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Wessanen Q2 2012 analyst&investors

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Q2 2012 results presentation for analysts & investors

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Wessanen Q2 2012 analyst&investors

  1. 1. Royal Wessanen nv Q2 2012 Amsterdam, 25 July 2012www.wessanen.com @RoyalWessanen
  2. 2. What is organic?! Strict criteria to be allowed to be labelled organic Demonstrably free from GMO, pesticides and growth hormones Strict rules on animal welfare Severe restrictions on fertilisers, herbicides and pesticides Severe restrictions on additives and processing aids All about being produced and processed in line with organic principles Organic products promote health and well-being Holding benefits for the planet and for future generations All about nutrition and taste ! Organic food is controlled by a unique European certification system At Wessanen, our vision is to make our organic brands most desired in Europe 2
  3. 3. Piet Hein Merckens (CEO)• Q2 highlights• Transformation 2009-12• Strategy and strategic objectives• Achievements 2010-12 3
  4. 4. Q2 highlights Revenue (in € mln) Current subdued European economies and consumer confidence continues to be low (2.0)% We set further steps in executing the strategic agenda in a consistent manner 161.1 150.8 We continued to invest in growth of our core brands and categories by driving innovation and activation Autonomous third party revenue growth EBIT (in € mln) Q2 showing mixed results  Grocery reconfirmed that we are on right track  HFS disappointing 7.3  Short term measures to improve profitability 2.9 2 strategic steps in transforming Wessanen into fully 2.2 2.2 organic company  ABC divestment process has started Q2 11 Q2 12  Favory minority stake, obtaining full ownership Reported, Normalised 4
  5. 5. Transformation 2010-12In € mln 1,586 KK, LR, Righi, PANOS1600 TOL NA ABC Frozen Foods1200 Kalisterra Tree of Life UK 712 706 694 581 800 Clipper (March 12) HFS Grocery 400 0 2009 2010 2011 2011 Pro 2011 Forma continued operationsFrom portfolio approach to focus on core 5
  6. 6. Tangible steps taken 2010-121. A clear vision and mission in place  To make our organic brands most desired in Europe2. Strategy and strategic direction clear  Strategic priorities 2012-14 in place  ‘OGSM’ framework to align plans and objectives3. Transition from a financial holding to a strategic orchestrator 6
  7. 7. Wessanen’s Strategy ARENAS  Healthy & sustainable nutrition through organic food in EuropeSTAGING VEHICLES Boost growth of current  Own/build organic business and resolve ‘big pioneering brands in all bets’ (OGSM!) ECONOMIC LOGIC relevant food channels At least one major  Preferred brands that can  Focus on sizeable, growing acquisition p.a. command a premium markets and categories Divest non-core businesses  European scale (COGS, where organic creates at sensible speed innovation, expertise) value  Acquire businesses with strong brands and European potential DIFFERENTIATORS  Preferred brands and impactful innovation  Superior product quality  Orchestration of a fast, flexible and efficient value chain  We are Europe’s No 1 and committed to Organic: our people have credibility and expertise (OEC) and we provide the most comprehensive thought leadership, service, consumer insight, product range 7
  8. 8. Strategic priorities 2012-14Strategic focus ActivitiesTopline growth • Grow core brands • Grow core categories • Build strongholds in new markets • Country specific growth strategies • Launch fewer, bigger, better innovations • Execute acquisitions shortlistProfitability • Central sourcing savings • Pricing strategies towards customersimprovement • Improve operational excellence with SAP • Filling own factoriesEnablers • Improve talent performance management / building connected leadership • Simplify how we are conducting business • Activate Organic Expertise Centre (OEC), integrate Quality 8
  9. 9. Strategic objectives 2012-14Strategic focus ActivitiesTopline growth • Brand activation • Bjorg during ‘Atelier bio’ weeks in France • Gayelord Hauser 9 Atelier bio nut Leclerc Albi
  10. 10. Strategic objectives 2012-14Strategic focus ActivitiesTopline growth • Brand activation • Ekoland in Amsterdam area Atelier bio nut Leclerc Albi 10
  11. 11. Strategic objectives 2012-14Strategic focus ActivitiesTopline growth • Category innovations • Bjorg tea • Zonnatura Kikker and nut bars • Whole Earth chocolate spreads • Ekoland fruit juices 11
  12. 12. Strategic objectives 2012-14Strategic focus ActivitiesTopline growth • Acquisitions (Clipper) • Assortment line-up and brand activation • Preparing for European roll-out in early 2013 Clipper ‘Congo’ TV ad aired in spring 12
  13. 13. Strategic objectives 2012-14Strategic focus ActivitiesProfitability • Gross margin improvement - in particular in Grocery - both in 2011 and 2012improvement • Deployment of SAP in France, the Netherlands, UK • Germany and Clipper planned for • Filling the factories in Germany with product categories such as breakfast cereals and pasta sauces 13
  14. 14. Strategic objectives 2012-14Strategic focus ActivitiesEnablers • Leadership programme in first half 2012 for top-65 of Wessanen • Practical toolbox to accelerate the execution of the strategy • 4 CBT teams to boost innovations • OEC up-and-running 14
  15. 15. Ronald Merckx (CFO)• Financials (p&l, net debt, cash flow, working capital)• Frozen Foods• Discontinued operations - ABC 15
  16. 16. Q2 2012 key figures In € mln Q2 2012 Q2 2011Revenue ¹ 150.8 161.1Autonomous growth (2.0)%Gross contribution 59.9 62.5As % of revenue 39.7% 38.8%Normalised EBIT ¹ 2.2 7.3As % of revenue 1.5% 4.5%EBIT ¹ 2.2 2.9Result discontinued operations (net of tax) 2.2 4.1Net result ² 3.1 5.4Earnings per share (EPS) ² 0.04 0.07¹ Continuing operations; ² Attributable to Wessanen equity holders 16
  17. 17. Bridge - revenue growthIn € mln175 (4.6)% 2.6% 0.7% (0.7)% (4.3% (6.4)%165155145 ix ts e . cy 1 2 iv m 1 1 /m en en d u 2 2 & m ol Q Q ce rr cq st V u ri A C ju P d A €161.1 €(7.4) €4.2 €1.0 €(1.0) €(6.9) €150.8 17
  18. 18. Q2 figures per segment In € mln Revenue Normalised EBIT Q2 12 Q2 11 Q2 12 Q2 11Grocery 71.7 65.9 5.2 6.5HFS (Health Food Stores) 52.0 68.9 (1.1) 2.0Frozen Foods 29.1 29.7 0.6 1.1Non-allocated * (2.0) (3.4) (2.5) (2.3)Wessanen 150.8 161.1 2.2 7.3* Eliminations for inter-segment revenue (between Grocery and HFS)Discontinued operationsABC $64.7 $49.9 $4.9 $6.5 18
  19. 19. Cash flow Q2In € mln Increase working (0.4) capital (*) Net Investments (0.7) (*) Cash flow from 4.4earnings (*) (6.1) Sources Dividends paid Increase of 4.7 net debt Derivatives and FX (1.6) Discontinued (0.3) operations Uses 19
  20. 20. Working capital 80 4 quarter average working capital  Cont. operations  ABC 60 40 20 0 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 1240 q-on-q movement working capital20 0-20-40 Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 20
  21. 21. Net debt and leverage ratioIn € mln150 Net debt €62.0 mln 75 0 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 4 Leverage ratio 2.1x 2 0 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 21
  22. 22. Frozen Foods Full ownership Favory Convenience Food Group  Acquired 35.9% stake held by Rabo Capital  Partly deferred consideration of €5 million Further strategic alignment and process integration to improve results To execute strategy and maximise shareholder value. Autonomous revenue (2.4)% (volume (5.8)%, price/mix 3.4%)  Ongoing focus on price, competitive environment with more promotions EBIT of (€0.6 mln) lower y-on-y  Operating expenses (incl. marketing) in line with last year  Implemented price increases could not fully compensate increased purchase price of raw materials Beckers focused on brand activation in out-of-home and retail channels 22
  23. 23. Discontinued operations - ABC Divestment process officially started, signing targeted in Q4 Q2 2012 another strong quarter  Autonomous growth 30.1% (volume 18.8%; price/mix 11.3%)  Daily’s and Little Hug both grew volumes strongly  RTD cocktail market continued to rapidly grow • Frozen pouches segment driver  Little Hug clearly gaining market share in single-serve fruit drinks • Segment growing modestly EBIT lower at US$ 4.9 million  Strong increase marketing investments • Supporting 2 key seasonal holidays (Memorial Day, 4th of July) 23
  24. 24. ABC - Daily’sTV commercials 7w sweepstake 4th of July Mobile website coupon 24
  25. 25. 4th of July promotion 6 Retailer Support
  26. 26. ABC - Little Hug Embossed barrel & Coupons new brand logo on capWhat did we change in last two years ?!• New Brand Name New more convenient packaging• New graphic design for cases• New bottle with logo• New higher quality box material• New Kiwi-Strawberry flavour• New Improved taste enriched with vitamins B / E• New communication of product attributes• New levels of advertising support• New straws added 26
  27. 27. Piet Hein Merckens (CEO)Closing remarks 27
  28. 28. Closing remarks Clarity, alignment and commitment regarding strategy Strategic priorities are set out, and being executed Good progress made in transforming role of HQ from financial holding to strategic orchestrator Clear steps to create focus Better connected leadership throughout the company Consumer confidence and reduced spending impacted growth Mixed results between and in different channels Short term measures will improve business results Sharpened strategic focus and change in Group composition cause us to assess our organisation structure and cost base 28
  29. 29. Royal Wessanen nv
  30. 30. Appendix - Sustainability 30
  31. 31. Attractiveness organic food markets European organic food an attractive, growing segment  Size €21 bn; 2011 growth around 6%  <3% of total European food market Increasing consumer appreciation Still low per capita consumption  European Union <€30> p.a. Consumers increasingly convinced of benefits of organic food regarding health, taste and environment Grocery and HFS channels developing at different growth path  Decline percentage of households shopping in HFS channel in the Netherlands halted 31
  32. 32. What is organic?! Strict criteria to be allowed to be labelled organic Demonstrably free from GMO, pesticides and growth hormones Strict rules on animal welfare Severe restrictions on fertilisers, herbicides and pesticides Severe restrictions on additives and processing aids All about being produced and processed in line with organic principles Organic products promote health and well-being Holding benefits for the planet and for future generations All about nutrition and taste ! Organic food is controlled by a unique European certification system 32
  33. 33. Wessanen Business principles Compliance with laws: being a responsible partner in society, acting with integrity towards all stakeholders and others who can be affected by our activities Environment: in line with commitment to sustainable development, we will do all that is reasonable and practicable to minimise adverse effects on the environment Product safety: we aim at all times to supply safe products and services Free market competition: we support free market competition as basis of conducting business; we observe applicable competition laws and regulations Child, bonded and forced labour: under no circumstances we are making use of forced or bonded labour; we do not employ children in violation of relevant conventions of ILO Human rights: we support and respect human rights and strive to ensure that our activities do not make it an accessory to infringements of human rightsWe expect suppliers and business partners to comply with the above principles 33
  34. 34. Commitment to minimise environmental impact Committed to minimising impact on environment by measuring and monitoring the effects of our operations All our organic products are free of GMO We are working on reducing our CO2 footprint and usage of water Additionally, organic products do not use pesticides, therefore contributing to a decrease ISO 14001 is an internationally recognised standard for embedding processes to analyse and reduce our impact on the environment 34
  35. 35. Wessanen’s supply chain 35
  36. 36. Palm oil - member RSPO Palm oil is important, versatile raw material for food  Only be cultivated in tropical areas of Asia, Africa and South America  Concerns that demand causing expansion of plantations into eco-sensitive areas Since March 2011 Member of Roundtable on Sustainable Palm Oil (RSPO)  Global multi-stakeholder initiative  Encouraging sustainable production/use palm oil  Wessanen commits to organisation’s objectives In 2011, we developed policy to govern palm oil sourcing and guidelines for implementation in partnership with our suppliers Committed to switching palm oil to RSPO certified sustainable palm oil during 2012-13  RSPO certified segregated palm oil for organic  GREEN PALM certificates for conventional 36
  37. 37. Organic Expertise Centre (OEC) We established our internal expertise - named OEC - in 2010  To stimulate exchange of knowledge / experience that is widely available within Wessanen  To educate and inspire our internal / external stakeholders in organic values Specialists join forces and work on pan-European issues To legitimise our position in organic world by championing the organic case Focal areas will be:  Training (incl. training package for newcomers) and founding Organic Academy  Knowledge building by teaming up with external researchers and experts  Lobbying to promote organic food  Communication for more general awareness / knowledge of organic food 37
  38. 38. Employee engagement  2012 Leadership development programme  Top-65  Focus on strategy execution, connected leadership  Employee turnover is key focus area  Competency model deployed  Defines behaviour expectations for all employees  Translates ambitions/values into behaviour conventions and skills100% 120 875% 6 8050% 4 4025% 2 0% 0 0 Executives Managers Associates 2009 2010 2011 2009 2010 2011 38 Men Women Injury severity rate Injury frequency rate
  39. 39. Appendix - Financials 39
  40. 40. Revenue Q2 - €151 mlnGrocery HFS (Health Food Stores)Revenue €71.7 mln Revenue €52.0 mlnEBIT €4.3 mln EBIT €(1.1) mln 47% 19% 34%Frozen Foods Non-allocated & eliminationsRevenue €29.1 mln Revenue € (2.0)mlnEBIT €0.6 mln EBIT € (1.6)mln Discontinued operations - ABC Revenue $64.7 mln EBIT $4.9 mln 40
  41. 41. Revenue breakdown per segment Grocery HFS 2.0% (5.9)% 68.9 71.1 52.0 65.9 Autonomous third party revenue growth Autonomous third party revenue growth Frozen Foods Discontinued operations – ABC in US$ 30.1% (2.4)% 29.7 29.1 64.7 49.9 Autonomous third party revenue growth Autonomous third party revenue growth 41
  42. 42. Bridge - segment revenue growthIn € mln 175 €5.8 €(16.9) 165 €161.1 155 €(0.6) €1.4 €150.8 145 Q2 11 Grocery HFS Frozen Foods Intersegment Q2 12 42
  43. 43. Bridge - EBITE development y-on-yIn € mln10 €7.3 €(1.3) €(3.1) 5 €(0.5) €(0.2) €2.2 0 Q2 11 Grocery HFS Frozen Foods Corporate Q2 12 43
  44. 44. Financials Q2 / guidance 2012Financials Q2 Net financing costs €(0.9) mln (Q2 2011: €(1.0) mln) Income tax expenses €(0.5) mln (Q2 2011: €(1.0) mln) Capex €(1.6) mln (Q2 2011: €(2.2) mln)Guidance FY2012 Net financing costs €(3-4) mln Effective tax rate around 35% Capex €6-8 mln Depreciation and amortisation €10-11 mln Non-allocated expenses (incl. corporate) €11-12 mln 44

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