Goodman Fielder Limited – Investor Day Presentation … registered office of Goodman Fielder...

The registered office of Goodman Fielder Limited and its Australian subsidiaries is T2, 39 Delhi Road North Ryde NSW 2113

Goodman Fielder LimitedABN 51 116 399 430

T2, 39 Delhi Road North Ryde NSW 2113 AustraliaLocked Bag 2222 North Ryde NSW 2113 Australia

Tel: 61 2 8899 7000 Fax: 61 2 8026 4200www.goodmanfielder.com.au

3 September 2012 Announcements Officer Listed Company Relations ASX Market Announcements NZX Limited ASX Limited Level 2, NZX Centre Exchange Centre 11 Cable Street 20 Bridge Street WELLINGTON SYDNEY NSW 2000 NEW ZEALAND

Goodman Fielder Limited – Investor Day Presentation

I attach a copy of the presentation to be made today at Goodman Fielder’s Investor Day. The attached document will be posted to the Company’s website once released to the market. Yours sincerely,

JONATHON WEST Company Secretary

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GOODMAN FIELDER LIMITED______________________________________________________

Investor Day3rd September 2012

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Disclaimer

This presentation is provided for information purposes only. The information contained in thisp p p p ypresentation is not intended to be relied upon as advice to investors and does not take into accountthe investment objectives, financial situation or needs of any particular investor. Investors shouldconsider their own individual investment and financial circumstances in relation to any investmentdecision.

Certain statements contained in this presentation may constitute forward-looking statements orstatements about future matters that are based upon information known and assumptions made as ofthe date of this presentation. These statements are subject to risks and uncertainties. Actual resultsp jmay differ materially from any future results or performance expressed, predicted or implied by thestatements contained in this presentation.

Normalised EBIT and Normalised EBITDA are non-IFRS measures that reflect in the opinion of theNormalised EBIT and Normalised EBITDA are non-IFRS measures that reflect, in the opinion of theDirectors, the ongoing operating activities of Goodman Fielder in a way that appropriately presents itsunderlying performance. The non-IFRS underlying profit measures exclude restructuring expenses,asset impairments, asset write-downs and realised foreign exchange losses.

Except where otherwise indicated, market share information contained in this presentation is sourcedfrom Aztec.

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Introduction of today’s presentersy p

Presenters

Pankaj TalwarCategory Managing Director, Bakery

Steven GreggChairman Elect

Chris DelaneyChief Executive Officer

Aaron CanningCategory Managing Director,

Chief Executive Officer Grocery

Shane GannonChief Financial Officer

J. Andre TeixeiraGroup R&D / Quality Director

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Agendag

Financial Overview

Bakery Turnaround

Innovation Introduction

Bakery Innovation

Grocery Innovation

Group Strategy

Agenda Item Presenter

• Vision and ValuesG St t

Chris Delaney• Group Strategy

y

• Sustainable Cost Position• Portfolio Optimisation

Shane Gannon

• Bakery Turnaround Pankaj Talwar

Coffee BreakI ti i FMCG A d é T i i• Innovation in FMCG André Teixeira

• Innovation in Bakery category Pankaj Talwar

• Innovation in Grocery category Aaron CanningInnovation in Grocery category Aaron Canning

• Summary Chris Delaney

• Concluding Remarks Steven Gregg

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• Concluding Remarks Steven Gregg

• Q&A Chris Delaney

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VISION, VALUES AND STRATEGYCHRIS DELANEY

,

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Vision, Purpose and Values, p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Vision

To be the leading and most innovative local food company

Purpose

Create food that people lovep p

Values – our six ingredients

We are ‘we’, not ‘me’

We love food, especially our

food

We dream big. And we will

make it happen

We get better –all the time

We stand by our words and

actions

We look after our own – in the company

and the happen

community

We areWe are

Our homegrown food company6

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Our vision

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Our VisionTo be the leading and mostand most innovative local food companyfood company

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Our purposep p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Our Purpose

To create food that people lovethat people love

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Our values - 6 key ingredientsy g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

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New logog

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

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Goodman Fielder is a leader in the consumer goods industryconsumer goods industry

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

At its core, Goodman Fielder is an attractive business

Significant

We lead in a number of

large, growing categories

Quality and relevant brands

gproduct

development, manufacturing

and selling capabilities

Long standing customer

relationships

Talented people

categories capabilities from which to

innovate

p

Present in o er 40 53Market leading All major 6 300Present in over 40 categories with

$20b in total category sales

53 manufacturing

sites

Market leading, iconic brands

5 brands = >$500m sales

All major supermarket

chains in A/NZ

~50,000 customers

6,300employees

Our strategy is focused on leveraging our brands in our core categories

customers

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The journey so farj y

We haveFinancial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Stabilised our business

Strengthened our leadership

team

Strengthened our balance

sheet

Progressed our strategic review

Developed our strategic plan

• Focus of today’s presentation

• Senior executive appointments:

- CEO

• FY12 earnings within guidance – 2H normalised

• Net debt reduced by 24% to $728m at end of FY12

• Core categories and brands identified for CEO

- CFO

- Bakery

- R&D

- HR

EBIT up 8.8% on 2H FY11

• $23m in cost savings achieved in

• Net proceeds of Integro sale (~A$165m) to further strengthen

focused investment

• Successful process for divestment of

- APAC

• Renewed Vision and Values

achieved in FY12

• Remain on track for A$100m

strengthen financial position

• Debt facilities successfully

divestment of Integro; divestment of NZ Milling on track

• Re-engaging organisation

savings by FY15

yrefinanced • Assessment

process for Businesses Under Review

• Supply Chain• Supply Chain and Manufacturing optimisation

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Strengthened leadership teamg p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Category Market Function

Aaron CanningCategory Managing Director, Grocery

Robert HilditchChief Information Officer

Peter FoystonManaging Director, Asia Pacific

Pankaj TalwarCategory Managing Director, Bakery

Andrew HippersonManaging Director, Australia

Neil KearneyChief Strategy & Corporate Development Officerp

J. Andre TeixeiraGroup R&D / Quality Director

Peter ReidieManaging Director,New Zealand

Ross O’BrienGroup HR Director

Jonathon WestGeneral Counsel and Company Secretary & Group Commercial Director 13

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The journey so farj y

We haveFinancial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Stabilised our business

Strengthened our leadership

team

Strengthened our balance

sheet

Progressed our strategic review

Developed our strategic plan

• Focus of today’s presentation

• Senior executive appointments:

- CEO

• FY12 earnings within guidance – 2H normalised

• Net debt reduced by 24% to $728m at end of FY12

• Core categories and brands identified for CEO

- CFO

- Bakery

- R&D

- HR

EBIT up 8.8% on 2H FY11

• $23m in cost savings achieved in

• Net proceeds of Integro sale (~A$165m) to further strengthen

focused investment

• Successful process for divestment of

- APAC

• Renewed Vision and Values

achieved in FY12

• Remain on track for A$100m

strengthen financial position

• Debt facilities successfully

divestment of Integro; divestment of NZ Milling on track

• Re-engaging organisation

savings by FY15

yrefinanced • Assessment

process for Businesses Under Review

• Supply Chain• Supply Chain and Manufacturing optimisation

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Group strategy – summary p gy y

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• GF’s turnaround will come from developing a world class organisation that:

- embraces a high performance culture with values-driven decision makingmaking

- is consumer centric and insight driven

- serves customers with a passion for excellence

• Strategic roadmap will be delivered over three waves of investment in FY13, FY14 and FY15 respectively; success in each wave will earn us the right toFY14 and FY15 respectively; success in each wave will earn us the right to fund the next

• Financial implications of delivering the turnaround:

- Sustainable EBIT growth on exit of the plan period

- Continued positive cash-flow to pay down debt and further improveContinued positive cash flow to pay down debt and further improve financial position

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FY13 – FY15 strategygy

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

ion

& G

oal

s


Shareholder

Restore acceptable shareholderOrganisation Imperatives

Vis

gie

s

1 2 3 4 5 6

Restore acceptable shareholder returns

Actively engaged employees Safety, Quality, Innovation, Efficiency

One Goodman Fielder

Str

ate

Sustainable cost structure

Portfolio optimisation

Bakery turnaround

Core category innovation

Improved customer alignment

New channels & geographies

Five Core Categories

as


Bakery, Dairy, Flour & Cake Mix, Spreads, Dressings & Mayo

Fo

cus

Are

a

Three Key Markets

Australia, New Zealand, Asia Pacific

Goodman Fielder Way

Safety Quality Talent Development Innovation Leadership16

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Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

ion

& G

oal

s


Shareholder


Vis

gie

s

1 2 3 4 5 6



One Goodman Fielder

Str

ate



Bakery turnaround





as



Fo

cus

Are

a

Three Key Markets


Goodman Fielder Way


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Improved customer alignmentp g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Improved customer relationships and shopper insight todrive growth in our key markets

Goal

• Recognition on both sides for need for structural change in Bakery model

• Mutual desire to restore category profitability and product innovation to benefit

Status

consumer

• Increased and improved dialogue

Action Plan • Restructure to provide one face to customer improved top to top dialogue andAction Plan • Restructure to provide one face to customer, improved top to top dialogue, and cross functional business planning

• Improved execution in-store due to increased reliability, customer service and deepen shopper understanding (in progress)

• Collaborative design of new bakery go to market model in Australia including:• Improved customer service

• SKU optimisation (stage I complete)

• Rural service model (late stage design)Rural service model (late stage design)

• Optimised distribution network (late stage design)

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New channels and geographiesg g p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Diversify earnings and grow beyond supermarket channel and leverage Asia Pacific presence

Goal

New Channels

• A/NZ Out of Home and Foodservice

New Geography: Asia

• Asia Pacific fastest growing GF• A/NZ Out-of-Home and Foodservice channels are large (A$2.7b) and growing

• Significant Artisan, Freshbake, Dairy

• Asia Pacific fastest growing GF business (Normalised EBITDA +13% in FY12)1

• Pacific – strong market leading and Spreads and Dressings category opportunities

• Product, service and brand opportunities being scoped

presence, mature premium brands. Consistent growth over strategic plan

• Asia – smaller growing food serviceopportunities being scoped Asia smaller, growing food service business. Scoping of core category opportunity in SE Asia / China

• Appointment of Peter Foyston, 17 ’ i i A i MDyears’ experience in Asia as MD,

APAC

19Note: 1 EBITDA before restructuring costs

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Our strategy will re-shape our business by reallocating focus and resourcesby reallocating focus and resources

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

OBJECTIVE ON EXIT OF PLAN FY15CURRENT (FY12) OBJECTIVE ON EXIT OF PLAN FY15

CategoriesDME spend and Capital Expenditure distributed

across more than 30 categories (~70% DME spent on top 5 categories)

f

Majority of DME and Capital Expenditure invested in 5 big categories (~90% DME spent

on top 5 categories)

CURRENT (FY12)

Manufacturing Footprint

Becoming more integrated and removing

>50 plants<35 plants, after divestments and

footprint rationalisation for improved capital efficiency

Focused food company with one face to

Earnings

OrganisationBecoming more integrated and removing

silos

Negative EPS and EBIT growth

p ythe customer and dedicated category

teams to drive innovation and efficiency

Targeting EPS growth of 6%+Growth

Return on Capital1

Negative EPS and EBIT growth Targeting EPS growth of 6%+

ROCE: 11.6% ROCE: 13 - 15%

ShareholderReturns

TSR in Bottom Quartile of ASX 200

TSR in Top 50% of ASX 200

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Financial Position Strengthening financial positionInvestment grade credit metrics

supporting further growthNote: 1 Normalised ROCE in respect of a financial year is calculated on the basis of Normalised EBIT before significant items for that year

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FINANCIAL OVERVIEW and SUSTAINABLE COST POSITIONSHANE GANNON

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Our strategic roadmap is structured as three waves over FY13 15as three waves over FY13-15

F13 F14 F15

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

F13 F14 F15

Wave 1: Turnaround and innovate the core

Cost-outBakery

turnaroundInnovate core

categoriesKey in-market

initiativesPortfolio

Optimisation

Wave 2: Core category leadership

Innovation in Fresh Dairy

Extend Innovation in Grocery

Longer Term Bakery Plays

Wave 3: Growth beyond core

New channels and geographies

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Project Renaissance $100m in annualised savings by FY15$100m in annualised savings by FY15

Identified & Plans in Place

(FY12 / FY13)

Work Plans in Progress(FY12 / FY14)

Savings Targeted(FY14 / FY15)

(FY12 / FY13)

Ongoing Savings $40m $25m $35mOngoing Savings $40m $25m $35m

Restructuring Costs $33m $20m - $25m TBD

Key Projects

Baking Australia Overheads

NZ restructure

Manufacturing & SupplyChain Optimisation

(Phase I)

Manufacturing & Supply Chain Optimisation

(Phase II)

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Project Renaissance on track to deliver $100m in annualised savings by FY15$100m in annualised savings by FY15

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Projects

Annualised Savings ($M) Cash Costs ($M)

IncurredTo be

incurredAchieved

To be achieved

Total Total

Phase 1 • Baking Australia overhead• Plant closures (ex Baking)• Australia restructure• NZ restructure

40 0 40 32 - 32

Phase 2 • Bakery turnaround including factory closures

• Procurement initiatives• Ongoing SG&A savings

S l h i i5 20 25 14 11 25

• Supply chain savings• Fixed manufacturing cost

reduction

Phase 3 • Bakery turnaround including factory closuresfactory closures

• Procurement initiatives• Ongoing SG&A savings• Supply chain savings• Fixed manufacturing cost

reduction

- 35 35 - TBD TBD

educ o

TOTAL 45 55 100 46 TBD TBD

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PORTFOLIO OPTIMISATIONSHANE GANNON

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Growth plans have been developed for each of five core categoriesfor each of five core categories

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

BAKERY DAIRY FLOUR & CAKE

MIXSPREADS

DRESSINGS& MAYONNAISE

• Optimise footprint and streamline

• Focus on branded Fresh milk product

• Differentiate and premiumise in A/NZ Flour

• Focus on core brands

• Focus on core brands, expand range in A/NZstreamline

supply chain

• Drive innovation and price

milk product

• Premiumisation in milk through differentiation

A/NZ Flour

• Drive volume growth in Pacific

• Innovate in

• Drive health benefits of category

• Innovate in

range in A/NZ retail

• Drive down cost (packaging

realisation in Freshbake

• Turnaround Homebake

• Selectively enter new markets in APAC

Innovate in Cake Mix

• Deliver lowest cost sourcing

Innovate in everyday and health

• Deliver lowest t i

options)

• Expand into key adjacencies (new subHomebake

• Leverage growth from Health

• Differentiate with

cost sourcing (new sub categories)

• Innovate for new occasions

branded artisan & target Food Service channel

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Resources will be directed towards core categoriescategories

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Investments in DME, capital expenditure and sales, marketing and innovation will increase in total with core category investments forming a greater proportion of the total

Category Investment

OTHER CATEGORIES

• Protect for profit

• Under review

• Divest

300

~$265M

Category Investment

B k200

Other

~$215M

$

• Bakery

• Dairy

• Flour and Cake Mix

Other

CORE • Spreads

• Dressing and Mayonnaise

100Core

27

0Current F15

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Core category focus and investment to improve earnings and returnsimprove earnings and returns

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

OTHER CATEGORIES

• Protect for profit

• Under review

• Divest

40

60

80

100%Other

EBIT

B k

0

20

40

Current

Core

F15

• Bakery

• Dairy

• Flour and Cake Mix

CORE • Spreads

• Dressing and Mayonnaise 10

15ROCE (%)

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0

5

Current

ROCE

F15

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Stranded cost mitigation plang p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• Businesses under review or targeted for divestment currently absorb ~$20m of SG&A

• This will be mitigated via 3 work streams:• All work streams are underway

• Specific action plans to be identified by end October 2012

SG&A Optimisation Indirect ProcurementRemoval of directly related

costs

• Process redesign

• Systems capability / SAP

• Sourcing improvements

• Remove complexity

• Role duplication and other procurement savings projects

• Managing supplier and internal practices to improve value delivered

g p j

• Merchandising

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Portfolio optimisation – Integro p g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

INTEGRO SALE AGREEMENT NET PROCEEDS REDUCE NET DEBT IMPROVED LEVERAGE RATIO

Sale of Integro business to GrainCorp/Gardner Smith FY12 (Pro 51200

A$m

GrainCorp/Gardner Smith demonstrates successful divestment strategy:

• Non core business to GF –agreed to sell for $170m –

Metric* FY12 forma)

Net Debt** $728m $563m

Leverage RatioNet Debt/EBITDA 2.4x 2.0x2

3

4

400

600

800

1000

g~$25m profit on sale (pre tax)

• Proceeds used to substantially strengthen GF’ fi i l iti

Net Debt/EBITDA

Interest CoverEBITDA/Net Interest 3.6x 3.6x0

1

0

200

400

FY08 FY09 FY10 FY11 FY12 Proforma

N tD bt N t D bt/EBITDA I t t CGF’s financial position

• Enables concentration of capital and DME spend on core GF categories

Notes: (*) These calculations are in accordance with the group’s debt covenants (**) FY12 Net debt excludes an unrealised FX gain of $52.5m (FY11: $71.4m) relating to the revaluation of the company’s US dollar private

Net Debt Net Debt/EBITDA Interest Cover

• Long term supply partnership structured with GrainCorp

• Dividend Policy to be revisited at half year

p y pplacement debt.

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revisited at half year

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BAKERY TRANSFORMATIONPANKAJ TALWAR

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Bakery turnaround overviewy

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Four key strategies for Bakery:

Transform the bakery business model

Increase brand equity in core of fresh loaf and chilled bread

Create breakthrough innovation and

choiceful renovation

Drive growth in new channels

Covered in Category innovation presentation

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Transformation of Bakery is based on four key workstreamsfour key workstreams

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Work Stream DescriptionApplicable

AustraliaNew

Zealand

OptimisePortfolio

• Rationalise national range

• Reduce regional complexity

• Optimise category with simplified planogram1

TransformManufacturingFootprint

• Optimise manufacturing footprint• Improve operating efficiencies and effectiveness• Sustainable reinvestments aligned with bigger, better

bakeries

2 bakeries

Improve Distribution Model

• Match distribution value with appropriate channel• Optimise line haul and “last mile” network• Increase asset utilisation by taking advantage of cross

h l d t t iti

3 channel and category opportunities

Fix our Cost-To-Serve

• Achieve a sustainable cost-to-serve model to regional and remote geographies

4 -

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Progress is being made on each workstreamworkstream

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• Broad, national product range with large product variety and many Optimise

FROM 2012 STATUS

• Limited national core range with regionally optimised offering

WORKSTREAMS

g p y yregional-specific SKUs

Opt sePortfolio

Transform• Nation-wide bakery network

g y p g

• Bakery footprint aligned to capital Transform

Manufacturing Footprint

• Under-utilised plants cities and strategic locations (3 plant closures announced on 25 June)

• Target 85% asset utilisation levels

Improve Distribution

Model

• Largely fixed cost and inflexible supply chain

• Daily deliveries to all customers

• Improve scalability of cost structure

• Channelised model for service and deliveries

• Mainland contractor efficiency Model yimplemented in Tasmania (32 vendors to 9 contractors)

Fix our • Uneconomic to serve regional and

remote geographies in Australia• Direct dialogue with customers to

create sustainable cost to serveCost-To-

Serve

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remote geographies in Australia create sustainable cost-to-serve model to maintain fresh daily service

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Optimise portfoliop p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

4

Maximise Portfolio

Opportunity

Finish

• Consistent, focused

Reduce R i l

Category Optimisation3

pp y

• Fill category portfolio gaps

focused product range

• Regionally

Optimise NationalRange1

Regional Complexity2

Start• Delete low

volume and

• Optimise planogram to meet local demographic

optimised

RangeStart

• Remove duplicate product SKUs

volume and non-strategic products

demand• Complex

national range

product SKUs

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Transform manufacturing footprintg p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Existing Bakery Footprint Strategic Mandate:

Fewer, bigger, better bakeries

Darwin

Cairns

Papua New Guinea

• Concentrate capital expenditure and R&M spend

• Capital avoidance

Townsville

Burleigh

Alice Springs

Cairns

Carina (Brisbane)Hemmant

(Brisbane)

Capital avoidance

• Reduce fixed and variable cost base

• Increased quality and safety standards

Burleigh (Gold Coast)

Moorebank(Sydney)

Forestville (Adelaide)

Malaga (Perth)

Ballarat

Tamworth

Canberra

Whiteside

Erskine Park(Sydney)

Hobart

DandenongFairbank(Melbourne)

(Melbourne)Auckland

Huntly

Wellington

Hawkes Bay

Nelson

36

Dunedin

Christchurch

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Staged plan for optimising manufacturing assetsmanufacturing assets

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Improve & Invest

OperationalExcellence

5

6

Future footprint

F

UpgradeCurrentAssets

4Improve& Invest

3• Initiate long term

NSW

• Initiate long term QLD & SA manufacturing footprint solution

• Fewer, more efficient bakeries

• Target 85% asset

Right-size

Outsource capacity

1

2

• Outsource low

• Increased Stay In Business Capital Expenditure

manufacturing footprint solution

• Implement New Zealand South Island strategy –

utilisation

Footprint1

• Close Cairns, Rockhampton and Whiteside

I

value and volume products

rebuild Christchurch bakery

• 28 facilities

Start

• Increase asset utilisation• Low asset

utilisation

In Current PlanOutside

Current Plan

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Improve distribution modelp

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Leverage scale4

Partner with customer base

Finish

• Simple, flexible, low

Route to

Leverage scale and scope

advantages3

• Implement cross

cost network

• Distribution model matched to customer

• Investigate long term alternative distribution structure

EfficiencyImprovements1

Route to market2

Start

• Restructure Tasmanian distribution

pindustry opportunities

• Joint line haul routes – internal

customer service requirements

• Complex national coverage

• Multiple

• Centralised picking and dispatch

• Breadroom efficiencies in

distribution

• Appropriate distribution model based on channel

and external opportunities

• Multiple models used in different locations

efficiencies in Australia

• Improved fulfilment and order execution

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Australia’s Cost-to-Serve model will become sustainablebecome sustainable

GOODMAN FIELDER IS DEVELOPING ADISTRIBUTION COSTS ARE DRIVING REMOTE AND REGIONAL SALES TO BE LOSS MAKING

• Goodman Fielder is committed to an Distribution Cost Index

GOODMAN FIELDER IS DEVELOPING A SUSTAINABLE COST-TO-SERVE MODEL

AND REGIONAL SALES TO BE LOSS MAKING FOR GOODMAN FIELDER

economically sustainable daily fresh bakery delivery model across Australia

• Goodman Fielder is able to satisfy the desire for daily fresh bread to all Australians

(Cost per Unit)

daily fresh bread to all Australians

• To do this, daily delivery runs include:- Townsville Bakery to Mount Isa : 903 km

- Perth Bakery to Port Headland : 1,633 km

• Goodman Fielder is engaged with customers on the following:

- Optimising delivery methods

- Reducing cost complexity and cost driversg p y

- Recovering the cost to serve in Regional and Remote areas

Sustainable cost-to-serve model

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Four key workstreams to transform Bakery business modelBakery business model

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

O ti i P tf liOptimise Portfolio

TransformManufacturing Footprint

Improve Distribution Model

Fix our Cost-To-Serve

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VALUE-DRIVING INNOVATION IN THE FMCG INDUSTRYJ.ANDRÉ TEIXEIRA

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Innovation in FMCG that creates value occurs in four dimensionsoccurs in four dimensions

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

?

New Consumers

Innovative

?

?? fOInnovative

Idea?? New BenefitsNew Occasions

?

New Channels/GeographiesNew Channels/Geographies

Answer YES to one or more of these questions and you will probabl ha e a good idea

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probably have a good idea

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Need to listen to three voices in combinationcombination

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Consumer

Consumer and productInteractive testing

Consumers and theirmarkets g

Customer product

Market Product

44

propositions

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(New) common wisdoms in FMCG innovationinnovation

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• Coupling TRENDS / INSIGHTS with technology SCOUTING / CONSUMER foresightsg

• Consumers and their habits are zapping

N d hi d i i t iti• New demographics driving new opportunities

• Combining creativity with processes for world-class i tiinnovation

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Examples of how we are answering the four questionsthe four questions

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

?

Asian products, Artisan

Innovative

?

??

Sensory,TextureFlat breads Innovative

Idea?? Texture,

Functionality,Freshness

Flat breads,Mobile

?

Asia Pacific FoodserviceAsia Pacific, Foodservice


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INNOVATION IN BAKERYPANKAJ TALWAR

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Bakery Category

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Bakery category vision

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

To be the l di dleading and most innovativemost innovativelocal baking gcompany

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GF has ~19% share of the $4 billion AU Fresh Bake market – opportunities for growthBake market opportunities for growth

Australia Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

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Source: AZTEC scan data; BIS Shrapnel; Datamonitor; IBIS World; Internal sales data; Industry reports

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GF has ~40% share of the $0.8 billion NZ Fresh Bake market – opportunities for growthBake market opportunities for growth

New Zealand Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

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Source: AZTEC scan data; BIS Shrapnel; Datamonitor; IBIS World; Internal sales data; Industry reports

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Consumer and shopper insightspp g

Consumer Insights

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Parents are seeking breads that are less

‘bulky’ and lower in ‘carbs’

39% of parents actively look for products that hide

the 'good stuff‘

Nutrition is the number one category driver

Consumers are seeking more premium, artisan

style bread

g

Shopper Insights

Bread is one of the highest volume

categories with 50% of all Shoppers buying at

pp g

Loaf Bread is an extremely planned purchase occasion with 87% of Shoppers pre-

planning a purchase

41% of Shoppers are changing bread purchases

based on perceived nutritional benefits

Shoppers purchase In Store Bakery Bread for

convenience. Quality and freshness perceptions lagpp y g

least 30 loaves per yearplanning a purchase nutritional benefits freshness perceptions lag

behind Hot Bread Shops.

53* U&A 2008 & 2009, Aztec Shopperview

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Four Bakery category strategiesy g y g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Transform the Bakery business

model

1

model

Increase brand equity in2

Increase brand equity in core of fresh loaf and

chilled bread

Create breakthrough innovation & choiceful

3

renovation

4


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Gluten free bread launch propels categorycategory

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• NZ 50.4% value market share

• Drove NZ category growth +57%

Increase in food intolerances driving growth in Gluten free diets

Insight ResultsActivation

Drove NZ category growth 57%

Until recently Gluten free bread has been a poor substitute for regular bread at the sandwich occasion

L h d J l 2011Launched July 2011

Re-launched Aug 2012g

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Garlic bread transformed by La Famiglia stone baked rangeLa Famiglia stone baked range

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• Increased share to 62%

• Highest share in 2 years

Consumers seek convenient, quality products that deliver the ‘T D ’ t h t t i i

Insight Results

g y

• Drove category growth +7%‘Ta Da’ moment when entertaining family and friends

Launched April 2012

Activation

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Thins redefines the sandwich occasion

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Consumers love sandwiches but are actively seeking options with

Helga’s (Australia) –Launched Feb 2012


y glower carbs and less bulk

Launched Feb 2012

• Generated 10% trial

• $7.7m RSV sales since launch

Launched Feb 2012 Freya’s (New Zealand) –Launched May 2012

• Generated 8.3% trial

• $1 1m RSV sales since launch$1.1m RSV sales since launch

Launched May 2012

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Family lunches all wrapped upy pp p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Parents want to keep kids’ lunchboxes exciting, yet nutritious

Insight Activation

nutritious

Launches Sept 2012

Launches Sept 2012

Adults want sandwich options that aren’t as filling

Launches Sept 2012

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Leveraging artisan bread to drive growth in new channelsgrowth in new channels

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

I would love to be able to

Insight

I would love to be able to buy an authentic fresh artisan bread-brand

i tl th t blconveniently, that enables me to discover better bread in an engaging way.

Size of Opportunity

Size of Market: ~$700m

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GF has commissioned and launched an artisan bread plant with $15m investmentartisan bread plant with $15m investment

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Erskine Park fully functional and capable of making wide range of artisan bread including Batards Baguettes Ciabattas & Rolls

Activation

artisan bread including Batards, Baguettes, Ciabattas & Rolls

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New channel opportunities for Artisanfor Artisan

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Hot Bread ShopsRetail In Store Bakery

Foodservice/QSR

Unbranded Branded BrandedUnbrandedPLG

Short term priority Longer term priorityShort term priority

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Four Bakery category strategiesy g y g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Transform the Bakery business

model

1

model

Increase brand equity in2

Increase brand equity in core of fresh loaf and

chilled bread

Create breakthrough innovation & choiceful

3

renovation

4


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INNOVATION IN GROCERYAARON CANNING

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Grocery Category

Spreads Dressings &Flour andSpreads Dressings & Mayonnaise

Flour and Baking Mixes

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Grocery category driversy g y

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Enter new channels and new markets

Optimise3

4

Innovate to

Optimise manufacturing to deliver lowest cost2

3

Focus on core categories and

accelerate growth

1

invest to strengthen market leading powerbrands

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Spreads category visionp g y

T i it it tTo re-ignite excitement in Spreads by leading the way in “healthy”,

“guilt-free” innovation in gu t ee o at oour core brands in each

marketmarket

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Spreads category insights

Consumer Insights

p g y g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Health is the #1 concern,65% of Spreads consumers

reduce their usage as a result1

Naturalness is also a concern,it influences purchase decisionfor 40% of Spreads consumers1

98% of all householdsbuy Spreads2

Taste is most importantfor 30% of Spreads

consumers1

Shopper Insights

Difficult category to shop, people find it hard to find

what they are looking for and even harder to understand

health in this category1

Bread (the natural accompaniment for spreads) is

one of the highest volume categories in the supermarket

with 50% of all Shoppers

How the shopper shops the Spreads category1

What are my preferred brands?

buying at least 30 loaves per year3

Price

Variant

Size

67¹ Ruby Cha Cha: Spreads: U &A 2009² Aztec IHP July 2012, Aztec IHP³ Shopper Tracker 2010, Segmentation Research 2011

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MeadowLea health education driving growth and retailer turnaroundgrowth and retailer turnaround

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

“As a parent, I am responsible for what my kids eat in their school


• Tested in the top 10% of advertising effectiveness globally1y

lunch box. It’s the choices I make each day that make a difference to my kids’ health”

advertising effectiveness globally

• Contributed to 29% brand growth since activation2

• Retailers re-engaged

• Enabler for ranging & promotional• Enabler for ranging & promotional improvements

5000.0

5500.0

Total MeadowLea ($000's)

3000.0

3500.0

4000.0

4500.0

68Source: 1 Millward Brown2 Aztec National Scan Sales to Aug 2012

4wks 06/11/11

4wks 04/12/11

4wks 01/01/12

4wks 29/01/12

4wks 26/02/12

4wks 25/03/12

4wks 22/04/12

4wks 20/05/12

4wks 17/06/12

4wks 15/07/12

4wks 12/08/12

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Flour & Cake Mix category visiong y

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

To lead the baking revival in everyday homes across A/NZ & Pacific by developing and

innovating our three core brands in each marketbrands in each marketFlame, White Wings &

EdmondsEdmonds

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Flour & Cake Mix category insights

Consumer Insights

g y g

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

The key driver for baking is the personal satisfaction and

gratification you receive from others

Consumers want simple natural closer to scratch

baking products

70% of consumers scratch bake and bake from cake

mixes1

Consumers want inspirationto create easy to make baking

goodies

Shopper Insights

Difficult category to shop, people find it hard to find

what they are looking for and hard to tell the difference

between products2

Category allows basket expansion as shoppers who buy cake mix also buy milk, butter/margarine, eggs etc.

How the shopper shops the Cake Mix category1

What am I using it for? Occasion

Formats

Flavours

70¹At least every 6 months Source: Colmar Brunton, Packet Mix U&A Project Macro June 2009² Bread & Butter Research & Planning, Project Dove 2005

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New Purer White Wings flourg

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

“I love sharing my baking with my loved ones, their enjoyment i di Th t’ h I


• Value share of mainstream flour up 1.5%pts following launch of Whit Wi NEW P Flis so rewarding. That’s why I

choose a good quality flour because I don’t want to take the chance that it won’t be perfect”

1.5%pts

White Wings NEW Purer Flour

p

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Flame flour (PNG)( )

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy


Flame is an iconic local brand in PNG with over 30 years’ h it It h l d

Flame Flour will execute its largest ever promotion this year

Flame Flour has grown 11% since 2008

heritage. It has scale and consumer brand significance equal to and beyond that of other global brands in PNG

s 11%

Ex-

Fac

tory

Ton

ne

s 11%

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Dressings & Mayonnaise visiong y

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Innovate the Praise brand

to provide flavour variety to

make fresh food a part ofp

every home everyday

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Dressing & Mayonnaise insightsg y g

Consumer InsightsFinancial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Consumers perceive homemade dressings as more

natural, better tasting and fresh1

Consumers seek variety in sandwich spread flavours but

are concerned with health1

Approximately 1 in 3 salads is made with homemade

dressings1

Mayonnaise is only used on 20% of homemade

sandwiches1

Shopper Insights

50% of shoppers in dressings category are “light” users purchasing one bottle per

year

Shopper walk through the bakery in all shopping

missions and 90% walk through fresh section

Shopper seeks out flavour in dressings first

Shopper driven to mayo aisle due to convenience

74¹U&A 2008 & 2009, Aztec Shopperview

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Praise Deli Style targets sandwich occasion with successoccasion with success

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Mayonnaise is only used on 20% of homemade sandwich occasions


• Week 3 is 48% ahead of target

• 97% distribution achieved

• Praise Sandwich Mayonnaise is the most successful launch in the Dressings and Mayonnaise category this season selling at 4 times the rate of other new entrants

Launched July 2012rate of other new entrants

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Paul Newman’s Own delivers new flavours to premium dressingsflavours to premium dressings

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Consumers love the mouthfeel and taste of a creamy dressing but try to have them infrequently as know oil


• Launched August 2012

• Full distribution targets achievedhave them infrequently as know oil based dressings are healthier1

Launched August 2012

• Driving higher $/L in the category with a 79% premium over Praise Traditional

761 Ruby Cha Cha: Spreads: U &A 2009

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Recap: Grocery category driversp y g y

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Enter new channels and new markets

Optimise3

4

Innovate to

Optimise manufacturing to deliver lowest cost2

3

Focus on core categories and

accelerate growth

1

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invest to strengthen market leading powerbrands

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SUMMARY CHRIS DELANEY

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Innovation will create value in Goodman FielderGoodman Fielder

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

?

New Consumers

Innovative

?

?? fOInnovative

Idea?? New BenefitsNew Occasions

?

New Channels/GeographiesNew Channels/Geographies


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Key achievements and plan going forwardforward

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

We have a strategy to deliver sustainable earnings improvement

A t i bl t t t t k t d li $100 i t i b FY15 A sustainable cost structure – on track to deliver $100m in cost savings by FY15

A focused food company - optimising our portfolio and focusing DME and capital

p y p g p g p

spend on five core categories

A defined strategy to turn around the Bakery division by transforming the

business model

A platform for growth through branded innovation in our core categories

A platform for growth through branded innovation in our core categories

St t t i l tf t t i d h h ld tStrong strategic platform to generate improved shareholder returns

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Recap: Vision, Purpose and Valuesp , p

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

Vision


Purpose

Create food that people lovep p

Values – our six ingredients

We are ‘we’, not ‘me’

We love food, especially our

food

We dream big. And we will

make it happen

We get better –all the time

We stand by our words and

actions

We look after our own – in the company

and the

We are

happencommunity

We are

Our homegrown food company81

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Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

ion

& G

oal

s


Shareholder


Vis

gie

s

1 2 3 4 5 6



One Goodman Fielder

Str

ate



Bakery turnaround





as



Fo

cus

Are

a

Three Key Markets


Goodman Fielder Way


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CONCLUDING REMARKS STEVEN GREGG

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Conclusion from Chairman Elect

St t i l t th i t t il t i th

Financial Overview

Bakery Turnaround


Bakery Innovation

Grocery Innovation

Group Strategy

• Strategic plan progress represents another important milestone in the turnaround of Goodman Fielder

• Building on the achievements over past 12 months to deliver on the g pcompany’s strategic priorities

• Goodman Fielder now has:- cost structure aligned to current market conditions to compete more efficiently- cost structure aligned to current market conditions to compete more efficiently

- improved financial position with greater financing flexibility

- strengthened executive leadership team

customer aligned operating structure to leverage our market leading brands and- customer-aligned operating structure to leverage our market-leading brands and positions in core categories and markets

Strong strategic platform to generate improved shareholder returns

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Goodman Fielder Limited – Investor Day Presentation … registered office of Goodman Fielder...

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Transcript of Goodman Fielder Limited – Investor Day Presentation … registered office of Goodman Fielder...