Chocoladefabriken Lindt & Spruengli Ag · SIX:LISN
Chocoladefabriken Lindt & Spruengli — Chocoladefabriken Lindt & Sprüngli — FY2016 Earnings Presentation
64 slides from Chocoladefabriken Lindt & Spruengli's earnings presentation, Mar 7, 2017
Slide 1: Analysts' Conference Financial Year 2016
Analysts‘ Conference Financial Year 2016 Maître Chocolatier Suisse Depuis 1845
Slide 2: Group Management
Group Management Martin Hug Rolf Fallegger Alain Germiquet Kamillo Kitzmantel Group CFO Int. Marketing, Global Retail, Int. Sales, CEO Switzerland, Country Responsibility Country Responsibility Duty Free, DIS Dr Dieter Weisskopf Group CEO Dr Adalbert Lechner Andreas Pfluger Guido Steiner Uwe Sommer
Slide 3: Lindt & Sprüngli Organization
Lindt & Sprüngli Organization Design principles for future oriented organization structure Quick & Agile • Flat hierarchy Future Oriented • Transition to generation change Geographical Set-up • Allow focus & synergies • Internal Sales: growing importance Functions Split • Internal Marketing & Retail
Slide 4: Agenda
Agenda 1. Key figures Financial Year 2016 D. Weisskopf 2. Insights Markets ● North America D. Weisskopf ● United Kingdom R.Fallegger ● Germany A.Lechner ● Switzerland/Duty Free K.Kitzmantel ● All other markets A.Germiquet 3. Investments G.Steiner 4. Detailed financial figures 2016 M.Hug 5. Outlook D
Slide 5: Key Figures
Key Figures Maître Chocolatier Suisse Depuis 1845
Slide 6: One of the most challenging years in decades
One of the most challenging years in decades Challenges of the financial year 2016 Cocoa prices at Global concerns Continued Integration of Stagnation of high level – re: economic aggressive price Russell Stover in overall US- decline only & political demand from challenging US chocolate market star
Slide 7: P&L Statement L&S Group
P&L Statement L&S Group Organic growth of +6.0% and EBIT margin increase of +20 BP fully in line with long term guidance CHF million 2015 2016 Growth in CHF Sales 3 653.3 3 900.9 +6.8% Growth in local currency +6.0% EBITDA 645.8 714.0 +10.6% Margin 17.7% 18.3% EBIT 518.8 562.5 +8.4% Margin 14.2% 14.
Slide 8: Shareholder Return
Shareholder Return Dividend payment of CHF 880 (reg.) or +10.0% vs. 2015 / continuous increase over the past 20 years 2012 2013 2014 2015 2016* ∆% 2016 Vs. 2012 Dividend Reg. (CHF) 575 650 725 800 880 53.0% • From Agio 535 555 325 400 300 • From Retained Earnings 40 95 400 400 580 Increase (CHF) 75
Slide 9: Lindt & Sprüngli around the globe
Lindt & Sprüngli around the globe 12 370 24 13’540 (+ 360 y.o.y.) ~100 Production Shops Subsidaries Employees Distributors facilities worldwide worldwide FTEs Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 9
Slide 10: Brand Portfolio
Brand Portfolio Global brand Key Products/ Brands > 75% of sales LINDOR EXCELLENCE SEASON PRALINES Regional brands ~ 22% of sales Local brand ~ 3% of sales Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 10
Slide 11: Sales Analysis − Markets
Sales Analysis − Markets Equal Weight of sales Europe vs. North America Total Sales CHF 11.7% NAFTA 3.901 bn EUROPE ALL OTHER MARKETS 42.6% 45.7% Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 11
Slide 12: NAFTA
NAFTA Confectionery Market NAFTA ● Political and economic uncertainty dampening consumer sentiment ● US total chocolate market stagnating 2016 vs. past years growth of +3 - 4% ● Premium chocolate segment continuing to outperform total chocolate market growth – confirmed trading up ● Brick-and-mortar
Slide 13: Europe
Europe Confectionery Market Europe ● Positive growth of most confectionery markets at low levels ● High political “instability” within the European Union impacting consumer mood ● Aggressive price pressure by trade partners from discounters Lindt & Sprüngli in Europe ● Organic sales growth of + 7.4%
Slide 14: All other markets
All other markets All other confectionery Markets ● Challenging economic environment in Brazil and South Africa ● Australia, UAE, China & Japan showing stable to improving economic growth ● Dynamic premium chocolate market – growth in all markets Lindt & Sprüngli in all other markets ● Total sales i
Slide 15: Global Retail
Global Retail Retail stores around the world ● Chocolate shops and cafés have a big impact on brand familiarity and image values ● Diverse concept of store types under Lindt, Russell Stover and Ghirardelli brand and visibility on high-street locations ● Almost 370 retail locations worldwide and more
Slide 16: New locations strengthening the brand
New locations strengthening the brand Lindt Shop - Switzerland Lindt Shop - Brazil Ghirardelli - USA § Lindt Shop - Spain Lindt Café - Japan Russell Stover – USA Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 16
Slide 17: Market Insights
Market Insights Maître Chocolatier Suisse Depuis 1845
Slide 18: North America
North America SALES NORTH AMERICA 11.7% USD 6.0% North America Germany 1.677 bn 42.6% France 5.3% CH (incl. Exports) Italy 6.2% UK Rest of Europe 4.3% CH All other markets 9.1% incl. Export 9.8% 14.1% Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 18
Slide 19: North America - Performance
North America - Performance Lindt & Sprüngli in North America ● Organic sales growth +3.4% ● Lindt: Good growth in the seasonal business and soft development in every-day-business ● Ghirardelli: Strong sales growth plus market share gains in the confectionery & baking chocolate division ● Russell St
Slide 20: North America - Highlights
North America - Highlights • Strong in seasonal business: Lindor Pumpkin Spice for autumn and Halloween • Great Visibility for Lindt at the Golden Globes in Hollywood: Lindt dominated lifestyle press as official confectionery partner of the Golden Globes for the second time and was featured by many
Slide 21: United Kingdom
United Kingdom SALES UK 11.7% GBP 6.0% North America Germany 155 mio. France 5.3% 42.6% CH (incl. Exports) Italy 6.2% UK 4.3% CH Rest of Europe 9.1% incl. All other markets Export 9.8% 14.1% Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 21
Slide 22: United Kingdom - Performance
United Kingdom - Performance Confectionery Market UK ● Confectionery market declining (mainly Snacking and Bars) ● Easter and Christmas Seasons still growing ● Polarized Market – Lindt and Ferrero the only manufacturers in growth Lindt & Sprüngli UK ● Strong double digit organic sales growth of +14%
Slide 23: Lindor – a real success story
Lindor – a real success story ● Strong momentum behind an advertising focused marketing plan ● Massive in-store and out-of-store Sampling program ● Exploitation of new product formats (Lindor treat bar) Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 23
Slide 24: Strong POS activation
Strong POS activation ● Great Gold Bunny personalization in Tesco /Selfridges - 3 million contacts with 16.000 Gold Bunnies personalized ● Differentiation unlocks feature space ● Christmas gift stations with competitions / gift with purchase to drive higher basket spend ● Success has guaranteed Tesc
Slide 25: UK Retail expansion
UK Retail expansion ● Strong UK retail growth of +57% (excluding new openings +9.4%) ● 5 new store openings including 3 new boutiques in Manchester, Leeds and Liverpool Liverpool Manchester Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 25
Slide 26: Germany
Germany SALES GERMANY 11.7% EUR 6.0% North America Germany 504.9 mio. France 42.6% 5.3% CH (incl. Exports) Italy 6.2% UK 4.3% CH Rest of Europe 9.1% incl. All other markets Export 9.8% 14.1% Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 26
Slide 27: Germany - Performance
Germany - Performance Confectionery Market German ● Third largest chocolate market world wide (CHF 7.7 bn) with high per capita-consumption of 9kg / pa (82 mio. habitants) ● Chocolate market is growing in moderation, due to price increases ● Intensive price competition due to high discount share Lin
Slide 28: Added value for trade partners
Added value for trade partners Strong trade partnerships ● Differentiation to hard discount - Consequent premium price positioning ● High added value ● Growth driver with innovations (LINDT HELLO, Mini Pralinés, Teddy etc.) ● First-class brand experience at POS and in our retail stores ● Extension o
Slide 29: Consistent strengthening of the brand
Consistent strengthening of the brand ● Uncompromised quality orientation and consistent premium positioning ● 360° degrees implementation of the Lindt Maîtres Chocolatiers campaign ● High innovational power ● First-class brand experience at POS and in our retail stores Innovation Highlights 2016 Fi
Slide 30: Retail Highlights 2016
Retail Highlights 2016 ● Strong growth in retail (+20%) ● Top locations at high traffic places Düsseldorf Dresden Leipzig Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 30
Slide 31: Switzerland
Switzerland SALES SWITZERLAND 11.7% incl. Duty Free / Distributors 6.0% North America CHF Germany 356.2 mio 5.3% 42.6% France CH (incl. Exports) Italy 6.2% UK Rest of Europe 4.3% CH 9.1% incl. All other markets Export 9.8% 14.1% Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis
Slide 32: Switzerland - Performance
Switzerland - Performance Confectionery Market Switzerland ● Generally very challenging market environment in slightly declining chocolate market ● Competitors continue to expand their sales channels through hard discounters ● Continued shopping tourism into neighboring countries Lindt & Sprüngli Sw
Slide 33: Switzerland - Highlights
Switzerland - Highlights ● #mylindormoment campaign boosted visibility of the brand in social media and among influencers (>13 mio contacts) ● Opening of Switzerland’s biggest Lindt chocolate shop in Kilchberg ● Focus on strongly performing key franchise: Lindor by far biggest brand (+8%) at an all-
Slide 34: Duty Free / Distributors - Highlights
Duty Free / Distributors - Highlights ● Lindt Duty Free was fastest growing confectionery brand 2016 (TRIQ) ● Market share gains in all regions (Europe, Americas, MEIA, Asia) ● New Shop-in-Shop concepts with travel retail partners at Hong Kong, Rio, Mumbai and Paris ● Exclusive Travel Retail product
Slide 35: All other markets
All other markets 11.7% All other markets North America CHF 6.0% Germany 457.1 mio 5.3% 42.6% France CH (incl. Exports) Italy 6.2% UK 4.3% CH Rest of Europe 9.1% incl. All other markets Export 9.8% 14.1% New markets development – Establishing new distribution in Iran, Myanmar, Mongolia, Vietnam and
Slide 36: All other markets - Australia
All other markets - Australia Australian Confectionery Market ● Stagnating chocolate market ● Concentrated modern trade environment ● Aggressive promotional mechanisms by trade partners Lindt & Sprüngli Australia ● Sales CHF 168.8 mio (+6.7%) ● Constant high market performance with leadership market
Slide 37: Australia - Highlights
Australia - Highlights ● Opening of Marsden Park in Sydney Australia – Lindt & Sprüngli Australia Headquarters – Warehouse and Factory Outlet ● AUD 60 mio investment ● Packing facilities allowing bespoke packaging for Australian market and higher flexibility and significant cost savings in supply ch
Slide 38: All other markets – Japan
All other markets – Japan ● Sales +40.5% - core growth with Lindor Pick & Mix ● Test of new stores with smaller footprint – Concept focused on chocolate only (without food and beverage offer) ● Distinct high premium positioning ● Expansion in Retail – Opening of 5 new stores in 2016 (Total of 20 sto
Slide 39: All other markets – South Africa
All other markets – South Africa ● Sales 2016 achieving +20.7% growth ● Year on year double digit growth since foundation in 2011 ● Expansion in Retail – Opening of 4 new stores in 2016 (Total of 8 stores) in biggest Shopping Centres Financial Analysts' Conference FY2016 Maître Chocolatier Suisse De
Slide 40: Investments Operations
Investments Operations Maître Chocolatier Suisse Depuis 1845
Slide 41: Operations 2016 − Investments
Operations 2016 − Investments Major line additions in 2016 ● Investments of 234 mio ● Squares and sticks line Driven by capacity expansion: Installation of modern line to produce and wrap squares and sticks at Stratham - 30 % Buildings / Land - 60 % Machinery - 10 % All others ● Lindor ball capacity
Slide 42: Operations 2016 − Efficiency
Operations 2016 − Efficiency Lindt Production Way ● Group-wide Operational Excellence Program Based on TPM philosophy Goal to eliminate all inefficiencies in supply chain ● Improvements in structure and execution in factories ● Multitude of big and small projects, focused on safety, quality, and eff
Slide 43: Operations 2016 – Safety & Quality, Logistics
Operations 2016 – Safety & Quality, Logistics Safety & Quality ● Safety Further improvement in safety KPI through targeted activities Integration of Russell Stover and L&S Australia in safety program ● CRM system Integration of Russell Stover in the group-wide system to capture all consumer interact
Slide 44: Detailed Financial Figures
Detailed Financial Figures Maître Chocolatier Suisse Depuis 1845
Slide 45: Sales growth − In CHF
Sales growth − In CHF Continuation of strong growth path Absolute in CHF million (as published) Growth Rate in % (as published) 3 700 3 901 3 653 3 200 3 385 2 700 2 883 2 670 2 200 7.3% 8.0% 17.4% 7.9% 6.8% 1 700 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suis
Slide 46: Sales − growth factors
Sales − growth factors Balanced growth between volume and price / mix 8% 7% 0.8% 6.8% 6% 2.1% 6.0% 5% 4% 3.9% 3% 2% 1% 0% Volume Price / Mix Organic Forex Sales in CHF Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 46
Slide 47: Organic growth by segment
Organic growth by segment Strong growth in All Other and Europe 12% 10% 10.2% 8% 7.4% 6% 4% 3.4% 2% 0% EUROPE NAFTA All Other Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 47
Slide 48: Material costs
Material costs Material costs including inventory-changes decreased by -40 BP Abolute in CHF million 1 400 In % Sales 1 376 1 200 1 306 1 228 1 000 940 943 800 600 400 200 35.2% 32.7% 36.3% 35.7% 35.3% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis
Slide 49: Cocoa price and butter ratio
Cocoa price and butter ratio Increasing butter ratio (over the past 12 months) impacting material costs Cocoa beans Prices in GBP t Butter ratio 2 500 2.70 2 400 2.60 2 300 2.50 2 200 2 100 2.40 2 000 2.30 1 900 2.20 1 800 2.10 1 700 1 600 36.3% 2.00 Jan. 16 22.5%Mrz. 16 22.7% Mai. 16 Jul. 16 21.2%
Slide 50: Personnel expenses
Personnel expenses Decreased expense ratio thanks to efficiency gains In CHF million In % Sales 800 846 807 720 600 655 600 400 200 22.5% 22.7% 21.2% 22.1% 21.7% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 50
Slide 51: Operating expenses
Operating expenses Continued good support of marketing investments in 2016 Absolute in CHF million 1 000 In % Sales 982 912 800 868 795 708 600 400 200 26.5% 27.6% 25.6% 25.0% 25.1% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017
Slide 52: Operating profit (EBIT)
Operating profit (EBIT) Increase in EBIT Margin by +20 BP to 14.4% (EBITA margin 14.6%) Absolute in CHF million 600 In % Sales 563 500 519 474 400 404 300 330 200 100 +XXX 12.4% +XXX 14.0% +XXX 14.0% +XXX 14.2% +XXX 14.4% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocol
Slide 53: EBITDA
EBITDA Strong EBITDA Margin increase by 60 BP Absolute in CHF million In % Sales 700 714 600 646 588 500 503 400 436 300 200 100 16.3% 17.5% 17.4% 17.7% 18.3% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 53
Slide 54: Capital investments
Capital investments Continued high investments to cope with volume growth Absolute in CHF million 240 253 235 234 200 191 160 120 145 80 40 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 54
Slide 55: Depreciation and impairments
Depreciation and impairments Increased depreciation ratio in view of high CAPEX Absolute in CHF million In % Sales 140 152 120 127 100 114 106 99 80 60 40 20 4.0% 3.4% 3.4% 3.5% 3.9% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 201
Slide 56: Tax rate
Tax rate Decrease in 2016 due to further tax optimization In % of income before taxes 30% 27.5% 25% 25.6% 25.5% 24.5% 24.2% 20% 15% 10% 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 56
Slide 57: Net income
Net income Increase in net income margin by +40 BP to 10.8% Absolute in CHF million In % Sales 400 420 350 381 343 300 303 250 245 200 150 100 50 9.2% 10.5% 10.1% 10.4% 10.8% 0 2012 2013 2014 2015 2016 Financial Analysts' Conference FY2016 Maître Chocolatier Suisse Depuis 1845 March 7th, 2017 57
Slide 58: Net Financial Position − development
Net Financial Position − development Decrease of net debt to 0.6x EBITDA thanks to good cash flow generation Net Cash in CHF million 0 -166 -166 -200 -400 -481 -481 -473 -234 -681 -400 515 8 -187 106 -600 -800 2015 Operating Cash Investment Dividend Capital Increase & CTA / Other 2016 Flow Activitie
Slide 59: Balance sheet
Balance sheet Strong equity further strengthened Equity in CHF million Equity B/S Ratio in % Net Financial Position in CHF million 60% -50 3 500 50% -250 3 674 40% 57.1% 3 000 3 490 55.7% 30% -473 -450 -681 20% 2 500 -650 10% 2 000 0% -850 2015 2016 2015 2016 2015 2016 Financial Analysts' Conference
Slide 60: Outlook
Outlook Maître Chocolatier Suisse Depuis 1845
Slide 61: Outlook - Environment
Outlook - Environment Key challenges confectionery landscape • Europe: Slow GDP growth / US: Economic uncertainties / BRICS: Weakness Macro • Election in Europe & Geo-politics regarding trade barriers Challenges • FX & commodity volatility • Two tier consolidation: Trade partners • Evolving demograp
Slide 62: Outlook - Lindt & Sprüngli
Outlook - Lindt & Sprüngli Lindt & Sprüngli’s responses • Further strengthen distinctiveness of the Lindt brand in all markets Marketing • Launch innovative new products meeting consumer needs & dreams Excellence • Increase rate of sales of core business «Lindor», «Excellence» plus «Seasonal» • Expl
Slide 63: Outlook - Summary
Outlook - Summary Outlook - Summary ● Premium chocolate market to continue its positive trend ● Lindt & Sprüngli’s strong global brands and strategic business actions to result in continued market share gains ● Efficiency- and cost improvement programs already in place to lead to additional cash gen
Slide 64: Disclaimer
DISCLAIMER This presentation contains forward looking statements which reflect Management‘s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements.
Chocoladefabriken Lindt & Sprüngli — FY2016 Earnings Presentation on 6ix