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Transcript of Achange - Presentation
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Thursday, 21 May 2009
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Rob CameronCameron Partners
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Surviving and Thriving in a RecessionPresentation to the Melbourne Junior Chamber of Commerce
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OutlineA tectonic shift has occurred in the economic
environment
We have now entered a recession and the recovery willtake time
It is possible to survive and thrive in a recession
Businesses will fail, survive and/or thrive depending on
their exposure to the recession and how they respond tothe changed environment
There is a real opportunity to leap frog competitors in a
recession
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Source: Bloomberg
A tectonic shift has occurred in
the global economic
environment
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Source: Bloomberg
A tectonic shift has occurred in
the global economic
environment
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This will continue for the next several quarters:
Credit terms and conditions continue to tighten
Inter-bank lending iced up, thawed but it still at historically high premia
Credit rating agencies are tightening and more rigourously apply ratings
criteria
Banks will continue to monitor and actively reduce exposure tocompanies and their shareholders
Acceptable levels of leverage for any given level of cash flow/asset base
has reduced significantly
it continues to profoundly constrict global credit availability and cost
A tectonic shift has occurred in
the global economic
environment
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It will impact on all asset prices and yields:Risk premiums are being radically revised
Assumptions about the capital appreciation component of total
return are being revised
Required cash yields will rise
Asset prices are adjusting to reflect fundamentals but nobody
knows what they are yet
it continues to profoundly constrict global credit availability and cost
A tectonic shift has occurred in
the global economic
environment
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Source: Bloomberg
A tectonic shift has occurred in
the global economic
environment
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We are now well into the
recession phase that follows a
financial crisis
Recession is the inevitable outcome of the adjustments that follow:
Consumer and business deleveraging
Realignment of asset prices and returns
Moderation of global imbalances
Impacts on wealth of property and sharemarket declines
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We are now well into the
recession phase that follows a
financial crisis
The length and depth of recession following crises have varied
significantly
Catastrophic recessions occur only when there is a prolongedblockage in the provision of capital to business and a long delay in
restoring confidence among consumers, companies, investors and
lenders.
The differences have been determined by how governments have
responded the quality of financial sector clean up and stimulus
packages.
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We are now well into the
recession phase that follows a
financial crisis
But we know that recovery will take time
On average, countries take two years to emerge from recessions that
following financial crises.On average, GDP and company earnings turning points lag
sharemarket turning points by 5-6 months and 10-12 months
respectively but there has been significant variation in the length of
these lags.
The IMF has substantially revised its view of the depth of the recession after only six months.
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We are now well into the
recession phase that follows a
financial crisis
IMFs forecast in Oct 08
IMFs forecast in Apr 09
Developing Nations
IMFs forecast in Oct 08
IMFs forecast in Apr 09
Developed Nations
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We are now well into the
recession phase that follows a
financial crisis
We should expect to be living with recession for a while
It is profoundly impacting the business environment creating:
Fundamental uncertainties and downside risks in the period ahead.
Unprecedented opportunities that could drive competitive advantage
for years ahead.
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The first step is to understand yourexposures in a recession
There are three steps to
surviving and thriving in a
recession
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The second step is to identify yourchoices for responding to
the new environment
There are three steps to
surviving and thriving in a
recession
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The third step is to determine yourpriorities for action and implement
them
There are three steps to
surviving and thriving in a
recession
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Businesses will fail,
survive and thrive
1. Road kill
Recession sensitive
Weak strategic position
Weak financial position
Failure to respond quickly and aggressively
2. Targets
Have a better recession exposure than road kill
Response is not sufficient to enable them to resist
strong acquirors
These businesses will fail
These businesses will beacquired and disappear
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Businesses will fail,
survive and thrive
3. Survivors
Strong strategic and/or financial position.
Response ensures adequate financial
flexibility. Choose to hunker down and not
proactively pursue new opportunities.
4. Thrivers
Strong strategic and/or financial position
Response ensures adequate financialflexibility.
Choose to take aggressive marketinitiatives and make game changingacquisitions.
These businesses will survive the recession in
a strong financial position but lose theopportunity to achieve industry leadership and
risk slipping back in the pack.
These companies will exploit the outstanding
opportunities that exist in recessions,
strengthen their strategic position and may
become industry leaders.
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Businesses will fail,
survive and thrive
but the opportunity to leap frog competitors is real
76%
24% 24% more firms moved from the back of
the pack to the front in the 2001 downturn
compared with the subsequent period of
economic calm
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Businesses will fail,
survive and thrive
but the opportunity to leap frog competitors is real
20%
80% 20% of leadership companies fell to the
bottom quartile
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Businesses will fail,
survive and thrive
Recession provides the opportunityto make bargain acquisitions to build
up the core even when it means
taking risks.
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Scott DelZoppoSustainability Manager Fosters Group
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Sustainability at Fosters
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Our approach to sustainability atFosters acknowledges the direct linkbetween effective management of ourenvironmental and social impacts and
our business success.
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Fosters Sustainability Strategy
Know ourbusiness
Understand ourimpacts
Establishpriorities
Communicateand leverage
Monitorperceptionsandperformance Growth
Efficiency
Capability
Engage ourStakeholders
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Governance
HIGHLIGHTS
Elevation of sustainability oversight
to Fosters Leadership TeamIncorporation of sustainability risksinto Enterprise Risk ManagementRegister
Sustainability reporting evolved tofocus more sharply on sustainabilitypriorities
Better business focus of allsustainability activities
Sustainability specialist roles addedto operating business units in keyareas
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2008 Sustainability Report
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Responsible consumption
HIGHLIGHTS
Voluntary withdrawal from manufactureand marketing of pre-mix drinks withenergy and higher ABV
Continued investment in lower alcohol,calorie and carbohydrate productinnovation
Improved Enjoy Responsiblytraining atemployee induction
Contributed more than $2.1m toresponsible consumption programs, suchas DrinkWise Australia
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HIGHLIGHTS
Released global wine data for first time Continued strong water performance at
Australian breweries
US wineries introduce solar energy andgeothermal
Improved biodiversity outcomesthroughout wine viticulture
Introduced Fosters Carbon ReductionProgram
Energy, water & climate change
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Product stewardship
HIGHLIGHTS
Established the Global QualityLeadership Team
23% reduction in productcomplaints globally
Released Cascade Green, a 100%carbon offset beer
Released Wolf Blass Green Label
wine in PET, reducing ghg by 29% vglass equivalent
Developed and rolled out GlobalFood Safety and Quality Manual
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Leadership & advocacy
HIGHLIGHTS
Achieved Gold Rating on CorporateResponsibility Index
Leadership, membership andsupport of industry and peak bodies
Sponsored major research projecton consumer attitudes to climatechange
Development of ProcurementSustainability Program
Launched Fosters SustainableLiving Guide for all employees
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Heather Le RoyVictorian General Manager The Smith Family
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Questions
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Nothing but Nets
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