MCPHERSON’S LIMITED 2019 FULL YEAR RESULT PRESENTATION€¦ · Global Face Mask Market expected...
Transcript of MCPHERSON’S LIMITED 2019 FULL YEAR RESULT PRESENTATION€¦ · Global Face Mask Market expected...
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MCPHERSON’S LIMITED
2019 FULL YEAR RESULT PRESENTATION15 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
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Refocus our business purely on Health, Wellness and Beauty1
Revitalise our own McPherson’s brands2
Create a New Business team focused on M&A and New Ventures10
Ensure a healthy balance sheet3
Move from transactional to strategic partnerships with our top six customers4
Ensure we have our team fit for the future with appropriate expertise, capabilities and values7
Create a China facing business6
Stop the bleeding in NZ and Singapore and expand into Asia8
Gain efficiencies and savings across Supply Chain infrastructure 9
Integrate and grow acquired skincare brands; Dr. LeWinn’s and A’kin5
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Refocus our business purely on Health, Wellness and Beauty1
Revitalise our own McPherson’s brands2
Create a New Business team focused on M&A and New Ventures10
Ensure a healthy balance sheet3
Move from transactional to strategic partnerships with our top six customers4
Ensure we have our team fit for the future with appropriate expertise, capabilities and values7
Create a China facing business6
Stop the bleeding in NZ and Singapore and expand into Asia8
Gain efficiencies and savings across Supply Chain infrastructure 9
Integrate and grow acquired skincare brands; Dr. LeWinn’s and A’kin5
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Brett Owers
Commercial Finance Business Director
Lori Pirozzi
International Sales DirectorSarah Tully
HR Director
David Fielding
Strategy, Planning & Innovation Director
Mark Brady
Supply chain Director
Mary Pearce
R&D Director
Paul Witheridge
Chief Financial Officer
Donna Chan
Marketing DirectorLaurence McAllisterManaging Director
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Laurence McAllisterManaging Director
Graham CubbinChairman
Geoffrey PearceNon-Executive Director
Grant PeckNon-Executive Director
Jane McKellarNon-Executive Director
Alison MewNon-Executive Director
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FINANCIALS
Paul Witheridge
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Sales revenue from continuing operations increased by 7%, excluding Coty Fine Fragrances
Owned brands: FY19 $m FY18 $m % change Comments
Skin, Hair and Body 40.0 23.1 72%• Strong export and domestic grow in Dr. LeWinn’s• Domestic growth in A’kin
Essential Beauty 56.9 57.5 (1%)• 2% growth in Manicare offset by 2% decline in Lady Jayne
and 7% decline in Swisspers
Household Essentials & others 63.4 64.2 (1%)• 1% growth in Multix brand, driven by new “Greener” range
offset by 8% decline in other small brands
Total Owned brands 160.3 144.8 11%
Agency Brands (excl Fine Fragrances)
23.3 26.1 (11%) • 20% reduction in Trilogy sales
Private Label 26.7 25.3 6% • Increased supply to Grocery customers
Total sales from continuing operations (excl Fine Fragrances)
210.3 196.2 7%
* The Coty Fine Fragrances distribution arrangement ceased with effect from 1st February 2018. It contributed $14.2m in sales revenue in FY18, takingtotal FY18 sales revenue to $210.4m
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❑ Net debt has reduced from $9.8m to $7.5m over the last 12 months
❑ Key investments in display fixtures ($3m), Kotiaventure ($2.9m) and Aware convertible note ($3.0m) made over last 12 months
❑ Gearing modest at 7%
10
44%
32%29%
10%7%
0%
10%
20%
30%
40%
50%
2015 2016 2017 2018 2019
Gearing % (30 June)77.2
49.9
36.4
9.8 7.50
10
20
30
40
50
60
70
80
90
2015 2016 2017 2018 2019
NET DEBT ($M - 30 JUNE)$m
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❑ Strong 117% cash conversion due to favourable sales mix and inventory reduction
❑ Continued focus on working capital management
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77%
118% 113%
82%
117%
0%
20%
40%
60%
80%
100%
120%
140%
2015 2016 2017 2018 2019
Cash Conversion
19.5
34.230.8
15.3
25.8
0
5
10
15
20
25
30
35
40
2015 2016 2017 2018 2019
OPERATING CASHFLOW BEFORE INTEREST AND TAX ($M)
$m
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❑ 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
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High 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%)
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MARKETING & SALES
Donna Chan & Lori Pirozzi
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China middle-class population projected to exceed 600M by
2022
CHINA EXPORT
SUSTAINABLE SOLUTIONS
DEMAND FOR NATURAL PROACTIVE CARE
Global Face Mask Market expected to reach $8.8B in 2021
China represents 48% of market
Australia Face Mask Market +50% CAGR (2016-2018)
Global Organic Personal Care Market projected to reach $25B
by 2025
Here to stay
Renew | Reuse | Recycle Remove
Consumers voting with their wallet
Source: IRI Market Edge; Euromonitor International; Grand View Research, Inc.,
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EXECUTION
• +45% increase in
merchandising investment
• +10% increase in A&P
• +65% increase in customer
participation
• +48k incremental distribution
points
PARTNERSHIPS
• Strategic alignment
• Trading Terms optimisation
• Building category solutions in
partnership
• Integrated Sales and
marketing plans
• 360 degree launches
• Investment in customer vehicles
• +80% increased R&D
investment to fuel
differentiation
• 11 x first to market sustainable NPD to grocery
• Clinical & Consumer User
efficacy claims
• FY19 $13.5M RSV delivered
• Innovation Partnerships
INNOVATION
• 12 New Countries in FY19
• Segment Expansion:
Dr. LeWinn’s Mask Destination
• Category Expansion:
A’kin Natural Deodorant
EXPANSION
Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19 Australian Grocery & Pharmacy16
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3.12.7
1.2
0.4
9.0
11.9
10.8
9.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Qtr To 16/09/18 Qtr To 16/12/18 Qtr To 17/03/19 Qtr To 16/06/19
Australia PharmacyDollars Growth % YA
Total Defined Pharmacy Total McP Core brands
17 Source: IRI Pharmacy Scan 6mm to 24/02/2019
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0.3 0.3
-1.3-0.6
11.1
9.5
5.0
6.4
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Qtr To 16/09/18 Qtr To 16/12/18 Qtr To 17/03/19 Qtr To 16/06/19
Australia PharmacyUnits Growth % YA
Total Defined Pharmacy Total McP Core brands
18 Source: IRI Pharmacy Scan 6mm to 24/02/2019
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1.91.4
0.92.2
-5.7
5.76.6
9.7
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Qtr To 01/07/18 Qtr To 30/09/18 Qtr To 30/12/18 Qtr To 31/03/19
National Dollars Growth % YA
Total Grocery excl. Tobacco Mcphersons Cons Prod
19 Source: IRI Grocery Scan Qtr to 06.01.19
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20 Source: IRI Grocery Scan Qtr to 06.01.19
1.7 1.1 0.51.5
-7.5
9.7
12.6
13.9
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Qtr To 01/07/18 Qtr To 30/09/18 Qtr To 30/12/18 Qtr To 31/03/19
National Units Growth % YA
Total Grocery excl. Tobacco Mcphersons Cons Prod
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#1 Australian Cosmeceutical BrandFacial 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 Revenue
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Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19 Australian Pharmacy
Accelerating Growth +26% (outpacing the category 4x)
Core Rejuvenation
Reversaderm range
Sales 7x versus prior relaunch
22
The most successful Anti-aging mask launch
6 Masks sold every minute since launch Contributing 30% to Dr. LeWinn’s growth
The #1 NPD Facial Skincare Launch
+60% R4 Growth
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Create a China facing business AUSTRALIA
澳大利亚
CHINA
中国
L I N E S M O O T H I N G C O M P L E X
#1 range for
Dr.LeWinn’s driven by China demand
排名#1 莱文医生系列
Dr. LeWinn’s Domestic vs Export
Source: MCP Ex. Factory Sales Revenue
FY17 FY18 FY19
Domestic Export
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Access China’s Forecast Secured for $5m by year end
100,000 LSC 3pk Masks 7,000 Ageless Trinity Packs
24Source: Ex. Factory FY19
HAIR CARE SKIN CARE PERSONAL CARE
15% Domestic Revenue Growth FY19
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GROWTH THROUGH INNOVATION & PROVEN CLINICAL TRIALS
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Core RejuvenationClinically proven Age Defy range
+182% vs YA
High Growth Mask Category100% Natural Eucalyptus Fibres
Australian Ingredients
Category ExpansionClinically proven Natural Deodorant
+241% vs YA
Source: IRI Market Edge Pharmacy Scan MAT 21.07.19 (Age Defy); MCP Ex. factory July 19 (Deodorant); Eucalyptus Fibre Face Mask
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Source: IRI Market Measurement – Scan, Data to: MAT Value To 23/06/19
#1 BEAUTY ACCESSORIES+$2.5M retail sales growth
Extending market leadership to 25.2%
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#1 HAIR ACCESSORIESExtending Pharmacy leadership to 48%
+4915 distribution points
#2 BEAUTY ACCESSORIES#1 Lash Brand during Party Season
+$808K incremental retail sales
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N O . 1 B A G S W R A P S & F O I L
3 4 % M A R K E T S H A R E
54%of Australian Households
have purchased a Multix product within
the last year
$135MRetail Sales Value
#1Aluminium Foil, Kitchen Tidy,
Garbage Bags, Baking Paper
and Freezer Bags
+12%MAT Value Growth
Outpacing Category Growth 5%
Source: IRI Market Measurement – Scan, Data to: MAT Value To 26/05/19; Nielsen Homescan, BWF, Data to: 15/06/201927
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I N V E S T E D O V E R $ 2 . 5 M T O B U I L D B R A N D E Q U I T Y
I N F Y 1 9
Source: Harvest Insights Brand Health Dip April 2017 (pre advertising) & September 2018 (post advertising); Nielsen Homescan 18/05/19 vs. LY
• 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%
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L E A D I N G S U S T A I N A B I L I T Y G R O W T H T H R O U G H
C O N S U M E R , M A R K E T A N D E N V I R O N M E N T A L I N S I G H T S
Source: IRI Market Measurement – Scan, Data to: MAT Value To 26/05/1929
SWISSPERS #1 COTTON57% Market Share
+11% quarter growth in cotton tips/buds
MULTIX SUSTAINABILITYRemove | Renew | Reuse | Renew
90% market share; growing +142%
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AMPLIFY
45M Ad Impressions
ENGAGE
18M consumers reached on owned social media
3M consumers reached via influencer activity
OPTIMISE
901 Products live on SKULibrary
Source: Facebook, Instagram, 3rd Party Ad Servers, Google Adwords, SKU Library
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• Top to top meetings
• Joint Business Planning
• Trading Terms
• Customer partnerships
• Event Participation
STRATEGIC CUSTOMER PARTNERSHIP
+65% increased participation +48000 incremental distribution points + 92 New Doors FY18/19
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Customer
Strategy
AlignmentPromotional
Vehicle
Effectiveness
Promotional
Differentiation
Exclusives
and First to
market
Unique In
store
Experiences
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Sampling
opportunities
Catalogue
Aligned field
comms &
targets
Ambassador
and
Instore
Training
Online
Integration
Premium Off
Location
Stands
Store
Takeovers
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Source: IRI MarketEdge Facial Skincare 6mm to 21/07/19
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Source: IRI Market Measurement – Scan, Data during promotional period
PRICELINE/MANICARE SPRING BEAUTY
+2.5 share points
Top 5 NPD (out of 586 products)
PRICELINE / GLAM MAGNETIC LASHES
+1.2 Share points since NPD launch
Top 3 Lash NPD launched in last 6 months
MULTIX XMAS ACTIVATION
+3.2 share points gain
Fresh reaching
3.1M consumers
Off location in 360 stores
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In Store Real Estate Investment
NEW PRODUCT LAUNCHESHigh impact in high traffic areas
CHEMIST WAREHOUSE :689 Stand in 281 Stores
+16% GROWTH
REAL ESTATE OPTIMISATIONAssist shopper navigation
+45% INVESTMENT IN REAL ESTATE
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NEW BUSINESS DEVELOPMENT
Brett Owers & David Fielding
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($5.7 Billion, +3.8% vs YA)
Maintain the state of good health by pro-actively seeking to prevent the onset or worsening of conditions
($6.5 Billion, +2.8% vs YA)
The subjective enhancement of physical perception for ones own
satisfaction
BEAUTYWELLNESSHEALTH($4.9 Billion, +3.9% vs YA)
The intent of enhancing and restoring health via symptomatic treatment.
Sources: Complimentary Medicine of Australia 2018 Report, AFR 2018, Statista 2019
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M&A growth remains a strategic priority
Health, Wellness & Beauty focussed
Strong balance sheet to fund acquisitions
Rigorous process and criteria
Have been actively approaching targets
Kōtia, Soulful and Sugarbaby ventures signed
M&A
GROWTH
ORGANIC GROWTH
MCPHERSON’S BASE
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• Enhance MCP’s capacity and capabilities
• E.g. investment in Aware Environmental Ltd (manufacturer)
Non-Controlling Strategic Investments Joint Ventures
Smaller Bolt On Acquisition Significant M&A Deal
• Access to early stage brand/technology opportunities
• De-risks entry, whilst providing pathway to full ownership
• Founders remain engaged to help grow
• Smaller uncomplicated deals
• Leverage MCP scale efficiencies
• Plug and play into MCP infrastructure e.g. sales, marketing and execution capability, geographic expansion
• Well positioned to complete a significant M&A transaction
• Add additional scale and earnings and yields strong synergies
• Access to new markets, categories and channels
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• 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
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EXPORT
David Fielding
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Continue to expand our presence geographically with a focus on Asia
New Zealand sales 18%Singapore sales 11%China sales 119%
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Continue 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
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EXECUTION
CAPABILITIES
OPPORTUNITIES
PEOPLE GLOBAL COVERAGE INNOVATION
DISTRIBUTION IN MARKET EXPANSION
BRAND AUSTRALIA DEMOGRAPHIC EXPERTISE
NPDDriven by
Asian beauty
trends
100+Merchandising Units Across
Southeast Asia
30Dedicated Headcount for MCP
Southeast Asian Expansion
Strong Partnerships
2500+Distribution Points in Southeast
Asia
12NEW Southeast Asian
Countries
66%Share of global Middle Class
represented in Asia by 2030
Winning in
Beauty
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• Strong partnerships with key distributors
• 2500+ distribution points
• Expansion of retail merchandising presence
• Entry into new markets
• Introduction of new brands
• Leverage financial confidence of the consumer in SEA
• Expand regional coverage with entry into new markets
• Introduction of new brands
• Strong growth achieved in FY19 with aggressive plans for FY20
• More than 1M ABM resellers in the network
• Expanding capabilities in export team
• Establish distribution and demand in new markets
• Develop strategic expansion plans across brands in key categories
MIDDLE EAST
CHINA
SOUTHEAST ASIA
UK/ EUROPE
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SUPPLY CHAIN
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+40%SIGNIFICANT HEADROOM
5,000+1,600 Australian Postcodes
-40%Last 2 Years
EFFICIENCY
ADAPTABLE &
FLEXIBLE
AVAILABLE CAPACITY DAILY DELIVERIES STAFF RETENTION
80+Tenure > 18 Years
SUPPLY CHAIN COSTS HARD SAVINGS WORKING CAPITAL
$7.5 Mill-56%
20%CAPEX – SUPPLY CHAIN ERP
FUTURE
PROOFINGTRUSTED PARTNERS ADAPTING ANNUAL INVESTMENT
8
18
Last 5 Years
Transitioning Businesses
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Hamond Road Facility - Dandenong
• One of the largest (22,000 sqm) manufacturing plants in Australia. With significant excess manufacturing capacity
• Largest and quickest laundry powder line in Australia
• Includes the only dishwashing tablet plant in the Southern Hemisphere
• 2,000 sqm TGA pharmaceutical clean room
• Highly efficient, eco-responsible and fully certified
• Planning underway for solar energy, biodiesel and fully recycled water system
• TGA, GMP (pending), ACO and COSMOS certified
• Dedicated output
• Prioritised work
• Confidence in supply/DIFOT
• Shorter lead times
• Positive impact on quality
• Improved turnaround on NPD samples
• Dedicated technical & operational staff
• Integrated supply chain eyeing China customers
• Unrestricted supply capacity
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SUMMARY AND OUTLOOK
Laurie McAllister
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Refocus our Business Revitalise own Brands Ensure Healthy Balance Sheet
Stop the Bleeding in NZ and Singapore Asian expansion
Efficiencies and Savings across Supply Chain
Create a New Business Team
Move from Transactional to Strategic Partner
Grow Acquired Skin Care Brands Create a China Facing Business Team Fit for the Future
+107%+11%
+18%
+11%
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High 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
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Q & A