Barry Callebaut Ag · SIX:BARN
Barry Callebaut — Q1 2014/15 Earnings Presentation
34 slides from Barry Callebaut's earnings presentation, Jan 15, 2015
Slide 1: Roadshow presentation – Q1 2014/15
Roadshow presentation – Q1 2014/15 January 2015 January 2015
Slide 2: Agenda
Agenda BC at a glance Highlights Q1 2014/15 Strategy & Outlook Appendix Page 2 January 2015 Q1 2014/15 Roadshow presentation
Slide 3: Barry Callebaut at a glance
Barry Callebaut at a glance Business description Key figures • World leading producer and business-to-business supplier FY 2013/14 of chocolate and cocoa products • Fully integrated with strong position in cocoa-orign Sales Volume 1.7 mio. tonnes countries Sales Revenue CHF 5.8 bn • Serving the enti
Slide 4: Barry Callebaut is present in the key parts of the cocoa and chocolate value chain
From the cocoa bean to the chocolate and cocoa products Barry Callebaut is present in the key parts of the cocoa and chocolate value chain Cocoa Farming Barry Callebaut’s core activities Cocoa Sourcing Cocoa Origination Cocoa Processing Cocoa Beans 80% Cocoa Liquor ~54% ~46% Cocoa Powder Cocoa Butte
Slide 5: Favourable Industry Dynamics
Favourable Industry Dynamics Global growth prospects Outsourcing rationale for customers Average market growth in chocolate: 2 % in Free up capital to invest in marketing and volume per year distribution Influenced by population growth and increase Access to most recent innovation and new in
Slide 6: Our factories provide us manufacturing diversification and unique competitive advantage
Our 52 factories provide us manufacturing diversification and unique competitive advantage Cocoa processing factory Chocolate factory Integrated factory New factories Page 6 January 2015 Q1 2014/15 Roadshow presentation
Slide 7: 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 + ADM Olam + ADM Blommer Blommer ADM Mondelez Cemoi Guan Chong Puratos Ecom Cocoa Fuji Oil Nestlé IRCA Ferrero Gu
Slide 8: Agenda
Agenda BC at a glance Highlights Q1 2014/15 Strategy & Outlook Appendix Page 8 January 2015 Q1 2014/15 Roadshow presentation
Slide 9: Start well ahead of the global market
Q1 2014/15 Start well ahead of the global market Europe Americas Asia Pacific Global Cocoa Volume growth 0.8% +0.2% +9.3% -1.8% Underlying market -2.0% -2.0% +0.8% -1.8% volume growth 1 1) Source: Nielsen data – Chocolate Confectionery market (Sep 2014- Nov 2014); Top 16 countries represent approx.
Slide 10: Cocoa bean price still at relatively high levels, other raw materials below prior year
Raw materials evolution Cocoa bean price still at relatively high levels, other raw materials below prior year Q1 14/15 Q1 vs. prior 300% year 250% Cocoa beans 200% +14% Sugar world 150% -7% 100% Sugar EU -26% 50% Milk powder -37% 0% Sep.2007 Sep.2008 Sep.2009 Sep.2010 Sep.2011 Sep.2012 Sep.2013 Sep
Slide 11: Cocoa combined ratio still under pressure, due to overcapacity in the industry
Cocoa processing profitability Cocoa combined ratio still under pressure, due to overcapacity in the industry European combined cocoa ratio – 6-month forward 4.00 Combined ratio 3.00 2.84 Jan 2, 2015 Butter ratio 2.00 1.00 Powder ratio 0.00 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan
Slide 12: Agenda
Agenda BC at a glance Highlights Q1 2014/15 Strategy & Outlook Appendix Page 12 January 2015 Q1 2014/15 Roadshow presentation
Slide 13: Our proven four-pillar strategy is the basis for our long-term business success
The Barry Callebaut Group’s growth strategy Our proven four-pillar strategy is the basis for our long-term business success “Heart and engine of the Vision chocolate and cocoa industry” Expansion Sustainable, 4 strategic Innovation profitable pillars growth Cost Leadership Sustainable Cocoa Page 13
Slide 14: Our expansion continues along the three key growth drivers
FY 2013/14 Our expansion continues along the three key growth drivers Emerging Markets Long-term outsourcing & Gourmet & Specialties Strategic partnerships Volume growth +18.3% vs prior year* +8.7 % vs prior year +7.3 % vs prior year CAGR 5 year +14.8%* +28.2% +8.7 % Volume 33% % of total Group 21%
Slide 15: We will further refine our focus with 6 shaping initiatives
The Barry Callebaut Group’s growth strategy We will further refine our focus with 6 shaping initiatives 1 3 5 Outsourcing & Product & Operational Partnerships service Excellence 2.0 differentiation Expansion Innovation Cost Leadership Sustainable Cocoa 2 4 6 Leadership in Compound & One Company coco
Slide 16: Untapped growth potential in different dimensions
Key growth drivers Untapped growth potential in different dimensions Emerging Markets Long-term outsourcing & Gourmet & Specialties Strategic partnerships • New factories in Chile, • 51% of industrial chocolate • Expand into new markets/ Turkey, India still captive market increase distribution point
Slide 17: Sustainable Cocoa
Sustainable Cocoa Aligning our sustainability strategy and activities with CocoaAction Sustainable Cocoa Innovation, Implementation, Impact Productivity Community - Farmer Training - Education - Inputs - Child Protection - Planting - Women’s Material - Financing Empowerment Solutions - Health KPIs P
Slide 18: Long-term and continued strong volume and EBIT growth
5-year development Long-term and continued strong volume and EBIT growth Sales Volume CAGR +9.1% Acquired Cocoa business BC stand-alone 09/10 10/11 11/12 12/13 13/14 EBIT CAGR +8.4% Currency effects (cumulated) Acq. Cocoa business BC stand-alone (before FX impact) 09/10 10/11 11/12 12/13 13/14 Page
Slide 19: Improved EBIT per tonne driven by stronger focus on profitability
5-year EBIT per tonne development Improved EBIT per tonne driven by stronger focus on profitability, despite low combined cocoa ratio 312 +9.3% 282 290 EBIT per tonne in CHF 274 (at constant currencies) 282 286 251 EBIT per tonne in CHF 256 (as reported) 242 223 +9.1% 1’717 Volume in kMT 1’378 1’536
Slide 20: Significant investments for growth, while still focusing on high returns
10-year development Significant investments for growth, while still focusing on high returns (CHF mio.) 21% 19% 20% 20% ROE target 20% 19% 19% 18% 18% 16% 15% 14% 14% 15% 15% ROIC target 15% 14% 14% 14% 13% 14% ROE 11% 11% 11% ROIC 250 249 218 224 200 CAPEX 153 144 145 145 102 115 90 2003/04 2004/05
Slide 21: Cash flow generation despite fast volume growth and expansion
Cash flow generation despite fast volume growth and expansion, which also translated into high return to shareholders in CHFm Total return to 696% shareholders 522% 502% 436% 411% 337% 324% 279% 161% 47% 69% 0% -2% CAGR 12.7% 480 474 458 455 451 434 418 407 348 313 Cash Flow 252 228 116 2002 2003 20
Slide 22: Our key focus areas going forward
Outlook FY 2014/15 Our key focus areas going forward Drive further expansion along our three key growth drivers Outsourcing & Partnerships Gourmet Emerging markets Continued focus on margins, tighter cost control, stronger discipline in CAPEX and cash flow generation Further implement HR
Slide 23: Challenging environment, confident to achieve mid-term guidance
Outlook & Guidance Challenging environment, confident to achieve mid-term guidance Market / industry outlook Long-term growth in chocolate and cocoa powder remains intact Significant growth opportunities Challenging environment in emerging markets, as well as in Europe Mid-term Guidance*
Slide 24: Appendix
BARRY ((}}) CALLEBAUT Appendix
Slide 25: What makes Barry Callebaut unique?
What makes Barry Callebaut unique? Global number one player focused in chocolate and cocoa Global leader in Gourmet Proven and long-term oriented strategy Unparalled global footprint, present in all key markets Preferred outsourcing and strategic partner Leading and growing presence in e
Slide 26: Sales Revenue split per currency – FY 2013/14
Sales Revenue split per currency – FY 2013/14 Others 12% CHF 1% EUR USD 52% 35% * Others include: Canadian Dollar, Brazilian Real, Japanese Yen, Russian Ruble, Chinese Yuan, Swedish Krona, Indian Rupee ,etc Page 26 January 2015 Q1 2014/15 Roadshow presentation
Slide 27: 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 (13/14): 4’345 TMT others 8% About 70% of total cocoa beans Ecuador come from West Africa 5% Brazil* 5% Ivory Cameroon BC processed ~940,000 tonnes or Coast* 22% of the world crop * 40% 5% Nigeria 6% Bar
Slide 28: Dividend increased to CHF 15.50 per share – up 6.9%
Dividend Dividend increased to CHF 15.50 per share – up 6.9% Total payout to shareholders Proposed dividend CHF 15.50 per share1, up 6.9% in CHF mio. Payout of 34% of Net Profit CAGR 4.2% 85 Not subject to withholding tax2 80 80 80 72 Timetable for dividend Shareholder approval: Dec 10, 2014
Slide 29: Enough headroom for further growth and raw material price fluctuations
Available Financing Enough headroom for further growth and raw material price fluctuations As of 31 Aug 2014 CHF 3,287 mio. CHF 730 mio. Various Short term uncommitted facilities 36.2% Program size increased to EUR 400 mio. EUR 600 mio Domestic Commercial (Oct 2014) Paper Programme CHF 2,100 mio. 3-
Slide 30: Capital Expenditures
Capital Expenditures in CHF mio. +4.5% +4.6% +4.2% CAPEX as % of sales revenue Average = 3.9% +3.2% +3.2% 249 218 224 200 174 Additional growth 145 IT Upgrade / efficiency gains existing sites Maintenance 2009/10 2010/11 2011/12 2012/13 2013/14 PLAN 2014/15 Page 30 January 2015 Q1 2014/15 Roadshow p
Slide 31: A big leap in sales volume and profit
FY 13/14 A big leap in sales volume and profit Group performance FY 2013/14 % vs prior year (in CHF) (in CHF) Sales Volume Total 1,716,766 +11.8% (in tonnes) Sales Volume stand-alone 1,541,654 +2.9% (in tonnes) EBIT Total 416.2 +21.4% EBIT per tonne 242.4 +8.5% EBIT stand-alone 392.8 +5.6% EBIT per
Slide 32: Strong focus on enhancing profitability and positive contribution from acquired business
EBIT Strong focus on enhancing profitability and positive contribution from acquired business in CHF mio. +21.4% +7.6% +94.6 +27.8 416.2 -30.0 400.5 +29.2 372.1 -3.3 -8.8 342.9 -36.2 EBIT Petra Foods EBIT Additional Additional Add. Costs, EBIT Petra Foods Additional Negative EBIT FY 2012/13 Cocoa st
Slide 33: Cash Flow negatively affected by higher raw material prices
Cash Flow Cash Flow negatively affected by higher raw material prices in CHF mio. +5.0% 474 451 -279 +272 17 -249 -142 +21 -80 Operating Operating Investment Capital Interest paid Dividend CF from Cash flow Net increase in Cash Flow* Cash Flow* in Working Expenditures and income & Capital acquisitio
Slide 34: Higher working capital led to higher debt and lower key ratios
Balance Sheet & key ratios Higher working capital led to higher debt and lower key ratios Aug 14 Aug 13 Total Assets [CHF m] 5,167.5 4,526.9 Net Working Capital [CHF m] 1,674.6 1,345.7 Non-Current Assets [CHF m] 2,175.6 2,071.9 Net Debt [CHF m] 1,803.5 1,525.2 Shareholders' Equity [CHF m] 1,790.7 1,