Barry Callebaut Ag · SIX:BARN
Barry Callebaut — HY 2017/18 Earnings Presentation
47 slides from Barry Callebaut's earnings presentation, April 2018
Slide 1: Roadshow presentation – Half-Year Results 2017/18
Roadshow presentation –Half‐Year Results 2017/18 April 2018
Slide 2: Agenda
Agenda BC at a glance Highlights HY 2017/18 Financial Review HY 2017/18 Strategy & Outlook April 2018 HY 2017/18 Roadshow Presentation
Slide 3: BC at a glance
BC at a glance April 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 April 2018 HY 2017/18 Roadshow Presentation
Slide 6: FY 2016/17
FY 2016/17 April 2018 HY 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 April 2018 HY 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 April 2018 HY 2017/18 Roadshow Presentation
Slide 11: Highlights HY 2017/18
Highlights HY 2017/18 April 2018
Slide 12: Strong performance in the first six months
HY Results 2017/18 Strong performance in the first six months Sales volume growth +8.0% Sales revenue of CHF 3.5 billion, ‐1.8% in local currencies (+0.3% in CHF) Operating profit (EBIT)1 up +20.6 % in local currencies (+24.6% in CHF) Net profit1 up +32.9% in local currencies (+37.5% in CHF)
Slide 13: Broad-based volume growth, significantly above the market
HY Results 2017/18 Broad‐based volume growth, significantly above the market HY volume growth vs prior year (in Tonnes) +6.2% +8.0% +15.5% 13,445 +5.5% 7,249 +9.6% 13,836 41,253 1,022,565 946,782 Group Region EMEA Region Americas Region Asia Pacific Global Cocoa Group HY 2016/17 HY 2017/18 Market Vo
Slide 14: Exceptional volume growth in the first six months of FY 2017/18
Quarterly volume evolution Exceptional volume growth in the first six months of FY 2017/18 Quarterly volume growth vs prior year FY growth 15/16 FY growth 16/17 +8.1% +2.2% +4.4% +4.8% +8.0% +7.4% +9.0% Chocolate (FM and Gourmet & Spec.) +9.2% Global Cocoa +12.6% +8.1% +5.5% +0.3% +8.2 +2.3% +3.5% +
Slide 15: Strong volume growth supported by all our key growth drivers
HY Results 2017/18– Key growth drivers Strong volume growth supported by all our key growth drivers % of total Group volume Volume growth vs prior year 35.6% Emerging markets +11.0% Key growth 33.1% Long‐term drivers outsourcing +8.1% & strategic crucial to partnerships continuously outperform the m
Slide 16: Expansion around the globe
Expansion around the globe Strong double‐digit growth in key emerging markets, across different product Groups Asia‐Pacific Accelerated momentum in Japan Expanding our Gourmet distribution via Alibaba Africa Started sales of cocoa powder in South Africa Developing West‐African sales of coc
Slide 17: 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 18: Gourmet & Specialties continues its strong expansion path
Gourmet & Specialties continues its strong expansion path Focusing on the core Innovating and inspiring Empowering the artisan • Chocolate Hero campaign • Roll out of Callebaut Gold • Online and off‐line Chocolate Academy • Specialties • Chocogelato roll out • Strong social media activities • Sustai
Slide 19: Our breakthrough innovation Ruby chocolate hits the market
Our breakthrough innovation Ruby chocolate hits the market April 2018 HY 2017/18 Roadshow Presentation
Slide 20: Financial Review
Financial Review April 2018
Slide 21: 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 22: 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 23: Gross Profit up +15.5% before FX impact
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 24: Combined ratio favourable for HY 2017/18
Cocoa processing profitability Combined ratio favourable for HY 2017/18 European combined ratio ‐ 6 months forward ratio 4.00 Combined ratio 3.7 3.00 Butter ratio 2.00 1.00 Powder ratio 0.00 Feb‐07 Feb‐08 Feb‐09 Feb‐10 Feb‐11 Feb‐12 Feb‐13 Feb‐14 Feb‐15 Feb‐16 Feb‐17 Feb‐18 For cocoa processors, pro
Slide 25: Steep increase in operating profit up +20.6% on a recurring basis
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 26: 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 27: Lower prices of main raw materials until end of February 2018
Lower prices of main raw materials until end of February 2018, cocoa bean prices recently increased 250% HY average increase vs. prior year 200% Sugar world ‐27.6%% 150% Cocoa beans ‐22.5% 100% Sugar EU ‐20.9% Milk powder 50% ‐27.8% Feb.2008 Feb.2009 Feb.2010 Feb.2011 Feb.2012 Feb.2013 Feb.2014 Feb.
Slide 28: 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 29: 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 30: Strategy & Outlook
Strategy & Outlook April 2018
Slide 31: 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 32: Focus on further commercializing our innovations
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 33: 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 34: 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 35: Operational excellence across different functions
Operational excellence accross 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 36: 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 increasing cocoa bean prices. We have good visibility on our portfolio. Mid‐term guidance (2015/16 – 2018/19) confirmed Ave
Slide 37: Chocovision
Chocovision April 2018 HY 2017/18 Roadshow Presentation
Slide 38: Appendix
Appendix April 2018
Slide 39: 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 40: 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 H1: 0.1% 2018 H1: 1.8% 2018 H1: 5.3% South America ( 7% of market) Asia Pacific (14% of
Slide 41: Our market and opportunities ahead
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 42: 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 Olam Blommer Ecom Cocoa Fuji Oil Blommer Cémoi Guan Chong Puratos Mondelez Clasen BT Cocoa Irca Nestlé Schokinag
Slide 43: 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 44: 8-year EBIT per tonne development
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 45: 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 April 2018 HY 2017/18 Roadshow Presentatio
Slide 46: 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 47: 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 April 2018 HY 2017/18 Roadshow Presentation