Aryzta Ag · SIX:ARYN
Aryzta — FY2015 Earnings Presentation
61 slides from Aryzta's earnings presentation, Sep 28, 2015
Slide 1: ARYZTA AG FY 2015 Results
ARYZTA AG FY 2015 Results 28 September 2015
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: Our Business – FY 2015
Our Business – FY 2015 –– International leader in speciality food –– Primary listing in Zurich and secondary listing in Dublin ARYZTA AG Food Europe Food North America Food Rest of World Bakeries Europe Food Solutions Brazil Asia Pacific (AFS) –– ARYZTA AG created in August 2008 by acquisition of IA
Slide 4: Share Price and Underlying Fully Diluted EPS (2008 – 2015)
ARYZTA Share Price and Underlying Fully Diluted EPS (2008 – 2015) € ARYZTA Share Price and Underlying Fully Diluted EPS € 80.00 4.50 70.00 4.00 60.00 3.50 50.00 3.00 40.00 2.50 30.00 2.00 20.00 1.50 JULY-08 JULY-09 JULY-10 JULY-11 JULY-12 JULY-13 JULY-14 Share Price (Financial Year End) € ARYZTA Und
Slide 5: Group Financial and Business Review
ARYZTA Group Financial and Business Review 5 © ARYZTA, September 2015
Slide 6: FY 2015 Financial Analysis – Income Statement
FY 2015 Financial Analysis – Income Statement –– Revenue growth – Continuing Operations +12.6% to €3.82bn –– Underlying revenue – Continuing Operations declined (2.2)% –– Underlying fully diluted EPS – Continuing Operations increased 1.6% to 368.9 cent –– ROIC reduced by (130)bps to 10.7% »» (90)bps
Slide 7: FY 2015 Financial Analysis – Balance Sheet
FY 2015 Financial Analysis – Balance Sheet Continuing Operations –– FY15 Investment capex of €329.4m, in-line with guidance on a constant currency basis –– €217.4m reinvested in complementary bolt-on acquisitions to extend geographies, customers and channels (including €68.9m post year-end) –– Syndi
Slide 8: ARYZTA AG – Group Continuing Operations FY 2009 – FY 2015
ARYZTA AG – Group Continuing Operations FY 2009 – FY 2015 Revenue (€m) (€m) Revenue EBITA EBITA (€m) (€m) 2015 2015 3,820 3,820 2015 514 2015 514 2014 Revenue 2014 Revenue (€m) Revenue (€m) (€m) 3,394 3,394 2014 EBITA (€m) 2014 EBITA (€m) EBITA (€m) 486 486 2013 2015 2015 2013 3,086 3,820 3,086 3,82
Slide 9: FY 2015 Underlying EPS Bridge
FY 2015 Underlying EPS Bridge 5.9c (25.9)c +1.4% (6.1)% 422.2c Disposal of FY14 Food 39% of EPS underlying (33.3)c Origin growth FY15 (7.9)% 402.2c FY15 EPS Disposal of total 29% of Origin 368.9c (12.6)% FY15 EPS Continuing Operations 9 © ARYZTA, September 2015
Slide 10: ARYZTA Group – Underlying Income Statement
ARYZTA Group – Underlying Income Statement Year ended 31 July 2015 Continuing Operations in EUR ’000 July 2015 July 2014 % Group revenue 3,820,231 3,393,783 12.6% EBITA1 513,965 486,294 5.7% EBITA margin 13.5% 14.3% (80) bps Joint venture (1,210) – EBITA including joint venture 512,755 486,294 5.4%
Slide 11: ARYZTA Group – FY 2015 Underlying Revenue
ARYZTA Group – FY 2015 Underlying Revenue Continuing Operations in EUR million Food Europe Food N. America Food Rest of World Total Food Group Group revenue 1,646.6 1,942.3 231.3 3,820.2 Underlying growth 1.0% (6.2)% 3.3% (2.2)% Acquisitions, net 0.4% 14.8% – 7.1% Currency 2.4% 13.8% 1.4% 7.7% Reven
Slide 12: ARYZTA Group – Quarterly Underlying Revenue
ARYZTA Group – Quarterly Underlying Revenue Continuing Operations Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 Food Europe 3.1 % 1.7 % 1.8 % (2.1)% 1.0% Food North America (3.2) % (8.4) % (6.7) % (6.5)% (6.2)% Food Rest of World 6.1 % 8.1 % 3.4 % (3.6)% 3.3% Total Group 0.5 % (2.4) % (2.3) % (4.3)% (2.2)
Slide 13: ARYZTA Group – Segmental EBITA
ARYZTA Group – Segmental EBITA Year ended 31 July 2015 Continuing Operations in EUR ’000 July 2015 July 2014 % Food Europe 212,031 230,334 (7.9)% Food North America 275,108 230,313 19.4% Food Rest of World 26,826 25,647 4.6% Total Group EBITA 513,965 486,294 5.7 % Joint venture (1,210) – (100.0)% To
Slide 14: ARYZTA Group – Segmental EBITA
ARYZTA Group – Segmental EBITA Continuing Operations in EUR ’000 H1 2015 H1 2014 % H2 2015 H2 2014 % Food Europe 98,635 92,097 7.1% 113,396 138,237 (18.0)% Food North America 112,974 89,899 25.7% 162,134 140,414 15.5% Food Rest of World 13,235 12,246 8.1% 13,591 13,401 1.4% Total Group EBITA 224,844
Slide 15: Margin Development
Margin Development FY 2009 – FY 2015 15.0% Revenue €m 14.3% 14.5% 5,000 14.0% 13.5% 4,000 13.2% 13.5% 13.1% 3,820 13.0% 12.5% 3,000 12.3% 3,394 3,086 12.5% 2,868 12.0% 2,577 12.0% 2,000 11.5% 1,713 1,679 11.0% 1,000 10.5% 322 375 407 486 514 0 205 207 10.0% 2009 2010 2011 2012 2013 2014 2015 EBITA R
Slide 16: Integration and Rationalisation Activities
Integration and Rationalisation Activities Year ended 31 July 2015 Continuing Continuing Discontinued Operations Operations Operations Non-cash Cash Total in EUR ’000 2015 2015 2015 2015 Net gain/(loss) on disposal of a business 523,300 (45,685) – 477,615 Asset write-downs – (146,289) – (146,289) Ac
Slide 17: Cash Generation – Continuing Operations
Cash Generation – Continuing Operations Year ended 31 July 2015 in EUR ’000 July 2015 July 2014 EBIT 345,943 362,532 Amortisation 168,022 123,762 EBITA 513,965 486,294 Depreciation 124,306 102,879 EBITDA 638,271 589,173 Working capital movement (63,319) 12,372 Working capital movement from debtor se
Slide 18: Net Debt and Investment Activity – Continuing Operations
Net Debt and Investment Activity – Continuing Operations Year ended 31 July 2015 in EUR ’000 FY 2015 FY 2014 Opening net debt as at 1 August (1,642,079) (849,228) Cash flow generated from activities 21,428 74,079 Disposal of businesses, net of cash and finance leases 22,728 – Proceeds from reduction
Slide 19: Return on Invested Capital – Continuing Operations
Return on Invested Capital – Continuing Operations Food Food North Food Rest Total in EUR million Europe America of World Group 2015 Group share net assets 2,023 2,602 204 4,829 EBITA incl. JVs cont. 217 275 27 519 ROIC1 10.7% 10.6% 13.2% 10.7% 2014 Group share net assets 1,811 2,303 243 4,357 EBITA
Slide 20: Food Group Financing
Food Group Financing –– Debt Financing »» Net debt of €1,725.1m »» Weighted average maturity of 4.98 years »» Weighted average interest cost of 3.84%1 »» Interest cover of 5.76 x (hybrid as debt) »» Intend to maintain investment grade credit position –– Hybrid Financing »» Total hybrid outstanding o
Slide 21: Acquisition and Disposal – Impact on Financing
Acquisition and Disposal – Impact on Financing Continuing Operations –– €217.4m reinvested in complementary bolt-on acquisitions, including (€68.9m) funded post year-end –– Annualised revenues of combined bolt-on acquisitions of €175m extend geographies, customers and channels: Pré Pain (Netherlands
Slide 22: Food Europe
ARYZTA Food Europe Year ended 31 July 2015 23 Bakeries & Kitchens Food Europe 2015 Financial Highlights 18 Countries Revenue 3.8% Underlying revenue 1.0% Acquisitions, net 0.4% Currency 2.4% EBITA (7.9)% EBITA margin (160) bps Savoury QSR8% & Other Food Solutions (7%) Top 20 22% 50% Conv
Slide 23: Food Europe Revenue Analysis
ARYZTA Food Europe Revenue Analysis €75.5m (€69.2) +4.8% (4.4)% Disposals Acquisitions €38.2m €1,646.6m €55.1m (€39.3m) +2.4% +3.8% +3.5% (2.5)% FY15 Revenue FX Losses Wins €1,586.3m FY14 Revenue 23 © ARYZTA, September 2015
Slide 24: Bakeries Europe
ARYZTA Bakeries Europe –– Established management team with deep industry experience –– Bakeries experiencing strong volume driven revenue growth run rate of c. 5% –– Completed significant new capacity investment to meet growing demand from large customers –– Focused on optimising this capacity aroun
Slide 25: Food Solutions (AFS)
ARYZTA Food Solutions (AFS) –– Experienced management team continues to deal with market disruption –– Price and volume pressure and stranded costs acute in H2-15 –– Convenience and independent retail (grocery and petrol stations) in Continental Europe most impacted, as indicated in Q3-15 update ––
Slide 26: Food North America
ARYZTA Food North America Year ended 31 July 2015 Food North America 2015 Financial Highlights Revenue 22.4% Underlying revenue (6.2)% Acquisitions 14.8% Currency 13.8% EBITA 19.4% EBITA margin (30) bps Hawaii 26 Bakeries & Kitchens 2 Countries Savoury & Other Customer Brand Other Top 20
Slide 27: Food North America Revenue Analysis
ARYZTA Food North America Revenue Analysis €219.5m €1,942.3m +13.8% +22.4% FY15 Revenue FX €152.9m (€251.8m) +9.6% (15.8)% €235.1m +14.8% Wins Losses Acquisitions €1,586.6m FY14 Revenue 27 © ARYZTA, September 2015
Slide 28: Food North America
ARYZTA Food North America –– Experienced management team, fully engaged with customers around product innovation –– Continuation of weak underlying trend reflects impact of revenue wins and losses –– Revenue weakness for some customers compounded impact –– Replaced half of the revenue volume loss si
Slide 29: Food Rest of World
ARYZTA Food Rest of World Year ended 31 July 2015 Food Rest of World 2015 Financial Highlights Revenue 4.7% Underlying revenue 3.3% Currency 1.4% EBITA 4.6% EBITA margin – 11 Bakeries & Kitchens 9 Countries Large Retail 4% 4% Savoury & Other Food Solutions Other Top 20 (6%) (1%) 19% 34% 66
Slide 30: Food Rest of World Revenue Analysis
ARYZTA Food Rest of World Revenue Analysis €12.9m (€5.8)m +5.9% (2.6)% €3.3m €231.3m Transitions +1.4% +4.7% FY15 FX Revenue Wins €220.9m FY14 Revenue 30 © ARYZTA, September 2015
Slide 31: Food Rest of World
Food Rest of World –– Experienced management team in place –– No revenue issues foreseen –– Leveraging European manufacturing and development expertise –– Underlying revenue growth in Rest of World was negative in Q4 due to timing issues and is not expected to recur as current run rates are positive
Slide 32: Dividend
Dividend –– Proposed dividend »» 15% of underlying fully diluted EPS »» 402.2 cent times 15% = €60.33 cent (CHF 65.55 Rp.1) »» Dividend to decline in line with EPS decline, dividend pay-out ratio unchanged »» Not subject to withholding tax –– Timetable for dividend »» Shareholder approval 08 Decembe
Slide 33: Food Group FY 2016 Financial Metrics
Food Group FY 2016 Financial Metrics Current Estimates1 Depreciation p.a. € 130 – 145 m Amortisation p.a. € 160 – 175 m Finance costs (including Hybrid financing) p.a. € 135 – 145 m Effective tax rate 17 % – 20 % Maintenance capex p.a. € 80 – 90 m Non-recurring cash costs not material Investment cap
Slide 34: Summary
Summary –– Food Solutions Europe, while challenged, is repositioned with »» Experienced Management »» Innovation and R&D investment »» Marketing and systems investment »» New premium channel focus –– Capacity with pan-continental reach in place in Europe and North America –– Customer centric strateg
Slide 35: Group Market Positioning, Outlook & Financial Calendar
ARYZTA Group Market Positioning, Outlook & Financial Calendar 35 © ARYZTA, September 2015
Slide 36: ARYZTA – Transformed Through Acquisition
ARYZTA – Transformed Through Acquisition FY 2008 – FY 2015 ARYZTA Food Revenue (€m) 3,820 3,394 3,086 2,868 2,577 1,635 1,713 1,679 1,866 1,918 1,867 1,635 1,713 1,590 1,612 1,702 2008 2009 2010 2011 2012 2013 2014 2015 2009 Underlying Business Revenue Acquisition Revenue FX 36 © ARYZTA, September 2
Slide 37: ARYZTA – Transformed Through Acquisition
ARYZTA – Transformed Through Acquisition FY 2008 – FY 2015 2008 (pro forma)1 2015 (EUR 1.6bn) (EUR 3.8bn) Food Restof World Food Rest of World 6% 1% Food North America Food Europe 28% Geographic 43% Geographic Mix Mix Food North America Food Europe 51% 71% Quick Serve Restaurant 4% Large Retail Larg
Slide 38: Constant Evolution to Remain Relevant
Constant Evolution to Remain Relevant Catalyst Action 1998 No growth in agri Acquire speciality foods business 2007 EU agri policy change Creation of Origin Enterprises 2009 Merger Hiestand Creation of ARYZTA AG 2010 Consumer response to recession Acquire major bakery infrastructure 2012 Customer re
Slide 39: Transition to Food Only Focus Complete
Transition to Food Only Focus Complete –– Origin has proved an excellent investment returning c. €1 bn in cash since its creation in 2007 (inclusive of dividends) –– The proceeds funded ARYZTA’s investment in Picard (49%) »» Picard is the leader in the branded consumer space in France »» Picard enha
Slide 40: Global Food & Speciality Bakery Market
Global Food & Speciality Bakery Market Global Food Market (MSP) Sweet Baked Good s Savo ury & Morning Good s Rest of World 15% & Other 26% 14% Global Food Market (~€ 3,275 bn) Europe Speciality Speciality Bakery Market 40% Bakery Market ~ € 35 bn North ~ € 35 bn America Bread Rolls & 45% Artisan Loa
Slide 41: Food Group Speciality Bakery Market Share
ARYZTA Food Group Speciality Bakery Market Share Total Market ~€35bn 40 ARYZTA Revenue €3.8bn 11% market share Total Market ~€26bn North America Market ~€16bn ARYZTA Revenue €1.6bn ARYZTA Revenue €1.9bn 12% market share 30 6% market share North America Market ~€14bn ARYZTA Revenue €0.5bn 3% market s
Slide 42: Speciality Bakery Market Remains Highly Fragmented
Speciality Bakery Market Remains Highly Fragmented ARYZTA ARYZTA 12 % 12 % Largest Largest Seven Competitor North America Competitors Europe Speciality Speciality 10 % Bakery Market 20 % Bakery Market Highly €16bn €14bn Fragmented Nine Other 68 % large Competitors 45 % Highly Fragmented 33 % 42 © AR
Slide 43: Customer Centric USP
ARYZTA Customer Centric USP 43 © ARYZTA, September 2015
Slide 44: Vision
ARYZTA Vision To be the Leader in Speciality Food –– Relevant to Consumers –– Relevant to Food Professionals –– Relevant to Large Scale Foodservice & Retail Customers 44 © ARYZTA, September 2015
Slide 45: Investment Case
ARYZTA Investment Case ARYZTA is well invested with a €1bn in revenue growth runway –– Assumptions »» Return to positive underlying growth »» Improve capacity utilisation as new investments become fully operational »» Recovery in AFS based on attractive growth trends in speciality food »» Improved b
Slide 46: Outlook
Outlook Revenue EBITDA Cash –– Business is well invested and positioned to focus on: »» Underlying revenue growth – Innovation led »» EBITDA development – positive operating leverage »» Reduced capital investment – leverage existing assets »» Free cash generation increasing on lower capital inve
Slide 47: Financial Calendar
Financial Calendar –– 05 October 2015 Issue of the 2015 annual report –– 30 November 2015 First-quarter trading update –– 08 December 2015 Annual General Meeting 2015 –– 14 March 2016 Announcement of half-year results 2016 –– 31 May 2016 Third-quarter trading update –– 26 September 2016 Announcement
Slide 48: Thank you!
Thank you! 48 © ARYZTA, September 2015
Slide 49: Appendix
Appendix 49 © ARYZTA, September 2015
Slide 50: Underlying Net Profit Reconciliation
Underlying Net Profit Reconciliation Year ended 31 July 2015 ARYZTA Group ARYZTA Group in EUR ’000 2015 2014 Underlying fully diluted net profit – continuing operations 329,988 324,588 Intangible amortisation (168,022) (123,762) Tax on amortisation 35,104 28,710 Share of joint venture intangible amo
Slide 51: Discontinued Operations – Origin
Discontinued Operations – Origin Aug – Mar Apr – Jul in EUR ’000 2015 2015 July 2015 July 2014 % Change Revenue 829,518 628,580 1,458,098 1,415,239 3.0% EBITA 12,803 66,092 78,895 79,513 (0.8)% EBITA margin 1.5% 10.5% 5.4% 5.6% (20)bps Associates and JV, net of tax 8,172 5,904 14,076 13,392 – EBITA
Slide 52: Continuing Operations Balance Sheet
Continuing Operations Balance Sheet as at 31 July 2015 Continuing operations Continuing operations in EUR ’000 2015 2014 Property, plant and equipment 1,543,263 1,283,584 Investment properties 25,916 23,141 Goodwill and intangible assets 3,797,269 3,539,225 Deferred tax on acquired intangibles (246,
Slide 53: Food Group – Financing
Food Group – Financing Debt Funding Principal Maturity Feb 2014 – Syndicated Bank Loan USD 330m Feb 2019 Feb 2014 – Syndicated Bank Loan CHF 230m Feb 2019 Feb 2014 – Syndicated Bank Loan GBP 100m Feb 2019 Feb 2014 – Syndicated Bank Loan CAD 110m Feb 2019 Feb 2014 – US Private Placement USD 490m / EU
Slide 54: Food Group – Gross Term Debt Maturity Profile
Food Group – Gross Term Debt Maturity Profile Food Group Gross Term Debt Maturity Profile (excluding hybrid)¹ Financial Year 2016 2% 2017 11% 2018 3% 2019 2% 37% Revolver 39% 2 2020 6% 2021 7% 2022 19% 2024 7% 2025 2% 2030 4% 1 The Group term debt maturity profile is set out as at 31 July 2015. Food
Slide 55: Food Group – Underlying Revenue Growth
55 -15.0% -10.0% -5.0% 10.0% 15.0% 20.0% 25.0% 0.0% 5.0% Q1 2009 Q2 2009 Q3 2009 Q4 2009 © ARYZTA, September 2015 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Food Group – Underlying Revenue Gr
Slide 56: Food Group – Five Year KPIs
Food Group – Five Year KPIs In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Total / CAGR1 Revenue 2,577.4 2,867.6 3,085.5 3,393.8 3,820.2 17.9% EBITDA 408.8 465.2 500.4 589.2 638.3 18.9% Underlying Net Profit – continuing operations 218.1 246.6 268.4 324.6 330.0 15.9% ARYZTA AG unde
Slide 57: Food Group – Five Year Cash Generation
Food Group – Five Year Cash Generation In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Five Year Total EBIT 235.8 275.0 300.1 362.5 346.0 1,519.4 Amortisation 86.5 99.8 106.6 123.8 168.0 584.7 EBITA 322.3 374.8 406.7 486.3 514.0 2,104.1 Depreciation 86.5 90.4 93.7 102.9 124.3 497.8
Slide 58: Food Group – Five Year Net Debt
Food Group – Five Year Net Debt In EUR million July 2011 July 2012 July 2013 July 2014 July 2015 Food Group opening net debt as at 1 August (1,115.6) (955.5) (976.3) (849.2) (1,642.1) Cash flows generated from activities 188.6 120.6 93.8 74.1 21.4 Disposal of businesses, net of cash – – – – 22.7 Pro
Slide 59: EUR Closing and Average FX Rates
EUR Closing and Average FX Rates Closing Rates July 2015 July 2014 % Change Swiss Franc 1.0635 1.2169 12.6% US Dollar 1.1109 1.3430 17.3% Canadian Dollar 1.4446 1.4611 1.1% Sterling 0.7091 0.7933 10.6% Average Rates July 2015 July 2014 % Change Swiss Franc 1.1191 1.2250 8.6% US Dollar 1.1799 1.3601
Slide 60: Food Group – International Footprint
Food Group – International Footprint 60 Bakeries & Kitchens 29 Countries Geography Channel Customer Capability Food Restof World 6% Top 20 Savo ury & Other (6%) Customers Large Quick Serve 54% 16% Bread Rolls & Food Europe Retail Restaurant (50%) (19%) Artisan Loaves Revenue 43% 32% Revenue 25% Reve
Slide 61: Presentation Glossary
Presentation Glossary –– ’Joint venture’ – presented as profit from joint venture, net of taxes and interest, before non-ERP amortisation and the impact of associated non-recurring items. –– ’EBITA’ – presented as earnings before interest, taxation, non-ERP related intangible amortisation; before ne