Barry Callebaut AG · SIX:BARN
Barry Callebaut — 9M 2016/17 Earnings Presentation
39 slides from Barry Callebaut's earnings presentation, July 2017
Slide 1: Roadshow presentation – 9 months Key Sales Figures 2016/17
Roadshow presentation – 9 months Key Sales Figures 2016/17 July 2017
Slide 2: Agenda
Agenda BC at a glance Highlights Q3 2016/17 Strategy & Outlook Page 2 July 2017 9-Month Roadshow presentation
Slide 3: BC at a glance
BC at a glance July 2017
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 July 2017 9-Month Roadshow presentation
Slide 6: FY 2015/16
FY 2015/16 Page 6 July 2017 9-Month 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 July 2017 9-Month 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 July 2017 9-Month Roadshow presentation
Slide 11: Highlights - 9-Month Key Sales Figures 2016/17
Highlights - 9-Month Key Sales Figures 2016/17 July 2017
Slide 12: Good growth momentum continues
9 months – Key sales figures 2016/17 Good growth momentum continues Sales volume growth up +2.8%, driven by strong above market growth in Chocolate +4.7% Acceleration in Q3 +5.5%, supported by key growth drivers: Outsourcing, Emerging markets and Gourmet and Specialties Sales revenue up by +2.9% in
Slide 13: Strong growth in Chocolate, significantly above the market
9 months – Key sales figures 2016/17 Strong growh in Chocolate including both Food Manufacturers and Gourmet & Specialties, significantly above the market in tonnes +5.5% +0.3% +7.2% +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
Slide 14: All key growth drivers fueled our sales volume growth
9 months – Key sales figures 2016/17 All key growth drivers fueled our sales volume growth Volume growth vs prior year 34.8% Emerging markets +3.3% Key growth 33.7% Long-term drivers outsourcing +6.6% & strategic crucial to partnerships continuously outperform the market 12.1% Gourmet & +11.6% Speci
Slide 15: Cocoa processing profitability
Cocoa processing profitability Combined ratio remains high, driven by tight supply and at historically low 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 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14
Slide 16: Continued low cocoa bean prices, milk powder and sugar above prior year
Raw materials price evolution Continued low cocoa bean prices, milk powder and sugar above prior year 9 months average increase 300% vs. prior year Sugar world 250% +34.9% 200% Cocoa beans -16.5% 150% 100% Sugar EU +14.3% 50% Milk powder +16.5% 0% Jun/2007 Jun/2008 Jun/2009 Jun/2010 Jun/2011 Jun/201
Slide 17: Barry Callebaut couples sustainability with its renewed banking credit facility
Financing Barry Callebaut couples sustainability with its renewed banking credit facility Amendment and extension of the revolving credit facility For the first time in Switzerland, second time in Europe, the interest rate will be coupled with the company’s sustainability performance and rating The
Slide 18: Strategy & Outlook
BARRY ((}) CALLEBAUT Strategy & Outlook
Slide 19: 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 20: Execution translated into our Product groups
Execution translated into our Product groups Accelerated growth • Expand reach Leveraging global scale and expertise • Expand scope • Growth & profit accretion Gourmet & Specialties Sustained growth • Strengthen existing Food Manufacturers partnerships • Foster new partnerships • Innovation & co- cr
Slide 21: 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 22: Outlook: Good momentum expected to continue. Mid-term guidance confirmed
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 23: Appendix
BARRY ((}) CALLEBAUT Appendix
Slide 24: 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 25: 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 9M: +0.9% 2017 9M: -0.6% 2017 9M: -1.6% South America ( 5% of market) Asia Pa
Slide 26: 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 27: 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 28: 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 29: 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 29 July 2017 9-Month Roadshow presentation
Slide 30: HY results 2016/17: 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 31: 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 32: 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 33: 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 34: 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 35: Free Cash Flow
Free Cash Flow Continued focus on free cash flow, temporarily affected by seasonality of cocoa crop and hedging of volaTle 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 36: Balance Sheet & key 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 37: 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 38: 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 39: 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 39 July 2017 9-Month Roadshow present