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DRIVING GROWTH
FY15 INVESTOR PRESENTATION
YEAR ENDED 28 JUNE 2015
Charlie McLeish – Chief Executive Officer
Albert Zago – Chief Financial Officer
Bleach production Line B (stage
1) completed SIGNIFICANT
EFFICIENCY improvements
Gross branded sales in Australia GREW 5.7%
& tactically defended its
position in New Zealand
White King advertising campaign SUCCESSFULLY
strengthened Pental’s CORE BRAND
Refresh of manufacturing team has
delivered significant improvement
in its operations
Refreshed sales
and marketing
team to accelerate GROWTH
OPPORTUNITIES
CAPITAL INVESTMENT OF
$5.3M
STRATEGIC ACHIEVEMENTS
Ranging of
NEW
PRODUCTS Commenced May/June 2015
announced at HY is
ON SCHEDULE
& will be operational by
third quarter of FY16
I 02 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
Underlying
Profit Before
Tax up 15.6%
on LY
Continuous
Improvement and
Profit Delivery
Project initiatives
mitigated many of
the raw material cost
increases
Share
consolidation 1
share for every
15 Shares was
completed on 1
December 2014
Further strengthened
Balance Sheet:
$6.644 million (net of
costs and tax) capital
raising via Loyalty
and Piggy Back
options holders • All options have now expired
No gearing
and substantial
capacity - Cash
at bank of
$11.040 million
I 03 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
STRATEGIC ACHIEVEMENTS CONT.
Total dividend
for FY15 is 2.58*
cents, at 60.9% of
underlying NPAT
• Proposed final fully franked
dividend of 1.80 cents.
Payable on 30 Sept.2015,
with a record date
11 Sept. 2015
* Based on number of shares issued at 28 June 2015
BUILDING STRONGER BUSINESS FY12 FY13 FY14 2016 AND ONWARDS FY15
CAPEX $0.3m $2.2m $4.6m $4.1m Bulk, High Speed Liquid Line
and Soap automation
Cash /(Debt) $(60.9)m $(8.2)m $Nil $11.0m Strong Balance Sheet
with substantial capacity
Underlying
EBITDA $5.4m 9.6m $9.7m $10.3m
Focused on growing
underlying earnings
Underlying
Profit before
Tax/(Loss)
$(5.2)m* $4.2m $6.9m $8.0m
Focused on sustainable
earnings in existing and
new channels
Dividends - -
Recommenced,
with full year
dividend paid
Dividends
60% of
underlying
NAPT
Future dividends 60%
of NPAT
* FY12: Consolidated net loss before tax $53.0m including discontinued operations
Relocation of bleach
plant and
commenced
new bleach private
label production
Key bleach
products previously
outsourced brought
in house
$5.3m of capital
projects announced
& on target for
completion 3rd
Qtr FY16
• Drive “Power” Brands
• Asia & bulk channels
• Becoming a low cost producer
• Expansion may include
acquisition in new growth
channels
Restructured
Group
RESTRUCTURE BUILDING EXPANDING
I 04 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
FINANCIAL HEADLINES
$’000 FY15 FY14 Change %
Gross Sales 111,150 109,376 1,774 1.6%
Underlying
EBITDA (i)
10,287 9,690 597 6.2%
Underlying EBITDA to
gross sales (i) 9.26% 8.86%
Depreciation (2,113) (1,793)
Underlying EBIT (i)
8,174 7,897 277 3.5%
Underlying EBIT to
gross sales (i) 7.35% 7.22%
Underlying NPBT 8,020 6,937 1,083 15.6%
NPAT 5,087 5,336 (249) -4.7%
Basic EPS (cents) 4.08 5.10
Working Capital 16,147 18,568 (2,421) -13.0%
Net Cash/ (Debt) 11,040 25 11,015 +100%
KEY POINTS • Australian Brands sales up 5.7%
• New Zealand sales down 0.65%,
impacted by aggressive pricing,
but tactically defended
• Pressure to increase trade spend
even when some retailers are under
performing
• Increased gross margins in both–
dollars & percentage terms – 1.34%
basis points
• Advertising spend rate to sales up
LY: 3.02% vs 2.89%, following
tactical increase in first half
• One off costs:
• Employee restructure $0.432
million
• Plant & equipment impairment
$0.553 million
• Finance costs down $0.806 million
to $0.154 million
• EPS down due to shares issued
from Loyalty & Piggy back Options
– All options have now expired
• No Debt - $11.040 million in cash.
(i) Before one-off significant items - 2015: Refer to commentary; 2014: relates to sale of Close Up Brand $0.4m profit.
I 05 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
UNDERLYING NET PROFIT BEFORE TAX UP 15.6%
Freight & Dist.
8.54% of Gross
Sales up 0.5%.
20% increase in
pallet volume Marketing 3.55%
of Gross Sales
vs LY 3.50%
Net change on LY:
• FX (currency) $0.3m
• Water treatment &
occupancy $0.2m
• Consultants $0.1m
Trade spend at
27.0% of Gross
Sales up 0.78%
on LY
I 06 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
Quality Australian Brands
*Source: Aztec, Australian Grocery Scan MAT 28/06/15
White King Brand TV commercial
ran from October to December 2014.
The White King TV campaign
produced a noticeable increase in
the sale of featured products:
3.1%* increase
in White King
Toilet Cleaners
8%* increase
in White King
Household Cleaners
BRAND HIGHLIGHTS
I 07 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
INVESTING IN KEY BRANDS
White King Community partnership
with Western Bulldogs
Pental is the official sponsor
of the Prostate Cancer
Foundation Australia Big
Aussie Barbie event - to be
communicated on our Little
Lucifer packs and included
in all the Big Aussie Barbie
launch events and PR
releases as well as their
website and all participants’
sponsorship pages.
White King Brand
TV Commercial
ran from October
- December 2014
Velvet PR Campaign, Print Ad
& Consumer promotion – Win
$10,000 or $100 Swarovski
voucher every day with Velvet
from 27th October to 21st
December 2014
I 08 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
2015 NEW PRODUCTS
Moving into high volume, high growth segments...
I 09 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
MARKETING STRATEGY
3 Year innovation
pipeline focused on
delivering brand and
category growth
Tailoring products for new markets and channels
Investment in research and insights to better understand consumer needs and market
opportunities
Improving on current best selling products through ongoing existing product
development
SUPPORTED BY “AUSTRALIAN MADE & OWNED” CREDENTIALS
INNOVATION
Building category
strategy to deliver
growth with our
Power Brands
STRATEGY
Investing in marketing
communication on our
key brands
COMMUNICATION
I 10 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
DIGITAL STRATEGY “IT’S A DIGITAL WORLD”
OUR OBJECTIVE
• Drive brand awareness
• Increase Sales
• Talk to Customers
Directly
• Increase Customer
Retention
• Increase Margin
I 11 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
HOW WE WILL ACHIEVE THIS
HOW WE ACHIVE THIS
BUILD A 18 MONTH
DIGITAL STRATEGY
SOCIAL
MEDIA
FEEDS
FORUMS
CHARITY
TIPS
SHOP
WEBSITE ONLINE STORE
APP ONLINE
ADVERTISING
WELL
- BEING
PRODUCTS
FACTS
HEALTH
COMMUNICATIONS
LIFESTYLE
I 12 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
TRANSFORMATION CONTINUES
CULTURAL CHANGE IMPROVING PRODUCTIVITY
Disciplines around production floor meetings
Site communication
RESTORE
BASIC
CONDITIONS
Continuous Improvement is the way forward
CREATE
THE NEW
“NORMAL”
STEP
CHANGE
- Safety
- Quality
- Production
- Capability
- Performance
Team approach winning together
Improve systems & measurement will drive better decision making
Proactively drive process change & capital program
LOW
COST PRODUCER
I 13 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
BUILD & DELIVER “ BEST IN CLASS”
Bleach Plant relocation & upgrade completed in FY14
Improve speed and capacity of Bleach Line B –
completed August 14
*Line A new bottle filler and Line B back end automation to – improved efficiency
& reduce trade waste
Ongoing review of High Speed Liquid & Bulk Lines – market
opportunities
Business case FY16
Execute CAPEX
Soap plant Modernisation
*SWING Plant – will reduce
operating costs
Consolidation of 5 soap lines and
back end automation
* Part of $5.3m capital investment announced at the December 2014 half year. Will be operational by 3rd Qtr FY16
BEC
OM
ING
A LO
W C
OS
T P
RO
DU
CER
I 14 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
BEFORE: BLEACH
LINE B PRODUCTION
• Throughput rate of 50 bottles per minute
• Labour intensive, manual handling
& process bottleneck
AFTER: AUTOMATED
SOLUTION
(Wrap around case packer, robotic
palletiser & stretch wrapper)
• Reduction of 3.5 units of labour
• Minimum throughput rate of 70
bottles per minute
DELIVERING ON MAJOR CAPITAL PROJECTS
I 15 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
CREATE A
SOLID PLATFORM
FOR GROWTH:
Nail the basics: Safety, People
Engagement, Environment ,
Quality & customer Service
Install world class back end
capability - bleach line, bulk line,
high speed liquid & Soap plant
automation
DRIVE GROWTH
THROUGH
NON–RETAIL:
COMMERCIAL &
INDUSTRIAL
CHANNELS
DRIVING GROWTH STRATEGY
OPTIMISE
VALUE GROWTH
FROM THE CURRENT
PORTFOLIO:
Focus on and over invest in Growth
categories and our Power brands
Build strategic alliances with global
category leaders to access customer
insights and innovation pipeline
Optimise pack and price in the
right Channel
Drive innovation
ACCELERATE
OUR CAPABILITY
TO GROW THE
EXPORT
BUSINESS
DRIVE
YEAR ON
YEAR REAL
PRODUCTIVITY
SAVINGS
3
4
5 2 1
I 16 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
DRIVE GROWTH THROUGH:
INDUSTRIAL
& COMMERCIAL
• Distributors
• Office supplies
• Commercial cleaning companies
• Defence dept.
• White King
• Little Lucifer
• Velvet
• Softly
• Janola (NZ)
• Sunlight (NZ)
NEW PRODUCT
DEVELOPMENT
• Asia Pacific
EXPORT
I 17 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
OUTLOOK Consistent trading conditions anticipated –
highly competitive
Private label continues to be an important
growth channel, but as with brand products, we
will compete on value rather than price alone
Growth opportunities driven via multiple paths:
• Expanding existing channels through
product innovation
• Export
• Bulk industrial and commercial
• New distributorships
Pental will continue pursuing any value-
creating acquisition opportunities in in
conjunction with its capital investment program
Strong product innovation, a continued focus
on driving manufacturing costs down and tight
cost controls will improve shareholder returns
over the long term
I 18 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
APPENDIX FINANCIAL
PERFORMANCE
I 19 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
DELIVERING GROWTH
UNDERLYING EBITDA UNDERLYING NET PROFIT BEFORE TAX
GROSS SALES UNDERLYING EBIT
I 20 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
KEY POINTS Sales
• Australian brand sales up
$5.7%
• New Zealand down 0.65% -
aggressive pricing campaign
aimed at Sunlight, tactically
defended
• Private label down – focus on
growing business at
acceptable margins
Additional investment in trade
spend – brands sales carton
volume up 7.9%. Retailer
pressure to maintain dollar
contribute, even when some
retailers are underperforming
Increased gross margin both on
dollars and percentage (1.34 basis
points) – increased raw material
cost mitigated
Increase in freight cost due to
higher volume of low view sales –
20% increase in pallets
Employee costs flat with
restructure of operational team
and some back office positions
PROFIT & LOSS
KEY POINTS Sales
• Australian brand sales up $5.7%
• New Zealand down 0.65% -
aggressive pricing campaign aimed
at Sunlight, tactically defended
• Private label down – focus on
growing business at acceptable
margins
Additional investment in trade spend
– brands sales carton volume up 7.9%.
Retailer pressure to maintain dollar
contribute, even when some retailers
are underperforming
Increased gross margin both on dollars
and percentage (1.34 basis points) –
increased raw material cost mitigated
Increase in freight cost due to higher
volume of low view sales – 20%
increase in pallets
Employee costs flat with restructure
of operational team and some back
office positions
(1) Underlying result excludes significant one-off items
$’000 FY 15 FY 14 % Change
Gross Sales 111,150 109,376 1.6%
Trade rebates and discounts (29,987) (28,654) -4.7%
Net Sales 81,163 80,722 0.5%
Gross margin (incl. trade
rebates) 39,656 37,563 5.6%
Freight expenses (9,487) (8,794) -7.9%
Employee expenses (11,588) (11,588) -
Marketing expenses (3,353) (3,162) -6.0%
Other expenses & revenue (4,941) (4,329) -14.1%
Underlying(1) EBITDA 10,287 9,690 6.2%
Depreciation & amortisation (2,113) (1,793) -17.8%
Underlying(1) EBIT 8,174 7,897 3.5%
% to Gross Sales:
Sales rebates and discounts 26.98% 26.20%
Gross Margin (incl. trade
rebates) 35.68% 34.34%
Freight and distribution costs 8.54% 8.04%
Marketing costs 3.02% 2.89%
I 21 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
BALANCE SHEET
KEY POINTS No Debt, cash at bank $11.040m
– Substantial capacity
Capital raising of $6.644m via Loyalty and
Piggy Back options – now all concluded
Working capital improved by $2.4m:
• Inventory management forecast &
planning systems
• Refocused management of debtors
$’000 FY 15 FY 14
Net Assets 81,734 73,015
Net Cash/(Debt) 11,040 25
Working Capital 16,147 18,568
Property, Plant and Equipment 15,252 13,745
Goodwill 25,084 25,084
Other Intangibles: Brand
Names & Software 15,202 15,237
Net Debt / Equity 0.0% 0.0%
Issued Capital 90,658 84,014
$’000 FY 15 FY 14
Trade & other receivables 24,118 24,726
Inventories 7,400 8,945
Trade & other payables (15,371) (15,103)
Working Capital 16,147 18,568
I 22 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
CASH FLOW
KEY POINTS Strong cash profit
No tax paid in FY15 due to carried
forward tax losses – now fully
utilised
Improved working capital by
$2.499m
Unused multi-option debt facility
of $16m
• Facility expires 28 February 2017
• Line fee of 0.9% line fee plus
interest
of 2.09%
Capital expenditure (some
overlapping financial years):
• WIP $2.0m of $5.3m capital
projects
• Stage 1 Bleach Line B bottle
unscrambler
• Chilling equipment in the
bleach plant
• Replacement of soap roller
• Additional warehouse racking
• Refresh of IT infrastructure
• Continued work on planning
& forecasting systems
CASH FLOW
KEY POINTS
Strong cash profit
No tax paid in FY15 due to carried
forward tax losses – now fully utilised
Improved working capital by $2.4m
Capital expenditure (some
overlapping financial years):
• WIP $2.0m of $5.3m capital projects
• Stage 1 Bleach Line B bottle
unscrambler
• Chilling equipment in the
bleach plant
• Replacement of soap roller
• Additional warehouse racking
• Refresh of IT infrastructure
• Continued work on planning
& forecasting systems
(1) Underlying result excludes significant one-off items
$’000 FY 15 FY 14 % Change
Gross Sales 111,150 109,376 1.6%
Trade rebates and discounts (29,987) (28,654) -4.7%
Net Sales 81,163 80,722 0.5%
Gross margin (incl. trade
rebates) 39,656 37,563 5.6%
Freight expenses (9,487) (8,794) -7.9%
Employee expenses (11,588) (11,588) -
Marketing expenses (3,353) (3,162) -6.0%
Other expenses & revenue (5,019) (4,329) -15.9%
Underlying(1) EBITDA
10,209
9,690 5.4%
Depreciation & amortisation (2,113) (1,793) -17.8%
Underlying(1) EBIT 8,096 7,897 2.5%
% to Gross Sales:
Sales rebates and discounts 26.98% 26.20%
Gross Margin (incl. trade
rebates) 35.68% 34.34%
Freight and distribution costs 8.54% 8.04%
Marketing costs 3.02% 2.89%
$’000
FY 15
FY 14
Cash in flow from
operating activities 11,810 6,991
Capital expenditure (4,138) (4,415)
Net Proceeds from issue of
shares 6,656 5,661
Net Repayment of borrowings - (12,556)
Dividend paid (3,313) -
Net increase/(decrease) in Cash 11,015 (4,319)
Net cash position at end of year 11,040 25
I 23 DRIVING GROWTH - FY15 INVESTOR PRESENTATION
DISCLAIMER
The material in this presentation is a summary of the results of Pental Limited (Pental) for the year (52 weeks) ended 28 June 2015 and
an update on Pental’s activities and is current at the date of preparation, 24 August 2015. Further details are provided in the Company’s
half year accounts and results announcement released on 24 August 2015.
No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this
presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in
relation to future matters contained in the presentation (“forward-looking statements”). Such forward looking statements are by their
nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject
to change (and in many cases are outside the control of Pental and its Directors) which may cause the actual results or performance of
Pental to be materially different from any future results or performance expressed or implied by such forward-looking statements.
This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as
advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any
particular investor.
Due care and consideration should be undertaken when considering and analysing Pental’s financial performance. All references to
dollars are to Australian Dollars unless otherwise stated.
To the maximum extent permitted by law, neither Pental nor its related corporations, Directors, employees or agents, nor any other
person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of
this presentation or its contents or otherwise arising in connection with it.
This presentation should be read in conjunction with other publicly available material. Further information including historical results and
a description of the activities of Pental is available on our website, www.pental.com.au
I 24 DRIVING GROWTH - FY15 INVESTOR PRESENTATION