Barry Callebaut Ag · SIX:BARN
Barry Callebaut — Q1 2012/13 Earnings Presentation
45 slides from Barry Callebaut's earnings presentation, January 2013
Slide 1: Barry Callebaut Roadshow presentation – Q1 2012/13
Barry Callebaut Roadshow presentation – Q1 2012/13 JANUARY 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13
Slide 2: Agenda
Agenda • BC at a glance • Highlights Q1 2012/13 • Strategy • Petra Foods Cocoa Ingredients Division acquisition January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 2
Slide 3: Vertically integrated in cocoa sourcing and processing since 1996
Vertically integrated in cocoa sourcing and processing since 1996 Cocoa Cocoa beans Plantations 80% Cocoa liquor ~54% ~46% Cocoa powder Cocoa butter Barry Callebaut + Sugar, Milk, + Sugar, Milk, + Sugar, Milk, core others fats, others others activity Powder mixes Compound/Fillings Chocolate couvertu
Slide 4: Barry Callebaut at a glance
Barry Callebaut at a glance FY 2011/12 – Pre-acquisition Sales volume =1,378,856 tonnes • World leader in high-quality cocoa and chocolate products and outsourcing/ Asia- strategic partner of choice Pacific Global 4% • World’s largest supplier of Gourmet & Sourcing Specialties chocolate for artisana
Slide 5: Agenda
Agenda • BC at a glance • Highlights Q1 2012/13 • Strategy • Petra Foods Cocoa Ingredients Division acquisition January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 5
Slide 6: Highlights Q1 2012/13
Highlights Q1 2012/13 • Strong volume growth: +8.3% • Growth across all Regions. Growth driven by Food Manufacturers and Gourmet • Significant strategic step: acquisition of Petra Foods’ Cocoa Ingredients Division • Growth targets confirmed January 2013 Barry Callebaut – Roadshow presentation – Q1 2
Slide 7: Slow volume growth in the Global chocolate market
Sep - Nov 2012 Slow volume growth in the Global chocolate market Chocolate confectionery market – top 15 countries 1 Total + 1.1% EE +3.3% WE 0.0% US -1.0% India + China +14.7% Brazil +0.7% 1) Source: Nielsen data (Sep –Nov 2012); - Top 15 countries represent app. 75% of the global chocolate market
Slide 8: Lower average prices for key raw material
Raw material price development Lower average prices for key raw material Q1 12/13 % of total BC raw material costs 270% 220% 55% Cocoa beans 170% Cocoa beans Milk powder 120% 14% Sugar Sugar EU Sugar world 12% Milk powder 70% 7% Fats 12% Others 20% Jul.06 Apr.07 Jan.08 Okt.08 Jul.09 Apr.10 Jan.11 Ok
Slide 9: Solid growth in Western Europe and EEMEA
Region Europe Solid growth in Western Europe and EEMEA • Chocolate confectionery market growth: +1.1% Sales Volume (in ‘000 tonnes) • Sales volume +6.3% in a market environment which was still depressed in Southern Europe 6.3% • Growth in Western Europe was particularly driven by Food 189 201 Manufa
Slide 10: Continued double-digit top-line growth
Region Americas Continued double-digit top-line growth • U.S. chocolate confectionery market -1.0% Sales Volume (in ‘000 tonnes) • Region Americas achieved double-digit growth rates in the 14.7% first three months; sales volume increased +14.7% • In North America global accounts in Food Manufacturer
Slide 11: Strong acceleration of growth
Region Asia-Pacific Strong acceleration of growth • Chocolate markets in Asia showed accelerated growth. India Sales Volume (in ‘000 tonnes) and China reached +14.7% 17.5% • Industrial and the Gourmet businesses showed high double digit-sales volume growth +17.5% 13 16 • Strong growth was recorded i
Slide 12: Fewer powder sales to third party customers
Global Sourcing & Cocoa Fewer powder sales to third party customers Sales Volume (in ‘000 tonnes) • Sales volume in the segment Global Sourcing & Cocoa went up 2.9% to 66,754 tonnes 2.9% • Growth was impacted by ongoing expansion at some of the 65 67 factories, as well as higher internal demand for
Slide 13: Strong decline in powder prices offset by butter ratios
Cocoa processing activity Strong decline in powder prices offset by butter ratios European combined ratio - 6 months forward ratio 4.20 Combined ratio 3.5 – Dec 12 3.20 2.20 Butter ratio Powder ratio 1.20 0.20 Oct-00 Sep-01 Aug-02 Jul-03 Jun-04 May-05 Apr-06 Mar-07 Feb-08 Jan-09 Dec-09 Nov-10 Oct-11
Slide 14: Agenda
Agenda • BC at a glance • Highlights Q1 2012/13 • Strategy • Petra Foods Cocoa Ingredients Division acquisition January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 14
Slide 15: Consistent implementation of our long-term strategy
Consistent implementation of our long-term strategy Our Vision: “Heart and engine of the chocolate industry” Geographical expansion in emerging markets and strengthen position in developed markets Expansion Long term outsourcing agreements/strategic partnerships Faster growth in Gourmet & Spec
Slide 16: Based on our strategy we grew almost 8% on average per year
Based on our strategy we grew almost 8% on average per year, driven by emerging markets and strategic partnerships % of total consolidated sales volume * CAGR 06-12 Emerging markets +17.2% +7.8% 24% 23% Long-term 22% Outsourcing 16% 20% 19% agreements & +67.2% Strategic 15% 11% 16% partnerships 7% 1
Slide 17: 3 mio tonnes of outsourcing potential for future growth
Expansion 3 mio tonnes of outsourcing potential for future growth Global Industrial Chocolate market in 2011/12 = 6,100,000 tonnes* Open market Integrated market Big 4 chocolate confectionary Competitors players Others Others 20% 40% 49% 51% * BC estimates January 2013 Barry Callebaut – Roadshow pre
Slide 18: Long-term outsourcing and strategic partnership agreements
Expansion Expansion Long-term outsourcing and strategic partnership agreements include both chocolate and cocoa products 2006-07 C + Ch deal Nestlé Cadbury Schweppes Hershey Morinaga (February 2007) (June 2007) (April 2007) (September 2007) C + Ch 2010-11 C + Ch deal C + Ch deal deal ex-Kraft Foods
Slide 19: Working on all priority areas
Expansion Expnsion Gourmet: Actions to accelerate growth Working on all priority areas 1 year 2 year 3 year 4-5 year Additional distribution points +945 (+3%) NA WE 2010/11 2011/12 January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 Today
Slide 20: Successful R&D activities generated new sales volume
Innovation Innovation Successful R&D activities generated new sales volume X Barry Callebaut received a positive opinion from the European Food Safety Authority for a health claim linking cocoa to improved blood flow X +11% number of R&D projects versus the prior year to 2,131. Project success rate,
Slide 21: Staying the leader in cost through our key initiatives
Cost Leadership Cost Leadership Staying the leader in cost through our key initiatives X Manufacturing costs per ton of activity like-for-like basis = - 3% (target: -2%). X Volume growth, technology and process improvements increased capacity utilization for liquid chocolate to 91% (target: 82-85%).
Slide 22: Sustainable Cocoa: Achievements in the last 12 months
Sustainable Cocoa Sustainable Cocoa Achievements in the last 12 months Farmer Farmer Farmer Practices Education Health X 20,000 Farmers trained and X Adults and children X New Water wells drilled certified Schools: 3 built, 4 under construction X CHF 2.8 mio. Certification Premiums paid X Curriculum
Slide 23: Agenda
Agenda • BC at a glance • Highlights Q1 2012/13 • Strategy • Petra Foods Cocoa Ingredients Division acquisition January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 23
Slide 24: Excellent strategic fit at the core of Barry Callebaut's cocoa and chocolate
Petra Foods Cocoa Ingredients: Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate X Supporting further chocolate growth by stepping up the integrated cocoa sourcing and processing activities X Strengthening current and future outsourcing and partnership agreements X Boostin
Slide 25: Cocoa Powder-based applications growing fast
Cocoa Powder-based applications growing fast Demand for powder As a result, derived demand applications growing faster for powder is the fastest growing CAGR 11-16 of main cocoa SFP applications (in %) CAGR (11-16F) 2 -5 % 1 Powder Powder applications Main powder/ 1-2% butter applications Liquor 1-2
Slide 26: Petra Foods – company overview
Petra Foods – company overview Branded consumer Cocoa Ingredients Division X One of the leading players in Southeast Asia X One of the world’s major manufacturers and that markets and distributes its own brands suppliers of premium cocoa products, of chocolate and sugar confectionery namely Cocoa Li
Slide 27: ...with a strong exposure to emerging markets
...with a strong exposure to emerging markets Cocoa Ingredients Division Cocoa Ingredients Division Sales volume per region – 2011 Sales volume per product type– 2011 Cocoa liquor 13% Developed markets 34% Cocoa butter Cocoa 42% powder Emerging 45% markets 66% January 2013 Barry Callebaut – Roadshow
Slide 28: Acquisition will position Barry Callebaut as a large, pro-active market player in Cocoa Powder
Expansion Acquisition will position Barry Callebaut as a large, pro- active market player in Cocoa Powder business globally X Barry Callebaut is the largest global industrial chocolate supplier Cocoa grinders Industrial chocolate – Open market BC + Petra Foods Barry Callebaut Cargill Cargill Barry C
Slide 29: Emerging markets exposure will increase to 31%
Expansion Through Petra Foods’ Cocoa Ingredients Division our emerging markets exposure will increase to 31% Geographic expansion Sales Volume breakdown Emerging markets 31% 24% Long-term 23% outsourcing 22% 18% agreements & 16% 20% 19% strategic 15% 11% 16% 7% 10% partnerships 2% 77% 67% 61% 51% 83
Slide 30: Increasing of cocoa sourcing and processing footprint (buy vs. build)
Cost Leadership Increasing of cocoa sourcing and processing Sustainable Cocoa footprint (buy vs. build) Footprint of cocoa processing factories Germany Switzerland France U.S. Mexico Thailand Ivory Coast Malaysia Brazil Singapore Ghana Global Headquarters Cameroon Indonesia Barry Callebaut cocoa fac
Slide 31: Petra Foods' Cocoa Ingredients Division is right at the core of our strategy
Petra Foods’ Cocoa Ingredients Division is right at the core of our strategy Our vision: “Heart and engine of the chocolate industry” 9 Supporting further chocolate growth in both Industrial and Gourmet 9 Strengthening current and future outsourcing and partnership Expansion agreements 9 Boosting sa
Slide 32: Historical financials – capacity and volumes
Petra Foods’ Cocoa Ingredients Division Historical financials – capacity and volumes Grinding capacity (kMT) and sales value (USDm) – 2002-2012 Sales value 2002: 160 Sales value 2011: 1,276 395 405 370 370 310 320 240 220 200 200 100 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q3 2012 Sales vo
Slide 33: Historical financials – profitability and assets
Petra Foods’ Cocoa Ingredients Division Historical financials – profitability and assets EBITDA / MT of sales volume (USD / MT) – 2002-2012(1) 250 208 221 204 215 198 190 159 136 119 100 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 9M 2012 EBITDA (USDm) – 2002-2012
Slide 34: Key transaction parameters
Key transaction parameters X Acquisition price: USD 950 mio(1) X Transaction structure: Share deal X EV/EBITDA multiple: 14.3x (2011) 9.2x – 9.7x post run-rate synergies(2) X Run-rate synergies: CHF 30 - 35 mio p.a. by year 4 (contribution to EBIT) X Financing: Fully underwritten bridge loan for tot
Slide 35: Key metrics
Key metrics In CHF mio Cocoa Cocoa Ingredients Ingredients Division Division FY 31-Aug 2012 (FY Aug 2012) (FY Dec 2011)(1) (9M Sep 2012)(2) Group volume (in kMT) 1,379 265(3) 188(3) Group revenue 4,830 1,132 732 EBITDA 434 59 33 % margin 9.0% 5.2% 4.5% EBIT 353 44 20 % margin 7.3% 3.9% 2.8% EBIT per
Slide 36: Numerous sources of synergies identified
Numerous sources of synergies identified Optimized Sourcing and product flows 1 5 Optimization of available capacity X Reduce transportation / logistics X Utilization of complementary costs through a more efficient “pockets of excess capacity” in utilisation of the combined network the Petra Foods a
Slide 37: Key figures of the acquired business – Guidance FY 13/14
Key figures of the acquired business Guidance FY 13/14 X Additional sales volume: 230,000 tonnes X Additional Net Sales Value: CHF 1.0-1.1 mio X Additional EBITDA: CHF 45-50 mio X Additional EBIT: CHF 30-35 mio (before synergy related costs) X Additional financing costs: CHF 30 to 32 mio (depending
Slide 38: Volatility Mitigation Potentials
Volatility Mitigation Potentials X Butter processing mainly used to support internal chocolate production X Increase share of cost plus / combined based deals in total sales volumes (ensures stable / predictable profitability level) X Enhanced purchasing platform Centralize bean sourcing Central
Slide 39: Appendix
Appendix January 2013 Barry Callebaut – Roadshow presentation – Q1 2012/13 39
Slide 40: 10 Reasons to invest in Barry Callebaut
10 Reasons to invest in Barry Callebaut World leader in high-quality cocoa and chocolate products Cost Leadership along the entire value chain with a continuous improvement structure Leader and growing presence in emerging markets World’s largest supplier of Gourmet & Specialties chocolate for artis
Slide 41: Accelerated sales, preparing for future growth
Key figures 2011/12 – from continuing operations Accelerated sales, preparing for future growth Twelve months - Sep 2011-Aug 2012 [CHF m] Change in % Change in % FY 2011/12 FY 2010/11 In local (restated) currencies Sales volume [in tonnes] 8.7% 1'378'856 1'268'925 Sales revenue 11.5% 8.3% 4'829.5 4'
Slide 42: Significant investments this year temporarily affected key ratios
Balance Sheet Significant investments this year temporarily affected key ratios Change Aug 12 Aug 11 in % Total Assets [CHF m] 9.6% 3'576.6 3'263.1 Net Working Capital [CHF m] 17.0% 1'039.2 888.1 Non-Current Assets [CHF m] 17.9% 1'424.8 1'208.4 Net Debt [CHF m] 19.4% 942.9 789.8 Shareholders' Equity
Slide 43: Stable financing structure with average tenor 6 years
Net debt Stable financing structure with average tenor 6 years Total sources (CHF m) 2-3 years 103 7% • Diversified & long-term funding structure refinanced last year • More than 70% of interest on a fixed basis, rest floating 4-5 years 132 588 50% • Bank loan as secure back-up facility for more att
Slide 44: Investments support the growth of our business
CAPEX development Investments support the growth of our business in mCHF 5.2% 4.4% 250 3.3% CAPEX as % of sales revenue 3.0% 2.8% Average = 3.8% 218 190 174 144 145 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 PLAN January
Slide 45: 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 (11/12): 3’962’000 MT X About 70% of total cocoa beans others come from West Africa 9% Ecuador 5% X BC processed ~603,000 tonnes of Brazil* Ivory cocoa beans or 15% of total world 5% Coast* harvest 39% Cameroo