Kerry Group will be: – the world leader in food ingredients and flavours serving
the food and beverage industry, and. – a leading supplier of added value brands
...
INTRODUCING KERRY REVENUE 2012
TRADING PROFIT 2012
› Kerry is the global leader in
Consumer Foods 29%
food ingredients & flavours
› UK/ROI leader in branded
Ingredients & Flavours 71%
Consumer Foods 21%
Ingredients & Flavours 79%
and customer branded Ingredients & Flavours Consumer Foods
chilled foods
€4,225m €1,712m
Ingredients & Flavours Consumer Foods
KERRY WORLDWIDE
› Revenue €5.8bn
SALES BY REGION 2012
EMEA 57%
›
Operations in 24 countries
›
Sales to 140 countries
›
140 manufacturing sites
›
24,000 employees
€508m €133m
Asia-Pacific 12%
› Enterprise Value €9bn*
› Market Capitalisation €8bn*
Americas 31%
Ingredients & Flavours Consumer Foods
Note: * As at 31-03-2013
MISSION STATEMENT
Kerry Group will be: – the world leader in food ingredients and flavours serving the food and beverage industry, and – a leading supplier of added value brands and customer branded foods to the Irish and UK markets Through the skills and wholehearted commitment of our employees, we will be leaders in our selected markets – excelling in product quality, technical and marketing creativity and service to our customers We are committed to the highest standards of business and ethical behaviour, to fulfilling our responsibilities to the communities which we serve and to the creation of long-term value for all stakeholders on a socially and environmentally sustainable basis
BUSINESS DEVELOPMENT ›
1972
Foundation as dairy processing company in Listowel, Ireland Dairy protein technology – US market focus
›
1974
Formation of Kerry Co-operative Creameries Ltd
›
1972 - 80
Organic growth Development of dairy business
›
1980
Strategy for the ’80’s Diversification Growth through acquisition – Ingredients – US, Europe – Foods
– Ireland, UK
›
1986
Stock market flotation of Kerry Group plc Significant acquisitions followed
›
Ingredients & Flavours
Progressive development of technology leadership Savoury & Dairy, Cereal & Sweet, Beverage Systems
›
Consumer Foods
Establishment of brand leadership
Selected private label growth categories
KERRY’S MAJOR ACQUISITIONS ›
1988
Beatreme Food Ingredients
US$130m
›
1994
DCA
US$400m
›
1998
Dalgety Food Ingredients
Stg£243m
›
2001
Golden Vale
›
2004
Quest Food Ingredients
US$440m
›
2005
Noon
Stg£124m
›
2009
Breeo Foods
›
2011
Cargill’s flavour business
€391m
€140m
US$230m
NOTE: KERRY GROUP HAS ACQUIRED APPROXIMATELY 100 SMALL TO MID-SIZED BUSINESSES
ACQUISITIONS 1987-2012 19
Food companies including Mattessons, Wall’s, Golden Vale, Noon Products, Breeo Foods, Headland Foods
89
Food ingredients, flavour, foodservice companies Kerry Jackson Beatreme Food Ingredients Dairyland Products Malcolm Foods Research Foods SPI Foods Inc. Kerry de Mexico DCA, DCA Solutech Ciprial S.A. SDF Foods Dalgety Food Ingredients Star & Arty Ingredientes Burns Philp Ingredients Div. Três Corações Tukania Gmbh Shade Foods (SFI) York Dragee Armour Food Ingredients Alferi Laboratories Inc. Corol S.A. Creative Seasonings Iowa Soy San Giorgio Flavours Tingles Ltd Nutrir S.A. Geneva Flavours Hickory Flavours Voyager Foods Siber Aromont S.A.
Stearns & Lehman Ringger Foods Roskam IDSA EBI Rector Foods IFI St Louis Flavors Metarom SunPure Pacific Seasonings Guernsey Bel Crystals International Da Vinci Gourmet Oregon Chai Extreme Foods Quest Food Ingredients Cremo Ingredients Flavurence Laboratorios Krauss Fructamine Manheimer Ernsts Food Ingredients Lanli Food Industry Company Custom Industries Nuvex Ingredients Titusfield Ltd Sugar & Spice Shanghai Vega Fragrance & Flavour Presco Food Seasonings
Can Pan Candy Fountainhead Manufacturing QA Products Inc X-Café LLC PT Armita Prima S.A. Dera Holding NV IPM Foods NutraCea’s cereal ingredients Tea Wave Agilex Flavors GM’s Australian lifestyle bakery KMC Foods Newmarket Creameries SpringThyme Oils Caffe D’Amore CF Chefs EBI Cremica General Cereals S.A. Cargill’s flavour business SuCrest GmbH FlavourCraft Lactose India IJC Fillings Millennium Foods Griffith do Brasil Big Train Angsana Food Industries Food Spectrum Group Pty
REVENUE AND ADJUSTED* EPS 1986-2012 REVENUE 1986-2012 (€M) 7000
5,848
6000 5000 3,755 3,693
4000 3000
2,200
4,960 4,646 4,788 4,791 4,521
3,003
1,523 1,566 1,707
2000 1000
2,456 2,622
4,129
4,430
5,302
337
370
504
710
742
959 1,050 1,117 1,121
0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ADJUSTED* EPS 1986-2012 (cent) 250.0
234.0 213.4 192.1
200.0
150.0
100.0
50.0 7.6
8.4
38.7 28.9 35.8 21.1 23.0 25.9 12.7 16.3 17.6
46.7
57.4
68.0
79.2
87.9
101.8
112.1
122.3
130.8 132.8
142.4
151.8
163.9
0.0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: * before brand related intangible asset amortisation and non-trading items. From 2011, with 2004 to 2010 re-presented, computer software is treated as a cost in calculating adjusted EPS
OUR BUSINESS STRUCTURE
Ingredients & Flavours
Consumer Foods
Agribusiness
Americas Region
Ireland
Ireland
EMEA Region
The UK
Asia-Pacific Region
KERRY GROUP – WORLDWIDE LOCATIONS
Head Offices Manufacturing Plants Sales Offices
EXTENSIVE MANUFACTURING (#140) AND SALES FOOTPRINT SUPPORTS SALES TO 140 COUNTRIES
* As at 31/12/2012
$50BN INGREDIENTS AND FLAVOURS MARKET REVENUE $BN (1)
›
Kerry is the largest player 6
in the ingredients and
flavours market ›
Highly fragmented, but growing market at 2% to
5
4
3
3% p.a. 2
›
Benefits to being a scale 1
player
(1) Source: most recently published full year results for ingredients and flavour divisions only, Kerry estimates.
DSM (Food Specialties)
Novozymes
Corbion
Glanbia Nutritionals
Chr Hansen
Sensient
Symrise
IFF
Firmenich
Tate & Lyle (SFI)
McCormick
ABF
Givaudan
Consolidation potential
DuPont
›
Kerry
0
KERRY INGREDIENTS & FLAVOURS: OUR CAPABILITIES TASTE & NUTRITION SYSTEMS LIPIDS & TEXTURANT SYSTEMS
DAIRY & SAVOURY
› › › › › › › › › ›
› ›
Dairy Flavour Solutions Customised Dairy Ingredients Cultured Dairy Ingredients Culinary Sauces Culinary Ingredients Snacks Seasonings Savoury Flavour Solutions Meat Coating Systems Functional Meat Solutions Meat Seasonings
› ›
Creaming Lipid Systems Texture & Stabilizer Systems Whipping & Emulsification Systems Emulsifiers
CEREAL & SWEET
› › › › › › › ›
Cereal & Sweet Flavour Solutions Cereal Agglomerates Expanded Cereal Shapes Baked & Dough Sweet Products Chocolate & Compounds Confections & Coated Sweets Sweet Particulates Wet Sweet Systems
BEVERAGE
› › › ›
› ›
Beverage Flavour Solutions Beverage Sauces & Syrups Beverage Systems Liquid Smoothies & Juices Tea & Coffee Concentrates Beverage Ingredients & Extracts
FUNCTIONAL INGREDIENTS & ACTIVES › › › ›
Enzymes Fermented Ingredients Pharma Excipients Media Ingredients
› › › ›
Specialised Functional Proteins Proteins Hydrolysates Protein Fractions Prebiotics, Probiotics & Metabolites
NUTRITION
› › › ›
Nutritional Beverages Infant Nutritional Bases Complete Infant Formula Complete Infant Cereal
KERRY INGREDIENTS & FLAVOURS: OUR APPROACH TECHNOLOGY & PRODUCT GROUPS DAIRY & SAVOURY
CEREAL & SWEET
BEVERAGE
NUTRITION
LIPIDS & TEXTURANT SYSTEMS
FUNCTIONAL INGREDIENTS & ACTIVES
PROCESSING CAPABILITY
BRINGING TOGETHER KERRY’S GLOBAL CAPABILITIES TO DEVELOP
FLAVOUR
AND DELIVER CONSUMER-
Encapsulation/Compoundin g Extraction Pyrolysis
FORMING & SHAPING
PREFERRED SOLUTIONS FOR OUR CUSTOMERS
CORE PROCESSES
Cold Form Extrusion Direct Expansion Extrusion Forming & Moulding
FUNCTIONAL Fermentation Evaporation & Centrifugation Ultrafiltration
Spray Drying Extrusion Baking etc…
MARKET & CONSUMER INSIGHTS
CULINARY EXPERTISE
SENSORY & ANALYTICAL SCIENCE
END USE MARKET APPLICATIONS
BUSINESS DESCRIPTION KERRY INGREDIENTS & FLAVOURS
REGION
› Kerry Ingredients & Flavours develops, manufactures and delivers innovative taste systems, functional and nutritional ingredients and integrated solutions for the food, beverage and pharmaceutical markets
Americas 44% EMEA 39%
› The largest player in the ingredients and flavours market Asia-Pacific 17%
› 2012 revenues were €4.2bn › The customer derives maximum synergies through utilising Kerry’s broad range of food and beverage technologies, applications and culinary expertise and processing capabilities › No. 1 position in Savoury & Dairy and Cereal & Sweet and key leading positions in Beverage, Pharma and Functional Ingredients
TECHNOLOGY
END USE MARKET Beverage 22%
Savoury & Dairy Systems & Flavours 44%
Meats 18%
Cereal & Sweet Systems & Flavours 20%
Dairy 9%
Bakery 13%
Soups, Sauces & Dressings 7% Beverage Systems & Flavours 17% Pharma/Functional Ingredients 9% Regional Ingredients 10%
Cereal & Bars 6% Prepared Meals & Side Dishes 6% Savoury Snacks 5%
Ice-cream & Desserts 4% Confectionery 4% Pharma 4% Appetisers 2%
KERRY’S LEADING TASTE POSITION
FOOD & BEVERAGE FOCUSED
NO.1 GLOBALLY FOR TASTE & INGREDIENT SOLUTIONS
TOP 5 PLAYER IN GLOBAL FLAVOURS
BREADTH OF APPLICATIONS & SENSORY EXPERTISE
GLOBAL TECHNOLOGY APPLICATION AND CULINARY LEADERSHIP – DRIVE GLOBAL ALIGNMENT ›
› ›
›
R&D EXPENDITURE
Best-in-class global development and applications model
Layer and leverage development and process capability Raw material category technology management
Ensure regional development and management of customised system technologies while maintaining global alignment
›
Develop flavours and technical ingredients platforms globally with regional product management and application
›
Significant investment in technology knowhow and applications via acquisitions
›
Execute through Kerry Global Technology & Innovation Centres supported by Regional Development & Application Centres
Note: * 2008 to 2010 re-presented in line with management reporting changes
220 200 180 160 140 120 100 80 60 40 20 0
4.7%
4.9%
4.6%
4.5%
4.4% 0.0% -20.0% -40.0%
147.5
156.4
147.8
167.1
185.9 -60.0% -80.0% -100.0%
2008
2009
2010
R&D Expenditure
2011
2012
% of KIF Revenue*
GLOBAL TECHNOLOGY & INNOVATION CENTRES
Dublin
San Juan del Rio
Beloit
Johor Bahru
Shanghai
KERRY INGREDIENTS & FLAVOURS BUSINESS GROWTH STRATEGIES
›
Continue to maximise organic growth opportunity
›
Technology layering and cross-selling opportunities
› ›
Continue to expand geographic market base Maximise opportunities through global customer alliances
›
Increase market focused innovation
›
Continuous efficiency gains to drive margin growth
›
Core to this strategy is the successful execution of 1 Kerry
DRIVE GLOBAL ALIGNMENT › Global Customer & Market Management › Global Technology & Application Leadership › Global Process Manufacturing & Supply Chain Leadership
› Leading-Edge Quality Supplier
ACCELERATE GROWTH IN DEVELOPING MARKETS › Asia Pacific › Latin America › Europe, Middle East, Africa
LEVERAGE CAPABILITIES & GROW EXPERTISE › Effective & Efficient Functional Expertise › Best-in-Class Talent Management
KERRY’S NUTRITION AND HEALTH POSITIONING Leading Portfolio of Nutritional Ingredients & Actives, Nutrition Enabling Technologies & Nutritional Delivery Systems
Undisputed Food Heritage
In-depth Understanding of Biological Sciences
World Class Applications Expertise Global Footprint
FORMULATION & APPLICATIONS EXPERTISE NUTRITIONAL INGREDIENTS & ACTIVES
NUTRITION ENABLING TECHNOLOGIES
NUTRITION DELIVERY SYSTEMS
Ingredients with a direct nutritional impact
Ingredients that address adverse impact on taste, texture etc. caused by the addition or removal of a nutrition component
Process or integrated solutions that delivers nutritional components to the customer
›
Milk Protein Isolates
›
Milk Protein
›
Concentrates
›
Mineral-enriched Proteins
›
Beta Casein Fractions
›
Comfort Proteins
›
Hypoallergenic Protein Hydrolysates
›
No Boil Over (microwave)
›
Gum Acacia
›
Fermented Ingredients
›
Fermented Celery (natural nitrate source)
›
Enzymes
›
Never-fry Coating Systems
›
Stabilised Grain Base
›
›
Modulation Technology › fmt® – salt › fmt® – sugar › Micronized salt for salt reduction Taste systems › Texture Systems › EMC and Flavours
›
Dry Nutritional Bases
›
RTD Beverages
›
Yoghurt
›
Creamers
›
Formed Foods › Oatmeal › Confections › Snacks
›
Granola
›
Clusters
›
Soy Crisps
PROGRESSING OUR DEVELOPING MARKETS STRATEGY KERRY GROUP REVENUE IN DEVELOPING MARKETS €1 BILLION 23% OF INGREDIENTS & FLAVOURS REVENUE
ASIA-PACIFIC CHINA › Investment in Shanghai, Songjiang and Hangzhou INDIA › Commissioning new manufacturing facilities SEA
› Expanding manufacturing footprint
LATAM › Deployment of all Group technologies to region › Investment in capabilities and infrastructure › Strong customer engagement through San Juan del Rio Technology & Innovation Centre
EMEA SOUTH AFRICA › Strong footprint established. Acquisition of FlavourCraft, Orley Foods RUSSIA AND EASTERN EUROPE › Extending commercial structure MIDDLE EAST › Investment in Regional Development and Applications Centre
A LEADING PLAYER IN GB/IRELAND FOOD & BEVERAGE FOCUSED ON CHILLED FOODS MARKETS Premier
Kerry Foods
Vion Kraft
Bakkavor
Boparan
Greencore
Coke Nestle
Tulip
Pepsico ABF
Samworth
Bakkavor Kerry Foods
Cranswick
Arla Morrisons Produce
Vion
Dairy Crest Muller
Muller
Tulip Mars
Danone
Unilever
Findus
Unilever
Princes
Dairy Crest
United Biscuits
CONSUMER FOODS COMPETES IN CHILLED FOODS MARKETS
Greencore
Arla
Heinz Moy Park
Boparan
Cranswick Samworth Gerber Danone Warburtons Birds Eye McCain
FOOD & NON ALCOHOLIC BEVERAGE TURNOVER GB/IRELAND ESTIMATED MARKET SIZE €115BN
Kellogg's
Source: OC&C, Nielsen, Kantar, company reports, Kerry estimates
Kraft IDB Nestle
GB/Ireland turnover in: Chilled Ready Meals, Ready to Cook, Cooked Meats, Sausage, Rashers, Pastry, Yellow Fats, Cheese, Yoghurts, Desserts, Pizza, Pasta, Sauce, Soup, Sandwiches.
BRAND PRIORITIES CORPORATE PRIORITIES
LOCAL BRANDS
OTHERS
DIVERSIFIED PRODUCT PORTFOLIO AND STRONG MARKET POSITION CONSUMER FOODS – ADDED VALUE CHILLED CATEGORIES Segment
Markets
MEAT & SAVOURY PROVISIONS €6.8bn
GB Cooked Meats GB Pastry GB Rasher GB Sausage Ireland
DAIRY PRODUCTS €5.0bn
GB Cheese GB Yellow Fats Ireland
MEAL SOLUTIONS €3.6bn
GB Chilled Ready Meals GB Ready to Cook GB Frozen Ready Meals Ireland
Key Products
Market Position ›
#1&2 breakfast product brands in Ireland
›
#1&2 cooked meat brands in Ireland
›
#1&2 sausage brands in GB
›
#2 (fastest growing) meat snacking brand in GB
›
#2 customer brand pastry in GB
›
Largest branded dairy supplier in Ireland
›
#1 spreads brand in Ireland
›
#1 cheese brand in Ireland
›
#1 kids cheese snack in GB
›
#1 customer brand dairy spreads and RTE cheese in GB
›
#1 GB customer brand supplier of
›
– chilled ready meals
›
– frozen ready meals
›
– ready to cook
KERRY FOODS STRATEGY ›
Increased focus on core branded and customer branded offerings › Differentiated portfolio of products › Demonstrating brand values and quality of our products
›
Leverage Kerry technological advantage › Branded meat and dairy snacking, and convenience products › Increased innovation in core product areas
›
Extend European market development › Cheestrings growth in France, Germany, The Netherlands and Poland
›
Optimise customer/channel alignment › Leveraging promotions’ management expertise › Connecting with today’s shoppers
1 KERRY BUSINESS TRANSFORMATION
BUSINESS STRATEGIES
OPERATING MODELS
KERRYCONNECT
Kerry Ingredients & Flavours ‘Go-to-market Strategy’
Driving market leadership and global alignment
‘Enabling better business’
Kerry Foods ‘Go-to-market Strategy’
Optimising scale and efficiency benefits
Standardised ways of working
Common data Building talent for a global organisation Integrated ICT system
ACQUISITION AND DEVELOPMENT STRATEGY KERRY INGREDIENTS & FLAVOURS
KERRY FOODS
TASTE
DEVELOPING MARKETS
KERRY INGREDIENTS & FLAVOURS Savoury & Dairy Cereal & Sweet Beverage Pharma | Functional
NUTRITION
EU MARKETS SELECTED NICHES
Meat & Savoury Dairy Products Meal Solutions
NEW CHILLED CATEGORIES
OUR STRATEGY FOR GROWTH
KERRY BUSINESS MODEL
1 KERRY
INGREDIENTS & FLAVOURS
KERRY FOODS
SUSTAINABILITY
Kerry Business Model delivering for the Group
1 Kerry Business Transformation – platform for growth Investing for the future
Kerry’s leading taste positioning Delivering across nutritional space Global technology and innovation leadership Developing Markets strategic growth plan
Investment in brand leadership and technologies
Securing sustainable growth 1 Kerry Sustainability Programme
‘SECURING SUSTAINABLE GROWTH’ EMBEDDING SUSTAINABILITY IN OUR BUSINESS Kerry’s sustainability plan represents a journey of continuous improvement
– an ongoing process and strategy to secure sustainable growth It offers Kerry Group a framework through which to ensure the longterm development of the organisation by building competitiveness, while at the same time enhancing the quality of life and protecting our natural resources. ›
SOCIAL Bearable
Integrated in 1 Kerry strategies and operational activities
Equitable
Sustainable ENVIRONMENT
›
Directed and governed by our Kerry Sustainability Council
›
Groupwide time-bound, quantified targets established to measure progress
ENVIRONMENT SUSTAINABILITY
MARKET SUSTAINABILITY
WORKPLACE SUSTAINABILITY
SECURING SUSTAINABLE GROWTH
ECONOMIC Viable
COMMUNITY SUSTAINABILITY
LONG TERM TARGETS (5 YEARS 2013 – 2017) GROWTH
›
Adjusted EPS* Growth
+10% p.a.
Achieved by: ›
Revenue Growth (LFL Volume)
Kerry Ingredients & Flavours
4% to 6% p.a.
(including emerging markets 10% p.a.)
›
Margin expansion
Consumer Foods
2% to 3% p.a.
Group
3% to 5% p.a.**
Kerry Ingredients & Flavours
50 bps p.a.
Consumer Foods
20 bps p.a.
Group 30 bps p.a. (+ an additional 100 bps at end of Kerryconnect project) ›
Financial and Tax Leverage
Structures aligned with 1 Kerry model
RETURN ›
ROACE* 12%+
CFROI 12%+
* Before brand related intangible asset amortisation and non-trading items (net of tax)
ROAE* 15%+
** Assumes market growth rate of 2% to 3% p.a. and neutral currency and raw materials
