Barry Callebaut AG · SIX:BARN
Barry Callebaut — H1 2010/11 Earnings Presentation
48 slides from Barry Callebaut's earnings presentation, April 2011
Slide 1: Half-Year Results 2010/11 Roadshow presentation
Half-Year Results 2010/11 Roadshow presentation April, 2011
Slide 2: Agenda
Agenda X BC at a glance X Highlights first six months of 2010/11 X Financial Results X Strategy & Outlook April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 2
Slide 3: Barry Callebaut at a glance
Barry Callebaut at a glance FY 2009/10 X World leader in high-quality cocoa and chocolate Sales volume =1,305,280 tonnes products and outsourcing partner of choice, with over 40% share in the open industrial chocolate market X World’s largest supplier of Gourmet & Gourmet Specialties chocolate for a
Slide 4: Barry Callebaut as the heart and engine of the chocolate industry
Barry Callebaut as the heart and engine of the chocolate industry Cocoa Cocoa Cocoa beans beans Plantations 80% Cocoa Cocoa liquor liquor ~54% ~46% Cocoa Cocoa powder powder Cocoa Cocoa butter butter BC core + Sugar, Milk, + Sugar, Milk, + Sugar, Milk, activity others fats, others others Powder Powd
Slide 5: Main raw materials and business model
Main raw materials and business model Main raw materials Barry Callebaut business model BC sourced in 09/10: % of total raw material value Gourmet & 20% Consumer Cocoa 570 KT 51% price lists Products regular Dairy 125 KT 10% updates Sugar 480 KT 8% Oils and Fats 82 KT 4% 80% Cost Plus Other 27% 100g
Slide 6: Highlights first six months of 2010/11
Highlights first six months of 2010/11 April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 6
Slide 7: Financial and business Highlights H1 2010/11
Financial and business Highlights H1 2010/11 X Sales volume grew twice as fast as the market: +7.1% X Strong profit growth: Net profit up 17.1% in local currencies (+9.0% in CHF) X Growth drivers: Emerging markets and Cocoa Products for strategic customers X Gourmet: Investing in structures and orga
Slide 8: Global chocolate confectionery market up 3.6%
Global chocolate confectionery market up 3.6% Sep-Jan 2010/11 (in 1,000 tonnes) WE -1.8% 7.1% EE 7.4% USA 670 658 410 439 274 295 2010 2011 2010 2011 2010 2011 24.3% China Total Top 15 countries 14 18 3.6% Brazil 12.1% 2010 2011 70 78 2010 2011 1’485 1’538 Source: Nielsen data (Sep 2010-Jan 2011) 20
Slide 9: Growth across all regions
Business Performance HY 2010/11 Growth across all regions Europe Americas Asia-Pacific Global Sourcing & Cocoa Food Manufacturers, Food Manufacturers Food Manufacturers Cocoa Products Gourmet & & Gourmet & Gourmet Consumer 56.8% of sales 21.3% of sales 3.8% of sales 18.1% sales volume volume volume
Slide 10: Raw materials at high levels, volatility increase
Raw materials at high levels, volatility increase “Cost plus” model proves to be robust Cocoa bean- Ldn 2nd Position in GBP/tonne White Sugar average price EUR/tonne london n°5 (2nd position) EU white sugar Kingsman‘s estimate WE 3000 (spot prices) March 2011 950 1994 GBP/tonne March 2011 2500 850 8
Slide 11: Situation in Côte d'Ivoire – as per 31st March 2011
Situation in Côte d’Ivoire – as per 31st March 2011 X Since elections end of November 2010, two parties are fighting for presidential power X Côte d’Ivoire accounts for about 35% of the total world cocoa crop Current X 14 January 2011: EU adopted sanctions against Côte d’Ivoire situation X 24 Januar
Slide 12: Financial results
Financial results April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 12
Slide 13: Growth twice as fast as the market and improved profitability
Key Figures – H1 2010/11 Growth twice as fast as the market and improved profitability Change in % Change in % H1 H1 In local 2010/11 2009/10 currencies Sales volume [in tonnes] 7.1% 706'570 659'536 Sales revenue [CHF m] 13.2% 3.1% 2'737.9 2'656.5 CHF per tonne 5.7% -3.8% 3'875 4'028 Gross profit [C
Slide 14: Positive growth driven by Eastern Europe
Region Europe Positive growth driven by Eastern Europe Europe • Mixed overall market growth, Eastern Europe with strong growth and slight decline in Western Europe, mainly Germany • BC achieved double digit volume growth in FM and Gourmet in Eastern Europe • Good demand of Gourmet products and marke
Slide 15: Significant growth driven by FM Corporate Accounts
Region Americas Significant growth driven by FM Corporate Accounts Americas • Chocolate consumption in the U.S. kept strong growth momentum (+7.1%); Brazil increased by +12.1% • Significant overall volume growth of +9.8% driven by U.S., Mexico and Brazil • Food Manufacturers recorded double-digit gr
Slide 16: Double digit growth with Gourmet business
Region Asia-Pacific Double digit growth with Gourmet business Asia-Pacific • Significant increase in volume growth, driven by India, Japan, Malaysia and China • Double-digit volume growth with Gourmet & Specialties Products, mainly with our global brands Cacao Barry and Callebaut • Food Manufacturer
Slide 17: Significant top- and bottom line growth
Region Global Sourcing & Cocoa Significant top- and bottom line growth Global Sourcing & • All relevant raw material prices moved up to new historical highs Cocoa • Significant volume growth positively impacted by higher demand of cocoa powder and cocoa products for strategic customers • Profitabili
Slide 18: Improved combined cocoa ratio
Cocoa processing profitability Improved combined cocoa ratio Cocoa powder-butter combined ratio* – European ratios 6 months forward against LIFFE 4.50 4.00 25 March 2011 3.41 Combined ratio 3.50 3.00 2.50 2.00 Powder ratio 1.50 Butter ratio 1.00 0.50 0.00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-10 Ma
Slide 19: Sustained double digit EBIT growth before scope and negative currency effects
EBIT – HY 2010/11 Sustained double digit EBIT growth before scope and negative currency effects in mCHF 14.2% 18.6 -10.8 238.5 -5.9 11.0 -15.5 10.9 217.1 208.8 EBIT Volume Margin Operational Additional EBIT before Scope Negative EBIT HY 2009/10 effects effects improvements SG&A Scope, non- effects c
Slide 20: Lower financial expenses, despite slightly higher interest rate
Net Financial Expenses Lower financial expenses, despite slightly higher interest rate in mCHF Av. interest rate 3.5% 3.9% 4.5 1.2 0.6 34.1 30.9 31.4 Net interest Net interest Bank charges, Gains on Exchange Net financial expense H1 expense H1 fees and other derivative rate impact expenses H1 2009/1
Slide 21: Lower financial expenses contributed to a double digit profit growth
From EBIT to Net Profit Lower financial expenses contributed to a double digit profit growth in mCHF Change in % Change in In local % H1 H1 currencies CHF 2010/11 2009/10 Operating profit (EBIT) 11.4% 4.0% 217.1 208.8 Financial items -19.8% (34.1) (42.5) Income taxes 17.8% (25.1) (21.3) Tax rate [in
Slide 22: Sustainable Cash Flow despite investments in Working Capital and Capex
Cash Flow Sustainable Cash Flow despite investments in Working Capital and Capex First 6-months 2009/10 First 6-months 2010/11 -21% 272.2 -330.0 (-56.2) 216.0 -226.0 -44.5 -94.0 -1.0 105.0 -27.3 129.6 Operating Investment Capital CF from Cash Operating Investment Capital CF from Cash Cash Flow* in W
Slide 23: Solid Financials with improvement of all key ratios
Balance Sheet – H1 2010/11 Solid Financials with improvement of all key ratios Change Feb 11 Feb 10 in % Total Assets [CHF m] -2.2% 3'979.1 4'068.0 Net Working Capital [CHF m] -13.5% 1'054.1 1'218.4 Non-Current Assets [CHF m] -3.3% 1'408.4 1'457.2 Net Debt [CHF m] -12.5% 956.2 1'093.4 Shareholders'
Slide 24: Financing and Credit Rating agencies
Financing and Credit Rating agencies Financing • Stable financing in place 1. Syndicated loan runs until July 2013 2. Term of outstanding bond is July 2017 No short term need for refinancing, however we look closer to market opportunities Credit Rating Agencies • Standard and Poors raised in Feb 201
Slide 25: Strategy & Outlook
Strategy & Outlook April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 25
Slide 26: Our Growth Strategy
Our Growth Strategy 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 chocolate chocolate company company Expansion Sustain
Slide 27: Emerging markets drive growth
Expansion 1. Geography Emerging markets drive growth Emerging markets in % of total sales volume (6 months figures) 2010/11 growth X Investments in emerging 21% +12.9% markets paying off 20% 13% 17% 12% 14% 6% 13% +38.1% X Poland: Line extension 2% 9% 10% completed X Mexico: Volume increased, gained
Slide 28: Implementation and strengthening partnerships
Expansion 2. Outsourcing/Partnerships Implementation and strengthening partnerships Long-term outsourcing agreements / Strategic partnerships -Evolution as % of total sales volume (6 months figures) 2010/11 X Implementation of Kraft growth long-term strategic partnership has started +12.9% 21% and i
Slide 29: Developments of our 6 strategic actions
Expansion 3. Gourmet & Specialties Products Developments of our 6 strategic actions 1. Sharpen focus on two global brands Cacao Barry and Callebaut X Centralization of brand management completed X Regional brand Managers put in place in U.S. and Western Europe 2. Move from a product to a segment foc
Slide 30: Many new, innovative specialties
Innovation Many new, innovative specialties Decorations & Fillings X 40 new decorations launched under „Callebaut“ brand X 120 new decorations launched under „Cacao Barry“ brand answering the trend towards smaller and customized products X Broad range of new fillings Inclusions X Innovative soft mel
Slide 31: Many new, innovative specialties
Innovation Innovation Many new, innovative specialties Healthier confectionary alternatives X Broadened range of specialty products reduced in saturated fats X Significant reduction in the use of hydrogenated fats X Elimination of almost all trans-fatty- acids from all products Terra Cacao Chocolate
Slide 32: Challenging environment offset by efficiency improvements
Cost leadership Cost Leadership Challenging environment offset by efficiency improvements X Higher manufacturing costs in last six months due to: X Strong growth in Gourmet and Specialties products X Reduced energy consumption per ton offset by higher energy prices X Contingency plan Côte d‘Ivoire X
Slide 33: Financial targets confirmed
Outlook Financial targets confirmed X Annual growth targets on average* for 2009/10 through 2012/13: Volumes: 6-8% EBIT: at least in line with volume growth * Our view for the 2009-2013 period reflects current economic forecasts for the markets we operate in as well as internal developments and
Slide 34: Q&A
Q&A April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 34
Slide 35: Summary
Summary X Sales volume growing twice as fast as the market: +7.1% X Growth drivers: Emerging markets and strategic partnerships X Strong profit growth: Net profit up 17.1% X Confirmation of four-year growth targets up to 2012/13 Volumes: 6-8% EBIT: at least in line with volume growth in local cu
Slide 36: Barry Callebaut Financial Calendar 2010/11
Barry Callebaut Financial Calendar 2010/11 X 9-month key sales figures 2010/11 (news release) – June 30, 2011 X Full-year results 2010/11 (news release / conference) – November 10, 2011 X Annual General Meeting 2010/11 – December 8, 2011 April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 36
Slide 37: Cautionary note
Cautionary note Certain statements in this presentation regarding the business of Barry Callebaut are of a forwardlooking nature and are therefore based on management’s current assumptions about future developments. Such forward-looking statements are intended to be identified by words such as “beli
Slide 38: Back-up
Back-up April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 38
Slide 39: 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 (10/11): 3 938 k MT others 12% X In FY 2009/10 BC sourced Ecuador ~570,000 cocoa beans, thereof 4% Ivory Coast* 65% directly from farmers, 33% Brazil* 5% cooperatives & local trade houses Cameroon* 6% X BC has
Slide 40: Raw materials: impact on a 100 gr. chocolate bar
Raw materials Impact on a 100 gr. chocolate bar Change in cocoa market prices Change in sugar prices 20% 2.0% change in finished product price change in finished product price 15% 10% 1.0% 5% 0% 0.0% -20% -10% -5% 0% 5% 10% 20% -10% -5% 0% 5% 10% -5% Price 100 gr milk Price 100 gr milk -10% Price 10
Slide 41: BC market leader in the open market
Expansion BC market leader in the open market Global Industrial Chocolate market in 2009 = 5,400,000 tonnes* Open market Integrated market Competitors Big 4 chocolate Others players 49% 51% Outsourced (long-term volumes) *BC estimates April 2011 Barry Callebaut H1 2010/11 Roadshow presentation 41
Slide 42: Stable financing structure through long-term secured credit lines
Net debt Stable financing structure through long-term secured credit lines Financing and liquidity situation as of Feb 28, 2011 (CHF million) 2,300 770 Various Short term uncommitted facilities EUR 850 mio 1,206 Syndicated bank Maturity 250 ABS receivables loan (12 banks) 2012 (17%) financing 2013 (
Slide 43: Investments support the growth of our business
CAPEX development Investments support the growth of our business Additional growth in mCHF IT 5% Upgrade / efficiency gains existing sites Maintenance 4% 250 3% 3% 3% CAPEX as % of sales 170 153 144 145 115 2005/06 2006/07 2007/08 2008/09 2009/10 FY 2010/11 April 2011 Barry Callebaut H1 2010/11 Road
Slide 44: Our manufacturing footprint with 42 factories worldwide
Our manufacturing footprint with 42 factories worldwide Chekhov, Russia (September 2007) Netherlands Stollwerck, Germany Sweden Luijckx (2002) (2004) (2003) Belgium UK Canada 1 Jacques, Belgium Robinson, U.S. (2002) (2008) Morinaga, Osaka, Japan Dijon, France (2007) Poland (2009) Nappa, U.S. (2005)
Slide 45: Fine-tuning our strategy on Gourmet
Fine-tuning our strategy on Gourmet Global Gourmet market Gourmet global market and BC presence Market X Highly fragmented market with more Total= >CHF 3bn than 100’000 end-customers Chocolate products Adjacent products CHF ~2bn sales CHF >1bn sales X Three main segments: 100% X Confectioners: artis
Slide 46: BC's sustainable and solid top-line and bottom-line growth over the last 5 years
BC’s sustainable and solid top-line and bottom-line growth over the last 5 years Sales Volume EBIT in CHF CAGR CAGR + 7.5% + 8,9% 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Net profit in CHF * Economic Value Added in CHF CAGR CAGR +11.0% 10.1% EVA Notional Capital Charge* 2005 2006
Slide 47: Improved cashflow decisive for the growth speed
Cash flow analysis FY 2009/10 Improved cashflow decisive for the growth speed Operational cash flow* Working Capital +1% +10% 355 1′037 1′010 317 965 921 884 297 273 238 2005/06 2006/07 2007/08 2008/09 2009/10 2005/06 2006/07 2007/08 2008/09 2009/10 Capital Expenditure Dividends** (CHF) +6% 250 +7%
Slide 48: BC share price development over last 5 years vs. relevant indexes
BC share price development over last 5 years vs. relevant indexes 1000 900 BARN.S = 745 800 CAGR 2006/11= +10% 700 600 500 400 300 200 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 BARN.S .SSHI .SX3E .SMIM Swiss Performance Dow Jones Euro Stoxx Swiss Market Index Mid Cap Index (Rebased) Food