Financial Results - London Stock Exchange2013/03/13 · supply chain • Food Systems...
Transcript of Financial Results - London Stock Exchange2013/03/13 · supply chain • Food Systems...
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Financial Results Q4 2012
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FORWARD-LOOKING STATEMENTS
This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking
statements“, as defined in the Securities Law - 1968, whose occurrence is not certain and which are not solely in the
Company's control. These forward-looking statements are included, inter alia, in discussions of strategy, objectives,
goals, plans, events, future intentions or other information relating to future events or issues whose occurrence is
not certain.
By their nature, forward-looking statements involve risk and uncertainty. Whether the forward looking information
occurs or not is affected, inter alia, by risk factors characteristic to the Company's operations and developments in
the general environment and external factors which impact the Frutarom Group and its area of activities.
This forward looking information could include facts and data based on the Company's subjective assessment,
including with regards to the current status of the Company and its business, the current situation in the industry in
which the Frutarom Group operates, macro-financial facts and information, all as are known to the Company on the
date on which this presentation was prepared, some of which were given to the Company by external sources, the
content of which was not independently examined by the Company, and therefore the Company is not responsible
for their verity.
This presentation must be read together with the Company's periodic and immediate reports, and was not meant to
replace the need for study of reports the Company has published, including, inter alia, the Company's periodic
report for 2012, published on March 2013, and the Company's periodic reports subsequently published. These
reports could include, inter alia, updates to the information regarding the Company's activities or of the forward
looking statements appearing in this presentation.
Subject to the requirements of applicable law, the Company does not intend to update any industry information or
forward-looking statements appearing in this presentation, and is not required to publish any additional
presentations for its shareholders in future.
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Frutarom’s Foundations
Founded in 1933, Frutarom combined the cultivation of aromatic plants
and flowers with the extraction and distillation of flavors, fine ingredients
and essential oils.
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A Leading Global Flavor and Fine Ingredient House
• Sales in 140+ countries
• 14,000+ customers Global
Company
• 30,000+ products
• 4,000+ raw materials
Broad Product Portfolio
• Listed on London and Tel Aviv Stock Exchanges (FRUT)
Public Company
• Since 2000
• 7.6x growth in sales
• 11.1x growth in EBITDA
• 13x growth in net profit
Financial
Success
4
Who We Are
0
100
200
300
400
500
600
Revenues, $M
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Frutarom - A Global Company
5
Accelerated growth - organic and through strategic acquisitions
Sales office acquisition
1996 Tel Aviv stock
exchange
IFF FS
Gewurzmuller
Adumim
Raychan
Rieber
EAFI
Savoury Flavours
Oxford
Balmey
Jupiter
FSI Corona
Nesse
CH Hansen
DE
CH Hansen
IT
Etol
Mylner
Aromco
FSI OH
Acatris
Flachsmann
Abaco
Tohar
Meer
Rayner
HK F&F
CPL Aroma Flavour key
Baltimore
Botanicare Kunshan
AM Todd
Rad London stock
exchange
Russia
Canada
Turkey
France Mexico
Ukraine
Poland
Kazakhstan
Hong Kong
Costa Rica
Czech Rep.
S. Africa
India
Brazil
2006 2007 2009 2012 1990-2000 2003 2004 2011 2001-2002 2005
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Sales and Marketing – 50 Offices
Production – 28 Sites R&D – 31 Labs
A Global Company We provide our customers with global and local support
Belgium
Brazil
China
Denmark
France
Germany
India
Indonesia
Israel
Italy
Kazakhstan
Mexico
Netherlands
Norway
Poland
Serbia
Singapore
Slovakia
Slovenia
South Africa
Turkey
Ukraine
UK South
UK North
Corona, CA NB, New Jersey
Cincinnati, OH Switzerland
Moscow Saint Petersburg
Perm Saratov
Hong Kong
Costa Rica
Georgia
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-
500
1,000
1,500
2,000
2,500
Estimated Flavor Sales
US$ M*
A Top-Ten Flavor House
Source: Companies’ Publications, Leffingwell & Associates, Reuters, Company’s estimations
* Based on 2012 results and Company’s estimations 7
500+ smaller
companies
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Asia
• Expanding R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam
• Building a state-of-the art, high-capacity plant in China with both traditional and savory flavor capabilities
Central and Eastern Europe
• Strengthening R&D and Application Centers in Russia, Ukraine, and Kazakhstan
• Strong base in central Europe
• Evaluating additional acquisitions and local production opportunities
Central & South America
• Strong base in Brazil
• Expanding penetration
• Investment in R&D and Applications Centers in Mexico & Costa Rica
• Evaluating acquisition opportunities
Africa
• Production, R&D and Application Center
• Evaluating acquisition opportunities
Towards Accelerated Penetration of Emerging Markets
8
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Growing Share of Emerging Markets
9 *2012 vs. 2011
60% growth in the
emerging markets
of China & South
East Asia, Central
& South America,
Central & Eastern
Europe and Africa*
31% growth in
the BRIC
countries*
Growing share of emerging markets Sales by Geography
(Rest of the world)
(M US$, % Of Total Sales)
122
222
230
260
99
136
Emerging Markets Western Europe ROW
451
618
22%
51%
27%
42%
36%
22%
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1996 Tel Aviv stock
exchange
IFF FS
Gewurzmuller
Adumim
Raychan
Rieber
EAFI
Savoury Flavours
Oxford
Balmey
Jupiter
FSI Corona
Nesse
CH Hansen
DE
CH Hansen
IT
Etol
Mylner
Aromco
FSI OH
Acatris
Flachsmann
Abaco
Tohar
Meer
Rayner HK F&F
CPL Aroma Flavour key
Baltimore
Botanicare Kunshan
AM Todd
Rad London stock
exchange
Russia
Canada
Turkey
France Mexico
Ukraine
Poland
Kazakhstan
Hong Kong
Costa Rica
Czech Rep.
S. Africa
India
Brazil
4 6
18
30 3342
52
914
32
49
66
80
100
10
Frutarom - A Global Company (Sales, EBITDA, Net Profit, USD M)
Net Profit 2000-2012
X13
EBITDA Profit 2000-2012
X11.1
Sales 2000-2012
X7.6 108
81
10
197
287
425
518
618
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In 12 months* Frutarom Accomplished 8 acquisition
*Jan 2011- Jan 2012
Enhancing savory activity
and presence in the UK
and emerging markets,
synergistic to UK savory
activity
Reinforcing Savory
position in Europe and
emerging markets
Strategic move to
strengthen Central- and
Eastern European
leadership; Diversified
natural product portfolio
Strengthening US activity
include. Savory &
innovative products,
penetration to the
food service sector
Supporting growth in
emerging markets,
synergistic to UK activity,
diversified technology base
First significant entry to
the flavors market in Brazil.
Important base for
expansion in LA
Enhancing savory activity in
UK market; synergistic to
UK savory activity
Reinforcing European
savory activity with focus
on Scandinavian market
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The Acquisitions’ Contribution
• The integration of the 8 acquisitions is progressing successfully as
planned:
- Merging Sales and R&D activities
- Optimizing production, supply chain and logistics infrastructures
• The acquisitions created opportunities for further improvement in profit
and profitability:
- Merging production sites/activities
- Transfer activities to lower cost countries
- Improvement in service and supply chain efficiencies
- Global logistics
Expected savings of ~ US$ 10 M annually starting H2 2013 but mainly in 2014
- Global purchasing reinforcement including procurement at countries of origin
Acquisitions are already contributing to sales & profit -
higher contribution to profit and profitability is expected in H2 of 2013, and in 2014
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20.1
40.8
72.6
108.5
131.6144.9
Q4/00 Q4/03 Q4/06 Q4/09 Q4/11 Q4/12
80.5 139.3
287.2
425.2
518.4
618.0
Fast Growth in Sales
Revenues Q4
(US$ M)
13 * Growth in local currency terms; in dollar term sales grew by 10.1%
** Growth in local currency terms; in dollar term sales grew by 19.2%
Revenues Full year
Record high in sales despite challenging market conditions & Currency effect
(US$ M)
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26.5 45.3
187.0
297.1
369.9
457.3
Flavors - Most Profitable Activity Growing Fast
14
Revenues Full year
(US$ M)
Share of total sales • Internal growth above
average market growth
rates
• USA, Latin America,
Asia, Central and
eastern Europe, Africa
• North America flavor sales
grow by 43% in 2012
74%
33%
Operating Profit Full year
14.7%
14.5%
* Growth in local currency terms; in dollar term sales grew at 23.6%
Growth was driven by
(US$ M)
71%
29.837.7
46.8
59.5
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Q4/11 Q4/12
Record in Gross Profit
15
Gross Profit Q4 Improvement is driven by:
Adjusting selling prices
Stabilization and some decrease in raw
material prices
Strengthening global purchasing
Substantial increase in purchasing power
35.5%
36.4%
Gross
Margin
Further actions to improve profitability
Operational synergies, including from
recent acquisitions
Gross Profit Full year
(US$ M)
36.4%
37.4%
Gross
Margin
(36.6%
including
Etol’s trade
& marketing
activity and re-
organization
expenses)
Harmonization of raw materials
(US$ M)
(35.5%
including
Etol’s trade
& marketing
activity and re-
organization
expenses)
Merging production sites/activities and
transfer of activities to lower cost countries
* Growth based on gross profit in millions, including Etol’s trade & marketing activity and re-organization expenses
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9.0 19.1
48.6
66.2
80.4
100.4
1.6
4.0
11.4
16.018.1
20.7
Q4/00 Q4/03 Q4/06 Q4/09 Q4/11 Q4/12
Record in EBITDA (US$ M)
14.3%
13.8%
16
16.2%
15.5%
EBITDA Q4 EBITDA Full year
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7.9
10.5
Q4/11 Q4/12
42.0
52.0
Record in Net Profit and EPS
17
Net Profit Q4 Net Profit Full year
(US$ M)
0.14 0.73 0.90 0.18 EPS ($) EPS ($)
(US$ M)
6%
7.3%
8.1%
8.4%
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Profitable Growth Generates Strong
Balance Sheet & Cash Flow from Operations
(USD M)
Cash flow
• $ 274 M – Cumulative cash flow
since 2009.
• Q4: $28.6M vs. $3.1M
• 2012: $91.2M vs. $35.6M
Balance Sheet
• Net debt (31.12.2012): USD 136.1M
• Equity (31.12.2012) USD 453.6 M
Cumulative Cash Flow
18
85
147
183
274
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Above-Industry
Organic Growth
Frutarom’s Strategy
Proven
Acquisition
Track Record
Margin
Expansion
19
Again doubling our revenue to reach $1 billion within 4 years
Continue successful strategy of combining rapid profitable organic growth with strategic acquisitions
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Flavor and Fragrance Specialty Ingredients
• Specialty botanical extracts, distillates, essential oils and aroma chemicals
Fine Ingredients ~25% of sales
Taste Solutions ~75% of sales
Flavors • Unique, high quality creation of sweet and
savory flavors for food and beverage products • Expertise in local and global tastes • Operational flexibility and local global
supply chain
Food Systems • Comprehensive sweet and savory food
systems • Unique technologies for fruit, spice,
vegetable, meat and fish preparations
Savory Solutions • Value-added functional savory solutions for the
food industry (snacks, meat, fish, organic, and culinary segments)
Health • Innovative, science-based health ingredients
for phyto-pharmaceuticals, nutraceuticals, dietary supplements, functional foods, cosmetics, and personal care
• Supporting the growing demand for health, wellness and beauty
Flavor and Fragrance Specialties
• Natural botanical extracts, distillates and essential oils
• Specialty aroma chemicals • Hydrocolloids • Citrus specialties • Global supply chain
20
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We share the…
Passion for Taste & Health
Flavors Fine Ingredients
We develop tailored solutions combining excellent
taste with health and functionality all under one roof 21
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Frutarom’s Strategy: Clear Focus Going Forward Profitable Internal Growth
Customer
Focus
Mid-sized and local
Private label
Multinational
Market
Focus
Developed markets (Europe and USA)
Emerging markets (e.g. Asia, Central & South America,
Central and Eastern Europe, Africa)
Product
Portfolio
Natural (extracts, fruit bases specialty essential oils)
Natural functional food ingredients
Comprehensive, integrated solutions
Cost reduction solutions
Core
Competencies
R&D and innovation – internal and external
Efficiencies, scale and synergies – cross selling
Experienced global management
Sales-driven organization 22
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32 successful acquisitions
Strict acquisition criteria: Highly valuable and experienced
employees
Major synergies and cross-selling
potential
Additional unique products and
technology
Positive impact on EPS
Focus on integration execution Optimization of cross selling
opportunities
Optimization and harmonization
of resources
Proven Acquisition
Track Record
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Positive Outlook for 2013
Profitable internal growth
Successful integration of the 8 acquisitions
Additional projects to improve efficiency and
merge activities and operations
Strengthening & leveraging global purchasing
Strong acquisitions’ pipeline
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Frutarom’s Vision
To Be The Preferred Partner For
Tasty And Healthy Success
25