Aryzta Ag · SIX:ARYN
Aryzta — H1 2019 Earnings Presentation
36 slides from Aryzta's earnings presentation, Mar 12, 2019
Slide 1: ARYZTA AG H1 2019 Results
ARYZTA AG H1 2019 Results 12 March 2019
Slide 2: Forward Looking Statement
Forward Looking Statement This document contains forward looking statements which reflect the Board of Directors' 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 forwa
Slide 3: Strategic, Financial and Operational Highlights
Strategic, Financial and Operational Highlights Strategic –– First step towards delivery of multi-year turnaround commitment –– Developing a unified, cohesive Group with singular focus on core strengths –– Project Renew launched; seeing early benefits »» delivered €7.6m savings in H1 2019 »» H2 2019
Slide 4: H1 2019 - Financial Overview
H1 2019 - Financial Overview –– Group organic revenue growth +0.7% in the period, reflecting ongoing stabilisation –– H1 2019 underlying EBITDA of €151.6m –– Group EBITDA margin stabilising at 8.9%, (10) bps decline year on year –– Net Debt of €811m with Net Debt: EBITDA covenant ratio of 2.5x –– Hy
Slide 5: Financial Review
Financial Review 5 March 2019
Slide 6: ARYZTA Group Underlying Income Statement
ARYZTA Group Underlying Income Statement Six month period ended 31 January 2019 in EUR ’000 January 2019 January 2018 % Group revenue 1,710,705 1,786,549 (4.2)% Underlying EBITDA1 151,629 161,284 (6.0)% Underlying EBITDA margin 8.9% 9.0% (10) bps Depreciation & ERP amortisation (66,031) (67,977) 2.9
Slide 7: Underlying Income Statement reconciliation to IFRS
Underlying Income Statement reconciliation to IFRS Six month period ended 31 January 2019 in EUR ’000 January 2019 January 2018 Underlying EBITDA 151,629 161,284 Depreciation (57,649) (59,283) ERP amortisation (8,382) (8,694) Underlying EBITA 85,598 93,307 Amortisation of other intangible assets (67
Slide 8: ARYZTA Group Revenue Performance
ARYZTA Group Revenue Performance Six month period ended 31 January 2019 ARYZTA ARYZTA ARYZTA ARYZTA in EUR million Europe North America Rest of World Group Revenue 859.7 717.9 133.1 1,710.7 Organic movement 1.9% (1.8)% 6.7% 0.7% Disposals movement (2.8)% (8.9)% – (5.3)% Currency movement (0.1)% 2.0%
Slide 9: ARYZTA Group – Quarterly Organic Revenue
ARYZTA Group – Quarterly Organic Revenue Q3 2018 Q4 2018 Q1 2019 Q2 2019 H1 2019 ARYZTA Europe Volume % (5.0)% 0.5% (0.1)% 1.4% 0.6% Price/Mix % 2.4% 2.1% 2.1% 0.5% 1.3% Organic movement % (2.6)% 2.6% 2.0% 1.9% 1.9% ARYZTA North America Volume % (1.9)% 1.2% (2.1)% (1.7)% (1.9)% Price/Mix % 0.6% (3.6
Slide 10: ARYZTA Group – Segmental EBITDA & EBITDA Margin
ARYZTA Group – Segmental EBITDA & EBITDA Margin Six months ended Six months ended Six months ended % Change in EUR ’000 31 January 2018 31 July 2018 31 January 2019 H1-19 v. H1-18 ARYZTA Europe 90,740 81,237 82,199 (9.4)% ARYZTA North America 49,962 39,940 48,671 (2.6)% ARYZTA Rest of World 20,582 1
Slide 11: ARYZTA Europe
ARYZTA Europe in EUR million H1 2019 H1 2018 ARYZTA Europe H1 2019 Financial Metrics Revenue 859.7 868.3 Revenue (1.0)% Underlying EBITDA 82.2 90.7 Organic Revenue +1.9% Underlying EBITDA margin 9.6% 10.5% Underlying EBITDA (9.4)% Underlying EBITDA margin (90) bps –– Organic revenue growth o
Slide 12: ARYZTA North America
ARYZTA North America in EUR million H1 2019 H1 2018 ARYZTA North America H1 2019 Financial Metrics Revenue 717.9 786.4 Revenue (8.7)% Underlying EBITDA 48.7 50.0 Organic Revenue (1.8)% Underlying EBITDA margin 6.8% 6.4% Underlying EBITDA (2.6)% Underlying EBITDA margin 40 bps –– Organic reve
Slide 13: ARYZTA Rest of World
ARYZTA Rest of World in EUR million H1 2019 H1 2018 ARYZTA Rest of World H1 2019 Financial Metrics Revenue 133.1 131.9 Revenue +0.9% Underlying EBITDA 20.8 20.6 Organic Revenue +6.7% Underlying EBITDA margin 15.6% 15.6% Underlying EBITDA +0.9% Underlying EBITDA margin – –– Organic revenue gr
Slide 14: Cash Generation
Cash Generation Six month period ended 31 January 2019 in EUR ’000 January 2019 January 2018 Underlying EBITDA 151,629 161,284 Working capital movement (79,105) (32,594) Working capital movement from debtor securitisation 1 2,945 10,315 Capital expenditure (35,102) (41,959) Proceeds from sale of fix
Slide 15: Net Debt and Investment Activity
Net Debt and Investment Activity Six month period ended 31 January 2019 in EUR ’000 January 2019 January 2018 Opening net debt as at 1 August (1,510,264) (1,733,870) Cash flow generated from activities (36,179) 39,755 Disposal of businesses, net 3,283 46,781 RCF termination costs – (12,415) Proceeds
Slide 16: Capital raise of €740m Net Proceeds
Capital raise of €740m Net Proceeds Use of Funds €m Repayment of term loan facility 455 Funding to implement Project Renew 150 Cover movements in net working capital & gain financial flexibility 135 Total 740 –– Strengthens balance sheet and provides covenant headroom –– Provides the necessary liqui
Slide 17: ARYZTA Senior Debt Financing Net Debt/EBITDA
ARYZTA Senior Debt Financing Syndicated Bank RCF, Term Loan & Schuldschein January 2019 July 2018 Net Debt: EBITDA 2.50x 3.83x Interest Cover (including hybrid deferred dividend) 3.13x 3.72x Gross Term Debt 2,000 4.0x EUR m FY18 –– Reduction in senior net leverage to 2.5x Net 3.5x Debt: EBITDA. 1,50
Slide 18: ARYZTA Capital Structure post Capital Raise
ARYZTA Capital Structure post Capital Raise As at 31 July 2018 As at 31 January 2019 3,000 Gross Term Debt & Hybrids 2,500 €2,676m 2,000 Gross Term Debt & Hybrids Gross Term Debt €2,058m €1,875m 1,500 Gross Term Debt 1,000 €1,224m 500 - Total Leverage Total Leverage Cash net of overdrafts: €342m Cas
Slide 19: Update on Project Renew: Individual Project Examples
Update on Project Renew : Individual Project Examples Workstream Initiatives Example Project Update US Management Team Downsizing: »» Reduction of 76 FTEs, including four members of management Complete team Savings Achieved »» Financials - Project cost: $1.9m; Annual project savings: $7.4m; Operatin
Slide 20: Project Renew
Project Renew €90m Targeted Run-rate Savings in FY 2021 % of target Workstream run rate savings €90m Manufacturing (automation & bakery c. 40% €70m optimisation) 40 €40m¹ 30 Procurement 20 c. 35% 40 50 Supply Chain 20 FY 2019 FY 2020 FY 2021 Europe North America Operating Model c. 25% FY2019 FY2020
Slide 21: Impairment, disposal and restructuring
Impairment, disposal and restructuring Six month period ended 31 January 2019 Impairment/ Disposal Restructuring Total Total in EUR `000 H1 2019 H1 2019 H1 2019 H1 2018 Net gain/(loss) on disposal of businesses and impairment of assets held for sale (847) – (847) (149,336) Labour-related business in
Slide 22: Joint Ventures
Joint Ventures Six month period ended 31 January 2019 Joint Venture Underlying Income Statement Picard Picard Signature Signature Total Total in EUR ’000 January 2019 January 2018 January 2019 January 2018 January 2019 January 2018 Revenue 800,508 810,337 – 60,402 800,508 870,739 Underlying EBITDA 1
Slide 23: Brexit
Brexit –– De-risked short term operational planning »» continuity of supply with key UK customers and product lines prioritised »» additional frozen warehousing secured to enable increased inventory levels »» alternate sourcing of key raw materials and some finished goods in place »» contingency pla
Slide 24: Summary
Summary o4 | ARYZTA Passion for good food March 2019
Slide 25: We make excellent products and have leading positions in key categories
We make excellent products and have leading positions in key categories –– Market leader in 5 core categories accounting for c. 50% of sales –– Stable of well-known B2B brands improve category profitability for our customers Artisan Bread Buns Donuts/Berliners #1 in Europe #1 in Europe Top 3 in Euro
Slide 26: Leading B2B brands celebrating landmark anniversaries
Leading B2B brands celebrating landmark anniversaries –– In celebration of “turning 30 years young” this year, La Brea Bakery announced plans to bring back La Brea founder, Nancy Silverton to help create new, special edition breads which will feature ingredients such as sprouted grains, alternative
Slide 27: Ongoing actions to address key issues
Ongoing actions to address key issues Key Issues Actions Undertaken • Ongoing Board refreshment and renewal • Talent loss / gaps • New management team appointed • New organisational structure, evolving culture & communications • Lack of Stakeholder Engagement • Refocus on customers, relationships &
Slide 28: Three Year Strategy - Stability, Performance & Growth
Three Year Strategy - Stability, Performance & Growth Improve performance and drive profitable Stabilise the Business H12019 growth FY2018 FY2019 - FY2021 1 4 Build new management team, streamline structures Margin growth driven by higher Improve operational efficiency volumes and price increases Pr
Slide 29: Outlook
Outlook “The result in H1 2019 is consistent with our focus on stability. This performance represents a first step towards the delivery of our multi-year turnaround commitment. We are developing a unified, cohesive Group with a singular focus on our core strengths within a growing frozen B2B bakery
Slide 30: Summary
Summary –– ARYZTA is a global leader in frozen B2B bakery –– Clear turnaround strategy and actions in place to deliver stability, performance and growth –– Creating a Customer focused Integrated Industrial Operating Group; focused on core businesses, operating performance and improvements –– Fully f
Slide 31: Appendix
Appendix 31 | AR¥ZTA Passion for good food March 2019
Slide 32: ARYZTA Group Balance Sheet
ARYZTA Group Balance Sheet as at 31 January 2019 in EUR ’000 January 2019 July 2018 Property, plant and equipment 1,237,038 1,243,692 Investment properties 14,861 14,574 Goodwill and intangible assets 2,013,696 2,057,703 Deferred tax on goodwill and intangibles (92,365) (104,075) Working capital (20
Slide 33: Hybrid Financing
Hybrid Financing Perpetual Callable Subordinated Instruments Coupon Coupon rate if not called in EUR `000 Not called CHF 400m 5.3% 6.045% +3 Month Swiss Libor (354,899) First call March 2019 EUR 250m 4.5% 6.77% +5 Year Euro Swap Rate (250,000) First call April 2020 CHF 190m 3.5% 4.213% +3 Month Swis
Slide 34: ARYZTA Group – Return on Invested Capital
ARYZTA Group – Return on Invested Capital ARYZTA ARYZTA North ARYZTA Rest ARYZTA in EUR million Europe America of World Group 31 January 2019 Segmental net assets1 1,400 1,323 181 2,904 TTM EBITA1 95 34 30 159 ROIC 1, 2 6.8% 2.6% 16.5% 5.5% 31 July 2018 Group share net assets1 1,354 1,331 177 2,862
Slide 35: EUR Closing and Average FX Rates
EUR Closing and Average FX Rates Average Average Closing Closing Currency H1 2019 H1 2018 % Change H1 2019 FY 2018 % Change CHF 1.1352 1.1573 1.9% 1.1271 1.1578 2.7% USD 1.1483 1.1862 3.2% 1.1323 1.1651 2.8% CAD 1.5119 1.4923 (1.3)% 1.5074 1.5219 1.0% GBP 0.8904 0.8923 0.2% 0.8629 0.8888 2.9% 35 Mar
Slide 36: Presentation Glossary
Presentation Glossary –– ‘Organic revenue’ – presents the revenue movement during the period, excluding impacts from acquisitions/(disposals) and foreign exchange translation. –– 'Underlying EBITDA' – presented as earnings before interest, taxation, depreciation and amortisation; before impairment,