Supercharging

supply performance

Amedeo Fasano – EVP Supply

9th June 2015

1
Supply – key partner in delivering RB’s strategy

Focus on Driving the

consumer earnings model
health Revenue,
capability Margins & Cash

2
Key facts – supply has always been ‘end–to–end’ …

Suppliers Plants Distribution Trade Consumers

centres customers

Manufacturing Supply services

3
Key facts & figures

COGS :

_ £4B
~
45 160 ~£200M
_
total capital
factories Distribution centres
(12 in health) expenditure

4
Focus on consumer health capability

5
Health manufacturing footprint in 2000

Hull

Mysore

Mauripur

6
Health manufacturing footprint in 2006

Hull

Nottingham

Bangplee
Mysore

Mauripur

7
Health manufacturing footprint in 2008

Hull

Nottingham

Fort Worth

Bangplee
Mysore

Mauripur

8
The challenge

Enhanced quality
Healthcare Greater scrutiny
GMP standards Higher compliance

Managed by household
Health plants manufacturing
& co-packers organisation

9
The solution

Created a global health manufacturing organisation

Greater
Reporting Enhanced investment
directly to resources behind
EVP Supply and quality technology and
compliance

10
Health manufacturing footprint in 2010 – SSL acquisition

Peterlee

Redruth Hull

Nottingham

Moscow
Fort Worth Qingdao

TTK JV1
Bangpakong
TTK JV2
TTK JV3
TTK JV4
Bangplee
Mysore

Mauripur

11
Bangpakong (Thailand) – creation of the SWB global R&D
center and Polyisoprene condoms capabilities

12
Bangpakong – global SWB R&D center

13
Bangpakong – creation of a global Polyisoprene facility

14
Leveraging assets to drive innovation: Real Feel

• New polyisoprene technology

• Launched so far in 23 markets
• 24 months from brief to sales
• 70M condoms delivered in 2014

15
Qingdao (China) at time of acquisition

16
Qingdao now: created world class capabilities in latex condoms

17
Leveraging assets to drive innovation: Invisible

• Thinnest Durex condom ever developed six months

ahead of schedule
• Leveraging the new production process to manufacture a
condom 10% thinner than the next thinnest Durex condom
• Outperforms all major competitor products in consumer
experience

18
Applying HC capability to more acquisitions – Paras (India)

Peterlee

Redruth Hull

Nottingham

Moscow
Fort Worth Qingdao
Baddi
TTK JV1
Bangpakong
TTK JV2
TTK JV3
TTK JV4
Bangplee
Mysore

Mauripur

19
Applying new HC capability to future factories

Hull UK Baddi - India

20
Applying HC capability to more acquisitions – Schiff & Guilong

Peterlee
Shanxhi
Redruth Hull

Nottingham Anhui
Salt Lake City
Moscow
Fort Worth Qingdao
Baddi
TTK JV1
Bangpakong
TTK JV2
TTK JV3
TTK JV4
Bangplee
Mysore

Mauripur

21
Schiff – at time of acquisition – a VMS plant

22
Schiff today – conversion to OTC standards

23
Schiff – leveraging new OTC standards
MegaRed/softgels insourcing and future softgels OTC NPD

24
Focus on our healthcare capabilities

Constant upgrade
Every new license is only
of GMP/Quality
a ‘license to learn’
standards

We are succeeding with

authorities – maintaining You are as good as
our licenses and adding your last landing
new licences

25
Quality vision – a healthy combination of……

26
Health global manufacturing cluster – rationalisation

Peterlee
Shanxhi
Redruth Hull

Nottingham Anhui
Salt Lake City
Moscow
Fort Worth Qingdao
Baddi
TTK JV1
Bangpakong
TTK JV2
TTK JV3
TTK JV4
Bangplee
Mysore

Mauripur

27
Health global manufacturing cluster – rationalisation

Peterlee
Shanxhi
Redruth Hull

Nottingham Anhui
Salt Lake City
Moscow
Fort Worth Qingdao
Baddi
TTK JV1
Bangpakong
TTK JV2
TTK JV3
Bangplee
Chennai
Mysore

Mauripur

28
Health global manufacturing cluster – rationalisation

Peterlee
Shanxhi
Redruth Hull

Nottingham Anhui
Salt Lake City
Moscow
Fort Worth Qingdao
Baddi
TTK JV1
Bangpakong
TTK JV2
TTK JV3
Bangplee
Chennai
Mysore

Mauripur

29
Driving the earnings model

30
Driving the earnings model

Global MFR Supply services

Quality & compliance Compliance
NR growth Innovation Customer service

Procurement Freight
Margin expansion Conversion cost Inventory losses
FUEL Logistics fixed costs

Payables Inventory
Cash CAPEX

31
Margin expansion

32
Margins – 3 years of virtuous earnings

Gross
Gross
margin
margin
+330bps

Net
Fixed
Revenue
cost
growth

Reinvest
Reinvest Operating
Operating
drive
drive margin
margin
+90bps +250bps

33
Earnings model Gross margin

Manufacturing
Global Logistics Project
Network
procurement efficiencies FUEL
Strategy

34
Project Fuel:

Airborne Strepsils Air Wick

(vitamin pre-mix) (formula harmonisation) (solvent reformulation)
£1.1m annual saving £1.1m annual saving £2.4m annual saving

35
Cash

36
CAPEX & PPE - KPIs

CAPEX/NR

CAPEX/COGS

PPE/NR

PPE/COGS

37
Driving efficiency in our plants to leverage assets

Overall manufacturing yield Labour Productivity index

Dipping process – China SWB factory Finish Quantum process – Poland ADW factory

38
CAPEX is about strategy and discipline

Impact on cash is immediate …….

…….today’s decisions last for years

39
Supply – key partner in delivering RB’s strategy

Focus on Driving the

consumer earnings model
health Revenue,
capability Margins & Cash

40
Q&A

41
Appendix

42
On track for Vision 2020 sustainability targets

GHG Waste Sent to Zero waste to Water Waste water

Energy Waste
emissions landfill landfill efficiency quality
mg/l discharging
kWh per 1000 tons CO2e per tons of waste % of manufacturing Number of landfill Cubic metres per
directly to a water
CUs 1000 CUs per 1000 Cus waste sent to landfill free factories 1000 CUs
body

2020
Target
vs 2012 baseline


ISO 14001 certification GMS compliance

% compliance with RB social

% of sites certified
standards

2020
Target

43