Below, we set out what we see as the key takeaways from yesterday’s CMD discussing the group’s Compass strategy. Focus Change in group structure; management believe this was one of the key issues in past poor delivery/failure to execute. The new category focus gives full P&L ownership and accommodates the different roles each division will play. Two divisions will lead on growth though new products (Unit Dosing and Aerosol), two will be more cost reduction-led (Liquid and Powder) and AsiaPac is a hybrid of the two. It should allow the group to rekindle specialisms and improve agility/speed to market. All divisions are projected to assist in reaching the €1bn target for revenue. Costs Critical early role – The team are aiming for £20m of annualised cost cuts by end FY23, from simplification of the portfolio as well as eradicating unjustified costs – allowing the existing scale benefits of the business to flow to profit. Some savings will be reinvested in reducing price to improve competitiveness and drive future revenue. Further cost savings will be sought in years 3-5. On raw materials, MCB will look for opportunities to manage the cycle better, but flagged that it cannot eradicate it completely. Across the cycle, the evidence is that they do recover costs, and with this plan they expect to deliver higher average margins across the cycle. The target is 6-8% EBITA margins by year 5 vs the 10 year average of 4%. Financials A two-stage plan – in the first 2 years, the focus is cutting costs, improving the NPD pipeline, and increasing marketing; Over the next 3 year, the team will target volume-led growth, share gains, and possible co-management deals. They expect some profit progress in first two years (+25-30%), but this should accelerate in years 3-5 (40-50%). On the cash front, this is not a capital intensive programme, either in terms of capex or exceptionals – all the heavy lifting has been done on the factory footprint and the assets are well invested. Any capex will need to be justified by growth or product capability. Acquisitions could play a part in time (especially in AsiaPac), to deliver new product offerings or to consolidate. A new divided policy has been introduced – the group is moving to an annual payment only, and only once net debt/EBITDA is <2x.