Barry Callebaut Ag · SIX:BARN
Barry Callebaut — FY2016/17 Earnings Presentation
50 slides from Barry Callebaut's earnings presentation, November 2017
Slide 1: Roadshow presentation - Full-Year Results 2016/17
Roadshow presentation - Full-Year Results 2016/17 November 2017
Slide 2: Agenda
Agenda BC at a glance Highlights FY 2016/17 Financial Review Strategy & Outlook Page 2 November 2017 FY 2016/17 Roadshow presentation
Slide 3: BC at a glance
BC at a glance November 2017
Slide 4: The heart and engine of the chocolate industry
Who are we? The heart and engine of the chocolate industry A merger between Cacao Barry, the very first chocolate connoisseur since 1842 and Callebaut a chocolate couverture manufacturer expert since 1911 Listed on the SIX Swiss Exchange since 1998 Today, the world's leading manufacturer of hi
Slide 5: We are present in the key parts of the cocoa and chocolate value chain
What do we do? We are present in the key parts of the cocoa and chocolate value chain Page 5 November 2017 FY 2016/17 Roadshow presentation
Slide 6: FY 2016/17
FY 2016/17 Page 6 November 2017 FY 2016/17 Roadshow presentation
Slide 7: A broad offering from standard to the most premium products
What do we offer? A broad offering from standard to the most premium products Cocoa Products Food Manufacturers Gourmet & Specialties Page 7 November 2017 FY 2016/17 Roadshow presentation
Slide 8: Our Regional and Product split
How are we organized? Our Regional and Product split FY 2016/17 Sales Volume: 1.9 million tonnes Sales Volume per Region Sales Volume per Product Group Gourmet & Asia Pacific Specialities 5% 12% Global Cocoa 23% Europe 45% Food Manu‐ facturers 65% Cocoa Products 23% Sales Revenue: CHF 6,805.2 mio. E
Slide 9: We apply a cost plus approach to the majority of the business
Our business model We apply a cost plus approach to the majority of the business Customers Pricing model Profit levers Food Manufacturers • Small, medium and • Cost Plus • Customer mix Global Food • Product mix Manufacturers • Economies of scale 65% Cocoa Products • Small, medium and • Market prices
Slide 10: A global footprint and a local service
A global footprint and a local service Cocoa factories in origin countries and chocolate factories close to our customers Cocoa processing factory Chocolate factory Integrated factory Page 10 November 2017 FY 2016/17 Roadshow presentation
Slide 11: Highlights FY 2016/17
Highlights FY 2016/17 November 2017
Slide 12: Change in the Executive Committee
FY results 2016/17 Change in the Executive Committee Generational change Victor Balli (born 1957) to retire as Chief Financial Officer effective February 28, 2018 after 11 successful years of service Victor Balli Remco J. Steenbergen (born 1968) appointed as new Chief Financial Officer and membe
Slide 13: Changes in the Board
Proposals to the AGM: Elections Changes in the Board Two Board members not standing for re-election Andreas Schmid, associated with Barry Callebaut since 1997 Wai Ling Liu, Board member since 2014 Andreas Schmid Elio Leoni Sceti proposed as new Board member About 25 years of experience in
Slide 14: Successful year, delivering on strategy
FY Results 2016/17 Successful year, delivering on strategy Sales volume growth Sales revenue growth (in local currencies) +4.4% +1.2% EBIT growth Net profit growth (Recurring and in local currencies) (Recurring and in local currencies) +17.8% +31.3% Free cash flow growth Dividend increase (in local
Slide 15: Highlights 2016/17
Highlights 2016/17 Mona Lisa as Barry Callebaut couples Acquisition of Extension of strategic Opening of first New Sustainability chocolate factory in strategy by 2025: decorations brand sustainability with its Ingredients Division of partnership with shifts to sustainably renewed banking credit Ger
Slide 16: Quarterly volume evolution
Quarterly volume evolution Top-line acceleration in Q3 and Q4 leading to an overall annual volume growth of +4.4% Quarterly volume growth vs prior year +9.2% FY growth 15/16 FY growth 16/17 +12.6% +2.2% +4.4% +5.5% +8.25 +0.3% +7.2% +3.5% +2.3% +4.9% +2.3% +3.8% +4.6% -8.6% -0.8% ‐0.4% +9.1% +8.1% +
Slide 17: Volume increase fueled by all our key growth drivers
FY Results 2016/17 Volume increase fueled by all our key growth drivers Volume growth vs prior year 34.5% Emerging markets +5.9% + 9.9% excl.Cocoa 34.1% Key growth Long‐term outsourcing drivers +9.3% & strategic to continuously partnerships outperform the market 11.7% Gourmet & +9.7% Specialties Pag
Slide 18: With good momentum in many key areas...
Expansion With good momentum in many key areas... Double-digit growth in key Driving long-term Strong growth of our emerging markets outsourcing & strategic Gourmet & Specialties partnerships business Page 18 November 2017 FY 2016/17 Roadshow presentation
Slide 19: Innovation: forefront of innovation, such as Ruby
Innovation We continue to be at the forefront of innovation, through breakthrough discoveries such as Ruby, the fourth type of chocolate... Page 19 November 2017 FY 2016/17 Roadshow presentation
Slide 20: Cocoa Leadership delivering on expectations
Cost Leadership Cocoa Leadership delivering on expectations Global steering Global harmonization Global design Combined ratio Customer segmentation Factory footprint optimized centralized management Cocoa product pricing methodology Factory organization setup Interregional product flow
Slide 21: Our focus on optimizing our cost base remains strong
Cost Leadership Our focus on optimizing our cost base remains strong, across several functional areas Defining, optimizing and aligning our processes end-to-end globally Cleaning and standardizing data Improving and aligning IT tools – Automation Centralization of day-to-day transactional ac
Slide 22: Forever Chocolate gaining momentum
Sustainability Forever Chocolate gaining momentum Achievements FY 2016/17 157,000 farmers 36% of our total cocoa beans 30% of non-cocoa raw -7,320 tonnes trained sourced sustainably materials sourced sustainably reduced of CO2 emissions Page 22 November 2017 FY 2016/17 Roadshow presentation
Slide 23: Financial Review
Financial Review November 2017
Slide 24: Successful year, delivering on our strategy
FY results 2016/17 Successful year, delivering on our strategy Group performance FY 2016/17 % vs prior year % vs prior year in (In CHF mio.) (in CHF) (in CHF) local currencies Sales Volume Total (in tonnes) 1,914,311 +4.4% Sales Revenue 6,805.2 +1.9% +1.2% Gross Profit 986.7 +14.3% +14.6% EBIT Total
Slide 25: All regions contributed to the strong results
FY Results 2016/17 All regions contributed to the strong results Group Sales Volume: 866,498 518,359 tonnes 1,914,311 tonnes tonnes 438,434 91,020 tonnes tonnes EMEA Americas Asia‐Pacific Global Cocoa FY volume growth +6.4% +2.2% +19.1% +0.4% EBIT growth in local currencies +9.8%* +9.2% +20.2% +272.
Slide 26: Gross profit up +14.3%
Gross Profit FY 2016/17 Gross profit up +14.3% driven by chocolate volume growth, better product and customer mix and strong improvement of our cocoa business In CHF mio +14.3% +57.7 986.7 -21.8 +49.1 +38.5 863.2 Gross Profit Volume effects Product/Customer Mix Cocoa Processing Additional costs due
Slide 27: Combined ratio remains favorable
Cocoa processing profitability Combined ratio remains favorable, driven by butter demand and lower cocoa bean prices European combined ratio - 6 months forward ratio FY 2016/17 4.00 Combined ratio 3.6 3.00 Butter ratio 2.00 1.00 Powder ratio 0.00 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-
Slide 28: Strong operating profit up +21.5% including non-recurring
EBIT FY 2016/17 Strong operating profit up +21.5% including non-recurring, +17.0% recurring In CHF mio +21.5% +17.0% +123.5 +18.1 488.2 -38.3 470.1 -27.0 401.7 +10.2 411.9 EBIT Restructuring & EBIT Additional Additional Other costs, EBIT Non-recurring EBIT FY 2015/16 other one-off FY 2015/16 Gross P
Slide 29: EBITDA to Net Profit
EBITDA to Net Profit Net Profit up +30.1% in CHF, as a result of strong profitability, lower financial expenses and a stable tax rate In CHF mio 638.1 Tax rate: 488.2 17.4% vs -149.9 PY: 17.8% +30.1% -121.6 302.9 -18.1 284.8 -63.6 219.0 EBITDA Depreciation EBIT Net Financial Income Net Profit One-of
Slide 30: Lower cocoa bean prices, milk powder and sugar above prior year
Raw materials price evolution Lower cocoa bean prices, milk powder and sugar above prior year FY average increase 300% vs. prior year 250% 200% Sugar world +16.5% Cocoa beans 150% ‐21.0% 100% Sugar EU +17.6% 50% Milk powder +12.6% 0% Sep/2007 Sep/2008 Sep/2009 Sep/2010 Sep/2011 Sep/2012 Sep/2013 Sep
Slide 31: Net Working Capital
Net Working Capital A decrease compared to prior year as a result of continued focus and tailwind from lower cocoa prices Receivables Stocks Payables in CHF mio. ‐17.8% +56 1,374 +71 +12 +28 1,130 -265 -96 -43 -7 Net Growth Price and Growth Operational Price Impact Growth Price impact Others and Net
Slide 32: Free Cash Flow
Free Cash Flow Strong free cash flow, based on higher profitability, lower working capital, stable interest and taxes paid, plus discipline on investments in CHF mio. +192.6 (PY +210.3) +14.9% 620.0 ‐139.8 (PY -140.8) 539.4 +23.2 +475.6 (PY +19.7) (PY +430.9) ‐220.4 (PY -201.0) EBITDA recurring EBIT
Slide 33: Positive development of all key financial ratios
Balance Sheet & key ratios Positive development of all key financial ratios Aug-17 Aug-16 Total Assets [CHF m] 5,534.1 5,640.8 Net Working Capital [CHF m] 1,129.5 1,374.2 Non-Current Assets [CHF m] 2,458.2 2,301.0 Net Debt [CHF m] 1,110.9 1,452.8 Shareholders' Equity [CHF m] 2,178.8 1,956.3 Debt/Equ
Slide 34: Proposed payout of CHF 20 per share, an increase of 29%
Dividend Proposed payout of CHF 20 per share, an increase of 29% 35% 39% 36%* Proposed dividend Payout ratio 33% 33% CHF 20.0 per share1 303 255 240 223 219 Payout of 36% of Net Profit Net Profit in CHF mio. Payout of 39% of recurring Net profit 2012/13 2013/14 2014/15 2015/16 2016/17 +38% Tim
Slide 35: Strategy & Outlook
Strategy & Outlook November 2017
Slide 36: Our long-term strategy remains unchanged
Our long-term strategy remains unchanged “Heart and engine of the Vision chocolate and cocoa industry” Expansion Sustainable growth Margin accretive growth 4 strategic Innovation ‘Smart Accelerated growth in Gourmet, pillars Growth’ Specialties and emerging markets Cost Leadership Return on Capital
Slide 37: Recent acquisitions underline focus on value-adding products
Expansion Recent acquisitions underline focus on value-adding products (Specialties) Acquisition of D’Orsogna Dolciaria Leading Italian supplier of decoration and inclusion solutions for ice- cream, dairy and bakery products in Europe Sales volume in 2016: 12,000 tonnes. Sales revenues of approx
Slide 38: Unleashing the power of our People
Talent & Teams Unleashing the power of our People A renewed Senior Leadership Combining continuity and adding new skills Preparing Talent for the Future Systematic accelerated succession planning Learning and Development as a business focus A Diverse Talent pool Reflecting society’s tr
Slide 39: Our focus areas in FY 2017/18
Our focus areas in FY 2017/18 Grow Competitively Expanding in emerging markets and drive long-term outsourcing agrements Greater focus on digital: e-commerce and customer portal Leading on innovation Grow Sustainably Scaling Forever Chocolate Invest in production capacity to cater for
Slide 40: Mid-term guidance confirmed and extended
Outlook Mid-term guidance confirmed and extended Outlook Current market environment remains positive, a more supportive cocoa products market and slightly improving demand for chocolate Mid‐term guidance extended until 2018/19: Average volume growth 4-6% EBIT growth on average above volume gro
Slide 41: Appendix
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Slide 42: What makes Barry Callebaut unique?
What makes Barry Callebaut unique? Global number one player in chocolate and cocoa Deep chocolate and cocoa expertise Global leader in Gourmet & Specialties Proven and long-term oriented strategy Unparalled global footprint, present in all key markets Preferred outsourcing and strategic
Slide 43: Chocolate confectionery market development – Nielsen data
Chocolate confectionery market development – Nielsen data North America (29% of market) Western Europe (41% of market) Eastern Europe (18% of market) 2012-16 average: -1.0% 2012-16 average: 0.0% 2012-16 average: -0.5% 2017 FY: +1.4% 2017 FY: -0.6% 2017 FY: -0.3% South America ( 5% of market) Asia Pa
Slide 44: Chocolate consumption per capita
Our market and opportunities ahead Global Chocolate confectionery volume growth vs cocoa bean price Growing economies with still low chocolate consumption per capita 5% 2500 Chocolate consumption per capita 5.5 Euro area 4% 2000 Russia 4.5 3% 1500 Volume growth GBP/tonne 3.5 USA 2% 1000 in kg. 1% 50
Slide 45: Barry Callebaut uniquely positioned in industrial chocolate and cocoa markets
Chocolate and Cocoa markets Barry Callebaut uniquely positioned in industrial chocolate and cocoa markets Cocoa grinding capacity Industrial chocolate – open market BC BC Cargill Cargill Olam Blommer Ecom Cocoa Fuji Oil Blommer Cémoi Guan Chong Puratos Mondelez Clasen BT Cocoa Irca Nestlé Schokinag
Slide 46: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer Total world harvest (15/16): 3,989 TMT others 12% About 70% of total cocoa beans Nigeria come from West Africa 5% Brazil* 3% BC processed ~900,000 tons or 23% Ivory Coast* of the world crop Cameroon* 39% 6% Barry Callebaut has various cocoa Ecu
Slide 47: 8-year EBIT per tonne development
8-year EBIT per tonne development Increase in EBIT per MT thanks to more favorable cocoa processing margin and improvement of product and customer mix 312 290 297 282 274 279 271 286 251 246 EBIT per tonne in CHF (at constant currencies) 256 219 242 EBIT per tonne in CHF 231 (as reported) 223 1’795
Slide 48: Capital Expenditures
12 months – CAPEX Capital Expenditures in CHF mio. +4.6% +4.2% +4.0% +3.0% +3.2% CAPEX as % of sales revenue 249 249 240 224 220 201 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 E Page 48 November 2017 FY 2016/17 Roadshow
Slide 49: Significant headroom for further growth and raw material price fluctuations
Significant headroom for further growth and raw material price fluctuations As of 31 August 2017 CHF 4,131 mio ABS CHF 960 mio Various uncommitted facilities ‐64% EUR 600 mio Domestic Commercial Paper Programme Various Bilateral LT Loans CHF 1,507 mio EUR 750 mio ABS Syndicated Bank Loan Maturity 20
Slide 50: Liquidity – Debt maturity profile
Liquidity – Debt maturity profile As of August 31, 2017 in CHF mio Uncommitted lines Committed lines Cash and revolving credit 857 facility (undrawn) Short-term facilities Bonds 157 507 399 375 283 183 3 3 Cash 2017 2018 2019 2020 2021 2022 2023 2024 Page 50 November 2017 FY 2016/17 Roadshow present