Barry Callebaut AG · SIX:BARN
Barry Callebaut — FY2008/09 Earnings Presentation
51 slides from Barry Callebaut's earnings presentation, November 2009
Slide 1: Roadshow presentation full-year results 2008/09
Barry Callebaut Roadshow presentation full-year results 2008_09 November 2009 November 2009 Barry Callebaut FY Results roadshow presentation 2008/09
Slide 2: Agenda
Agenda X Barry Callebaut at a glance X Highlights FY 2008/09 X Financial and operational performance X Strategy going forward & market opportunities X Outlook November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 2
Slide 3: Active along the entire cocoa and chocolate value chain
Barry Callebaut is active along the entire cocoa and chocolate value chain Cocoa Semi-finished Products Chocolate Products Sugar 100% Retail Milk customers Other Consumer Products Liquor for Chocolate via Industrial Shells/ chocolate Couverture customers waste 50% Butter Artisanal 100% customers 20%
Slide 4: Barry Callebaut at a glance
Barry Callebaut at a glance Barry Callebaut FY 2008/09 Net revenue: CHF 4.9 bn X World leader in high-quality cocoa and chocolate products and outsourcing partner of choice, with over 40% share in the Consumer Cocoa industrial chocolate market Products 11 %15% 17% 23 % X World’s largest supplier of
Slide 5: Cocoa, dairy, and sugar are the most important raw materials we source
Cocoa, dairy, and sugar are the most important raw materials we source Barry Callebaut business model 100g 100gchocolate chocolatetablet tabletcontains: contains: Gourmet & Consumer Milk Milk Dark Dark 20% Products Price Lists Cocoa Cocoaliquor liquor 11g 11g 44g 44g regular updates Cocoa Cocoabutte
Slide 6: Agenda
Agenda X Barry Callebaut at a glance X Highlights FY 2008/09 X Financial and operational performance X Strategy going forward & market opportunities X Outlook November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 6
Slide 7: Exceptionally challenging markets
Exceptionally challenging markets: Negative volume growth in mature markets – emerging markets still growing but slowed down Global chocolate market declined by more than 2% in volume - 2.6% 1'575'544 1'534'170 + 1.6% 2008 Volume in tons 2009 736'031 764'920 Volume in tons - 6.6% Volume in units 350
Slide 8: Cocoa prices volatile, sugar price high
Raw material price development Cocoa prices volatile, sugar price high London Cocoa 2nd Position – weekly close in £/ton in EUR/ton London Sugar No. 5 – 1st position 700.00 03/11/2009, 2750 2600 593.80 in €/ton 600.00 2450 in £/ton 2300 2150 500.00 2000 1850 400.00 $ / MT 1700 1550 1400 300.00 1250
Slide 9: Combined ratio hovering at low levels
Raw material price development Combined ratio hovering at low levels Cocoa powder-butter combined ratio – European ratios 6 months forward against LIFFE EU powder EU butter Combined ratio 4.40 4.20 4.00 3.80 3.60 3.40 3.20 3.00 Butter - Powder - Combined 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20
Slide 10: Delivering strong top-line and bottom-line growth
Financial summary 2008/09: Delivering strong top-line and bottom-line growth X Sales volume up 4.1% in a declining global chocolate market X Accelerating volume growth in the second half of the fiscal year: +8.7% X Sales revenue up 8.5% in local currencies, driven by price increases (+1.3% in CHF) X
Slide 11: Focus on core business – Industrial & Gourmet
Strategic highlights 2008/09: Focus on core business – Industrial & Gourmet January 2009 June 2009 1st quarter 2010 February 2009 Acquisition of Inauguration of Chocolate Sale of Van Houten Danish Vending mix September 2008 new factory in factory in Brazil Singapore company Eurogran Acquisition of I
Slide 12: Intended acquisition of Chocovic in Spain
Expanding our core business: Intended acquisition of Chocovic in Spain X Agreement signed with Nederland Group to acquire Spanish chocolate maker Chocovic X Facts & Figures on Chocovic: X Approx. EUR 60 million sales revenue (2008) X 30,000 tonnes of chocolate and specialty products (2008) X Approx.
Slide 13: Significant steps in implementing our strategy
Strategic highlights 2008/09: Significant steps in implementing our strategy Strategy Geographic expansion Geographic expansion Innovation Cost leadership Innovation Cost leadership Targeted geographic Fundamental R&D: Purchasing power Achievements expansion: •11 clinical studies in Cost savings and
Slide 14: Outsourcing contracts on track
Strategic highlights 2008/09: Outsourcing contracts on track X Nestlé: Outsourcing contract is fully implemented X Hershey’s: Strong increase in deliveries out of our Mexican and US factories – volumes with Hershey’s will again increase in FY 09/10 X Cadbury: Running on track X Morinaga: Factory sta
Slide 15: Agenda
Agenda X Barry Callebaut at a glance X Highlights FY 2008/09 X Financial and operational performance X Strategy going forward & market opportunities X Outlook November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 15
Slide 16: Strong profit growth in local currencies
Key Figures Strong profit growth in local currencies Change Change FY FY In local currencies 2008/09 2007/08 Sales volume [in tonnes] 4.1% 1'213'610 1'166'007 Sales revenue [CHF m] 8.5% 1.3% 4'880.2 5 226.5 4'815.4 CHF per tonne 4.3% -2.6% 4'021 4'130 Gross profit [CHF m] 7.0% 1.0% 707.8 749.9 700.8
Slide 17: Gross profit: margin positive, combined ratio & FX negative
GROSS PROFIT Margin positive, combined ratio & FX negative in CHF m +8 750 -16 +28 -42 +29 CHF m 700 650 600 701 708 550 500 FY 07/08 Volume Product mix Efficiency Cocoa Negative Current FY Gross Profit growth / margin gains processing currency Gross Profit impact effects November, 2009 Barry Calleb
Slide 18: EBIT: efficiency gains positive, non-recurring & FX negative
EBIT Efficiency gains positive, ∆ non-recurring & FX negative EBIT development [CHF m] 400 - 15 16 - 18 + 49 - 23 350 CHF m 300 351 341 250 FY 07/08 EBIT Additional Additional Efficiency Delta non- Net FY 08/09 EBIT Gross Profit SG&A from gains recurring FX effect (excl. FX business items impact) gr
Slide 19: Stable net interest rate, but higher average debt
Below EBIT - Financial Expense: Stable net interest rate, but higher avg. debt capital employed FY 2008/09 CHF m Avg. interest rate 100 5.7% 4.7% 6.2 6.3 90 7.0 -6.6 % 80 70 91.6 90.7 84.7 60 50 40 Net interest Net interest Bank charges Losses on Exchange rate Net financial expense expense and fees
Slide 20: From EBIT to PAT
From EBIT to PAT: Stable financial cost & tax, less one-offs Change 2008/09 2007/08 in % Operating Profit (EBIT) CHF m 2.8 350.8 341.1 in local currencies CHF m 9.5 373.5 Financial expense, net CHF m -1.3 (91.6) (92.8) Disposal of financial assets, other CHF m 0.5 (6.4) Income taxes CHF m -0.3 (32.7
Slide 21: Cash-flow: full self-financing of investments and expansion
Cash-Flow: Full self-financing of investments and expansion 350.0 -6.3% 300.0 -57 250.0 CHF m 200.0 317 -144 150.0 297 +6 100.0 -59 50.0 +43 0.0 24 Operating Cash Operating Cash Investment CAPEX CF from Dividend** Increase in net flow* 2007/08 flow * 2008/09 into working acquisitions, cash (excl. FX
Slide 22: CAPEX development: back to long-term sustainable levels
CAPEX development: Back to long-term sustainable levels CHF m 300 250 250 200 additional growth 153 144 150 115 ~125 IT On- going Upgrade/ efficiency 100 level gains existing sites Maintenance 50 0 2005/06 2006/07 2007/08 2008/09 2009/10 plan November, 2009 Barry Callebaut FY results roadshow presen
Slide 23: Balance sheet: lower net debt and NWC
Balance sheet: Lower net debt and NWC despite growth and higher cocoa prices, supported by currency effect CHF m Change Aug 09 Aug 08 [%] absolute Total assets -5.8% -214.7 3'514.8 3'729.5 Net working capital -2.6% -27.0 1'010.1 1'037.1 Non-current assets 0.6% 8.5 1'432.2 1'423.7 Net debt -9.5% -98.
Slide 24: Stable financing situation due to long-term secured credit-lines
Stable financing situation due to long-term secured credit-lines Financing and liquidity situation as at August 31, 2009 [CHF] 2500 >CHF 650 various Short-term uncommitted 2000 facilities Financial leeway per end August 2009 1500 EUR 850 CHF m Maturity 2012 (17%) Syndicated 262 2013 (83%) bank loan
Slide 25: EVA keeps growing despite raw material price impact
EVA keeps growing despite impact of raw material prices on working capital and high investments EVA defined as measure to determine the value created above the return required by shareholders 1 0.5% 350 CAGR + 300 250 130 NOPAT (CHFm) 126 123 200 105 87 150 100 177 148 156 169 142 50 0 2004/05 2005/
Slide 26: Agenda
Agenda X Barry Callebaut at a glance X Highlights FY 2008/09 X Financial and operational performance X Strategy going forward & market opportunities X Outlook November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 26
Slide 27: Strategy confirmed, new growth opportunities
Strategy going forward: Strategy confirmed, new growth opportunities X “Heart X “Heart and and engine engine of of the the chocolate chocolate industry” industry” Vision X Chocolate X Chocolate expert expert and and business business partner partner of of choice choice X Number X Number one one choc
Slide 28: Future growth through Geographic Expansion
Strategy confirmed, new growth opportunities: Future growth through Geographic Expansion Geographic Expansion X Expand with regional customers (e.g. Russia, China, Japan, Americas) X Grow Gourmet organically and through acquisitions (e.g. Chocovic) X Expand into emerging markets through existing cus
Slide 29: Additional market outsourcing potential between 250,000 and 500,000 tonnes
Strategy confirmed, growth opportunities: Geographic Expansion Additional market outsourcing potential between 250,000 and 500,000 tonnes Geographic Expansion Top 11 Manufacturers of Industrial Chocolate X Total global industrial yearly (in '000 tonnes) chocolate production is Barry Callebaut estima
Slide 30: Better implementing our innovations
Strategy confirmed, new growth opportunities: Better implementing our innovations Innovation X Innovate products and services to sustain price premium and increase Share of Wallet X Enlarge certification and traceability on farmer level and improve quality of cocoa X Establish incubator structure fo
Slide 31: Clinical research program: 11 studies completed
Innovation Innovation 2008/09: Clinical research program: 11 studies completed Aim: to substantiate scientific evidence of health-enhancing benefits of cocoa and chocolate, focus on cocoa flavanols 1. Antioxidant effect Completed: 2, of which 1 in FY08-09 On-going: meta-analysis, opinion from EFSA o
Slide 32: New innovative products launched
Innovation Innovation 2008/09: New innovative products launched Health & Wellness Premium X Toothfriendly chocolate X The largest range of single origin chocolates and moves toward X White Chocolate with Real new, more exclusive and certified origins Fruit X Plantations – Millesime premium concept w
Slide 33: Innovations on multiple fronts in Gourmet
Innovation Innovation 2008/09: Innovations on multiple fronts in Gourmet Gourmet drivers Functional Convenience Ready-to-serve of innovation X Added value X Functional X Convenience X Ready-to serve Anti-oxidant Mousse pre-mixes Frozen dessert line X Decorations enriched X Adaptation to Decorations
Slide 34: Reducing costs on an ongoing basis
Strategy confirmed, new growth opportunities: Reducing costs on an ongoing basis Cost Leadership X Optimize flow and footprint to achieve lower logistic costs, higher scale effects and lower fixed costs X Increase capacity utilization X Improve processes to optimize stock management and reduce worki
Slide 35: Sustainability and CSR commitment in Africa
Focus on farmers, children, cocoa farming communities: BC’s sustainability and CSR commitment in Africa X Working to empower cocoa farmers X Quality Partner program in Ivory Coast: X 38 cooperatives, 42,000 farmers X Farmer training to achieve higher yields, better quality and, thus, higher income X
Slide 36: Executive Committee
Organization: Executive Committee Status as of November 10, 2009 – replaces former Senior Management Team (SMT) Juergen B. Steinemann, CEO Victor Balli, CFO Massimo Garavaglia, Western Europe David S. Johnson, Americas Steven Retzlaff, Global Sourcing & Cocoa Dirk Poelman, Chief Operations Officer H
Slide 37: Agenda
Agenda X Barry Callebaut at a glance X Highlights FY 2008/09 X Financial and operational performance X Strategy going forward & market opportunities X Outlook November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 37
Slide 38: Barry Callebaut is uniquely positioned
Strong platform for continued growth: Barry Callebaut is uniquely positioned X Clear growth strategy and robust business model X Recognized as the global market leader X Unmatched global presence X Leader in cocoa and chocolate innovations X Cost leader X Broadly diversified product portfolio From
Slide 39: Financial targets for 3-year period 2009/10-2011/12
Outlook: Financial targets for 3-year period 2009/10-2011/12 X Annual growth targets on average* for 2009/10 through 2011/12: X Volumes: 6-8% X EBIT: at least in line with volume growth *Our view for the 2009-2012 period reflects current economic forecasts for the markets we operate in as well as in
Slide 40: Chocolate market down – Barry Callebaut up
Summary: Chocolate market down – Barry Callebaut up We delivered strong top-line and bottom-line growth in a declining market Our growth strategy stood the test of the global economic crisis. We will continue on this path We will continue to significantly outperform the global chocolate market Novem
Slide 41: Cautionary note
Cautionary note Forward-looking statements Any information given on these slides as well as during the conference call has been prepared by Barry Callebaut solely for the use at this analyst presentation. Certain statements contained therein regarding the business of Barry Callebaut are of a forward
Slide 42: BACK-UP
BACK-UP November, 2009 Barry Callebaut FY results roadshow presentation 2008/09 42
Slide 43: West Africa is the world's largest cocoa producer
West Africa is the world’s largest cocoa producer – BC sources locally World total harvest: (08/09): 3456 K MT X Total 3,456 m tonnes harvested Dominican Republic Others 9% globally in 2008/09 1% X BC sources ~540k MT/y (08/09) cocoa, thereof 65% directly from Papa New Guinea 2% Indonesia /Malaysia*
Slide 44: Chocolate consumption per capita 2008
U ni te d Ki ng d om Ire 11.6 la Sw nd it z 9.9 er la nd G 9.8 er m an y 8.1 Au st ria N 7.3 or w Kg/capita/year ay Barry Callebaut 2009 Sl ov 7.3 en ia Be 6.6 lg iu m D en 5.8 m ar k Sw 5.7 ed en 5.6 U SA 5.5 Fi n la n d R 5.5 us si a Au 5.1 s tra N lia et he r 5.0 la nd s 5.0 Es to n ia C 4.2 Fr z
Slide 45: Third year of cocoa deficit despite decreased grinding volumes
Third year of cocoa deficit despite significantly decreased grinding volumes Cocoa production versus consumption End of Gross Surplus/d Crop year Grinding season crop eficit* stock 2005/06 3776 3508 239 1891 2006/07 3426 3658 -266 1625 2007/08 3718 3743 -62 1563 2008/09 3456 3494 -73 1490 * Current
Slide 46: Region Europe: market impacted by recession
Region Europe: Market impacted by recession – volumes regaining momentum in H2 Regional revenue split 08/09 X Declining chocolate consumption in particular in mature markets. Asia/RoW X BC achieved slight growth supported by Eastern Europe and a 8% rebound in activities in the second half-year. X HO
Slide 47: Region Americas: market share gains in a declining market
Region Americas: Market share gains in a declining market Regional revenue split 08/09 X Continued expansion in difficult market environment. Asia/RoW 8% X Barry Callebaut with a strong sales volume growth due to deliveries from Mexico plant to Hershey’s, increased share of wallet with other key acc
Slide 48: Region Asia/RoW: well positioned for further growth
Region Asia/RoW: Well positioned for further growth Regional revenue split 08/09 X Results partly distorted due to changes in scope (e.g. profitable sale of consumer activities in Asia and Africa). Asia/RoW 8% X Sales volume up 14.6%, partly due to the acquisition in Malaysia, the new outsourcing ag
Slide 49: Industrial Segment results
Industrial Segment: Benefiting from key accounts and local customers – cocoa margin suffering from lower combined ratio Cocoa Revenue by Business Unit 08/09 X Cocoa volumes up by 22% due to the acquisition in Malaysia as well as the expansion of existing sites and activities Consumer Cocoa Products
Slide 50: Food Service/Retail Segment results
Food Service/Retail Segment: Shift from restaurant consumption to at-home eating, Consumer unit recovered Gourmet & Specialties Revenue by Business Unit 08/09 X Gourmet affected by down-trading, but managed to Consumer maintain its sales revenue in local currencies at the Cocoa Products 15% prior-ye
Slide 51: Plant utilization per end 2008/09
Plant utilization per end 2008/09 2007 -09 substantial expansion of plant capacity Cocoa Grinding Capacity MT 600'000 92.2% 500'000 93.7% 88.6% 400'000 X BC has usually utilization 300'000 rates in chocolate of > 90%, in cocoa grinding even 200'000 100'000 higher 0 2006/07 2007/08 2008/09 Origin Cou