graeme mcfaull ceoww7.investorrelations.co.uk/wincanton/uploads/... · market trends - cee •...

Graeme McFaullCEO

Investor Meeting

17 April 2007

Overview

• Structural and Cultural Change

- ‘One Wincanton’

- ‘Four Pillars’

• Our Track Record

- Significant cash flow generation

- Organic growth and acquisitions

- Excellent TSR performance

Operational

ExcellenceCustomer

IntimacyValue Product

Leadership

Overview

• Fundamental Strategic Review

- Core geographic focus

- ‘High growth’ opportunities identified

- Vision and financial goals set

• ‘Building Momentum’ and ‘Continuing Opportunity’

Overview

• Mainland Europe : Building Momentum

- Karl Nutzinger : Germany

- Ryszard Warzocha : Central and Eastern Europe

- Fiona Durousseaud : France

• Questions

Overview

• UK : Continuing Opportunity

- Martin Taylor : Retail

- Gordon Scott : Industrial

- Jeff Anderson : Manufacturing

• Questions

Investing for Growth in Germany

Karl NutzingerManaging Director

Wincanton Germany

Hamburg

Bremen

BerlinBraunschweig

Magdeburg

LeipzigDresden

ChemnitzEisenach

GüterslohWesel

NeussWuppertal

KölnDüren

Duisburg

MainzFrankfurt

WormsBischofsheim

MannheimSt. Ingbert

Heilbronn

Fulda

Bamberg

NürnbergKarlsruhe

Kehl

Weil

Stuttgart

AugsburgMünchen

Schömberg

Bergisch Gladbach

Frankenthal

Bünde

Neubrandenburg

Neustadt-Glewe

Itzehoe

Hannover

Herborn

Göttingen

Hof

Würzburg

Ulm

KemptenRosenheim

Rheine

Basel

Strasbourg

Thionville

Reims

RotterdamRidderkerk

MoerdijkZwijndrecht

VenloAntwerp

Wittlich

Winnersh/UK

Neuburg

Daun Koblenz

Groß-GerauLille

RegensburgRastatt

s‘Heerenberg

• 4,100 Employees

• 76 Locations

(plus 13 subsidary locations outside Germany)

• 750 m€ revenue (2006/2007)

• 400,000 m² warehouse space

One Wincanton in Germany: Project Phoenix

• 9 operational companies merged into “Wincanton GmbH”

effective 1st November 2006

• Strong, unique messages to the market

• Flat management structures

• Focus on business sectors and product portfolio

• Full utilisation of infrastructure and synergies

• Replication of products / solutions in multiple locations

• Integrated Service Provider: One-Stop-Shopping

Business Sectors

Business Development

Solutions

RoadIntermodal

High-Tech

Road

• 40 locations / 2 hubs

• 24hr service

• Hub and spoke system

• Distribution and collection

• Procurement logistics

• 220 daily line hauls

• 3.1m. shipments

• 20,000 customers

• Customer pool forinternational transportsolutions

High Tech

• Specialised transport

network for highly

sensitive cargo

• High end distribution

• Technical services

• Specialised equipment

• Installation services

• High security levels

• Market leading

• European network

Intermodal

• Trimodal integrated solutions

with barges, rail and road

• Market Leader on the Rhine

• 600,000 TEU per year

• 6 container terminals

• Presence also in France,

Switzerland and Benelux

• Wincanton Rail: own railway

company

• Specialist in bulk cargo

Solutions

• Contract logistics structures forstrategic customers

• Integrated offering tailored tocustomers needs

• Combining the Wincantonexpertise

• One face to the customer

• Long standing partnerships

• Creating value and innovation

Business Development

• Unique structure enables cross and deep-selling

• 60 specialists for differentindustries

• Focus on middle sizedcompanies and multinationalblue chips

• Key Account Management fornational and internationalcustomers

• Ongoing Wincanton image campaign

Major wins in 06 / 07

• Elco

• Unilever

• Optimus

• Drescher

• Decete

• Volkswagen

• Wincor Nixdorf

• Würth

• German Pellets

• MAN

Major renewals in 06 / 07

• Bunge

• Volvo

• Exxon

• BMW

• BP Castrol

• John Deere

• Hamman

• Lafarge

• Ruhrkohle

• Thiele Kaolin

Key market drivers in Germany

• Biggest European market

• Recovery of economy

• Economic growth

expected 1.7 % in 2007

• Growth of logistics market

3.5% p.a.

Source: Die Top 100 der Logistik, 4. Auflage 2006

Source: Deutsches Institut für Wirtschaftsforschung

1

2

1

2

1%

2%

3%

4% Logistics

Economy

Development of a five yeargrowth strategy: Project WAVE

• Confirmation of our core competencies

• Development of new products in high growth / high profit market sectors (Customers / Market segments)

• Concentration on investments and management focus on key areas

Strategy Implementation Programme:

• Audit and analysis of organisation and potential of eachlocation

• Strategic and operational realisation of WAVE – Strategy

• Building of operational and human resources to supportstrategy

German growth strategy

• Defined areas of focus:

- Contract logistics

- International road transport

- High Tech Products

- Container Terminal Operation

- Border Crossing Rail Services

• Investments:

- Human resources

- Infrastructure

- IT excellence

Summary

• Strong presence in Germany

• Consolidation process finished

• Growing German market

• Strategy plan defined

• Excellent basis for long term progress

Focus and Priorities in Central & Eastern Europe

Ryszard WarzochaManaging Director

PIASECZNOPIASECZNO

GDA SKGDA SK

SZCZECINSZCZECIN

POZNAPOZNA

B ONIEB ONIE

ÓDÓD

WROC AWWROC AW

SOSNOWIECSOSNOWIEC

TARNÓWTARNÓW

MIELECMIELEC

PRAGUEPRAGUE

BRNOBRNO

SENECSENECDEBRECENDEBRECEN

BUDAPESTBUDAPESTGYORGYOR

PECSPECS

SZENTGOTTHARDSZENTGOTTHARD

KESCSKEMETKESCSKEMET

Wincanton presence

RUZOMBEROKRUZOMBEROK

Economical situation in CEE

Poland:

• Population: 38.6 million

• GDP growth: 5.8 %

• Inflation: 1.4 %

• Budget deficit related to GDP: 3.4 %

• Unemployment rate: 12.2 %

Czech:






Slovakia:






Hungary:

• Population: 10 million





Wincanton in Poland

Turnover: € 70 million

Employees: 920

Employed Vehicles: 750

Warehousing: 145,000 m2

Services

• Contract logistics and warehousing

• National distribution

• International transport

• Sea freight

• Warehouse and transport systems

• Supply chain analysis

• Value added services

Sectors

• Consumer goods

• Electronic and white goods

• Retail

• Automotive

• Industrial

Ma aszewicze

Warszawa

Szczecin

ód

Wroc aw

Mielec

Pozna

Sosnowiec

Gda sk

Tarnow Rzeszów

PiasecznoB onie

Gdynia

Dzier oniów

Wincanton in Hungary


Employees: 360



Services

• Contract Logistics and Warehousing

• National Distribution

• International Transport

• Custom Clearance

• Warehouse and Transport Systems

• Value Added ServicesPécs

Gyöngyös

BudapestGyör

Békéscsaba

Szeged

Szirmabeseny

Várpalota

Budaörs Dunaharaszti

ZalaegerszegKecskemét

Debrecen

Sectors

• Consumer goods

• Retail

• Automotive

• Industrial

Wincanton in the Czech Republic

Services





• Supply Chain Analysis

• Value Added Services

Kralupy

Brno

Prague Ostrava

Sectors

• Consumer goods

• Retail

• Automotive

• Industrial


Employees: 112



Wincanton in the Slovak Republic

Services





• Supply Chain Analysis

• Value Added Services

Senec

Sectors

• Consumer goods

• Retail

• Automotive

• Industrial


Employees: 60



Ruzomberok

Market trends - CEE

• Increase of investment and production

• Industrial development in Poland

• Development of automotive in Slovakia and Czech

• Still low remuneration rates

• Migration of people to other EU countries

• Increase of the payroll costs, increase of efficiency

Latest wins - Poland

PZ Cussons

Rieber Foods

Johnson Diversey

Selena

Latest wins - Hungary

Henkel

Group SEB

SSL

Goodyear

Latest wins – Slovak Republic

New Business Opportunities

• Pharmaceutical

• Chemical

• 4 PL – transport management

• VAS

• Recycling

A new platform for growth in France

Fiona DurousseaudGeneral Manager

A national platform

Sectors

• Automotive

• Consumer goods

• Retail

• Industrial

• Chemicals and lubricants

• Pharmaceuticals

Turnover: € 160million

Employees: 1,500

Owned Vehicles: 300


Locations: 30

Services

• Contract logistics and warehousing

- National distribution

• International transport

• Air and sea freight forwarding

• Warehouse and transport systems

• Supply chain analysis

• Value added services

Early successes / new business wins

• Consumer goods

- Kronenbourg : dedicated warehouse / 6 years

- SSL Healthcare : 3 years

- Christofle

• Catalogue / Internet shopping

- Kiala : 3 years

- Society of roof windows : 5 years

- Outiror : 3 years

- HSS

Future opportunities

• Increasing brand recognition

• Excellent feedback SITL 2007

• Extensive new

contacts

• Higher tender

activity expected


Group customers cross-

border opportunities

• Decathlon: France / Poland

• Daikin: France / Belgium

• SSL: France / Hungary

• Seb: France / Hungary

Tender Activity

• €10m opportunity across

sectors

Lyon

Toulouse

Strasbourg

Nantes

Paris


- Internet / home delivery

- General retail

- Consumer goods (FMCG, electronics & appliances)

- Transport management

- Consultancy: opening of Consilium this year

- Other group activities such as reverse logistics or waste management

Target sectors

Service expansion

Current Status

• Successful integration

- 4 Pillars

- Operational Excellence

- HS & E Standards

• Customer and sectors account plans

- Identifying opportunity

• Building the pipeline : growing tender activity

• Pipeline significantly up on last year

Retail

Martin Taylor

Managing Director

Wincanton’s Customer Base

• Major contracts with 15 of the top 30 retailers

• Major 3PL for all the top supermarkets –Tesco, Sainsbury’s, Asda,

Morrisons, Somerfield

• Retail turnover to top £1b p.a. in 2007/2008

Market Developments

• Supermarkets move into non-food

• Non-food retailers source more product from Far-East

• Growth in multi-channel selling – Internet / Home Delivery

• More attention to availability and increase in store delivery frequency

• Increase in proportion of meals that are ‘eaten out’

Wincanton Wins – Last 2 Years

Argos: • Corby (500k sq ft)

• Kettering (700k distribution centre)

Sainsbury's: • Buntingford

• Maltby

• Northampton (700k sq ft)

Screwfix: • Stafford

• Stoke

Comet: • UK transport

Asda: • Doncaster (700k sq ft)

Dunnes Stores: • Dublin (Textiles)

Marks and Spencers: • UK (Non-merchandise)

Opportunities

Home Delivery – 2 man:• Dedicated

• Network

Far East: • UK supply chain through Kerry JV

Food Retailers: • Continue to outsource

Non-Food Retailers:• Increased outsourcing plus trend to

shared user

Container Bases: • Port distribution centre

Food Services • Network capability

Multi-Channel Selling

• Massive growth of 30% per annum in internet sales

• As store sales decline, internet sales increase

• Wincanton acquired Lane Group in October 2006 for its two-man

home delivery capability

• Dedicated Home Delivery – Comet, B&Q, Magnet, Homebase

• Network Home Delivery – Electrolux, Bosch, Sainsbury’s

• Wincanton one of the few 3PL that has UK network capability

Home Delivery - Improvements

• Built on the ‘unique’ Home Delivery software to ensure a more

robust operating platform

• Invested in ‘Best in Industry’ equipment that ensures a reliable

operating platform

• Raised efficiency by 35% in past 6 months

• Introduced dedicated management focused on delivering

improvements and efficiency into the network

• Identified and implemented a new ‘fit for purpose’ location which

allows for anticipated growth

Container Logistics

• As manufacturing output falls within the UK, more products are being

sourced from overseas in particular from the Far East

• Wincanton has identified requirements for container storage away form

congested and expensive ports. Ports facing pressure on space as

container ships become larger

• Wincanton sees additional benefits for our customers as this offering

expands the supply chain and offers the customer greater control over

what is delivered into a distribution centre and when

• The recent JV with Kerry allows Wincanton to provide a well controlled

and efficient end to end supply chain solution

Industrial Sector

Gordon ScottManaging Director

Business Focused on Four Key Sectors

Construction Recycling

Milk Petrochemicals

Customer Base

Local Authorities

High Growth

Mature Sectors

Construction

• Key Issues Driving Change:

• New Legislation• Carbon Footprint• Sustainability• Planning

• Ongoing demand and major infrastructure projects

• Complexity creating opportunity in fragmented market:

• No major 3PL presence• Regional Competitors

Recycling

• Key Issues Driving Change:

• Landfill restriction• European legislation• General environmental awareness• Latest position

• Fundamental change in retail and manufacturing supply chains

• Complexity creating opportunity in new market:

• Compliance schemes and traceability• Infrastructure and networks

Recent Wins / Renewals

Local Authorities

Manufacturing Sector

Jeff AndersonManaging Director

Broad Range of Services

Typical Supply Chain

Food FMCG: Services: Co-PackingPallet ControlTransportWarehousing- Shared User- Temp Controlled- Bonded- Automated

& Drink:

Significant Market Changes

Warehousing

• Decline of automation

• Shift to shareduser

• Collaborationsolution

• Offshoringproduction

• Reduced stock holding andSKUs

Transport

• Backhaul based pricing

• Central planning

• Inboundmanagement

• Factory GatePricing

• Smallerconsignments / split waves

Added Value

• End to End solutions

• Co-Packing

• Co-Manufacturing

• Property and assetsolutions

• Adminoutsourcing

• Holistic view of supply chain

Retailer Power and Price Pressure

Open Book to Closed Book

Rationalisation of Manufacturers’ Supply Chain

Recent contract wins

FoodManufacturers

Drinks

New Services

Temperature controlled warehousing and transport

National transport

National transport

UK warehousing

International movements

Co-Packing

Co-Manufacturing (robotic)

Centralised transport planning

Future growth strategy

•Global Manufacturer Consolidation •Centre & DC Replenishment

Port Centric Manufacturer

Consolidation Centres

•3. Order•Amendment

•1. Orders

•2. Visibility of•Stockholding & Demand

•Global Manufacturer Consolidation

North and South Consolidation

Centres

Global + 2 Smaller Manufacturers

Collaboration

• Environmentally friendly

• Reduces cost

• Service simplicity for retailers

• Based on product, services and processes

• Inclusive and holistic supply chain

TransportOptimisation

• Single, integratedtransport network

• Dynamic scheduling and optimisation

• Scalable and flexible

• Reduces cost

Future growth strategy

Co-packing

• Provides non-core manufacturing processes

• Extends service offering to existing customers

• Exploits warehouse synergies and removes unnecessary transport cost

• From simple labelling to promotional packs to robotic co-manufacturing

• Operations for Heinz, P&G, Purina

• Dedicated or shared user

Manufacturing Food Services

• Integral part of wider transport and food services strategy

• Independent small drop and vending network to Manufacturers

• Alternative to traditional wholesale model

• Shared user route to market

• Synergistic, cost savings

• Chilled, ambient and beverage product groups

Graeme McFaullCEO

Summary

Summary

• Culture and Focus

• Momentum and Opportunity

• Organic Growth and Acquisitions

• European Leadership our Goal

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