Barry Callebaut Ag · SIX:BARN
Barry Callebaut — 9M 2017/18 Earnings Presentation
42 slides from Barry Callebaut's earnings presentation, July 2018
Slide 1: Roadshow presentation – 9-Month Key Sales Figures 2017/18
Roadshow presentation – 9-Month Key Sales Figures 2017/18 July 2018 New picture Marika
Slide 2: Agenda
Agenda BC at a glance Highlights 9M 2017/18 Strategy & Outlook Page 2 July 2018 9M 2017/18 Roadshow Presentation
Slide 3: BC at a glance
BC at a glance New picture Marika July 2018
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 French chocolate connaisseur since 1842 and Callebaut a Belgian chocolate couverture manufacturer expert since 1911 Listed on the SIX Swiss Exchange since 1998 Today, the world's leading man
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 July 2018 9M 2017/18 Roadshow Presentation
Slide 6: FY 2016/17
FY 2016/17 Page 6 July 2018 9M 2017/18 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 July 2018 9M 2017/18 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: 55 factories worldwide
Where are we present? A global footprint and a local service: 55 factories worldwide Cocoa factories in origin countries and chocolate factories close to our customers Cocoa processing factory Chocolate factory Integrated factory Page 10 July 2018 9M 2017/18 Roadshow Presentation
Slide 11: Highlights 9M 2017/18
Highlights 9M 2017/18 July 2018
Slide 12: Good momentum continued
9-Month Key Sales Figures 2017/18 Good momentum continued Sales volume growth +6.9%, supported by all key growth drivers and all regions EMEA volume +8.1% Americas volume +5.3% Asia Pacific volume +14.8% Global Cocoa volume +4.9% Sales revenue of CHF 5.2 billion, -2.4% in local currencie
Slide 13: Broad-based volume growth, significantly above the market
9-Month Key Sales Figures 2017/18 Broad-based volume growth, significantly above the market 9M volume growth vs prior year (in Tonnes) +4.9% +6.9% +14.8% 15,876 +5.3% 10,229 +8.1% 19,972 52,122 1,512,853 1,414,654 1,414,654 Group 9M Region EMEA Region Americas Region Asia Pacific Global Cocoa Group
Slide 14: Ongoing good volume growth in the first nine months of FY 2017/18
9-Month Key Sales Figures 2017/18 Ongoing good volume growth in the first nine months of FY 2017/18 Quarterly volume growth vs prior year FY growth 15/16 FY growth 16/17 9M growth 17/18 +2.2% +4.4% +6.9% +4.8% +8.1% +2.3% Chocolate (FM and Gourmet & Spec.) +8.0% +4.8% +5.5% Global Cocoa +7.4% +9.0%
Slide 15: Volume growth supported by all our key growth drivers
9-Month Key Sales Figures 2017/18 Volume growth supported by all our key growth drivers % of total Group volume Volume growth vs prior year 35.4% Emerging markets +8.8% Key growth 33.5% Long-term drivers outsourcing +8.1% & strategic crucial to partnerships continuously outperform the market 12.3% G
Slide 16: Combined ratio remains favourable for 9M 2017/18
Cocoa processing profitability Combined ratio remains favourable for 9M 2017/18 European combined ratio - 6 months forward ratio 4.00 Combined ratio 3.6 3.00 Butter ratio 2.00 1.00 Powder ratio 0.00 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 For cocoa process
Slide 17: Lower prices of main raw materials, cocoa bean prices volatile
Raw materials price evolution Lower prices of main raw materials, cocoa bean prices volatile 3 9M average increase vs. prior year 2.5 2 Sugar world 1.5 -27.6% Cocoa beans -12.2% 1 Milk powder -26.7% 0.5 Sugar EU -28.2% 0 Jun.2008 Jun.2009 Jun.2010 Jun.2011 Jun.2012 Jun.2013 Jun.2014 Jun.2015 Jun.201
Slide 18: Strategy & Outlook
BARRY ((}]) CALLEBAUT Strategy & Outlook
Slide 19: Consistent long-term strategy, continued focus on execution
Consistent long-term strategy, continued focus on execution “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
Slide 20: Focus on further commercializing our innovations and expanding our value-adding portfolio
Focus on further commercializing our innovations and expanding our value-adding portfolio across all our Product Groups Gourmet & Specialties Food Manufacturers Global Cocoa • Callebaut Gold, leveraging • Global approach to Specialties • Continued focus on on our global R&D and and Decorations, leve
Slide 21: Continuous progress made in Sustainability
Continuous progress made in Sustainability First progress report published December 2017 36% of sustainable cocoa 98% of our palm oil is traceable to mill level Signatory to the Cocoa & Forest Initiative Framework for Action in November 2017 Forever Chocolate Pilots Purpose is to acceler
Slide 22: Going digital with customer focus
Going digital with customer focus Online Chocolate Academy Offer expert chocolate education for chefs, by chefs. Interactive video courses – techniques – recipes – community Go-live in Summer 2018 Customer portal With the “My BC” customer portal, we will offer an improved experience throug
Slide 23: Operational excellence across different functions to drive efficiencies
Operational excellence across different functions to drive efficiencies and value added activities FOX Focus on harmonization and automation of Finance key processes Definition of an operating model for Finance that allows resources to focus on business partnering Clear roles and career paths
Slide 24: Integration of bolt-on acquisitions in process
Integration of bolt-on acquisitions in process Integration of D’Orsogna Dolciaria in process Part of Region EMEA as of Oct 2017 Capabilities: Multiple technologies (some patented), highly flexible and tailor-made product offering Products: amaretti, meringues, cookies, glazings, toppings, in
Slide 25: Outlook: mid-term guidance confirmed
Outlook Good portfolio visibility and diligent execution of “smart growth” strategy. Mid-term guidance confirmed Outlook We continue to see healthy market dynamics, despite volatile cocoa bean prices. We have good visibility on our portfolio. Mid-term guidance (2015/16 – 2018/19) confirmed Avera
Slide 26: Appendix
Appendix July 2018
Slide 27: 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 28: Chocolate confectionery market development – Nielsen data
Chocolate confectionery market development – Nielsen data North America (22% of market) Western Europe (33% of market) EEMEA (24% of market) 2012-17 average: +0.1% 2012-17 average: 0.0% 2012-17 average: -0.6% 2018 9M: -0.4% 2018 9M: -0.1% 2018 9M: +8.4% South America ( 7% of market) Asia Pacific (14
Slide 29: 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 30: 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 Notes: Olam incl. ADM; Cargill incl. ADM chocolate business; Fuji Oil incl. Harald Sources: Proprietary estimates Page 30 July 2018 9M
Slide 31: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer Total world harvest (16/17): 4,748 TMT others 11% About 70% of total cocoa beans come Nigeria from West Africa 5% Brazil* 4% BC processed ~925,000 tonnes or Ivory Coast* approximately 20% of the world crop Cameroon* 43% 5% Barry Callebaut has v
Slide 32: Strong volume growth translates into a significant improvement of bottom-line performance
HY Results 2017/18– Financial Key Figures Strong volume growth translates into a significant improvement of bottom-line performance Group performance HY 2017/18 % vs prior year % vs prior year (in CHF mio.) (in CHF) (in CHF) (in local currencies) Sales volume Total (in tonnes) 1’022’565 +8.0% Sales
Slide 33: All regions contributed to the strong performance in the first six months
HY Results 2017/18– Regions Key Performance Indicators All regions contributed to the strong performance in the first six months Group Sales Volume: 471’120 265’904 tonnes 1’022’565 tonnes tonnes 231’420 54’121 tonnes tonnes EMEA Americas Asia-Pacific Global Cocoa FY volume growth +9.6% +5.5% +15.5%
Slide 34: Gross Profit HY 2017/18
Gross Profit HY 2017/18 Gross Profit up +15.5% before FX impact, driven by strong volume, good product and customer mix and a more supportive market environment in CHFmio +15.5% +30.3 +17.2 553.0 535.8 +28.8 -15.2 +27.9 464.0 Gross Profit Volume Product/Customer Cocoa Additional Gross Profit FX Impa
Slide 35: EBIT HY 2017/18
EBIT HY 2017/18 Steep increase in operating profit up +20.6% on a recurring basis and before FX impact in CHFmio +16.1% +20.6% +71.8 +9.0 276.8 267.8 238.4 -26.1 222.1 -16.3 EBIT Non-recurring EBIT Additional Additional EBIT FX Impact EBIT HY 2016/17 HY 2016/17 Gross Profit SG&A, scope, HY 2017/18 H
Slide 36: Net Profit up +37.5% in CHF
EBITDA to Net Profit Net Profit up +37.5% in CHF, as a result of strong profitability and lower financial expenses In CHF mio 359.4 Tax rate: 24.0% vs PY 19.5%. 276.8 Excl. Tax reform one-time impact 82.6 ETR would be 19.5% 49.2 10.1 +37.5% 173.0 -54.6 16.3 142.1 125.8 EBITDA Depreciation EBIT Finan
Slide 37: Robust Free Cash Flow generated from higher profitability
Free Cash Flow – 12-month Rolling Robust Free Cash Flow generated from higher profitability, lower working capital requirements and discipline on Capital Expenditures in CHF mio. +225 (PY -43) +18.9% 688 -168 (PY -148) +31 547 578 (PY +11) (PY +315) -229 (PY -207) EBITDA reported EBITDA reported Cha
Slide 38: Solid Balance Sheet, focus on improvement of key financial ratios
HY Results 2017/18– Financial Key Figures Solid Balance Sheet, focus on improvement of key financial ratios (in CHF mio) Feb-18 Aug-17 Feb-17 Total Assets 6,187 5,534 5,912 Net Working Capital 1,175 1,130 1,398 Non-Current Assets 2,547 2,458 2,378 Net Debt 1,208 1,111 1,455 Shareholders’ Equity 2,21
Slide 39: Increase in EBIT per MT thanks to more favorable cocoa processing margin
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 40: 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 40 July 2018 9M 2017/18 Roadshow Pres
Slide 41: Enough headroom for further growth and raw material price fluctuations
Enough headroom for further growth and raw material price fluctuations As of February 28, 2018 CHF 4,147mio ABS CHF 959 mio Various uncommitted facilities -61% EUR 600 mio Domestic Commercial Paper Programme Various Bilateral LT Loans CHF 1,600 mio EUR 750 mio ABS Syndicated Bank Loan Maturity 2022
Slide 42: Liquidity – Debt maturity profile
Liquidity – Debt maturity profile As of February 28, 2018 in CHF mio Uncommitted lines Committed lines Cash and revolving credit 862 facility (undrawn) Short-term facilities Bonds 212 510 352 368 285 172 3 2 Cash 2018 2019 2020 2021 2022 2023 2024 Page 42 July 2018 9M 2017/18 Roadshow Presentation