Bringing packaging to life RPC GROUP PLC CAPITAL MARKETS DAY 5 NOVEMBER 2013

Transcription

1 Bringing packaging to life RPC GROUP PLC CAPITAL MARKETS DAY 5 NOVEMBER 2013

2 2 VISION 2020 RPC is a leading packaging company creating significant shareholder value Opportunities for focused growth organically, consolidating in Europe through acquisitions and expanding our global presence Strong European asset base optimised by final phase of Fitter for the Future

3 3 Setting the Scene

4 4 SETTING THE SCENE EXTENSIVE PRODUCT RANGE RPC Sales 2012/13 Global rigid plastic packaging market Non- Food Europe $49bn 42% 1.1bn 58% 2013 $135bn North America South & Central America Asia $35bn $4bn $37bn Food ROW $10bn Source: Smithers Pira, 2013

5 Weak Competitive position Strong RPC Group Plc 5 SETTING THE SCENE STRONG MARKET POSITIONS % of FY12/13 revenue 10% 6% 6% 9% 4% 3% 1% 6% 14% 17% 4% 13% 7% Low Market attractiveness High

6 6 SETTING THE SCENE KEY STRENGTHS Strong market positions in selected segments Leading innovation capabilities across all conversion technologies Blue chip customer base Cost leadership conversion cost and polymer buying Process and operational excellence

7 7 SETTING THE SCENE PROFITABILITY SIGNIFICANTLY IMPROVED IN RECESSIONARY CIRCUMSTANCES Sales ( m) Return on net operating assets Adjusted operating profit ( m) 8.3% 8.5% 5.7% 6.8% ,130 1, % 13.5% 17.9% 22.5% 21.2% 4.6% /09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13 ROCE 10.7% 13.5% 15.1% 19.3% 18.3% 08/09 09/10 10/11 11/12 12/13 Return on sales (%)

8 8 SETTING THE SCENE SIGNIFICANT SHAREHOLDER VALUE CREATED OVER LAST FIVE YEARS Earnings per share (Pence) Dividends per share (Pence) /09 09/10 10/11 11/12 12/ /09 09/10 10/11 11/12 12/13 Market capitalisation ( m) RPC share price vs. FTSE p 91.7p 222.8p /09 09/10 10/11 11/12 12/13 31/10/13 01/04/09 03/ /04/10 31/03/ /03/ /04/11 01/04/12 31/03/ /03/ /10/13

9 9 SETTING THE SCENE INTERNATIONAL MANAGEMENT TEAM Executive Board Members Chief Executive Group Finance Director Group Purchasing Business Improvement** Corporate Development Pim Vervaat 6 years* Simon Kesterton 1 year* Darin Evans 16 years* Frank Doorenbosch 24 years* Tom Saunderson 3 years* Cluster Managers Superfos UKIM Bramlage Wiko Blow Moulding BEBO René Valentin 22 years* Bruce Margetts 26 years* Alfons Böckmann 38 years* Alistair Herd 26 years* Thomas Wahlmeyer 32 years* International management team with close to 200 years experience in the plastic packaging industry * Years of experience in the plastic packaging industry ** Also responsible for Cobelplast cluster

10 10 Vision 2020: Focused Growth

11 11 VISION 2020: FOCUSED GROWTH Focused growth Continuing focus on organic growth Selective consolidation in Europe Rigid plastic packaging market forecast to grow by 5.5% globally in the next five years with 2.7% growth in Europe Plastic packaging whilst concentrated in selective niches remains a largely fragmented market Creating a meaningful presence outside Europe Rigid plastic packaging is forecast to grow by 6.5% outside Europe whilst 94% of RPC s sales are currently in Europe Source: Smithers Pira, 2013

12 12 VISION 2020 ANTICIPATED MARKET GROWTH RATES Category Group sales Products Commodity products 657m Generally standard product ranges (pails, pots, bottles, jars, tubs and lids) for food and non-food markets Global market growth rate GDP Personal care and cosmetics 137m Multi-part packaging including dispensing systems as well as standard product ranges 5% Single serve beverage systems 92m Coffee capsules and single serve systems for other beverages 20% Barrier products 44m Multi-layer oxygen barrier packaging for long shelf life food packaging GDP+ Pharmaceutical / Healthcare 39m Inhalers, dose counters and other medical devices in addition to containers and closures for OTC and prescription medicines 6%

13 13 VISION 2020 COMMODITY PRODUCTS - OR ARE THEY? Perception Highly competitive Mundane / easy Low added value Standard / undifferentiated Reality Strong market positions Innovative Value added Industry leading product ranges Creating shareholder value RPC uniquely positioned: Geographic reach Innovation capabilities Scale = cost leadership Provides profitable and cash generative base for the Group Highly operationally geared to European recovery

14 14 VISION 2020 INNOVATION ACROSS PRODUCT PORTFOLIO Commodity products Personal care and cosmetics Major weight and energy savings through innovative tooling and process engineering Globally leading airless dispenser range Single serve beverage systems Enhancing output ratios through mould technology Barrier products Unique barrier-in-label solution Pharmaceutical / Healthcare Industry leading standard solution for the dose counter market

15 15 VISION 2020 AWARD WINNING French Packaging Award INDUSTRY LEADING Starpack 2013 Awards of Excellence RPC Superfos - SuperLock Pack/product integration Structural design 2012 UK Stock Market Awards Scanstar 2013 Green Apple Best Industrial Goods and Services plc Deal of the Year (Superfos Acquisition) Mix of excellent packaging innovation A shining example to the industry The perfect business model Barrier innovation Sustainability

16 16 VISION 2020 ORGANIC GROWTH STRATEGIES Commodity products Personal care and cosmetics Single serve beverage systems Barrier products Pharmaceutical / Healthcare 657m 2012/13 Group sales 137m 2012/13 Group sales 92m 2012/13 Group sales 44m 2012/13 Group sales 39m 2012/13 Group sales Further increase added value offering Innovate and follow our customers globally Supporting customer growth through operational excellence Growth through substitution and enhanced product offering Further develop niche position through innovative higher added value products

17 17 VISION 2020 VALUE ACCRETIVE ACQUISITION OPPORTUNITIES IN EUROPE Industry landscape Plastic packaging market in Europe remains fragmented Few strategic acquirers of scale Strategic rationale Enhancing current strong market positions Occupying additional complementary product-markets Scale in polymer purchasing Significant shareholder value can be created

18 18 VISION 2020 CREATING MEANINGFUL PRESENCE OUTSIDE EUROPE Where we manufacture Where we sell Currently c.6% of RPC s sales are outside Europe Opportunities to expand outside Europe in higher growth markets

19 19 VISION 2020 RATIONALE, FOCUS AND IMPLEMENTATION Strategic rationale Higher growth rates outside Europe International customer base would like RPC to follow them outside Europe Opportunity to leverage leading innovation capabilities Focus Leveraging RPC s competitive advantages: Strong customer relationships Innovation capabilities Extensive product range Operational excellence Focus geographies: North America BRIC countries Implementation Further organic growth in US Engage with multi-national customers Target local packaging companies via various co-operation / investment modes

20 20 VISION 2020 US GROWTH Leveraging our products and processes in the US Following international customers Focus areas: Coffee capsules Personal care Higher added value food packaging RPC US Sales ($m) $9m currently being invested in US plant expansion 09/10 10/11 11/12 12/13

21 21 VISION 2020 DISCIPLINED APPROACH TO ACQUISITIONS Core criteria Strategic fit Strength of incumbent management Financial track record Financial criteria: ROCE > WACC of RPC* Quantifiable synergies Impact on Group KPIs Earnings accretion Extracting value Enhancing product offering to customers Purchasing synergies Manufacturing optimisation Best practice sharing Remove overhead duplication Customer and product range extension Capital priorities and structure Profitable organic growth Acquisitions that meet investment criteria Progressive dividend policy - dividend cover at 2.5x through the cycle Leverage to remain at a suitable and responsible level *Currently estimated at 9% pre-tax

22 22 Final optimisation of current portfolio

23 23 OPTIMISATION OF THE BUSINESS PORTFOLIO TRANSFORMATION 2008/09 Today RPC 2008/09 11% ROCE 5% Return on sales 114m Market capitalisation Transformation Structural cost reduction: RPC 2010 Fitter for the Future phase 1 Focus of business portfolio: Exit MLE vending cups Sale of automotive business Sale of Cork closures Acquisition of quality businesses: Superfos Manuplastics Growth in higher added value products RPC Today 18% ROCE 9% Return on sales 847m Market capitalisation

24 24 FINAL OPTIMISATION OF CURRENT PORTFOLIO BUSINESS UNIT RONOA FIVE YEAR HISTORY Business unit RONOA weighted by annual sales 2008/ / / / /13 RONOA < 10% RONOA 10% 19% RONOA >= 20% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Final phase Fitter for the Future

25 25 FINAL OPTIMISATION OF CURRENT PORTFOLIO FITTER FOR THE FUTURE FINAL PHASE Programme contents: Rationalise manufacturing footprint Programme main work streams: Nordic region - merger of Tenhult into Mullsjö Merge French dairy operations Optimise existing business portfolio Strategic refocus Spanish operations Optimisation of overhead following internal re-organisation Review of business portfolio Intended divestment of Cobelplast cluster Intended sale of disposable trading business

26 26 FINAL OPTIMISATION OF CURRENT PORTFOLIO BUSINESSES HELD FOR DISPOSAL Site: Lokeren Cobelplast Site: Offenburg Disposables Semi-finished product Montonate and Lokeren 2012/13 sales: 69m (40) Site: Montonate Cobelplast Disposables stockist - Offenburg 2012/13 sales: 13m Businesses held for disposal: 2012/13 sales: 82m 2012/13 adjusted operating loss: 1m

27 27 FINAL OPTIMISATION OF CURRENT PORTFOLIO FITTER FOR THE FUTURE FINAL PHASE P&L and associated cash impact Final phase Fitter for the Future ( m) (40) 23 P&L exceptional costs include 14m of 21 non-cash impairments relating to the disposal of businesses Any capital expenditure associated with the final phase will be funded from on-going investment budgets P&L exceptional costs Non-cash asset impairments Final phase targeted to be cash neutral with 7m of steady state P&L benefits

28 28 Vision 2020

29 29 VISION 2020 FINANCIAL METRICS Return on net operating assets Adjusted operating profit ( m) Return on sales (%) 8.3% 8.5% 6.8% 5.7% 4.6% 10.5% 13.5% 17.9% 22.5% 21.2% /09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13 VISION 2020: At least 20% VISION 2020: At least 8% Progressive dividend with 2.5x dividend cover through the cycle Continue to target 20% ROCE through the cycle for existing business portfolio

30 30 Supplementary material

31 31 VISION 2020 Acquisition growth strategy Strong financial performance Sustainable competitive advantage Leading packaging company creating shareholder value Focused growth Strong market positions Strong European asset base Experienced internal management Global presence Leading product and process innovation Operational excellence

32 32 SUPPLEMENTARY MATERIAL POLYMER PRICE PASS THROUGH / SUPPLY DEMAND FORECAST Polymer is an important input cost for RPC Group, representing 38% of sales in 2012/13 Polymer price pass-through Contribution lost Contribution gained PP polymer Supply/Demand TONNES (M) OPERATING RATE % 90 88% /t % 84% 82% 80% t0 t1 t2 t3 t4 t5 t % Polymer cost Recovery of polymer cost within sales price Operating Rate Actual Demand Free Capacity Forecast Demand Fluctuations in polymer price are generally passed on to customers albeit with a time lag Forecasts indicate favourable supply-demand going forward Source: Chemical Market Associates, Inc.

33 33 SUPPLEMENTARY MATERIAL PREDICTED GROWTH IN RIGID PLASTIC PACKAGING Rigid plastic packaging set to grow (million tonnes) Rigid plastic packaging grows across all regions: BRICs region (million tonnes) The BRIC countries show strong growth: 9.8% 12.0% % 2.3% % 5.2% 6.1% 15.2% 5.3% Europe North America South & Central America 2013 Predicted 2018 Forecast Source: Smithers Pira, 2013 Asia Rest of World X% CAGR Brazil Russia India China 2013 Predicted 2018 Forecast X% CAGR

34 34 SUPPLEMENTARY MATERIAL SIGNIFICANT OPPORTUNITIES TO GROW EXIST (1/4) Personal Care Care and and Cosmetics Market PER development, TONNE rigid plastics Pharmaceutical Market development, rigid plastics 2013 Predicted 2018 Forecast Region CAGR (%) Rest of World 6.8% Asia 9.2% South & Central America 6.0% North America 1.5% Europe 2.5% Growing disposable incomes and consumer demands in emerging markets Economic recovery drives trend towards luxury and innovative packaging HDPE BM PP HOMO Plastics are best placed to facilitate rapid design and pack development demands Source: Platts / ICIS Source: Smithers Pira, 2013 Region CAGR (%) Rest of World 7.8% Asia 10.8% South & Central America 2013 Predicted 2018 Forecast GDP+ underlying growth driven by demographics, improving disease detection and rising incomes 6.5% North America 2.6% Europe 3.3% Growing demand for sophisticated and convenient packaging (dose counters, child resistant, tamper evident) Growing health awareness Increase in self administration - necessitating complex packaging

35 35 SUPPLEMENTARY MATERIAL SIGNIFICANT OPPORTUNITIES TO GROW EXIST (2/4) Food Personal Packaging Care and Cosmetics Market PER development, TONNE rigid plastics 2013 Predicted 2018 Forecast Substitution from metal and glass to plastic Region Asset rich/time poor consumers requiring convenience HDPE BM PP HOMO Advancement of barrier solutions Source: Platts / ICIS CAGR (%) Rest of World 6.8% Asia 10.1% South & Central America 5.4% North America 2.7% Europe 2.8% Source: Smithers Pira, 2013

36 36 SUPPLEMENTARY MATERIAL SIGNIFICANT OPPORTUNITIES TO GROW EXIST (3/4) Conversion from glass and metal to plastic Forecast growth in packaging by material (Global market), CAGR (%) Conversion from glass and metal to plastic Packaging units per annum (billions), Europe, 2009, Split by rigid plastic versus glass and metal Rigid plastics Metal Glass Total market Baby food Pet food Soups, sauces, pickles & fats Glass and metal Rigid plastic packaging Canned & preserved foods Demand for light-weighting driving substitution from metal and glass to plastic Substitution in food packaging requires multi-layer barrier plastic packaging solutions Substitution also driven by filling-line preferences and safety considerations Source: Smithers Pira, 2011 Penetration in key food markets still limited by virtue of multi-layer barrier plastic packaging being a relatively recent technology Large addressable markets still open to conversion from glass and metal to plastic Source: Smithers Pira, 2010

37 37 SUPPLEMENTARY MATERIAL SIGNIFICANT OPPORTUNITIES TO GROW EXIST (4/4) Packaging production by type - Europe 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Other 3% Other 2% Other 2% Other 2% Other 1% Glass 9% Metal 21% Paper 46% Plastic 21% Glass 7% Glass 6% Glass 5% Glass 5% Metal 19% Paper 39% Plastic 32% Metal 18% Paper 37% Plastic 37% Metal 16% Paper 36% Plastic 41% Metal 15% Paper 34% Plastic 45% Source: Industrieverband Kunststoffe, Datamonitor

38 38 SUPPPLEMENTARY MATERIAL FITTER FOR THE FUTURE PHASE I & FINAL PHASE COMBINED Phase 1 Final Phase Total programme Business Total excl. business excl. business disposals programme disposals disposals P&L exceptional cost (30.0) (25.0) (55.0) (15.0) (70.0) Annual EBIT benefit: 2012/13 actual /14 forecast /15 forecast /16 forecast /17 forecast Steady state

39 39 SUPPLEMENTARY MATERIAL ROCE AND RONOA Definition / reconciliation: Net equity / net assets Add-back: Net debt Add-back: Net long-term retirement obligation Capital employed Less: Goodwill and intangible fixed assets Less: Deferred and current tax Less: Provisions Net Operating Assets X X X X X X X X Return on Capital Employed ( ROCE ) and Return on Net Operating Assets ( RONOA ) both use adjusted continuing operating profit as the numerator Capital employed considers the total capital invested in the business: net equity + net debt + net long-term retirement obligation Net Operating Assets include tangible fixed assets and working capital, and can therefore be reconciled to Capital Employed as shown Capital Employed and Net Operating Assets for a given reporting period are calculated as the average of the opening and closing positions