INTRODUCING KERRY
KERRY WORLDWIDE SALES BY REGION 2012
› Kerry is the global leader in
food ingredients & flavours
› UK/ROI leader in branded
and customer branded
chilled foods
› Revenue €5.8bn
› Enterprise Value €9bn*
› Market Capitalisation €8bn*
Note: * As at 31-03-2013
Ingredients & Flavours €4,225m Consumer Foods €1,712m
Ingredients & Flavours €508m Consumer Foods €133m
Consumer Foods 29%
Ingredients & Flavours 71%
Consumer Foods 21%
Ingredients & Flavours 79%
REVENUE 2012 TRADING PROFIT 2012
› Operations in 24 countries
› Sales to 140 countries
› 140 manufacturing sites
› 24,000 employees
Ingredients & Flavours Consumer Foods
Americas 31%
Asia-Pacific 12% EMEA 57%
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 €391m
› 2004 Quest Food Ingredients US$440m
› 2005 Noon Stg£124m
› 2009 Breeo Foods €140m
› 2011 Cargill’s flavour business 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
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
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
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.
REVENUE AND ADJUSTED* EPS 1986-2012
ADJUSTED* EPS 1986-2012 (cent)
337 370 504 710 742
959 1,050 1,117 1,121 1,523 1,566 1,707
2,200 2,456 2,622
3,003
3,755 3,693 4,129
4,430 4,646 4,788 4,791
4,521 4,960
5,302
5,848
0
1000
2000
3000
4000
5000
6000
7000
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
7.6 8.4 12.7 16.3 17.6 21.1 23.0 25.9 28.9 35.8 38.7 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
192.1
213.4
234.0
0.0
50.0
100.0
150.0
200.0
250.0
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
REVENUE 1986-2012 (€M)
OUR BUSINESS STRUCTURE
Ingredients & Flavours Consumer Foods Agribusiness
Americas Region Ireland Ireland
EMEA Region The UK
Asia-Pacific Region
KERRY GROUP – WORLDWIDE LOCATIONS
* As at 31/12/2012
Head Offices Manufacturing Plants Sales Offices
EXTENSIVE MANUFACTURING (#140) AND SALES FOOTPRINT SUPPORTS SALES TO 140 COUNTRIES
$50BN INGREDIENTS AND FLAVOURS MARKET
REVENUE $BN (1)
› Kerry is the largest player
in the ingredients and
flavours market
› Highly fragmented, but
growing market at 2% to
3% p.a.
› Benefits to being a scale
player
› Consolidation potential
(1) Source: most recently published full year results for ingredients and flavour divisions only, Kerry estimates.
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2
3
4
5
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TASTE & NUTRITION SYSTEMS
KERRY INGREDIENTS & FLAVOURS: OUR CAPABILITIES
CEREAL & SWEET
BEVERAGE 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 Flavour Solutions
› Cereal Agglomerates › Expanded Cereal
Shapes › Baked & Dough Sweet
Products › Chocolate &
Compounds › Confections & Coated
Sweets › Sweet Particulates › Wet Sweet Systems
› Beverage Flavour Solutions
› Beverage Sauces & Syrups
› Beverage Systems
› Liquid Smoothies & Juices
› Tea & Coffee Concentrates
› Beverage Ingredients & Extracts
NUTRITION LIPIDS &
TEXTURANT SYSTEMS
› Nutritional Beverages
› Infant Nutritional Bases
› Complete Infant Formula
› Complete Infant Cereal
FUNCTIONAL INGREDIENTS & ACTIVES
› Enzymes
› Fermented Ingredients
› Pharma Excipients
› Media Ingredients
› Specialised Functional Proteins
› Proteins Hydrolysates
› Protein Fractions
› Prebiotics, Probiotics & Metabolites
KERRY INGREDIENTS & FLAVOURS: OUR APPROACH
FLAVOUR
FORMING & SHAPING
Cold Form Extrusion Direct Expansion Extrusion Forming & Moulding
FUNCTIONAL
Fermentation Evaporation & Centrifugation
Ultrafiltration
CORE PROCESSES
Spray Drying Extrusion Baking etc…
Encapsulation/Compounding
Extraction Pyrolysis
PROCESSING CAPABILITY BRINGING TOGETHER KERRY’S
GLOBAL CAPABILITIES TO DEVELOP
AND DELIVER CONSUMER-
PREFERRED SOLUTIONS FOR OUR
CUSTOMERS
MARKET & CONSUMER
INSIGHTS
CULINARY EXPERTISE
SENSORY & ANALYTICAL
SCIENCE
TECHNOLOGY & PRODUCT GROUPS
END USE MARKET APPLICATIONS
FUNCTIONAL INGREDIENTS & ACTIVES
DAIRY & SAVOURY
CEREAL & SWEET
BEVERAGE
LIPIDS & TEXTURANT
SYSTEMS NUTRITION
› Kerry Ingredients & Flavours develops, manufactures and delivers innovative taste systems, functional and nutritional ingredients and integrated solutions for the food, beverage and pharmaceutical markets
› The largest player in the ingredients and flavours market
› 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
Savoury & Dairy Systems &
Flavours 44%
Cereal & Sweet Systems &
Flavours 20%
Beverage Systems & Flavours
17%
Pharma/Functional Ingredients
9%
Regional Ingredients 10%
BUSINESS DESCRIPTION
TECHNOLOGY END USE MARKET
KERRY INGREDIENTS & FLAVOURS REGION
Beverage 22%
Meats 18%
Bakery 13%
Dairy 9%
Soups, Sauces & Dressings 7%
Cereal & Bars 6%
Prepared Meals & Side Dishes 6%
Savoury Snacks 5%
Ice-cream & Desserts 4%
Confectionery 4%
Pharma 4%
Appetisers 2%
Americas 44%
EMEA 39%
Asia-Pacific 17%
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
147.5 147.8 156.4 167.1 185.9
4.7% 4.9% 4.6% 4.5% 4.4%
-100.0%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
0
20
40
60
80
100
120
140
160
180
200
220
2008 2009 2010 2011 2012
R&D Expenditure % of KIF Revenue*
› 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 know-
how 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
R&D EXPENDITURE
GLOBAL TECHNOLOGY & INNOVATION CENTRES
GLOBAL TECHNOLOGY APPLICATION AND CULINARY LEADERSHIP – DRIVE GLOBAL ALIGNMENT
San Juan del Rio
Beloit Dublin
Johor Bahru Shanghai
KERRY INGREDIENTS & FLAVOURS BUSINESS GROWTH STRATEGIES
ACCELERATE GROWTH IN DEVELOPING
MARKETS
DRIVE GLOBAL ALIGNMENT
› Global Customer &
Market Management
› Global Technology &
Application Leadership
› Global Process
Manufacturing &
Supply Chain
Leadership
› Leading-Edge Quality
Supplier
LEVERAGE CAPABILITIES & GROW EXPERTISE
› Effective & Efficient
Functional Expertise
› Best-in-Class Talent
Management
› Asia Pacific
› Latin America
› Europe, Middle East,
Africa
› 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
KERRY’S NUTRITION AND HEALTH POSITIONING
FORMULATION & APPLICATIONS EXPERTISE
Leading Portfolio of Nutritional Ingredients
& Actives, Nutrition Enabling Technologies & Nutritional Delivery
Systems
NUTRITIONAL INGREDIENTS & ACTIVES
Ingredients with a direct nutritional impact
NUTRITION ENABLING TECHNOLOGIES
Ingredients that address adverse impact on taste, texture etc. caused by the addition
or removal of a nutrition component
NUTRITION DELIVERY SYSTEMS
Process or integrated solutions that delivers nutritional components to the
customer
› Modulation Technology
› fmt® – salt
› fmt® – sugar
› Micronized salt for salt reduction
› Taste systems
› Texture Systems
› EMC and Flavours
› No Boil Over (microwave)
› Fermented Ingredients
› Enzymes
› Never-fry Coating Systems
› Dry Nutritional Bases
› RTD Beverages
› Yoghurt
› Creamers
› Formed Foods
› Oatmeal
› Confections
› Snacks
› Granola
› Clusters
› Soy Crisps
› Milk Protein Isolates
› Milk Protein
› Concentrates
› Mineral-enriched Proteins
› Beta Casein Fractions
› Comfort Proteins
› Hypoallergenic Protein Hydrolysates
› Gum Acacia
› Fermented Celery (natural nitrate source)
› Stabilised Grain Base
Undisputed Food Heritage
In-depth Understanding of Biological Sciences
World Class Applications Expertise
Global Footprint
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
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
LATAM
› Deployment of all Group technologies
to region
› Investment in capabilities and
infrastructure
› Strong customer engagement through
San Juan del Rio Technology &
Innovation Centre
Kellogg's
McCain
Birds Eye
Warburtons
Danone
Gerber
Samworth
Cranswick
Moy Park
Heinz
Greencore
United Biscuits
Princes
Findus
Unilever
Mars
Tulip
Muller
Dairy Crest
Morrisons Produce
Arla
Kerry Foods
Bakkavor
ABF
Pepsico
Nestle
Coke
Boparan
Kraft
Vion
Premier
A LEADING PLAYER IN GB/IRELAND FOOD & BEVERAGE FOCUSED ON CHILLED FOODS MARKETS
Nestle
IDB
Kraft
Boparan
Arla
Dairy Crest
Unilever
Danone
Muller
Vion
Cranswick
Samworth
Tulip
Greencore
Bakkavor
Kerry Foods
Source: OC&C, Nielsen, Kantar, company reports, Kerry estimates
FOOD & NON ALCOHOLIC BEVERAGE
TURNOVER GB/IRELAND ESTIMATED MARKET
SIZE €115BN
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.
CONSUMER FOODS COMPETES IN CHILLED
FOODS MARKETS
BRAND PRIORITIES
CORPORATE PRIORITIES
LOCAL BRANDS
OTHERS
DIVERSIFIED PRODUCT PORTFOLIO AND STRONG MARKET POSITION
CONSUMER FOODS – ADDED VALUE CHILLED CATEGORIES
Segment Markets 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
GB Cheese
GB Yellow Fats
Ireland
GB Cooked Meats
GB Pastry
GB Rasher
GB Sausage
Ireland
GB Chilled Ready Meals
GB Ready to Cook
GB Frozen Ready Meals
Ireland
MEAT & SAVOURY PROVISIONS €6.8bn
DAIRY PRODUCTS €5.0bn
MEAL SOLUTIONS €3.6bn
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
OPERATING MODELS BUSINESS STRATEGIES
Kerry Ingredients
& Flavours
‘Go-to-market Strategy’
Kerry Foods
‘Go-to-market Strategy’
KERRYCONNECT
‘Enabling better business’
Standardised ways of
working
Common data
Integrated ICT system
Driving market leadership
and global alignment
Optimising scale and
efficiency benefits
Building talent for a
global organisation
ACQUISITION AND DEVELOPMENT STRATEGY
KERRY INGREDIENTS & FLAVOURS KERRY FOODS
TASTE
NUTRITION DEVELOPING
MARKETS
KERRY INGREDIENTS & FLAVOURS Savoury & Dairy Cereal & Sweet
Beverage Pharma | Functional
Meat & Savoury
Dairy Products
Meal Solutions
NEW CHILLED
CATEGORIES
EU MARKETS SELECTED
NICHES
OUR STRATEGY FOR GROWTH
KERRY BUSINESS MODEL
Kerry Business Model delivering for the Group
1 KERRY 1 Kerry Business Transformation – platform for growth
Investing for the future
INGREDIENTS & FLAVOURS
Kerry’s leading taste positioning
Delivering across nutritional space
Global technology and innovation leadership
Developing Markets strategic growth plan
SUSTAINABILITY Securing sustainable growth
1 Kerry Sustainability Programme
KERRY FOODS Investment in brand leadership and technologies
ENVIRONMENT ECONOMIC
SOCIAL
Bearable Equitable
Sustainable
Viable
‘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 long-
term development of the organisation by building competitiveness,
while at the same time enhancing the quality of life and protecting
our natural resources.
› Integrated in 1 Kerry strategies and operational activities
› Directed and governed by our Kerry Sustainability Council
› Groupwide time-bound, quantified targets established to measure progress
ENVIRONMENT SUSTAINABILITY
MARKET SUSTAINABILITY
WORKPLACE SUSTAINABILITY
COMMUNITY SUSTAINABILITY
SECURING SUSTAINABLE GROWTH
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.)
Consumer Foods 2% to 3% p.a.
Group 3% to 5% p.a.**
› Margin expansion 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%+ ROAE* 15%+
* Before brand related intangible asset amortisation and non-trading items (net of tax) ** Assumes market growth rate of 2% to 3% p.a. and neutral currency and raw materials
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