Aryzta Ag · SIX:ARYN

Aryzta — H1 FY2016 Earnings Presentation

49 slides from Aryzta's earnings presentation, Mar 14, 2016

  1. Slide 1: H1 Results, FY 2016

    ARYZTA AG H1 Results, FY 2016 14 March 2016

  2. 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

  3. Slide 3: Our Business

    Our Business –– International leader in speciality food –– Primary listing in Zurich and secondary listing in Dublin ARYZTA AG Food Europe Food North America Food Rest of World –– ARYZTA AG created in August 2008 by acquisition of IAWS Group plc (listed since 1989) and merger with Hiestand AG (liste

  4. Slide 4: 2016 Focus

    2016 Focus –– Underlying revenue growth »» Trend improving each quarter but still behind our expectations –– Reducing capital investment »» Successfully dialling back capex –– Commissioning newly invested capacity »» Commencing in H2 –– Increasing free cash generation »» Excellent cash flow in H1 4

  5. Slide 5: Financial and Business Review

    Financial and Business Review 5 © ARYZTA, March 2016

  6. Slide 6: H1 2016 Financial Analysis – Income Statement

    H1 2016 Financial Analysis – Income Statement –– Revenue increase of 5.5% to €1,960m –– Underlying revenue increased 0.2% –– Acquisitions/(disposals) increased revenues 0.3% –– Currency increased revenues 5.0% –– EBITA increased 2.7% to €230.8m –– Associate and joint ventures contributed €13.7m –– F

  7. Slide 7: H1 2016 Financial Analysis – Balance Sheet

    H1 2016 Financial Analysis – Balance Sheet Cash –– H1 investment capex decreased substantially to €68.8m from €172.1m in comparable period –– Free cash generation increased €146.9m from €26.1m to €173.0m Refinancing –– New five year bank refinancing in place with no significant changes in covenants

  8. Slide 8: Picard

    Picard –– Performed to expectations during the period –– Is consistent with ARYZTA's strategy to remain relevant to consumers across all channels –– Has an attractive cash generative business model –– Continues to grow branded (97% of revenue) market share within France –– Retains leadership market

  9. Slide 9: H1 2016 Underlying EPS Bridge

    H1 2016 Underlying EPS Bridge 16.0c (18.1)c +9.9% (11.2)% Finance JVs & Associate, net cost, incl. 0.2c (1.0)c Hybrid (0.6)% of tax 7.5c +0.1% (6.9)c 161.4c +4.7% (4.4)% (0.7)c Food Food (0.4)% H1 FY15 North America 158.4c Origin Rest of World EPS Food 2.5% discontinued Europe operations Tax, H1 FY1

  10. Slide 10: Underlying Income Statement

    Underlying Income Statement Six month period ended 31 January 2016 Continuing Operations in EUR ’000 January 2016 January 2015 % Group revenue 1,960,014 1,857,870 5.5% EBITA1 230,832 224,844 2.7% EBITA margin 11.8% 12.1% (30) bps Associate and JVs, net of tax 13,699 (554) – EBITA including associate

  11. Slide 11: Integration and Rationalisation Activities

    Integration and Rationalisation Activities Six month period ended 31 January 2016 Total Total Continuing operations Non-cash Cash January January in EUR ’000 2016 2016 2016 2015 Net gain/(loss) on disposal of businesses 2,395 – 2,395 (9,740) Asset write-downs (7,379) – (7,379) (8,982) Acquisition-re

  12. Slide 12: Underlying Revenue

    Underlying Revenue Six month period ended 31 January 2016 Continuing Operations in EUR million Food Europe Food N. America Food Rest of World Total Group Group revenue 881.7 971.0 107.3 1,960.0 Underlying growth 4.7% (4.0)% 3.9% 0.2% Acquisitions, net 2.7% (1.8)% – 0.3% Currency 2.1% 9.4% (11.1)% 5.

  13. Slide 13: Quarterly Underlying Revenue

    Quarterly Underlying Revenue Continuing Operations Q1 2016 Q2 2016 H1 2016 Food Europe 5.5 % 3.8% 4.7% Food North America (5.6) % (2.4)% (4.0)% Food Rest of World 2.2 % 5.7% 3.9% Total Group (0.4) % 0.8% 0.2% Q1 2015 Q2 2015 H1 2015 Q3 2015 Q4 2015 FY 2015 Food Europe 3.1% 1.7 % 2.4 % 1.8 % (2.1)% 1

  14. Slide 14: Segmental EBITA

    Segmental EBITA Six month period ended 31 January 2016 Continuing Operations in EUR ’000 January 2016 January 2015 % Food Europe 105,370 98,635 6.8% Food North America 113,129 112,974 0.1% Food Rest of World 12,333 13,235 (6.8)% Total Group EBITA 230,832 224,844 2.7 % EBITA Margin EBITA Margin Janua

  15. Slide 15: Cash Generation

    Cash Generation Six month period ended 31 January 2016 Continuing Operations in EUR ’000 January 2016 January 2015 EBIT 144,462 140,420 Amortisation 86,370 84,424 EBITA 230,832 224,844 Depreciation 69,025 64,990 EBITDA 299,857 289,834 Working capital movement 26,707 (40,319) Working capital movement

  16. Slide 16: Net Debt and Investment Activity

    Net Debt and Investment Activity Six month period ended 31 January 2016 Continuing Operations in EUR ’000 January 2016 January 2015 Opening net debt as at 1 August (1,725,103) (1,642,079) Cash flow generated from activities 173,041 26,088 Disposal of businesses, net of cash and finance leases 35,992

  17. Slide 17: Financing Update

    Financing Update –– During March 2016 agreed new revolving credit facility »» Reduces available capacity from CHF 1,977m to CHF 1,400m »» Extends the facility to March 2019-2021 »» Substantially unchanged financial covenants »» Lower finance costs –– Debt Financing »» Revolving credit facility outst

  18. Slide 18: Acquisitions and Disposals – Impact on Financing

    Acquisitions and Disposals – Impact on Financing –– €682m disposals over trailing 18 months including Origin, Fillings and Mixes business (North America), Fresca and Carroll's (Europe) –– €679m investments over trailing 18 months including Picard, Pré Pain, Fornetti and La Rousse –– €3m total procee

  19. Slide 19: ARYZTA Food Europe

    ARYZTA Food Europe Six month period ended 31 January 2016 23 Bakeries & Kitchens Food Europe H1 2016 Financial Highlights 18 Countries Revenue  9.5% Underlying revenue  4.7% Acquisitions/(Disposals)  2.7% Currency  2.1% EBITA  6.8% EBITA margin  (30) bps Savoury & Other Food Solutions QSR7% 21

  20. Slide 20: ARYZTA Food Europe Revenue Analysis

    ARYZTA Food Europe Revenue Analysis €79.3m (€57.3)m +9.8% (7.1)% Disposals Acquisitions €17.3m €881.7m €54.0m (€16.7)m +9.5% +6.8% +2.1% (2.1)% H1 FY16 FX Revenue Losses Wins €805.1m H1 FY15 Revenue 20 © ARYZTA, March 2016

  21. Slide 21: ARYZTA Bakeries Europe

    ARYZTA Bakeries Europe –– Completed European investment programme with commissioning of new capacity in H2 –– Achieving good cross-selling success –– Market continues to display above average growth in ISB (in-store bakery) due to success of discounters –– European customer base increasing through l

  22. Slide 22: ARYZTA Food Solutions

    ARYZTA Food Solutions –– Return to underlying revenue growth in the period with strong cash delivery –– Continued disruption within independents due to growth in discounting –– Proposition positioning continues to align with market trends –– Revenue growth in Ireland and UK as economies improve –– R

  23. Slide 23: ARYZTA Food North America

    ARYZTA Food North America Six month period ended 31 January 2016 Food North America H1 2016 Financial Highlights Revenue  3.6% Underlying revenue  (4.0)% Acquisitions/(Disposals)  (1.8)% Currency  9.4% EBITA  0.1% EBITA margin  (40) bps Hawaii 24 Bakeries & Kitchens 2 Countries Savoury & Other

  24. Slide 24: ARYZTA Food North America Revenue Analysis

    ARYZTA Food North America Revenue Analysis €89.7m (€127.5)m +9.6% (13.6)% Wins Losses €88.3m €971.0m +9.4% +3.6% H1 FY16 Revenue FX €937.2m H1 FY15 Revenue (€16.7)m (1.8)% Disposals 24 © ARYZTA, March 2016

  25. Slide 25: ARYZTA Food North America

    ARYZTA Food North America –– Investing in branded propositions around Otis Spunkmeyer and La Brea Bakery –– Continued traction with organic growth in Retail and Foodservice with customer centric strategy –– Volume losses due to optimisation, supply chain contract renewals, and some customer weakness

  26. Slide 26: ARYZTA Food Rest of World

    ARYZTA Food Rest of World Six month period ended 31 January 2016 Food Rest of World H1 2016 Financial Highlights Revenue  (7.2)% Underlying revenue  3.9% Currency  (11.1)% EBITA  (6.8)% EBITA margin  – 11 Bakeries & Kitchens 9 Countries Large Retail 4% Savoury & Other Food Solutions Other Top 2

  27. Slide 27: ARYZTA Food Rest of World Revenue Analysis

    ARYZTA Food Rest of World Revenue Analysis € 8.6m (€ 4.1)m +7.5% (3.6)% Losses € (12.8)m Wins (11.1)% € 115.6m FX H1 FY15 Revenue € 107.3m (7.2)% H1 FY16 Revenue 27 © ARYZTA, March 2016

  28. Slide 28: Food Rest of World

    Food Rest of World –– Continued growth despite challenging economic environment in the region –– FX negatively impacting performance –– Continuing to explore new capacity options 28 © ARYZTA, March 2016

  29. Slide 29: ARYZTA AG – Group Continuing Operations

    ARYZTA AG – Group Continuing Operations FY 2009 – FY 2015 Revenue (€m) (€m) Revenue EBITA EBITA (€m) (€m) 2015 2015 3,820 3,820 2015 514 2015 514 2014 Revenue 2014 Revenue (€m) Revenue (€m) (€m) 3,394 3,394 2014 EBITA (€m) 2014 EBITA (€m) EBITA (€m) 486 486 2013 2015 2015 2013 3,086 3,820 3,086 3,82

  30. Slide 30: ARYZTA Group Investment Case & Outlook

    ARYZTA Group Investment Case & Outlook 30 © ARYZTA, March 2016

  31. Slide 31: Investment Case Post 2020

    Investment Case Post 2020 –– Leader in Speciality Food –– Innovation enhancing relevance »» Consumer »» Professional »» Commercial –– Revenue €6.5bn+1 –– EBITDA €1.1Bn+1 –– Free Cash Flow €500m+1 –– 40% Revenue Consumer Branded –– 40% Business Asset Light –– Significant investment building blocks in

  32. Slide 32: Outlook and Short-Term Focus

    Outlook and Short-Term Focus –– Underlying revenue growth »» Secure supply chain contracts »» Invest in brands –– Increase operating leverage –– Unlock recently invested capacity –– Reduce investment capex –– Increase free cash generation 32 © ARYZTA, March 2016

  33. Slide 33: Financial Calendar

    Financial Calendar –– 31 May 2016 Third-quarter trading update –– 26 September 2016 Announcement of full-year results 2016 –– 03 October 2016 Issue of the 2016 annual report –– 06 October 2016 Capital Markets Day –– 28 November 2016 First-quarter trading update –– 13 December 2016 Annual General Mee

  34. Slide 34: Thank you

    Thank you 34 © ARYZTA, March 2016

  35. Slide 35: Appendix

    Appendix 35 © ARYZTA, March 2016

  36. Slide 36: FY 2016 Financial Metrics

    FY 2016 Financial Metrics Current Estimates1 Depreciation p.a. € 130 – 145 m Amortisation p.a. € 160 – 175 m Finance costs (including Hybrid financing) p.a. € 135 – 145 m Effective tax rate 17 % – 20 % Maintenance capex p.a. € 80 – 90 m Non-recurring cash costs not material Investment capex € 100 –

  37. Slide 37: Discontinued operations - Origin

    Discontinued operations - Origin in EUR ’000 January 2016 January 2015 Revenue 194,721 531,599 EBITA 146 4,110 EBITA margin 0.1% 0.8% Associates and JV, net of tax 881 6,284 EBITA incl. associates and JV 1,027 10,394 Finance costs, net (1,015) (2,789) Pre-tax profits 12 7,605 Income tax 154 (309) To

  38. Slide 38: Underlying Net Profit Reconciliation

    Underlying Net Profit Reconciliation Six month period ended 31 January 2016 in EUR ’000 January 2016 January 2015 Underlying fully diluted net profit – continuing operations 141,074 138,313 Intangible amortisation (86,370) (84,424) Tax on amortisation 17,817 17,919 Share of joint venture intangible

  39. Slide 39: Balance Sheet

    Balance Sheet as at 31 January 2016 in EUR ’000 January 2016 July 2015 Property, plant and equipment 1,566,682 1,543,263 Investment properties 25,015 25,916 Goodwill and intangible assets 3,694,663 3,797,269 Deferred tax on acquired intangibles (229,976) (246,116) Working capital (360,774) (218,669)

  40. Slide 40: Financial Position

    Financial Position Outstanding Debt Funding as at January 2016 Principal in EUR `000 Syndicated Bank Loan EUR 190m (190,000) Syndicated Bank Loan USD 550m (503,894) Syndicated Bank Loan CAD 80m (52,209) Syndicated Bank Loan GBP 100m (131,657) Syndicated Bank Loan CHF 230m (207,413) Private Placement

  41. Slide 41: Gross Term Debt Maturity Profile

    Gross Term Debt Maturity Profile Gross Term Debt Maturity Profile (excluding hybrid)¹ 2% 10% 2% 2% Revolver 12% 14%² 5% 6% Revolver 34% 40%² 16% 6% 2% 3% 1 The Group term debt maturity profile is set out as at 31 January 2016, adjusted for the terms of the new revolving credit facility. Gross term d

  42. Slide 42: Return on Invested Capital – Continuing Operations

    Return on Invested Capital – Continuing Operations Food Food North Food Rest Total in EUR million Europe America of World Group 31 January 2016 Group share net assets 1,874 2,528 189 4,591 EBITA 220 274 26 520 ROIC1 11.7% 10.8% 13.7% 11.3% 31 July 2015 Group share net assets 1,963 2,602 204 4,769 EB

  43. Slide 43: Food Group – Underlying Revenue Growth

    Food Group – Underlying Revenue Growth 25.0% Food Europe 20.0% Food North America 15.0% Recession & Trading Down Total Food Group 10.0% SKU Rationalisation & Independent Retailer Challenges 5.0% 0.0% (5.0%) (10.0%) Exit of DSD in North America (15.0%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

  44. Slide 44: Food Group – Five Year KPIs

    Food Group – Five Year KPIs In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Total / CAGR1 Revenue 2,577.4 2,867.6 3,085.5 3,393.8 3,820.2 17.9% EBITDA 408.8 465.2 500.4 589.2 638.3 18.9% Underlying Net Profit – continuing operations 218.1 246.6 268.4 324.6 330.0 15.9% ARYZTA AG unde

  45. Slide 45: Food Group – Five Year Cash Generation

    Food Group – Five Year Cash Generation In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Five Year Total EBIT 235.8 275.0 300.1 362.5 346.0 1,519.4 Amortisation 86.5 99.8 106.6 123.8 168.0 584.7 EBITA 322.3 374.8 406.7 486.3 514.0 2,104.1 Depreciation 86.5 90.4 93.7 102.9 124.3 497.8

  46. Slide 46: Food Group – Five Year Net Debt

    Food Group – Five Year Net Debt In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Opening net debt as at 1 August (1,115.6) (955.5) (976.3) (849.2) (1,642.1) Cash flows generated from activities 188.6 120.6 93.8 74.1 21.4 Disposal of businesses, net of cash – – – – 22.7 Proceeds from

  47. Slide 47: EUR Closing and Average FX Rates

    EUR Closing and Average FX Rates Closing Rates H1 2016 FY 2015 % Change Swiss Franc 1.1089 1.0635 (4.3)% US Dollar 1.0915 1.1109 1.7% Canadian Dollar 1.5323 1.4446 (6.1)% Sterling 0.7596 0.7091 (7.1)% Average Rates H1 2016 H1 2015 % Change Swiss Franc 1.0862 1.1894 8.7% US Dollar 1.1020 1.2548 12.2%

  48. Slide 48: ARYZTA Group – International Footprint

    ARYZTA Group – International Footprint 58 Bakeries & Kitchens 29 Countries Food Rest of World Savoury 5% Top 20 & Other (6%) Customers Large Quick Serve 16 % Bread Rolls & 53% Retail Restaurant (16%) Artisan Loaves Food Europe (54%) 22% 37 % 45% 33% Channel Capability Customer (25%) (36%) Geography

  49. Slide 49: Presentation Glossary

    Presentation Glossary –– ‘Associate and JVs, net’ – presented as profit from associate and JVs, net of taxes and interest, before non-ERP amortisation and the impact of associated non-recurring items. –– ’EBITA’ – presented as earnings before interest, taxation, non-ERP related intangible amortisati

Aryzta — H1 FY2016 Earnings Presentation on 6ix