Barry Callebaut Ag · SIX:BARN
Barry Callebaut — H1 2012/13 Earnings Presentation
53 slides from Barry Callebaut's earnings presentation, Apr 8, 2013
Slide 1: Roadshow - Half-year results 2012/13
Barry Callebaut Roadshow- Half-year results 2012/13 April 8, 2013 April 8, 2013 Barry Callebaut - Roadshow HY 2012/13
Slide 2: Agenda
Agenda • BC at a glance • Highlights HY 2012/13 • Financials • Strategy and outlook April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 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: Agenda
Agenda • BC at a glance • Highlights HY 2012/13 • Financials • Strategy and outlook April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 6
Slide 7: Strong volume growth, product margins improved, continued investments
Half-year results 2012/13 Strong volume growth, product margins improved, continued investments in future growth X Sales volume growth +7.8%, significantly outpacing the market X Growth fueled by X outsourcing and strategic partnerships +19% X Gourmet +6.9% X emerging markets +13% X Product margins
Slide 8: Global chocolate confectionery market grew +1.5%
Market development Global chocolate confectionery market grew +1.5% in the last half-year 5 Months Sep-Jan 2013 (in 1,000 tonnes)1 Chocolate Confectionery volume growth +1.5% +1.4% -1.3% 2011/12 +3.4% 2012/13 -1.3% -0.7% +4.1% +16.3% USA Western Italy Eastern Brazil China India Europe Europe 1) Sour
Slide 9: Growth across all Regions and Product Groups
Growth across all Regions and Product Groups Six months volume growth vs. prior year Sales Volume per Region – HY 2012/13 Europe +5.8% Asia- Pacific Global 4% Americas +13.6% Sourcing & Cocoa 18% Asia Pacific +11.9% Europe 51% Food Manufacturers +8.8% Americas 27% Cocoa Products +4.9% Gourmet & Spec
Slide 10: Average prices of main raw materials lower
Raw material price development Average prices of main raw materials lower compared to prior year HY12/13 % of total BC raw material costs 300% 250% 55% Cocoa beans 200% Cocoa beans 150% 14% Sugar Milk powder Sugar world 12% Milk powder 100% Sugar EU 7% Fats 12% Others 50% Sep-2006 Sep-2007 Sep-2008
Slide 11: Significant strategic steps to generate further growth
Highlights first six months – HY 2012/13 Significant strategic steps to generate further growth First long-term outsourcing Completion of Dijon sale to Acquisition of ASM Foods AB in agreement in South America “Chocolaterie de Bourgogne” Sweden. Strengthening presence in with Arcor, Dos en Uno Scand
Slide 12: Petra Foods Cocoa Ingredients' acquisition in line with our strategy
Petra Foods Cocoa Ingredients’ acquisition in line with our strategy Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate business, supporting the company’s overall growth X Supporting further chocolate growth by stepping up the integrated cocoa sourcing and processing activi
Slide 13: Transaction and integration timeline
Transaction and integration timeline 12 Dec 8 Apr Apr Apr Summer 2012 2013 2013 2013 2013 2015/16 Barry Barry Petra Callebaut Callebaut Foods half-year ’EGM for AGM Transaction Transaction results capital announcement Closing increase Carve out Petra Food’s cocoa business Regulatory approvals Financ
Slide 14: Agenda
Agenda • BC at a glance • Highlights HY 2012/13 • Financials • Strategy and outlook April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 14
Slide 15: Key figures HY 2012/13
Key figures HY 2012/13 – from continuing operations Strong volume growth, product margin improved, continued investments in future growth Six months - Sep 2012-Feb 2013 [CHF m] Change in % Change in % H1 2012/13 H1 2011/12 in local in CHF (restated) currencies Sales volume [in tonnes] 7.8% 745'256 6
Slide 16: Region Europe: Solid growth, both top and bottom line
Region Europe Solid growth, both top and bottom line X Overall chocolate confectionery market in Europe grew +2%. Some countries showed a decline such as Italy X We achieved strong solid growth in WE driven by higher sales of both standard and specialty products in both Food Manufacturers and Gourme
Slide 17: Region Americas: Continued double digit top line
Region Americas Continued double digit top line, strong bottom line performance X Chocolate confectionery market in the U.S. decreased by -1.3%; Brazil was at -0.7% X We continued our double digit pace in the top-line. In North America, growth was mainly driven by global accounts in Food Manufacture
Slide 18: Region Asia-Pacific: Double-digit volume growth
Region Asia-Pacific Double-digit volume growth, investing in the future X Chocolate confectionery markets in India and China together grew 11.6% X Our sales volume in the region increased by 11.9%. China and India together grew +20% X Gourmet brand Callebaut® achieved broad based, double-digit volum
Slide 19: Low combined ratio for H1
Cocoa processing activity Low combined ratio for H1 driven by lower cocoa powder prices, partly offset by higher cocoa butter European combined ratio - 6 months forward ratio HY 12/13 4.20 Combined ratio 3.35 – Feb 13 3.20 Relevant for H1 2.20 Butter ratio Powder ratio 1.20 0.20 Sep-00 Sep-01 Sep-02
Slide 20: Global Sourcing & Cocoa
Global Sourcing & Cocoa Combined cocoa ratio affecting profitability in H1 X Third party sales volume up +4.9%, despite a slowdown in powder demand in the U.S. and Europe X Sales prices for cocoa ingredients (cocoa butter, cocoa liquor, and cocoa powder) were significantly lower X As expected, the c
Slide 21: Improved Gross Profit despite negative combined ratio effect
Gross Profit – February 2013 Improved Gross Profit despite negative combined ratio effect in mCHF * Without Cocoa Processing impact +12.3% +5.5% +38.0 -23.3 +0.1 357.3 +16.6 -12.9 338.8 Gross Profit Volume Product mix Cocoa Additional Scope effects, Gross Profit H1 2011/12 effects and margin process
Slide 22: Operating profit mainly impacted by investments into future growth
EBIT – February 2013 Operating profit mainly impacted by ongoing investments into future growth in mCHF -2.1% • Côte d’Ivoire new +16.4 cocoa procurement concept • Selective investments • Overfull factories +9.5 187.1 -11.2 • Petra acquisition costs 177.6 173.8 -18.5 EBIT H1 Non EBIT Additional SG&A
Slide 23: Higher financial expenses due to higher credit spread
Net Financial Expenses Higher financial expenses due to higher credit spread and less FX gains in CHF m - From continuing operations only Average 4.3% 4.6% interest rate 0.3% -2.0 35.4 33.6 33.7 3.7 Net interest expense Net interest expense Bank charges, fees and Gain on derivative fin. Net financia
Slide 24: Net profit from continuing operations affected by higher financial items
From EBIT to PAT Net profit from continuing operations affected by higher financial items and higher taxes [CHF m] Change in % Change in H1 2012/13 H1 2011/12 In local % (restated) currencies CHF Operating profit (EBIT) -2.4% -2.1% 173.8 177.6 Financial items -14.8% -14.2% (35.4) (31.0) Result from
Slide 25: Higher operating cash flow which supports further growth
Cash Flow Higher operating cash flow which supports further growth in mCHF +5.2% 236 -116 224 -92 -47 31 -32 +22 Operating Operating Investment in Capital CF from Interest paid and Cash flow Net decrease in Cash Flow Cash Flow Working Capital Expenditures acquisitions, income taxes from financing ca
Slide 26: Net Working Capital improved by 1.8%
Net Working Capital evolution Improved by 1.8% despite volume growth in mCHF Receivables Stocks Payables -1.8% +72 1,045 +82 +9 +9 +16 1,026 +63 -128 -142 Net Growth Price impact Growth Price impact Growth Price impact Others FX impacts Net impact and impact and impact and and scope Working Working
Slide 27: Ongoing investments, stable Balance Sheet and financial ratios
Balance Sheet Ongoing investments, stable Balance Sheet and financial ratios Change Feb 13 Feb 12 in % Total Assets [CHF m] -8.2% 3'556.0 3'875.7 Net Working Capital [CHF m] -1.8% 1'026.2 1'045.1 Non-Current Assets [CHF m] 10.0% 1'488.4 1'353.1 Net Debt [CHF m] 2.9% 993.9 965.5 Shareholders' Equity
Slide 28: Strong volume growth over the last years and EBIT per tonne maintained
Strong volume growth over the last 5 years and EBIT per tonne maintained, excluding negative FX impact Group development 336 308 312 303 297 297 EBIT (CHF) / tonne * 293 289 286 at constant currencies 282 256 233 CAGR +7.6% EBIT (CHF) / tonne as reported 1.3 1.4 1.1 1.2 1.0 Volume (MT mio) 0.7 from
Slide 29: Committed to long-term volume growth, improving ROE and ROIC
Committed to long-term volume growth, while improving our return on equity and on invested capital 21% 20% 20% ROE target 20% 19% 19% 19% 18% 18% ROE 16% 15% 14% 14% ROIC target 15% 14% 14% 14% 14% 14% 14% ROIC 13% 11% 10% 10% 250 218 CAPEX 153 144 145 145 115 102 90 74 69 2001/02 2002/03 2003/04 20
Slide 30: Financing of the Petra Foods' Cocoa Ingredients Division acquisition
Financing of the Petra Foods’ Cocoa Ingredients Division acquisition X Total consideration: USD 950 mio X Bridge loan for total consideration provided by Credit Suisse currently in place X Take out – bridge loan X USD 300 mio equity via accelerated book building or rights issue X USD 600 million Rul
Slide 31: Agenda
Agenda • BC at a glance • Highlights HY 2012/13 • Financials • Strategy and outlook April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 31
Slide 32: Our Strategy
Our Strategy Vision “Heart and engine of the chocolate industry” Expansion Innovation Strategic Sustainable, pillars profitable growth Cost leadership Sustainable Cocoa April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 32
Slide 33: Expansion based on key growth drivers
Expansion Expansion based on key growth drivers • Consolidation in mature markets • Achieve full potential in recently entered emerging markets • Further expand in new emerging markets • Strengthen current partnerships Geography • Implement recently signed contracts • New outsourcing deals with loca
Slide 34: Development of our growth drivers
Expansion Development of our growth drivers HY 2012/13 CAGR 07/13 Total Group % of total Group Volume +6.7% Emerging markets 22% +16.3% Outsourcing & Strategic Partnerships 30% +89.0% Gourmet & Specialties +6.0% 11% Global chocolate market* +1.0% * Source: Euromonitor CAGR 07/13 and Nielsen last 6 m
Slide 35: Global manufacturing footprint continues to expand by 12 factories
Expansion Our global manufacturing footprint continues to expand by 12 factories Thimister, Belgium Chekhov, Russia Lebbeke-Wieze, Belgium Heule-Kortrijk, Belgium Nuth, The Netherlands Zundert, The Netherlands Banbury, UK St Helens, UK Kagerod, Sweden Mjolby, Sweden Chester, UK Lodz, Poland Louviers
Slide 36: Continuous strong focus on Gourmet
Expansion Continuous strong focus on Gourmet, our strategy has translated into key actions Our key focus We want our brands to empower chef & artisans to Our brand equities should become the delight customers with Global brands strongest in their competitive set & / Portfolio superior creations our
Slide 37: Further efforts on global brands and balanced push-pull approach
Expansion Further efforts on global brands and balanced push-pull approach Global brands X Building Brand Equity: Core Range Differentiation X Belgian Chocolate Leadership through “Growing Great Chocolate” & New packaging X Cacao Barry Brand reactivation to be initiated in H2 2012/13 Balanced push -
Slide 38: Double-digit growth in the Gourmet business
As a result of our focus and recent investments Expansion in the Gourmet business, we grew double-digit top and bottom-line Group Gourmet Business (excluding Beverages) CAGR +10% Volume 2008/09 2009/10 2010/11 2011/12 CAGR +11% EBIT in constant currencies (2008/09) 2008/09 2009/10 2010/11 2011/12 Ap
Slide 39: Successful R&D activities enable further growth
Innovation Innovation Innovation Successful R&D activities enable further growth Fully loaded portfolio of future facing Innovations… Enjoy Superior Navigating Heath Making a As real as we can Make it easy Sensorics & Nutrition difference get Nut pastes Cocoa Nibs Bake Stable Chips, Natural Flavours
Slide 40: Coping with strong growth, while striving to be cost leader
Cost Leadership Cost Leadership Coping with strong growth, while striving to be cost leader Factory costs • Efficiency gains like for like of -0.5% vs target of -2% • Costs driven by volume growth, new factories, CAPEX and inflation • Overload of factories in WE and Asia had high single digit additi
Slide 41: Spring Program to accelerate our speed towards customers
«Spring» Program to accelerate our speed towards our customers is well on track Today Oct 17 May 8 (2012) Dec 15 April June (2013) September (2013) Jun 2014 (2011) v Detailed process design Implementation Go-live Roll Out and organization system Pre- Spring: Study • Detailed process re- • System bui
Slide 42: Increased investments to secure cocoa supply and improve farmer livelihoods
Sustainable Cocoa Increased investments to secure enough cocoa supply and to improve farmer livelihoods Long-term threats Our latest actions X Lack of enough Farmer Practices Farmer Education Farmer Health quantity and quality cocoa beans Aim: double yield Aim: develop next Aim: improve the (+ 800kg
Slide 43: Mid-term guidance confirmed
Outlook – Mid-term Guidance Mid-term guidance confirmed Growth targets for 2011/12-2014/15: X On average 6-8% volume growth X Average EBIT growth at least in line with volume growth * Our view for the 2011-2015 period reflects current economic forecasts for the markets we operate in as well as inter
Slide 44: Summary
Summary X Strong broad based volume growth: sales volume +7.8%, fueled by strategic growth drivers outsourcing, Gourmet and emerging markets X Product margins improved; gross profit up +5%, despite an unfavorable combined cocoa ratio X EBIT decreased by 2.4% in local currencies (-2.1% in CHF) impact
Slide 45: Cautionary note
Cautionary note Certain statements in this presentation regarding the business of Barry Callebaut are of a forward-looking nature and are therefore based on management’s current assumptions about future developments. Such forward-looking statements are intended to be identified by words such as “bel
Slide 46: Appendix
Appendix April 8, 2013 Barry Callebaut - Roadshow HY 2012/13 46
Slide 47: 10 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 48: Stable financing with enough headroom to cope with future growth
Net debt Stable financing with enough headroom to cope with future growth Financing and liquidity situation as of Feb 29, 2013 (CHF million) 2164 CHF 700 mio Short term Various uncommitted facilities 1215 221 ABS receivables financing EUR 600 mio Maturity 2016 Syndicated bank 272 Short-term loan (12
Slide 49: 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 April 8, 2013 Barry Callebaut - Roadshow HY
Slide 50: 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 51: 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 April 8
Slide 52: 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 53: 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): 4’075’000 MT X About 70% of total cocoa beans others come from West Africa 10% Ecuador 5% X BC processed ~574,000 tonnes of Ivory cocoa beans or 14% of total world Brazil* Coast* 5% 36% harvest Camero