goodman fielder limited – investor day presentation … registered office of goodman fielder...
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The registered office of Goodman Fielder Limited and its Australian subsidiaries is T2, 39 Delhi Road North Ryde NSW 2113
Goodman Fielder LimitedABN 51 116 399 430
T2, 39 Delhi Road North Ryde NSW 2113 AustraliaLocked Bag 2222 North Ryde NSW 2113 Australia
Tel: 61 2 8899 7000 Fax: 61 2 8026 4200www.goodmanfielder.com.au
3 September 2012 Announcements Officer Listed Company Relations ASX Market Announcements NZX Limited ASX Limited Level 2, NZX Centre Exchange Centre 11 Cable Street 20 Bridge Street WELLINGTON SYDNEY NSW 2000 NEW ZEALAND
Goodman Fielder Limited – Investor Day Presentation
I attach a copy of the presentation to be made today at Goodman Fielder’s Investor Day. The attached document will be posted to the Company’s website once released to the market. Yours sincerely,
JONATHON WEST Company Secretary
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GOODMAN FIELDER LIMITED______________________________________________________
Investor Day3rd September 2012
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Disclaimer
This presentation is provided for information purposes only. The information contained in thisp p p p ypresentation is not intended to be relied upon as advice to investors and does not take into accountthe investment objectives, financial situation or needs of any particular investor. Investors shouldconsider their own individual investment and financial circumstances in relation to any investmentdecision.
Certain statements contained in this presentation may constitute forward-looking statements orstatements about future matters that are based upon information known and assumptions made as ofthe date of this presentation. These statements are subject to risks and uncertainties. Actual resultsp jmay differ materially from any future results or performance expressed, predicted or implied by thestatements contained in this presentation.
Normalised EBIT and Normalised EBITDA are non-IFRS measures that reflect in the opinion of theNormalised EBIT and Normalised EBITDA are non-IFRS measures that reflect, in the opinion of theDirectors, the ongoing operating activities of Goodman Fielder in a way that appropriately presents itsunderlying performance. The non-IFRS underlying profit measures exclude restructuring expenses,asset impairments, asset write-downs and realised foreign exchange losses.
Except where otherwise indicated, market share information contained in this presentation is sourcedfrom Aztec.
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Introduction of today’s presentersy p
Presenters
Pankaj TalwarCategory Managing Director, Bakery
Steven GreggChairman Elect
Chris DelaneyChief Executive Officer
Aaron CanningCategory Managing Director,
Chief Executive Officer Grocery
Shane GannonChief Financial Officer
J. Andre TeixeiraGroup R&D / Quality Director
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Agendag
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Agenda Item Presenter
• Vision and ValuesG St t
Chris Delaney• Group Strategy
y
• Sustainable Cost Position• Portfolio Optimisation
Shane Gannon
• Bakery Turnaround Pankaj Talwar
Coffee BreakI ti i FMCG A d é T i i• Innovation in FMCG André Teixeira
• Innovation in Bakery category Pankaj Talwar
• Innovation in Grocery category Aaron CanningInnovation in Grocery category Aaron Canning
• Summary Chris Delaney
• Concluding Remarks Steven Gregg
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• Concluding Remarks Steven Gregg
• Q&A Chris Delaney
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VISION, VALUES AND STRATEGYCHRIS DELANEY
,
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Vision, Purpose and Values, p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Vision
To be the leading and most innovative local food company
Purpose
Create food that people lovep p
Values – our six ingredients
We are ‘we’, not ‘me’
We love food, especially our
food
We dream big. And we will
make it happen
We get better –all the time
We stand by our words and
actions
We look after our own – in the company
and the happen
community
We areWe are
Our homegrown food company6
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Our vision
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Our VisionTo be the leading and mostand most innovative local food companyfood company
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Our purposep p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Our Purpose
To create food that people lovethat people love
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Our values - 6 key ingredientsy g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
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New logog
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
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Goodman Fielder is a leader in the consumer goods industryconsumer goods industry
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
At its core, Goodman Fielder is an attractive business
Significant
We lead in a number of
large, growing categories
Quality and relevant brands
gproduct
development, manufacturing
and selling capabilities
Long standing customer
relationships
Talented people
categories capabilities from which to
innovate
p
Present in o er 40 53Market leading All major 6 300Present in over 40 categories with
$20b in total category sales
53 manufacturing
sites
Market leading, iconic brands
5 brands = >$500m sales
All major supermarket
chains in A/NZ
~50,000 customers
6,300employees
Our strategy is focused on leveraging our brands in our core categories
customers
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The journey so farj y
We haveFinancial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Stabilised our business
Strengthened our leadership
team
Strengthened our balance
sheet
Progressed our strategic review
Developed our strategic plan
• Focus of today’s presentation
• Senior executive appointments:
- CEO
• FY12 earnings within guidance – 2H normalised
• Net debt reduced by 24% to $728m at end of FY12
• Core categories and brands identified for CEO
- CFO
- Bakery
- R&D
- HR
EBIT up 8.8% on 2H FY11
• $23m in cost savings achieved in
• Net proceeds of Integro sale (~A$165m) to further strengthen
focused investment
• Successful process for divestment of
- APAC
• Renewed Vision and Values
achieved in FY12
• Remain on track for A$100m
strengthen financial position
• Debt facilities successfully
divestment of Integro; divestment of NZ Milling on track
• Re-engaging organisation
savings by FY15
yrefinanced • Assessment
process for Businesses Under Review
• Supply Chain• Supply Chain and Manufacturing optimisation
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Strengthened leadership teamg p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Category Market Function
Aaron CanningCategory Managing Director, Grocery
Robert HilditchChief Information Officer
Peter FoystonManaging Director, Asia Pacific
Pankaj TalwarCategory Managing Director, Bakery
Andrew HippersonManaging Director, Australia
Neil KearneyChief Strategy & Corporate Development Officerp
J. Andre TeixeiraGroup R&D / Quality Director
Peter ReidieManaging Director,New Zealand
Ross O’BrienGroup HR Director
Jonathon WestGeneral Counsel and Company Secretary & Group Commercial Director 13
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The journey so farj y
We haveFinancial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Stabilised our business
Strengthened our leadership
team
Strengthened our balance
sheet
Progressed our strategic review
Developed our strategic plan
• Focus of today’s presentation
• Senior executive appointments:
- CEO
• FY12 earnings within guidance – 2H normalised
• Net debt reduced by 24% to $728m at end of FY12
• Core categories and brands identified for CEO
- CFO
- Bakery
- R&D
- HR
EBIT up 8.8% on 2H FY11
• $23m in cost savings achieved in
• Net proceeds of Integro sale (~A$165m) to further strengthen
focused investment
• Successful process for divestment of
- APAC
• Renewed Vision and Values
achieved in FY12
• Remain on track for A$100m
strengthen financial position
• Debt facilities successfully
divestment of Integro; divestment of NZ Milling on track
• Re-engaging organisation
savings by FY15
yrefinanced • Assessment
process for Businesses Under Review
• Supply Chain• Supply Chain and Manufacturing optimisation
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Group strategy – summary p gy y
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• GF’s turnaround will come from developing a world class organisation that:
- embraces a high performance culture with values-driven decision makingmaking
- is consumer centric and insight driven
- serves customers with a passion for excellence
• Strategic roadmap will be delivered over three waves of investment in FY13, FY14 and FY15 respectively; success in each wave will earn us the right toFY14 and FY15 respectively; success in each wave will earn us the right to fund the next
• Financial implications of delivering the turnaround:
- Sustainable EBIT growth on exit of the plan period
- Continued positive cash-flow to pay down debt and further improveContinued positive cash flow to pay down debt and further improve financial position
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FY13 – FY15 strategygy
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
ion
& G
oal
s
To be the leading and most innovative local food company
Shareholder
Restore acceptable shareholderOrganisation Imperatives
Vis
gie
s
1 2 3 4 5 6
Restore acceptable shareholder returns
Actively engaged employees Safety, Quality, Innovation, Efficiency
One Goodman Fielder
Str
ate
Sustainable cost structure
Portfolio optimisation
Bakery turnaround
Core category innovation
Improved customer alignment
New channels & geographies
Five Core Categories
as
Five Core Categories
Bakery, Dairy, Flour & Cake Mix, Spreads, Dressings & Mayo
Fo
cus
Are
a
Three Key Markets
Australia, New Zealand, Asia Pacific
Goodman Fielder Way
Safety Quality Talent Development Innovation Leadership16
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FY13 – FY15 strategygy
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
ion
& G
oal
s
To be the leading and most innovative local food company
Shareholder
Restore acceptable shareholderOrganisation Imperatives
Vis
gie
s
1 2 3 4 5 6
Restore acceptable shareholder returns
Actively engaged employees Safety, Quality, Innovation, Efficiency
One Goodman Fielder
Str
ate
Sustainable cost structure
Portfolio optimisation
Bakery turnaround
Core category innovation
Improved customer alignment
New channels & geographies
Five Core Categories
as
Five Core Categories
Bakery, Dairy, Flour & Cake Mix, Spreads, Dressings & Mayo
Fo
cus
Are
a
Three Key Markets
Australia, New Zealand, Asia Pacific
Goodman Fielder Way
Safety Quality Talent Development Innovation Leadership17
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Improved customer alignmentp g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Improved customer relationships and shopper insight todrive growth in our key markets
Goal
• Recognition on both sides for need for structural change in Bakery model
• Mutual desire to restore category profitability and product innovation to benefit
Status
consumer
• Increased and improved dialogue
Action Plan • Restructure to provide one face to customer improved top to top dialogue andAction Plan • Restructure to provide one face to customer, improved top to top dialogue, and cross functional business planning
• Improved execution in-store due to increased reliability, customer service and deepen shopper understanding (in progress)
• Collaborative design of new bakery go to market model in Australia including:• Improved customer service
• SKU optimisation (stage I complete)
• Rural service model (late stage design)Rural service model (late stage design)
• Optimised distribution network (late stage design)
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New channels and geographiesg g p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Diversify earnings and grow beyond supermarket channel and leverage Asia Pacific presence
Goal
New Channels
• A/NZ Out of Home and Foodservice
New Geography: Asia
• Asia Pacific fastest growing GF• A/NZ Out-of-Home and Foodservice channels are large (A$2.7b) and growing
• Significant Artisan, Freshbake, Dairy
• Asia Pacific fastest growing GF business (Normalised EBITDA +13% in FY12)1
• Pacific – strong market leading and Spreads and Dressings category opportunities
• Product, service and brand opportunities being scoped
presence, mature premium brands. Consistent growth over strategic plan
• Asia – smaller growing food serviceopportunities being scoped Asia smaller, growing food service business. Scoping of core category opportunity in SE Asia / China
• Appointment of Peter Foyston, 17 ’ i i A i MDyears’ experience in Asia as MD,
APAC
19Note: 1 EBITDA before restructuring costs
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Our strategy will re-shape our business by reallocating focus and resourcesby reallocating focus and resources
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
OBJECTIVE ON EXIT OF PLAN FY15CURRENT (FY12) OBJECTIVE ON EXIT OF PLAN FY15
CategoriesDME spend and Capital Expenditure distributed
across more than 30 categories (~70% DME spent on top 5 categories)
f
Majority of DME and Capital Expenditure invested in 5 big categories (~90% DME spent
on top 5 categories)
CURRENT (FY12)
Manufacturing Footprint
Becoming more integrated and removing
>50 plants<35 plants, after divestments and
footprint rationalisation for improved capital efficiency
Focused food company with one face to
Earnings
OrganisationBecoming more integrated and removing
silos
Negative EPS and EBIT growth
p ythe customer and dedicated category
teams to drive innovation and efficiency
Targeting EPS growth of 6%+Growth
Return on Capital1
Negative EPS and EBIT growth Targeting EPS growth of 6%+
ROCE: 11.6% ROCE: 13 - 15%
ShareholderReturns
TSR in Bottom Quartile of ASX 200
TSR in Top 50% of ASX 200
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Financial Position Strengthening financial positionInvestment grade credit metrics
supporting further growthNote: 1 Normalised ROCE in respect of a financial year is calculated on the basis of Normalised EBIT before significant items for that year
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FINANCIAL OVERVIEW and SUSTAINABLE COST POSITIONSHANE GANNON
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Our strategic roadmap is structured as three waves over FY13 15as three waves over FY13-15
F13 F14 F15
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
F13 F14 F15
Wave 1: Turnaround and innovate the core
Cost-outBakery
turnaroundInnovate core
categoriesKey in-market
initiativesPortfolio
Optimisation
Wave 2: Core category leadership
Innovation in Fresh Dairy
Extend Innovation in Grocery
Longer Term Bakery Plays
Wave 3: Growth beyond core
New channels and geographies
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Project Renaissance $100m in annualised savings by FY15$100m in annualised savings by FY15
Identified & Plans in Place
(FY12 / FY13)
Work Plans in Progress(FY12 / FY14)
Savings Targeted(FY14 / FY15)
(FY12 / FY13)
Ongoing Savings $40m $25m $35mOngoing Savings $40m $25m $35m
Restructuring Costs $33m $20m - $25m TBD
Key Projects
Baking Australia Overheads
NZ restructure
Manufacturing & SupplyChain Optimisation
(Phase I)
Manufacturing & Supply Chain Optimisation
(Phase II)
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Project Renaissance on track to deliver $100m in annualised savings by FY15$100m in annualised savings by FY15
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Projects
Annualised Savings ($M) Cash Costs ($M)
IncurredTo be
incurredAchieved
To be achieved
Total Total
Phase 1 • Baking Australia overhead• Plant closures (ex Baking)• Australia restructure• NZ restructure
40 0 40 32 - 32
Phase 2 • Bakery turnaround including factory closures
• Procurement initiatives• Ongoing SG&A savings
S l h i i5 20 25 14 11 25
• Supply chain savings• Fixed manufacturing cost
reduction
Phase 3 • Bakery turnaround including factory closuresfactory closures
• Procurement initiatives• Ongoing SG&A savings• Supply chain savings• Fixed manufacturing cost
reduction
- 35 35 - TBD TBD
educ o
TOTAL 45 55 100 46 TBD TBD
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PORTFOLIO OPTIMISATIONSHANE GANNON
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Growth plans have been developed for each of five core categoriesfor each of five core categories
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
BAKERY DAIRY FLOUR & CAKE
MIXSPREADS
DRESSINGS& MAYONNAISE
• Optimise footprint and streamline
• Focus on branded Fresh milk product
• Differentiate and premiumise in A/NZ Flour
• Focus on core brands
• Focus on core brands, expand range in A/NZstreamline
supply chain
• Drive innovation and price
milk product
• Premiumisation in milk through differentiation
A/NZ Flour
• Drive volume growth in Pacific
• Innovate in
• Drive health benefits of category
• Innovate in
range in A/NZ retail
• Drive down cost (packaging
realisation in Freshbake
• Turnaround Homebake
• Selectively enter new markets in APAC
Innovate in Cake Mix
• Deliver lowest cost sourcing
Innovate in everyday and health
• Deliver lowest t i
options)
• Expand into key adjacencies (new subHomebake
• Leverage growth from Health
• Differentiate with
cost sourcing (new sub categories)
• Innovate for new occasions
branded artisan & target Food Service channel
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Resources will be directed towards core categoriescategories
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Investments in DME, capital expenditure and sales, marketing and innovation will increase in total with core category investments forming a greater proportion of the total
Category Investment
OTHER CATEGORIES
• Protect for profit
• Under review
• Divest
300
~$265M
Category Investment
B k200
Other
~$215M
$
• Bakery
• Dairy
• Flour and Cake Mix
Other
CORE • Spreads
• Dressing and Mayonnaise
100Core
27
0Current F15
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Core category focus and investment to improve earnings and returnsimprove earnings and returns
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
OTHER CATEGORIES
• Protect for profit
• Under review
• Divest
40
60
80
100%Other
EBIT
B k
0
20
40
Current
Core
F15
• Bakery
• Dairy
• Flour and Cake Mix
CORE • Spreads
• Dressing and Mayonnaise 10
15ROCE (%)
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0
5
Current
ROCE
F15
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Stranded cost mitigation plang p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• Businesses under review or targeted for divestment currently absorb ~$20m of SG&A
• This will be mitigated via 3 work streams:• All work streams are underway
• Specific action plans to be identified by end October 2012
SG&A Optimisation Indirect ProcurementRemoval of directly related
costs
• Process redesign
• Systems capability / SAP
• Sourcing improvements
• Remove complexity
• Role duplication and other procurement savings projects
• Managing supplier and internal practices to improve value delivered
g p j
• Merchandising
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Portfolio optimisation – Integro p g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
INTEGRO SALE AGREEMENT NET PROCEEDS REDUCE NET DEBT IMPROVED LEVERAGE RATIO
Sale of Integro business to GrainCorp/Gardner Smith FY12 (Pro 51200
A$m
GrainCorp/Gardner Smith demonstrates successful divestment strategy:
• Non core business to GF –agreed to sell for $170m –
Metric* FY12 forma)
Net Debt** $728m $563m
Leverage RatioNet Debt/EBITDA 2.4x 2.0x2
3
4
400
600
800
1000
g~$25m profit on sale (pre tax)
• Proceeds used to substantially strengthen GF’ fi i l iti
Net Debt/EBITDA
Interest CoverEBITDA/Net Interest 3.6x 3.6x0
1
0
200
400
FY08 FY09 FY10 FY11 FY12 Proforma
N tD bt N t D bt/EBITDA I t t CGF’s financial position
• Enables concentration of capital and DME spend on core GF categories
Notes: (*) These calculations are in accordance with the group’s debt covenants (**) FY12 Net debt excludes an unrealised FX gain of $52.5m (FY11: $71.4m) relating to the revaluation of the company’s US dollar private
Net Debt Net Debt/EBITDA Interest Cover
• Long term supply partnership structured with GrainCorp
• Dividend Policy to be revisited at half year
p y pplacement debt.
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revisited at half year
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BAKERY TRANSFORMATIONPANKAJ TALWAR
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Bakery turnaround overviewy
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Four key strategies for Bakery:
Transform the bakery business model
Increase brand equity in core of fresh loaf and chilled bread
Create breakthrough innovation and
choiceful renovation
Drive growth in new channels
Covered in Category innovation presentation
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Transformation of Bakery is based on four key workstreamsfour key workstreams
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Work Stream DescriptionApplicable
AustraliaNew
Zealand
OptimisePortfolio
• Rationalise national range
• Reduce regional complexity
• Optimise category with simplified planogram1
TransformManufacturingFootprint
• Optimise manufacturing footprint• Improve operating efficiencies and effectiveness• Sustainable reinvestments aligned with bigger, better
bakeries
2 bakeries
Improve Distribution Model
• Match distribution value with appropriate channel• Optimise line haul and “last mile” network• Increase asset utilisation by taking advantage of cross
h l d t t iti
3 channel and category opportunities
Fix our Cost-To-Serve
• Achieve a sustainable cost-to-serve model to regional and remote geographies
4 -
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Progress is being made on each workstreamworkstream
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• Broad, national product range with large product variety and many Optimise
FROM 2012 STATUS
• Limited national core range with regionally optimised offering
WORKSTREAMS
g p y yregional-specific SKUs
Opt sePortfolio
Transform• Nation-wide bakery network
g y p g
• Bakery footprint aligned to capital Transform
Manufacturing Footprint
• Under-utilised plants cities and strategic locations (3 plant closures announced on 25 June)
• Target 85% asset utilisation levels
Improve Distribution
Model
• Largely fixed cost and inflexible supply chain
• Daily deliveries to all customers
• Improve scalability of cost structure
• Channelised model for service and deliveries
• Mainland contractor efficiency Model yimplemented in Tasmania (32 vendors to 9 contractors)
Fix our • Uneconomic to serve regional and
remote geographies in Australia• Direct dialogue with customers to
create sustainable cost to serveCost-To-
Serve
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remote geographies in Australia create sustainable cost-to-serve model to maintain fresh daily service
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Optimise portfoliop p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
4
Maximise Portfolio
Opportunity
Finish
• Consistent, focused
Reduce R i l
Category Optimisation3
pp y
• Fill category portfolio gaps
focused product range
• Regionally
Optimise NationalRange1
Regional Complexity2
Start• Delete low
volume and
• Optimise planogram to meet local demographic
optimised
RangeStart
• Remove duplicate product SKUs
volume and non-strategic products
demand• Complex
national range
product SKUs
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Transform manufacturing footprintg p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Existing Bakery Footprint Strategic Mandate:
Fewer, bigger, better bakeries
Darwin
Cairns
Papua New Guinea
• Concentrate capital expenditure and R&M spend
• Capital avoidance
Townsville
Burleigh
Alice Springs
Cairns
Carina (Brisbane)Hemmant
(Brisbane)
Capital avoidance
• Reduce fixed and variable cost base
• Increased quality and safety standards
Burleigh (Gold Coast)
Moorebank(Sydney)
Forestville (Adelaide)
Malaga (Perth)
Ballarat
Tamworth
Canberra
Whiteside
Erskine Park(Sydney)
Hobart
DandenongFairbank(Melbourne)
(Melbourne)Auckland
Huntly
Wellington
Hawkes Bay
Nelson
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Dunedin
Christchurch
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Staged plan for optimising manufacturing assetsmanufacturing assets
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Improve & Invest
OperationalExcellence
5
6
Future footprint
F
UpgradeCurrentAssets
4Improve& Invest
3• Initiate long term
NSW
• Initiate long term QLD & SA manufacturing footprint solution
• Fewer, more efficient bakeries
• Target 85% asset
Right-size
Outsource capacity
1
2
• Outsource low
• Increased Stay In Business Capital Expenditure
manufacturing footprint solution
• Implement New Zealand South Island strategy –
utilisation
Footprint1
• Close Cairns, Rockhampton and Whiteside
I
value and volume products
rebuild Christchurch bakery
• 28 facilities
Start
• Increase asset utilisation• Low asset
utilisation
In Current PlanOutside
Current Plan
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Improve distribution modelp
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Leverage scale4
Partner with customer base
Finish
• Simple, flexible, low
Route to
Leverage scale and scope
advantages3
• Implement cross
cost network
• Distribution model matched to customer
• Investigate long term alternative distribution structure
EfficiencyImprovements1
Route to market2
Start
• Restructure Tasmanian distribution
pindustry opportunities
• Joint line haul routes – internal
customer service requirements
• Complex national coverage
• Multiple
• Centralised picking and dispatch
• Breadroom efficiencies in
distribution
• Appropriate distribution model based on channel
and external opportunities
• Multiple models used in different locations
efficiencies in Australia
• Improved fulfilment and order execution
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Australia’s Cost-to-Serve model will become sustainablebecome sustainable
GOODMAN FIELDER IS DEVELOPING ADISTRIBUTION COSTS ARE DRIVING REMOTE AND REGIONAL SALES TO BE LOSS MAKING
• Goodman Fielder is committed to an Distribution Cost Index
GOODMAN FIELDER IS DEVELOPING A SUSTAINABLE COST-TO-SERVE MODEL
AND REGIONAL SALES TO BE LOSS MAKING FOR GOODMAN FIELDER
economically sustainable daily fresh bakery delivery model across Australia
• Goodman Fielder is able to satisfy the desire for daily fresh bread to all Australians
(Cost per Unit)
daily fresh bread to all Australians
• To do this, daily delivery runs include:- Townsville Bakery to Mount Isa : 903 km
- Perth Bakery to Port Headland : 1,633 km
• Goodman Fielder is engaged with customers on the following:
- Optimising delivery methods
- Reducing cost complexity and cost driversg p y
- Recovering the cost to serve in Regional and Remote areas
Sustainable cost-to-serve model
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Four key workstreams to transform Bakery business modelBakery business model
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
O ti i P tf liOptimise Portfolio
TransformManufacturing Footprint
Improve Distribution Model
Fix our Cost-To-Serve
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VALUE-DRIVING INNOVATION IN THE FMCG INDUSTRYJ.ANDRÉ TEIXEIRA
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Innovation in FMCG that creates value occurs in four dimensionsoccurs in four dimensions
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
?
New Consumers
Innovative
?
?? fOInnovative
Idea?? New BenefitsNew Occasions
?
New Channels/GeographiesNew Channels/Geographies
Answer YES to one or more of these questions and you will probabl ha e a good idea
43
probably have a good idea
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Need to listen to three voices in combinationcombination
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Consumer
Consumer and productInteractive testing
Consumers and theirmarkets g
Customer product
Market Product
44
propositions
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(New) common wisdoms in FMCG innovationinnovation
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• Coupling TRENDS / INSIGHTS with technology SCOUTING / CONSUMER foresightsg
• Consumers and their habits are zapping
N d hi d i i t iti• New demographics driving new opportunities
• Combining creativity with processes for world-class i tiinnovation
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Examples of how we are answering the four questionsthe four questions
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
?
Asian products, Artisan
Innovative
?
??
Sensory,TextureFlat breads Innovative
Idea?? Texture,
Functionality,Freshness
Flat breads,Mobile
?
Asia Pacific FoodserviceAsia Pacific, Foodservice
Answer YES to one or more of these questions and you will probabl ha e a good idea
46
probably have a good idea
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INNOVATION IN BAKERYPANKAJ TALWAR
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Bakery Category
49
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Bakery category vision
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
To be the l di dleading and most innovativemost innovativelocal baking gcompany
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GF has ~19% share of the $4 billion AU Fresh Bake market – opportunities for growthBake market opportunities for growth
Australia Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
51
Source: AZTEC scan data; BIS Shrapnel; Datamonitor; IBIS World; Internal sales data; Industry reports
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GF has ~40% share of the $0.8 billion NZ Fresh Bake market – opportunities for growthBake market opportunities for growth
New Zealand Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
52
Source: AZTEC scan data; BIS Shrapnel; Datamonitor; IBIS World; Internal sales data; Industry reports
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Consumer and shopper insightspp g
Consumer Insights
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Parents are seeking breads that are less
‘bulky’ and lower in ‘carbs’
39% of parents actively look for products that hide
the 'good stuff‘
Nutrition is the number one category driver
Consumers are seeking more premium, artisan
style bread
g
Shopper Insights
Bread is one of the highest volume
categories with 50% of all Shoppers buying at
pp g
Loaf Bread is an extremely planned purchase occasion with 87% of Shoppers pre-
planning a purchase
41% of Shoppers are changing bread purchases
based on perceived nutritional benefits
Shoppers purchase In Store Bakery Bread for
convenience. Quality and freshness perceptions lagpp y g
least 30 loaves per yearplanning a purchase nutritional benefits freshness perceptions lag
behind Hot Bread Shops.
53* U&A 2008 & 2009, Aztec Shopperview
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Four Bakery category strategiesy g y g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Transform the Bakery business
model
1
model
Increase brand equity in2
Increase brand equity in core of fresh loaf and
chilled bread
Create breakthrough innovation & choiceful
3
renovation
4
Drive growth in new channels
54
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Gluten free bread launch propels categorycategory
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• NZ 50.4% value market share
• Drove NZ category growth +57%
Increase in food intolerances driving growth in Gluten free diets
Insight ResultsActivation
Drove NZ category growth 57%
Until recently Gluten free bread has been a poor substitute for regular bread at the sandwich occasion
L h d J l 2011Launched July 2011
Re-launched Aug 2012g
55Source: AZTEC
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Garlic bread transformed by La Famiglia stone baked rangeLa Famiglia stone baked range
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• Increased share to 62%
• Highest share in 2 years
Consumers seek convenient, quality products that deliver the ‘T D ’ t h t t i i
Insight Results
g y
• Drove category growth +7%‘Ta Da’ moment when entertaining family and friends
Launched April 2012
Activation
56Source: AZTEC
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Thins redefines the sandwich occasion
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Consumers love sandwiches but are actively seeking options with
Helga’s (Australia) –Launched Feb 2012
Insight ResultsActivation
y glower carbs and less bulk
Launched Feb 2012
• Generated 10% trial
• $7.7m RSV sales since launch
Launched Feb 2012 Freya’s (New Zealand) –Launched May 2012
• Generated 8.3% trial
• $1 1m RSV sales since launch$1.1m RSV sales since launch
Launched May 2012
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Family lunches all wrapped upy pp p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Parents want to keep kids’ lunchboxes exciting, yet nutritious
Insight Activation
nutritious
Launches Sept 2012
Launches Sept 2012
Adults want sandwich options that aren’t as filling
Launches Sept 2012
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Leveraging artisan bread to drive growth in new channelsgrowth in new channels
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
I would love to be able to
Insight
I would love to be able to buy an authentic fresh artisan bread-brand
i tl th t blconveniently, that enables me to discover better bread in an engaging way.
Size of Opportunity
Size of Market: ~$700m
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GF has commissioned and launched an artisan bread plant with $15m investmentartisan bread plant with $15m investment
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Erskine Park fully functional and capable of making wide range of artisan bread including Batards Baguettes Ciabattas & Rolls
Activation
artisan bread including Batards, Baguettes, Ciabattas & Rolls
60
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New channel opportunities for Artisanfor Artisan
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Hot Bread ShopsRetail In Store Bakery
Foodservice/QSR
Unbranded Branded BrandedUnbrandedPLG
Short term priority Longer term priorityShort term priority
61
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Four Bakery category strategiesy g y g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Transform the Bakery business
model
1
model
Increase brand equity in2
Increase brand equity in core of fresh loaf and
chilled bread
Create breakthrough innovation & choiceful
3
renovation
4
Drive growth in new channels
62
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INNOVATION IN GROCERYAARON CANNING
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Grocery Category
Spreads Dressings &Flour andSpreads Dressings & Mayonnaise
Flour and Baking Mixes
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Grocery category driversy g y
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Enter new channels and new markets
Optimise3
4
Innovate to
Optimise manufacturing to deliver lowest cost2
3
Focus on core categories and
accelerate growth
1
invest to strengthen market leading powerbrands
65
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Spreads category visionp g y
T i it it tTo re-ignite excitement in Spreads by leading the way in “healthy”,
“guilt-free” innovation in gu t ee o at oour core brands in each
marketmarket
66
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Spreads category insights
Consumer Insights
p g y g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Health is the #1 concern,65% of Spreads consumers
reduce their usage as a result1
Naturalness is also a concern,it influences purchase decisionfor 40% of Spreads consumers1
98% of all householdsbuy Spreads2
Taste is most importantfor 30% of Spreads
consumers1
Shopper Insights
Difficult category to shop, people find it hard to find
what they are looking for and even harder to understand
health in this category1
Bread (the natural accompaniment for spreads) is
one of the highest volume categories in the supermarket
with 50% of all Shoppers
How the shopper shops the Spreads category1
What are my preferred brands?
buying at least 30 loaves per year3
Price
Variant
Size
67¹ Ruby Cha Cha: Spreads: U &A 2009² Aztec IHP July 2012, Aztec IHP³ Shopper Tracker 2010, Segmentation Research 2011
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MeadowLea health education driving growth and retailer turnaroundgrowth and retailer turnaround
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
“As a parent, I am responsible for what my kids eat in their school
Insight ResultsActivation
• Tested in the top 10% of advertising effectiveness globally1y
lunch box. It’s the choices I make each day that make a difference to my kids’ health”
advertising effectiveness globally
• Contributed to 29% brand growth since activation2
• Retailers re-engaged
• Enabler for ranging & promotional• Enabler for ranging & promotional improvements
5000.0
5500.0
Total MeadowLea ($000's)
3000.0
3500.0
4000.0
4500.0
68Source: 1 Millward Brown2 Aztec National Scan Sales to Aug 2012
4wks 06/11/11
4wks 04/12/11
4wks 01/01/12
4wks 29/01/12
4wks 26/02/12
4wks 25/03/12
4wks 22/04/12
4wks 20/05/12
4wks 17/06/12
4wks 15/07/12
4wks 12/08/12
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Flour & Cake Mix category visiong y
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
To lead the baking revival in everyday homes across A/NZ & Pacific by developing and
innovating our three core brands in each marketbrands in each marketFlame, White Wings &
EdmondsEdmonds
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Flour & Cake Mix category insights
Consumer Insights
g y g
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
The key driver for baking is the personal satisfaction and
gratification you receive from others
Consumers want simple natural closer to scratch
baking products
70% of consumers scratch bake and bake from cake
mixes1
Consumers want inspirationto create easy to make baking
goodies
Shopper Insights
Difficult category to shop, people find it hard to find
what they are looking for and hard to tell the difference
between products2
Category allows basket expansion as shoppers who buy cake mix also buy milk, butter/margarine, eggs etc.
How the shopper shops the Cake Mix category1
What am I using it for? Occasion
Formats
Flavours
70¹At least every 6 months Source: Colmar Brunton, Packet Mix U&A Project Macro June 2009² Bread & Butter Research & Planning, Project Dove 2005
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New Purer White Wings flourg
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
“I love sharing my baking with my loved ones, their enjoyment i di Th t’ h I
Insight ResultsActivation
• Value share of mainstream flour up 1.5%pts following launch of Whit Wi NEW P Flis so rewarding. That’s why I
choose a good quality flour because I don’t want to take the chance that it won’t be perfect”
1.5%pts
White Wings NEW Purer Flour
p
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Flame flour (PNG)( )
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Insight ResultsActivation
Flame is an iconic local brand in PNG with over 30 years’ h it It h l d
Flame Flour will execute its largest ever promotion this year
Flame Flour has grown 11% since 2008
heritage. It has scale and consumer brand significance equal to and beyond that of other global brands in PNG
s 11%
Ex-
Fac
tory
Ton
ne
s 11%
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Dressings & Mayonnaise visiong y
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Innovate the Praise brand
to provide flavour variety to
make fresh food a part ofp
every home everyday
73
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Dressing & Mayonnaise insightsg y g
Consumer InsightsFinancial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Consumers perceive homemade dressings as more
natural, better tasting and fresh1
Consumers seek variety in sandwich spread flavours but
are concerned with health1
Approximately 1 in 3 salads is made with homemade
dressings1
Mayonnaise is only used on 20% of homemade
sandwiches1
Shopper Insights
50% of shoppers in dressings category are “light” users purchasing one bottle per
year
Shopper walk through the bakery in all shopping
missions and 90% walk through fresh section
Shopper seeks out flavour in dressings first
Shopper driven to mayo aisle due to convenience
74¹U&A 2008 & 2009, Aztec Shopperview
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Praise Deli Style targets sandwich occasion with successoccasion with success
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Mayonnaise is only used on 20% of homemade sandwich occasions
Insight ResultsActivation
• Week 3 is 48% ahead of target
• 97% distribution achieved
• Praise Sandwich Mayonnaise is the most successful launch in the Dressings and Mayonnaise category this season selling at 4 times the rate of other new entrants
Launched July 2012rate of other new entrants
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Paul Newman’s Own delivers new flavours to premium dressingsflavours to premium dressings
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Consumers love the mouthfeel and taste of a creamy dressing but try to have them infrequently as know oil
Insight ResultsActivation
• Launched August 2012
• Full distribution targets achievedhave them infrequently as know oil based dressings are healthier1
Launched August 2012
• Driving higher $/L in the category with a 79% premium over Praise Traditional
761 Ruby Cha Cha: Spreads: U &A 2009
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Recap: Grocery category driversp y g y
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Enter new channels and new markets
Optimise3
4
Innovate to
Optimise manufacturing to deliver lowest cost2
3
Focus on core categories and
accelerate growth
1
77
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SUMMARY CHRIS DELANEY
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Innovation will create value in Goodman FielderGoodman Fielder
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
?
New Consumers
Innovative
?
?? fOInnovative
Idea?? New BenefitsNew Occasions
?
New Channels/GeographiesNew Channels/Geographies
Answer YES to one or more of these questions and you will probabl ha e a good idea
79
probably have a good idea
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Key achievements and plan going forwardforward
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
We have a strategy to deliver sustainable earnings improvement
A t i bl t t t t k t d li $100 i t i b FY15 A sustainable cost structure – on track to deliver $100m in cost savings by FY15
A focused food company - optimising our portfolio and focusing DME and capital
p y p g p g p
spend on five core categories
A defined strategy to turn around the Bakery division by transforming the
business model
A platform for growth through branded innovation in our core categories
A platform for growth through branded innovation in our core categories
St t t i l tf t t i d h h ld tStrong strategic platform to generate improved shareholder returns
80
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Recap: Vision, Purpose and Valuesp , p
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
Vision
To be the leading and most innovative local food company
Purpose
Create food that people lovep p
Values – our six ingredients
We are ‘we’, not ‘me’
We love food, especially our
food
We dream big. And we will
make it happen
We get better –all the time
We stand by our words and
actions
We look after our own – in the company
and the
We are
happencommunity
We are
Our homegrown food company81
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FY13 – FY15 strategygy
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
ion
& G
oal
s
To be the leading and most innovative local food company
Shareholder
Restore acceptable shareholderOrganisation Imperatives
Vis
gie
s
1 2 3 4 5 6
Restore acceptable shareholder returns
Actively engaged employees Safety, Quality, Innovation, Efficiency
One Goodman Fielder
Str
ate
Sustainable cost structure
Portfolio optimisation
Bakery turnaround
Core category innovation
Improved customer alignment
New channels & geographies
Five Core Categories
as
Five Core Categories
Bakery, Dairy, Flour & Cake Mix, Spreads, Dressings & Mayo
Fo
cus
Are
a
Three Key Markets
Australia, New Zealand, Asia Pacific
Goodman Fielder Way
Safety Quality Talent Development Innovation Leadership82
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CONCLUDING REMARKS STEVEN GREGG
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Conclusion from Chairman Elect
St t i l t th i t t il t i th
Financial Overview
Bakery Turnaround
Innovation Introduction
Bakery Innovation
Grocery Innovation
Group Strategy
• Strategic plan progress represents another important milestone in the turnaround of Goodman Fielder
• Building on the achievements over past 12 months to deliver on the g pcompany’s strategic priorities
• Goodman Fielder now has:- cost structure aligned to current market conditions to compete more efficiently- cost structure aligned to current market conditions to compete more efficiently
- improved financial position with greater financing flexibility
- strengthened executive leadership team
customer aligned operating structure to leverage our market leading brands and- customer-aligned operating structure to leverage our market-leading brands and positions in core categories and markets
Strong strategic platform to generate improved shareholder returns
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