FY20 results release 19th august 2020 - Health Wellness & Beauty - Bell Direct
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Mcpherson’s Limited
FY20
th
results release
19 august 2020
CREATING BETTER IN
Health Wellness & Beauty
Agenda
1 Introduction – LAURIE MCALLISTER
2 FY2020 Financial results – Paul Witheridge
3 CORE BRANDS – Donna chan
4 Channel & CUSTOMER – Lori Pirozzi
5 Export – DAVID FIELDING
6 Summary and OUTLOOK – Laurie mcallister
2
HEALTH, WELLNESS & BEAUTY – A $17 billion market
health WELLNESS beauty
($4.9 Billion, +3.9% vs YA) ($5.6 Billion, +3.8% vs YA) ($6.5 Billion, +2.8% vs YA)
The intent of enhancing and restoring health Maintain the state of good health by pro- The subjective enhancement of physical
via symptomatic treatment actively seeking to prevent the onset or perception for ones own satisfaction
worsening of conditions
3
strategic business imperatives
Refocus McPherson's on Health,
1 Wellness & Beauty with 6 Create a China facing business
sustainability and people at the core
Ensure we have our team fit for the
2 Revitalise our own McPherson’s
brands
7 future with appropriate expertise,
capabilities and values
3 Ensure a healthy balance sheet 8 Stabilize and grow NZ & Singapore and
expand in Asia & International
4 Move from transactional to strategic
partnerships with our top six customers
9 Gain efficiencies and savings across
Supply Chain infrastructure
5 Integrate and grow acquired skincare
brands; Dr. LeWinn’s and A’kin
10 Create a new business team focused
on significant M&A opportunities
4
A’KIN
Australian Tea Tree Oil Detoxifying Mask
Mcpherson’s
FY2020
FINANCIAL
RESULTS
HIGHLIGHTS
5
FY20 SALES REVENUE BREAKDOWN BY PRODUCT CATEGORY
Sales revenue from owned brands increased by 16%
Owned brands: FY20 $m FY19 $m % change Comments
• Strong export and domestic sales of Dr. LeWinn’s
Skin, Hair and Body 63.8 40.0 59%
• DLW Export 130% Growth; DLW Domestic 18% Growth
• 3% growth in Manicare offset by 6% decline in Lady Jayne
Essential Beauty 57.3 56.9 1%
• Swisspers in line with prior period
• 4% growth in Multix
Household Essentials & others 64.4 63.4 2%
• 23% 2H20 growth in Multix on pcp.
Total Owned brands 185.5 160.3 16%
Agency Brands 13.1 23.3 (44%) • Termination of Trilogy and Karen Murrell agencies
Private Label 23.6 26.8 (12%) • Reduced volumes in Aldi
Total Sales 222.2 210.4 6%
Less Terminated Agencies (0.1) (11.1)
Total Sales excluding
222.1 199.3 11%
Terminated Agencies 6
RAPID GROWTH IN DR. LEWINN’S CHINA REVENUE
DLW Export to Total Sales
$45m 30%
DLW Export % DLW Export to Total sales
FY20
$40m $38.2m
25%
$35m
$30m 20%
$25m 17.2%
15%
$20m FY19
$16.7m
$15m 10%
$10m 7.9%
FY18 5%
$3.3m
$5m FY16 FY17
$0.1m $0.5m
1.6%
$0m 0%
0.0% 0.3%
FY16 FY17 FY18 FY19 FY20
7
STRONG GROWTH IN DR. LEWINN’S domestic REVENUE
$25m
DLW Domestic to Total Sales 20%
DLW Domestic Sales % DLW Domestic to Total Sales 18%
FY20
$20m $19.3m 16%
FY19
$16.3m 14%
$15m 12%
FY18
FY16
FY17 $11.4m 10%
$10.9m
$10.1m
$10m 8%
8.7%
7.7% 6%
$5m 4%
4.7% 4.9% 5.4%
2%
$m 0%
FY16 FY17 FY18 FY19 FY20
8
DR. LEWINN’S CHINA JV MCP & ABM
9
BRIDGE OF FY19 TO FY20 SALES
$M
$240
Increase in Manicare
Increase in Dr. Increase in Multix $1.0m
$230 Increase in Dr. $1.9m
LeWinn's Domestic
LeWinn's Export
$3.0m
$21.5m
$220 Decrease in Private Label
Trilogy & Karen Murrell Others
$11.1m ($3.2m) ($1.2m)
$210
$200
FY20
$222.2m
$190 FY19
$199.3m
$180
$170
10BRIDGE OF FY19 TO FY20 UNDERLYING PBT
$M
$35
Decrease in
Commodity
Prices
$3.3m
Increase in Dr
LeWinn's
$30 Export
Contribution
$9.6m
Increase in STI
Others
$25 & LTI expense
Increase in $0.2m
($1.3m)
seed
investment in Decrease in
JVs Singapore & NZ
Trilogy & Karen ($1.4m) PBT Adverse
Murrell
($2.3m) AUD/USD FX
$20 $1.7m
Impact
($4.3m)
FY20
$22.8m
$15
FY19
$17.3m PBT excluding
impact of Trilogy &
Karen Murrell
$10
11BALANCE SHEET
❑ Net debt excluding lease liabilities has remained
stable at $9.2m over the last 12 months Net Debt* ($m - 30 June)
❑ Key additional investments in Aware ($3.0m) and
joint ventures ($2.7m) made over last 12 months
❑ Gearing modest at 9.3%, excluding lease liabilities
Gearing* % (30 June)
29.2%
32.3%
49.9
36.4
9.9% 9.3%
7.2%
9.8 7.5 9.2
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
* Excluding lease liabilities 12CASHFLOW
❑ Strong underlying cash conversion of 103%
Operating Cashflow before interest and tax ($m)
❑ Vastly improved 2H20 underlying cash conversion
due to seasonal factors
➢ Strong second half customer receipts
➢ Second half reduction in inventory net of
trade payables
Underlying Cash Conversion
103%
24.9 24.2
117%
113%
76% 82%
19.8 19.3
6.9
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
13FY20 ORDINARY DIVIDENDS
❑ Final ordinary dividend of 7.0 cents per share fully franked (2H19 6.0 cents per share)
❑ Full year ordinary dividend of 11.0 cents per share fully franked (FY19: 10.0 cents per
share and 2.0 cents per share interim special dividend)
❑ Payout ratio of 72% of FY20 underlying earnings per share
❑ Final dividend payable 24 September 2020
❑ Dividend reinvestment plan retained, 2.5% discount to VWAP re-introduced
14Mcpherson’s
CORE BRANDS
Dr. Lewinn’s
Ultra R4 Collagen Surge Plumping Gel
15FY20 Core brands IN MARKET PERFORMANCE
+21% DOMESTIC GROWTH +1.3 SHARE POINT GAIN +1 SHARE POINT GAIN
+1.7 SHARE POINT GAIN 70% SUSTAINABLE SHARE MAINTAIN SHARE
16RESILIENT PORTFOLIO DURING COVID
MCP CORE BRANDS GROWING 1.5X AHEAD OF THE CATEGORIES IT PARTICIPATES IN
MULTIX +13% DUE TO INCREASED BAKING & COOKING BEAUTY AT HOME DRIVING +15% GROWTH IN MANICARE SWISSPERS +11% OUTPACING CATEGORY GROWTH
STRONG CHINA EXPORT DEMAND CONTINUES for DR. LEWINN’S DELIVERING +140% GROWTH DURING ABM 6.6 FESTIVAL
17Innovation SUCCESS driving sustainable growth
MCP Core Brands NPD Cumulative Share %
Rolling 3FY
28.3%
20.5%
15.3%
#1 FACIAL SKINCARE NPD PHARMACY #1 HAIR BRUSH NPD PHARMACY
10.4%
FY17 FY18 FY19 FY20
11 13
3 6
R&D R&D R&D R&D
AUSTRALIA & EXPORT CHINA NPD FIRST TO MARKET LASH NPD
Foreign market registrations
220 PROJECTS IN THE INNOVATION FUNNEL
18LEVERAGE MACRO TRENDS to drive future growth
CHINA PROACTIVE SUSTAINABLE COVID
EXPORT BEAUTY SOLUTIONS NEW NORM
The little
iron
八胜肽小
熨斗
• +133% Dr. LeWinn’s China Export • Convergence of Wellness & Beauty • Multix #1 Sustainable brand in Bags, • 46% working from home
Sales Growth vs YA Wraps & Foil growing +36%
• NEW Dr. LeWinn’s Inner Beauty • +121% increase in Multix social
• #1 Hero Product Triple Action Day Collagen Shot • Swisspers #1 Sustainable brand in engagement
Defence Winning Awards in China Cotton Tips growing +133%
• 64% look to purchase products which • Rise of DIY Beauty delivering +95%
• New China Hero’s developed via contain the most natural ingredients • Expanding sustainability footprint increase in MCP Video Views
NPD with NPD
• NEW Scientifically Proven • +270% increase in digital reach
A’kin Volumising Haircare
19THINK BEYOND GROWTH OPPORTUNITIES
Mcpherson’s think beyond team Everyday hygiene new product development
▪ 12 KEY PROJECTS
▪ AGILE WORKING TEAM MEETING FORTNIGHTLY
▪ CROSS FUNCTIONAL REPRESENTATION
▪ Leadership Team
▪ Marketing
▪ R&D Incremental channel & portfolio expansion
▪ Sales
▪ Supply Chain
▪ Commercial Finance
▪ $50K - $3M INCREMENTAL OPPORTUNTIES
20Mcpherson’s
Channel &
customer
21MCP performance FY20 in traditional
Channels
MCP Growth X1.5 AHEAD Of Essential Beauty Categories
Total Pharmacy and
Grocery market
MCP Growth X4.5 AHEAD of Pharmacy Facial skincare category
Dr. Lewinn’s shelf presence increase +33% in Priceline +25% Chemist Warehouse
Pharmacy
MCP SWISSPERS Growth X 1.6 AHEAD OF Grocery cotton Category
Portfolio management driving profitability in Grocery Channel
22
GroceryContinued focus on Execution DRIVING
Sustainable Growth
Category Solutions IN STORE REALESTATE Share of Shelf Gains
Add images
Customer first to Innovation success ONLINE Focus
market launches
23Demonstrated Agility and RESILIENCE DURING
Covid
INCREMENTAL RANGING INVESTMENT
Accelerated FOCUS ONLINE RETAIL Oz Hair & Beauty
25 skus A’kin | 24 skus Dr. LeWinn’s
NEW CUSTOMERS
Active Skin
10 skus A’kin
Discount Vitamin Express (DVE)
21 skus A’kin
+ 30%
INVESTMENT TO CUSTOMER
Catch
ONLINE PLATFORMS VIA
42 skus Multix & Swisspers TRADING TERMS VS FY19
A’KIN IN GROCERY NZ CORE RANGE DISTRIBUTION
Incremental Channel EXPANsION
NEW CHANNELS
+ 10%
INCREASE IN CORE
RANGE COMPLIANCE VS FY19
INDEPENDENT CHANNELS
WOOLWORTHS B2B
24
24ANZ business Growth Pillars
Outlook
Drive growth from CORE AND
Innovation
Range and DATA Led BUSINESS PLANNING
Investment Strategic participation In Private
Optimisation Label Expansion
Continued PORTFOLIO MANAGEMENT NZ Brand Expansion into Grocery
Promotional effectiveness New Channel Penetration
INCREASE in ONLINE INVESTMENT KOTIA Distribution Expansion
EXECUTION
RESHAPE TRADING TERMS
& Innovation A’kin in Woolworths
25CHANNEL EXPANSION Driving visibility and SCALE
Naturals in Grocery AU
$100M Category +44% vs YA
Pharmacy Dept Stores ONLINE Grocery Grocery Natural Offering - Value
$48,438,298
$34,902,754
$13,456,798
$3,452,296
Natural Facial Natural Hair Care Natural Soap & Natural
Skincare LY TY Body Wash Deodorants
Grocery Partnerships ANZ
+ 5000
DISTRIBUTION
POWERFUL AUSTRALIAN BEAUTY POINTS
26
26Mcpherson’s
export
Dr lewinn’s
Line Smoothing Complex S8
27Dr. lewinn’s Strategy
1 DELIVER SUSTAINABLE GROWTH – DR. LEWINN’S +133% vs FY19
2 Expand Hero product scope – 3 skus in fy19 to 5 skus in fy20
3 Launch new products and accelerate innovation pipeline – 4 new skus introduced in fy20
4 Expand marketing touch points – NEW PLATFORMS, TMALL FLAGSHIP STORE, INFLUENCER endorsements
5 BUILD ENGAGEMENT WITH ABMERS – MONTHLY EVENTS, BRAND DAY, TOP SELLER REWARDS
28Milestones
ABM 3 RD 1,200 5 million ONLINE TO Expansion
ANNIVERSARY employees in people in the OFFLINE across nz,
4 locations abm north
network America,
Europe & SEA
29DR. LEWINN’S
Year on Year Growth
FY17 FY18 FY19 FY20
$500k $3.1m $16m $37m
1 hero 529% growth 413% growth 133% growth
product 2 hero 3 hero 5 hero
products products products
30CHINA
Top Performer
Wechat search
DR. LEWINN’S
history shows
RETAINS A TOP 3
building
POSITION IN THE
awareness in
ABM PORTFOLIO
china
SKU MIX IS DE-
RISKED AS HERO
PRODUCT SCOPE
GROWS STRONGER
31Event Results
DAIGOU FESTIVAL JUNE 2020
NO. 3 BRAND
TOP PRODUCTS #6 & #7
More than 500,000 units sold
Purchases from 9 countries & 879 cities
32EXPORT The Aware Group
IN May 2020 IN FY20 MCP PROGRESSIVELY
Aware produced the INCREASED THEIR EQUITY
1 millionth unit of STAKE IN THE AWARE GROUP
dr. lewinn’s TO 10%
Over 50 skus
Aware manufactures
HAVE Successfully
over 25% of all
undergone a tech
dr. lewinn’s products
transfer
33A’Kin
Natural Australian Skincare
Mcpherson’s
SUMMARY AND
OUTLOOK
34SUMMARY AND OUTLOOK
1 STrONG brand and channel MIX –OWNED brands +16% vs FY19
2 Exceptional demand for Dr. LeWinn’s in domestic / export channels 75%
Strategic JV with ABM secures china growth.
3 Aware investment supporting supply chain
4 Investments in key capabilities supporting innovation agenda
5 Growth through M&A is a strategic priority –experienced new business team
laser focussed on h,w & b targets
6 Extremely healthy balance sheet / Low gearing ( 9%), facilitating dividend
payout ratio of 72%
7 Management Closely monitoring coronavirus situation
8 FIT FOR THE FUTURE; SHORT, MEDIUM & LONG TERM
36Q&A 37 —
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