Emmi Ag · SIX:EMMN
Emmi — Non-Deal Roadshow (April 2012)
62 slides from Emmi's roadshow presentation, Apr 2, 2012
Slide 1: Emmi results 2011: A solid foundation for further success
Emmi results 2011: A solid foundation for further success Helvea Roadshow London Reto Conrad, CFO Emmi Schweiz AG London, 2 April 2012
Slide 2: Emmi in brief
Emmi in brief Overview of the financial year 2011 Annual results 2011 Most important success factors Market situation and outlook Appendix
Slide 3: Independent and successful in open markets
Independent and successful in open markets Strategy and vision Vision • Long-term success as an independent company in open markets Market positioning • No. 1 among Swiss milk processors • The top company for Swiss cheese, both within Switzerland and abroad • A leading company in Europe for premium
Slide 4: Emmi strengthens its international footprint and constantly improves its competitiveness
Emmi strengthens its international footprint and constantly improves its competitiveness The strategic pillars at Emmi Defend our domestic position International growth Cost management Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 2012 Page 4
Slide 5: Sales 2002 – 2011 and the medium-term goal
Sales 2002 – 2011 and the medium-term goal Steady growth with medium-term 50/50 ratio Switzerland and international CHF millions 3,000 2721 2684 2671 2619 2501 2,500 2335 626 675 732 811 50% 587 2027 509 2,000 1879 1926 444 414 447 1,500 1389 256 50% 1,000 2045 1944 1952 1910 1909 1826 1914 1465 147
Slide 6: Broadly based product portfolio
Broadly based product portfolio Product groups (net sales 2011) Dairy products Fresh products 26.9 % (CHF 733 mio) 23.6 % (CHF 641 mio) Other products and services 5.8 % (CHF 158 mio.) Powder/concentrates 3.3 % (CHF 89 mio) Cheese 34.0 % (CHF 925 mio) Fresh cheese 6.4 % (CHF 175 mio) Total net sales
Slide 7: Reinforcing our brand concepts
Reinforcing our brand concepts Emmi house of brands Emmi position Statement Real Swiss premium delight One Word Equity Emmi Indulgence One Word Equity CH & local Original Refinement Inspiration Well-being Desserts* Brands jewels Product brands * Bontà Divina desserts are produced in Italy by A-27 S.
Slide 8: Most important production sites in Switzerland
Most important production sites in Switzerland Constantly improved productivity and efficiency Suhr AG Kaltbach LU Dagmersellen LU Kirchberg Kirchberg BEBE Emmen LU Ostermundigen BE Landquart GR Langnau BE Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 201
Slide 9: International base
International base Expansion through subsidiaries and cooperations USA, Monroe, WI Penn Yan, NY Canada Emmi Roth Inc. CASP Benelux United Kingdom Germany USA, Arcata, CA Cypress Grove Ch. Austria Italy Italy Rancio Valcuvia Roverè della Luna France Spain Switzerland 43% Kaiku Emmi results 2011: A so
Slide 10: Overview of the financial year 2011
Emmi in brief Overview of the financial year 2011 Annual results 2011 Most important success factors Market situation and outlook Appendix
Slide 11: Pleasing sales despite import pressure and strong Swiss franc
Pleasing sales despite import pressure and strong Swiss franc International business at the upper range of expectations Group § Net sales of CHF 2,721 million > 1.4% increase Switzerland § Slight decline due to elimination of unprofitable business > Sales of CHF 1,909.9 million, -2.2% > Retail busin
Slide 12: Strategy on course
Strategy on course Strengthening of key markets, investments in productivity § Focus on selected market concepts and markets with potential § Powerful innovations in Switzerland: Mozzarella Mini Marinati, Milk Shake, Yogurt Milk § Successful local products abroad: Onken, Trentina, Cypress Grove Chèv
Slide 13: Facts and figures for financial year 2011
Facts and figures for financial year 2011 Sales and income exceed expectations Amounts in CHF million 2011 2010 2009 2008 2007 Net sales 2 721 2 684 2 619 2 671 2 501 Earnings before interest, taxes, depreciation 239.3 233.6 208.3 184.4 140.1 and amortization (EBITDA) as % of net sales 8.8 8.7 8.0 6
Slide 14: 5-year trend in profits
5-year trend in profits Operating and net profit ratios almost doubled, steady increase of EBITDA % 8.7 8.8 9 8.0 8 6.8 7 5.6 6 5.1 4.8 5 4.2 3.8 4 3 2.5 3.2 3.0 2.9 2 2.2 1 1.6 0 2007 2008 2009 2010 2011 EBITA margin EBIT margin Net profit ratio Emmi results 2011: A solid foundation for further suc
Slide 15: Sales trends 2011 – Group
Sales trends 2011 – Group Increase of 1.4% +6.1% -2.8% -2.5% +0.6% organic -1.9% 2683.7 2721.3 2010 Acq. FX Volume Price 2011 Acq.: effects due to acquisitions; FX: foreign currency effects; Volume: volume effects; Price: price effects Emmi results 2011: A solid foundation for further success, Helve
Slide 16: Sales trends 2011 – in Switzerland and abroad
Sales trends 2011 – in Switzerland and abroad Stable domestic core business, intl. growth despite strong Swiss franc Sales – Switzerland Sales – international in CHF million in CHF million +18.1% -10.4% +1.5% -3.7% - +0.9% +2.3% organic -3.7% organic +3.2% 1951.9 1909.9 731.8 811.4 2010 Acq. Vol. Pr
Slide 17: Exchange-rate driven loss in sales since 2008
Exchange-rate driven loss in sales since 2008 Loss in sales of CHF 180 million in 3 years CHF million 180 160 § With a stable exchange rate since the beginning of 2009, 140 international sales would have 120 been more than 20% higher! 100 80 60 40 20 0 2009 2010 2011 Emmi results 2011: A solid found
Slide 18: Annual results 2011
Emmi in brief Overview of the financial year 2011 Annual results 2011 Most important success factors Market situation and outlook Appendix
Slide 19: An overview of the financial year
An overview of the financial year Further development in a turbulent environment Refinancing Sale of a property in Thun Acquisition Rutz Käse Group Acquisition of Impairments in Onken goodwill, tangible assets Acquisition A-27 Group 9.8. 6.9. 3.1. 30.6. 1.7. 1.8. 15.9. 1.12. SNB intervention (EUR/CH
Slide 20: Second-best EBIT in Emmi's history
Gross profit to EBIT Second-best EBIT in Emmi's history in CHF million 2011 2010 ∆ in % § Disproportionate increase in Net sales 2 721.3 2 683.7 +1.4 operating expense (+3.3%), Gross 907.1 892.5 +1.6 primarily due to acquisitions operating profit as % of net sales 33.3 33.3 § Profit from sale of pro
Slide 21: Exceptional income and expenses 2011
Exceptional income and expenses 2011 Exceptional influences in 2011 balance each other out in CHF million 2011 2010 ∆ in % Gain on the disposal of fixed assets EBIT, as published 130.3 135.8 -4.0 § Sale of property in Thun Profit from sale of -15.9 -3.1 CHF 15.5 million tangible assets Impairments I
Slide 22: EBIT to net profit
EBIT to net profit Net profit margin makes it over the 3% barrier in CHF million 2011 2010 ∆ § Improved FX result thanks to EBIT 130.3 135.8 -5.5 prudent hedging strategy and Income from 3.7 2.7 +1.0 good FX trend in Q4 associated companies Financial result -7.0 -18.2 +11.2 § Higher tax expense due
Slide 23: Cash flow (1/2)
Cash flow (1/2) Operating cash flow continues to be strong in CHF million 2011 2010 ∆ Operating cash flow 218.3 222.4 -4.1 Change in net current assets -42.1 -15.8 -26.3 Other -25.8 -30.2 +4.4 Cash flow from operating activities 150.4 176.4 -26.0 Investments in tangible assets -94.8 -105.0 +10.2 Inv
Slide 24: Cash flow (2/2)
Cash flow (2/2) Largest investment projects § Expansion of milk processing and process optimization of UHT production in Suhr Total CHF 11.2 million, 2011 CHF 8.0 million (remainder in 2012) § Expansion of cheese curing cellar in Saignelégier Total CHF 8.4 million, 2011 CHF 2.7 million (remainder in
Slide 25: Key figures for 2011 (1/4)
Key figures for 2011 (1/4) Net debt/EBITDA in CHF million Factor 400 § Issue of a bond due to 350 342 3 advantageous conditions 306 287 - the result is higher 300 net financial liabilities 250 2.19 192 2 § As before, net debt/EBITDA ratio 200 181 is considerably lower than the 150 1.56 established l
Slide 26: Key figures for 2011 (2/4)
Key figures for 2011 (2/4) Equity ratio in CHF million in % 1949 2000 70 § Equity ratio remains clearly 1729 1800 1635 1683 1655 above the set limits 60 1600 52.4 47.9 49.6 55.3 56.5 § Equity basis for additional 1400 50 financing remains very stable 1200 40 1000 30 800 600 20 400 10 200 0 0 2007 20
Slide 27: Key figures for 2011 (3/4)
Key figures for 2011 (3/4) Return on invested capital (ROI) in CHF million in % 1267 1112 § Decrease in ROI to 8.8% 1200 10 1107 1114 1016 9.8 § Investments made in the second 1000 half did not yet fully impact the 8.8 8 8.4 7.6 income in full-year 2011 800 6 § Impact of slight decrease in 600 5.8 e
Slide 28: Key figures for 2011 (4/4)
Key figures for 2011 (4/4) Constant dividend in CHF in % 18.00 40 § The Board of Directors proposes 16.10 15.51 34.6 14.08 35 to the General Meeting a 15.00 constant dividend of CHF 3.40 30 12.00 10.98 25 § The BoD expects a future 23.7 distribution rate of 20 - 25% 9.00 21.1 21.9 20 7.52 21.3 15 6.
Slide 29: Most important success factors
Emmi in brief Overview of the financial year 2011 Annual results 2011 Most important success factors Market situation and outlook Appendix
Slide 30: Trend analysis as the basis for innovation
Trend analysis as the basis for innovation Key trends for Emmi in the food sector § Taste § Health Lactose-free "All Natural" Toni § Convenience § Sustainability Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 2012 Page 30
Slide 31: Emmi Caffè Latte breaks the 90-million-cup barrier
Key products: Emmi Caffè Latte breaks the 90-million-cup barrier Positive development since product launch Defence in Switzerland Million cups International growth 100 90 80 +3% 70 60 50 40 30 +7% 20 10 0 2007 2008 2009 2010 2011 CH Export Volume delivered from our plants Emmi results 2011: A solid
Slide 32: Emmi Caffè Latte: Most important markets
Healthy growth across the board Emmi Caffè Latte: Most important markets Defence in Switzerland International growth Growth 2010 -> 2011* Size of market** Switzerland + 7% No. 1 Germany - 21% No. 2 (de-listings due to price increases) Austria + 11% No. 3 Spain + 76% No. 4 UK + 49% No. 5 Belgium + 47
Slide 33: Strong growth in US specialities market: Cow's milk cheese
Key products: Strong growth in US specialities market: Cow's milk cheese Local growth of Emmi Roth USA: Steady increase each year since takeover International growth Index 160 +6% § Double-digit growth in sales 150 in 2011 (single-digit in volume) +20 § Local production reaches 140 % limits of capac
Slide 34: Strong growth in US specialities market: Goat's milk cheese
Key products: Strong growth in US specialities market: Goat's milk cheese Cypress Grove Chèvre: Leader position and growth above the market average International growth Index 140 § Capacity set to increase +17 massively in 2012 thanks to 130 % additional production infrastructure. 120 +13% 110 +7% 1
Slide 35: Re-positioning of Trentina bearing fruit
Key products: Re-positioning of Trentina bearing fruit Sharpened brand positioning International growth Index 140 § 2008: 130 Launch of the Trentinalatte brand 120 +16% § 2011: 110 Re-positioning with change +7% of name to "Trentina" 100 90 80 2009 2010 2011 Indexed yoghurt sales Emmi results 2011:
Slide 36: Successful acquisition: Onken in UK
Successful acquisition: Onken in UK No. 1 within branded big-pot yogurts in the UK International growth Achievements in 2011 Activities for 2012 § Financial Integration completed § Sharpened brand positioning § New marketing team set up (Honest Tasty Pleasure) § Various promotion activities with tra
Slide 37: Successful acquisition: Bontà Divina dessert specialties
Successful acquisition: Bontà Divina dessert specialties A-27 SpA offers new business opportunities International growth Achievements in 2011 Activities for 2012 § Integration into Emmi’s books § Assessment synergies in Benelux & UK § Definition of synergy potential in § Re-definition of marketing m
Slide 38: Cost savings
Cost savings: Savings of CHF 15 million in 2011 Highlights Cost management § "Operational excellence" initiatives at all major locations; focus on process optimization § Replacement investments bring about increase in efficiency § Insourcing of logistics services for own company § Abandonment of unp
Slide 39: Investment: a prerequisite for further growth
Investment: a prerequisite for further growth Focus on creating extra productive capacity Switzerland Kaltbach: New facilities for producing goat's milk fresh cheese CHF 4.5 million Saignelégier: Extra capacity for the curing of Tête de Moine cheese CHF 8 million International USA/Monroe: Extra capa
Slide 40: Market situation and outlook
Emmi in brief Overview of the financial year 2011 Annual results 2011 Most important success factors Market situation and outlook Appendix
Slide 41: Percentage shares of export business and local production 2007 – 2011
Percentage shares of export business out of Switzerland and business produced locally abroad 2007 – 2011 Higher increase in share of locally produced business Percent Major acquisitions 100 76% 75% 67% 64% 53% 2006: Trentinalatte yoghurt, fresh cheese (Italy) 2009: Roth Käse (USA) 50 2010: Cypress G
Slide 42: Environment in Switzerland and internationally
Environment in Switzerland and internationally Factors affecting sales Stimulating Limiting Switzerland § Acquisitions (Rutz) § Abandonment of unprofitable positions (generic products, industry § Optimization and expansion and logistics) of brand portfolio § Price pressure in retail § Product innova
Slide 43: Measures for Switzerland in 2012
Measures for Switzerland in 2012 Press ahead with successful brand concepts § Increase investments in brand concepts (Caffè Latte, Emmi umbrella brand) § Targeted innovation within existing brand concepts § Optimization of successful sponsoring (skiing, open-airs) § Operating expenses: further savin
Slide 44: Measures for the international market in 2012
Measures for the international market in 2012 Continued targeted strengthening of key markets Cheese § Exploit market potential in the US § Growth in fondue in Benelux § Exploit positive development of Kaltbach cheese in Germany Caffè Latte § Investment in Germany, the biggest foreign market of Caff
Slide 45: Outlook for 2012 as a whole
Outlook for 2012 as a whole 2% to 3% Group growth, profit along the lines of the previous year Growth incl. acquisitions, profit § Group sales 2% to 3% § Sales Switzerland -2% to -1% § International sales 10% to 15% § EBIT, CHF 125 to 140 million § Net profit margin around 3% (Figures assume constan
Slide 46: Medium-term objectives
Medium-term objectives 2% to 3% organic growth per year at Group level Growth without acquisitions, profit § Group sales 2% to 3% § Sales Switzerland stable § International sales 6% to 8% § Net profit margin 2.5% to 3.5% (Figures assume constant exchange rates and raw milk prices; organic) Emmi resu
Slide 47: Appendix 1 Financials
Appendix 1 Financials
Slide 48: Sales trends – Switzerland
Sales trends – Switzerland Good performance of brand concepts, increasing import pressure Sales of cheese Sales of fresh products Sales of dairy products in CHF million in CHF million in CHF million - -0.8% +1.1% +0.3% -2.8% +1.3% +5.1% -5.7% -1.5% organic +0.3% organic -1.5% organic -7.2% 369.6 370
Slide 49: Sales trends – international
Sales trends – international Caffè Latte and local production abroad drive success Sales of fresh products Sales of fresh cheese Sales of cheese in CHF million in CHF million in CHF million +54.2 -9.1% +6.6% -11.3% -4.8% +1.0% +38.7% +8.0% % -3.6% +3.0% organic - -15.0% organic -3.8% -0.6% organic +
Slide 50: Factors driving EBIT
Factors driving EBIT Increase in costs due primarily to acquisitions Profit from In Gross Other sale of fixed Personnel Write-back Depreciation/ Other operating Depreciation Release of CHF mio. Gross profit profit assets PersonnelOperating expense expense amortization expense Negative badwillgoodwil
Slide 51: Systematic cost management
Systematic cost management Targeted use of resources optimizes costs ∆ in in CHF million 2011 2010 % § Increase in personnel expenses Personnel expenses 344.8 332.2 +3.8 of 3.8% due to acquisitions as % of net sales 12.7 12.4 § Decrease in marketing expenses Advertising and marketing 105.2 107.6 -2.
Slide 52: Financial result
Financial result Significantly improved financial result in CHF million 2011 2010 ∆ § Positive currency result thanks to Currency result 1.7 -17.1 +18.8 effective hedging measures and Interest result -7.7 -4.2 -3.5 positive currency trend in Q4 Other financial result -1.0 +3.1 -4.1 § Interest result
Slide 53: Maturity of credits/credit lines
Maturity of credits/credit lines Maturity of used and not used credits/credit lines 250 200 150 in mio. CHF 100 50 - 2012 2013 2014 2015 2016 2017 2018 used credits/limits free limits Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 2012 Page 53
Slide 54: Development of US Dollar
Development of US Dollar Forex situation extremely challenging in 2011 1. HY 2. HY ø 1.HY2010 ø 2.HY2010 - 17,63 centimes - 16.28 % - 13,55 centimes - 13.50 % ø 1.HY2011 ø 2.HY2011 Quelle: OANDA Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 2012 Page 54
Slide 55: Development of Euro
Development of Euro Forex situation extremely challenging in 2011 1. HY 2. HY ø 1.HY2010 - 16,85 centimes ø 2.HY2010 - 11.71 % ø 1.HY2011 - 13,22 centimes - 9.95 % ø 2.HY2011 Quelle: OANDA Emmi results 2011: A solid foundation for further success, Helvea Roadshow London, 2 April 2012 Page 55
Slide 56: Appendix 2 Additional information
Appendix 2 Additional information
Slide 57: Volume of milk and cream processed by Emmi in Switzerland
Volume of milk and cream processed by Emmi in Switzerland Emmi processes over 900 million kg Milk and cream processing by Emmi Milk suppliers in Switzerland in 2011 Switzerland in kg millions Nordostmilch 1000 29 38 40 Direct suppliers 38 40 and others 800 Milchverband beider Basel MIBA 600 842 878
Slide 58: The culture to support innovations
The culture to support innovations Image shaped through innovative brand concepts Swiss Müesli Gala Mousse Kaltbach Extra Minicol Benecol Création Yoghurt Luzerner Yogodu Emminent Emmi Caffè Latte Intenso Choco Latte 2003 2004 2005 2006 2007 2008 2009 2010 2011 Winzer Emmi Caffè Latte Zero Milk Shak
Slide 59: Possible routes for acquisitions
Possible routes for acquisitions Focus on existing Emmi international key markets Brand Jewel Technology Market Synergies/ Organic Regional / Leader / Added Efficiency competion of Value PL product range CHF 1’000 mio. International Strategic/ Onken Bontà Possible Divina Roth Cheese/ Fromalp Possibl
Slide 60: Milk-price developments in 2011
Milk-price developments in 2011 Difference CH – EU has expanded due to currency situation Milk price developments in Switzerland and the EU [Price/kg milk] 70 65 CH 2011: Ø 62.7 centimes CH 2010: Ø 61.8 centimes 60 55 50 45 EU 2010: Ø 43.5 centimes EU 2011: Ø 43.4 centimes 40 35 EU 2011: Ø 34.7 euro
Slide 61: Sustainability is part of our company policy
Sustainability is part of our company policy Key environmental measures 2005 to 2011 Dagmersellen Logistics: ongoing adapt. of Landquart production facility: 86% of our heavy-load trucks production facility: delivery schedules and heat recovery have the lowest level of Switchover of various modernis
Slide 62: Environmental index Emmi Group 2008 - 2011
Environmental index Emmi Group 2008 - 2011 Above-average decline in emissions Index 100.5 100 98.9 98.6 97.1 96.9 94.8 95.9 93.8 89.9 92.3 90 88.0 80 76.7 Current sustainability report 2008 2009 2010 2011 from Emmi Electricity Waste to incineration plant Water Dotted line = product sales as a benchm