INTRODUCING KERRY
REVENUE 2012
TRADING PROFIT 2012
› Kerry is the global leader in
Consumer
Foods 29%
food ingredients & flavours
› UK/ROI leader in branded
Ingredients
& Flavours
71%
Consumer
Foods 21%
Ingredients
& Flavours
79%
and customer branded
Ingredients & Flavours
Consumer Foods
chilled foods
€4,225m
€1,712m
Ingredients & Flavours
Consumer Foods
KERRY WORLDWIDE
› Revenue €5.8bn
SALES BY REGION 2012
EMEA 57%
›
Operations in 24 countries
›
Sales to 140 countries
›
140 manufacturing sites
›
24,000 employees
€508m
€133m
Asia-Pacific
12%
› Enterprise Value €9bn*
› Market Capitalisation €8bn*
Americas
31%
Ingredients & Flavours
Consumer Foods
Note: * As at 31-03-2013
MISSION STATEMENT
Kerry Group will be:
– the world leader in food ingredients and flavours serving the food and beverage
industry, and
– a leading supplier of added value brands and customer branded foods to the Irish
and UK markets
Through the skills and wholehearted commitment of our employees, we will be
leaders in our selected markets – excelling in product quality, technical and
marketing creativity and service to our customers
We are committed to the highest standards of business and ethical behaviour, to
fulfilling our responsibilities to the communities which we serve and to the
creation of long-term value for all stakeholders on a socially and environmentally
sustainable basis
BUSINESS DEVELOPMENT
›
1972
Foundation as dairy processing company in Listowel, Ireland
Dairy protein technology – US market focus
›
1974
Formation of Kerry Co-operative Creameries Ltd
›
1972 - 80
Organic growth
Development of dairy business
›
1980
Strategy for the ’80’s
Diversification
Growth through acquisition
– Ingredients
– US, Europe
– Foods
– Ireland, UK
›
1986
Stock market flotation of Kerry Group plc
Significant acquisitions followed
›
Ingredients & Flavours
Progressive development of technology leadership
Savoury & Dairy, Cereal & Sweet, Beverage Systems
›
Consumer Foods
Establishment of brand leadership
Selected private label growth categories
KERRY’S MAJOR ACQUISITIONS
›
1988
Beatreme Food Ingredients
US$130m
›
1994
DCA
US$400m
›
1998
Dalgety Food Ingredients
Stg£243m
›
2001
Golden Vale
›
2004
Quest Food Ingredients
US$440m
›
2005
Noon
Stg£124m
›
2009
Breeo Foods
›
2011
Cargill’s flavour business
€391m
€140m
US$230m
NOTE: KERRY GROUP HAS ACQUIRED APPROXIMATELY 100 SMALL TO MID-SIZED BUSINESSES
ACQUISITIONS 1987-2012
19
Food companies
including Mattessons, Wall’s, Golden Vale, Noon Products, Breeo Foods, Headland Foods
89
Food ingredients, flavour, foodservice companies
Kerry Jackson
Beatreme Food Ingredients
Dairyland Products
Malcolm Foods
Research Foods
SPI Foods Inc.
Kerry de Mexico
DCA, DCA Solutech
Ciprial S.A.
SDF Foods
Dalgety Food Ingredients
Star & Arty Ingredientes
Burns Philp Ingredients Div.
Três Corações
Tukania Gmbh
Shade Foods (SFI)
York Dragee
Armour Food Ingredients
Alferi Laboratories Inc.
Corol S.A.
Creative Seasonings
Iowa Soy
San Giorgio Flavours
Tingles Ltd
Nutrir S.A.
Geneva Flavours
Hickory Flavours
Voyager Foods
Siber
Aromont S.A.
Stearns & Lehman
Ringger Foods
Roskam
IDSA
EBI
Rector Foods
IFI
St Louis Flavors
Metarom
SunPure
Pacific Seasonings
Guernsey Bel
Crystals International
Da Vinci Gourmet
Oregon Chai
Extreme Foods
Quest Food Ingredients
Cremo Ingredients
Flavurence
Laboratorios Krauss
Fructamine
Manheimer
Ernsts Food Ingredients
Lanli Food Industry Company
Custom Industries
Nuvex Ingredients
Titusfield Ltd
Sugar & Spice
Shanghai Vega Fragrance & Flavour
Presco Food Seasonings
Can Pan Candy
Fountainhead Manufacturing
QA Products Inc
X-Café LLC
PT Armita
Prima S.A.
Dera Holding NV
IPM Foods
NutraCea’s cereal ingredients
Tea Wave
Agilex Flavors
GM’s Australian lifestyle bakery
KMC Foods
Newmarket Creameries
SpringThyme Oils
Caffe D’Amore
CF Chefs
EBI Cremica
General Cereals S.A.
Cargill’s flavour business
SuCrest GmbH
FlavourCraft
Lactose India
IJC Fillings
Millennium Foods
Griffith do Brasil
Big Train
Angsana Food Industries
Food Spectrum Group Pty
REVENUE AND ADJUSTED* EPS 1986-2012
REVENUE 1986-2012 (€M)
7000
5,848
6000
5000
3,755 3,693
4000
3000
2,200
4,960
4,646 4,788 4,791 4,521
3,003
1,523 1,566 1,707
2000
1000
2,456 2,622
4,129
4,430
5,302
337
370
504
710
742
959 1,050 1,117 1,121
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
ADJUSTED* EPS 1986-2012 (cent)
250.0
234.0
213.4
192.1
200.0
150.0
100.0
50.0
7.6
8.4
38.7
28.9 35.8
21.1 23.0 25.9
12.7 16.3 17.6
46.7
57.4
68.0
79.2
87.9
101.8
112.1
122.3
130.8 132.8
142.4
151.8
163.9
0.0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Note: * before brand related intangible asset amortisation and non-trading items. From 2011, with 2004 to 2010 re-presented, computer software is treated as a cost in calculating adjusted EPS
OUR BUSINESS STRUCTURE
Ingredients & Flavours
Consumer Foods
Agribusiness
Americas Region
Ireland
Ireland
EMEA Region
The UK
Asia-Pacific Region
KERRY GROUP – WORLDWIDE LOCATIONS
Head Offices
Manufacturing Plants
Sales Offices
EXTENSIVE MANUFACTURING (#140) AND SALES FOOTPRINT SUPPORTS SALES TO 140 COUNTRIES
* As at 31/12/2012
$50BN INGREDIENTS AND FLAVOURS MARKET
REVENUE $BN (1)
›
Kerry is the largest player
6
in the ingredients and
flavours market
›
Highly fragmented, but
growing market at 2% to
5
4
3
3% p.a.
2
›
Benefits to being a scale
1
player
(1) Source: most recently published full year results for ingredients and flavour divisions only, Kerry estimates.
DSM (Food Specialties)
Novozymes
Corbion
Glanbia Nutritionals
Chr Hansen
Sensient
Symrise
IFF
Firmenich
Tate & Lyle (SFI)
McCormick
ABF
Givaudan
Consolidation potential
DuPont
›
Kerry
0
KERRY INGREDIENTS & FLAVOURS: OUR CAPABILITIES
TASTE & NUTRITION SYSTEMS
LIPIDS &
TEXTURANT
SYSTEMS
DAIRY &
SAVOURY
›
›
›
›
›
›
›
›
›
›
›
›
Dairy Flavour Solutions
Customised Dairy
Ingredients
Cultured Dairy
Ingredients
Culinary Sauces
Culinary Ingredients
Snacks Seasonings
Savoury Flavour
Solutions
Meat Coating Systems
Functional Meat
Solutions
Meat Seasonings
›
›
Creaming Lipid Systems
Texture & Stabilizer
Systems
Whipping &
Emulsification Systems
Emulsifiers
CEREAL &
SWEET
›
›
›
›
›
›
›
›
Cereal & Sweet Flavour
Solutions
Cereal Agglomerates
Expanded Cereal
Shapes
Baked & Dough Sweet
Products
Chocolate &
Compounds
Confections & Coated
Sweets
Sweet Particulates
Wet Sweet Systems
BEVERAGE
›
›
›
›
›
›
Beverage Flavour
Solutions
Beverage Sauces &
Syrups
Beverage Systems
Liquid Smoothies &
Juices
Tea & Coffee
Concentrates
Beverage Ingredients &
Extracts
FUNCTIONAL INGREDIENTS & ACTIVES
›
›
›
›
Enzymes
Fermented Ingredients
Pharma Excipients
Media Ingredients
›
›
›
›
Specialised Functional Proteins
Proteins Hydrolysates
Protein Fractions
Prebiotics, Probiotics & Metabolites
NUTRITION
›
›
›
›
Nutritional Beverages
Infant Nutritional Bases
Complete Infant
Formula
Complete Infant Cereal
KERRY INGREDIENTS & FLAVOURS: OUR APPROACH
TECHNOLOGY & PRODUCT GROUPS
DAIRY &
SAVOURY
CEREAL &
SWEET
BEVERAGE
NUTRITION
LIPIDS &
TEXTURANT
SYSTEMS
FUNCTIONAL INGREDIENTS & ACTIVES
PROCESSING CAPABILITY
BRINGING TOGETHER KERRY’S
GLOBAL CAPABILITIES TO DEVELOP
FLAVOUR
AND DELIVER CONSUMER-
Encapsulation/Compoundin
g
Extraction
Pyrolysis
FORMING & SHAPING
PREFERRED SOLUTIONS FOR OUR
CUSTOMERS
CORE PROCESSES
Cold Form Extrusion
Direct Expansion Extrusion
Forming & Moulding
FUNCTIONAL
Fermentation
Evaporation & Centrifugation
Ultrafiltration
Spray Drying
Extrusion
Baking
etc…
MARKET &
CONSUMER
INSIGHTS
CULINARY
EXPERTISE
SENSORY &
ANALYTICAL
SCIENCE
END USE MARKET
APPLICATIONS
BUSINESS DESCRIPTION
KERRY INGREDIENTS & FLAVOURS
REGION
› Kerry Ingredients & Flavours develops, manufactures and delivers
innovative taste systems, functional and nutritional ingredients
and integrated solutions for the food, beverage and
pharmaceutical markets
Americas 44%
EMEA 39%
› The largest player in the ingredients and flavours market
Asia-Pacific 17%
› 2012 revenues were €4.2bn
› The customer derives maximum synergies through utilising
Kerry’s broad range of food and beverage technologies,
applications and culinary expertise and processing capabilities
› No. 1 position in Savoury & Dairy and Cereal & Sweet and key
leading positions in Beverage, Pharma and Functional Ingredients
TECHNOLOGY
END USE MARKET
Beverage 22%
Savoury & Dairy Systems &
Flavours 44%
Meats 18%
Cereal & Sweet Systems &
Flavours 20%
Dairy 9%
Bakery 13%
Soups, Sauces & Dressings 7%
Beverage Systems & Flavours
17%
Pharma/Functional Ingredients
9%
Regional Ingredients 10%
Cereal & Bars 6%
Prepared Meals & Side Dishes 6%
Savoury Snacks 5%
Ice-cream & Desserts 4%
Confectionery 4%
Pharma 4%
Appetisers 2%
KERRY’S LEADING TASTE POSITION
FOOD &
BEVERAGE
FOCUSED
NO.1 GLOBALLY
FOR TASTE &
INGREDIENT
SOLUTIONS
TOP 5 PLAYER IN
GLOBAL
FLAVOURS
BREADTH OF
APPLICATIONS &
SENSORY
EXPERTISE
GLOBAL TECHNOLOGY APPLICATION AND CULINARY LEADERSHIP –
DRIVE GLOBAL ALIGNMENT
›
›
›
›
R&D EXPENDITURE
Best-in-class global development and
applications model
Layer and leverage development and
process capability
Raw material category technology
management
Ensure regional development and
management of customised system
technologies while maintaining global
alignment
›
Develop flavours and technical ingredients
platforms globally with regional product
management and application
›
Significant investment in technology knowhow and applications via acquisitions
›
Execute through Kerry Global Technology &
Innovation Centres supported by Regional
Development & Application Centres
Note: * 2008 to 2010 re-presented in line with management reporting changes
220
200
180
160
140
120
100
80
60
40
20
0
4.7%
4.9%
4.6%
4.5%
4.4%
0.0%
-20.0%
-40.0%
147.5
156.4
147.8
167.1
185.9
-60.0%
-80.0%
-100.0%
2008
2009
2010
R&D Expenditure
2011
2012
% of KIF Revenue*
GLOBAL TECHNOLOGY & INNOVATION CENTRES
Dublin
San Juan del Rio
Beloit
Johor Bahru
Shanghai
KERRY INGREDIENTS & FLAVOURS BUSINESS GROWTH STRATEGIES
›
Continue to maximise
organic growth
opportunity
›
Technology layering and
cross-selling
opportunities
›
›
Continue to expand
geographic market base
Maximise opportunities
through global customer
alliances
›
Increase market focused
innovation
›
Continuous efficiency
gains to drive margin
growth
›
Core to this strategy is
the successful execution
of 1 Kerry
DRIVE GLOBAL
ALIGNMENT
› Global Customer &
Market Management
› Global Technology &
Application Leadership
› Global Process
Manufacturing &
Supply Chain
Leadership
› Leading-Edge Quality
Supplier
ACCELERATE GROWTH
IN DEVELOPING
MARKETS
› Asia Pacific
› Latin America
› Europe, Middle East,
Africa
LEVERAGE CAPABILITIES
& GROW EXPERTISE
› Effective & Efficient
Functional Expertise
› Best-in-Class Talent
Management
KERRY’S NUTRITION AND HEALTH POSITIONING
Leading Portfolio of
Nutritional Ingredients
& Actives, Nutrition
Enabling Technologies
& Nutritional Delivery
Systems
Undisputed Food
Heritage
In-depth Understanding
of Biological Sciences
World Class
Applications Expertise
Global Footprint
FORMULATION & APPLICATIONS EXPERTISE
NUTRITIONAL INGREDIENTS
& ACTIVES
NUTRITION ENABLING
TECHNOLOGIES
NUTRITION DELIVERY SYSTEMS
Ingredients with a direct nutritional impact
Ingredients that address adverse impact on
taste, texture etc. caused by the addition
or removal of a nutrition component
Process or integrated solutions that
delivers nutritional components to the
customer
›
Milk Protein Isolates
›
Milk Protein
›
Concentrates
›
Mineral-enriched Proteins
›
Beta Casein Fractions
›
Comfort Proteins
›
Hypoallergenic Protein Hydrolysates
›
No Boil Over (microwave)
›
Gum Acacia
›
Fermented Ingredients
›
Fermented Celery (natural nitrate
source)
›
Enzymes
›
Never-fry Coating Systems
›
Stabilised Grain Base
›
›
Modulation Technology
› fmt® – salt
› fmt® – sugar
› Micronized salt for salt reduction
Taste systems
› Texture Systems
› EMC and Flavours
›
Dry Nutritional Bases
›
RTD Beverages
›
Yoghurt
›
Creamers
›
Formed Foods
› Oatmeal
› Confections
› Snacks
›
Granola
›
Clusters
›
Soy Crisps
PROGRESSING OUR DEVELOPING MARKETS STRATEGY
KERRY GROUP REVENUE IN DEVELOPING MARKETS €1 BILLION
23% OF INGREDIENTS & FLAVOURS REVENUE
ASIA-PACIFIC
CHINA
› Investment in Shanghai, Songjiang
and Hangzhou
INDIA
› Commissioning new manufacturing
facilities
SEA
› Expanding manufacturing footprint
LATAM
› Deployment of all Group technologies
to region
› Investment in capabilities and
infrastructure
› Strong customer engagement through
San Juan del Rio Technology &
Innovation Centre
EMEA
SOUTH AFRICA
› Strong footprint established.
Acquisition of FlavourCraft,
Orley Foods
RUSSIA AND EASTERN EUROPE
› Extending commercial structure
MIDDLE EAST
› Investment in Regional Development
and Applications Centre
A LEADING PLAYER IN GB/IRELAND FOOD & BEVERAGE FOCUSED ON
CHILLED FOODS MARKETS
Premier
Kerry Foods
Vion
Kraft
Bakkavor
Boparan
Greencore
Coke
Nestle
Tulip
Pepsico
ABF
Samworth
Bakkavor
Kerry Foods
Cranswick
Arla
Morrisons Produce
Vion
Dairy Crest
Muller
Muller
Tulip
Mars
Danone
Unilever
Findus
Unilever
Princes
Dairy Crest
United Biscuits
CONSUMER FOODS
COMPETES IN CHILLED
FOODS MARKETS
Greencore
Arla
Heinz
Moy Park
Boparan
Cranswick
Samworth
Gerber
Danone
Warburtons
Birds Eye
McCain
FOOD & NON
ALCOHOLIC BEVERAGE
TURNOVER GB/IRELAND
ESTIMATED MARKET
SIZE €115BN
Kellogg's
Source: OC&C, Nielsen, Kantar, company reports, Kerry estimates
Kraft
IDB
Nestle
GB/Ireland turnover in:
Chilled Ready Meals, Ready to
Cook, Cooked Meats, Sausage,
Rashers, Pastry, Yellow Fats,
Cheese, Yoghurts, Desserts,
Pizza, Pasta, Sauce, Soup,
Sandwiches.
BRAND PRIORITIES
CORPORATE PRIORITIES
LOCAL BRANDS
OTHERS
DIVERSIFIED PRODUCT PORTFOLIO AND STRONG MARKET POSITION
CONSUMER FOODS – ADDED VALUE CHILLED CATEGORIES
Segment
Markets
MEAT & SAVOURY
PROVISIONS
€6.8bn
GB Cooked Meats
GB Pastry
GB Rasher
GB Sausage
Ireland
DAIRY PRODUCTS
€5.0bn
GB Cheese
GB Yellow Fats
Ireland
MEAL SOLUTIONS
€3.6bn
GB Chilled Ready Meals
GB Ready to Cook
GB Frozen Ready Meals
Ireland
Key Products
Market Position
›
#1&2 breakfast product brands in Ireland
›
#1&2 cooked meat brands in Ireland
›
#1&2 sausage brands in GB
›
#2 (fastest growing) meat snacking brand
in GB
›
#2 customer brand pastry in GB
›
Largest branded dairy supplier in Ireland
›
#1 spreads brand in Ireland
›
#1 cheese brand in Ireland
›
#1 kids cheese snack in GB
›
#1 customer brand dairy spreads and RTE
cheese in GB
›
#1 GB customer brand supplier of
›
– chilled ready meals
›
– frozen ready meals
›
– ready to cook
KERRY FOODS STRATEGY
›
Increased focus on core branded and customer branded
offerings
› Differentiated portfolio of products
› Demonstrating brand values and quality of our products
›
Leverage Kerry technological advantage
› Branded meat and dairy snacking, and convenience
products
› Increased innovation in core product areas
›
Extend European market development
› Cheestrings growth in France, Germany, The Netherlands
and Poland
›
Optimise customer/channel alignment
› Leveraging promotions’ management expertise
› Connecting with today’s shoppers
1 KERRY BUSINESS TRANSFORMATION
BUSINESS STRATEGIES
OPERATING MODELS
KERRYCONNECT
Kerry Ingredients
& Flavours
‘Go-to-market Strategy’
Driving market leadership
and global alignment
‘Enabling better business’
Kerry Foods
‘Go-to-market Strategy’
Optimising scale and
efficiency benefits
Standardised ways of
working
Common data
Building talent for a
global organisation
Integrated ICT system
ACQUISITION AND DEVELOPMENT STRATEGY
KERRY INGREDIENTS & FLAVOURS
KERRY FOODS
TASTE
DEVELOPING
MARKETS
KERRY INGREDIENTS
& FLAVOURS
Savoury & Dairy
Cereal & Sweet
Beverage
Pharma | Functional
NUTRITION
EU MARKETS
SELECTED
NICHES
Meat & Savoury
Dairy Products
Meal Solutions
NEW
CHILLED
CATEGORIES
OUR STRATEGY FOR GROWTH
KERRY BUSINESS
MODEL
1 KERRY
INGREDIENTS &
FLAVOURS
KERRY FOODS
SUSTAINABILITY
Kerry Business Model delivering for the Group
1 Kerry Business Transformation – platform for growth
Investing for the future
Kerry’s leading taste positioning
Delivering across nutritional space
Global technology and innovation leadership
Developing Markets strategic growth plan
Investment in brand leadership and technologies
Securing sustainable growth
1 Kerry Sustainability Programme
‘SECURING SUSTAINABLE GROWTH’
EMBEDDING SUSTAINABILITY IN OUR BUSINESS
Kerry’s sustainability plan represents a journey of continuous improvement
– an ongoing process and strategy to secure sustainable growth
It offers Kerry Group a framework through which to ensure the longterm development of the organisation by building competitiveness,
while at the same time enhancing the quality of life and protecting
our natural resources.
›
SOCIAL
Bearable
Integrated in 1 Kerry strategies and operational activities
Equitable
Sustainable
ENVIRONMENT
›
Directed and governed by our Kerry Sustainability Council
›
Groupwide time-bound, quantified targets established to measure
progress
ENVIRONMENT
SUSTAINABILITY
MARKET
SUSTAINABILITY
WORKPLACE
SUSTAINABILITY
SECURING SUSTAINABLE GROWTH
ECONOMIC
Viable
COMMUNITY
SUSTAINABILITY
LONG TERM TARGETS (5 YEARS 2013 – 2017)
GROWTH
›
Adjusted EPS* Growth
+10% p.a.
Achieved by:
›
Revenue Growth (LFL Volume)
Kerry Ingredients & Flavours
4% to 6% p.a.
(including emerging markets 10% p.a.)
›
Margin expansion
Consumer Foods
2% to 3% p.a.
Group
3% to 5% p.a.**
Kerry Ingredients & Flavours
50 bps p.a.
Consumer Foods
20 bps p.a.
Group
30 bps p.a.
(+ an additional 100 bps at end of Kerryconnect project)
›
Financial and Tax Leverage
Structures aligned with 1 Kerry model
RETURN
›
ROACE* 12%+
CFROI 12%+
* Before brand related intangible asset amortisation and non-trading items (net of tax)
ROAE* 15%+
** Assumes market growth rate of 2% to 3% p.a. and neutral currency and raw materials