Chocoladefabriken Lindt & Spruengli Ag · SIX:LISN
Chocoladefabriken Lindt & Spruengli — Chocoladefabriken Lindt & Sprüngli — FY2020 Earnings Presentation
57 slides from Chocoladefabriken Lindt & Spruengli's earnings presentation, Mar 2, 2021
Slide 1: Our Purpose
gf Our Purpose We Enchant the World with Cheekale’ BA LINDT & SPRUNGLI
Slide 2: Full-year Results 2020
Full-year Results 2020 March 2, 2021
Slide 3: Group Management
Group Management Martin Hug Rolf Fallegger Alain Germiquet Group CFO Country Responsibility Country Responsibility Dieter Weisskopf Group CEO Adalbert Lechner Guido Steiner Jennifer Picenoni Country Responsibility International Operations General Counsel & Corporate Secretary Full-year Results 2020
Slide 4: Agenda
Agenda 1. Financial Year 2020 in Brief 2. Market Insights and Highlights 3. Financial Figures 2020 4. Sustainability - ESG 5. Outlook 6. Q&A Full-year Results 2020 March 2, 2021 4
Slide 5: Key Figures & Achievements
Key Figures & Achievements 4.02 -6.1% -10.9% Group sales in CHF bn organic sales growth sales growth in CHF 10.5% 8% 473 57.2% EBIT margin net income margin free cash flow in CHF mn; equity ratio CHF 420.3 mn CHF 320.1 mn 11.8% of NTS Market share Streamlining E-commerce for growth in North America
Slide 6: Responding to Covid-19
Responding to Covid-19 Combination of business-as-usual and special measures • Protecting and supporting employees globally and locally • Remaining in control of day-to-day business: “end-to-end supply chain“ • Maximizing demand, minimizing costs, optimizing cash • Continuing to invest in future gro
Slide 7: Market Insights & Highlights
Market Insights & Highlights
Slide 8: Sales Analysis: Markets
Sales Analysis: Markets Lindt & Sprüngli leads the premium chocolate segment and gains market shares in almost all markets Rest of the World CHF 0.47 bn (-16.1%) 11.7% 38.2% North America CHF 1.54 bn (-6.8%) Total Group sales CHF 4.02 bn (-6.1%) Europe CHF 2.01 bn (-2.9%) 50.1% Full-year Results 202
Slide 9: Business Impact of Covid-19
Business Impact of Covid-19 Managing short-term challenges while benefiting from long-term trends Sales Channels Categories Geographies UK, Germany, Nordics, CEE, Online, wholesale Bars and Lindor (wholesale) Spain, US wholesale (Lindt, Ghirardelli), Japan, China Own stores, Travel Retail, Food- Ita
Slide 10: Europe: Market Split
Europe: Market Split Market shares expanded in all key countries Germany 8.4% France 3.7% Total sales Europe CHF 4.9% 2.01 bn UK (-2.9%) Italy 6.4% CH (excl. export and 10.0% duty free business) 16.7% Rest of Europe
Slide 11: Europe: Highlights
Europe: Highlights -2.9% sales decline Market share gains in all markets Sales growth in Germany (+2.0%), UK (+2.1%), Spain (+3.2%), CEE (+12.0%), Nordics (+10.6%) and the Netherlands (+56.5%) Covid-19 impact: temporary closure of own stores, missing tourist business, lockdowns during Easter and Chr
Slide 12: North America: Market Split
North America: Market Split Market share gains in the entire region 32.7% Total sales North America CHF 1.54 bn USA (-6.8%) 5.1% Canada Mexico 0.4%
Slide 13: North America: Highlights
North America: Highlights -6.8% sales decline Covid-19: Food-Service business, gifting products Easter & Christmas, temporary store closures Growth in wholesale Lindt and Ghirardelli: e.g. Lindt Excellence even in the double digits Boom in the baking segment of Ghirardelli Lindt & Sprüngli factory i
Slide 14: Progress Streamlining in North America
Progress Streamlining in North America Foundations for sustainable and profitable future growth laid Logistics network: Impairment and closure of warehouses and substantial efficiency improvements Finished by September Production footprint: Closure of one Russell Stover factory in Colorado, reductio
Slide 15: Rest of the World: Market Split
Rest of the World: Market Split Continued successful geographical expansion of L&S business impacted negatively by Travel Retail 11.7% Total sales Rest of the World CHF 0.47 bn (-16.1%)
Slide 16: Rest of the World: Highlights
Rest of the World: Highlights -16.1% sales decline Covid-19 impact: travel restrictions, temporary store closures China (+10.1%) and Japan (+7.4%) with strong sales growth Collaboration with big coffee chain and first Lindt Pop-Up-Shop in L+Mall in China Additional stores and cafés in Japan and Braz
Slide 17: E-Commerce & Digital
E-Commerce & Digital • Investments in the past few years are paying off L&S was ready for shift to e-commerce during Covid-19 pandemic • E-Sales: L&S e-commerce, “click to mortar”, “pure play” platforms doubled to 5% of sales • Numerous initiatives in the markets e.g.: • Order & pick-up at own sto
Slide 18: Financial Figures
Financial Figures
Slide 19: Overview – Year 2020
Overview – Year 2020 Covid effects contained, free cash flow margin increased Organic growth EBIT margin Net income margin Free cash flow Net debt position in % sales 13.2% 11.4% 423 6.1% 11.8% 10.5% 11.7% 8.0% 209 -6.1% 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 Full-year Results 2020 March
Slide 20: Shareholder Return
Shareholder Return Continued increase in dividend, record market capitalization 2016 2017 2018 2019 2020* Ordinary dividend reg. (CHF) 880 930 1,000 1,050 1,100 Special dividend (CHF) - - - 700 - Dividend yield reg. 1.4% 1.3% 1.4% 2.0% 1.2% Payout ratio 49.8% 49.5% 50.0% 83.2% 82.5% Share buyback (C
Slide 21: Organic Sales Growth
Organic Sales Growth Strong share gains and sales growth in key markets offset by negative Covid impact Absolute in CHF million (as published) 5,000 Growth rate in % (organic) 4,500 4,509 4,313 4,000 4,088 4,017 3,901 3,500 3,000 6.0% 3.7% 5.1% 6.1% -6.1% 2,500 2016 2017 2018 2019 2020 Full-year Res
Slide 22: Sales Growth in CHF
Sales Growth in CHF Strong Swiss Franc again limiting reported growth Absolute in CHF million (as published) 5,000 Growth rate in % (as published) 4,500 4,509 4,000 4,313 4,088 4,017 3,901 3,500 3,000 6.8% 4.8% 5.5% 4.5% -10.9% 2,500 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 26
Slide 23: Sales: Growth Factors
Sales: Growth Factors Pricing positive with Covid factors driving negative volume and mix Growth rate in % 6% 4% 2% 0% -2% -4% -2.3% -3.8% -6.1% -6% -8% -10% -4.8% -10.9% -12% Volume Price / Mix Organic Forex Sales in CHF Full-year Results 2020 March 2, 2021 27
Slide 24: Sales Analysis: Segment Information
Sales Analysis: Segment Information Growth in key markets Germany, UK and in US wholesale (Lindt & Ghirardelli) Growth rate in % (organic) Absolute in CHF million (as published) Europe North America Rest of the World 12.0% 12.0% 10.0% 10.0% 10.0% 8.0% 5.0% 7.6% 8.0% 6.0% 469 0.0% 6.0% 4.0% 6.2% 5.4%
Slide 25: Material Costs incl. Change in Inventories
Material Costs incl. Change in Inventories Covid drives lower net sales per ton and higher cost ratio Absolute in CHF 1,600 In % to sales 1,400 1,518 1,376 1,425 1,434 1,422 1,200 1,000 800 ,800 80 0 600 ,600 60 0 400 ,400 40 0 200 ,200 35.3% 34.8% 33.1% 33.6% 35.3% ,0 0 2016 2017 2018 2019 2020 Ful
Slide 26: Cocoa Price
Cocoa Price Price of cocoa bean futures slightly decreasing in 2020 (Chart does not include LID (USD 400/mt) that we have paid since October 2020) 2’150 Cocoa bean prices in GBP / t 2’050 1’950 1’850 1’750 1,700 1’650 1’550 LIffe Full-year Results 2020 March 2, 2021 30
Slide 27: Personnel Expenses
Personnel Expenses Cost reduction initiatives largely enough to offset sales decline In CHF million, in % to sales 1’000 979 938 800 886 885 846 600 400 200 21.7% 21.7% 21.8% 21.7% 22.0% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 31
Slide 28: Number of Employees (FTE)
Number of Employees (FTE) Decrease thanks to US efficiency gains and temporary Covid-related measures Average number of employees (FTE) Growth rate in % 15,000 14,570 14,621 13,000 13,539 13,949 13,557 11,000 9,000 7,000 5,000 +2.7% +3.0% +4.5% +0.4% -7.3% 3,000 2016 2017 2018 2019 2020 Full-year Re
Slide 29: Operating Expenses
Operating Expenses Maintained high advertising investments, reduced other costs – diseconomies of scale Absolute in CHF million 1’200 In % to sales 1,144 1,113 1’000 1,030 1,036 ,982 800 600 400 200 25.1% 25.2% 26.5% 24.7% 25.9% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 33
Slide 30: Depreciation and Impairments
Depreciation and Impairments Slight increase in depreciation driven by higher capex Absolute in CHF million In % to sales 323 320 280 76* 276 240 70* 247 200 206 160 169 180 120 152 80 40 3.9% 4.1% 4.2% 7.2% 6.9% 0 2016 2017 2018 2019 2020 * Additional depreciation due to new leasing reporting Full-
Slide 31: Operating Profit (EBIT)
Operating Profit (EBIT) Fully in line with guidance Absolute in CHF million In % to sales -29.1% 700 600 637 595 593 500 563 400 420 300 200 100 14.4% 14.6% 14.8% 13.2% 10.5% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 35
Slide 32: EBIT by Segment
EBIT by Segment Underlying improvement in North American profitability EBIT in % Absolute in CHF million Europe North America Rest of the World 25.0% 7.0% 25.0% 6.0% 20.0% 20.0% 19.2% 5.0% 5.8% 15.0% 4.0% 15.0% 17.6% 14.4% 4.3% 10.0% 3.0% 10.0% 2.0% 5.0% 5.0% 8.8% 1.0% 0.0% 0.0% 0.0% 2019 2020 2019
Slide 33: EBITDA
EBITDA Below historic levels of profitability due to Covid Absolute in CHF million -24.0% In % to sales 900 916 800 816 700 764 714 696 600 500 400 300 200 100 18.3% 18.7% 18.9% 20.3% 17.4% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 37
Slide 34: Free Cash Flow
Free Cash Flow Strong free cash flow generation driven by excellent net working capital management Absolute in CHF million -10.5% In % to sales 600 500 529 473 400 406 394 300 281 200 100 17.3% 7.2% 9.9% 9.1% 11.7% 11.8% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 38
Slide 35: Capital Expenditure
Capital Expenditure Continued investments into growth and efficiency though less than planned Absolute in CHF million 280 240 257 249 234 235 200 160 185 120 80 40 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 39
Slide 36: Tax Rate
Tax Rate Extraordinary positive impacts in 2020 In % of income before taxes 30% 25% 24.2% 20% 22.4% 21.5% 18.8% 15% 10% 8.8% 5% 0% 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 40
Slide 37: Net Income
Net Income Positive impact from net financial expenses and income taxes Absolute in CHF million -37.5% In % to sales 550 500 512 450 487 400 453 420 350 300 320 250 200 150 100 50 10.8% 11.1% 11.3% 11.4% 8.0% 0 2016 2017 2018 2019 2020 Full-year Results 2020 March 2, 2021 41
Slide 38: Net Financial Position: Development
Net Financial Position: Development Decrease in net debt despite special dividend - mainly driven by strong free cash flow generation Absolute in CHF million Free cash flow = 473 600 400 200 -249 +787 -65 0 +13 -209 -200 -418 -423 +146 -400 -600 01.01.2020 Operating cash CAPEX Repayment of Dividend
Slide 39: Equity Ratio
Equity Ratio Strong balance sheet In % of total assets 60% 60.1% 57.8%* 58.1% 57.1% 57.2% 55% 50% 2016 2017 2018 2019 2020 *2018 adjusted by leasing impact for comparability reasons Full-year Results 2020 March 2, 2021 43
Slide 40: Sustainability - ESG
Sustainability - ESG
Slide 41: 2020 Goals Achieved
2020 Goals Achieved 100% of cocoa 10% reduction in 10% reduction beans are greenhouse gas in municipal traceable and emissions in the water used in the externally production production verified by 2020 process process (base year 2015) (base year 2015)
Slide 42: Sustainability – ESG: Approach & Commitments
Sustainability – “ESG“: Approach & Commitments Full-year Results 2020 March 2, 2021 46
Slide 43: Sustainability – ESG: Approach & Commitments
Sustainability – “ESG“: Approach & Commitments* • Marketing and advertising communication fully compliant with national / international laws • 100 % Cocoa Beans sustainably • Highest commitment to quality and food safety standards sourced - achieved in 2020 • 100 % Cocoa Butter/Powder sustainably so
Slide 44: Sustainability – ESG: Approach & Commitments
Sustainability – “ESG“: Approach & Commitments* • Marketing and advertising communication • 100 % Cocoa Beans sustainably sourced - achieved in 2020 fully compliant with national / international laws • 100 % Cocoa Butter/Powder sustainably sourced by 2025 • Highest commitment to quality and food • 8
Slide 45: Sustainability – ESG: Approach & Commitments
Sustainability – “ESG“: Approach & Commitments* • Marketing and advertising communication fully compliant with national / international • 100 % Cocoa Beans sustainably sourced - achieved in 2020 laws • 100 % Cocoa Butter/Powder sustainably • Highest commitment to quality and food sourced by 2025 saf
Slide 46: Sustainability – ESG: Approach & Commitments
Sustainability – “ESG“: Approach & Commitments* • 100 % Cocoa Beans sustainably sourced - achieved • Marketing and advertising in 2020 communication fully compliant • 100 % Cocoa Butter/Powder sustainably sourced with national / international laws by 2025 • 80% in Raw- & pack materials - bearing sus
Slide 47: Lindt & Sprüngli Farming Program
Lindt & Sprüngli Farming Program
Slide 48: Objectives of the Farming Program
Objectives of the Farming Program Higher productivity of farms and, at the same time, conservation of biodiversity and natural ecosystems Diversified incomes and increased resilience of farmers Reduction of the risk of child labor Improved community infrastructure
Slide 49: Lindt & Sprüngli Farming Program
Lindt & Sprüngli Farming Program Overview of Sourcing Origins & Farmers participating in the Program Dominican Republic 739 farmers Ghana 64,406 farmers Ecuador 8,473 farmers Papua Madagascar New Guinea 2,223 farmers 4,138 farmers Full-year Results 2020 March 2, 2021 53
Slide 50: Our achievements since 2008
Our achievements since 2008 4 Elements of the Lindt & Sprüngli Farming Program Traceability and Training and Farmer investments Verification farmer knowledge and community and continuous organization transfer development progress ~1.95 m ~130,000 ~80,000 33 shade trees have been member of the commun
Slide 51: Outlook
Outlook
Slide 52: Share Buyback - Program
Share Buyback - Program Repurchase of RSs and PCs of max. CHF 750 mn for the purpose of a capital reduction Key Drivers: • Record free cash flow of CHF 473 mn in 2020 • Solid long-term financing – CHF 250 mn 8-year bond and CHF 250 mn 12-year bond issued in 2020 • Strong Balance Sheet (close to 60%
Slide 53: Looking to the Near Future
Looking to the Near Future Growing markets, big potential, gaining shares • Increasing demand for premium chocolate products in all markets • Lindt & Sprüngli to focus on: • Innovation and leader products: Lindor, Excellence, Seasonal • Premiumization • Growth markets • Continued high investment in
Slide 54: Lindt & Sprüngli - Strategic Direction
Lindt & Sprüngli - Strategic Direction Projects along six focus areas Organization Foster entrepreneurship & increase ability to react quickly to changes Products & consumers Inspire & surprise consumers with innovative highest quality chocolate products in an increasingly digitalizing world Channel
Slide 55: Outlook - Summary
Outlook - Summary Lindt & Sprüngli will continue to grow faster than the market • Lindt & Sprüngli remains convinced that the positive growth of the chocolate markets and in particular the premium segment will continue in the future. • In 2020, Lindt & Sprüngli strengthened the foundations for furth
Slide 56: Disclaimer
Disclaimer This presentation 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 statements.
Slide 57: Q&A
ff Q&A BA LINDT & SPRUNGLI
Chocoladefabriken Lindt & Sprüngli — FY2020 Earnings Presentation on 6ix