Barry Callebaut AG · SIX:BARN
Barry Callebaut — CAGE – Consumer Analyst Group Europe 2014
35 slides from Barry Callebaut's conference presentation, Mar 19, 2014
Slide 1: Barry Callebaut – CAGE Conference
Barry Callebaut CAGE – Consumer Analyst Group Europe CEO- Juergen Steinemann London, March 19th 2014 Because we love chocolate…
Slide 2: Present in all stages of the industrial chocolate value chain
Barry Callebaut is present in all stages of the industrial chocolate value chain Cocoa plantations Cocoa Beans 80% Barry Callebaut’s Cocoa Liquor core activities ~54% ~46% Cocoa Powder Cocoa Butter + Sugar, + Sugar, Milk, + Sugar, Milk, Milk, others fats, others others Powder mixes Compound & Chocol
Slide 3: Barry Callebaut at a glance
Barry Callebaut at a glance FY 2012/13 Sales volume =1,535,662 tonnes • World leader in high-quality cocoa and chocolate products and outsourcing/ Asia- strategic partner of choice Pacific 4% • World’s largest supplier of Gourmet & Global Sourcing Specialties chocolate for artisanal & Cocoa customer
Slide 4: Volatility of raw materials mitigated through...
Volatility of raw materials mitigated through... Historical evolution % of total BC raw material costs Q1 13/14 300% 250% Cocoa beans 55% 200% Cocoa beans 150% Milk powder 14% Sugar Sugar EU 100% Sugar world 12% Milk Powder 7% Fats 50% 12% Others Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep
Slide 5: … our robust business model
… our robust business model Gourmet & Specialties Cocoa Products • Price List 100g chocolate tablet contains: • Market prices • Combined ratio r 10% • Cost plus Cocoa butter 20% Milk powder Sugar Other Food Manufacturers • Cost plus 70% X Raw materials represent about 80% of operating costs For the
Slide 6: Our strategy remains unchanged
Our strategy remains unchanged “Heart and engine of the Vision chocolate and cocoa industry” Expansion People & Processes Innovation Sustainable, Strategic profitable pillars growth Cost Leadership Sustainable Cocoa March 2014 CAGE Conference - London 6
Slide 7: Continued focus on our key expansion drivers
Five-year development Continued focus on our key expansion drivers Emerging Markets Long-term outsourcing & Gourmet & Specialties Strategic partnerships Volume +23% vs prior year +28% vs prior year +10% vs prior year growth CAGR +15% CAGR +34% CAGR+9% 26% 22% of total 10% 20% Group 10% volume 10% 20
Slide 8: Further geographical expansion of our global footprint
Further geographical expansion of our global footprint provides diversification and competitive advantage Cocoa processing factory Chocolate factory Integrated cocoa & chocolate factory New Factory, under construction or expansion March 2014 CAGE Conference - London 8
Slide 9: Sufficient outsourcing potential for future growth
Sufficient outsourcing potential for future growth Global Industrial Chocolate market in 2012/13= 6,250,000 tonnes* Open market Integrated market Big 4 chocolate confectionary players Competitors Others 20% 40% 49% 51% * Company estimates March 2014 CAGE Conference - London 9
Slide 10: Gourmet & Specialties: strong top and bottom-line performance
Gourmet & Specialties: strong top and bottom-line performance Group Gourmet & Specialties Business – Growth evolution CAGR+9.0% +9.9% Sales Volume 1.2% 0.6% 1.3% 1.5% Underlying (tonnes) -0.7% market growth* 2008/09 2009/10 2010/11 2011/12 2012/13 CAGR +11.5% +17.7% EBIT (in constant currencies) 200
Slide 11: Striving for cost leadership while continuously expanding
Striving for cost leadership while continuosly expanding Truly global footprint with 50 factories, in origin countries and Flow and close to customers footprint Recipe optimization, reduce Efficiency waste and rework, improve- Raw and ment of yields in the plants materials Capacity usage utilization
Slide 12: Aiming to secure enough cocoa supply in the future
“Cocoa Horizons”: Execution platform for sustainability projects Aiming to secure enough cocoa supply in the future Increase sustainable cocoa supply and improve farmer livelihoods Farmer Practices Farmer Education Farmer Health Double yield & improve quality Train next farmer Clean water & basic he
Slide 13: Innovation with focus on five discovery areas
Innovation with focus on five discovery areas... Fewer, bolder and bigger projects Structure, Authenticity Next Five Texture & Cocoa Compounds Discovery & Generation areas Sensory Science & Fillings Permissibility Process Project B Project A C I Project J O L D N A QPP + Pure Innovation Project C E
Slide 14: Petra Foods Cocoa Ingredients division acquisition supports our core strategy
Petra Foods Cocoa Ingredients division acquisition supports our core strategy Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate business supporting the company’s overall growth 2. Strengthen outsourcing and 3. 1. partnership Boosting Support agreements sales further volume
Slide 15: Taking global leadership in chocolate and cocoa
Expansion Taking global leadership in chocolate and cocoa Cocoa Grinding Capacity Industrial chocolate – Open market Barry Callebaut Barry Callebaut Cargill Cargill ADM Blommer Blommer ADM Mondelez Cemoi Guan Chong Puratos Nestlé Fuji Oil Ferrero IRCA BT Cocoa Guittard Ecom Cocoa others Other player
Slide 16: Demand outlook in chocolate remains strong ...
Further expansion of our business Demand outlook in chocolate remains strong ... Chocolate Confectionery – Volume in tonnes 1 280 240 Western Europe 200 160 Eastern Europe Asia Pacific Absolute growth (Tonnes) 120 2013-18 Latin America 80 Australasia 40 North America 0 Middle East and Africa -1.0% 0
Slide 17: and even stronger in cocoa powder
Further expansion of our business and even stronger in cocoa powder Cocoa powder– Volume in tonnes 1 24 South America 20 16 EU Annual Asia-Pacific absolute growth 12 (Tonnes) 2011-16 8 6 North America 4 0 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Annual average growth 2011-16 Bubble size indicates total volume
Slide 18: The integration project is on well track...
The integration project is on well track... Organization is in Ensuring the best balance between BC and ex-Petra resources on key place positions (Regional commercial organizations and global functions) Commercial By creating combined cocoa/chocolate sales teams (so leveraging on our model has been
Slide 19: The integration project is well on track
The integration project is well on track Systems are We are implementing quick wins where required to being streamline the business, while in parallel we are implemented starting up a project to structurally identify what is needed from a process and systems perspective for our new/combined organiza
Slide 20: Our key focus areas for 2013/14
Strategy Our key focus areas for 2013/14 X Integrate Petra Foods cocoa business and strengthen our position in cocoa powder X Enhance profitability X Continue product margin improvement X Keep supply chain and fixed costs under control X Full implementation of Project Spring X Accelerate talent mana
Slide 21: Strong volume growth over the last 6 years and EBIT per tonne maintained
Based on our strategy, we achieved strong volume growth over the last 6 years and EBIT per tonne maintained Group development CAGR +7.8% 336 308 312 297 297 297 EBIT (CHF) / tonne * at constant currencies 293 289 282 286 256 246 EBIT (CHF) / tonne as reported 1.5 Volume (MT mio) 1.2 1.3 1.4 from con
Slide 22: Our outlook for the next year and mid-term guidance
Outlook & Guidance Our outlook for the next year and mid-term guidance Guidance: X Volume growth: 6-8% on average per year until 2015/16 X EBIT/tonne restored to Barry Callebaut’s pre-acquisition level by 2015/16* * As of consolidation of the cocoa business acquired from Petra Foods: EBIT per tonne
Slide 23: Appendix
Appendix March 2014 CAGE Conference - London 23
Slide 24: Strong top-line growth, gaining profitability momentum
Strong top-line growth, gaining profitability momentum Group performance FY 2012/13 % vs prior year (in CHF) Sales Volume Total 1’535’662 +11.4% Sales Volume stand-alone 1’498’632 +8.7% EBIT Total 339.6 -3.9% EBIT stand-alone 368.8 +4.4% EBIT per tonne 246.1 -3.9% Net profit from continuing operatio
Slide 25: Stand-alone operating result gained momentum +4.4%
EBIT bridge Stand-alone operating result gained momentum +4.4% in CHF m * Without Cocoa Processing impact +11.5% +4.4% +64.3 -24.0 368.8 353.2 -24.7 -12.0 339.6 -17.2 EBIT Additional Additional SG&A Add. costs, EBIT stand- Petra Foods Acquisition EBIT FY 2011/12 Gross Profit from business Scope and
Slide 26: Foreseen profitability improvement of the recently acquired cocoa business
Foreseen profitability improvement of the recently acquired cocoa business of Petra Foods X Good visibility of current portfolio X Recent improvement of combined ratio will positively impact 2014 X Synergies confirmed X Integration of sourcing operations started X European business improvement initi
Slide 27: Balance Sheet & key ratios
Balance Sheet & key ratios Stand-alone most ratios improved, total impacted by recent acquisition BC stand-alone Aug 13 Aug 12 Aug 2013 Total Assets [CHF m] 4'527.1 3'576.6 Net Working Capital [CHF m] 1'083.4 1'345.7 1'039.2 Non-Current Assets [CHF m] 2'072.1 1'424.8 Net Debt [CHF m] 993.1 1'525.2 9
Slide 28: Payout ratio increased to 35%, total payout maintained
Dividend Payout ratio increased to 35%, total payout maintained Total payout to shareholders Proposed dividend in CHF m X CHF 14.50 per share1 CAGR +5% X Payout of 35 % of Net Profit 80 80 80 72 X Not subject to withholding tax2 65 Timetable for dividend X Shareholder approval: Dec 11, 2013 (AGM) X
Slide 29: Significant investments for growth, while still focusing on high returns
Significant investments for growth, while still focusing on high returns (CHF mn) 21% 20% 20% 19% ROE target 20% 19% 19% 18% 18% 18%* ROE 16% 15% 14% 14% 14% 14% ROIC target 15% 14% 14% 14% 13%* 13% ROIC 11% 10% 250 218 224 CAPEX 153 144 145 145 102 115 90 69 2002/03 2003/04 2004/05 2005/06 2006/07
Slide 30: Capex investments support the growth of our business
Capex investments support the growth of our business in CHFm CAPEX as % of sales revenue +5.2% Average = 4.0% +4.4% +4.5% +3.0% +3.3% +2.8% 250 218 224 200 174 Additional growth 144 145 IT Upgrade / efficiency gains existing sites Maintenance 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 P
Slide 31: Strong operating cashflow despite fast volume growth and expansion
Cash flow evolution Strong operating cashflow despite fast volume growth and expansion in CHFm CAGR 13.2% 480 458 455 451 434 407 418 348 313 252 228 116 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * Operating Cash Flow before working capital changes Negative FX impact March 2014 CAG
Slide 32: Working capital rather flat, despite sales volume growth
Working capital rather flat, despite a sales volume growth of 6% over the last 5 years in CHFm CAGR +1.8% 23% 21% 21% 22% 20% 1,039 1,083 1,010 965 888 FY 08/09 FY 09/10 FY10/11 FY 11/12 FY 12/13 • Working capital is mostly composed of highly liquid inventories • Net working capital requirements are
Slide 33: Stable financing offering enough headroom for future growth
Stable financing offering enough headroom for future growth and average maturity of 6 years Financing and liquidity situation as of August 31, 2013 in CHFm 2,945 CHF 570 mio Various Short term uncommitted facilities 40.4% EUR 400 mio Commercial Paper 3-5 years Various bilateral LT loans 1,756 EUR 60
Slide 34: Long-term outsourcing and strategic partners, one of our key growth drivers
Long-term outsourcing and strategic partners, one of our key growth drivers with further potential March 2014 CAGE Conference - London 34
Slide 35: Sourcing of cocoa beans and our direct approach
Sourcing of cocoa beans and our direct approach Total world harvest (12/13): 3’986 TMT X About 70% of total cocoa beans come from West Africa Ecuador others 5% 10% X BC stand-alone processed ~620,000 tonnes or 16 % of the world crop Brazil* Ivory 5% Coast* X BC including recently acquired cocoa Came
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