Barry Callebaut Ag · SIX:BARN
Barry Callebaut — H1 2012/13 Earnings Presentation
45 slides from Barry Callebaut's earnings presentation, Apr 8, 2013
Slide 1: Analysts Conference - Half-year results 2012/13
Barry Callebaut Analysts Conference - Half-year results 2012/13 April 8, 2013 April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference
Slide 2: Cautionary note
Cautionary note Certain statements in this presentation regarding the business of Barry Callebaut are of a forward-looking nature and are therefore based on management’s current assumptions about future developments. Such forward-looking statements are intended to be identified by words such as “bel
Slide 3: Agenda
Agenda • Highlights HY 2012/13 • Financials • Strategy update • Q&A April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 3
Slide 4: Strong volume growth, product margins improved, continued investments in future growth
Half-year results 2012/13 Strong volume growth, product margins improved, continued investments in future growth X Sales volume growth +7.8%, significantly outpacing the market X Growth fueled by X outsourcing and strategic partnerships +19% X Gourmet +6.9% X emerging markets +13% X Product margins
Slide 5: Global chocolate confectionery market grew +1.5% in the last half-year
Market development Global chocolate confectionery market grew +1.5% in the last half-year 5 Months Sep-Jan 2013 (in 1,000 tonnes)1 Chocolate Confectionery volume growth +1.5% +1.4% -1.3% 2011/12 +3.4% 2012/13 -1.3% -0.7% +4.1% +16.3% USA Western Italy Eastern Brazil China India Europe Europe 1) Sour
Slide 6: Growth across all Regions and Product Groups
Growth across all Regions and Product Groups Six months volume growth vs. prior year Sales Volume per Region – HY 2012/13 Europe +5.8% Asia- Pacific Global 4% Americas +13.6% Sourcing & Cocoa 18% Asia Pacific +11.9% Europe 51% Food Manufacturers +8.8% Americas 27% Cocoa Products +4.9% Gourmet & Spec
Slide 7: Average prices of main raw materials lower compared to prior year
Raw material price development Average prices of main raw materials lower compared to prior year HY12/13 % of total BC raw material costs 300% 250% 55% Cocoa beans 200% Cocoa beans 150% 14% Sugar Milk powder Sugar world 12% Milk powder 100% Sugar EU 7% Fats 12% Others 50% Sep-2006 Sep-2007 Sep-2008
Slide 8: Significant strategic steps to generate further growth
Highlights first six months – HY 2012/13 Significant strategic steps to generate further growth First long-term outsourcing Completion of Dijon sale to Acquisition of ASM Foods AB in agreement in South America “Chocolaterie de Bourgogne” Sweden. Strengthening presence in with Arcor, Dos en Uno Scand
Slide 9: Petra Foods Cocoa Ingredients' acquisition in line with our strategy
Petra Foods Cocoa Ingredients’ acquisition in line with our strategy Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate business, supporting the company’s overall growth X Supporting further chocolate growth by stepping up the integrated cocoa sourcing and processing activi
Slide 10: Transaction and integration timeline
Transaction and integration timeline 12 Dec 8 Apr Apr Apr Summer 2012 2013 2013 2013 2013 2015/16 Barry Barry Petra Callebaut Callebaut Foods half-year ’EGM for AGM Transaction Transaction results capital announcement Closing increase Carve out Petra Food’s cocoa business Regulatory approvals Financ
Slide 11: Agenda
Agenda • Highlights HY 2012/13 • Financials • Strategy update • Q&A April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 11
Slide 12: Key figures HY 2012/13 – from continuing operations
Key figures HY 2012/13 – from continuing operations Strong volume growth, product margin improved, continued investments in future growth Six months - Sep 2012-Feb 2013 [CHF m] Change in % Change in % H1 2012/13 H1 2011/12 in local in CHF (restated) currencies Sales volume [in tonnes] 7.8% 745'256 6
Slide 13: Region Europe
Region Europe Solid growth, both top and bottom line X Overall chocolate confectionery market in Europe grew +2%. Some countries showed a decline such as Italy X We achieved strong solid growth in WE driven by higher sales of both standard and specialty products in both Food Manufacturers and Gourme
Slide 14: Region Americas
Region Americas Continued double digit top line, strong bottom line performance X Chocolate confectionery market in the U.S. decreased by -1.3%; Brazil was at -0.7% X We continued our double digit pace in the top-line. In North America, growth was mainly driven by global accounts in Food Manufacture
Slide 15: Region Asia-Pacific
Region Asia-Pacific Double-digit volume growth, investing in the future X Chocolate confectionery markets in India and China together grew 11.6% X Our sales volume in the region increased by 11.9%. China and India together grew +20% X Gourmet brand Callebaut® achieved broad based, double-digit volum
Slide 16: Low combined ratio for H1 driven by lower cocoa powder prices
Cocoa processing activity Low combined ratio for H1 driven by lower cocoa powder prices, partly offset by higher cocoa butter European combined ratio - 6 months forward ratio HY 12/13 4.20 Combined ratio 3.35 – Feb 13 3.20 Relevant for H1 2.20 Butter ratio Powder ratio 1.20 0.20 Sep-00 Sep-01 Sep-02
Slide 17: Global Sourcing & Cocoa
Global Sourcing & Cocoa Combined cocoa ratio affecting profitability in H1 X Third party sales volume up +4.9%, despite a slowdown in powder demand in the U.S. and Europe X Sales prices for cocoa ingredients (cocoa butter, cocoa liquor, and cocoa powder) were significantly lower X As expected, the c
Slide 18: Gross Profit – February 2013
Gross Profit – February 2013 Improved Gross Profit despite negative combined ratio effect in mCHF * Without Cocoa Processing impact +12.3% +5.5% +38.0 -23.3 +0.1 357.3 +16.6 -12.9 338.8 Gross Profit Volume Product mix Cocoa Additional Scope effects, Gross Profit H1 2011/12 effects and margin process
Slide 19: EBIT – February 2013
EBIT – February 2013 Operating profit mainly impacted by ongoing investments into future growth in mCHF -2.1% • Côte d’Ivoire new +16.4 cocoa procurement concept • Selective investments • Overfull factories +9.5 187.1 -11.2 • Petra acquisition costs 177.6 173.8 -18.5 EBIT H1 Non EBIT Additional SG&A
Slide 20: Net Financial Expenses
Net Financial Expenses Higher financial expenses due to higher credit spread and less FX gains in CHF m - From continuing operations only Average 4.3% 4.6% interest rate 0.3% -2.0 35.4 33.6 33.7 3.7 Net interest expense Net interest expense Bank charges, fees and Gain on derivative fin. Net financia
Slide 21: From EBIT to PAT
From EBIT to PAT Net profit from continuing operations affected by higher financial items and higher taxes [CHF m] Change in % Change in H1 2012/13 H1 2011/12 In local % (restated) currencies CHF Operating profit (EBIT) -2.4% -2.1% 173.8 177.6 Financial items -14.8% -14.2% (35.4) (31.0) Result from
Slide 22: Cash Flow
Cash Flow Higher operating cash flow which supports further growth in mCHF +5.2% 236 -116 224 -92 -47 31 -32 +22 Operating Operating Investment in Capital CF from Interest paid and Cash flow Net decrease in Cash Flow Cash Flow Working Capital Expenditures acquisitions, income taxes from financing ca
Slide 23: Net Working Capital evolution
Net Working Capital evolution Improved by 1.8% despite volume growth in mCHF Receivables Stocks Payables -1.8% +72 1,045 +82 +9 +9 +16 1,026 +63 -128 -142 Net Growth Price impact Growth Price impact Growth Price impact Others FX impacts Net impact and impact and impact and and scope Working Working
Slide 24: Balance Sheet
Balance Sheet Ongoing investments, stable Balance Sheet and financial ratios Change Feb 13 Feb 12 in % Total Assets [CHF m] -8.2% 3'556.0 3'875.7 Net Working Capital [CHF m] -1.8% 1'026.2 1'045.1 Non-Current Assets [CHF m] 10.0% 1'488.4 1'353.1 Net Debt [CHF m] 2.9% 993.9 965.5 Shareholders' Equity
Slide 25: Group development
Strong volume growth over the last 5 years and EBIT per tonne maintained, excluding negative FX impact Group development 336 308 312 303 297 297 EBIT (CHF) / tonne * at constant currencies 293 289 286 282 256 233 EBIT (CHF) / tonne as reported CAGR +7.6% 1.3 1.4 1.1 1.2 1.0 Volume (MT mio) 0.7 from
Slide 26: Committed to long-term volume growth, while improving ROE and ROIC
Committed to long-term volume growth, while improving our return on equity and on invested capital 21% 20% 20% ROE target 20% 19% 19% 19% 18% 18% ROE 16% 15% 14% 14% ROIC target 15% 14% 14% 14% 14% 14% 14% ROIC 13% 11% 10% 10% 250 218 CAPEX 153 144 145 145 115 102 90 74 69 2001/02 2002/03 2003/04 20
Slide 27: Financing of the Petra Foods' Cocoa Ingredients Division acquisition
Financing of the Petra Foods’ Cocoa Ingredients Division acquisition X Total consideration: USD 950 mio X Bridge loan for total consideration provided by Credit Suisse currently in place X Take out – bridge loan X USD 300 mio equity via accelerated book building or rights issue X USD 600 million Rul
Slide 28: Agenda
Agenda • Highlights HY 2012/13 • Financials • Strategy update • Q&A April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 28
Slide 29: Our Strategy
Our Strategy Vision “Heart and engine of the chocolate industry” Expansion Innovation Strategic Sustainable, pillars profitable growth Cost leadership Sustainable Cocoa April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 29
Slide 30: Expansion based on key growth drivers
Expansion Expansion based on key growth drivers • Consolidation in mature markets • Achieve full potential in recently entered emerging markets • Further expand in new emerging markets • Strengthen current partnerships Geography • Implement recently signed contracts • New outsourcing deals with loca
Slide 31: Development of our growth drivers
Expansion Development of our growth drivers HY 2012/13 CAGR 07/13 Total Group % of total Group Volume +6.7% Emerging markets 22% +16.3% Outsourcing & Strategic Partnerships 30% +89.0% Gourmet & Specialties +6.0% 11% Global chocolate market* +1.0% * Source: Euromonitor CAGR 07/13 and Nielsen last 6 m
Slide 32: Our global manufacturing footprint continues to expand by 12 factories
Expansion Our global manufacturing footprint continues to expand by 12 factories Thimister, Belgium Chekhov, Russia Lebbeke-Wieze, Belgium Heule-Kortrijk, Belgium Nuth, The Netherlands Zundert, The Netherlands Banbury, UK St Helens, UK Kagerod, Sweden Mjolby, Sweden Chester, UK Lodz, Poland Louviers
Slide 33: Continuous strong focus on Gourmet, our strategy has translated into key actions
Expansion Continuous strong focus on Gourmet, our strategy has translated into key actions Our key focus We want our brands to empower chef & artisans to Our brand equities should become the delight customers with Global brands strongest in their competitive set & / Portfolio superior creations our
Slide 34: Further efforts on global brands and balanced push-pull approach
Expansion Further efforts on global brands and balanced push-pull approach Global brands X Building Brand Equity: Core Range Differentiation X Belgian Chocolate Leadership through “Growing Great Chocolate” & New packaging X Cacao Barry Brand reactivation to be initiated in H2 2012/13 Balanced push -
Slide 35: Double-digit top and bottom-line growth in Gourmet business
As a result of our focus and recent investments Expansion in the Gourmet business, we grew double-digit top and bottom-line Group Gourmet Business (excluding Beverages) CAGR +10% Volume 2008/09 2009/10 2010/11 2011/12 CAGR +11% EBIT in constant currencies (2008/09) 2008/09 2009/10 2010/11 2011/12 Ap
Slide 36: Successful R&D activities enable further growth
Innovation Innovation Innovation Successful R&D activities enable further growth Fully loaded portfolio of future facing Innovations… Enjoy Superior Navigating Heath Making a As real as we can Make it easy Sensorics & Nutrition difference get Nut pastes Cocoa Nibs Bake Stable Chips, Natural Flavours
Slide 37: Coping with strong growth, while striving to be cost leader
Cost Leadership Cost Leadership Coping with strong growth, while striving to be cost leader Factory costs • Efficiency gains like for like of -0.5% vs target of -2% • Costs driven by volume growth, new factories, CAPEX and inflation • Overload of factories in WE and Asia had high single digit additi
Slide 38: Spring Program to accelerate our speed towards our customers
«Spring» Program to accelerate our speed towards our customers is well on track Today Oct 17 May 8 (2012) Dec 15 April June (2013) September (2013) Jun 2014 (2011) v Detailed process design Implementation Go-live Roll Out and organization system Pre- Spring: Study • Detailed process re- • System bui
Slide 39: Increased investments to secure enough cocoa supply and improve farmer livelihoods
Sustainable Cocoa Increased investments to secure enough cocoa supply and to improve farmer livelihoods Long-term threats Our latest actions X Lack of enough Farmer Practices Farmer Education Farmer Health quantity and quality cocoa beans Aim: double yield Aim: develop next Aim: improve the (+ 800kg
Slide 40: Mid-term guidance confirmed
Outlook – Mid-term Guidance Mid-term guidance confirmed Growth targets for 2011/12-2014/15: X On average 6-8% volume growth X Average EBIT growth at least in line with volume growth * Our view for the 2011-2015 period reflects current economic forecasts for the markets we operate in as well as inter
Slide 41: Agenda
Agenda • Highlights HY 2012/13 • Financials • Strategy update • Q&A April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 41
Slide 42: Summary
Summary X Strong broad based volume growth: sales volume +7.8%, fueled by strategic growth drivers outsourcing, Gourmet and emerging markets X Product margins improved; gross profit up +5%, despite an unfavorable combined cocoa ratio X EBIT decreased by 2.4% in local currencies (-2.1% in CHF) impact
Slide 43: Gourmet:
Gourmet: April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 43
Slide 44: Appendix
Appendix April 8, 2013 Barry Callebaut - HY 2012/13 Analysts Conference 44
Slide 45: Stable financing with enough headroom to cope with future growth
Net debt Stable financing with enough headroom to cope with future growth Financing and liquidity situation as of Feb 29, 2013 (CHF million) 2164 CHF 700 mio Short term Various uncommitted facilities 1215 221 ABS receivables financing EUR 600 mio Maturity 2016 Syndicated bank 272 Short-term loan (12