Aryzta Ag · SIX:ARYN
Aryzta — FY2017 Earnings Presentation
38 slides from Aryzta's earnings presentation, Sep 25, 2017
Slide 1: FY17 Results
FY17 Results 25 September 2017
Slide 2: Forward Looking Statement
Forward Looking Statement This document 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
Slide 3: Key Developments
Key Developments • Management • Board & Governance • Capital Structure • Scrip dividend • Impairment • Picard 3 September 2017
Slide 4: Financial Review
Financial Review 4 September 2017
Slide 5: ARYZTA Group – Underlying Income Statement
ARYZTA Group – Underlying Income Statement REVENUE 2017 3,796,770 in EUR ’000 July 2017 July 2016 % Group revenue 3,796,770 3,878,871 (2.1)% EBITDA 420,307 609,640 (31.1)% in EUR ’000 EBITDA margin 11.1% 15.7% (460)bps Depreciation (142,997) (124,773) 14.6% EBITA 277,310 484,867 (42.8)% EBITDA 2017
Slide 6: Group Underlying Net Profit Reconciliation
Group Underlying Net Profit Reconciliation in EUR ’000 July 2017 July 2016 Underlying net profit – continuing operations 179,026 311,542 Intangible amortisation (174,640) (176,241) Tax on amortisation 32,997 36,715 Share of JV intangible amortisation and restructuring costs, net of tax 17,099 (3,966
Slide 7: Impairments
Impairments ARYZTA ARYZTA ARYZTA ARYZTA in EUR ’000 Europe North America Rest of World Group Impairment of goodwill (103,000) (491,872) – (594,872) Impairment of intangibles – (138,642) – (138,642) Impairments and disposal of fixed assets (1,320) (126,414) 1,532 (126,202) Total (104,320) (756,928) 1
Slide 8: Acquisition and restructuring related costs
Acquisition and restructuring related costs in EUR ’000 2017 2016 Acquisition-related costs – (2,330) Severance and other staff-related costs (21,367) (65,447) Contractual obligations (7,295) (6,738) Advisory and other costs (5,463) (8,805) Labour-related business interruption (16,349) – Acquisition
Slide 9: ARYZTA Europe
ARYZTA Europe Revenue (0.5)% REVENUE 2017 €1.74bn EBITDA (23.3)% EBITDA 2017 EBITDA margin (360) bps €211.1m EBITDA margin 2017 • Organic revenue growth of 1.4% comprised a volume decline of (0.6)% and a price/mix improvement of +2.0% as most geographies 12.1% in Europe performed well • Princi
Slide 10: ARYZTA North America
ARYZTA North America Revenue (5.7)% REVENUE 2017 €1.8bn EBITDA (43.3)% EBITDA 2017 EBITDA margin (620) bps €170.1m • Organic revenue declined (6.3)% comprised a volume decline EBITDA margin 2017 of (8.5)% and a price/mix improvement of +2.2% 9.5% • Revenue decline driven by known and previousl
Slide 11: ARYZTA Rest of World
ARYZTA Rest of World Revenue 15.8% REVENUE 2017 €259.1m EBITDA 13.6% EBITDA 2017 EBITDA margin (30) bps €39.1m EBITDA margin 2017 • Organic revenue growth of 7.2% comprised a volume increase of 4.7% and a price/mix improvement of +2.5% 15.1% • The business experienced steady revenue and EBITDA
Slide 12: Refinancing
Refinancing • Unsecured €1,800m underwritten Bank RCF and Term Loan refinancing Comprises €1,000m amortising Term Loan and €800m RCF Underwritten by 4 key relationship banks General Syndication phase commencing Maximum Net Debt: EBITDA covenant: > 4.75x for test at 31 July 2017 and 31 January 2018 G
Slide 13: Group Financing
Group Financing Year ended 31 July 2017 July 2017 July 2016 Net Debt: EBITDA (syndicated bank RCF) 4.15x 2.90x • Debt Financing »» Net Debt of €1,733.9m »» Weighted average maturity of 2.52 years »» Weighted average interest cost of 2.18% »» Interest cover including Hybrid interest of 4.64x • Hybrid
Slide 14: Cash generation
Cash generation in EUR’000 July 2017 July 2016 EBITDA 420,307 609,640 Working capital movement 5,613 40,586 Working capital movement from debtor securitisation 1 16,766 54,258 Capital expenditure (102,577) (213,935) Proceeds from sale of fixed assets and investment property 36,218 1,030 Acquisition
Slide 15: Dividend
Dividend • Scrip dividend proposed • To be offered out of new shares • Proposed scrip dividend (in euro value terms) »» 15% of underlying fully diluted EPS »» 201.6 cent times 15% = €0.3024 (CHF 0.34891) • Deferral of hybrid dividend • Temporary measure consistent with plan to deleverage 1 Based on
Slide 16: Picard
Picard Joint Venture Underlying Income Statement in EUR `000 Picard Signature July 2017 July 2016 Revenue 1,398,030 117,819 1,515,849 1,402,987 EBITDA 203,117 15,902 219,019 197,851 EBITDA margin 14.5% 13.5% 14.4% 14.1% Depreciation (29,580) (6,397) (35,977) (32,210) EBITA 173,537 9,505 183,042 165,
Slide 17: Financial Focus
Financial Focus • Deleverage through improved performance, cash conversion and realisations • Best current estimate for FY18 EBITDA is to be broadly in line with FY17 given the range of internal and external challenges 17 September 2017
Slide 18: Strategy & Outlook
Strategy & Outlook 18 September 2017
Slide 19: Strategy & Outlook
Strategy & Outlook • ARYZTA is the global leader in the growing frozen bakery sector • Well invested assets, good geographic reach and good customer positioning • Strategic focus on B2B Frozen Bakery and European Food Solutions business • The areas we will not focus on: > Not being a Retailer > Not
Slide 20: Appendix
Appendix 20 September 2017
Slide 21: Segmental EBITDA and EBITA
Segmental EBITDA and EBITA Segmental EBITDA EBITDA EBITDA % Margin Margin % in EUR `000 July 2017 July 2016 Change 2017 2016 Change ARYZTA Europe 211,128 275,099 (23.3)% 12.1% 15.7% (360) bps ARYZTA North America 170,096 300,132 (43.3)% 9.5% 15.7% (620) bps ARYZTA Rest of World 39,083 34,409 13.6% 1
Slide 22: Volume & Price/Mix Trend
Volume & Price/Mix Trend Q1 2017 Q2 2017 Q3 2017 Q4 2017 FY 2017 ARYZTA Europe Volume % 1.8% (0.1)% 1.3% (4.7)% (0.6)% Price/Mix % (0.4)% 0.7% 3.0% 4.0% 2.0% Organic growth % 1.4% 0.6% 4.3% (0.7)% 1.4% ARYZTA North America Volume % (5.7)% (5.5)% (6.7)% (16.1)% (8.5)% Price/Mix % 1.0% (0.3)% 2.4% 5.5
Slide 23: Return on Invested Capital
Return on Invested Capital North Rest Total in EUR million Europe America of World Group 2017 Group share net assets 1,676 1,710 194 3,580 TTM EBITA 147 100 30 277 ROIC1 8.8% 5.9% 15.3% 7.7% 2016 Group share net assets 1,903 2,488 198 4,589 TTM EBITA 215 243 26 484 ROIC1 11.3% 9.8% 13.0% 10.5% In re
Slide 24: Balance Sheet
Balance Sheet in EUR ‘000 2017 2016 Property, plant and equipment 1,386,294 1,594,885 Investment properties 19,952 24,787 Goodwill and intangible assets 2,651,937 3,617,194 Deferred tax on goodwill and intangibles (82,534) (210,635) Working capital (334,078) (361,307) Other segmental liabilities (61
Slide 25: Net Debt & Investment Activity
Net Debt & Investment Activity in EUR’000 July 2017 July 2016 Opening net debt as at 1 August (1,719,617) (1,725,103) Cash flow generated from activities 196,153 266,732 Disposal of businesses, net of cash and finance leases – 42,060 Proceeds from disposal of Origin, net of cash disposed – 225,101 I
Slide 26: Debt Financing
Debt Financing Outstanding Debt Funding as at 31 July 2017 in EUR ’000 Syndicated Bank RCF (1,193,912) Term loan facility (590,000) Schuldschein (384,289) Gross term debt (2,168,201) Upfront borrowing costs 13,916 Term debt, net of upfront borrowing costs (2,154,285) Finance leases (1,525) Cash and
Slide 27: Hybrid Funding
Hybrid Funding Perpetual Callable Subordinated Instruments Coupon Step-up interest if not called in EUR ’000 First call date April 2018 CHF 400m 4.0% 6.045% + 3 Month Swiss Libor (352,740) First call date March 2019 EUR 250m 4.5% 6.77% + 5 Year Euro Swap Rate (250,000) First call date April 2020 CHF
Slide 28: Five Year Cash Generation
Five Year Cash Generation In EUR million July 2013 July 2014 July 2015 July 2016 July 2017 Five Year Total EBITDA 500.4 589.2 638.3 609.6 420.3 2,757.8 Working capital movement, including securitisation (11.2) 46.6 40.7 94.9 22.4 193.4 Capital expenditure, net (216.2) (336.8) (410.1) (212.9) (66.3)
Slide 29: Five Year Net Debt
Five Year Net Debt In EUR million July 2013 July 2014 July 2015 July 2016 July 2017 Opening net debt as at 1 August (976.3) (849.2) (1,642.1) (1,725.1) (1,719.6) Cash flow generated from activities 93.8 74.1 21.4 266.7 196.2 Disposal of businesses, net of cash and finance leases – – 22.7 42.1 – Proc
Slide 30: EUR Closing and Average Rates
EUR Closing and Average Rates Closing Rates July 2017 July 2016 % Change Swiss Franc 1.1340 1.0855 (4.5)% US Dollar 1.1756 1.1162 (5.3)% Canadian Dollar 1.4674 1.4562 (0.8)% Sterling 0.8933 0.8399 (6.4)% Average Rates July 2017 July 2016 % Change Swiss Franc 1.0818 1.0905 0.8% US Dollar 1.0938 1.110
Slide 31: CEO Compensation - FY18
CEO Compensation - FY18 –– Base Salary »» €850,000 –– Short Term Bonus »» to a maximum of 150% of base salary –– LTIP »» to a maximum of 200% of base salary Base Salary 22% Variable Contingent Pay 78% 31 September 2017
Slide 32: Major F&B trends in 2017
Major F&B trends in 2017 The major F&B trends in 2017 are expected to provide a mix of headwinds and tailwinds for the baked goods industry F&B Mega Trends Consumer and market impact 1 Shifting consumer package size preferences • Consumers are increasingly seeking smaller portion sizes, particularly
Slide 33: ARYZTA's key channels
ARYZTA’s key channels Channel Retail ISB QSR Foodservice Retail Center Aisle ARYZTA capability fit High High High Low Key trends impacting 1 Shifting consumer package size Snacking & food on-the-go Snacking & food on-the-go Shifting consumer package channel preferences ì 3 ì 3 ì 1 size preferences ì
Slide 34: ARYZTA's unique selling proposition
ARYZTA’s unique selling proposition ARYZTA’s unique selling proposition is as the world’s leading global, frozen, B2B bakery solutions provider Extensive product range Large-scale capabilities Leading B2B Scale to serve big customers in Large product offerings Retail, QSR, Convenience & Independent
Slide 35: ARYZTA Group – International Footprint
ARYZTA Group – International Footprint 57 Bakeries 29 Countries Rest of World 7% Top 20 Savoury & Other Customers Large QSR 53 % 13 % Bread Rolls & Europe Retail Artisan Loaves Channel 24 % Geography 46 % 32 % Customer Capability 38 % Revenue Revenue Revenue Revenue €3.8bn Convenience & €3.8bn €3.8b
Slide 36: ARYZTA Group 2017 Underlying EBITDA Bridge
ARYZTA Group 2017 Underlying EBITDA Bridge FX Impact €4.9m +0.8% Underlying Acquisitions, Growth net of Disposals ARYZTA €(1.7)m Underlying Rest of World (0.3)% Growth €1.8m ARYZTA Europe +0.3% €(62.3)m (10.2)% Underlying Growth FY16 ARYZTA FY17 EBITDA North America EBITDA €609.6m €(132.0)m €420.3m
Slide 37: ARYZTA Group 2017 Underlying Fully Diluted EPS Bridge
ARYZTA Group 2017 Underlying Fully Diluted EPS Bridge Weighted Average FX Impact Shares +5.5c Outstanding +€4.9m +0.3% Acquisitions, net of Disposals (1.9)c (€1.7m) Underlying Growth ARYZTA Tax NCI Europe Underlying +26.8c +1.3c (70.1)c Funding +€23.8m FY16 (€62.3m) Growth Costs +€1.1m ARYZTA EPS Re
Slide 38: Presentation Glossary
Presentation Glossary –– ‘Joint ventures, net of interest and tax’ – presented as profit from joint ventures, net of interest and tax, before non-ERP amortisation and the impact of associated non-recurring items. –– ‘EBITA’ – presented as earnings before interest, taxation, non-ERP related intangibl