Barry Callebaut AG · SIX:BARN
Barry Callebaut — Q3 2013/14 Earnings Presentation
39 slides from Barry Callebaut's earnings presentation, July 2014
Slide 1: Roadshow presentation - Q3 2013/14
Barry Callebaut Roadshow presentation - Q3 2013/14 July 2014 July, 2014 Barry Callebaut - Roadshow Q3 2013/14
Slide 2: Agenda: BC at a glance
BC at a glance Highlights Q3 2013/14 Selective financial information Strategy update & Outlook July, 2014 Barry Callebaut - Roadshow Q3 2013/14 2
Slide 3: Barry Callebaut at a glance
Barry Callebaut at a glance Business description Key figures • World leading producer and business-to- FY 2012/13 business supplier of chocolate and cocoa products Sales Volume 1.5 m tonnes • Fully integrated with strong position in cocoa- Sales Revenue CHF 5 bn orign countries EBIT CHF 339 m • Serv
Slide 4: Present in all stages of the industrial chocolate value chain
Barry Callebaut is present in all stages of the industrial chocolate value chain Cocoa Beans Cocoa plantations 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 5: Favourable Industry Dynamics
Favourable Industry Dynamics Global growth prospects Outsourcing rationale for customers Average market growth in chocolate: Free up capital to invest in marketing 2 % in volume per year and distribution Influenced by population growth and Access to most recent innovation and increase in dis
Slide 6: Robust business model
Robust business model Gourmet & Specialties Cocoa Products • Price List 100g chocolate tablet contains: • Market prices • Combined ratio r • Cost plus Cocoa butter 10% 20% Milk powder Sugar Other Food Manufacturers • Cost plus 70% Raw materials represent about 80% of operating costs For the majori
Slide 7: Manufacturing footprint provides diversification and competitive advantage
Our current manufacturing footprint provides diversification and unique competitive advantage Cocoa processing factory Chocolate factory Integrated cocoa & chocolate factory New Factory, under construction or expansion 7
Slide 8: Agenda: Highlights Q3 2013/14
BC at a glance Highlights Q3 2013/14 Selective financial information Strategy update & Outlook July, 2014 Barry Callebaut - Roadshow Q3 2013/14 8
Slide 9: Highlights Q3 2013/14
Highlights Q3 2013/14 • Strong volume growth of +15.8% driven by the recently acquired cocoa business (+2.4% stand- alone) • Main growth drivers were the recently acquired cocoa business, and on a stand-alone basis emerging markets (+18.2%), Gourmet (+6.9%) as well as Outsourcing (+5.2%) • Integrati
Slide 10: Healthy chocolate market, challenging short-term environment
Healthy chocolate market. However on short term challenging market environment Raw Materials1 Currencies2 Q3 13/14 Δ prices vs py 5% 300% 0% 250% Cocoa beans +18% -5% 200% Sugar world RUB/CHF -13% INR/CHF -10% 150% BRL/CHF Sugar EU -18% -15% USD/CHF 100% Milk powder EUR/CHF +13% -20% 50% -25% 0% Sep
Slide 11: Strong growth driven by acquired cocoa business
Strong growth driven by acquired cocoa business - stand-alone growth in line with market Europe Americas Asia-Pacific Global Sourcing & Cocoa Volume growth (0.2)% +6.2% +9.6% +75.0%1 +1.9%2 Market volume +1.9% +2.8% +9.1% growth3 Sales revenue +74.7%1 +10.6% +12.6% +18.9% (in local +2.2%2 currencies
Slide 12: Cocoa acquisition drives strong volume expansion
Q3 2013/14 Cocoa acquistion drives strong volume expansion; volume +15.8% Sales Volume by Region Volume growth vs prior year Q3 2013/14 = 1,288,365 tonnes Group volume +15.8% Asia- Pacific 4% Stand-alone +2.4% Global Cocoa Europe -0.2% 28% Europe 43% Americas +6.2% Asia-Pacific +9.6% Americas Global
Slide 13: Continued positive performance of key growth drivers
Q3 2013/14 development Continued positive performance of our key growth drivers Emerging Markets Long-term outsourcing & Gourmet & Specialties Strategic partnerships Volume +18.2% vs prior year* +5.2% vs prior year +6.9% vs prior year growth 10% 29% 29% % of total Group volume * Stand-alone, includi
Slide 14: Ongoing focus on our strategic pillars
Highlights first nine months- FY 2013/14 Ongoing focus on our strategic pillars Barry Callebaut Barry Callebaut helps Barry Callebaut hosts Barry Callebaut takes over to form the Cocoa second CHOCOVISION Inauguration of cocoa begins production in remaining 51% of Action strategy of the stakeholder c
Slide 15: Agenda: Selective financial information
BC at a glance Highlights Q3 2013/14 Selective financial information Strategy update & Outlook July, 2014 Barry Callebaut - Roadshow Q3 2013/14 15
Slide 16: Key Figures Barry Callebaut
Key Figures Barry Callebaut FY ending August HY ending February FY 2010/11 H1 2012/13 [CHFm] FY 2011/12 FY 2012/13 H1 2013/14 (restated) (restated) Sales volume [in tonnes] 1,268,925 1,378,856 1,535,662 745,256 876,297 % growth 8.7% 11.4% 17.6% Sales revenue 4,460 4,830 4,884 2,392 2,907 Gross profi
Slide 17: Improved stand-alone EBIT/tonne; dilution from acquired business
Improved stand-alone EBIT/tonne in first 6 months of FY 13/14. Dilution from acquired business at Group level Group development 336 308 312 305 297 297 297 Stand-alone EBIT / tonne * at constant currencies 297 289 256 248 282 286 246 Stand-alone EBIT (CHF) / tonne as reported 230 Group EBIT (CHF)/ t
Slide 18: Commitment to get back to target ROIC / RoE levels
Commitment to get back to target / pre acquisition ROIC / RoE levels in mid term (CHF mn) 21% 20% 20% 19% ROE target 20% 19% 19% 18% 18% 18%* ROE 16% 15% 14% 14% 14% ROIC target 15% 14% 14% 14% 14% 13%* 13% ROIC 11% 10% 250 218 224 220 CAPEX 153 144 145 145 115 102 90 69 2002/03 2003/04 2004/05 2005
Slide 19: Strong increase in cocoa bean prices
Cocoa Bean Price Strong increase in cocoa bean prices over the last 12 months London Cocoa 2nd Position Since Sep 2002, in GBP/mt 2'600 2'500 2'400 2'300 2'200 2'100 2'000 1'900 1'800 1'700 1'600 1'500 1'400 1'300 1'200 1'100 1'000 900 800 700 600 500 Mar-04 Mar-09 Mar-14 Oct-03 Oct-08 Oct-13 Dec-04
Slide 20: Cocoa processing profitability: combined ratio
Cocoa processing profitability Combined ratio softer than expected. Neutral impact for H1 13/14. Last few month on a sideways trend European combined ratio - 6 months forward ratio 4.60 4.40 4.20 4.00 3.80 3.60 3.40 3.20 Combined ratio 3.00 3.0 2.80 2.60 Butter ratio 2.40 2.20 2.00 1.80 1.60 1.40 1.
Slide 21: Maturity Profile
Maturity Profile Syndicated Revolving Credit Facility of 600 m EUR prolonged from June 2016 to June 2019 Uncommitted Committed Funding 215 Liquidity Buffer / 338 Other L/T Bank Debt Availability under the RCF 8 Term Loan RCF S/T Bank Debt (O/S) Liquidity 477 18 RCF 424 395 348 CP 301 213 USD Bonds 1
Slide 22: Agenda: Strategy update & Outlook
BC at a glance Highlights Q3 2013/14 Selective financial information Strategy update & Outlook July, 2014 Barry Callebaut - Roadshow Q3 2013/14 22
Slide 23: Our strategy remains unchanged
Our strategy remains unchanged “Heart and engine of the Vision chocolate and cocoa industry” Expansion People & Processes Innovation Sustainable, Strategic profitable pillars growth Cost Leadership Sustainable Cocoa July, 2014 Barry Callebaut - Roadshow Q3 2013/14 23
Slide 24: Gourmet strategy implementation delivers growth in global brands
Expansion Focus on Gourmet strategy implementation, delivers positive growth in particular global brands Sales volume evolution – Global brands Product Superiority global Global brands & differentiation on CAGR +9% Brands +11% track Innovation Best in class launch Cacao Barry «Purity from Nature»
Slide 25: Innovating based on insights and discovery areas
Innovation Innovating based on insights and focus on 5 discovery areas Portfolio Discovery areas Global Insights Cocoa Science Daily luxury Post harvest treatment, fermentation, Cocoa Cocoa bean identity, origin treats, color, taste, metabolomics, application Structure, Texture & Sensory Smart & Mic
Slide 26: Production capacities expanded, costs under control
Cost Leadership Production capacities expanded, while Expansion keeping manufacturing costs under control • Liquid chocolate capacity utilization improved, from end of last year over 90% to 88% (target 82-85%). Focus on eliminating capacity constraints in Western Europe Belgium Spain Poland Germany
Slide 27: Full acquisition of Biolands: direct sourcing business model
Strengthening our position in Sustainable Cocoa Sustainable Cocoa Full acquisition of Biolands: direct sourcing business model Barry Callebaut acquired a 49% stake in 2008 and acquired the remaining 51% Feb 18 2014 Strategic step to increase our direct sourcing activities and with the aim to rep
Slide 28: Our key focus areas for 2013/14
Strategy Our key focus areas for 2013/14 Integrate Petra Foods cocoa business and strengthen our position in cocoa powder Enhance profitability Continue product margin improvement Keep supply chain and fixed costs under control Full implementation of Project Spring Strengthen leadership
Slide 29: Continuous focus on integration
Cocoa Business acquired from Petra Foods Continuous focus on integration What we achieved ...thanks to Global milestones are Focus and dedication of the different stakeholders – majority of being reached projects is now firmly owned by the regions. Tracking shows that only 16% of global milestones i
Slide 30: Project Spring: Achievements
Project Spring: Achievements Current status: Fully implemented Customer Segmentation Extension What has been done • Customer segmentation became key decision driver • Enhanced differentiation in Pricing has lead to significant margin improvements More responsive & • New customer care organisation, t
Slide 31: Chocovision 2014: three distinct sessions
Chocovision 2014 Sustainable Cocoa Sustainable Cocoa Three distinct sessions - each with a different focus June 18 June 18 June 19 MORNING AFTERNOON MORNING SESSION SESSION SESSION Inspiration Innovation Impact 1 2 3 impact Fundamental trends and Innovative ways of working Practical case studies dev
Slide 32: Broad range of topics in the cocoa value chain
Chocovision 2014 Sustainable Cocoa Sustainable Cocoa Broad range of topics around challenges and opportunities in the cocoa value chain... MACRO- CONSUMER EONOMIC NEEDS CHANGES DEMO- INNOVATION GRAPHICS RETAIL HEALTH LANDSCAPE DIGITAL SOCIAL REVOLUTION VALUES July, 2014 Barry Callebaut - Roadshow Q3
Slide 33: Barry Callebaut a leading force in CocoaAction
CocoaAction Sustainable Cocoa Sustainable Cocoa Barry Callebaut a leading force Source: web page of the World Cocoa Foundation http://worldcocoafoundation.org/ July, 2014 Barry Callebaut - Roadshow Q3 2013/14 33
Slide 34: Making our Talents Visible at BC
Talent Program Making our Talents Visible at BC We are here Talent Identification Talent Review Talent Program - Talent Identification - Talent Review meetings - Feedback to talents meetings in all sites and in all regions & functional - Create Individual departments based on areas lead by business
Slide 35: Our mid-term financial guidance
Guidance Our mid-term financial guidance Guidance: Volume growth: 6-8% on average per year until 2015/16 EBIT/tonne restored to Barry Callebaut’s pre-acquisition level by 2015/16* * As of consolidation of the cocoa business acquired from Petra Foods: EBIT per tonne CHF 256 – barring any major un
Slide 36: Appendix
Appendix July, 2014 Barry Callebaut - Roadshow Q3 2013/14 36
Slide 37: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer – BC sources locally Total world harvest (12/13): 3’986 TMT About 70% of total cocoa beans come from West Africa others BC stand-alone processed 10% Ecuador ~620,000 tonnes or 16 % of the 5% world crop Brazil* Ivory 5% Coast* 37% BC (including
Slide 38: Petra Foods Cocoa Ingredients acquisition supports core strategy
Petra Foods Cocoa Ingredients division acquisition supports our core strategy Excellent strategic fit at the core of Barry Callebaut’s cocoa and chocolate business supporting the company’s overall growth 2. Strengthen outsourcing and partnership 3. 1. agreements Support Boosting sales further volume
Slide 39: Taking global leadership in chocolate and cocoa
Expansion Taking global leadership in chocolate and cocoa Cocoa Grinding Capacity Industrial chocolate – Open market Barry Callebaut Barry Callebaut Cargill Cargill ADM Blommer Blommer ADM Mondelez Cemoi Guan Chong Puratos Nestlé Fuji Oil Ferrero IRCA BT Cocoa Guittard Ecom Cocoa Other players other