2019 FULL YEAR RESULT PRESENTATION
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
MCPHERSON’S LIMITED
2019 FULL YEAR RESULT PRESENTATION
15 August 2019
Presented by:
• Laurie McAllister, Managing Director
• Paul Witheridge, Chief Financial Officer
• Donna Chan, Marketing Director
• Lori Pirozzi, National Sales Director
• Brett Owers, Commercial Finance Business Director
• David Fielding, Strategy, Planning & Innovation Director
1 Refocus our business purely on Health, Wellness and Beauty
2 Revitalise our own McPherson’s brands
3 Ensure a healthy balance sheet
4 Move from transactional to strategic partnerships with our top six customers
5 Integrate and grow acquired skincare brands; Dr. LeWinn’s and A’kin
6 Create a China facing business
7 Ensure we have our team fit for the future with appropriate expertise, capabilities and values
8 Stop the bleeding in NZ and Singapore and expand into Asia
9 Gain efficiencies and savings across Supply Chain infrastructure
3 10 Create a New Business team focused on M&A and New Ventures
1 Refocus our business purely on Health, Wellness and Beauty
2 Revitalise our own McPherson’s brands
3 Ensure a healthy balance sheet
4 Move from transactional to strategic partnerships with our top six customers
5 Integrate and grow acquired skincare brands; Dr. LeWinn’s and A’kin
6 Create a China facing business
7 Ensure we have our team fit for the future with appropriate expertise, capabilities and values
8 Stop the bleeding in NZ and Singapore and expand into Asia
9 Gain efficiencies and savings across Supply Chain infrastructure
4 10 Create a New Business team focused on M&A and New Ventures
Laurence McAllister Paul Witheridge Donna Chan David Fielding
Managing Director Chief Financial Officer Marketing Director Strategy, Planning &
Innovation Director
Lori Pirozzi Brett Owers
Commercial Finance Mary Pearce Mark Brady Sarah Tully
International Sales Director R&D Director Supply chain Director HR Director
Business Director
5
Graham Cubbin Jane McKellar Grant Peck
Chairman Non-Executive Director Non-Executive Director
Geoffrey Pearce Alison Mew Laurence McAllister
Non-Executive Director Non-Executive Director Managing Director
6
FINANCIALS Paul Witheridge
Sales revenue from continuing operations increased by 7%, excluding Coty Fine Fragrances
Owned brands: FY19 $m FY18 $m % change Comments
• Strong export and domestic grow in Dr. LeWinn’s
Skin, Hair and Body 40.0 23.1 72%
• Domestic growth in A’kin
• 2% growth in Manicare offset by 2% decline in Lady Jayne
Essential Beauty 56.9 57.5 (1%)
and 7% decline in Swisspers
• 1% growth in Multix brand, driven by new “Greener” range
Household Essentials & others 63.4 64.2 (1%)
offset by 8% decline in other small brands
Total Owned brands 160.3 144.8 11%
Agency Brands (excl Fine
23.3 26.1 (11%) • 20% reduction in Trilogy sales
Fragrances)
Private Label 26.7 25.3 6% • Increased supply to Grocery customers
Total sales from continuing
operations (excl Fine 210.3 196.2 7%
Fragrances)
* The Coty Fine Fragrances distribution arrangement ceased with effect from 1st February 2018. It contributed $14.2m in sales revenue in FY18, taking
total FY18 sales revenue to $210.4m
8
9
❑ Net debt has reduced from $9.8m to $7.5m over $m
the last 12 months NET DEBT ($M - 30 JUNE)
90
❑ Key investments in display fixtures ($3m), Kotia 80
venture ($2.9m) and Aware convertible note
70
($3.0m) made over last 12 months
60
❑ Gearing modest at 7%
50
Gearing % (30 June)
40 77.2
50%
44% 30
40%
49.9
30% 32%
29% 20
36.4
20%
10
10% 10%
7% 9.8 7.5
0% 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
10
$m OPERATING CASHFLOW BEFORE INTEREST
❑ Strong 117% cash conversion due to favourable AND TAX ($M)
40
sales mix and inventory reduction
35
❑ Continued focus on working capital management
30
25
Cash Conversion
20
140%
118% 113% 117% 34.2
120% 15 30.8
100% 82% 25.8
77%
80% 10 19.5
60% 15.3
40% 5
20%
0% 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
11❑ Final ordinary dividend of 6.0 cents per share (cps) fully franked (FY18 2.5 cps).
Final dividend payable 26 September 2019
❑ Total ordinary dividends of 10.0 cps fully franked (FY18: 8.5 cps)
❑ Special dividend of 2.0 cps fully franked – paid 21 March 2019
❑ Objective to increase the return of franking credits to shareholders
❑ Dividend reinvestment plan retained, 2.5% discount to VWAP to encourage
reinvestment
12High quality of FY19 earnings indicated by: ❑ Increase in proportion of “owned brand” sales from 69% in FY18 to 76% in FY19 ❑ Reduction in proportion of sales in Grocery, increase in Pharmacy ❑ Absence of “significant items” in FY19 ❑ Very strong operating cash conversion – 117% ❑ Key strategic investments in Kotia, Aware and display fixtures ❑ High dividend payout (77%) ❑ Low gearing (7%) 13
MARKETING & SALES Donna Chan & Lori Pirozzi
CHINA SUSTAINABLE
DEMAND FOR NATURAL PROACTIVE CARE
EXPORT SOLUTIONS
China middle-class population Global Organic Personal Care Renew | Reuse | Recycle Global Face Mask Market
projected to exceed 600M by Market projected to reach $25B Remove expected to reach $8.8B in 2021
2022 by 2025 Consumers voting with their China represents 48% of market
Here to stay wallet Australia Face Mask Market
+50% CAGR (2016-2018)
15 Source: IRI Market Edge; Euromonitor International; Grand View Research, Inc.,INNOVATION EXECUTION PARTNERSHIPS EXPANSION
• +80% increased R&D • +45% increase in • Strategic alignment • 12 New Countries in FY19
investment to fuel merchandising investment
differentiation • Trading Terms optimisation
• +10% increase in A&P • Building category solutions in • Segment Expansion:
• 11 x first to market sustainable
NPD to grocery partnership Dr. LeWinn’s Mask Destination
• +65% increase in customer • Integrated Sales and
• Clinical & Consumer User participation
efficacy claims marketing plans
• Category Expansion:
• 360 degree launches A’kin Natural Deodorant
• FY19 $13.5M RSV delivered • +48k incremental distribution
points • Investment in customer
• Innovation Partnerships vehicles
16 Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19 Australian Grocery & PharmacyAustralia Pharmacy
Dollars Growth % YA
Total Defined Pharmacy Total McP Core brands
14.0
11.9
12.0
10.8
9.6
10.0
9.0
8.0
6.0
4.0 3.1
2.7
2.0 1.2
0.4
0.0
Qtr To 16/09/18 Qtr To 16/12/18 Qtr To 17/03/19 Qtr To 16/06/19
17 Source: IRI Pharmacy Scan 6mm to 24/02/2019Australia Pharmacy
Units Growth % YA
Total Defined Pharmacy Total McP Core brands
12.0 11.1
10.0 9.5
8.0
6.4
6.0 5.0
4.0
2.0
0.3 0.3
0.0 -0.6
-1.3
-2.0
Qtr To 16/09/18 Qtr To 16/12/18 Qtr To 17/03/19 Qtr To 16/06/19
18 Source: IRI Pharmacy Scan 6mm to 24/02/2019National
Dollars Growth % YA
Total Grocery excl. Tobacco Mcphersons Cons Prod
12.0
10.0 9.7
8.0
6.0
6.6
5.7
4.0
1.9
2.0 1.4 2.2
0.9
0.0
-2.0
-4.0
-5.7
-6.0
-8.0
Qtr To 01/07/18 Qtr To 30/09/18 Qtr To 30/12/18 Qtr To 31/03/19
19 Source: IRI Grocery Scan Qtr to 06.01.19National
Units Growth % YA
Total Grocery excl. Tobacco Mcphersons Cons Prod
20.0
15.0
13.9
12.6
10.0
9.7
5.0
1.7 1.1 1.5
0.5
0.0
-5.0
-7.5
-10.0
Qtr To 01/07/18 Qtr To 30/09/18 Qtr To 30/12/18 Qtr To 31/03/19
20 Source: IRI Grocery Scan Qtr to 06.01.19#1 Australian Cosmeceutical Brand
Facial Skincare Pharmacy Channel
125% Revenue Growth FY19
21 Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19 Australian Pharmacy: FY19 ex. Factory Sales RevenueAccelerating Growth +26% (outpacing the category 4x)
The most successful Anti-aging
Core Rejuvenation The #1 NPD mask launch
Reversaderm range Facial Skincare Launch 6 Masks sold every minute since launch
Sales 7x versus prior relaunch +60% R4 Growth Contributing 30% to Dr. LeWinn’s growth
22 Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19 Australian PharmacyCreate
L I NaEChina
S Mfacing
O O T business
HING AUSTRALIA
COMPLEX 澳大利亚
Dr. LeWinn’s Domestic vs Export
Domestic Export
#1 range for
Dr.LeWinn’s driven by FY17 FY18 FY19
China demand
排名#1 莱文医生系列 CHINA
23
中国
Source: MCP Ex. Factory Sales RevenueAccess China’s Forecast Secured for $5m by year end
HAIR CARE SKIN CARE PERSONAL CARE
100,000 LSC 3pk Masks 7,000 Ageless Trinity Packs
15% Domestic Revenue Growth FY19
2424
Source: Ex. Factory FY19GROWTH THROUGH INNOVATION & PROVEN CLINICAL TRIALS
Core Rejuvenation Category Expansion High Growth Mask Category
Clinically proven Age Defy range Clinically proven Natural Deodorant 100% Natural Eucalyptus Fibres
+182% vs YA +241% vs YA Australian Ingredients
2525
Source: IRI Market Edge Pharmacy Scan MAT 21.07.19 (Age Defy); MCP Ex. factory July 19 (Deodorant); Eucalyptus Fibre Face Mask#1 BEAUTY ACCESSORIES #2 BEAUTY ACCESSORIES #1 HAIR ACCESSORIES
+$2.5M retail sales growth #1 Lash Brand during Party Season Extending Pharmacy leadership to 48%
Extending market leadership to 25.2% +$808K incremental retail sales +4915 distribution points
26 Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19NO. 1 BAGS WRAPS & FOIL
34% MARKET SHARE
$135M +12% #1 54%
MAT Value Growth Aluminium Foil, Kitchen Tidy, of Australian Households
Retail Sales Value Outpacing Category Growth 5% Garbage Bags, Baking Paper have purchased a Multix product within
and Freezer Bags the last year
27 Source: IRI Market Measurement – Scan, Data to: MAT Value To 26/05/19; Nielsen Homescan, BWF, Data to: 15/06/2019INVESTED OVER $2.5MTO BUILD BRAND EQUIT Y
IN FY19
• CHOOSE WISELY CHOOSE MULTIX TV & Digital Campaign August 2018
• Alfoil TVC | Greener TVC | 3 x Digital Executions
• Increased consumer perceptions for Multix as the smart choice and
better quality products
• Prompted Awareness increased from 54% to 66%
• Ever Purchased increased from 42% to 52%
• Household Penetration increased from 49.6% to 53.8%
28 Source: Harvest Insights Brand Health Dip April 2017 (pre advertising) & September 2018 (post advertising); Nielsen Homescan 18/05/19 vs. LYL E A D I N G S U STA I N A B I L I T Y G ROW T H T H RO U G H
C O N S U M E R , M A R K E T A N D E N V I RO N M E N TA L I N S I G H T S
MULTIX SUSTAINABILITY SWISSPERS #1 COTTON
Remove | Renew | Reuse | Renew 57% Market Share
90% market share; growing +142% +11% quarter growth in cotton tips/buds
29 Source: IRI Market Measurement – Scan, Data to: MAT Value To 26/05/19ENGAGE AMPLIFY OPTIMISE
18M consumers reached on owned
social media
3M consumers reached via influencer
activity 45M Ad Impressions 901 Products live on SKULibrary
30 Source: Facebook, Instagram, 3rd Party Ad Servers, Google Adwords, SKU LibrarySTRATEGIC CUSTOMER PARTNERSHIP
+65% increased participation +48000 incremental distribution points + 92 New Doors FY18/19
• Top to top meetings
• Joint Business Planning
• Trading Terms
• Customer partnerships
• Event Participation
31Unique In Promotional
store Differentiation
Experiences
Customer
Strategy
Alignment
Promotional Exclusives
Vehicle and First to
Effectiveness market
32Ambassador
and
Catalogue
Instore
Training
Premium Off
Location
Sampling Stands
opportunities
Store
Takeovers
Online
Integration
Aligned field
comms &
targetsSource: IRI MarketEdge Facial Skincare 6mm to 21/07/19
Fresh
reaching
3.1M
consumers
Off
location
in 360
stores
PRICELINE/MANICARE SPRING BEAUTY PRICELINE / GLAM MAGNETIC LASHES
+2.5 share points +1.2 Share points since NPD launch MULTIX XMAS ACTIVATION
Top 3 Lash NPD launched in last 6 months +3.2 share points gain
Top 5 NPD (out of 586 products)
35
Source: IRI Market Measurement – Scan, Data during promotional periodIn Store Real Estate Investment
+45% INVESTMENT IN REAL ESTATE
CHEMIST WAREHOUSE : REAL ESTATE OPTIMISATION
NEW PRODUCT LAUNCHES
689 Stand in 281 Stores Assist shopper navigation
High impact in high traffic areas
+16% GROWTH
36NEW BUSINESS DEVELOPMENT
Brett Owers & David FieldingHEALTH WELLNESS BEAUTY
($4.9 Billion, +3.9% vs YA) ($5.7 Billion, +3.8% vs YA) ($6.5 Billion, +2.8% vs YA)
The intent of enhancing and restoring Maintain the state of good health by The subjective enhancement of
health via symptomatic treatment. pro-actively seeking to prevent the physical perception for ones own
onset or worsening of conditions satisfaction
Sources: Complimentary Medicine of Australia 2018 Report, AFR 2018, Statista 2019M&A M&A growth remains a strategic priority
GROWTH
Health, Wellness & Beauty focussed
ORGANIC
GROWTH Strong balance sheet to fund acquisitions
Rigorous process and criteria
MCPHERSON’S
BASE Have been actively approaching targets
Kōtia, Soulful and Sugarbaby ventures signed
39Non-Controlling Smaller Bolt On
Strategic Investments Joint Ventures Significant M&A Deal
Acquisition
• Enhance MCP’s capacity • Access to early stage • Smaller uncomplicated deals • Well positioned to complete a
and capabilities brand/technology opportunities significant M&A transaction
• Leverage MCP scale
• E.g. investment in Aware • De-risks entry, whilst providing efficiencies • Add additional scale and earnings
Environmental Ltd pathway to full ownership and yields strong synergies
(manufacturer) • Plug and play into MCP
• Founders remain engaged to infrastructure e.g. sales, • Access to new markets,
help grow marketing and execution categories and channels
capability, geographic
expansion
40• Anti-Aging Skincare
• NZ Deer Milk Hero Ingredient
• China & European potential
• Tanning and Skincare
• Targeting fast growing, high-spending
Millennial consumers
• Recruiting young consumers to MCP portfolio
• E-Commerce
• Health and Wellness focused
• Target fast growing gut health market (Aus
$0.4bn and China $3.5bn)
• China potential
41EXPORT David Fielding
Continue to expand our presence geographically with a focus on Asia
China sales 119% Singapore sales 11% New Zealand sales 18%
43Continue to expand our presence geographically with a focus on Asia
Country A’kin Dr Lewinn’s Manicare Lady Jayne Swisspers Multix
Brunei p p p p p
Cambodia p
China p p
HK p p p
India p p p p
Indonesia p p p
Japan p p
Korea p
Lebanon p p p p
Libya p
Malaysia p p p p p
Singapore p p p p p p
Taiwan p
Thailand p p p
UAE p p
UK p p
Vietnam p
44CAPABILITIES PEOPLE GLOBAL COVERAGE INNOVATION
Strong Partnerships
30 NPD
Dedicated Headcount for MCP Driven by
Southeast Asian Expansion Asian beauty
trends
EXECUTION DISTRIBUTION IN MARKET EXPANSION
2500+ 100+ 12
Distribution Points in Southeast Merchandising Units Across NEW Southeast Asian
Asia Southeast Asia Countries
OPPORTUNITIES BRAND AUSTRALIA DEMOGRAPHIC EXPERTISE
66% Winning in
Share of global Middle Class
represented in Asia by 2030
Beauty
45• Establish distribution and • Strong growth achieved in FY19
demand in new markets with aggressive plans for FY20
• Develop strategic expansion • More than 1M ABM resellers
plans across brands in key in the network
categories • Expanding capabilities
in export team
MIDDLE
CHINA
EAST
UK/ SOUTHEAST
EUROPE ASIA • Strong partnerships
with key distributors
• 2500+ distribution points
• Expansion of retail
merchandising presence
• Entry into new markets
• Expand regional coverage with • Introduction of new brands
entry into new markets • Leverage financial confidence of
• Introduction of new brands the consumer in SEA
46SUPPLY CHAIN
ADAPTABLE & AVAILABLE CAPACITY DAILY DELIVERIES STAFF RETENTION
FLEXIBLE
+40% 5,000+ 80+
SIGNIFICANT HEADROOM 1,600 Australian Postcodes Tenure > 18 Years
EFFICIENCY
SUPPLY CHAIN COSTS HARD SAVINGS WORKING CAPITAL
-40%
-56% $7.5 Mill Last 2 Years
Last 5 Years
FUTURE
TRUSTED PARTNERS ADAPTING ANNUAL INVESTMENT
PROOFING
8 20%
18 CAPEX – SUPPLY CHAIN ERP
Transitioning Businesses
48Hamond Road Facility - Dandenong
• Dedicated output
• One of the largest (22,000 sqm) manufacturing plants
in Australia. With significant excess manufacturing • Prioritised work
capacity
• Confidence in supply/DIFOT
• Largest and quickest laundry powder line in Australia
• Shorter lead times
• Includes the only dishwashing tablet plant in the
Southern Hemisphere • Positive impact on quality
• 2,000 sqm TGA pharmaceutical clean room • Improved turnaround on NPD samples
• Highly efficient, eco-responsible and fully certified • Dedicated technical & operational staff
• Planning underway for solar energy, biodiesel and fully • Integrated supply chain eyeing China customers
recycled water system
• Unrestricted supply capacity
• TGA, GMP (pending), ACO and COSMOS certified
49SUMMARY AND OUTLOOK
Laurie McAllisterRefocus our Business Revitalise own Brands Ensure Healthy Balance Sheet
Move from Transactional to Grow Acquired Skin Care Brands Create a China Facing Business Team Fit for the Future
Strategic Partner
+107%
+11%
Stop the Bleeding in NZ and Efficiencies and Savings across Create a New Business Team
Singapore Asian expansion Supply Chain
+18%
+11%
51High quality of FY19 earnings indicated by: ❑ Increase in proportion of “owned brand” sales from 69% in FY18 to 76% in FY19 ❑ Reduction in proportion of sales in Grocery, increase in Pharmacy ❑ Absence of “significant items” in FY19 ❑ Very strong operating cash conversion – 117% ❑ Key strategic investments in Kotia, Aware and display fixtures ❑ High dividend payout (77%) ❑ Low gearing (7%) ❑ Full year 2020 guidance at +10% Year on Year PBT 52
Q&A
You can also read
