Aryzta Ag · SIX:ARYN
Aryzta — H1 2011 Earnings Presentation
55 slides from Aryzta's earnings presentation, Mar 14, 2011
Slide 1: H1 Results, FY 2011
ARYZTA AG H1 Results, FY 2011 14 March 2011
Slide 2: Forward Looking Statement
Forward Looking Statement This document contains forward looking statements which reflect management’s 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 forward looking
Slide 3: Agenda
Agenda – Our Business – Financial Review – Operating Environment – Summary and Outlook 3 © ARYZTA, March 2011
Slide 4: Our Business
ARYZTA AG Our Business 4 © ARYZTA, March 2011
Slide 5: Our Business
Our Business – Global food business > Global leader in speciality bakery – Zurich based Swiss AG > Operations in Europe, North and South America, South East Asia, Australia and New Zealand – Listed in Zurich (SIX; ARYN), and secondary listing in Dublin (ISE; YZA) Reporting Segments ARYZTA AG Food Eu
Slide 6: Geographic Reach – Global Food Group
Geographic Reach – Global Food Group Pro Forma Revenue1 Pro Forma EBITDA1 EUR 2.5bn EUR 407m Food Europe Food Europe Food North America 46% Food North America 47% 48% 47% Food Rest of World Food Rest of World 6% 6% 1 Pro forma TTM revenue and EBITDA to July 2010 includes acquisitions of Fresh Start
Slide 7: Channel and Product Mix – Global Food Group
Channel and Product Mix – Global Food Group Customer Channel Mix1 Product Mix1 Quick Service Other Foodservice Sweet Baked Goods & Restaurant Bread Rolls & Morning Goods 32% 24% Artisan Loaves 33% 46% Convenience & Independent Retail 20% Large Retail Savoury & Other 24% 21% Pro Forma Revenue1 Pro Fo
Slide 8: Origin Enterprises plc – 71.4% Holding
Origin Enterprises plc – 71.4 % Holding Origin Enterprises plc Origin is a leading agri-business group focused on integrated agronomy and agri-inputs, with operations in the UK, Ireland and Poland. ARYZTA AG is the majority shareholder (71.4 %) in Origin Enterprises plc, which has a listing on the A
Slide 9: Financial Review
ARYZTA AG Financial Review 9 © ARYZTA, March 2011
Slide 10: ARYZTA AG – Income Statement
ARYZTA AG – Income Statement 6 month period ended 31 January 2011 in Euro ’000 January 2011 January 2010 % Group revenue 1,894,272 1,394,053 35.9% EBITA 173,118 114,013 51.8% EBITA margin 9.1% 8.2% Associates and JVs, net 10,729 13,635 EBITA incl. associates and JVs 183,847 127,648 44.0% Finance cos
Slide 11: ARYZTA AG – Underlying Revenue Growth
ARYZTA AG – Underlying Revenue Growth 6 month period ended 31 January 2011 Food N. Food Total in Euro million Food Europe America Rest of World Food Group Origin1 Total Group revenue 585.3 610.5 87.4 1,283.2 611.1 1,894.3 Underlying growth (0.9)% 2.1% 18.4% 0.4% 7.4% 3.3% Acquisitions & disposals 7.
Slide 12: Food Group – Underlying Revenue Growth
Food Group – Underlying Revenue Growth Underlying Revenue Growth Per Quarter FY 2009 – H1 FY 20111 30.0 % Food Europe 22.5 % Food North America Total Food Group 15.0 % 7.5 % 0.0 % (7.5 )% (15.0 )% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2010 2011 1 including pro forma Hiestand data for FY 2008 1 FY 2009
Slide 13: ARYZTA AG – Segmental EBITA
ARYZTA AG – Segmental EBITA 6 month period ended 31 January 2011 in Euro ’000 January 2011 January 2010 % Food Group Food Europe 66,004 60,736 8.7% Food North America 76,953 35,271 118.2% Food Rest of World 12,520 2,073 504.0% Total Food Group 155,477 98,080 58.5% Origin 17,641 15,933 10.7% Total Gr
Slide 14: Food Group – Income Statement
Food Group – Income Statement 6 month period ended 31 January 2011 in Euro ’000 January 2011 January 2010 % Group revenue 1,283,194 800,921 60.2% EBITA 155,477 98,080 58.5% EBITA margin 12.1% 12.2 % JVs, net 4,328 8,468 EBITA incl. JVs 159,805 106,548 50.0% Finance costs, net (30,590) (15,961) Hybri
Slide 15: Food Group – Cash Generation
Food Group – Cash Generation 6 month period ended 31 January 2011 in Euro ’000 January 2011 January 2010 EBIT 113,000 76,331 Amortisation 42,477 21,749 EBITA 155,477 98,080 Depreciation 41,545 28,044 Reported EBITDA 197,022 126,124 Working capital movement (16,498) (9,968) Dividends received1 12,967
Slide 16: Food Group Net Debt and Investment Activity
Food Group Net Debt and Investment Activity 6 month period ended 31 January 2011 in Euro ’000 Food Group Food Group opening net debt as at 31 July 2010 (1,115,623) Cash flows generated from activities 125,670 Hybrid instrument proceeds 285,061 Maidstone Bakeries acquisition (316,563) Business combin
Slide 17: Food Group Financing
Food Group Financing Excluding Origin – non-recourse financing facilities Debt Financing – Food Group net debt of EUR 1.06bn – Food Group gross term debt weighted average maturity of circa 6.7 years – Weighted average interest cost of Food Group financing facilities of circa 4.14%1 – Net debt: EBITD
Slide 18: ARYZTA AG – Return on Investment
ARYZTA AG – Return on Investment as at 31 January 2011 Food Food N. Food Rest Total in Euro million Europe America of World Food Group Origin Total 2011 Group share net assets 1,374 1,732 229 3,335 297 3,632 EBITA incl. associates and JVs 140 161 23 325 80 405 ROI 10.1% 9.3% 10.2% 9.7% 27.1% 11.1% 2
Slide 19: Food Group Strategic Repositioning
Food Group Strategic Repositioning Financial impact Non-recurring costs for 6 month period ending 31 January 2011 in Euro ’000 Non-Cash Cash Total Maidstone fair value gain on existing 50% at acquisition 121,391 – 121,391 Business combination costs (18,809) (13,491) (32,300) Transaction costs (inclu
Slide 20: Food Group Strategic Repositioning
Food Group Strategic Repositioning Medium term financial target metrics – 15%+ return on investment from existing asset base by 2015 – 15%+ return on investment from new investments within 5 years – Net debt: EBITDA in the range of 2x – 3x – Effective tax rate target at sub 20% – Annual maintenance
Slide 21: Food Group Operating Environment
Food Group Operating Environment 21 © ARYZTA, March 2011
Slide 22: Food Group Operating Environment
Food Group Operating Environment 6 month period ended 31 January 2011 Revenue – Over 50% revenue growth from acquisitions – Underlying revenue growth is returning – Consumer recovery across most markets Margin – Primary food inflation accelerating – Dynamic pricing necessary Market Position – Signif
Slide 23: Food Europe – €585m Revenue
Food Europe – €585m Revenue 6 month period ended 31 January 2011 – Revenue growth of 9.7% – acquisition contribution 7.3% – EBITA growth 8.7% – Underlying revenue decline 0.9% – UK and Ireland > Market stabilising but challenges remain > Support to customers to reposition value proposition – Contine
Slide 24: Food North America – €611m Revenue
Food North America – €611m Revenue 6 month period ended 31 January 2011 – Revenue growth 140% – excellent acquisition contribution 128% – EBITA growth 118% – Underlying revenue growth 2.1% – Growth most evident in retail and quick service restaurant segments – Continued focus on product and value ad
Slide 25: Food Rest of World – €87m Revenue
Food Rest of World – €87m Revenue 6 month period ended 31 January 2011 – Revenue growth 591% – acquisition contribution 550% – EBITA growth 504% – Strong underlying revenue growth 18.4% – Focus on Asian and Latin American quick service restaurant opportunity > Development of new bakery in Brazil on
Slide 26: Foodservice lagging behind retail
Foodservice lagging behind retail ARYZTA has been impacted by a lagging foodservice market, especially in the U.S. and Europe WW Foodservice and Retail Markets1 by CAGR (2008–2010) Total Foodservice Sales by Region CAGR % 2.9% 3% Region CAGR (2008-10) Asia Pacific 3.6% Australasia 3.0% 2% 1.6% Europ
Slide 27: Macroeconomic Drivers
Macroeconomic Drivers As the employment rate decreased, ARYZTA experienced a decline in sales ARYZTA Revenue Growth vs. U.S. Employment Rate 1 (Q1 2009– Q2 2011) Percent Employment Rate (%) 20% 62% Total Food Group 15% Food North America 61% 10% Employment Rate1 5% 60% 0% 59% (5)% (10)% 58% Q1 2009
Slide 28: U.S. Food Expenditure
U.S. Food Expenditure Spending on food away from home has consistently grown 1–2% faster than spending on food at home U.S. Food Expenditure (1970 –2009) Billions of Dollars 600 Food at Home 500 Food Away from Home 400 CAGR % (1970 –2009) 300 Total 6.1% Food at Home 5.4% 200 Food Away from Home 7.1%
Slide 29: Primary Food Inflation
Primary Food Inflation Re-emergence of inflation / volatility for primary food products – Speed and severity of cost increases 160 % unexpected 140 % – Return to dynamic pricing as in 120 % 2008 100 % – Current trends suggest double digit 80 % price increase 60 % 40 % – Volatility likely to become
Slide 30: Bakery Resilience
Bakery Resilience – Bakery still offers most compelling food value – Essential functional role in menu delivery – especially foodservice – Least expensive menu component – Lowest unit cost converter from grain to food – Plays important role in maintaining innovative value proposition to consumers 30
Slide 31: H1 FY 2011 Summary and Outlook
H1 FY 2011 Summary and Outlook Revenue – Acquisitions contributing to growth – Underlying revenue improving Margin – Raw material inflation – immediate focus – Bakery resilient in inflationary environment Performance – FY 2011 consensus underlying EPS appears reasonable1 – FY 2013 underlying EPS tar
Slide 32: Appendix – Origin Financials
ARYZTA AG Appendix 1 – Origin Financials 32 © ARYZTA, March 2011
Slide 33: Origin Income Statement
Origin Income Statement 6 month period ended 31 January 2011 in Euro ’000 January 2011 January 2010 % Group revenue 611,078 593,132 3.0% EBITA 17,641 15,933 10.7% EBITA margin 2.9 % 2.7 % Associates and JV, net 6,401 5,167 EBITA incl. associates and JV 24,042 21,100 13.9% Financing costs, net (6,123
Slide 34: Origin Underlying Net Profit Rec.
Origin Underlying Net Profit Rec. 6 month period ended 31 January 2011 in Euro ’000 January 2011 Reported net profit 8,916 Amortisation of intangible assets 1,660 Tax on amortisation (294) Transaction related costs 327 Net loss on transfer of Origin Food and Feed businesses to associates 5,206 Under
Slide 35: Appendix – Other Financial Information and Presentation Glossary
ARYZTA AG Appendix 2 – Other Financial Information and Presentation Glossary 35 © ARYZTA, March 2011
Slide 36: ARYZTA AG Underlying Net Profit Rec.
ARYZTA AG Underlying Net Profit Rec. 6 month period ended 31 January 2011 in Euro ’000 January 2011 Reported net profit 164,513 Amortisation of intangible assets 44,137 Tax on amortisation (12,172) Maidstone fair value gain on existing 50% at acquisition (121,391) Hybrid instrument accrued dividend
Slide 37: Food Group Underlying Net Profit Rec.
Food Group Underlying Net Profit Rec. 6 month period ended 31 January 2011 in Euro ’000 January 2011 Reported net profit 158,146 Amortisation of intangible assets 42,477 Tax on amortisation (11,878) Maidstone fair value gain on existing 50% at acquisition (121,391) Hybrid instrument accrued dividend
Slide 38: ARYZTA AG Balance Sheet
ARYZTA AG Balance Sheet as at 31 January 2011 in Euro ’000 As at January 2011 As at January 2010 Property, plant and equipment 970,640 655,288 Investment properties 20,648 63,083 Goodwill and intangible assets 2,597,937 1,508,187 Associates and joint ventures 159,615 147,270 Working capital (53,270)
Slide 39: Food Group Balance Sheet
Food Group Balance Sheet as at 31 January 2011 in Euro ’000 As at January 2011 As at January 2010 Property, plant and equipment 889,695 570,745 Investment properties 4,646 3,869 Goodwill and intangible assets 2,529,256 1,395,017 Joint ventures 5,527 60,118 Investment in Origin 51,045 51,045 Working
Slide 40: Food Group Financing Facilities
Food Group Financing Facilities Excluding Origin – non-recourse financing facilities Debt Funding Principal 1 Maturity May 2010 – Syndicated Bank Loan CHF 600m Dec 2014 May 2010 – U.S. Private Placement USD 420m /EUR 25m May 2013 – May 2022 Dec 2009 – U.S. Private Placement USD 200m Dec 2021 – Dec 2
Slide 41: Food Group Gross Term Debt Maturity Profile
Food Group Gross Term Debt Maturity Profile weighted average maturity c. 6.7 years Gross Term Debt Maturity Profile1 Gross Term Debt Maturity Profile � 2012 2013 4% 2014 9% 2015 37% 2016 2% 2017 14% 2018 3% 2019 3% 2020 2% 2021 9% 2022 10% 2025 2% 2030 5% 1 Profile of term debt maturity is set out a
Slide 42: Fair Value Gain on Maidstone Acquisition
Fair Value Gain on Maidstone Acquisition – A non cash gain on 50% Maidstone Bakeries previously owned being recorded (under revised IFRS 3 implemented as required for the year ended 31 July 2010) > EUR 121.4m1 (CAD 172.2m) based on multiple of 10.2 x EBITDA in Canadian Dollar million Pro forma TTM E
Slide 43: Food Group Key Financial Metrics
Food Group Key Financial Metrics Current financial metrics based on existing balance sheet Current annual run rate Depreciation €80 – 85m Amortisation €90 – 95m Effective tax rate 16% – 20% Finance costs €70 – 75m 43 © ARYZTA, March 2011
Slide 44: Presentation Glossary
Presentation Glossary – 'EBITA' – presented before non-recurring items and related deferred tax credits. SAP intangible asset amortisation is treated as depreciation. – 'Associates and JVs, net' – presented as profit from associates and JVs, net of taxes and interest. – 'EBITDA' – presented as TTM
Slide 45: Presentation Glossary
Presentation Glossary – 'Hybrid instrument' – presented as Perpetual Callable Subordinated Instrument in interim accounts. – 'Return on Investment' (ROI) – is calculated as pro forma trailing twelve months EBITA (reflec- ting the full twelve months impact of Great Kitchens, Fresh Start Bakeries an
Slide 46: Appendix – FX Analysis, Macroeconomic Analysis & Consensus Estimates
ARYZTA AG Appendix 3 – FX Analysis, Macroeconomic Analysis & Consensus Estimates 46 © ARYZTA, March 2011
Slide 47: FX Rates January 2010 and January 2011
FX Rates January 2010 and January 2011 January 2011 January 2010 % Closing Rates Swiss Franc 1.2950 1.4700 (11.9) % US Dollar 1.3699 1.3985 (2.0)% Canadian Dollar 1.3648 1.4870 (8.2) % Sterling 0.8624 0.8648 (0.3) % Average Rates Swiss Franc 1.3169 1.5080 (12.7) % US Dollar 1.3343 1.4574 (8.4)% Cana
Slide 48: EURUSD Trend
EURUSD Trend 6 month period ended 31 January 2011 1.41 1.3898 1.39 Average Monthly Rate 1.3699 1.37 Closing Monthly Rate 1.35 1.3384 1.3343 1.33 1.3079 1.3079 1.31 1.29 1.2931 1.27 1.2708 1.25 Jul ’10 Aug ’10 Sept ’10 Oct ’10 Nov ’10 Dec ’10 Jan ’11 48 © ARYZTA, March 2011
Slide 49: EURCHF Trend
EURCHF Trend 6 month period ended 31 January 2011 1.38 1.3616 1.3678 1.3616 Average Monthly Rate 1.36 Closing Monthly Rate 1.34 1.32 1.3169 1.30 1.2950 1.28 1.26 1.2464 1.24 Jul ’10 Aug ’10 Sept ’10 Oct ’10 Nov ’10 Dec ’10 Jan ’11 49 © ARYZTA, March 2011
Slide 50: Food Group Revenue by Currency
Food Group Revenue by Currency Pro Forma Currency Mix1 Euro 31% U.S. Dollar 43% Other Currencies2 26% 1 Based on €2.5bn pro forma TTM revenue to July 2010 includes acquisitions of Fresh Start Bakeries and Great Kitchens, translated at EURUSD rate of 1.38, and pro forma TTM revenue to October 2010 fo
Slide 51: U.S. per Capita Spend on Food
U.S. per Capita Spend on Food U.S. food expenditure per capita have been increasing at 5% p.a. since 1970 U.S. Food Expenditure per Capita (1970– 2009) U.S. Dollars 4,000 Expenditure per capita 3,000 CAGR % (1970 –2009) 2,000 Expenditure per capita 5.0% 1,000 0 1970 1980 1990 2000 2009 Source: USDA,
Slide 52: U.S. Disposable Income Spend on Food
U.S. Disposable Income Spend on Food However, the total share of disposable income spent on food is declining Disposable Income Spent on Food as a % of Total Disposable Income (1970 – 2009) Percent 10% Food at Home 8% Food Away from Home 6% 4% 2% 0% 1970 1980 1990 2000 2009 Source: USDA, L.E.K. anal
Slide 53: ARYZTA FY 2011 Consensus Estimates
ARYZTA FY 2011 Consensus Estimates* March 2011 in Euro million mean Based on 8 analysts EBITA including associates & JVs 415.3 Underlying fully diluted net profit 254.4 Underlying EPS (cent) 304.4 Based on 5 analysts Food Group Net Debt (1,120.1) Origin Net Debt (59.6) 1 EBITA presented before impac
Slide 54: Thank you!
ARYZTA AG Thank you! 54 © ARYZTA, March 2011
Slide 55: Investor Information
Investor Information Company Contact Paul Meade Communications Officer ARYZTA AG Talacker 41 8001 Zurich Switzerland Tel: +41 (0) 44 583 42 00 Fax: +41 (0) 44 583 42 49 info@aryzta.com www.aryzta.com 55 © ARYZTA, March 2011