Aryzta Ag · SIX:ARYN
Aryzta — H1 2014 Earnings Presentation
47 slides from Aryzta's earnings presentation, Mar 10, 2014
Slide 1: H1 Results, FY 2014
ARYZTA AG H1 Results, FY 2014 10 March 2014
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: Agenda
Agenda – Group Profile.................................................Owen Killian (CEO) – Financial & Business Review.......................Patrick McEniff (CFO & COO) 3 © ARYZTA, March 2014
Slide 4: Our Business
Our Business – International leader in speciality bakery – Primary listing in Zurich (SIX: ARYN), and secondary listing in Dublin (ISE: YZA) Reporting Segments ARYZTA AG Origin Enterprises plc Origin Enterprises plc Food Europe Food North America Food Rest of World 85.3 million shares (68.1 % Holdin
Slide 5: Origin Enterprises plc – 68.1% Holding
Origin Enterprises plc – 68.1% Holding January 2014 (EUR m) Change Revenue 517.6 (8.8)% Underlying fully diluted EPS 5.931 (21.9)% Market Cap2 945 Market Value of ARYZTA holding2 644 –– Performance to expectation in seasonally weakest period (over 90% of profit earned in H2) –– Seasonality incre
Slide 6: Food Group – Repositioning
Food Group – Repositioning 2008 (pro forma)1 2013 (EUR 1.6bn) (EUR 3.1bn) Food Rest of World Food Rest of World 1% 8% Food North America Food North America 28% 47% Geographic Geographic Mix Mix Food Europe Food Europe 71% 45% Quick Serve Restaurant 4% Large Retail Large Retail Quick Serve 24% 28% Re
Slide 7: ARYZTA Transformation Initiative (ATI)
ARYTZA Transformation Initiative (ATI) – Creating an integrated customer centric business focused on growth – Rolling out a single instance global ERP – Establishing ARYZTA Business Services (ABS) shared centres of excellence to support customer centric strategy – Investing EUR 460m over three years
Slide 8: FY 2014 Food Group Strategic Focus
FY 2014 Food Group Strategic Focus – Complete ATI programme in Europe – Unlock revenue growth > Customer centric teams leveraging bakery infrastructure – Strategic acquisitions to add capability, customer access and geographic reach > H1 invested EUR 83.7m in Pita Pan in US and Rina in Europe > H2 i
Slide 9: Strategic and Financial Rationale
Strategic and Financial Rationale – Double digit EPS accretion in fiscal 2015 – Customer centric strategy will unlock benefits of scale – Excellent skill base with combination of flexible and automated manufacturing assets – Enhanced consumer access through convenience channels – Leverage leadership
Slide 10: Financial and Business Review
Financial and Business Review 10 © ARYZTA, March 2014
Slide 11: ARYZTA Group Financial Highlights
ARYZTA Group Financial Highlights ARYZTA Food Group Origin Group Revenue 5.7% (8.8)% 1.7% EBITA 5.6% 68.1% 6.4% Underlying fully diluted net profit 6.5% (24.2)% 4.7% –– ARYZTA Group underlying fully diluted net profit increased by 4.7% to EUR 135.6m –– ARYZTA Group underlying fully
Slide 12: ARYZTA Group – Income Statement
ARYZTA Group – Income Statement Six month period ended 31 January 2014 Includes Origin 100% as prescribed by IFRS (68.1% ARYZTA owned) in Euro ’000 January 2014 January 2013 % Change Group revenue 2,102,800 2,067,994 1.7% EBITA 198,254 186,311 6.4% EBITA margin 9.4% 9.0% Associates and JVs, net 6,69
Slide 13: ARYZTA Group – Underlying Revenue Growth
ARYZTA Group – Underlying Revenue Growth Six month period ended 31 January 2014 Food Food North Food Total ARYZTA in Euro million Europe America Rest of World Food Group Origin Group Group revenue 764.0 714.7 106.5 1,585.2 517.6 2,102.8 Underlying growth 1.7% (0.2)%1 5.9% 1.1% (5.4)% (0.7)% Acquisit
Slide 14: ARYZTA Group – Segmental EBITA
ARYZTA Group – Segmental EBITA Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 % Change Food Group Food Europe 92,097 77,611 18.7% Food North America 89,899 90,738 (0.9)% Food Rest of World 12,246 15,576 (21.4)% Total Food Group 194,242 183,925 5.6% Origin 4,012 2,386 6
Slide 15: Food Group – Income Statement
Food Group – Income Statement Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 % Change Group revenue 1,585,194 1,500,314 5.7% EBITA 194,242 183,925 5.6% EBITA margin 12.3% 12.3% – JVs, net – 203 – EBITA incl. JVs 194,242 184,128 5.5% Finance costs, net (23,631) (30,333)
Slide 16: Food Group – Cash Generation
Food Group – Cash Generation Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 EBIT 134,701 135,188 Amortisation 59,541 48,737 EBITA 194,242 183,925 Depreciation & ERP amortisation 46,422 46,252 EBITDA 240,664 230,177 Working capital movement (12,262) (14,987) Maintenance
Slide 17: Food Group – Net Debt and Investment Activity
Food Group – Net Debt and Investment Activity Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 Food Group opening net debt as at 1 August (849,228) (976,283) Cash flows generated from activities 180,101 170,956 Origin tender offer proceeds 71,789 – Net debt cost of acqui
Slide 18: Food Group – Financing as at 31 January 2014
Food Group – Financing as at 31 January 2014 Excluding Origin – non-recourse financing facilities Debt Financing – Net Debt of EUR 840.3m – Weighted average maturity of 4.51 years1 – Weighted average interest cost of 4.43%1 – Interest cover of 10.43x (hybrid as equity) – Intend to maintain investmen
Slide 19: ARYZTA Transformation Initiative Update
ARYZTA Transformation Initiative Update in Euro ’000 ARYZTA Transformation Initiative Acquisition, disposal and restructuring-related costs Cash Total ATI Non-cash Total Period ended 31 January 2014 18,176 – 18,176 49,918 68,094 Year ended 31 July 2013 82,459 – 82,459 37,355 119,814 Year ended 31 Ju
Slide 20: ARYZTA Transformation Initiative Update
ARYTZA Transformation Initiative Update Food Group acquisition, disposal and restructuring-related costs in Euro '000 Cash Non-cash Total Acquisition-related costs 2,180 – 2,180 Asset write-downs and fair value adjustments – 49,918 49,918 Severance and other staff related costs 7,184 – 7,184 Other c
Slide 21: Food Europe
Food Europe Six month period ended 31 January 2014 19 Bakeries & Kitchens 12 Countries Revenue €764.0m, +19.1% Underlying revenue +1.7% Acquisitions +18.6% Currency (1.2)% EBITA €92.1m, +18.7% EBITA margin unchanged at 12.1% – Cash non-recurring costs of EUR 12m – ERP and optimisation-related capita
Slide 22: Food North America
Food North America Six month period ended 31 January 2014 25 Bakeries & Kitchens 2 Countries Revenue €714.7m, (3.5)% Underlying revenue was flat Acquisitions +1.9% Currency (5.2)% EBITA €89.9m, (0.9)% Positive EBITA margin expansion of 30 bps to 12.6% Hawaii – Cash non-recurring costs of EUR 6m – ER
Slide 23: Food Rest of World
Food Rest of World Six month period ended 31 January 2014 11 Bakeries & Kitchens 9 Countries Revenue €106.5m, (9.9)% Underlying revenue +5.9% Currency (15.8)% EBITA €12.2m, (21.4)% EBITA margin 11.5%, a decline of (170)bps – Total capital investment of EUR 10m – Currency impact - translational and t
Slide 24: Food Group – Underlying Revenue Growth
Food Group – Underlying Revenue Growth Quarterly Underlying Revenue Growth Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Food Europe (2.6)% (0.7)% (0.2)% 1.2% (1.9)% 1.4% 0.7% 2.6% Food North America 6.0% 7.2% 1.3% 3.0% (0.1)%1 2.3%1 1.7%1 (2.1)%1 Food Rest of World 11.8% 11.4% 4.8
Slide 25: Food Group – Financing Update
Food Group – Financing Update February 2014 – US Private Placement – Additional funding of USD 490m and EUR 25m – Weighted average maturity of 8.40 years – Weighted average interest cost of 3.93% February 2014 – Revolving Credit Facility Amendment – Increased facility from CHF 970m to CHF 1,977m – E
Slide 26: Food Group – Investment Update
Food Group – Investment Update – H2 acquiring Pineridge Bakery and Cloverhill Bakery – Consideration EUR 730m – Post-acquisition capital investments and non-recurring cash costs of EUR 70m to support strong growth pipeline and integration – Combined revenue of EUR 400m in calendar year 2013 with dou
Slide 27: Pineridge and Cloverhill Bakery Investments
Food Group – Pineridge and Cloverhill Bakery Investments – Agreed to acquire 100% of both Pineridge Bakery and Cloverhill Bakery, subject to regulatory approvals – Pineridge is a top tier Canadian speciality bakery – Cloverhill is a leading manufacturer of Ready to Eat (RTE) individually wrapped bak
Slide 28: Outlook
Outlook – Customer centric model well established with responsibility centre management – ATI and acquisitions rebalanced business and increased relevance to customers – ATI investment programme on track to be substantially completed during 2014 – Well positioned to grow market share through continu
Slide 29: Appendix – Origin Financials
Appendix 1 – Origin Financials 29 © ARYZTA, March 2014
Slide 30: Origin – Income Statement
Origin – Income Statement Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 % Change Group revenue 517,606 567,680 (8.8)% EBITA 4,012 2,386 68.1% EBITA margin 0.8% 0.4% Associates and JVs, net 6,693 10,866 (38.4)% EBITA incl. associates and JVs 10,705 13,252 (19.2)% Finan
Slide 31: Origin – Underlying Net Profit Rec.
Origin – Underlying Net Profit Rec. Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 Reported net profit 3,353 6,701 Intangible amortisation 2,859 2,901 Tax on amortisation (509) (586) Net acquisition, disposal and restructuring related costs 2,409 1,791 Tax on net acqui
Slide 32: Appendix – Other Financial Information and Presentation Glossary
Appendix 2 – Other Financial Information and Presentation Glossary 32 © ARYZTA, March 2014
Slide 33: ARYZTA Group – Underlying Net Profit Rec.
ARYZTA Group – Underlying Net Profit Rec. Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 Reported net profit 40,582 62,051 Intangible amortisation 62,400 51,638 Tax on amortisation (14,537) (13,158) Hybrid instrument accrued dividend (14,258) (8,234) Net acquisition, d
Slide 34: Food Group – Underlying Net Profit Rec.
Food Group – Underlying Net Profit Rec. Six month period ended 31 January 2014 in Euro ’000 January 2014 January 2013 Reported net profit1 38,297 57,439 Intangible amortisation 59,541 48,737 Tax on amortisation (14,028) (12,572) Hybrid instrument accrued dividend (14,258) (8,234) Net acquisition, di
Slide 35: ARYZTA Group – Balance Sheet
ARYZTA Group – Balance Sheet as at 31 January 2014 in Euro ’000 As at January 2014 As at July 2013 Property, plant and equipment 1,173,427 1,141,847 Investment properties 23,007 22,984 Goodwill and intangible assets 2,892,480 2,905,242 Associates and joint ventures 50,721 45,235 Other receivables 40
Slide 36: Food Group – Balance Sheet
Food Group – Balance Sheet as at 31 January 2014 in Euro ’000 As at January 2014 As at July 2013 Property, plant and equipment 1,087,415 1,061,200 Investment properties 15,432 15,409 Goodwill and intangible assets 2,743,009 2,775,430 Investment in Origin 45,824 51,045 Working capital (101,682) (70,7
Slide 37: Food Group – Financing
Food Group – Financing Excluding Origin – non-recourse financing facilities Debt Funding Principal Maturity Feb 2014 – Syndicated Bank Loan CHF 1,977m Feb 2019 Feb 2014 – US Private Placement USD 490m/EUR 25m May 2020 – May 2024 May 2010 – US Private Placement USD 350m /EUR 25m May 2016 – May 2022 D
Slide 38: Food Group – Gross Term Debt Maturity Profile
Food Group – Gross Term Debt Maturity Profile Gross Term Debt Maturity Profile (excluding hybrid)¹ 7% 10% 2% 12% 3% 3% 16% 19% 6% 7% 20% 8% 2% 4% 1 Food Group gross term debt at 31 January 2014 was €1,175m, incorporating the drawn amount on the Revolving Credit Facility of €257m and excluding the hy
Slide 39: ARYZTA Group – Return on Invested Capital
ARYZTA Group – Return on Invested Capital Food Food North Food Rest Total ARYZTA in Euro million Europe America of World Food Group Origin3 Group3 31 January 2014 Group share net assets1 1,811 1,600 244 3,655 416 4,071 EBITA incl. associates and JVs2 203 189 27 419 84 503 ROIC 11.2% 11.8% 11.1% 11.5
Slide 40: Food Group – Underlying Revenue Growth
Food Group – Underlying Revenue Growth Channel and geographic rebalancing 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% (5.0%) (10.0%) (15.0%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 201
Slide 41: Food Group – Five Year KPIs
Food Group – Five Year KPIs in Euro million July 2009 July 2010 July 2011 July 2012 July 2013 Total/CAGR1 Revenue 1,712.8 1,679.4 2,577.4 2,867.6 3,085.5 13.5% EBITDA 259.3 268.1 408.8 465.2 500.4 17.9% Underlying Net Profit 149.3 157.7 218.1 246.6 268.4 16.2% ARYZTA AG underlying fully diluted EPS
Slide 42: Food Group – Five Year Cash Generation
Food Group – Five Year Cash Generation in Euro million July 2009 July 2010 July 2011 July 2012 July 2013 Five Year Total EBIT 161.7 160.3 235.8 275.0 300.1 1,132.9 Amortisation 43.0 47.4 86.5 99.8 106.6 383.3 EBITA 204.7 207.7 322.3 374.8 406.7 1,516.2 Depreciation 54.6 60.4 86.5 90.4 93.7 385.6 EBI
Slide 43: Food Group – Five Year Net Debt
Food Group – Five Year Net Debt in Euro million July 2009 July 2010 July 2011 July 2012 July 2013 Food Group opening net debt as at 1 August (552.6) (505.5) (1,115.6) (955.5) (976.3) Cash flows generated from activities 236.4 251.0 271.9 314.9 369.4 Hybrid instrument proceeds – – 285.0 – 319.4 Cost
Slide 44: EUR Closing and Average FX Rates
EUR Closing and Average FX Rates Closing Rates January 2014 July 2013 % Change Swiss Franc 1.2299 1.2339 0.3% US Dollar 1.3682 1.3280 (3.0)% Canadian Dollar 1.5196 1.3644 (11.4)% Sterling 0.8226 0.8630 4.7% Average Rates January 2014 January 2013 % Change Swiss Franc 1.2314 1.2095 (1.8)% US Dollar 1
Slide 45: ARYZTA – Consensus Estimates
ARYZTA – Consensus Estimates1 FY 2014 in Euro million Low High Mean Based on 11 analysts EBITA including associates & JVs2 531 547 540 Underlying fully diluted net profit3 348 360 355 Underlying EPS (cent)3 384.0 406.1 397.7 FY 2015 in Euro million Low High Mean Based on 11 analysts EBITA including
Slide 46: Presentation Glossary
Presentation Glossary – 'ERP' - Enterprise Resource Planning intangible assets include the Food Group SAP and Origin Microsoft Dynamics AX software systems – 'EBITDA' – presented as earnings before interest, taxation, depreciation and amortisation reported for the year and before non-recurring items
Slide 47: Thank you!
Thank you! 47 © ARYZTA, March 2014