Barry Callebaut Ag · SIX:BARN
Barry Callebaut — Q1 2013/14 Earnings Presentation
47 slides from Barry Callebaut's earnings presentation, January 2014
Slide 1: Roadshow presentation – Q1 2013/14
Barry Callebaut Roadshow presentation – Q1 2013/14 January, 2014 Because we love chocolate…
Slide 2: Agenda
Agenda X BC at a glance X Highlights Q1 2013/14 X Strategy update & Outlook January 2014 Q1 2013/14 Roadshow presentation 2
Slide 3: 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 4: 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 & Specialties chocolate for artisanal Global Sourcing customers & Coco
Slide 5: Robust business model
Robust business model Barry Callebaut business model 100g chocolate tablet contains: Gourmet & Specialties Cocoa Products • Price List r • Market prices Cocoa butter • Combined ratio 10% 20% • Cost plus Milk powder Sugar Other Food Manufacturers • Cost plus 70% X Raw materials represent about 80% of
Slide 6: Agenda
Agenda X BC at a glance X Highlights Q1 2013/14 X Strategy update & Outlook January 2014 Q1 2013/14 Roadshow presentation 6
Slide 7: Highlights Q1 2013/14
Highlights Q1 2013/14 • Solid start +19.5% volume growth incl. the recently acquired cocoa business (+4.6% stand- alone) • Main growth drivers were the recently acquired cocoa business, emerging markets (+19.1%) and Gourmet (+9.7%) • Good progress on integration of Petra Foods Cocoa business • Mid-t
Slide 8: Solid start- good progress on integration of acquired cocoa business
Solid start- good progress on integration of acquired cocoa business Europe Americas Asia-Pacific Global Sourcing & Cocoa Volume growth +1.5% +10.3% +7.4% +91.0%1 +4.4%2 Market volume +2.9% +3.0% +9.3% growth3 Sales revenue +70.0%1 +11.5% +9.0% +10.2% (in local -6.3%2 currencies) 1) Including acquis
Slide 9: Strong volume growth in the Global chocolate market
Sep - Nov 2013 Strong volume growth in the Global chocolate market Chocolate confectionery market – top 25 countries 1 Total + 3.4% EE +4.5% WE 2.2% US +2.1% APAC +9.3% South America +9.5% 1) Source: Nielsen data (Sep –Nov 2013); - Top 25 countries of the global chocolate market in volume; - USA tot
Slide 10: Raw materials development
Raw materials development 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 13 • Cocoa beans averag
Slide 11: Slight improvement in powder ratios offset by decline of butter ratios
Cocoa processing activity Slight improvement in powder ratios offset by decline of butter ratios European combined ratio - 6 months forward ratio 4.00 Combined ratio 3.29 – Dec 13 3.00 Butter ratio 2.00 1.00 Powder ratio 0.00 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-
Slide 12: Agenda
Agenda X BC at a glance X Highlights Q1 2013/14 X Strategy update & Outlook January 2014 Q1 2013/14 Roadshow presentation 12
Slide 13: Our strategy remains unchanged
Our strategy remains unchanged Vision “Heart and engine of the chocolate and cocoa industry” Expansion Innovation Sustainable, Strategic profitable pillars growth Cost leadership Sustainable Cocoa January 2014 Q1 2013/14 Roadshow presentation 13
Slide 14: 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% 10% of total 20% Group 10% 10% volume 20
Slide 15: Significant expansion of manufacturing footprint
Significant expansion of manufacturing footprint provides diversification and unique competitive advantage Cocoa processing factory Chocolate factory Integrated cocoa & chocolate factory New Factory, under construction or expansion January 2014 Q1 2013/14 Roadshow presentation 15
Slide 16: Long-term outsourcing and strategic partners
Long-term outsourcing and strategic partners, one of our key growth drivers with further potential January 2014 Q1 2013/14 Roadshow presentation 16
Slide 17: 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 1.3% 1.5% Underlying (tonnes) 1.2% 0.6% market growth* -0.7% 2008/09 2009/10 2010/11 2011/12 2012/13 CAGR +11.5% +17.7% EBIT (in constant currencies) 200
Slide 18: Striving for cost leadership while growing at a high pace
Striving for cost leadership while growing at a high pace... Capacity Manufacturing Higher Utilization costs per supply chain tonne costs • Chocolate: 95% due to (target 82-85%) -2.6%1 capacity • Cocoa 92 % constraints (target 90-95%) Energy Optimization Production consumption of materials capacity
Slide 19: Our sustainability initiative in numbers
“Cocoa Horizons”: Execution platform for sustainability projects Our sustainability initiative in numbers Increase sustainable cocoa supply and improve farmer livelihoods Farmer Practices Farmer Education Farmer Health Double yield & improve Train next farmer Clean water & basic quality generation h
Slide 20: Strong innovation funnel with focus on fewer, bolder and bigger projects
Strong innovation funnel with focus on fewer, bolder and bigger projects Project B Project A C B Asia Project J O I N L QPP + Pure D T A Terra Cacao Project C E R U Project D A A N Acticoa C C G T H Sweet Project E Project K A Project M Stevia F Relauch Sweet by fruit T G G Project G E A A Project H
Slide 21: Project «Spring»: Enhancing our leadership in service
Project «Spring»: Enhancing our leadership in service Workstreams Customer segmentation Harmonized processes Customer Service for Quality Assurance New Product Pricing Introduction Today Oct 17 2011 May 8 2012 Dec 15 April June 2013 Sept 2013 Jun 2014 Pre-Spring: Process design Implementation Go-liv
Slide 22: Petra Foods Cocoa Ingredients division – Company overview
Recent acquisition of Petra Foods Cocoa Ingredients division – Company overview Global cocoa business with United States France Netherlands Germany exposure to emerging markets • Largest cocoa products supplier in Asia-Pacific with Philippines around 1,800 employees Thailand • Sales volume of 255,87
Slide 23: Petra Foods 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 • Supporting further chocolate growth by stepping up the integrated cocoa sourcing and processin
Slide 24: The acquisition increases our strength in high growth markets
The acquisition increases our strength in high growth markets Higher demand for product Cocoa Powder demand driven categories containing powder by emerging markets CAGR (11-16F) Annual growth rate 2 -5 % 20 5-9% 3-8% Powder 2-4% Annual growth in volume (‘000 MT) 0-3% 1-2% Asia- South EU North Pacifi
Slide 25: Numerous sources of synergies identified
Numerous sources of synergies identified Optimized Sourcing and Optimization of available 1 product flows capacity 5 • Reduce transportation / logistics • Utilization of complementary costs through a more efficient “pockets of excess capacity” in utilisation of the combined network the Petra Foods C
Slide 26: Integration of the recently acquired cocoa business well on track
Integration of the recently acquired cocoa business from Petra Foods well on track... Organization in place X Regional and global commercial and functional organization Commercial model X Combined cocoa and chocolate sales forces, one face to the customer approach Global Supply Chain X Global manufa
Slide 27: 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 Other players other
Slide 28: Our ambition: preferred, proactive cocoa powder supplier
Our ambition: preferred, proactive cocoa powder supplier Move from Move to X Tactical player X Proactive seller of cocoa products X Strong sourcing base in West X More globally balanced sourcing Africa from origin countries, including Asia and South America X Limited presence in emerging X Greatly e
Slide 29: 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) 2013-18 120 Australasia Latin America 80 40 North America 0 Middle East and Africa -1.0% 0.0%
Slide 30: 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 31: Strong volume growth and EBIT per tonne maintained
Strong volume growth over the last 6 years and EBIT per tonne maintained, excluding negative FX impact Group development 336 308 312 297 297 297 EBIT (CHF) / tonne * at constant currencies 293 289 286 282 256 246 EBIT (CHF) / tonne as reported CAGR +7.8% 1.4 1.5 1.2 1.3 1.0 1.1 Volume (MT mio) from
Slide 32: Our outlook for the next year and mid-term guidance
Outlook & Guidance Our outlook for the next year and mid-term guidance Market / X Long-term growth remains intact: around 2% volume Industry growth X Sensitive economic environment in Southern European markets X Slower growth in some emerging markets, including FX risks X Improvement of combined coc
Slide 33: Appendix
Appendix January 2014 Q1 2013/14 Roadshow presentation 33
Slide 34: 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 35: 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 36: Foreseen profitability improvement of the 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 37: Continued good working capital management
Net Working Capital evolution Continued good working capital management in mCHF Receivables Stocks Payables +263 1’346 +4.3% +103 +77 -41 1’083 1’039 -7 -44 -32 -12 Net Growth Price impact Growth Price impact Growth Price impact Others, scope Net Petra Foods Net Working impact and impact and impact
Slide 38: Stand-alone most ratios improved, total impacted by acquisition
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 39: Significant growth top and bottom-line
Based on our strategy we achieved significant growth top and bottom-line… Sales Volume (in Tons) Divestiture of the consumer business CAGR+6% 1,535 1,376 1,403 1,316 1,166 1,213 1,130 1,011 1,052 1,049 891 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 EBIT (CHF) – from continuing operations
Slide 40: ...while still focusing on high returns
...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 153 144 145 145 115 102 90 69 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2
Slide 41: 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 X Payout of 35 % of Net Profit CAGR +5% 80 80 80 X Not subject to withholding tax2 72 65 Timetable for dividend X Shareholder approval: Dec 11, 2013 (AGM) X
Slide 42: 3 mio tonnes of outsourcing potential for future growth
Expansion 3 mio tonnes of outsourcing potential for future growth Global Industrial Chocolate market in 2012/13= 6,250,000 tonnes* Open market Integrated market Big 4 chocolate confectionary Competitors players Others Others 20% 40% 49% 51% * Company estimates January 2014 Q1 2013/14 Roadshow presen
Slide 43: Capex investments support the growth of our business
Capex investments support the growth of our business in CHFm +5.2% +4.4% +4.5% CAPEX as % of sales revenue +3.0% +3.3% +2.8% Average = 4.0% 250 218 224 200 174 144 145 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 P
Slide 44: Strong operating cashflow despite fast volume growth
Cash flow evolution Strong operating cashflow despite fast volume growth and expansion CAGR 13.2% Negative FX impact 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 January 2014 Q1 2013/1
Slide 45: Working capital rather flat despite 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% 22% 21% 20% 1,083 1,010 1,039 965 888 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 46: 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 Programme 3-5 years Various bilateral LT loans 1,
Slide 47: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer – BC sources locally Total world harvest (12/13): 3’986 TMT X About 70% of total cocoa beans come from West Africa others X BC stand-alone processed 10% Ecuador ~620,000 tonnes or 16 % of the 5% world crop Brazil* Ivory 5% Coast* 37% X BC (including