Barry Callebaut AG · SIX:BARN
Barry Callebaut — Non-Deal Roadshow (April 2014)
46 slides from Barry Callebaut's roadshow presentation, April 2014
Slide 1: Roadshow Half-year Results 2013/14
Barry Callebaut Roadshow-Half-year Results 2013/14 April 2014 April, 2014 Barry Callebaut - Roadshow HY 2013/14
Slide 2: BC at a glance, Highlights, Financial review, Strategy update & Outlook
BC at a glance Highlights HY 2013/14 Financial review Strategy update & Outlook April, 2014 Barry Callebaut - Roadshow HY 2013/14 2
Slide 3: Barry Callebaut at a glance
Barry Callebau 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 mn tonnes • Fully integrated with strong position in cocoa- Sales Revenue CHF 5 bn orign countries EBIT CHF 339 mn • Ser
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 April, 2014 Barry Callebaut - Roadshow HY 2013/14 7
Slide 8: BC at a glance, Highlights, Financial review, Strategy update & Outlook
BC at a glance Highlights HY 2013/14 Financial review Strategy update & Outlook April, 2014 Barry Callebaut - Roadshow HY 2013/14 8
Slide 9: Strong profit growth, strong contribution of acquired cocoa business
Highlights HY 2013/14 Strong profit growth, strong contribution of acquired cocoa business Sales Volume EBIT in CHF Net Profit for the period in CHF +17.6% +15.3% +3.1%1 +8.8%1 +8.3% Sales volume increase driven by recent cocoa acquisition, emerging markets, outsourcing and Gourmet Profit improv
Slide 10: Healthy chocolate market. Challenging market environment
Healthy chocolate market. Challenging market environment Raw Materials1 Currencies2 HY 13/14 ∆ prices vs py 300% 5% 250% 0% Cocoa beans +29% 200% -5% Sugar world -8% RUB/CHF 150% -10% INR/CHF Sugar EU -15% 100% -23% BRL/CHF Milk powder USD/CHF 50% -20% +26% 0% -25% Chocolate Market Development3 GDP
Slide 11: Growth across all regions; total volume +17.6%
HY 2013/14 Growth across all regions; total volume +17.6% Sales Volume by Region Volume growth vs prior year HY 2013/14 = 876,297 tonnes Group volume +17.6% Stand-alone +3.1% Europe +0.3% Americas +8.5% Asia-Pacific +11.0% Global Cocoa 1 +80.1% Underlying market2 +3.2% 1 Global Cocoa including recen
Slide 12: Continued positive performance of our key growth drivers
HY 2013/14 development Continued positive performance of our key growth drivers Emerging Markets Long-term outsourcing & Gourmet & Specialties Strategic partnerships Volume +17.9% vs prior year* +8.0% vs prior year +6.6% vs prior year growth % of total Group volume * Stand-alone, including recently
Slide 13: Ongoing focus on our strategic pillars
Highlights first six months- FY 2013/14 Ongoing focus on our strategic pillars Barry Callebaut Barry Callebaut Callebaut® launches takes over Inauguration of cocoa begins production in ‘Finest Belgian Hot remaining 51% of factory in Makassar with new, relocated Chocolate’ for the certified bean JV p
Slide 14: BC at a glance, Highlights, Financial review, Strategy update & Outlook
BC at a glance Highlights HY 2013/14 Financial review Strategy update & Outlook April, 2014 Barry Callebaut - Roadshow HY 2013/14 14
Slide 15: Strong profit growth, strong contribution of acquired cocoa ingredients business
HY 2013/14 Strong profit growth, strong contribution of the recently acquired cocoa ingredients business Group performance HY % vs prior % vs prior year (in local (CHF m) 2013/14 year currencies) (in CHF) Sales Volume Total (in tonnes) 876,297 +17.6% Sales Volume stand-alone 768,352 +3.1% EBIT Total
Slide 16: Region Europe: profitability reflects focus on product margins
Region Europe Significantly increased profitability reflects focus on product margins Western Europe with strong focus on higher product margins, better customer segmentation and positive impact from Project Spring Addressing capacity shortage, with investments in factory expansions in Belgium,
Slide 17: Region Americas: Strong performance across all markets
Region Americas Strong performance across all markets Strong performance top- and bottom- line, across Food Manufacturers and Gourmet Good growth in North America, despite extreme weather hampering logistics and leading to lower demand Particularly strong growth in Mexico and Brazil +8.5% +20.
Slide 18: Region Asia-Pacific: Continued strong growth
Region Asia-Pacific Continued strong growth Food Manufacturers business achieved double-digit growth, in particular in China, Japan, Indonesia and Malaysia Slower economic environment and weakeaning of some local currencies influenced the demand for the international Gourmet brands EBIT impact
Slide 19: Global Cocoa: volume and profit contribution of acquired business
Global Cocoa Significant volume and profit contribution of acquired cocoa business The acquisition of the cocoa business from Petra Foods brought this business to a new level Stand-alone volume flat due to increased internal demand for cocoa products and transfer of volumes to recently acquired
Slide 20: Gross profit: product margin improvement
Gross Profit –HY 13/14 Strong product margin improvement on stand-alone basis. Positive contribution of recently acquired business in mCHF +11.3% +23.8 421.6 +41.7 397.8 +3.8 -4.0 -9.7 +8.7 357.3 Gross Profit Volume Product mix Cocoa Additional Scope effects, Gross Profit Petra Foods Gross Profit H1
Slide 21: Combined ratio, softer than expected with neutral impact for H1
Cocoa processing profitability Combined ratio, softer than expected with neutral impact for H1 European combined ratio- 6 months forward ratio Combined ratio Butter ratio Powder ratio For cocoa processors, profitability depends on the ratio between input costs (price of cocoa beans) and output price
Slide 22: Stand-alone EBIT increased +8.8%
EBIT bridge Focus on profitable growth paid off: stand-alone EBIT increased +8.8% in CHF m +8.8% +40.5 -4.3 +12.9 201.7 -1.6 190.4 -20.7 174.9 EBIT Additional Additional SG&A Add. costs, EBIT stand- Petra Foods Acquisition and EBIT H1 2012/13 Gross Profit from business Scope and alone Cocoa business
Slide 23: Improved stand-alone EBIT/tonne in the last 6 months
Improved stand-alone EBIT/tonne in the last 6 months. 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)/ tonne CAGR
Slide 24: Net finance costs impacted by acquisition financing
Financial items Net finance costs impacted by increased financing needs due to the acquisition and higher raw material prices in CHF m Average 4.3% 4.5% 56.6 interest rate 14.6 +12% 2.0 0.5 37.8 2.7 33.7 Net interest Net interest Bank charges, Pension costs FX gains and Petra Foods Net Finance expen
Slide 25: Net profit impacted by financing and higher tax rate
Below EBIT Net profit impacted by financing related to acquisition and higher tax rate [CHF m] Change in % Change in H1 2013/14 H1 2012/13 In local % (restated) currencies CHF Operating profit (EBIT) 16.8% 15.3% 201.7 174.9 Financial items 59.3% 55.5% (56.6) (36.4) Share of result of equity-accounte
Slide 26: Net working capital evolution
Net Working Capital evolution Significant impact from higher raw material prices, resulted in higher working capital in mCHF Receivables Stocks Payables +21.5% -22 1’501 +446 -124 -168 255 -65 1’246 +32 1’026 +27 +94 Net Growth Price impact Growth Price impact Growth Price impact Others and FX impac
Slide 27: Cash Flow
Cash Flow Strong operating cash flow, offset by higher working capital and continuous investments in further growth in CHF m +9.4% 258 236 +204 2 -317 -47 -110 +10 Operating Operating Investment in Interest paid and Capital CF from Cash flow from Net decrease in Cash Flow H1 Cash Flow H1 Working Cap
Slide 28: Balance Sheet & key ratios
Balance Sheet & key ratios Ratios impacted by recent acquisition and higher working capital needs BC stand-alone Feb 14 Feb 13 1 Feb 14 Total Assets [CHF m] 5,106.9 3,555.9 Net Working Capital [CHF m] 1,246.5 1,501.4 1,026.2 Non-Current Assets [CHF m] 2,068.6 1,488.4 Net Debt [CHF m] 1,182.3 1,698.2
Slide 29: BC at a glance, Highlights, Financial review, Strategy update & Outlook
BC at a glance Highlights HY 2013/14 Financial review Strategy update & Outlook April, 2014 Barry Callebaut - Roadshow HY 2013/14 29
Slide 30: Our strategy remains unchanged
Our strategy remains unchanged “Heart and engine of the Vision chocolate and cocoa industry” Expansion People & Processes Innovation Sustainable, profitable Strategic growth pillars Cost Leadership Sustainable Cocoa April, 2014 Barry Callebaut - Roadshow HY 2013/14 30
Slide 31: 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 Brands track Best in class launch Cacao Innovation Barry «Purity from Nature» / Callebaut «H
Slide 32: 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 33: Production capacities expanded, manufacturing costs under control
Cost Leadership Production capacities expanded, while Expansion keeping manufacturing costs under control • Liquid chocolate capacity utilization has improved, from end of last year now at 90% (target 82-85%). Focus on eliminating capacity constraints in Western Europe Belgium Poland Germany Italy Q
Slide 34: 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 35: 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 36: Integration of acquired business well on track
Integration of acquired business well on track... Organization is • Ensuring the best balance between BC and ex-Petra resources on in place key positions (Regional commercial organizations and global functions) Commercial • Combined cocoa/chocolate sales teams and account allocation, model has been
Slide 37: ...and identified synergies confirmed
...and identified synergies confirmed Systems are • Streamline the business, starting up a being project to structurally identify what is needed implemented from a process and systems perspective for the new/combined organization Synergies are • Identified and confirmed synergies, and put a identifi
Slide 38: Project Spring: Achievements
Project Spring: Achievements Current status: Fully implemented Customer Segmentation Roll out ongoing What has been done • Customer segmentation became key decision driver • Enhanced differentiation in Pricing has lead More responsive & to significant margin improvements Harmonised QA profitable Pri
Slide 39: Talent Management and Development
Talent Management and Development Talent Management Components April, 2014 Barry Callebaut - Roadshow HY 2013/14 39
Slide 40: Chocovision 2014
Chocovision 2014 Fast forward – From Cocoa to Chocolate – Inspiration, Innovation, Impact Follow us on: www.chocovision.ch/blog @chocovision_org vimeo.com/chocovisionorg flickr.com/chocovision_org April, 2014 Barry Callebaut - Roadshow HY 2013/14 40
Slide 41: 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 42: Summary – HY 2013/14
Summary – HY 2013/14 Strong profit growth +15.3% Total business; EBIT +8.8% Stand-alone Volume growth driven by Emerging Markets, outsourcing and strategic partnerships and Gourmet Integration well on track. Strong contribution of recently acquired cocoa business. First synergies realized Mi
Slide 43: Appendix
Appendix April, 2014 Barry Callebaut - Roadshow HY 2013/14 43
Slide 44: 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 45: Capex investments support the growth of our business
Capex investments support the growth of our business in CHFm +5.2% +4.4% +4.5% CAPEX as % of sales revenue +3.0% +3.3% +2.8% Average = 4.0% 250 218 224 200 174 144 145 Additional growth IT Upgrade / efficiency gains existing sites Maintenance 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 P
Slide 46: Stable financing with headroom for growth and average maturity of 6 years
Stable financing offering headroom for future growth and average maturity of 6 years Financing and liquidity situation as of Feb 28, 2013 in CHFm 3,222 CHF 670 mio Various uncommitted facilities 39.7% EUR 400 mio Commercial Paper Programme Various bilateral LT loans EUR 175 mio 1,943 Maturity 2016 T