First-half 2016 results

Transcription

1 First-half 2016 results 06/09/2016

2 Grégoire Gonnord, Chairman Régis Lebrun, Chief Executive Officer Jean-Louis Roy, Senior Vice President Administration and Finance First-half 2016 results 06/09/2016

3 02 Summary Situation and New Strategic Priorities 4 Financial Results 11 Operations and Action Plans 22 Business Segments: French Supermarkets, International, New Food Services Development Paths Page Appendices 54 3

4 Situation and New Strategic Priorities Financial Results Operations and Action Plans 4

5 01 Our business environment DEMANDING... Pressure on margins Price war in French Supermarkets Pig farming crisis Media pressure...but FAVORABLE IN THE LONG-TERM Consumer focus: "eat better", act responsibly Transparency a must Numerous opportunities for innovation/differentiation Growth potential in France and abroad 5

6 What are Fleury Michon's strategic priorities for the future? New strategic challenges require new priorities for action! 6

7 02 Fleury Michon s past challenges and priorities SITUATION OUR PAST PRIORITIES A major brand, but not top-of-mind (2008: Herta no. 1, FM ranked 9th) Looming battle among brands (2008 law on modernisation of the French economy) Food scandals and consumer distrust - brands asked to respond; Fleury Michon and agroindustry put in same basket Digital revolution Win the race to achieve leadership and critical size Make FM the leading brand with a project that was truly responsible and focused on society Strengthen our historic core segments: hams, prepared meals and surimi Explore our potential in services and international markets 7

8 results Revenue multiplied by two in ten years Brand gains new status Gap widens with competitors International Operations: from 10m to 120m in ten years ** * Source: Kantar year-to-date 30 June ** 2015 revenue based on FM's interest

9 04 Fleury Michon s future challenges and priorities A NEW SITUATION NEW PRIORITIES Pressure on margins Customers looking to reinvent themselves Emergence of new technologies Historic opportunity for innovation: "Help People Eat Better!" Focus on profitable, lasting growth Be recognised as the most innovative food company Put an emphasis on high-impact innovations (usefulness for consumers, high growth, profitability, image) Unleash our potential in services and international operations 9

10 05 Keys to success Continue to shift to an even more consumer-focused culture Determine our priority projects for the future Focus our resources for even greater success Adapt our organisation to be increasingly nimble and efficient 10

11 Situation and New Strategic Priorities Financial Results Operations and Action Plans 11

12 01 Revenue in m H H % change French Supermarkets % 21.8 International % +33.9% at constant exchange rates Total International 63.2m +11.4% % Services 29.2 and Other TOTAL % *Joint venture revenue based on Fleury Michon's interest and at constant exchange rates 12

13 02 Fleury Michon brand revenue Revenue in m 119,6 113,1 115,4 110, ,3 123,5 130, , ,7 138,6 139,5 133,2 135,9 143,8 142,2 145, ,1 156,9 151,7 150, , Average year-on-year revenue growth (Q3 to Q2) % 20 0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

14 03 Operating Profit and Margin H H French Supermarkets Operating Profit Other Businesses 15.91m ( 0.54m) French Supermarkets Op Margin 4.7% 13.12m 0.18m French Supermarkets Op Margin 4.0% Operating Profit 15.4m 13.3m Operating Margin 4.1% 3.6% 14

15 04 Net Profit and Margin in m H H Recurring operating profit Operating profit Finance costs, other financial income and expense, net (0.7) 0 Income tax expense (5.9) (3.7) Share in profits (losses) of associates (0.6) (0.7) Net profit Net margin 2.2% 2.4% 15

16 05 Cash Flow H in m Uses Sources Cash flow 24.3 Change in operating working capital (2.6) Net cash provided by operating activities Capital spending Borrowings 15.1 Dividends 5 Securitisation programme* 46.2 Other 0.3 TOTAL Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period * Securitisation programme launched in February 2016 Presented in accordance with French GAAP 16

17 06 Capital Spending m 7.8% in m H TOTAL %* 5.9% 4.7% standard level 4% < > 5% of revenue 3.9% 3.6% *Capital spending as a % of revenue 17

18 07 Key Ratios After-tax ROCE (Return on capital employed) Recurring operating margin after income tax Asset turnover ROE (Return on equity) EPS (Earnings per share) PER (at closing share price on 30 June 2014 = 60.39; 2015 = 57.05) H H % 6.20% 2.3% 2.30% % 4.1% 4.20%

19 08 Debt H H Net financial debt in m GEARING (Net debt/equity) 27.5% 25.3% Net debt/ebitda Free cash flow in m

20 09 Statement of Financial Position +5.2% -3.3% 20

21 10 Conclusion First half ended with a year-on-year decrease in operating profit as revenue held virtually stable. This reflects lower revenue and a narrower operating margin in French Supermarkets. The International and New Food Services segments enjoyed continued growth and wider operating margins. Net margin improved and finance costs (net) came in at zero. Fleury Michon continued to strengthen its financial position and saw an improvement in gearing. 21

22 Situation and New Strategic Priorities Financial Results Operations and Action Plans Business Segments Development Paths 22

23 Situation and New Strategic Priorities Financial Results Operations and Action Plans Business Segments Development Paths 23

24 Operations and Action Plans Business Segments French Supermarkets International New Food Services 24

25 01 French Supermarkets impacted by higher raw material costs and lower consumer prices +6.3% Ham, flank removed consensus Price at Rungis +43.0% Norwegian salmon market price trends in NOK Consumer selling prices: Inflation over 1 yr* All products: -1.20% National brands: -1.73% Fleury Michon has made a conscious choice to raise its prices in a situation of dwindling value *Source IRI, July 2016, FMCG, HMSM 25

26 02 Increasingly costly promotional campaigns* YEAR AFTER YEAR, PROMOTIONS ARE WEIGHING MORE ON PRODUCERS + 5 points in 5 years for producer brands, and the trend is continuing in 2016 Proportion of revenue from heavy promotions (in %) Hypermarket/Supermarket Producer Brands FMCG revenue +1.5% Promotional discounts granted +8% * Source Nielsen

27 03 General trend: Promotions pushed down FMCG brands' revenue in Q PROMOTION TRENDS FOR FAST-MOVING CONSUMER GOODS Change in Fresh Self-Service FMCG revenue in hypermarkets and supermarkets Excluding store promotions Total store promotions Of which flyers Of which displays Full year 2015 Year-to-date P Source: Nielsen Q

28 04 Fleury Michon: Carefully considered promotions Our goal is to achieve profitable, lasting growth and maintain our connection with consumers Enhanced presence for Fleury Michon in flyers (products in flyers up 5.3%): greater visibility among consumers But reasonable promotional discounts Result: Fleury Michon products sold via promotions down by 1,100 metric tons in H vs H But we have strengths in this environment 28

29 05 An effective brand identity Around 1bn in consumer sales Only majority family-owned company Fleury Michon is one of the few players to maintain its market share Fleury Michon stabilises: No. 3 in Top 10 for market share in value, but No. 1 single brand Mkt share in value (and change in bp vs. Y-1) Change in mkt share value (%) Purchase frequency Fresh Self-Service FMCG All channels Q MAT vs Q MAT 29

30 06 An increasingly trusted brand 2009: the 9th most purchased brand 2014: the 4th most purchased brand 2016: the 2 nd most purchased brand! Two indicators of attractiveness: How many households buy a brand and how often (Consumer Reach Points - CRP) 107 Source: Kantar 2016 Brand Footprint expressed in CRP: Number of consumers x Frequency of purchase, in millions 30

31 07 Fleury Michon brand attractiveness For Fleury Michon: +138,000 consumer households, for a10 bp increase in purchases over the past 12 months The only brand among the Top 5 FMCG brands to see an increase in these two indicators And still plenty of room for growth Customer base Purchase frequency in all for Fresh Self-Service FMCG Fresh Self-Service FMCG All channels Q MAT vs Q MAT 31

32 08 Fleury Michon: Steady growth in consumer reach points Increasing CRPs is the key growth driver for Fleury Michon A strategic challenge for the product offering's value added , ,95 0,93 1,01 1, ,02 1,00 0,98 0,96 0,94 0, ,89 0,90 0, MAT QT11 MAT Q212 MAT Q213 MAT Q214 MAT Q215 MAT Q216 CAM 2T11 CAM 2T12 CAM 2T13 CAM 2T14 CAM 2T15 CAM 2T16 Source: Kantar 2016 Brand Footprint expressed in CRP: Number of consumers x Frequency of purchase CRP 0,86 Part Market de marché share valeur in value 100% 100% PGC-FLS Fresh Self-Service FMCG 32

33 Operations and Action Plans Business Segments French Supermarkets International New Food Services 33

34 01 EXPORT (1) -2.9% Continued growth in International Operations Revenue of consolidated subsidiaries 27.9m +28.0% 15.6% CANADA Revenue based on Fleury Michon's interest EXPORT (1) -2.9% SLOVENIA 6.9% 3.8% 63.2m +11.4% NORWAY (4) -56.5% ITALY (2) SLOVENIA 8.8% 75.6% CANADA 33.4% 35.9% (1) Export + Fleury Michon Switzerland 20% (2) Piatti Freschi Italia 50% interest (3) Platos Tradicionales 47.5% interest (4) Fleury Michon Norge now 100% interest SPAIN (3) 34

35 02 Delta Dailyfood Good growth in revenue (up 40.9%), lifted by airline catering and brand sales Wider margins thanks to revenue growth and improved production costs 35

36 03 Piatti Freschi Italia Revenue down 1.1%, good full-year trend 36

37 04 Platos Tradicionales First-half 2016 revenue down 2.9% but good full-year trend Profitability outlook still positive 37

38 05 Proconi Revenue up 6.7% 38

39 Operations and Action Plans Business Segments French Supermarkets International New Food Services 39

40 01 New Food Services Excluding non-strategic businesses 29.2m +7.5% EAT-OUT +6.8% 38.9% Good performance across the portfolio Favourable growth in meal solutions for healthcare facilities Firm results from airline catering 14.3% 46.8% CATERING +9.8% ROOM SAVEURS +7.5% 40

41 02 Room Saveurs Robust revenue growth, margins still at a good level 41

42 Situation and New Strategic Priorities Financial Results Operations and Action Plans Business Segments Development Paths 42

43 01 Priority actions OUR PRIORITIES Focus on profitable, lasting growth Be recognised as the most innovative food company Put an emphasis on high-impact innovations (usefulness for consumers, high growth, profitability, image) Create sustainable, differentiating competitive advantage that gives Fleury Michon an exclusive product offering Unleash our potential in services and international operations (43)

44 02 Development paths - method Become the benchmark player in high demand, high value-added food segments (product offering) Be as close to consumers as possible (distribution channels) Work actively with French Supermarkets to reinvent the model together Shift from communicating towards consumers to creating a relationship with them Adopt a flexible method and organisation, adapted to these objectives 44

45 03 Changing consumer patterns Multiple behaviours depending on: The time The place High expectations for well-being, a clearly-signalled desire to consume better and responsibly Consumers want to make enlightened choices on the product experience offered to them Consumers are attentive to corporate responsibility and develop special ties with companies; they voice their opinions to make brands change The focus of the offering needs to shift from the product to the "brand experience" 45

46 04 Priority in product innovation: Develop value added Health Well-being An offering that makes me feel good Organic Quality channels A responsible offierng Healthy snacking Healthy delivered meals and buffets An offering that is available at the right time 46

47 05 Health and nutrition Healthy products - Carefully controlled additives Kept to a strict minimum In the smallest possible proportions (e.g., nitrates, palm oil, sodium glutamate, phosphates, etc.) - Clear consumer information (what people need to know, not pedantic) 47 - Involvement in sourcing channels

48 06 Seek out consumers where they are Convenience stores E-commerce 43% of growth in FMCG - purchasing outlets where I live Supermarkets Work together to invent tomorrow's categories and aisles Eat-out Heathcare institutions Airline catering Wherever consumers are 48

49 07 Organise aisles with the consumer in mind (rather than professionals) Consumers organise their shopping based on their own buying criteria Store aisles are still organised on the basis of industrial or supply chain considerations Store aisles and product categories have not changed much since the 1990s Think of ways to display products that are aligned with consumers' perceptions and various expectations 49

50 08 How we will organise differently in the future Strategic direction Ensure that all our projects are aligned with our Company Project -> go from an organisation by market to an organisation by projects Objectives Less hierarchy Greater autonomy, broader areas of responsibility Faster implementation at the operating level Same amount of resources, but allocated more effectively 50

51 09 To sum up A period of transformation Reflecting our constantly changing lifestyles Rooted in Fleury Michon's corporate culture Strengths to implement this change And a strategy focused on product quality, customer intimacy and consumer satisfaction 51

52 In conclusion (52)

53 : Pivoting to new priorities Our past priorities Win the race to achieve leadership and critical size Make FM the leading brand with a project that was truly responsible and focused on society Strengthen our historic core segments: hams, prepared meals and surimi Explore our potential in services and international markets Our new priorities Focus on profitable, lasting growth Be recognised as the most innovative food company Put an emphasis on high-impact innovations (usefulness for consumers, high growth, profitability, image) Unleash our potential in services and international operations Priorities that are an obvious fit An ideal position for achieving our objectives 53

54 APPENDICES First-half 2016 results 05/09/

55 02 Pork Hams Market 5.0% (-11.40%) 2.4% (+12.0%) 4.6% (+17.3%) 21.6% (-2.2%) 1,537m -0.9% Fleury Michon Herta Private Labels MADRANGE Lowest Price Other 48.20% (-1.4%) 18.3% (+0.0%) Moving annual total Supermarkets + Hard Discount - Source: IRI 12 June

56 02 Poultry Cuts 4.6% (-3.2%) 8.9% (+16.3%) Market 356m +2.4% Fleury Michon Herta Private Labels Lowest Price Other 37.9% (-2.5%) 5.2% (+23.8%) 43.4% (+3.6%) Moving annual total Supermarkets + Hard Discount - Source: IRI 12 June

57 Ready-to-Eat Charcuterie 3.7% (-8.1%) 9.0% (+1.6%) Market 389m +0.2% Fleury Michon Petigas Private Label Lowest Price Other 36.1% (-3.8%) 42.3% (+3.6%) 5.3% (+5.3%) Moving annual total Supermarkets + Hard Discount - Source: IRI 12 June

58 02 Individual Prepared Meals 15.4% (+13.5%) 31.1% (-0.7%) 28.6% (-3.1%) 8.7% (+17.0%) 16.2% (+10.6%) Market 474m +3.7% Fleury Michon Marie WW Private Labels Other Moving annual total Supermarkets + Hard Discount - Source: IRI 12 June

59 02 Surimi 5.9% (-9.7%) 3.9% (-7.5%) 27.5% (-3.2%) Market 280m -2.9% Fleury Michon Coraya Private Labels Lowest Price Other 42.1% (-5.2%) 20.7% (+6.0%) Moving annual total Supermarkets + Hard Discount - Source: IRI 12 June

60 First-half 2016 results 06/09/2016