Barry Callebaut Ag · SIX:BARN
Barry Callebaut — FY2011/12 Earnings Presentation
52 slides from Barry Callebaut's earnings presentation, November 2012
Slide 1: Full Year Results 2011-12 Roadshow Presentation
Full Year Results 2011-12 Roadshow Presentation NOVEMBER, 2012
Slide 2: Agenda
Agenda • BC at a glance • Highlights FY11/12 • Financials • Strategy and outlook November 2012 Barry Callebaut – FY 2011/12 – 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 2011/12 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 artisanal & Cocoa customer
Slide 5: Robust business model
Robust business model Barry Callebaut business model 100g chocolate tablet contains: Price List r Cocoa Products Gourmet at market price Cocoa butter business 10% 10% Milk powder Cocoa Products Sugar on cost plus Other 10% Food Manufacturers 70% 80% Cost Plus X Raw materials represent about 80% of o
Slide 6: Our manufacturing footprint – 45 factories worldwide
Expansion Our manufacturing footprint – 45 factories worldwide Thimister, Belgium Chekhov, Russia Lebbeke-Wieze, Belgium Heule-Kortrijk, Belgium Nuth, The Netherlands Zundert, The Netherlands Banbury, UK St. Albans, VT, US St Helens, UK Kagerod, Sweden Chester, UK Pennsauken, NJ, US St. Hyacinthe, C
Slide 7: Agenda
Agenda • BC at a glance • Highlights FY11/12 • Financials • Strategy and outlook November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation 7
Slide 8: Highlights FY 2011/12
Highlights FY 2011/12 • Strong volume growth: +8.7% • Growth across all Regions and Product Groups • Significant investments affecting bottom-line result: • EBIT +1.0% in local currencies • Net Profit from continuing operations: -5.2% in local currencies • Investments in structures, factory expansio
Slide 9: Strategic milestones in the last 12 months
Strategic milestones in the last 12 months Long-term outsourcing Global long-term Acquisition of Purchase assets of EFSA issues positive First long-term agreement with Mexican partnership agreement Mona Lisa, a the Chatham, Scientific Opinion outsourcing Group Bimbo, leading with Unilever for cocoa
Slide 10: Slow volume growth in the Global chocolate market
Sep 2011- Aug 2012 Slow volume growth in the Global chocolate market Chocolate confectionery market – top 15 countries 1 Total + 1.0% EE +5.2% WE - 0.6% US - 2.0% India + China +7.3% Brazil +4.7% Gourmet global market = 1% 1) Source: Nielsen data (Sep 2011- Aug 2012); - Top 16 countries represent ap
Slide 11: Strong volatility in main raw materials
Raw material price development Strong volatility in main raw materials FY11/12 % of total BC raw material costs 240% 55% Cocoa beans 190% Cocoa beans 140% Milk powder 14% Sugar Sugar EU Sugar world 12% Milk powder 90% 7% Fats 12% Others 40% 2006 2007 2008 2009 2010 2011 2012 • Cocoa bean price down
Slide 12: Agenda
Agenda • BC at a glance • Highlights FY11/12 • Financials • Strategy and outlook November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation 12
Slide 13: 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 14: Region Europe: Strong growth in partly difficult markets
Region Europe Strong growth in partly difficult markets • Chocolate confectionery market growth: +1.4% • Growth driven by outsourcing agreements, market share gains and speciality products • Gourmet business showed a good performance, biggest contribution from our global brand Callebaut® • Beverages
Slide 15: Region Americas: Continued double digit growth
Region Americas Continued double digit growth, top and bottom-line • U.S. chocolate confectionery market -2.0%. Brazil’s growth pace at +4.7% • Food Manufacturers and Gourmet business continued to grow double digit • Significant progress in emerging markets, Mexico and Brazil achieved double-digit g
Slide 16: Region Asia-Pacific: High, profitable growth
Region Asia-Pacific High, profitable growth • Chocolate markets in Asia continued their solid growth pace. India and China reached +7.9% • We achieved double digit volume growth despite capacity constraints that limited growth opportunities early in the year • Investing in capacity expansions in all
Slide 17: Global Sourcing & Cocoa: Investments in future growth
Global Sourcing & Cocoa Investments in future growth • Capacity expansions at existing factories and higher internal demand for cocoa powder in first half-year • Early 2012, external demand started to pick-up driven by strategic partners. High cocoa powder prices drove higher sales revenue • Positiv
Slide 18: Strong decline in powder prices partly offset by butter ratios
Cocoa processing activity Strong decline in powder prices partly offset by butter ratios European combined ratio - 6 months forward ratio FY 11/12 4.50 4.00 3.50 Combined ratio 3.37 – Oct 12 3.00 2.50 2.00 Powder ratio 1.50 Butter ratio 1.00 0.50 0.00 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06
Slide 19: Gross profit before FX impact improved 5.3%
Gross Profit FY 2011/12 Gross profit before FX impact improved 5.3% despite higher additional costs from business growth in mCHF +5.3% +15.3 +55.6 -23.4 -12.8 693.7 -21.1 672.6 659.0 Gross Profit Volume Product mix, Add. operational Ramp up Gross profit Negative Gross Profit FY 2010/11 effects Price
Slide 20: EBIT grew by 1% excluding FX impact
EBIT- FY 11-12 from continuing operations EBIT grew by 1% (excluding FX impact), volume growth partially offset significant expansion investments in mCHF +1.0% +34.7 -23.3 -7.7 366.0 -12.9 362.3 353.2 EBIT Additional Additional SG&A Scope effect, ramp EBIT before Negative EBIT FY 2010/11 Gross Profi
Slide 21: Long-term secured financing structure coming at higher cost
Net Financial Expenses Long-term secured financing structure coming at higher cost in mCHF - From continuing operations only Average 3.85% 4.45% interest rate +15% -4.4 74.9 71.9 7.4 62.7 Net interest expense Net interest expense Bank charges, fees and FX gains and gains on Net financial FY 2010/11
Slide 22: One-time charge from discontinued operations
Below EBIT One-time charge from discontinued operations (closing Stollwerck and Dijon) in mCHF Stollwerck Dijon 16.4 98.5 8.7 11.4 7.4 22.9 31.7 Stollwerck closing Impairment Accumulated Transaction, Net Result from Cash injection Net result from adjustments of assets translation effects separation
Slide 23: Net profit from continuing operations affected by financial items and taxes
From EBIT to PAT Net profit from continuing operations affected by higher financial items and higher taxes [CHF m] Change in % Change in FY 2011/12 FY 2010/11 In local % (restated) currencies CHF Operating profit (EBIT) 1.0% -2.5% 353.2 362.3 Financial items 8.2% 4.7% (74.9) (71.5) Income taxes 36.3
Slide 24: Significant investments in setting up for future growth
Cash Flow Significant investments in setting up for future growth in mCHF -2,3% 451 440 128 218 117 147 80 5 11 Operating Operating Investment in Capital CF from Interest paid Dividend* Cash flow Net decrease Cash Flow Cash Flow Working Capital Expenditures acquisitions, and income from financing in
Slide 25: Increased net working capital
Net Working Capital evolution Increased net working capital due to growth, scope effects and FX in mCHF Receivables Stocks Payables +88 90 1,039 +67 +23 +27 +5 888 -19 -130 Net Growth Price impact Growth Price impact Growth Deterioration Others FX impacts Net impact and impact and impact and scope W
Slide 26: Significant investments 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 27: 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 28: Payout of CHF 15.5 per share or 33% payout ratio
Proposed Payout Payout of CHF 15.5 per share or 33% payout ratio Payout per share (CHF) Key Facts: 8% 15,5 15,5* Average annual 14,0 payout increase of 12,5 8% (2005-2012) 11,5 CHF 15.5 proposed dividend Payout ratio of 33% in 2011/12 * Paid out partly from paid-in capital reserves and par val
Slide 29: Agenda
Agenda • BC at a glance • Highlights FY11/12 • Financials • Strategy and outlook November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation 29
Slide 30: Consistent implementation of long-term Strategy
Consistent implementation of long-term Strategy Our vision: “Heart and engine of the chocolate industry” Our growth drivers: Geographical expansion in emerging markets and strengthen position in Expansion developed markets Long term outsourcing agreements/strategic partnerships Faster growth i
Slide 31: Overall growth based on 3 dimensions
Expansion Overall growth based on 3 dimensions % 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% 10% 2% 83% 77% 70% 67% 61% 59% Developed markets +0.7% 2006/07 2007/0
Slide 32: Growing faster than the market: Asia-Pacific strategy
Emerging markets: update on Asia-Pacific strategy Growing faster than the market Key priorities Status Grow the export markets from SEA factories Expansions of current factories in 1 (Malaysia and Singapore) Singapore and Malaysia during 2012 80% capacity utilization, factory to Double the size of t
Slide 33: Key findings - Eastern Europe strategy
Expansion Key findings - Eastern Europe strategy X Total market in Eastern Europe is approx. 1.5 mio tonnes X Average annual growth of 3.5% for the total Region X 20% of the market in open and 80% captive X 60% of the market is chocolate and 40% compound X Barry Callebaut has a market share of 25% X
Slide 34: Key growth priorities in EEMEA
Expansion Key growth priorities in EEMEA (Eastern Europe, Middle East and Africa) EEMEA 1 Grow aggressively in Russia and maintain profitability Build presence in Turkey to achieve the leading position 2 in the country as the open market player Develop a semi-finished strategy for the Region in 3 or
Slide 35: Adding new long-term agreements & strategic partnerships
Expansion Adding new long-term agreements & strategic partnerships 2006-07 Nestlé Cadbury Hershey Morinaga (February 2007) Schweppes (April 2007) (September 2007) (June 2007) 2010-11 ex-Kraft Foods Green Mountain Hershey Extension Chocolates Turín Baronie Group (September 2010) Coffee Roasters (May
Slide 36: Gourmet: Actions to accelerate growth
Expnsion Expansion 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 36 November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation Today
Slide 37: Successful R&D activities generated new sales volume
Innovation Successful R&D activities generated new sales volume • Barry Callebaut received a positive opinion from the European Food Safety Authority for a health claim linking cocoa to improved blood flow • +11% number of R&D projects versus the prior year to 2,131. Project success rate, went up 8%
Slide 38: Staying the leader in cost through our key initiatives
Cost Leadership Staying the leader in cost through our key initiatives • Manufacturing costs per ton of activity like-for-like basis = - 3% (target: -2%). • Volume growth, technology and process improvements increased capacity utilization for liquid chocolate to 91% (target: 82-85%). Cocoa processin
Slide 39: Some key deliverables from Spring
Cost Leadership Some key deliverables from “ Spring ” Customer segmentation driving customer value proposition More transparent Optimized indirect and responsive spend pricing “Spring” Program Customer Segmentation Customer Sales & Pricing Service Operations Model Planning Improved contact Increased
Slide 40: Sustainable Cocoa: Achievements in the last 12 months
Sustainable Cocoa Achievements in the last 12 months Farmer Farmer Farmer Practices Education Health • 20,000 Farmers trained and • Adults and children • New Water wells drilled certified Schools: 3 built, 4 under construction • CHF 2.8 mio. Certification Premiums paid • Curriculum development for •
Slide 41: Chocovision
Sustainable Cocoa Chocovision X A platform for informed discussion, discourse and debate for 200 senior business leaders and stakeholders in the cocoa, chocolate and retail industry, organized by Barry Callebaut November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation 41
Slide 42: Renewed mid-term guidance
Renewed mid-term guidance Volume growth EBIT growth in local currencies 8.7% 7.6% 7.2% 15.3% Guidance Guidance Average 7.8% Average 7.3% 5.6% 1.0% FY 09/10 FY 10/11 FY 11/12 FY 09/10 FY 10/11 FY 11/12 X Four-year average growth targets for 2011/12 –2014/15 Volumes: +6-8% EBIT: at least in line w
Slide 43: Our key priorities for FY 12/13
Our key priorities for FY 12/13 X Finalize the various investments in capacities and structures X Increase presence in emerging markets X Implement current outsourcing deals and gain additional volume from strategic partners X Focus on Gourmet to increase growth pace X Increase our operational effic
Slide 44: Appendix
Appendix November 2012 Barry Callebaut – FY 2011/12 – Roadshow Presentation 44
Slide 45: 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 46: 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 November 2012 Barry Callebaut – FY 2011/12
Slide 47: 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 Novembe
Slide 48: Net Debt increase affected by discontinued operations and FX impact
Net Debt increase affected by discontinued operations and FX impact in mCHF 153.1 -98.4 -30.1 -11.7 +3.2 16.1 Increase in Short-term debt CTA impact Increase in Other Increase in Net Net debt (BS) shifted to liabilities borrowings debt based on in FY 11/12 held for sale FY10 (acquisitions) CF FY 11/
Slide 49: Impact from investments in future growth
Impact from investments in future growth Future volume growth requires: Investing cycle for future growth • Additional production capacity: lower utilization and higher fixed costs at the beginning Volume (MT) • Additional overhead, such as QA, planning and supply chain management, customer service,
Slide 50: West Africa is the world's largest cocoa producer
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
Slide 51: Revenue by currency
Revenue by currency FY 2011/12 Sales Revenue Others 30% EUR 38% CAD 4% CHF 2% GBP 8% USD 18% * Others include: Mexican Peso, Polish Zloty , Brazilian Real, Japanese Yen, Russian Ruble, Australian Dollar, Chinese Yuan, Malaysian Ringgit,, Czech koruna, Swedish Krona, Indonesian, Rupiah ,etc November
Slide 52: Exchange rates
Exchange rates vs. CHF Aug 12 Aug 11 % 2012/2011 Closing rates EUR 1.20071 1.15765 4.30% USD 0.96080 0.80370 15.70% CAD 0.96835 0.82186 14.60% GBP 1.51730 1.30738 21.00% Average rates EUR 1.21145 1.26817 -5.70% USD 0.92763 0.91284 1.50% CAD 0.91900 0.92262 -0.40% GBP 1.46011 1.46426 -0.40% November