Preliminary Results Year Ended 31 May 2012media.investis.com/P/PZ-Cussons/presentations/2012/...7...
Transcript of Preliminary Results Year Ended 31 May 2012media.investis.com/P/PZ-Cussons/presentations/2012/...7...
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Preliminary Results
Year Ended 31 May
2012
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Introduction
Richard Harvey
Chairman
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Highlights
Alex Kanellis
Group Chief Executive
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Highlights
• Revenue up 4.7% despite challenging trading conditions, particularly Nigeria and Australia
• Profits hit by high raw material costs, Australian trading downturn and tensions in Nigeria
• Extension of Beauty division portfolio with acquisition of Fudge hair care brand
• Supply chain optimisation project underway
• Confident of return to profitable growth in current year
• Overall performance since year-end in line with expectations
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Financials
Brandon Leigh
Group Finance Director
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Profit, EPS and Dividend Growth
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Operating profit Earnings per Share Dividend per share
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Financial Highlights – Year to 31 May 2012
Year to Year to Excluding exchange31 May 2012 31 May 2011 impact
Revenue £858.9m £820.7m + 5% £875.0m + 7%
Operating profit1 £93.4m £108.1m -14% £95.3m -12%
Profit before tax1 £92.3m £108.9m -15% £94.2m -13%
Effective tax rate1 27.0% 27.8%
Earnings per share1 14.74p 16.20p -9% 15.04p -7%
Dividend per share 6.717p 6.61p + 2%
Net (debt)/funds (£17.9m) £51.8m
Notes1 Before exceptional items
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Regional SummaryNET REVENUE £m £m
2012 2011AFRICA 362.2 339.1 7% 11%
ASIA 158.8 176.1 -10% -12%
EUROPE 337.9 305.5 11% 12%
TOTAL 858.9 820.7 5% 7%
OPERATING PROFIT
AFRICA 33.5 41.0 -18% -15%
ASIA 8.3 17.5 -53% -51%
EUROPE 51.6 49.6 4% 4%
TOTAL 93.4 108.1 -14% -12%
Reported Growth %
Constant Currency %
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H1 / H2 SummaryNET REVENUE £m £m £m £m
H1 2012 H1 2011 H2 2012 H2 2011
AFRICA 162.7 142.3 14% 22% 199.5 196.8 1% 3%
ASIA 76.8 86.1 -11% -14% 81.9 90.0 -9% -10%
EUROPE 174.5 146.4 19% 19% 163.5 159.1 3% 6%
TOTAL 414.0 374.8 10% 13% 444.9 445.9 0% 1%
OPERATING PROFIT
AFRICA 13.7 13.7 0% 7% 19.8 27.3 -27% -25%
ASIA 2.1 8.6 -76% -73% 6.3 8.9 -29% -30%
EUROPE 24.3 23.7 3% 2% 27.3 25.9 5% 6%
TOTAL 40.1 46.0 -13% -10% 53.4 62.1 -14% -13%
Reported Growth %
Constant Currency %
Reported Growth %
Constant Currency %
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Operating Margin
H1 2012 H1 2011 H2 2012 H2 2011 FY 2012 FY 2011
AFRICA 8.4% 9.6% (1.2pp) 9.9% 13.9% (4.0pp) 9.2% 12.1% (2.9pp)
ASIA 2.7% 10.0% (7.3pp) 7.6% 9.9% (2.3pp) 5.2% 9.9% (4.7pp)
EUROPE 13.9% 16.2% (2.3pp) 16.7% 16.3% 0.4pp 15.3% 16.2% (0.9pp)
TOTAL 9.7% 12.3% (2.6pp) 12.0% 13.9% (1.9pp) 10.9% 13.2% (2.3pp)
VarianceVariance Variance
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Regional SummaryAfrica
• Nigeria (Group’s main market)• H2 sales affected by the social and economic tensions/strike
• Profits lower as a result of the above as well as higher raw material costs
• Ghana and Kenya performed well, both increasing profitability
Asia
• Continued positive momentum in Indonesia
• Overall Asia revenue and profits lower primarily due to the challenging trading conditions in the Australian homecare category
Europe
• Robust performance in the UK driven by brand innovation and renovation despite competitive trading conditions
• Strong performance in the Beauty division with significant new product launches
• Strong trading in Poland, Greece down but immaterial
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Raw Material Prices
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Net (Debt)/Funds Statement
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Year to 31 May 2012
Year to 31 May 2011
Cash from operations 72.8 119.7
Defined benefit pension scheme contributions (15.3) (6.7)
Returns on investments & servicing of finance (8.1) (5.3)
Taxation (21.6) (23.0)
Capital expenditure (16.6) (22.2)
Investment in Joint Ventures (16.8) 1.0
Acquisition of minority interest (8.6) (2.9)
Acquisitions (26.3) (62.5)
Equity dividends paid (28.8) (26.0)
Net decrease in funds (69.3) (27.9)
Opening net funds 51.8 86.5
Exchange difference (0.4) (6.8)
Closing net (debt)/funds (17.9) 51.8
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Net Working Capital as % of Sales
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Africa Asia Europe Group
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Financial Summary
• 4.7% revenue growth, despite challenges
• Profit before tax and exceptional items 15% lower; impacted by- Raw material costs
- Australia homecare category
- Social and economic tensions in Nigeria
• Supply chain optimisation project initiated to ensure supply chain cost base remains competitive
• Strong balance sheet with small net debt
• Dividend growth of 1.6% year on year
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Africa
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Africa – Nigeria Macro Overview• Trading in second half of the year significantly affected by:
- Social instability in the north - Removal of the fuel duty subsidy in January and consequential national strike
• The economic outlook for the country remains encouraging with positive GDP growth rates expected to continue
• Oil production currently at 2.4 million barrels per day
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Africa - OverviewNet Sales £362.2m vs. £339.1m (7% growth )
Family Care (PC/HC)• Focus has continued on brand renovation across the portfolio of soaps, detergents, baby care and medicaments
• Significant year on year increase in raw material costs adversely affected margins
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Africa – OverviewElectricals
• Focus has continued to be on the core range of fridges, freezers and air conditioners sold through the HPZ joint venture with Haier
• Further HT Cool World stores were opened taking the number to seven with further stores planned in the new financial year
• The range of separately imported generators sold under TEC brand was expanded and delivered revenue growth
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Africa – Overview
Food & Nutrition• Nutricima joint venture with Glanbia Plc has seen revenue growth of almost 20% in the year to circa £72m despite tough trading conditions
• Continued increases in the cost of milk and the weaker exchange rate have however adversely affected margins
• Brand portfolio has now been extended to five brands; Nunu, Coast, Bliss, Olympic and Yo!
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Africa – Wilmar Update
• Refinery on schedule for completion by end of calendar year
• New consumer brand to be launched early in calendar year 2013
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Asia
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Asia – OverviewNet Sales £158.8m vs. £176.1m (10% decline)
Australia• Revenue declined 27%, with business moving from profit to loss• Home Care trading environment worsened during the year• Measures to address underperformance proving successful; business back into monthly profit• Moved to variable cost model; manufacturing facility closed• Personal Care and Beauty the focus for future growth – both grew revenue and profit during the year
Smaller Asian markets:• Thailand - lower revenue and profitability as a result of disruption caused by the flooding• Middle East - results adversely impacted by social and political unrest in the region
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Asia – Overview
Indonesia
• Continued positive momentum with another year of growth in revenue and profitability
• Cussons Baby range benefited from portfolio improvements and distribution expansion
• Cussons Baby now clearly established as number one brand in the segment
• Other brands also performed well – Imperial Leather, Morning Fresh, Carex
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Europe
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Europe – OverviewNet Sales £337.9m vs. £305.5m (11% growth)
UK – Washing & Bathing
• Robust performance with revenue and profitability ahead of the prior year despite competitive trading conditions
• Carex ‘Protect Plus’ launched during the year
Poland
• Strong performance with revenue and profitability ahead of the prior year
Greece• Lower profitability as a result of the domestic economic crisis but immaterial
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Europe – OverviewMum & Me Product Range Launched June 2012• Internally developed Personal Care range specifically designed to take mums on journey from Bump to Baby
• Backed by superior research and reassurance
• Launched into UK market with extensive 360° marketing and extremely positive reaction from retailers
• Demonstrates PZ Cussons’ capacity for dynamic innovation
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Europe – Overview (cont.)UK – Beauty Division
• First full year with strong performance and significant new product launches
• Acquired the Fudge hair care brand for £26.3m
• Signed ballet star Darcey Bussell as Sanctuary brand ambassador
• International expansion continues in US
• Salon at home range has achieved a step-change for Charles Worthington positioning
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Summary & Outlook
• Focus remains on driving profitable growth via:
• brand innovation and renovation and new sources of growth
• margin improvement through further cost reduction initiatives
• Nigerian market remains fragile
• Supply chain optimisation benefits to be seen in current year
• Strong balance sheet – well placed to pursue growth opportunities
• Confident of return to profitable growth in current year