Aryzta Ag · SIX:ARYN
Aryzta — FY2019 Earnings Presentation
44 slides from Aryzta's earnings presentation, Oct 8, 2019
Slide 1: ARYZTA AG – FY 2019 Results
ARYZTA AG – FY 2019 Results Delivering Group Level EBITDA Stability 08 October 2019
Slide 2: Forward Looking Statement
Forward Looking Statement This document contains forward looking statements which reflect the Board of Directors' current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forwa
Slide 3: FY19 Financial Highlights
FY19 Financial Highlights –– Key measures of Group profitability improved –– Project Renew delivered €26m benefits and €40m run-rate savings achieved –– Underlying EBITDA growth of +1.9% and margin growth of +30bps achieved –– Group organic revenue flat; total revenue declined (1.5)% to €3,383m –– I
Slide 4: Delivering Group Level EBITDA Stability and Slight Improvement Sequentially H2 vs H1
Delivering Group Level EBITDA Stability and Slight Improvement Sequentially H2 vs H1 EBITDA 2018 2019 H1 H2 FY H1 H2 FY in EUR ’000 2018 2018 2018 2019 2019 2019 ARYZTA Europe 90,740 81,237 171,977 82,199 85,506 167,705 ARYZTA North America 49,962 39,940 89,902 48,671 49,322 97,993 ARYZTA Rest of Wo
Slide 5: Group Revenue Performance
ARYZTA Group Revenue Performance Year ended 31 July 2019 Organic Disposals Currency Total revenue in EUR million Revenue movement movement movement movement ARYZTA Europe 1,713.3 1.9% (1.8)% 0.1% 0.2% ARYZTA North America 1,397.9 (3.8)% (4.8)% 3.8% (4.8)% ARYZTA Rest of world 272.2 8.9% – (2.9)% 6.0
Slide 6: North America
ARYZTA North America in EUR million FY 2019 FY 2018 ARYZTA North America FY 2019 Financial Metrics Revenue 1,397.9 1,468.0 Revenue (4.8)% Underlying EBITDA 98.0 89.9 Organic Revenue (3.8)% Underlying EBITDA margin 7.0% 6.1% Underlying EBITDA +9.0% Underlying EBITDA margin +90 bps –– Organic
Slide 7: North America - FY 2019 Revenue Commercial & Channel Deep Dive
ARYZTA North America - FY 2019 Revenue Commercial & Channel Deep Dive – Organic decline of $66m (3.8)% Organic Organic Movement Movement Channel Weight (%) ($) Issue Action QSR 45% (1.9)% $(14)m Top 1 customer > 1% growth Maintained our share with customer Revenue loss of $(15)m attributable to one
Slide 8: North America – Q4 2019 Revenue Commercial & Channel Deep Dive
ARYZTA North America – Q4 2019 Revenue Commercial & Channel Deep Dive; Organic decline of $32m (8.0)% –– Revenue stabilisation has been challenging and recovery will be bumpy as the run of losses carry through into current year and the rebuilding of growth will take time to come through Organic Orga
Slide 9: North America – Actions in place to stabilise revenue and grow
ARYZTA North America – Actions in place to stabilise revenue and grow –– Revenue stabilisation has been challenging and recovery will be bumpy as the run of losses carry through into current year and the rebuilding of growth will take time to come through –– No major customers lost –– New management
Slide 10: Europe
ARYZTA Europe in EUR million FY 2019 FY 2018 ARYZTA Europe FY 2019 Financial Metrics Revenue 1,713.3 1,710.6 Revenue 0.2% Underlying EBITDA 167.7 172.0 Organic Revenue +1.9% Underlying EBITDA margin 9.8% 10.1% Underlying EBITDA (2.5)% Underlying EBITDA margin (30) bps –– Organic revenue grow
Slide 11: Europe – FY19 Progress Underway
ARYZTA Europe – FY 19 Progress Underway –– Good start to Project Renew - Savings of €11m achieved in FY19, primarily operating model (headcount reductions) and procurement/supply chain optimisation –– Disposals Programme ongoing - two loss-making bakeries sold in Europe and non-core UK Food Solution
Slide 12: Brexit
Brexit –– Potential No Deal Brexit impact on ARYZTA »» FY20 impact not expected to be material given short-term contingency plans »» Long-term impact more difficult to quantify »» Total revenue exposed to UK < 5% of Group revenue –– De-risked short-term operational planning »» Fully engaged with cus
Slide 13: Rest of World – Continued Growth
ARYZTA Rest of World – Continued Growth in EUR million FY 2019 FY 2018 ARYZTA Rest of World FY 2019 Financial Metrics Revenue 272.2 256.8 Revenue +6.0% Underlying EBITDA 41.8 39.9 Organic Revenue +8.9% Underlying EBITDA margin 15.4% 15.6% Underlying EBITDA +4.7% Underlying EBITDA margin (20)
Slide 14: Financial Review
Financial Review 14 October 2019
Slide 15: Group Underlying Income Statement
ARYZTA Group Underlying Income Statement Year ended 31 July 2019 in EUR ’000 FY2019 FY2018 Change % Group revenue 3,383,425 3,435,422 (1.5)% Underlying EBITDA1 307,508 301,822 1.9% Underlying EBITDA margin 9.1% 8.8% 30 bps Depreciation (137,584) (136,886) (0.5)% Underlying EBITA1 169,924 164,936 3.0
Slide 16: Underlying Income Statement Reconciliation to IFRS
Underlying Income Statement Reconciliation to IFRS Year ended 31 July 2019 in EUR ’000 FY2019 FY2018 Underlying EBITDA 1 307,508 301,822 Depreciation (120,758) (119,850) ERP amortisation1 (16,826) (17,036) Underlying EBITA 1 169,924 164,936 Amortisation of other intangible assets (135,872) (155,642)
Slide 17: Group – Quarterly Organic Revenue
ARYZTA Group – Quarterly Organic Revenue Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 FY 2019 ARYZTA Europe Volume % 0.5% (0.1)% 1.4% 0.7% (3.3)% (0.3)% Price/Mix % 2.1% 2.1% 0.5% 3.7% 2.7% 2.2% Organic movement % 2.6% 2.0% 1.9% 4.4% (0.6)% 1.9% ARYZTA North America Volume % 1.2% (2.1)% (1.7)% (4.9)% (12
Slide 18: Cash Generation
Cash Generation Year ended 31 July 2019 in EUR ’000 FY2019 FY2018 Underlying EBITDA 307,508 301,822 Working capital movement (26,463) (33,470) Working capital movement from debtor securitisation 1 (13,842) (19,430) Capital expenditure (85,397) (87,146) Renew capital expenditure (19,524) – Proceeds f
Slide 19: Net Debt and Investment Activity
Net Debt and Investment Activity Year ended 31 July 2019 in EUR ’000 FY2019 FY2018 Opening net debt as at 1 August (1,510,264) (1,733,870) Cash flow generated from activities 52,758 110,463 Disposal of businesses, net of cash and finance leases 3,129 101,599 Disposal of joint venture – 34,948 RCF te
Slide 20: Senior Debt Financing
ARYZTA Senior Debt Financing Syndicated Bank RCF, Term Loan & Schuldschein July 2019 January 2019 July 2018 Net Debt: EBITDA Ratio 2.43x 2.50x 3.83x Interest Cover (including hybrid deferred dividend) 3.45x 3.13x 3.72x Gross Term Debt 2,000 4.0x EUR m FY18 –– Reduction in senior net leverage to 2.43
Slide 21: Current Capital Structure
ARYZTA Current Capital Structure As at 31 July 2018 As at 31 July 2019 2,500 Gross Term Debt & Hybrids €2,676m 2,000 Gross Term Debt & Hybrids €1,999m Gross Term Debt €1,875m 1,500 Gross Term Debt 1,000 €1,133m 500 - Total Leverage Total Leverage Cash net of overdrafts: €342m Cash net of overdrafts:
Slide 22: Impairment, Disposal and Restructuring
Impairment, Disposal and Restructuring Year ended 31 July 2019 Impairment Restructuring Total Total in EUR `000 FY2019 FY2019 FY2019 FY2018 Net loss on disposal of businesses and impairment of disposal groups held for sale (6,988) – (6,988) (183,316) Impairment of goodwill – – – (175,000) Impairment
Slide 23: Joint Ventures
Joint Ventures Year ended 31 July 2019 Joint Venture Underlying Income Statement Picard Picard Signature Signature Total Total in EUR `000 July 2019 July 2018 July 2019 July 20181 July 2019 July 2018 Revenue 1,422,772 1,449,671 - 83,844 1,422,772 1,533,515 Underlying EBITDA 194,434 207,272 - 11,689
Slide 24: Disposals Progress
Disposals Progress –– Early October binding offer to sell the majority of the interest in Picard received –– UK Food Solutions business disposed (October 2019) –– Two loss-making bakeries in Europe sold (FY19) –– Cloverhill, La Rousse and Signature joint venture disposed (FY18) –– Disposals are cons
Slide 25: Project Renew
Project Renew 25 October 2019
Slide 26: Project Renew – Delivering Performance
Project Renew – Delivering Performance –– On track in FY19 and FY20 –– €26m benefits to P&L1 Actual Target annualised run-rate savings €90m –– €40m run rate savings achieved €70m 40 €40m 30 Project Renew - FY19 Actuals 20 Annualised 50 40 H1 2019 H2 2019 FY 2019 Run Rate 20 €7.5m €18.5 €26m 1 €40m F
Slide 27: Project Renew – FY19 Review & FY20 Outlook
Project Renew – FY19 Review & FY20 Outlook –– €26m savings achieved in FY19 generating annualised run-rate savings of €40m –– ARYZTA Europe – Savings of €11m achieved in FY19, primarily: »» Operating model/headcount reductions »» Manufacturing efficiency including automation projects »» Procurement/
Slide 28: Review & Outlook
Review & Outlook 28 October 2019
Slide 29: Progress on Three-Year Turnaround
Progress on Three-Year Turnaround Performance Grow ility th Stab Underlying EBITDA Disposals & Underlying EBITDA Pricing Project Renew Balance Sheet Margin Optimisation Group Underlying Underlying EBITDA Achieved positive Achieved savings of Two loss-making 2.43x Net Debt/ EBITDA increase of margin
Slide 30: Summary & Outlook
Summary & Outlook Performance ty Gro bili Sta wth Summary Outlook –– Project Renew delivering and gathering momentum –– Group underlying EBITDA to improve in FY20 –– Key measures of Group profitability improved –– Continued increase in underlying EBITDA margin –– Lowest level of debt since 2013 –– N
Slide 31: Appendix I ARYZTA – Scale & Market Positioning
Appendix I ARYZTA – Scale & Market Positioning 31 October 2019
Slide 32: ARYZTA is the Clear Leader in Frozen B2B Bakery
ARYZTA is the Clear Leader in Frozen B2B Bakery »» Focus on supporting B2B customers with frozen bakery solutions »» Consumer-led, customer-centric innovative solutions focused on "Hero" Categories »» Clear focus on food safety and quality »» Rigorous financial controls in place »» Delivering on thr
Slide 33: Frozen Bakery Market Growing Faster than Overall Market
Frozen Bakery Market Growing Faster than Overall Market Global Frozen Bakery Market (2018-2012F) €70,000 ~ €63 bn €60,000 ~ €54 bn €50,000 €40,000 Five-year CAGR €30,000 €20,000 Overall Bakery Market ~ < 1% €10,000 Frozen Bakery Market ~ 2-4% €0 1 2018 2 2021F North America Europe ¹ Asia Row 1. EU 2
Slide 34: ARYZTA – The Global Leader In Frozen Bakery
ARYZTA – The Global Leader In Frozen Bakery Global ARYZTA scale »» #1 frozen baker »» Global share of 6% Europe ARYZTA scale North America »» #1 frozen baker »» 1.5x size of #2 ARYZTA scale »» Regional share 9% »» #1 frozen baker »» 1.3x size of #2 »» Regional share 7% LatAm APMEA ARYZTA scale ARYZT
Slide 35: Our Five 'Hero' Categories ~ 44% of Group Revenue
Our Five ‘Hero’ Categories ~ 44% of Group Revenue Artisan Bread Buns Donuts Market size c. €2.8 bn Market size c. €3.8 bn Market size c. €1.0 bn »» #1 in Europe »» #1 in Europe »» Top 3 in Europe »» #1 in North America »» Top 5 in North America »» #1 in North America »» Large Category »» Large categ
Slide 36: Appendix II Financials
Appendix II Financials 36 October 2019
Slide 37: Group Balance Sheet
ARYZTA Group Balance Sheet as at 31 July 2019 in EUR `000 July 2019 July 2018 Property, plant and equipment 1,248,835 1,243,692 Investment properties 12,185 14,574 Goodwill and intangible assets 1,964,298 2,057,703 Deferred tax on goodwill and intangibles (81,634) (104,075) Working capital (246,838)
Slide 38: Group Gross Term Debt Financing Facilities
ARYZTA Group Gross Term Debt Financing Facilities In EUR ’000 July 2019 Syndicated Bank RCF (394,179) Term loan facility (353,368) Schuldschein (385,284) Gross term debt (1,132,831) Upfront borrowing costs 21,966 Term debt, net of upfront borrowing costs (1,110,865) Finance leases (291) Cash and cas
Slide 39: Hybrid Financing
Hybrid Financing Perpetual Callable Subordinated Instruments Coupon Coupon rate if not called in EUR `000 Not called CHF 400m 5.3% 6.045% +3 Month Swiss Libor (362,355) Not called EUR 250m 6.8% 6.77% +5 Year Euro Swap Rate (250,000) First call April 2020 CHF 190m 3.5% 4.213% +3 Month Swiss Libor (17
Slide 40: Group – Return on Invested Capital
ARYZTA Group – Return on Invested Capital ARYZTA ARYZTA ARYZTA North Rest of ARYZTA in EUR million Europe America World Group 2019 Segmental net assets1 1,315 1,341 175 2,831 TTM EBITA 1 101 41 31 173 ROIC 1,2 7.7% 3.0% 17.8% 6.1% 2018 Segmental net assets1 1,354 1,331 177 2,862 TTM EBITA 1 102 34 3
Slide 41: EUR Closing and Average FX Rates
EUR Closing and Average FX Rates Average Average Closing Closing Currency 2019 2018 % Change 2019 2018 % Change CHF 1.1310 1.1629 2.7% 1.1039 1.1578 4.7% USD 1.1378 1.1951 4.8% 1.1149 1.1651 4.3% CAD 1.5055 1.5210 1.0% 1.4672 1.5219 3.6% GBP 0.8825 0.8863 0.4% 0.8955 0.8888 (0.8)% 41 October 2019
Slide 42: Five-Year KPIs
ARYZTA Five-Year KPIs In EUR million Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Revenue 3,820 3,879 3,797 3,435 3,383 Underlying EBITDA 638 610 420 302 308 Underlying net profit 330 312 179 50 74 ARYZTA AG underlying fully diluted EPS (cent)1 78.4 74.5 42.9 11.9 9.0 Working capital movement, including secur
Slide 43: Project Renew - Delivering performance
Project Renew - Delivering performance –– Project Renew is a key pillar of our three-year turnaround plan Target annualised run rate savings –– Delivery on Renew will result in improved performance €90m from a more streamlined and agile commercial €70m 40 organisation €40m 30 –– It will reduce the c
Slide 44: Presentation Glossary
Presentation Glossary –– ‘Organic revenue’ – presents the revenue movement during the period, excluding impacts from acquisitions/(disposals) and foreign exchange translation. –– 'Underlying EBITDA' – presented as earnings before interest, taxation, depreciation and amortisation; before impairment,