Barry Callebaut Ag · SIX:BARN
Barry Callebaut — H1 2008/09 Earnings Presentation
42 slides from Barry Callebaut's earnings presentation, April 2009
Slide 1: Half-year results 2008/09 Roadshow presentation
Half-year results 2008/09 Roadshow presentation April 2009 April 2009 Barry Callebaut H1 08/09
Slide 2: Cautionary note
Cautionary note 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 Barry Callebaut are of a forward
Slide 3: Agenda
Agenda X Barry Callebaut company overview X Highlights H1 2008/09 X Financial and operational performance X Outlook April 2009 Barry Callebaut H1 08/09 3
Slide 4: Active along the entire cocoa and chocolate value chain
Barry Callebaut is active along the entire cocoa and chocolate value chain Cocoa Semi-finished Products Chocolate Products Sugar 100% Retail Milk customers Other Consumer Products Liquor for Chocolate via Industrial Shells/ 27% chocolate Couverture customers waste 50% Butter Artisanal 100% customers
Slide 5: Barry Callebaut at a glance
Barry Callebaut at a glance Barry Callebaut FY 2007/08 Net revenue: CHF 4.8 bn X World leader in high-quality cocoa and chocolate products and outsourcing partner of choice, with over 40% share in the industrial chocolate market 11 %Cocoa Consumer 23Products % 13% X World’s largest supplier of Gourm
Slide 6: Global areas of responsibility for defined customer segments
Global areas of responsibility for defined customer segments Others 10% X Cocoa PNG 1% Indonesia* Ivory Coast* 13% 39% Ecuador 3% Brazil* 5% Industrial customers Cameroon* 5% Nigeria X Beverages 5% Ghana* 21% X Chocolate & Confectionery industry X Tobacco industry X Total 3,684 m tonnes harvested gl
Slide 7: Europe has highest per capita consumption of chocolate
Europe has highest per capita consumption of chocolate Consumption of chocolate confectionery 2008 – kilos per head 11.7 10.0 9.8 8.0 7.0 6.3 6.0 5.9 5.8 5.3 5.3 5.1 5.0 5.0 4.0 3.5 2.7 2.1 1.6 1.2 1.2 0.1 A n l en a n y m a ay ia d d al da d k y ce om s lia zi in S ai al si pa n n n n ar d tr iu g
Slide 8: Agenda
Agenda X Barry Callebaut company overview X Highlights H1 2008/09 X Financial and operational performance X Outlook April 2009 Barry Callebaut H1 08/09 8
Slide 9: Increased profitability in recessionary markets
Financial summary H1 2008/09 Increased profitability in recessionary markets X Sales volumes remain stable at 611,920 tonnes in a declining global chocolate market X Sales revenue increases 4.7% in local currencies In Swiss francs: CHF 2,543.1 million (-1.6%) X Operating profit (EBIT) rose 17.6% in
Slide 10: Declining mature markets, growing emerging markets
Exceptionally challenging markets Declining mature markets, growing emerging markets Global chocolate confectionary market: Declining trend in key markets * 10 000 USA ** Western Europe Emerging markets MT units 133'385 -9.8% MT 782'080 -2.6% 510'000 +8.5% 140'000 800'000 761'494 411'521 410'000 379
Slide 11: Profitability drivers in challenging markets
Cost leadership Profitability drivers in challenging markets X Continued cost savings first introduced in January 2008 X Hiring freeze X Flexible operational set-up – reduce production costs X Reduced promotional spend X Higher product margins X Lower logistics costs X Decrease in shipping costs of
Slide 12: Barry Callebaut to focus on FM and Gourmet
Focus on core business Barry Callebaut to focus on FM and Gourmet X Barry Callebaut has taken major steps to focus on its core Food Manufacturers and Gourmet business: X Sale of Van Houten Singapore consumer business to Hershey’s (February 2009) X Memorandum of Understanding with Natra to possibly i
Slide 13: Natra transaction will allow BC to focus on core
Focus on core business Natra transaction will allow BC to focus on core MoU for the combination of BC and Natra consumer businesses in Europe NA NA Mutual benefits: NA Barry Callebaut: X Natra shares (30-49%) X Complementary product portfolio X Long-term supply agreement for 85,000 tonnes liquid X C
Slide 14: BC signs distribution agreement in Brazil
Geographic expansion BC signs distribution agreement in Brazil X Exclusive distribution agreement with Bunge for food service segment across the country for products made in Brazil X BC and Bunge will jointly develop products X Bunge has the largest distribution network in Brazil. Every day, it serv
Slide 15: BC innovation leader: controlled fermentation
Innovation BC innovation leader: controlled fermentation Fermentation: naturally removes the remaining fruit pulp that sticks to the beans. The beans change color from beige to purple and develop their aroma. Fermentation is a spontaneous process and differs from country to country. Main benefits of
Slide 16: Implementing BC's strategy
Strategic highlights H1 2008/09 Implementing BC’s strategy January 2009 February 2009 March 2009 Inauguration of Sale of Van Houten Barry Callebaut Brazil S/A, September 2008 new factory in Singapore and Bunge signed a Acquisition of IBC, October 2008 Monterrey, consumer business distribution agreem
Slide 17: Agenda
Agenda X Barry Callebaut company overview X Highlights H1 2008/09 X Financial and operational performance X Outlook April 2009 Barry Callebaut H1 08/09 17
Slide 18: Key Figures: Increased profitability in recessionary markets
Key Figures Increased profitability in recessionary markets Change in % 2008/09 2007/08 in local in CHF currencies 6-months 6-months Volume sold in ('000) -0.1% 611.9 612.4 Sales revenue (in CHF m) -1.6% 4.7% 2'543.1 2'585.0 Gross profit (in CHF m) 1.4% 9.0% 383.2 378.0 Gross profit as % of sales 15
Slide 19: Gross profit bridge
GROSS PROFIT Price increases and efficiency measures more than compensate higher input prices and FX effect CHF m 7 400 29 1 108 350 66 300 378 383 250 200 Gross Profit Volume impact Impact of raw Price, margin Other FX impact Gross Profit Feb 29, 2008 material prices and cost Feb 28, 2009 improveme
Slide 20: EBIT: Increased profit despite negative FX impact
EBIT Increased profit despite negative FX impact CHF m 260 19 17 240 17 220 34 200 180 160 219 200 140 120 100 EBIT Additional Reduction of Delta non- FX impact EBIT Feb 29, 2008 Gross Profit; G&A and M&S recurring and Feb 28, 2009 excl. FX impact costs scope effects April 2009 Barry Callebaut H1 08
Slide 21: Region Europe
Region Europe Improved profit in declining market Regional revenue split H1 08/09 X Volumes in FM and Gourmet declined in line with negative market trends in key countries such as France, Belgium, Italy and Spain. Asia/RoW 8% X Eastern European volumes grow double digit thanks to more resilient mark
Slide 22: Region Americas
Region Americas Continued growth in challenging market Regional revenue split H1 08/09 X Positive volume development, driven by new outsourcing Asia/RoW 8% contracts and gains in market share. This despite a strongly declining confectionery market. Americas 21% X Revenues increased as result of volu
Slide 23: Region Asia/RoW
Region Asia/RoW Increased volumes, capacity expansion Regional revenue split H1 08/09 X After a slow start (Melamine issue) volume picked up in Q2. Asia/RoW Growth was supported by additional volumes from new factories in Malaysia and Japan. 8% X EBIT was positively impacted by the volume growth and
Slide 24: Industrial Segment
Industrial Segment Slow down in growth, strong cocoa profitability Revenue by Business Unit H1 08/09 Cocoa X Semi-finished product sales to 3rd parties were pushed due to Consumer Products Cocoa high price levels with good profitability. 18% 15% X New capacities in Malaysia, USA and Ivory Coast supp
Slide 25: Food Service/Retail segment
Food Service/Retail segment Downtrading supports PLB, dampens HORECA Gourmet & Specialties Revenue by Business Unit H1 08/09 X Revenues down due to slightly lower volumes and a shift Consumer to lower priced, locally produced products Products Cocoa 15% X HORECA segment affected by recession, howeve
Slide 26: Below EBIT - Financial Expense
Below EBIT - Financial Expense Lower interest rate - increased average debt level CHF m 60 Average interest rate: 55 5.6% 50 +11.2% 1.7 2.3 1.9 6.2% 45 40 35 48.5 49.8 30 43.6 25 20 15 Net interest Net interest Bank charges Gain on derivative Commitment and Net financial expense Feb 29, expense Feb
Slide 27: P&L Overview
P&L Overview Strong CHF has a negative impact on results % change Feb 28, 2009 Feb 29, 2008 Revenue from sales and services CHF m -1.6% 2'543.1 2'585.0 in local currencies 4.7% 2'706.7 Gross Profit CHF m 1.4% 383.2 378.0 in local currencies 9.0% 412.0 EBITDA CHF m 4.5% 268.1 256.5 in local currencie
Slide 28: Key figures balance sheet
Key figures balance sheet CHF m Change (year-on-year) Feb 09 Aug 08 Feb 08 [%] absolute Total assets -1.9% -71.8 3'704.5 3'729.5 3'776.3 Net working capital 13.5% 135.9 1'143.2 1'037.1 1'007.3 Non-current assets 12.1% 148.9 1'384.2 1'423.7 1'235.3 Net debt 16.5% 158.1 1'116.9 1'041.2 958.8 Sharehold
Slide 29: Key ratios
Key ratios Barry Callebaut has solid key ratios Feb 09 Aug 08 Feb 08 1) Debt/Equity ratio 95.6% 88.5% 89.3% 2) Solvency ratio 31.6% 31.5% 28.4% Net debt/EBITDA (12 month roll-over) 2.5x 2.3x 2.2x 3) Interest cover ratio 5.4x 4.8x 5.9x 4) ROIC (12 month roll-over) 14.5% 14.0% 13.6% 5) ROE (12 month r
Slide 30: Cash-Flow
Cash-Flow Stable operating cash flow*, higher investments in working capital due to seasonal factors 250 +5% 200 150 100 196 205 CHF m -251 50 0 -50 -76 134 -100 -12 -150 Operating Cash Operating Cash Increase in CAPEX CF from Net additional flow * 1st flow * 1st Working Capital acquisitions and fin
Slide 31: Stable financing situation due to long-term secured credit-lines
Stable financing situation due to long-term secured credit-lines Financing and liquidity situation per February 28, 2009 [CHF] 2500 > 500 various 2000 uncommittedf Short-term Financial leeway facilities per end February 2009 1260 1500 Syndicated CHF m Maturity 273 ABS receivable financing 2012 (16%)
Slide 32: Natra transaction – impact on BC financials
Natra transaction – impact on BC financials [preliminary] X Revenue carve out from European Consumer business: CHF m 800- 850 X Additional volume for BC food manufacturing: > 85 000 tonnes from long-term outsourcing contract (revenues approx. 300 CHF m) X No short-term change in profitability expect
Slide 33: EVA development
EVA development Positive NOPAT and EVA development NOPAT and EVA Evolution * EVA +12% (at WACC 8%) 200 NOPAT (CHFm) 150 95 85 100 50 81 90 0 2007/8 H1 2008/9 H1 Notional Capital Charge EVA * Based on real bean price development (change from prior 1H year presentation) April 2009 Barry Callebaut H1 0
Slide 34: Agenda
Agenda X Barry Callebaut company overview X Highlights HY 2008/09 X Financial and operational performance X Outlook April 2009 Barry Callebaut H1 08/09 34
Slide 35: Strategy successful even in challenging times
Confirmed growth strategy Strategy successful even in challenging times X “Heart X “Heart and and engine engine of of the the chocolate chocolate industry” industry” Vision X Chocolate X Chocolate expert expert and and business business partner partner of of choice choice X Number X Number one one c
Slide 36: Confirms 4-year targets through to 2010/11
Outlook Confirms 4-year targets through to 2010/11 X Barry Callebaut sees 2008/09 as a year of slower volume but strong profit growth: X Volume growth expected at 2-4% - clearly outpacing the global chocolate market X Profits in local currencies to be in line with targets X Good start to Q3 Æ volume
Slide 37: Summary
Summary Barry Callebaut’s well-balanced global presence, broad product portfolio and cost leadership are decisive advantages in times of economic crisis Increased profitability in recessionary markets 2008/09 year of slower volume growth; Four-year financial targets confirmed April 2009 Barry Calleb
Slide 38: Back-up
Back-up April 2009 Barry Callebaut H1 08/09 38
Slide 39: Raw materials price development in H1 2008/09
Raw materials price development in H1 2008/09 Lower raw material & higher cocoa butter prices London Cocoa 2nd Position – weekly close in £/ton Cocoa powder-butter combined ratio EU powder EU butter Combined ratio London Cocoa 2nd Position 4.40 Weekly Close 4.00 2700 2600 2500 in €/ton 3.60 2400 in
Slide 40: CAPEX development
CAPEX development Planned to decrease to maintenance level in 2 years CHF m 300 250 250 200 120- additional growth 153 150 150 115 ~127 IT On- going Upgrade/ efficiency 100 level gains existing sites Maintenane 50 0 2005/06 2006/07 2007/08 2008/09 2009/10 plan plan April 2009 Barry Callebaut H1 08/0
Slide 41: FX development versus CHF
FX development versus CHF Negative currently development BS Feb BS Feb P&L 1H P&L 1H 2009 2008 2009 2008 Real (Brazilian) BRL -21% 0.49 0.62 -18% 0.52 0.63 Canadian Dollar CAD -12% 0.93 1.06 -11% 0.96 1.08 Yuan Renminbi CNY 16% 0.17 0.15 10% 0.17 0.15 Czech Koruna CZK -17% 0.05 0.06 -8% 0.06 0.06 Eu
Slide 42: Major changes in scope of consolidation
Major changes in scope of consolidation Activity Country Effective as at: - Chocodi Consumer Ivory Coast February 29, business 2008 - Wurzener Consumer Germany February 28, Dauerbackwaren business 2008 GmbH + KL-Kepong Cocoa Cocoa Malaysia April 30, 2008 products processing (now BC Malaysia) + IBC I