Capital Markets Day - RPC Group/media/Files/R/RPC-Group/documents/... · CAPITAL MARKETS DAY 2017....
Transcript of Capital Markets Day - RPC Group/media/Files/R/RPC-Group/documents/... · CAPITAL MARKETS DAY 2017....
RPC – THE ESSENTIAL INGREDIENT
© 2017 RPC Group Plc. All Rights Reserved.
13 November 2017
RPC GROUP PLCCAPITAL MARKETS DAY2017
2
Setting the scene
Vision 2020 strategy: Opportunities going forward
In conclusion
Agenda
Innovation in rigid plastic packaging
Selective consolidation in Europe.Case study: Flexibles
Business strategy outside Europe
Added value opportunitiesin non-packaging markets
Breakout presentations:
3
SETTING THE SCENE
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High added value niche strategy outside Europe
Higher growth forecast outside Europe whilst 75% of RPC’s sales are currently in Europe (2)
Plastic packaging - whilst concentrated in selective niches remains a largely segmented market
Plastic packaging market forecast to grow by 3.7% p.a.(1) globally in the next five years
Vision 2020 strategy: Focused growth
Innovative design and engineering company
Leading strategic consolidator in Europe
Leading polymer and engineering capabilitiesWide spectrum of polymer consuming markets; segments advanced by innovation offer attractive opportunities
FO
CU
SE
D G
RO
WT
H Selective consolidationin Europe
Creating a meaningful presence outside Europe
Continuing focuson organic growth
Pursuing added value opportunitiesin non-packaging markets
(1) Smithers Pira, 2017(2) Pro forma to include a full year of acquisitions
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A leading global design and engineering company for plastic products
*Pro forma to include a full year of acquisitions
Food 29%
Non-Food 26%
Personal Care 12%
Beverage 11%
Healthcare 5%
Non-packaging Markets 17%
Europe 75%
North America 17%
Asia 4%
Rest of World 4%
RPC Sales 2016/17- by end market*
RPC Sales 2016/17- by destination*
£3.6bnsales
£3.6bnsales
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Global footprint - worldwide excellence in design and engineering
Largest European plastic converter and
industry leading innovator
Manufacturing countries
Countries we sell intolisted on London Stock Exchange
1993
design & engineering centres
32
operations194
member since 2011
FTSE 250
employees
circa 25,000
countries34
8
Rising and ageing populations
Increasing number of smaller and single person households in developed economies
Increasing income in emerging markets
Busier lifestyles and convenience packaging
Growing importance of lightweighting, sustainability and the circular economy
Move to e-commerce
Macro economic trends favouring growth in plastic packaging
RigidPlastic
FlexiblePlastic Card Metal Glass
$0$50$100$150
Plastic packaging by region
Packaging by material type
4.9%
5.0%
2.3%
2.0%
2.8%
0% 2% 4% 6%
Europe
NorthAmerica
South &CentralAmerica
Asia
Rest ofWorld
CAGRUSD $ billions
$0$200$400
2.4%
1.4%
2.7%
4.0%
3.4%
0% 2% 4% 6%
RigidPlastic
FlexiblePlastic
Card
Metal
Glass
CAGRUSD $ billions
Significant NegativeLevel of impact: NeutralPositive
Source: Smithers Pira - 2017-2022 Market forecast
Growth drivers
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Packaging segment1980
Key players2017
Key players
Global consolidation well advanced across non-plastic substrates
Source: Deutsche Bank Research, Smithers Pira
Key players global market share2017
Consolidationwell advanced
Consolidationin progress
Food cans
Beverage cans
25
14
Meta
l
Bottles 19
Gla
ss
Flexibles
Rigid plastics
Numerous
NumerousP
lastics /
Spe
cia
ltie
s
Paperboard
Containerboard, corrugated
Numerous
Numerous
Fib
re
80%
80%
90%
10%
30%
75%
75%
3
3
3
5
5
5
5
11
$9.2
$7.8$7.5
$4.8 $4.7
$4.0$3.7
$2.5 $2.3$1.9
$10.8
$8.1
$4.8
$5.4
$1.3
$4.6
$3.5
$1.5
$2.3
$1.3
Major plastic packaging peers
(2)
Revenue(1) USD $bnCombined revenue <15% market share
rigid and flexible markets
2017 2013
(2)
(3) (3)
(2)
(3)
RPC IS THE MAJOR EUROPEAN STRATEGIC CONSOLIDATOR
(1) Revenues for continuing operations for the financial years closest to RPC’s 31 Mar year end. GBP revenue converted to USD using an exchange rate of 0.77, EUR converted using a rate of 0.88(2) Pro forma to include a full year of acquisitions(3) Revenues exclude non-plastic divisions
2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013 2017 2013
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Solid platforms outside Europe
Entered new geographies, followingmultinational customers
Performance since Vision 2020 strategy launch (1/4)
GDP
3 year average
weighted to RPC’s
destination of sales
RPC
3 year average
like-for-like sales
2.0%
3.2%
310
450
610
1,100
13/14 14/15 15/16 16/17
5%
25%
£890m
£50m
2016 /172012 /13
% of RPC sales
15%
£420m
Tonnes annualised (Thousands)
• Access to global sources of polymer
• Secures supply in tight markets
• Opportunities for group wide enhancement exist
Strategic scale in polymer procurement3 year organic growth > GDP
Good innovation and market focusdriven organic growth ahead of GDP
RPC revenue outside Europe (by destination)
RPC ‘as was’ year ended
RPC pro forma to includea full year of acquisitions
13
20.6%
26.0%
12/13 16/17
Return on net operating assets*#
All figures are based on continuing operations
Performance since Vision 2020 strategy launch (2/4)
982
2,747
12/13 16/17
Sales (£m)
92
308
12/13 16/17
Adjusted operating profit (£m)
SIGNIFICANTLY ENLARGED BUSINESS WITH ENHANCED OPERATIONAL RETURNS
9.3%
11.2% Return
on sales
*Normalised for the effect of acquisitions and excluding Q4 acquisitions (2013: None, 2017: ESE, Letica and Amber). Comparatives restated to include acquisitions on pro forma basis#Full definition included within supplementary material
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92
62
308
192
74
44
294
157
Adjusted Statutory Adjusted Statutory
Performance since Vision 2020 strategy launch (3/4)
2016 /17
Increased capital employed;
well above WACC returns
475
1,720
2,195
19.4%
13.9%15.1%
Capital employed (£m)Return on capital employed*#
*Normalised for the effect of acquisitions and excluding Q4 acquisitions (2013: None, 2017: ESE, Letica and Amber)#Full definition included within supplementary material
RPC Group
March 2017
Acquisitions
& organic investments
5 years
ROCE
Capital
employed
2012 /13
RPC Group
pre Vision 2020
81%
EBIT £m
Operating cash flow# £m
Cash conversion
70%
95%
82%
Cash flow improved whilst funding a
large restructuring programme
consolidating the European footprint
EBIT and operating cash flow (£m)
2012 /13 2016 /17
15
Performance since Vision 2020 strategy launch (4/4)
EPS
62.2p
DPS
24.0p
RPC’s flotation
2.0p
16/17
5.1p
92/93
Adjusted earnings per share vs. Dividends per shareRestated following Rights Issues in 1996, 2011, 2015, 2016 and 2017
SIGNIFICANT SHAREHOLDER VALUE CREATED
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VISION 2020 STRATEGY: OPPORTUNITIES GOING FORWARD
1. Innovation based organic growth
2. Selective acquisition opportunities in Europe
3. Leveraging our global platform
17
INNOVATION BASED ORGANIC GROWTH
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Innovation based organic growth (1/4)Organic growth profile
Overall like-for-like annual growth of c.3% achieved since the launch of
Vision 2020, ahead of relevant GDP
Growth strategies focused on innovation with price / margin emphasis in
more mature market segments
Global plastic packaging markets anticipated to grow by c.4%* with the
highest growth rates outside Europe and North America
Growth outside Europe more turn-key related, leveraging group wide
innovation capability
* Growth rates to 2022 (Source: Smithers Pira, 2017)
TARGETING ORGANIC GROWTH THROUGH THE CYCLE AHEAD OF GDP
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Consistent investment in product design and process technology
Innovation based organic growth (2/4)Innovation in product design and engineering
Numerous innovative projects in the pipeline
Group currently has 32 focused innovation centres with well over 1,000 patents
Innovation capability is a key competitive advantage over generally smaller and
less well invested competitors
LEADING INNOVATION CAPABILITIES DELIVERING ORGANIC GROWTH
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Innovation based organic growth (3/4)Continued investment in growth related capital expenditure
36 42 49
83
225
33
5052
93
4254
74
129
190
1.6x
1.4x
1.2x
1.4x1.7x
Depreciation
Maintenance related capex
Growth related capex
£m’s
13/14 14/15 15/16 16/17 17/18
Technicalguidance
Revenue £1,047 £1,222 £1,642 £2,747
Capex to revenue 6.5% 7.6% 6.2% 6.4%
Capex / depreciation:
circa
circa
23
Innovation based organic growth (4/4)RPC’s key competitive advantages
Innovation in product design, engineering
and material scienceProviding security of supply
Breadth of product ranges and
conversion technologies
Scale and global geographical footprint
Ability to invest in and manage global
turn-key projects
Sector focused management teams
providing best-in-class speed to market
RPC WELL PLACED VERSUS COMPETITION
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SELECTIVE ACQUISITION OPPORTUNITIES IN EUROPE
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Selective acquisition opportunities in Europe (1/3)Disciplined and selective approach to acquisitions
Core acquisition criteria
Strategic fit
Strength of incumbent management
Financial track record
Financial criteria:• ROCE > WACC of RPC
• Quantifiable cost and cash synergies
• Impact on Group KPIs (ROS & RONOA)
• Earnings accretion
Acquisitions generally concluded at below market average EBITDA multiples
Source:Mergermarket,company information
Overview (EV / EBITDA LTM)
2011-2013 Average 7.8x 2014-2017 Average 9.3x
Sector trading multiples
RPC major transactions =
Transaction multiples
Adding value
Improving RPC’s overall commercial position
Improving RPC’s strategic buying position
Realising cost synergies (including procurement)
Enhancing performance and innovation focus of acquired businesses
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Selective acquisition opportunities in Europe (2/3)Disciplined and selective approach to acquisitions
>360
94
17
5%60% 25%
>215
Acquisition process
Acquired
Hand over to divisional management team and corporate purchasing
Of those reviewed in-depth, 17 were acquired equating to 18%
More than one in three acquisitions have been off-market, one-to-one processes initiated through existing industry relationships
Targets reviewed in-depth
In-depth due diligence performed by RPC teams and external advisers
Rejected when target does not meet RPC’s acquisition criteria
Desktop review
Desktop review of businesses and market segment
More attractive opportunities progressed to review involving business management teams
Rejected where no strategic fit or value
Opportunities presented to RPC (since launch of Vision 2020)
Industry is consolidating – numerous opportunities presented
Database maintained with attractive assets to be actively approached40% Rejected withoutextensive review
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Selective acquisition opportunities in Europe (3/3)Size of the opportunity in Europe
IDENTIFIED GOOD QUALITY ACQUISITION OPPORTUNITIES IN EUROPE
WITH COMBINED REVENUES OF >€26 BILLION
c.€63bn
Numerous opportunities driven by:
• Short term hold periods of private equity
• Owner-managed business with succession challenges
Note: Not representative of total market, only those targets actively monitored
Size(by revenue)
Number Combinedrevenues
>€500m 12 >€13bn
€50m-€500m 60 >€11bn
<€50m >100 >€2bn
Total >€26bn
Rigid and flexible plastic packaging
c.€3bnRPC
*Smithers Pira, 2017; converted to EUR using an exchange rate of 0.88
Europe*
Actively monitored targets
(European
packaging only)
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LEVERAGING OUR GLOBAL PLATFORM
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Innovation and best practice sharing: Sports cap
Leveraging our global platform (1/2)General approach
RPC revenue outside Europe (by destination)
Market leading beverage closure, developed in France
Now produced in 6 countries across 3 continents;sold worldwide
Efficient roll-out facilitated by internally developed standardised approach
Patented innovation incorporating functionality for on-the-go consumption
INTERNATIONAL PLATFORM PROVIDING ATTRACTIVE GROWTH OPPORTUNITIES
5%
25%
£890m
£50m
% of RPC sales
15%
£420m
Sales
2016 /172012 /13
RPC ‘as was’ year ended
RPC pro forma to includea full year of acquisitions
Our approach:
Key account management for major multi-national customers in support of their globalisation strategies
Network of 32 centres of excellence providing an innovative and comprehensive product offering
Utilising global manufacturing footprint with local management teams providing best-in-class speed to market
30
Leveraging our global platform (2/2)Focus by region
Introduce RPC’s wider product offering through the enhanced geographic footprint
Realising the previously announced US$17m of cost savings (including synergies) associated with Letica
Continue to grow sales by extending the product range with higher added value solutions, utilising the Asian manufacturing network
Establish a wider manufacturing footprint
Start-up plant in Brazil for key multi-national customer
Introduce RPC’s wider product offering through the enhanced geographic footprint
Introduce RPC’s wider product offering through the enhanced geographic footprint
NorthAmerica
Asia
SouthAmerica
Africa
Australia
*Pro forma to include a full year of acquisitions
2 locationsc.£25m sales*
12 locationsc.£75m sales*
11 locationsc.£130m sales*
22 locationsc.£630m sales*
1 locationStart-up
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CAPITAL MARKETS DAY:IN CONCLUSION
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In conclusion
Further developing the current business:
Innovation based organic growth
Leveraging global platform
Concluding the European synergy programme
Continuously reviewing performance of the current business portfolio
Acquiring quality businesses that meet our strict acquisition criteria:
Focus on a selective roll-up acquisition strategy in our core European markets
Targeted bolt-on acquisitions in non-European markets
VISION 2020 STRATEGY TO CONTINUE TO ADD SHAREHOLDER VALUE
33
CAPITAL MARKETS DAY –BREAKOUT PRESENTATIONS
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Capital Markets Day – breakout presentations
Business strategy outside Europe
Added value opportunities in non-packaging markets
Innovation in rigid plastic packaging
Selective consolidation in Europe. Case study: Flexibles
Alfons Böckmann
CEO - RPC Bramlage
Andrew Green
Deputy CEO - RPC bpi Group
Björn Hedenström
Promens ESE - CEO
David Duffield
CEO - RPC M&H
Derek Hindle
Bramlage -Business Development Director
Eric Chavent
Global Account Director
Robin Moore
Superfos Astrapak - CEO
Thierry Bernet
Bramlage –Sustainability Director
Thorsten Fisher
Bramlage Pharma –Business Unit Manager
Anton Letica
Superfos Letica - President CEO
Vincent Clauzel
Bramlage Astra Plastique & ZPManaging Director
Wim Warnier
bpi Agriculture –Business Director
Frank Doorenbosch
Director Business ImprovementCEO - RPC bpi group
Gerry McGarry
bpi Recycled Products –Business Director
Jack Yeung
CEO - RPC Ace
Johan Van Landschoot
bpi Indupac - Business Director
Marc Rademacher
Bebo Plastik - General Manager
René Valentin
CEO - RPC Superfos
RPC – THE ESSENTIAL INGREDIENT
© 2017 RPC Group Plc. All Rights Reserved.
RPC GROUP PLCCAPITAL MARKETS DAY2017
36
Summary
Vision 2020 strategy successful to date
Good value creating opportunities going forward
Underpinned by
• Innovation capabilities
• Depth in management
RPC – THE ESSENTIAL INGREDIENT
© 2017 RPC Group Plc. All Rights Reserved.
RPC GROUP PLCCAPITAL MARKETS DAY
QUESTIONS?
38
Forward-looking statements
This presentation contains forward-looking statements, which
have been made by the directors in good faith based on the information available to
them up to the time of the approval of this presentation and such information
should be treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying such forward-looking information.
The Group undertakes no obligation to update these forward-looking statements and nothing in this presentation should be construed as a profit forecast. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
Nothing in this announcement shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter.
39
Supplementary material
40
Return definitionsSupplementary material
Definition Description
ROCE ROCE is measured over the previous 12 months and normalised for the effect of acquisitions, is
adjusted operating profit for continuing operations, divided by the average of opening and
closing shareholders equity, after adjusting for net retirement benefit obligations, assets held for
sale, acquisition intangibles and net borrowings for the year concerned. All years exclude Q4
acquisitions (2016/17: ESE, Letica and Amber).
RONOA RONOA is measured over the previous 12 months and normalised for the effect of acquisitions,
is adjusted operating profit for continuing operations divided by the average of opening and
closing property plant and equipment and working capital for continuing operations for the year
concerned. Comparatives are restated to include acquisitions on a pro forma basis and 2016/17
Q4 acquisitions are excluded (ESE, Letica and Amber)
Operating cash flow Operating cash flow is cash generated from operations less net capital expenditure, adjusted to
exclude exceptional cash flows and non-underlying cash provision movements