Interim results presentation Six months to 31 December 2016 Rik De Vos & Chris Smith 22 February 2017
Agenda 1. Headlines 2. Repair, Prepare, Grow timeline 3. Market update 4. Commercial results 5. Achievements 6. Financial update 7. Prepare – strategy update 8. Outlook Appendices Financial schedules McBride plc 1 McBride Interim Results Presentation February 2017
Prepare phase – on track Quality of earnings continuing to improve Strategic Financial • Growth strategy and associated capital • Adjusted operating profjt £22.9 million, expenditure plans mostly complete up 30.1% (9.6% at constant currency), margin at 6.4% (2015: 5.1%) • Board considering expressions of interest to acquire the Group’s Aerosols activities • Underlying revenues down 4.5% (at constant currency), “customer choices” Tactical an additional 2.5% • Key feedstock prices have moved higher • ROCE further developing to 28.0%, in recent months and the outlook is for now within our strategic target range further increases • Interim payment to shareholders up 16.7% • Retail dynamics remain mixed in to 1.4 pence (2015: 1.2p) core markets McBride plc 2 McBride Interim Results Presentation February 2017
• Embed culture shift towards Manufacturing and Operational Excellence • Clarify and implement PCA improvements • Defjne and launch the supporting asset development programme • Upgrade organisational skills and capabilities, emphasis on commercial acumen • Key projects delivered or in fjnal stage: • customer and SKU simplifjcation • overhead alignment programmes • Defjne and launch the fjve-year growth plan • Monitor tactical and/or strategic M&A opportunities • underperforming businesses identifjed, progress already in Asia • Deliver the Discount and Retail Channel growth • Identify and develop the Contract Manufacturing business Reminder – Repair, Prepare, Grow Time horizon by calendar year 2016 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Repair Prepare Grow McBride plc 3 McBride Interim Results Presentation February 2017
Market update • European FMCG market broadly fmat • Brands winning share over Private Label (“PL”) • PL in Personal Care (“PC”) losing share • Limited assortment discounters (“LADs”), varying growth • EDLP reducing promotional activity, fading defmation • Contract manufacturing requirements with brand owners increasing • Asia growing in contract manufacturing, accelerating SE Asian PL presence McBride plc 4 McBride Interim Results Presentation February 2017
H1 commercial results Revenue Volume (23.9) Price (3.2) (9.8) (13.8) (0.3) (3.2) 43.6 387.7 £m 344.1 360.6 H1 FY16 Foreign exchange H1 FY16 Net wins/losses “Customer choices” Demand Price HY FY17 (reported) (constant currency) (reported) Net wins/losses Market demand • Discontinued low margin business • Favourable in UK, Spain and Germany • Prior years’ service/reliability legacies • Brand and channel pressure evident in France, Italy and Poland • End-of-life co-man agreements, churn efgect Pricing Choices • Reduced defmationary impact in most geographies • Fully delivered as planned • France and Italy; intense retail competition • Additional PCA Repair phase activity – pricing pressures McBride plc 5 McBride Interim Results Presentation February 2017
Achievements Product quality upgrade has resulted into several quality awards Allowing us to renew and/or gain several new contracts Driving substantial improvement in supply service • #1 retailer in Germany • Re-negotiating exited contracts Position Supplier Service Level YTD 1 Robert Mcbride 100.0% 98.4% • Access allowed to additional opportunities 2 Unilever 99.7% 98.1% • Now supplying top 50 European retailers 3 SC Johnson 98.7% 96.4% 4 Procter & Gamble 96.6% 96.8% 5 Nestle Purina 96.6% 96.7% 6 Mars Petcare 95.7% 98.1% 7 Northwood & Wepa 95.3% 95.8% 8 Bob Martin 92.3% 98.4% 9 RB 91.4% 95.1% 10 SCA 90.6% 98.0% We have substantially 11 C & D Foods 89.2% 91.4% enhanced our 12 Kimberly-Clark 85.3% 95.9% innovation speed McBride plc 6 McBride Interim Results Presentation February 2017
Financial headlines • Adjusted operating profjt £22.9 million, • Adjusted diluted EPS up 42.3% to 7.4 pence up by 9.6% at constant currency (2015: 5.2p) • Positive progress on margin, adjusted • Strong cash generation continues with operating margin now 6.4% (2015: 5.1%) underlying net cash infmow of £14.8 million, net debt cover ratio down to 1.4x from 1.7x • Underlying Group revenues 4.5% lower at year end 2016 at constant currency, “customer choices” project accounting for a further 2.5% • Positive progress on ROCE at 28.0% • Adjusted profjt before taxation up 43.4% • Interim payment to shareholders of 1.4 pence to £19.5 million (2015: £13.6m) (2015: 1.2p), up 16.7% on last half year McBride plc 7 McBride Interim Results Presentation February 2017
Income statement Revenue Adjusted EBITA Adjusted EBITA by segment Labour cost % of revenue and £m £m £m overhead % of gross profjt 387.7 383.6 376.8 361.1 360.6 22.9 20.9 0.9 20.5 88.3% 1.6 1.5 18.0 13.7 85.2% 23.8 23.7 26.5 19.7% 82.7% 19.0% 18.5% -4.5 -4.7 -4.5 2015/16 H1 2015/16 H2 2016/17 H2 2014/15 2015/16 2016/17 2014/15 2015/16 2016/17 FY 2014/15 FY 2015/16 H1 2016/17 HH PCA Corporate H1 H2 H1 H2 Labour cost % of revenue Constant currency Constant currency Constant currency Overhead % of gross profit • Impact of “customer choices” • Cost reduction • Price/volume drivers • Segment profjts • Raw materials • EPS development McBride plc 8 McBride Interim Results Presentation February 2017
Balance sheet and cash fmow ROCE Cash fmow from Net debt £m/ % operations £m debt cover x 92.4 90.9 86.3 82.9 1.9 32.9 1.7 28.0% 1.7 23.4% 24.9 22.7 18.8% 1.4 Jun 15 Dec 15 Jun 16 Dec 16 FY 2014/15 FY 2015/16 H1 2016/17 H1 2014/15 H1 2015/16 H1 2016/17 Net debt Debt cover • Low level exceptional items • FX impact on headline borrowings • Stable working capital • Debt cover and covenants McBride plc 9 McBride Interim Results Presentation February 2017
Other fjnancials Customer service levels Capex Group pension liability % £m £m 43.6 99.2% 98.8% 32.9 7.4 7.2 0.78 0.78 0.78 97.7% 32.3 5.6 9 7.1% 0.77 31.5 96.6% 31.4 0.74 2015/16 2015/16 2016/17 2014/15 2015/16 2016/17 2014/15 2015/16 2016/17 H1 H2 H1 H2 H1 H2 Funding ratio • Capital expenditure building • Interest costs – Euro impact • Payments to shareholders increasing • Tax rate stable McBride plc 10 McBride Interim Results Presentation February 2017
Prepare phase – update Prepare McBride will invest into its manufacturing assets and optimise its warehousing and distribution network. We will align the new organisational set-up aiming to institutionalise our new way of working with our people. We will provide a clear way forward for identifjed sub-optimal customer/categories and products. Sales strategy/ Asset proposition confjguration Organisational Mergers and development acquisitions McBride plc 11 McBride Interim Results Presentation February 2017
• Household ambition defjned, prioritised categories, markets and channels • Co-manufacturing strategy and targets • Cost to serve and proposition model • PCA market strategy concluded Prepare phase – update Prepare McBride will invest into its manufacturing assets and optimise its warehousing and distribution network. We will align the new organisational set-up aiming to institutionalise our new way of working with our people. We will provide a clear way forward for identifjed sub-optimal customer/categories and products. Sales strategy/ proposition McBride plc 12 McBride Interim Results Presentation February 2017
• 4 year capex plan fjnalised, linked to growth ambition – £100 million over 4 years • Centre of Excellence plans for key growth categories • Separation of PC and HH manufacturing activities • Poland factory upgrade project completing spring 2017 Prepare phase – update Prepare McBride will invest into its manufacturing assets and optimise its warehousing and distribution network. We will align the new organisational set-up aiming to institutionalise our new way of working with our people. We will provide a clear way forward for identifjed sub-optimal customer/categories and products. Asset confjguration McBride plc 13 McBride Interim Results Presentation February 2017
programme underway • Aerosols divestment under pipeline in development • Acquisition strategy and • R&D team alignment • Talent management consideration • PMO fully resourced • Further effjciency improvements Prepare phase – update Prepare McBride will invest into its manufacturing assets and optimise its warehousing and distribution network. We will align the new organisational set-up aiming to institutionalise our new way of working with our people. We will provide a clear way forward for identifjed sub-optimal customer/categories and products. Organisational Mergers and development acquisitions McBride plc 14 McBride Interim Results Presentation February 2017
Prepare phase – what does it look like? Product category focus Channel strategies Geographic priorities Manufacturing choices McBride plc 15 McBride Interim Results Presentation February 2017
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