Aryzta Ag · SIX:ARYN
Aryzta — FY2010 Earnings Presentation
66 slides from Aryzta's earnings presentation, Sep 27, 2010
Slide 1: FY 2010 Results
ARYZTA AG FY 2010 Results 27 September 2010
Slide 2: Forward Looking Statement
Forward Looking Statement This document contains forward looking statements which reflect management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking
Slide 3: Results Highlights
Results Highlights Group – Underlying Group revenue declined by 8.6 % to €3.01bn – Operating profit (incl. associates and JVs) increased by 2.2 % to €305m – Underlying fully diluted EPS increased by 4.0 % to 244.0 cent – Proposed dividend payout of 36.6 cent (CHF 0.48021) per share based on a payout
Slide 4: Agenda
Agenda – Our Business – Financial Review – Operating Environment – Strategic Evolution – Outlook 4 © ARYZTA, September 2010
Slide 5: Our Business
ARYZTA AG Our Business 5 © ARYZTA, September 2010
Slide 6: Our Business
Our Business – Zurich based Swiss AG > Operations in Europe, North and South America, South East Asia, Australia and New Zealand – Created in 2008 – merger of Hiestand and IAWS August 2008 – Primary listing in Zurich (SIX; ARYN), and secondary listing in Dublin (ISE; YZA) – Holds 71.4 % of Origin En
Slide 7: Corporate Structure ARYZTA AG
Corporate Structure ARYZTA AG ARYZTA AG Food Europe Food North America Food Rest of World Origin Key Bakery Business Brands Key Bakery Business Brands Key Bakery Business Brands Origin 71.4 % Holding Hiestand La Brea Bakery Hiestand Origin Cuisine de France Otis Spunkmeyer Fresh Start Bakeries Delic
Slide 8: Geographic Reach – Food Group
Geographic Reach – Food Group Pro Forma Revenue1 (Including Fresh Start Bakeries & Great Kitchens) EUR 2.4 bn Food Europe 49 % Food North America 45 % Food Rest of World 6% Pro Forma Revenue1 (Including Fresh Start Bakeries & Great Kitchens) EUR 2.4 bn 1 Pro forma TTM revenue to July 2010 (including
Slide 9: Customer Channel Mix – Food Group
45 % Customer Channel Mix – Food Group Food Rest of World 6% Pro Forma Revenue1 (Including Fresh Start Bakeries & Great Kitchens) EUR 2.4 bn Convenience &Independent Retail Quick Service Restaurant 21 % 28 % Large Retail 25 % Other Foodservice 26 % Pro Forma Revenue1 (Including Fresh Start Bakeries
Slide 10: Product Mix – Food Group
Product Mix – Large Food Group Retail 25 % Other Foodservice 26 % Pro Forma Revenue1 (Including Fresh Start Bakeries & Great Kitchens) EUR 2.4 bn Morning Goods 14% Sweet Baked Goods Bread Rolls&Artisan Loaves 16 % 48 % Savoury &Other 22 % 1 Pro forma TTM revenue to July 2010 (including completed acq
Slide 11: Our Markets – Food Europe
Our Markets Food Europe Food Europe has market positions in speciality baking in Switzerland, Germany, Poland, the UK, Ire- land, France, Sweden and Spain. ARYZTA has a mixture of business to business and consumer brands including Hiestand, Cuisine de Pro Forma Key Figures1 Geographical Footprint (I
Slide 12: Our Markets – Food North America
Our Markets Food North America Food North America has market positions in speciality baking in the United States and Canada. ARYZTA has a mixture of business to business and consumer brands including Otis Spunkmeyer, La Brea Bakery, Fresh Start Bakeries, Pennant Foods, Sweet Life and Great Kitchens.
Slide 13: Our Markets – Food Rest of World
Our Markets Food Rest of World ARYZTA has embryonic speciality Pro Forma Key Figures1 Geographical Footprint bakery businesses in Japan, (Including Fresh Start Bakeries&Great Kitchens) Malaysia, Brazil, Australia and New Zealand, with joint ven- Revenue EBITDA EBITA Bakeries2 Countries ture operatio
Slide 14: Key Bakery Business Brands
Key Bakery Business Brands Hiestand Cuisine de France Hiestand offers a broad range of innovative bakery Cuisine de France offers the consumer traditional products (croissants, bread, rolls, pastries, snacks, French breads, pastries and also a wide range pretzels) and the comprehensive services to o
Slide 15: Key Bakery Business Brands
Key Bakery Business Brands Delice de France Coup de Pates Delice de France supplies high quality continental Coup de Pates is the principal brand of Groupe breads, viennoiserie, savoury and confectionery Hubert, a leading developer and distributor of products, including hospitality goods, primarily
Slide 16: Key Bakery Business Brands
Key Bakery Business Brands Fresh Start Bakeries Pennant Foods Sweet Life Fresh Start Bakeries (incorporating Pennant Pennant Foods is a leading provider of speciality Sweet Life is a leading innovator and manufac- Foods and Sweet Life) is a global supplier of bakery products and solutions to the Nor
Slide 17: Key Bakery Business Brands
Key Bakery Business Brands La Brea Bakery Otis Spunkmeyer Great Kitchens La Brea Bakery is widely credited as the pioneer Otis Spunkmeyer is a leading, premium fresh Great Kitchens is a leading supplier of pizza and and leader of the artisan bread movement in baked goods brand in its US market categ
Slide 18: Origin 71.4 % Holding
Origin 71.4 % Holding Origin ARYZTA AG is the majority shareholder (71.4 %) in Origin Enterprises plc, which has a listing on the AIM in London and the ESM in Dublin (AIM:OGN, ESM:OIZ). As of 24 September 2010, Origin had a market capitalisation of €368m (133m shares at €2.77), valuing ARYZTA‘s hol-
Slide 19: Financial Review
ARYZTA AG Financial Review 19 © ARYZTA, September 2010
Slide 20: ARYZTA AG Income Statement
ARYZTA AG Income Statement in Euro `000 July 2010 July 2009 % Group revenue 3,009,726 3,212,270 (6.3) Group operating profit1 272,973 280,409 (2.7) Share of associates and JVs2 31,613 17,525 Operating profit incl. associates and JVs1 304,586 297,934 2.2 Finance cost, net (51,485) (50,652) Pre-tax pr
Slide 21: Underlying Revenue Growth 2010 – ARYZTA AG
Underlying Revenue Growth 2010 – ARYZTA AG Food N. Food Total in Euro million Food Europe America Rest of World Food Group Origin1 Total Group revenue 1,072.0 571.6 35.8 1,679.4 1,330.3 3,009.7 Underlying growth (8.2) % (4.3) % 8.4 % (6.7) % (10.8) % (8.6) % Acquisitions3 2.0 % 8.4 % 57.2 % 4.8 % 0.
Slide 22: ARYZTA AG Segmental Profit
ARYZTA AG Segmental Profit in Euro `000 July 2010 July 2009 % Food Group1 Food Europe 131,245 135,103 (2.9) Food North America 69,911 67,481 3.6 Food Rest of World 5,963 2,123 180.9 Total Food Group 207,119 204,707 1.2 Origin 65,854 75,702 (13.0) Total Group 272,973 280,409 (2.7) Associates & JVs2 F
Slide 23: Dividend
Dividend – Proposed dividend > 15 % of underlying fully diluted EPS > 244 cent x 15 % = 36.6 cent (CHF 0.48021) – Timetable for dividend > Shareholder approval 2 December 2010 (General assembly) > Expected ex-date 27 January 2011 > Payment date 1 February 20112 1 Based on EUR 0.3660 per share conver
Slide 24: Food Group Income Statement
Food Group Income Statement in Euro `000 July 2010 July 2009 % Group revenue 1,679,417 1,712,754 (1.9) Group operating profit1 207,119 204,707 1.2 Operating margin 12.3 % 12.0 % Share of JVs2 20,041 13,808 Operating profit incl. JVs1 227,160 218,515 4.0 Finance costs, net (36,272) (33,299) Pre-tax p
Slide 25: Food Group Cash Generation
Food Group Cash Generation in Euro `000 July 2010 July 2009 EBIT 160,252 161,724 Amortisation 47,450 42,983 EBITA1 207,702 204,707 Depreciation 60,363 54,628 EBITDA 268,065 259,335 Working capital movement from debt factoring 21,554 – Working capital movement 3,264 24,675 Dividends received2 24,158
Slide 26: Food Group Net Debt and Investment Activity
Food Group Net Debt and Investment Activity in Euro `000 Food Group Food Group opening net debt as at 31 July 2009 (505,504) Cash flows generated from activities 251,018 Cost of acquisitions (incl. transaction costs and net debt (860,313) acquired) Share placement 115,001 Investment capital expendit
Slide 27: Food Group Funding Highlights
Food Group Funding Highlights – USD 620m (two tranches; USD 200m and USD 420m) and EUR 25m U.S private placement funding obtained during FY 2010 – New syndicated bank facility of CHF 600m established in FY 2010 – Swiss bond of CHF 200m launched in FY 2010 – Placing of 3.8m shares in June 2010 to ens
Slide 28: Food Group Gross Term Debt Maturity Profile
Food Group Gross Term Debt Maturity Profile – weighted average maturity c. 7.1 years Gross Term Debt Maturity Profile1 Term Debt Maturity Profile of Gross Debt1 2011 2012 2013 4% 2014 8% 2015 40% 2016 2% 2017 14% 2018 3% 2019 3% 2020 2% 2021 8% 2022 10% 2025 2% 2030 4% 1 Profile of term debt maturit
Slide 29: Food Group Financing Facilities
Food Group Financing Facilities Description Principal1 Maturity2 May 2010 – Syndicated Bank Loan CHF 600m Dec 2014 May 2010 – US Private Placement USD 420m / EUR 25m May 2013 – May 2022 Dec 2009 – US Private Placement USD 200m Dec 2021 – Dec 2029 Nov 2009 – Swiss Bond CHF 200m March 2015 Jun 2007 –
Slide 30: Return on Investment
Return on Investment Food Food N. Food Rest Total in Euro million Europe¹ America of World Food Group Origin Total 2010 Group share net assets1 1,427 1,281 230 2,938 3824 3,320 EBITA & associates/JVs cont.2 141 137 23 301 77 378 ROI 9.9 % 10.7 %3 10.0 % 10.2 % 20.3 % 11.4 % 2009 Group share net asse
Slide 31: Post Balance Sheet Events
Post Balance Sheet Events – Agreed acquisition with Tim Hortons of outstanding 50 % of Maidstone Bakery > Consideration of CAD 475m > Expected closing by December 2010 – Fresh Start Bakeries to invest in four bakeries in Rest of World > Facilities located in Taiwan, Singapore, Malaysia and Brazil >
Slide 32: Summary of Financial Review
Summary of Financial Review – Underlying Food Group revenue decline of 6.7 % reflecting recessionary environment > 5.1 % underlying revenue decline over last two years – Responsive business model with 30bps increase in operating margins to 12.3 % > 170bps increase over last two years – Underlying fu
Slide 33: Operating Environment
ARYZTA AG Operating Environment 33 © ARYZTA, September 2010
Slide 34: Year in Review Operating Environment
Year in Review Operating Environment – Challenging economic backdrop – Consumer slowdown impacts revenues – Severe impact on foodservice and convenience channels in Ireland and U.K – Cost containment and operating efficiencies compensate for revenue weakness 34 © ARYZTA, September 2010
Slide 35: Food Europe
Food Europe – Underlying revenue declined 8.2 % – Operating profit declined 2.9 % – UK and Ireland > Economic conditions weak > Supporting customers to reposition value proposition – Continental Europe > Stable revenues > Growth in new customers offsetting declines in existing customers > New field
Slide 36: Food North America
Food North America – Underlying revenue declined 4.3 % – Revenue declined from high 2009 comparator – Operating profit increased 3.6 % – Cost curtailment and operating efficiencies drive profit growth – Product innovation remains critical to consumer experience – Economic conditions weak > Value pro
Slide 37: Origin 71.4 % Holding
Origin 71.4 % Holding – Released results on 22 September (available on www.originenterprises.com) – Strong H2 momentum delivered full year EPS Growth – Increased global demand exposes fragile supply side dynamics – Long term food inflation – food production becoming strategically important – Re-emer
Slide 38: Commodity Inflation
Commodity Inflation Price Movement Contract Hard Red Winter Wheat Ticker KW 1 Exchange KBOT – Re-emergence of commodity inflation / volatility # 11 World Sugar SB1 ICE 70% Crude Soybean Oil BO1 CBOT No. 2 Yellow Com C1 CBOT 60% – Responsive pricing – ongoing trend 50% – Bakery offers compelling 40%
Slide 39: Strategic Evolution
ARYZTA AG Strategic Evolution 39 © ARYZTA, September 2010
Slide 40: ARYZTA Strategic Evolution
ARYZTA Strategic Evolution – Completed acquisition of Fresh Start Bakeries (incorporating Pennant Foods & Sweet Life) and Great Kitchens in Q4 – Milestone acquisitions to deliver on ARYZTA objectives – Improved strategic market positioning – Size Relevance Enhanced – Scale to the customer consumer e
Slide 41: Acquisitions – Great strategic fit
Acquisitions Great strategic fit Rationale – Geographic expansion in Europe – Product expansion in North America – Increase channel access into retail and QSR – Build capabilities in Food Rest of World segment – Substantially increased bakery capability and capacity What did we find? > Tremendous de
Slide 42: ARYZTA Positioning
ARYZTA Positioning ARYZTA benefiting from long-term food industry trends ARYZTA is benefiting from three long-term trends Declining in-home food Shortage of skilled labour Increasing demand for preparation consistent quality at moderate costs – Shift from ambient to frozen foods – Increased food awa
Slide 43: Frozen Food Spend per Capita
ARYZTA Positioning As markets evolve, consumers spend more at foodservice establishments and increase consumption of frozen products Markets Evolution, Foodservice and Frozen Foods Spend per Capita Dollars 135 USA 130 50 UK 45 Frozen Food Spend per Capita* 40 Germany 35 30 25 France 20 15 10 Brazil
Slide 44: Spending on food away from home
ARYZTA Positioning Spending on food away from home has consistently grown 1 – 2 % faster than spending on food at home Food Spending Over Time Indexed to 1958 Spending (1958 – 2008) CAGR % Percent (1958 – 2008) Foodservice 7.0 % 3000 2500 Total Food 5.8 % 2000 Spending Food at Home 1500 5.3 % 1000 5
Slide 45: QSRs are growing faster than other foodservice outlets
ARYZTA Positioning QSR’s are growing 1 – 2 % faster than other foodservice outlets Total WW Foodservice sales by segment (2006 – 2014F) Trillions of Dollars CAGR % CAGR % (2006 – 2009) (2009 – 2014F) 2.2 2.1 2.0 Total 2.1 3.3 2.0 1.9 1.9 Other 1.2 2.6 1.8 1.8 1.8 Managed 1.8 1.7 1.7 food services 2.
Slide 46: Frozen and bake-off bakery products growth
ARYZTA Positioning Frozen and bake-off bakery products are growing 1 – 2 % faster than the rest of the baked goods market U.S. Baked Goods Growth (2006 – 2014F) Percent Competitive Advantage of 3.5 Frozen & Bake-off 3.3 3.0 – "Always fresh" and convenient offering 2.5 – Efficient model > Minimise wa
Slide 47: Market leadership in growing categories
ARYZTA Positioning Market leadership in growing categories How ARYZTA is positioned to benefit – International leadership across product categories – Strategically aligned with key growth drivers – Unmatched international manufacturing capabilities – Speciality bakery expertise for product developme
Slide 48: Outlook
Outlook – Ongoing focus on bakery innovation and excellence – Continued focus on operating efficiencies, cost curtailment and cash generation – Strategic acquisitions facilitate growth in recessionary environment – Opportunity to unlock potential across enlarged business base – EPS accretion of c. 4
Slide 49: Strategic Market Positioning
Strategic Market Positioning "Developing customer partnership model with leading operators in every channel to consumers" 49 © ARYZTA, September 2010
Slide 50: Appendix – Origin Financials
ARYZTA AG Appendix 1 – Origin Financials 50 © ARYZTA, September 2010
Slide 51: Origin Income Statement
Origin Income Statement in Euro `000 July 2010 July 2009 % Group revenue1 1,330,309 1,499,516 (11.3) Group operating profit2 65,854 75,702 (13.0) Operating margin3 5.0 % 5.0 % Share of associates and JV4 11,572 3,717 Operating profit incl. associates and JV2 77,426 79,419 (2.5) Financing costs, net
Slide 52: Origin Underlying Net Profit Reconciliation
Origin Underlying Net Profit Reconciliation in Euro `000 July 2010 Reported net profit 48,039 Amortisation of intangible assets 3,914 Tax on amortisation (767) Underlying net profit 51,186 Underlying fully diluted EPS1 37.26c 1 Origin 2010 underlying fully diluted EPS is calculated using the weighte
Slide 53: Appendix – Other Financial Information
ARYZTA AG Appendix 2 – Other Financial Information 53 © ARYZTA, September 2010
Slide 54: ARYZTA AG Underlying Net Profit Reconciliation
ARYZTA AG Underlying Net Profit Reconciliation in Euro `000 July 2010 Reported net profit 151,729 Amortisation of intangible assets 50,730 Tax on amortisation (11,959) Acquisition costs 4,643 Underlying net profit 195,143 Dilutive impact of Origin management incentives (1,264) Underlying fully dilut
Slide 55: Food Group Underlying Net Profit Reconciliation
Food Group Underlying Net Profit Reconciliation in Euro `000 July 2010 Reported net profit1 117,420 Amortisation of intangible assets 46,816 Tax on amortisation (11,192) Acquisition costs 4,643 Underlying net profit 157,687 1 Reported net profit excludes dividend income of €7,600,000 from Origin. 55
Slide 56: ARYZTA AG Balance Sheet
ARYZTA AG Balance Sheet in Euro `000 As at July 2010 As at July 2009 Property, plant and equipment 945,100 664,532 Investment properties 20,648 62,975 Goodwill and intangible assets 2,264,421 1,498,430 Associates and joint ventures 162,881 139,351 Working capital (58,672) (14,871) Other segmental li
Slide 57: Food Group Balance Sheet
Food Group Balance Sheet in Euro `000 As at July 2010 As at July 2009 Property, plant and equipment 815,918 577,772 Investment properties 4,646 3,761 Goodwill and intangible assets 2,149,826 1,382,431 Joint ventures 73,140 55,720 Investment in Origin 51,045 51,045 Working capital (49,997) (28,744) O
Slide 58: FX Rates
FX Rates July 10 July 09 % Closing Rates Swiss Franc 1.3616 1.5247 10.7 % US Dollar 1.3079 1.4252 8.2 % Canadian Dollar 1.3546 1.5372 11.9 % Sterling 0.8373 0.8545 2.0 % Average Rates Swiss Franc 1.4621 1.5310 4.5 % US Dollar 1.3811 1.3643 (1.2 %) Canadian Dollar 1.4494 1.5932 9.0 % Sterling 0.8776
Slide 59: EUR USD Trend FY2010
EUR USD Trend FY2010 H1 H2 1.4894 1.50 1.4650 Average Monthly Rate 1.45 Closing Monthly Rate 1.40 1.3811 1.35 1.30 1.25 1.2338 1.20 Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul 59 © ARYZTA, September 2010
Slide 60: EUR CHF Trend FY2010
EUR CHF Trend FY2010 H1 H2 1.55 1.5250 1.53 Average Monthly Rate 1.51 1.5207 Closing Monthly Rate 1.49 1.47 1.4621 1.45 1.43 1.41 1.39 1.37 1.3580 1.35 Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul 60 © ARYZTA, September 2010
Slide 61: Food Group Revenue by Currency
Food Group Revenue by Currency Pro Forma Revenue1 (Including Fresh Start Bakeries & Great Kitchens) EUR 2.4 bn Other Currencies2 23% Euro 32% US Dollar 45% 1 Pro forma TTM revenue to July 2010 (including completed acquisitions of Fresh Start Bakeries and Great Kitchens), translated at USD- EUR rate
Slide 62: Appendix – Analysts' Consensus
ARYZTA AG Appendix 3 – Analysts’ Consensus 62 © ARYZTA, September 2010
Slide 63: ARYZTA FY 2010 Consensus Estimates
ARYZTA FY 2010 Consensus Estimates* September 2010 in Euro million mean Based on 8 analysts EBITA including associates & JVs 296.7 Underlying fully diluted net profit 188.8 Underlying EPS (cent) 238.5 Based on 5 analysts Food Group Net Debt (1,185.5) Origin Net Debt (119.3) 1 Net profit & EPS presen
Slide 64: ARYZTA FY 2011 Consensus Estimates
ARYZTA FY 2011 Consensus Estimates* September 2010 in Euro million mean Based on 8 analysts EBITA including associates & JVs 381.5 Underlying fully diluted net profit 248.4 Underlying EPS (cent) 297.8 Based on 5 analysts Food Group Net Debt (1,050.7) Origin Net Debt (90.4) 1 Net profit & EPS present
Slide 65: Thank you!
ARYZTA AG Thank you! 65 © ARYZTA, September 2010
Slide 66: Investor Information
Investor Information Company Contact Hilliard Lombard Head of Group Finance and Communications ARYZTA AG Talacker 41 8001 Zurich Switzerland Tel: +41 (0) 44 583 42 00 Fax: +41 (0) 44 583 42 49 [email protected] www.aryzta.com 66 © ARYZTA, September 2010