Barry Callebaut AG · SIX:BARN
Barry Callebaut — HY 2016/17 Earnings Presentation
44 slides from Barry Callebaut's earnings presentation, May 2017
Slide 1: Roadshow presentation - Half-Year Results 2016/17
Roadshow presentation - Half-Year Results 2016/17 April – May 2017
Slide 2: Agenda
Agenda BC at a glance Highlights HY 2016/17 Financial Review Strategy & Outlook Page 2 April - May 2017 HY 2016/17 Roadshow presentation
Slide 3: BC at a glance
BARRY (() BC at a glance April - May 20: —— in gts : .
Slide 4: The heart and engine of the chocolate industry
Who are we? The heart and engine of the chocolate industry A merger between Cacao Barry, the very first chocolate connoisseur since 1842 and Callebaut a chocolate couverture manufacturer expert since 1911 Listed on the SIX Swiss Exchange since 1998 Today, the world's leading manufacturer of high-qua
Slide 5: We are present in the key parts of the cocoa and chocolate value chain
What do we do? We are present in the key parts of the cocoa and chocolate value chain Page 5 April - May 2017 HY 2016/17 Roadshow presentation
Slide 6: FY 2015/16
FY 2015/16 Page 6 April - May 2017 HY 2016/17 Roadshow presentation
Slide 7: A broad offering from standard to the most premium products
What do we offer? A broad offering from standard to the most premium products Cocoa Products Food Manufacturers Gourmet & Specialties Page 7 April - May 2017 HY 2016/17 Roadshow presentation
Slide 8: Our Regional and Product split
How are we organized? Our Regional and Product split HY 2016/17 Sales Volume: 946,782 tonnes Sales Volume per Region Sales Volume per Product Group Gourmet & Asia Pacific Specialities 5% 12% Global Cocoa 23% Europe 45% Food Manu- facturers 65% Cocoa Products 23% Sales Revenue: CHF 3,538.7 mio EBITDA
Slide 9: We apply a cost plus approach to the majority of the business
Our business model We apply a cost plus approach to the majority of the business Customers Pricing model Profit levers Food Manufacturers • Small, medium and • Cost Plus • Customer mix Global Food • Product mix Manufacturers • Economies of scale 65% Cocoa Products • Small, medium and • Market prices
Slide 10: A global footprint and a local service
A global footprint and a local service Cocoa factories in origin countries and chocolate factories close to our customers Cocoa processing factory Chocolate factory Integrated factory Page 10 April - May 2017 HY 2016/17 Roadshow presentation
Slide 11: Highlights HY - 2016/17
Highlights HY - 2016/17 April - May 2017
Slide 12: Volume growth picking up, significant profit improvement
HY Results 2016/17 Volume growth picking up, significant profit improvement Volume growth picking up in Q2 +3.5%, first six months +1.4% Chocolate business volume up +3.5%. Intentional phase out of less profitable contracts in Cocoa completed Sales revenue up by +2.5% in local currencies Strong EBIT
Slide 13: Volume growth picking up, phasing-out of less profitable contracts concluded
HY results 2016/17 Volume growth picking up, phasing-out of less profitable contracts in Global Cocoa concluded in tonnes +3.5% +4.9% +2.3% -0.8% +4.6% -8.6% +2.3% +3.8% -0.4% +9.1% +8.1% -23.2% +6.4% -7.9% -13.7% -3.5% +9.7% Chocolate (FM and Gourmet & Specialties) Global Cocoa -2.0% Q1 15/16 Q2 15
Slide 14: Positive impact from all our key growth drivers
HY Results 2016/17 Positive impact from all our key growth drivers Volume growth vs prior year 34.7% Emerging markets +0.4% + 3.6% excl.Cocoa Key growth 33.1% Long-term drivers outsourcing +3.8% & strategic crucial to partnerships continuously outperform the market 12.4% Gourmet & +14.7% Specialties
Slide 15: Continue to expand in key emerging markets...
Emerging Markets Continue to expand in key emerging markets... Double-digit growth in Brazil, China, India, Indonesia, challenging environment in Eastern Europe Demand for value for money and premium products Growth across Food Manufacturers and Gourmet Expansion with existing and new customers Succ
Slide 16: Successful ramp-up of additional volume from new long-term contracts
Long-term outsourcing & Strategic Partnerships Successful ramp-up of additional volume from new long-term contracts Integration of Halle factory in Belgium and first deliveries to Mondelez started beg of 2017 Jan 2017, first deliveries to Garuda Foods in Indonesia Additional volume with some existin
Slide 17: A success story that goes on...
Gourmet & Specialties A success story that goes on... Strong brand Expanding products and Driving bolt-on activation programs categories acquisitions Callebaut Hero Campaign Callebaut Gelato Beverages activity from FrieslandCampina Kievit Cacao Barry Challenger Cacao Barry Zéphyr Caramel #unboxcreat
Slide 18: Financial review HY 2016/17
Financial review HY 2016/17 April - May 2017
Slide 19: Volume picking up, significant profit improvement
HY results 2016/17 Volume picking up, significant profit improvement Group performance HY 2016/17 % vs prior year % vs prior year in (In CHF mio.) (in CHF) (in CHF) local currencies Sales Volume Total (in tonnes) 946,782 +1.4% Sales Revenue 3,538.7 +3.3% +2.5% Gross Profit 464.0 +6.0% +6.2% EBIT Tot
Slide 20: Chocolate Regions fuelled growth, Cocoa Products major driver for profit improvement
HY Results 2016/17 Chocolate Regions fuelled growth, Cocoa Products as major driver for profit improvement Group Sales Volume: 429,867 252,068 tonnes 946,782 tonnes tonnes 217,975 46,872 tonnes tonnes EMEA Americas Asia-Pacific Global Cocoa HY volume growth +4.4% +0.4% +14.6% -5.0% EBIT growth in +1
Slide 21: Gross profit up +6.0% driven by chocolate volume growth
Gross Profit H1 2016/17 Gross profit up +6.0% driven by chocolate volume growth, better product and customer mix and strong improvement of our cocoa business In CHF mio +6.0% +17.0 464.0 -7.1 +8.9 +7.4 437.9 Gross Profit Volume Product/Customer Cocoa Processing Additional Gross Profit HY 2015/16 eff
Slide 22: Combined ratio up, driven by tight supply and lower cocoa bean prices
Cocoa processing profitability Combined ratio up, driven by tight supply and lower cocoa bean prices European combined ratio - 6 months forward ratio 4.00 Combined ratio 3.5 3.00 Butter ratio 2.00 1.00 Powder ratio 0.00 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 For
Slide 23: Strong operating profit up +18.8% including non-recurring
EBIT HY 2016/17 Strong operating profit up +18.8% including non-recurring, +7.8% like for like 18.8% In CHF mio +7.8% +26.2 +16.3 238.4 222.1 200.7 +5.3 206.0 -10.0 EBIT Restructuring EBIT Additional Additional EBIT Non- recurring EBIT HY 2015/16 HY 2015/16 Gross Profit SG&A and other HY 2016/17 HY
Slide 24: From EBITDA to Net Profit
From EBITDA to Net Profit Net Profit up 31.7%, driven by higher EBIT and structurally lower financing costs. Like for like +16.6% In CHF mio 309.9 238.4 Tax rate: 19.5% vs -71.5 18.6% in prior year 31.7% +16.6% -62.0 142.1 -16.3 125.8 -34.4 107.9 EBITDA Depreciation EBIT Financial items Income Net P
Slide 25: Lower cocoa bean prices, milk powder and sugar above prior year
Raw materials price evolution Lower cocoa bean prices, milk powder and sugar above prior year HY average increase 300% vs. prior year Sugar world 250% +44.8% 200% Cocoa beans -10.2% 150% 100% Sugar EU +9.2% 50% Milk powder +20.7% 0% Sep/2007 Sep/2008 Sep/2009 Sep/2010 Sep/2011 Sep/2012 Sep/2013 Sep/
Slide 26: Net Working Capital
Net Working Capital A stable working capital, inventories price reduction partly offset by higher volumes (correction from an exceptionally low prior year) Receivables Stocks Payables in CHF mio. +1.2% +24 +55 -79 +35 -16 1,398 1,382 +59 -53 +8 Net Growth Price and Growth Operational Price Impact Gr
Slide 27: Continued focus on free cash flow
Free Cash Flow Continued focus on free cash flow, temporarily affected by seasonality of cocoa crop and hedging of volaQle raw materials prices in CHF mio. 10.8% 321 290 -219 (py +58) -42 (py -36) -97 +8 -29 (py -91) (py -1) (py +220) Operating Operating Cash Change in Interest paid and CAPEX Others
Slide 28: Continuous improvement of key financial ratios
Balance Sheet & key ratios Continuous improvement of key financial ratios Feb-17 Aug-16 Feb-16 Total Assets [CHF m] 5,912.3 5,640.8 5,509.9 Net Working Capital [CHF m] 1,398.4 1,374.2 1,382.3 Non-Current Assets [CHF m] 2,378.5 2,301.0 2,253.4 Net Debt [CHF m] 1,454.9 1,452.8 1,538.2 Shareholders' Eq
Slide 29: Strategy & Outlook
Strategy & Outlook April - May 2017
Slide 30: Consistent long-term strategy, focus on execution
Consistent long-term strategy, focus on execution “Heart and engine of the Vision chocolate and cocoa industry” Expansion Sustainable growth Margin accretive growth 4 strategic Innovation “Smart Accelerated growth in Gourmet, pillars growth” Specialties and emerging markets Cost Leadership Return on
Slide 31: Continuously innovating on different fronts
Continuously innovating on different fronts Increased digital contact with our customers 2D+ printing for personalised products Page 31 April - May 2017 HY 2016/17 Roadshow presentation
Slide 32: Ahead of the curve in trends, targeting different needs
Ahead of the curve in trends, targeting different needs Functional health claims Develop “better for you” alternatives Benefit from the positive halo of Free-From Leverage better perception Page 32 April - May 2017 HY 2016/17 Roadshow presentation
Slide 33: Forever Chocolate
Forever Chocolate Our plan to make sustainable chocolate the norm Signed the Cocoa and Forests Initiative, committing with 11 other leading cocoa and chocolate companies On track to deliver 500,000 cocoa plant seedlings from its nurseries to farmers in Indonesia in 2017 26% of non-cocoa ingredients
Slide 34: Outlook
Outlook Good momentum expected to continue. Mid-term guidance confirmed Outlook Markets to remain volatile, with an equal balance of tail- and headwinds Good momentum in volume growth and profitability to continue, we will further implement our Cocoa Leadership program and consistently execute our “
Slide 35: Appendix
Appendix April - May 2017
Slide 36: What makes Barry Callebaut unique?
What makes Barry Callebaut unique? Global number one player in chocolate and cocoa Deep chocolate and cocoa expertise Global leader in Gourmet & Specialties Proven and long-term oriented strategy Unparalled global footprint, present in all key markets Preferred outsourcing and strategic partner Lead
Slide 37: Chocolate confectionery market development – Nielsen data
Chocolate confectionery market development – Nielsen data North America (29% of market) Western Europe (41% of market) Eastern Europe (18% of market) 2012-16 average: -1.0% 2012-16 average: 0.0% 2012-16 average: -0.5% 2017 H1: -1.3% 2017 H1: -1.9% 2017 H1: -2.1% South America ( 5% of market) Asia Pa
Slide 38: Our market and opportunities ahead
Our market and opportunities ahead Global Chocolate confectionery volume growth vs cocoa bean price Growing economies with still low chocolate consumption per capita 6.5 5% 2500 5.5 Euro area Consumption per capita in kg. 4% 2000 3% 1500 4.5 Russia Volume growth USA GBP/tonne 2% 1000 3.5 1% 500 2.5
Slide 39: Barry Callebaut uniquely positioned in industrial chocolate and cocoa markets
Chocolate and Cocoa markets Barry Callebaut uniquely positioned in industrial chocolate and cocoa markets Cocoa grinding capacity Industrial chocolate – open market BC BC Cargill Cargill Olam Blommer Blommer Fuji Oil Mondelez Puratos Guan Chong Cémoi Ecom Cocoa Irca BT Cocoa Clasen Nestlé Kerry Grou
Slide 40: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer Total world harvest (15/16): 4,031 TMT others 13% About 70% of total cocoa beans Nigeria come from West Africa 5% Brazil* 3% BC processed ~900,000 tonnes or Ivory Coast* 22% of the world crop Cameroon* 39% 6% Barry Callebaut has various cocoa Ecuador
Slide 41: Capital Expenditures
Capital Expenditures in CHF mio. +4.5% +4.6% +4.2% +4.0% +3.0% CAPEX as % of sales revenue 249 249 218 224 201 200 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 E Page 41 April - May 2017 HY 2016/17 Roadshow presentation
Slide 42: 7-year EBIT per tonne development
7-year EBIT per tonne development EBIT per tonne temporarily affected by a challenging cocoa products market and a strong Swiss franc 312 282 290 274 279 271 286 251 EBIT per tonne in constant currencies 256 231 219 242 EBIT per tonne in CHF 223 (as reported) +7.2% 1’717 1’795 1’834 1’379 1’536 1’21
Slide 43: Enough headroom for further growth and raw material price fluctuations
Enough headroom for further growth and raw material price fluctuations As of 28 February 2017 CHF 4,200 mio ABS CHF 963 mio Various uncommitted facilities -56.5% EUR 600 mio Domestic Commercial Paper Programme CHF 1,827 mio Various Bilateral LT Loans EUR 600 mio ABS Maturity 2019 Syndicated Bank Loa
Slide 44: Liquidity – Debt maturity profile
Liquidity – Debt maturity profile As of 28 February 2017 In CHF mio Uncommitted lines Committed lines Cash and revolving credit facility (undrawn) Short-term facilities Bonds 641 160 473 391 373 393 264 173 Cash Other 2017 2018 2019 2020 2021 2022 2023 2024 Page 44 April - May 2017 HY 2016/17 Roadsh