Barry Callebaut AG · SIX:BARN
Barry Callebaut — FY2003/04 Earnings Presentation
39 slides from Barry Callebaut's earnings presentation, Nov 10, 2004
Slide 1: Annual Results 2003/04
Annual Results 2003/04 MEDIA CONFERENCE - NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference
Slide 2: Agenda
Agenda X Business review 2003/04 X Industrial Business Segment X Food Service/Retail Business Segment X Proposals to AGM X Financial results X Performance targets X Summary NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 2
Slide 3: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements Forward-looking statements Any information given on these slides as well as during the conference call has been prepared by Barry Callebaut solely for the use at this analyst presentation. Certain statements contained therein regarding the business of Ba
Slide 4: Business Review 2003/04
Patrick G. De Maeseneire, Chief Executive Officer Business Review 2003/04 NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 4
Slide 5: Highlights of fiscal year 2003/04
Highlights of fiscal year 2003/04 (closed as of August 31, 2004) X Strong sales, operating profit and net profit growth X Material EBIT contributions from Cocoa, Food Manufacturers and Gourmet X Moderate, positive EBIT contribution from Consumer Products North America X Unsatisfactory EBIT developme
Slide 6: Major events for Barry Callebaut during FY 2003/04
Major events for Barry Callebaut during FY 2003/04 X Acquisition of Brach’s (September 2003) as platform to grow our consumer business in the US. Integration and restructuring completed. Now focus on new product offerings X Dedicated factory approach expanded to consumer business to accelerate strat
Slide 7: Top-line growth targets achieved
Top-line growth targets achieved reported like-for-like growth growth1) Industrial Business Segment Cocoa tonnes 4,5% 4,5% Food Manufacturers tonnes 2,7% 5,7% Food Service/Retail Business Segment Gourmet & Specialities CHF m 7,9% 3,8% Consumer Products CHF m 47,8% 0,3% BC Group Sales volumes tonnes
Slide 8: Operational performance by business segments
Operational performance by business segments Industrial Business Food Service / Retail Business X Cocoa X Gourmet & Specialties X Food Manufacturers X Consumer Products Sales volumes Tonnes 650'621 Sales volumes Tonnes 360'737 Sales revenue CHF m 2'203.3 Sales revenue CHF m 1'845.6 EBIT EBIT 2003/04
Slide 9: Industrial Business Segment 2003/04: Another very successful year
Industrial Business Segment 2003/04: Another very successful year Change 2003/04 2002/03 Sales revenue CHF m 0.4% 2,203.3 2,193.9 Sales volume tonnes 3.1% 650,622 631,146 Operating profit (EBIT) CHF m 22.7% 175.2 142.8 Segment assets CHF m -8.7% 1,658.2 1,815.4 X Composed of the asset- and capital i
Slide 10: Cocoa 2003/04: Substantial EBIT contribution
Cocoa 2003/04: Substantial EBIT contribution X Sales volume 126'316 tonnes 4.5% X Sales revenue CHF 564.0 million - 8.2% X Barry Callebaut processes approx. 15% of global cocoa harvest Approx. 3/4 of the products are for in-house use Remainder sold to the food industry X Sales volume increase:
Slide 11: Food Manufacturers 2003/04: Very successful year
Food Manufacturers 2003/04: Very successful year X Sales volume 524'305 tonnes + 2.7% X Sales revenue CHF 1'639.3 million + 3.8% X On a like-for-like basis sales volume up 5.7% compared to overall growth of world chocolate market of ~1% Fastest growth in France, Mediterranean countries, Eastern Eu
Slide 12: Food Service/Retail Business Segment 03/04: Positive EBIT contribution from both businesses
Food Service/Retail Business Segment 03/04: Positive EBIT contribution from both businesses Change 2003/04 2002/03 Sales revenue CHF m 34.0% 1,845.6 1,377.4 Operating profit (EBIT) CHF m - 2.6% 99.3 102.0 Segment assets CHF m 22.8% 953.4 776.5 X Consists of the business units closer to the end-consu
Slide 13: Gourmet & Specialties 2003/04: Substantial EBIT growth
Gourmet & Specialties 2003/04: Substantial EBIT growth X Sales revenue CHF 514.0 million + 7.9% X Sales volume 107,901 tonnes + 4.8% X Sales revenue increase of 7.9%, of which 3.8% organic growth Evidence that ready-to-use/ready-to-sell strategy is working Direct sales force in several countries
Slide 14: Consumer Products 2003/04: Action taken to achieve cost leadership
Consumer Products 2003/04: Action taken to achieve cost leadership X Sales revenue CHF 1,331.6 million +47.8% X Sales revenue increase of 47.8% X Acquisition of Brach’s (Sept. 2003) to create platform for building attractive consumer confectionery business in the U.S. restructuring and integration
Slide 15: The key to cost leadership - dedicated factories
The key to cost leadership - dedicated factories (new organization announced 10 Sept. 2004) Markets by geography & clients ... Food Manu- Artisanal Global facturers customers Retailers Marketing & Sales Cons. Cons. Cocoa FM G&S Europe America Operations & Supply Chain Plant 1 Plant 2 Plant 3 ... Pla
Slide 16: Achieving cost leadership - Consumer Products Europe
Achieving cost leadership - Consumer Products Europe X SKU reduction X Walk away from unprofitable volumes X Product transfer X Recipe optimization X Sales force restructuring X Streamlined brand portfolio X Brand transition NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Med
Slide 17: Example: Consumer Products Europe - Rigorous SKU reduction in 2003/04
Example: Consumer Products Europe - Rigorous SKU reduction in 2003/04 3‘089 41 % re du ct 1‘085 io Stopped n 101 Transition (to be stopped) 75 1‘828 Under review Including Alprose and Jacques NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 17
Slide 18: Example: Product transfers - move to dedicated factories
Example:Product transfers - move to dedicated factories X Move to industrial plants Specialty chocolates (Sugar free, white) 1Q 05 Fat fillings 1Q 05 Nut pastes 1Q 05 X Move to consumer plants Liquid chocolate for German & Swiss customers Started Easymelt for Gourmet 2Q 05 1 kg blocs for
Slide 19: Recipe optimization - provided no impact on quality & taste
Recipe optimization - provided no impact on quality & taste X Tablets (illustrative example) Addition of BB3 Different milk powder Total cost impact EUR 0.03 per kg X Dragees (illustrative example) Recipe optimization (same actions as above) Optimized chocolate cover Different raisins (T
Slide 20: Sales force restructuring
Sales force restructuring X Need to adapt sales force to changed retail landscape X Concentration of big retailers X Growing importance of discount channel X Bringing together the two sales forces of Gubor and Stollwerck X So far independent, leading to overlap X Reduction from approx. 200 to approx
Slide 21: Streamline the brand portfolio
Streamline the brand portfolio before after Europe US Europe US Premium Germany Germany Centre of R&D Middle Local brands Private PLB / own brands Customer Solutions NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 21
Slide 22: Building a strong brand under one umbrella ...
Building a strong brand under one umbrella ... t i on nsi 2005/06 T ra and ~ EUR 100 m B r 2003/04 • More visibility in shelf EUR 40 m • Higher significance for retail • Chocolate competence through wide range of products • Creating values through brand positioning & upgrading (new design, relaunch)
Slide 23: ... by transitioning successful concepts
... by transitioning successful concepts One strong brand umbrella NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 23
Slide 24: Proposals to Annual General Meeting (December 8, 2004)
Proposals to Annual General Meeting (December 8, 2004) X Payout X Increased payout of CHF 7.80 per registered share proposed to AGM. Par-value reduction and repayment in lieu of dividend New par value CHF 92.20 instead of CHF 100.00 Net of withholding tax Pay-out free of charges in February 20
Slide 25: Financial Results 2003/04
Dieter Enkelmann, Chief Financial Officer Financial Results 2003/04 NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 25
Slide 26: Financial summary 2003/04 – P&L
Financial summary 2003/04 – P&L: X Sales revenues increased again strongly by 13.4% to more than CHF 4.0 bn (thereof 5.0% organic) X Sales volume grew 13.5% to more than 1.0 million tonnes (thereof 4.4% organic) X Gross profit jumped 29.9% to CHF 1.5 bn reflecting the changed business portfolio - Gr
Slide 27: Financial Highlights 2003/04
Financial Highlights 2003/04 % change 2003/04 2002/03 Sales Revenue CHF m 13,4 4'048,9 3'571,3 in local currencies 11,7 3'989,0 EBIT CHF m 9,4 228,3 208,7 in local currencies 7,3 224,0 EBIT per tonne CHF/mt -3,6 225,7 234,2 in local currencies -5,4 221,5 Net Profit (PAT) CHF m 12,0 115,6 103,2 in lo
Slide 28: Sales revenue development by business unit 1999/00 – 2003/04
Sales revenue development by business unit 1999/00 – 2003/04 (in CHF m) 4'049 3'571 1'332 (33%) Consumer Products 901 2'622 2'549 2'410 185 476 (13%) Gourmet & Specialities 209 514 424 578 427 1'580 1'639 (40%) Food Manufacturers 1'393 1'392 1'417 (14%) Cocoa 496 620 614 564 441 1999/00 2000/01 2001
Slide 29: Steady operational improvement and bottom-line growth
Steady operational improvement and bottom-line growth 250 (in CHF m / CHF) 240 234 X EBIT/ton declined from CHF 234 to CHF 226 228 230 226 X Cocoa, FM and G&S 200 substantially improved 228 220 213 209 X Diluted by moderate EBIT/ton for Brach‘s 210 150 168 173* and unsatisfactory 149 contribution fr
Slide 30: EBIT not correlated to cocoa prices
EBIT not correlated to cocoa prices (in CHF m) (GBP/mt) 250 228,3 2500 208,7 200 168,0 173,2* 2000 148,7 150 130,2 1157 1500 988 100 713 1425 1000 661 619 50 500 0 0 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 EBIT Cocoa price (Closing 31 Aug, Terminal Market Second Position) * Before CHF 80 m r
Slide 31: Very strong Q4 contrasting weak Q3
Very strong Q4 contrasting weak Q3 250 (in CHF m) 2001/02 +9% 2002/03 2003/04 228 200 209* 150 174 +15% 100 +15% 92 +26% 79 50 -38% 67 58 58 51 46 38 32 31 38 20 0 Q1 Q2 Q3 Q4 Full Year * Before CHF 80 m restructuring provision Stollwerck NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation
Slide 32: Convincing development of profitability ratios
Convincing development of profitability ratios (in CHF m) 250.0 19.0% 17.0% 200.0 15.4% 15.3% 15.0% 14.0% 14.4% 15.0% 13.9% 13.8% 13.6% 150.0 13.9% 13.0% 13.5% 10.4% 9.9% 9.6% 11.0% 100.0 8.9% 8.7% 9.0% 50.0 7.0% 0.0 5.0% 1999/00 2000/01 2001/02 2002/03 2003/04 ROCE ROE ROIC EBIT PAT NOVEMBER 10, 20
Slide 33: Restructuring provisions Stollwerck & Brach's – Usage and closing balance
Restructuring provisions Stollwerck & Brach’s – Usage and closing balance FY 2003/04 (in CHF m) Usage 08/31/04 Stollwerck 25.8 17.6 Brach‘s 19.5 44.1 Comments X The remaining Stollwerck restructuring provision will cover for the announced closure of the Cologne factory and the move of part of the pr
Slide 34: A considerably sounder balance sheet
A considerably sounder balance sheet 2002/03* 2003/04* 286 ST-debt Net 459 ST-debt Net Working 955 Working 914 LT- debt incl. Capital LT- debt incl. Capital 660 High Yield bond 575 High Yield bond Fixed Fixed assets 664 assets 746 Equity and 1‘068 Equity and Other 972 other LT- Other other LT- asset
Slide 35: Performance targets and summary
Patrick G. De Maeseneire, Chief Executive Officer Performance targets and summary NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 35
Slide 36: Growth in mature markets = innovation & cost leadership
Growth in mature markets = innovation & cost leadership X Innovation at Barry Callebaut means: X Expanding to new geographic markets and increasing market penetration X Continuous launch of “better” products to stimulate consumer and customer demand X Extending the offer to tap into new buyer groups
Slide 37: Performance targets through 2006/07
Performance targets through 2006/07 1) X Top line growth (organic) 3 - 5% on average – at least twice expected market growth X EBITA2) growth 8 – 10%3 X PAT 12 – 15% - fuelled by expected ongoing favorable tax situation as well as close management of financial costs 1) Our view for the 2004–2007 per
Slide 38: Summary
Summary Barry Callebaut is the only fully vertically integrated chocolate company from the bean to the shelf and the world market leader Cost leadership – differentiated services – innovation are the drivers for growing twice as fast as the markets We have a strong focus on quality and on innovation
Slide 39: Question and answer session
Question and answer session X Thank you for your attention NOVEMBER 10, 2004 Barry Callebaut Annual Results Presentation 2003/04 – Media Conference 39