINANCIAL MATTERS

Net Debt of €1.3b Net Debt Will report in line with new structure from 2018 Capital Markets Day

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Kerry Business Model – Our Platform for Growth

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BUSINESS MODEL

Development & Applications Culinary & Insights Product Process Technologies

Taste & Nutrition Solutions

Authentic Taste Nutrition, Wellness & Functionality Retail & Foodservice

Kerry Foresight & Insight

Consumer, Customer, Sensory & Analytical, Market and Regulation

Foundational Technologies Integrated Technology Value Creation Channels & Customers

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OUTLOOK AND FUTURE PROSPECTS

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Future Prospects

  • Continued growth ahead of our markets
  • Unique Kerry business model for global, regional and local customers
  • Innovation and agility the key drivers of growth
  • Continued investment for growth
  • Continued enhancement in breadth and depth of our foundational

technologies

  • Localisation of footprint expansion in key growth markets
  • Strategic channel development
  • Continue to pursue strategic acquisition opportunities

We are confident of achieving good revenue growth and taking into account the 4% currency translation headwind, we expect to achieve adjusted EPS* growth of 4% to 6%

  • n a reported basis to a range of 336 - 343 cent per share (2016: 323.4 cent)

Note: * before brand related intangible asset amortisation and non-trading items (net of related tax)

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Q3 2017 Interim Management Statement

November 2017