Barry Callebaut Ag · SIX:BARN
Barry Callebaut — 9M 2012/13 Earnings Presentation
41 slides from Barry Callebaut's earnings presentation, July 2013
Slide 1: Roadshow presentation – 9 months key sales figures 2012-13
Barry Callebaut Roadshow presentation – 9 months key sales figures 2012-13 July 2013
Slide 2: Agenda
Agenda • BC at a glance • Highlights 9 months 2012-13 • Acquisition of Petra Foods Cocoa Ingredients Division • Financial Performance • Concluding Remarks July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 2
Slide 3: Barry Callebaut at a glance
Barry Callebaut at a glance FY 2011/12 • Founded in 1996 via the combination of the Sales volume = 1.4 million tonnes Belgian chocolate producer Callebaut and the French chocolate company Cacao Barry • World leader in high-quality cocoa and Asia-Pacific chocolate products and outsourcing / 4% Global
Slide 4: Present in all stages of the industrial chocolate value chain
Barry Callebaut is present in all stages of the industrial chocolate value chain Cocoa plantations Cocoa Beans Barry Callebaut’s Cocoa Liquor core activities Cocoa Powder Cocoa Butter + Sugar, + Sugar, Milk, + Sugar, Milk, Milk, others fats, others others Powder mixes Compound & Chocolate Couverture
Slide 5: Robust business model underpins earnings stability…
Robust business model underpins earnings stability… Barry Callebaut business model 10% 20% Price list Combined ratio / Partly cost plus Sales Volume 70% Cost plus Cost Plus model – pass-on the cost of raw materials to customers July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 5
Slide 6: …by mitigating volatility impact of main raw materials
…by mitigating volatility impact of main raw materials Historical evolution % of total BC raw material costs 300% 250% 55% Cocoa beans 200% 150% 14% Sugar 100% 12% Milk Powder 7% Fats 50% 12% Others Note: All figures are indexed to Aug 2006. Source: Sugar world London n°5 (2nd position), Sugar EU Ki
Slide 7: Our Strategy
Our Strategy Vision “Heart and engine of the chocolate industry” Expansion Innovation Sustainable, Strategic profitable pillars growth Cost leadership Sustainable Cocoa July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 7
Slide 8: Expansion based on key growth drivers
Expansion Expansion based on key growth drivers FY 2011/12 Geography % of total Group Volume • Consolidation in mature markets 24% Emerging Markets • Achieve full potential in recently entered emerging markets • Further expand in new emerging markets Outsourcing & Strategic Partnerships • Strengthen
Slide 9: Global manufacturing footprint provides diversification and competitive advantage
Expansion Global manufacturing footprint provides diversification and a unique competitive advantage Thimister, Belgium Chekhov, Russia Lebbeke-Wieze, Belgium Heule-Kortrijk, Belgium Nuth, The Netherlands Zundert, The Netherlands Banbury, UK Mjolby, Sweden St Helens, UK Kagerod, Sweden Chester, UK L
Slide 10: Increasing market share through outsourcing and strategic partnership agreements
Expansion Expansion Increasing market share through long-term outsourcing and strategic partnership agreements C + Ch deal 2006-07 Nestlé Cadbury Schweppes Hershey Morinaga (September (February 2007) (June 2007) (April 2007) 2007) C + Ch C + Ch C + Ch deal deal deal 2010-11 ex-Kraft Foods Green Moun
Slide 11: Outsourcing trend provides clear growth opportunity
Expansion Expansion Outsourcing trend provides clear growth opportunity Global Industrial Chocolate market in 2011/12 = 6,100,000 tonnes* Open market Captive market Competitors Big 4 chocolate confectionary Others players Others 40% 48% 52% The Open Market continues to grow in share * BC estimates.
Slide 12: Gourmet – strong focus on growth acceleration
Expansion Expansion Gourmet – strong focus on growth acceleration • Gourmet & Specialty business represents 10% of our total sales, but stronger EBIT contribution • Highly fragmented market with different segments (Bakery, HORECA, Confectioners) • Two global premium brands Callebaut® and Cacao Barry
Slide 13: Focus and investments in Gourmet drove double-digit growth
As a result of our focus and recent investments Expansion in the Gourmet business, we grew double-digit top and bottom-line Group Gourmet Business (excluding Beverages) CAGR +10% Volume 2008/09 2009/10 2010/11 2011/12 CAGR +11% EBIT in constant currencies (2008/09) 2008/09 2009/10 2010/11 2011/12 Ap
Slide 14: Focus on R&D drives further growth while defending market leadership
Innovation Innovation Focus on R&D drives further growth while defending market leadership Fully loaded portfolio of future facing Innovations… Enjoy Superior Navigating Health & Making a difference As real as we can get Make it easy Sensorics Nutrition Nut pastes Cocoa Nibs Origin Cocoa Bake Stable
Slide 15: Maintaining cost leadership through our key initiatives
Cost leadership Maintaining cost leadership through our key initiatives • Continuously improving our operational and cost efficiency by: • upgrading our technology and achieving higher scale effects through better capacity utilization • optimizing product flows, logistics and inventory management •
Slide 16: Increased investments to secure cocoa supply and improve farmer livelihoods
Sustainable cocoa Increased investments to secure sufficient cocoa supply and to improve farmer livelihoods Long-term threats Our latest actions • Lack of sufficient quantity Farmer Practices Farmer Education Farmer Health and quality of cocoa beans Aim: double yield Aim: develop next Aim: improve t
Slide 17: Agenda
Agenda • BC at a glance • Highlights 9 months 2012-13 • Acquisition of Petra Foods Cocoa Ingredients Division • Financial Performance • Concluding Remarks July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 17
Slide 18: Highlights Q3 2012/13
Highlights Q3 2012/13 • Strong volume growth: +8.2% • Growth driven by strategic partnerships, emerging markets and Gourmet • Significant strategic step: successful closing of the acquisition of Petra Foods’ Cocoa Ingredients Division • Growth targets as of consolidation confirmed July 2013 Barry Ca
Slide 19: Global chocolate confectionery market grew +1.9% in the last 9 months
Market development Global chocolate confectionery market grew +1.9% in the last 9 months 9 Months Sep-May 2013 (in 1,000 tonnes)1 Chocolate Confectionery volume growth +1.9% +1.9% -1.2% 2011/12 +2.8% 2012/13 -1.8% 0.9% +13.7% +25.0% USA Western Italy Eastern Brazil China India Europe Europe 1) Sourc
Slide 20: Growth driven by outsourcing, emerging markets and Gourmet
Growth driven by outsourcing, emerging markets and Gourmet Sales Volume per Region – 9 months 2011/12 Europe +5.7% • Western Europe performed very well against the background of a still challenging market environment • The Gourmet & Specialties Products business showed high single digit growth in Q3
Slide 21: Continued decline in powder prices offset by butter ratios
Cocoa processing activity Continued decline in powder prices offset by butter ratios European combined ratio - 6 months forward ratio FY 2012/13 4.00 Combined ratio 3.38 – June 13 3.00 Butter ratio 2.00 Powder ratio 1.00 0.00 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-
Slide 22: Agenda
Agenda • BC at a glance • Highlights 9 months 2012-13 • Acquisition of Petra Foods’ Cocoa Ingredients Division • Financial Performance • Concluding Remarks July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 22
Slide 23: Petra Foods Cocoa Ingredients Division – company overview
Petra Foods Cocoa Ingredients Division – company overview United States France Netherlands Germany Global cocoa business with exposure to emerging markets • Largest cocoa products supplier in Asia-Pacific with around 1,800 employees Philippines • Sales volume of 255,872 tonnes, Thailand sales revenu
Slide 24: Petra Foods acquisition supports our core strategy
Petra Foods Cocoa Ingredients division acquisition supports our core strategy Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate business supporting the company’s overall growth • Supporting further chocolate growth by stepping up the integrated cocoa sourcing and processin
Slide 25: The acquisition increases our strength in high growth markets
The acquisition increases our strength in high growth markets Higher demand for product Cocoa Powder demand driven categories containing powder by emerging markets CAGR (11-16F) Annual growth rate 2 -5 % 20 5-9% 3-8% Powder 2-4% Annual growth in volume (‘000 MT) 0-3% 1-2% Asia- South EU North Pacifi
Slide 26: Numerous sources of synergies identified
Numerous sources of synergies identified Optimized Sourcing and Optimization of available 1 product flows capacity 5 • Reduce transportation / logistics • Utilization of complementary costs through a more efficient “pockets of excess capacity” in utilisation of the combined network the Petra Foods C
Slide 27: Ability to leverage clear leadership positions to capitalize on growth
Expansion Ability to leverage clear leadership positions to capitalize on growth opportunities • Barry Callebaut is the largest global industrial chocolate supplier Cocoa Grinding Capacity Industrial chocolate – Open market Barry Callebaut + Petra Foods Barry Callebaut Cocoa Ingredients Division* Ca
Slide 28: Upcoming integration milestones – Petra Cocoa Ingredients' acquisition
Upcoming integration milestones – Petra Cocoa Ingredients’ acquisition 2013 2014 2015 16 17 Closing of the transaction (June 30th 2013) Full route-to-market implementation Commercial Finalize full org structure Organization Implement shared & Human services between cocoa Resources and chocolate Bene
Slide 29: Agenda
Agenda • BC at a glance • Highlights 9 months 2012-13 • Acquisition of Petra Foods Cocoa Ingredients Division • Financial Performance • Concluding Remarks July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 29
Slide 30: Key Figures Barry Callebaut
Key Figures Barry Callebaut FY ending August HY ending February FY 2009/10 FY 2010/11 H1 2011/12 [CHFm] FY 2011/12 H1 2012/13 (restated) (restated) (restated) Sales volume [in tonnes] 1'209'654 1'268'925 1'378'856 691'061 745'256 % growth 4.9% 8.7% 7.6% 7.8% Sales revenue 4'525 4'460 4'830 2'450 2'3
Slide 31: Strong volume growth over the last 5 years and EBIT per tonne maintained
Strong volume growth over the last 5 years and EBIT per tonne maintained, excluding negative FX impact Group development 336 308 312 297 297 303 EBIT (CHF) / tonne* 297 at constant currencies 289 282 286 256 EBIT (CHF) / tonne as reported 233 CAGR +7.6% 1.3 1.4 1.2 1.0 1.1 Volume (MTm) 0.7 from cont
Slide 32: Committed to long-term volume growth, improving ROE and ROIC
Committed to long-term volume growth, while improving our return on equity and on invested capital 21% 20% 20% ROE target 20% 19% 19% 19% 18% 18% ROE 16% 15% 14% 14% ROIC target 15% 14% 14% 14% 14% 14% 14% ROIC 13% 11% 10% 10% 250 218 CAPEX 153 144 145 145 115 102 90 74 69 2001/02 2002/03 2003/04 20
Slide 33: Key Figures Petra Foods Cocoa Ingredients Division
Key Figures Petra Foods Cocoa Ingredients Division • Estimated annual synergy [USDm] FY 2011 FY 2012 potential for Barry Callebaut will amount to CHF 30 to 35m Sales volume [in tonnes] 265'053 255'872 at EBIT level resulting from: % growth (3.5%) • Optimizing sourcing and product flows Sales revenue
Slide 34: Working capital is mostly composed of highly liquid inventories
Working capital is mostly composed of highly liquid inventories in mCHF Barry Callebaut standalone Petra Foods Cocoa Ingredients Division 1'218 1'054 1'045 1'039 1'026 965 888 * 454 H1 2009/10 FY 2009/10 H1 2010/11 FY 2010/11 H1 2011/12 FY 2011/12 H1 2012/13 FY 2012 (Feb) (Aug) (Feb) (Aug) (Feb) (Au
Slide 35: 10 Reasons to invest in Barry Callebaut
10 Reasons to invest in Barry Callebaut • World leader in high-quality cocoa and chocolate products • Cost Leadership along the entire value chain with a continuous improvement structure • Leader and growing presence in emerging markets • World’s largest supplier of Gourmet chocolate for artisanal c
Slide 36: Appendix
Appendix July 2013 Barry Callebaut - Roadshow Q3 figures 2012-13 36
Slide 37: West Africa is the world's largest cocoa producer – BC sources locally
West Africa is the world’s largest cocoa producer – BC sources locally Total world harvest (11/12): 3’962’000 MT X About 70% of total cocoa beans others come from West Africa 9% Ecuador 5% X BC processed ~603,000 tonnes of Brazil* Ivory cocoa beans or 15% of total world 5% Coast* harvest 39% Cameroo
Slide 38: Impact from investments in future growth
Impact from investments in future growth Future volume growth requires: Investing cycle for future growth • Additional production capacity: lower utilization and higher fixed costs at the beginning Volume (MT) • Additional overhead, such as QA, planning and supply chain management, customer service,
Slide 39: Stable long term financing offering enough headroom for future growth
Stable long term financing offering enough headroom for future growth and improved duration CHF 1,842 mln 38% CHF 17m other LT facilities Pro Forma as per 28/February/2013 EUR 600m CHF 1,140 mln Syndicated Bank Loan due 2016 (12 banks) CHF 17m other LT debt EUR 25m Synd. Loan EUR 250m EUR 250m 5.375
Slide 40: Capex investments support the growth of our business
Capex investments support the growth of our business in mCHF 5.2% CAPEX as % of sales revenue 4.4% Average = 3.8% 3.3% 250 3.0% 2.8% 218 190 174 144 145 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 PLAN July 2013 Barry Cal
Slide 41: Ongoing investments, stable Balance Sheet and financial ratios
Balance Sheet Ongoing investments, stable Balance Sheet and financial ratios Change Feb 13 Feb 12 in % Total Assets [CHF m] -8.2% 3'556.0 3'875.7 Net Working Capital [CHF m] -1.8% 1'026.2 1'045.1 Non-Current Assets [CHF m] 10.0% 1'488.4 1'353.1 Net Debt [CHF m] 2.9% 993.9 965.5 Shareholders' Equity