Q2 2013 wessanen analyst&investor meeting
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Transcript of Q2 2013 wessanen analyst&investor meeting
Royal Wessanen nv
Q2 2013
Amsterdam, 25 July 2013
www.wessanen.com
Q2 2013 performance We have to cope with uncertain economic times, low consumer confidence and
increasing unemployment
Consumer appreciation for healthy and sustainable food is continuously growing Consumers are gradually incorporating more of a sustainable agenda when making food
purchases Consumers show growing engagement with healthier food via alternative food solutions
such as organic, free from, ethical and local provinence
'Wessanen 2015' is progressing well Wessanen becoming a more profitable company, being more focused on its core
activities, more agile and more efficient Savings of €15 mln expected from 2014 onwards
ABC’s first half year performance was very disappointing
2
‘Wessanen 2015’
1. Create more focus on our activities
• Reduction of approx. 300 FTE
• One-off costs €(21) mln cash
• Savings €15 mln p.a. from beginning of 2014 onwards
• Reduction of approx. 300 FTE
• One-off costs €(21) mln cash
• Savings €15 mln p.a. from beginning of 2014 onwards
3. Addressing low-yielding and non-performing activities Strongly reducing German grocery presence, changing go-to-market approach
Focus in Italian grocery on non-dairy (soy)
2. Reduce complexity and simplify processes• Cutting the tail / reducing number of SKUs at
− Dutch brands; √ French HFS brands; Export
Centralising quality department
• In the Netherlands, focus on one franchise formula (Natuurwinkel), to end GooodyFooods formula
Supply chain to manage our plants as of 2013 and to streamline processes
• Further increased focus on core brands and core categories
Expansion number of CBTs (category brand teams)
Split Benelux operations in branded and distribution organisation
Split French HFS operations in branded and distribution organisation
Grocery
France growing, driven by Dr. Schär, Krisprolls, Gayelord Hauser For the latter, we ran a sizeable promotional campaign
Bjorg slightly up, impacted by of a temporarily category delisting at a customer
New large TV campaign to be aired in Q3 Acquisition Alter Eco closed at end of May
UK branded business posted a strong performance Market share gains in its major categories
Tea, dairy alternatives and stocks & gravies Kallo is to be rebranded into Kallø from September
Supported by social media campaign, story-telling books and sampling events
In the Netherlands, Zonnatura and Dr Schär both showed a good performance
Zonnatura’s new TV commercial "what happened to our food?" was well received
In € mln H1-13 H1-12
Revenue 144.0 138.1
Autonomous growth 1.3%
Normalised EBIT15.6 10.0
As % of sales 10.8% 7.2%
Exceptional items (1.2) (0.9)
EBIT 14.4 9.1
4
Health Food Stores (HFS)
Wholesale reporting lower sales Natudis has been growing France lower volumes
• Moving part fruit & vegetables to Biodistrifrais• Bonneterre ceased chilled and larger part fruit & vegetables
Refocus Bonneterre company going well Cutting the tail programme implemented Bonneterre and Evernat brands making inroads at specialty chains
and buying groups
Our brands showed a good performance Allos, Tartex and Bonneterre growing In total, brands do represent 2/3 of total HFS sales
Autonomous growth and operating result strongly up Volumes and gross margins up in all 3 markets Lower operating costs (first benefits ‘Wessanen 2015’) Marketing spending up due to large campaign at Bonneterre
In € mln H1-13 H1-12
Revenue 106.9 105.9
Autonomous growth 0.7%
Normalised EBIT2.8 (0.5)
As % of sales 2.6% (0.5)%
Exceptional items (0.7) -
EBIT 2.1 (0.5)
5
CBT’s starting to deliver tangible results
Fully aligned product and packaging launch in 3 countries,
produced in own factory
€1 mln revenue (full year basis)
Additional fixed cost coverage Allos factory
6
To come
To come
Innovative concept in both channels in France, produced at own
factory, further roll-out in progress
€2 mln revenue (full year basis)
Additional fixed cost coverage Bioslym factory
CBT Cereals
CBT Dairy alternatives
Significant renovation core product across countries to
remove palm oil (consumer issues re. sustainability/health)
+12% growth on renovated products in France
CBT Sweet in between
Clipper roll-out progressing well
France in Q1, Netherlands and Germany in Q3
Initial sales in France above budget
Year 1 contribution over €1 mln in revenue
Export - double-digit growth in H1
Reported as part of Grocery and HFS
Small dedicated group organised by brand and geography
Multiple export markets Most important ones are Nordics, Austria, Italy, Japan, Spain, Switzerland Also includes Russia, Middle East, Far East and Australia
Export plans based on clear brand and market choices
First half year growth 11%, driven by Clipper, Allos and Whole Earth
8
IZICO - integrated frozen foods company
Good progress in becoming one company to strengthen its position on Benelux market and in export to further improve profitability to better and more effectively cope with the challenging environment
All ‘Wessanen 2015’ actions have been completed Closure Deurne plant New structure and roles at various departments implemented Offices combined in Breda
Market: retail growing, out-of-home impacted by sluggish demand
Bicky continued to grow, while Beckers lost some market share in retail Plans to revitalise Beckers underway
In H2 2013, half of €5 mln ‘Wessanen 2015’ savings to materialse
In € mln H1-13 H1-12
Revenue 53.2 56.9
Autonomous growth (6.4%)
Normalised EBIT1.5 0.7
As % of sales 2.8% 1.2%
Exceptional items (0.2) -
EBIT 1.3 0.7
9
ABC - Little Hug’s growth offset by Daily’s
Little Hug continues to perform well Growing revenue and market share Continue to invest in brand activation Introduced new flavours Berry Blend and Apple Orchard
Daily’s maintained its clear leadership share in pouch segment Year-to-date, frozen pouches lost >20% (volume and value) No meaningful improvement foreseen for remainder of 2013 Daily’s underperformed broader RTD market
• Numerous initiatives: 6 new flavours, new campaign and grown distribution coverage.
Expected FY13 revenue breakdown Little Hug 45-50%, single serve fruit drinks >10% Daily’s 40-45% (2/3 frozen pouches, 1/3 non-alcoholic mixers)
FY2013 operational loss (EBITE) expected of US$5-10 million
FY2014, we expect ABC to be profitable again
In US$ mln H1-13 H1-12
Revenue 79.2 97.6
Autonomous growth (18.8%)
Normalised EBIT(1.4) 6.5
As % of sales (1.8)% 6.7%
Exceptional items (0.5) -
EBIT (1.9) 6.5
10
Ronald Merckx (CFO)
• Financials
11
Q2/H1 P&L in more detail
In € mln Q2 2013 Q2 2012 H1 2013 H1 2012
Revenue 187.3 201.0 359.8 371.6
Autonomous growth (6.8)% (4.1)%
Gross contribution - - 137.9 142.4
As % of revenue - - 38.3% 38.3%
Normalised EBIT 4.8 6.2 14.1 9.1
As % of revenue 2.6% 3.1% 3.9% 2.4%
Exceptional costs (1.3) (0.3) (2.4) (0.3)
EBIT 3.5 5.9 11.7 8.8
Net financing costs (0.6) (0.7) (1.0) (1.3)
Income tax expenses (4.1) (2.1) (6.8) (2.9)
Net result attributable to equity
holders
(1.2) 3.2 3.9 4.9
12
Organic growth in perspective
13
In € mln Q2 13 H2 13 H1 14
Grocery (2) (5) (2-3)
• Germany - different go-to-market model (0.5) (1) -
• Italy - withdrawal Bjorg and Efficance brands (0.3) (0.6) (0.3)
• UK - ending private label contracts (1) (2) (1)
• NL - terminating Biorganic (0.3) (1.5) (1)
HFS (1) (6) (3-4)
• France - cutting the tail / ending frozen, F&V (0.5) (4) (3)
• NL - cutting the tail (0.5) (1) (1)
• Germany - SAP implementation 1 July 0.7 (0.7) n.m.
IZICO (3) (7) (4)
• Closing Deurne plant / cutting the tail
H1 gross profit / normalised EBIT
Gross profit in line with last year Grocery
• Underlying improvement HFS
• Growth brands and deliberate downsizing part of wholesale operations IZICO
• Ending low-margin Halal and breadcrumb activities; under-absorption Q2 production ABC
• Lower pouches sales and provisions for customer returns / obsolete inventory
Marketing spending Grocery
• France - phasing towards Q1 and Q3 (new TV campaign to be launched)• UK - due to large media spending on both Clipper and Kallo last year• Germany - revised go-to-market approach
HFS • Due to a large billboard/poster campaign in France
At ABC and IZICO in line with last year
Warehousing / logistics / general & administrative Lower general and administrative costs Lower warehousing and logistical costs
14
‘Wessanen 2015’ - cash costs
15
In € mln Q4 2012 Q1 2013 Q2 2013 H2 2013
Grocery (3.0) (0.2) (0.8) (0.5-1)
HFS (6.5) (0.5) (0.2) (0.5-1)
IZICO (6.2) (0.2) - (0.5-1)
Non-allocated (0.6) - - -
Costs ‘Wessanen 2015’ (16.3) (0.9) (1.0) (2-3)
First half 2013 cash flow
16
20.8
(3.6)(3.7)
(8.4)
(15.7)
(3.9)
(3.6)
(18.3)
Successful renewal credit facility
0
25
50
75
100
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 130
1
2
3
Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 1317
Three-year secured €100 million revolving credit facility Current facility scheduled to mature in Feb. 2014
Uncommitted options to Extend facility for in total two years Increase facility up to maximum aggregate amount of €25 mln (‘accordion facility’)
Pricing grid narrowed to 110-205 bps over Euribor Based on leverage ratio (Net debt/EBITDAE) (max. remains at 3.0x)
Increase in debt (€74.6 mln vs. €62.7mln at end of Q1) due to: Cash out provision expenses €8.4 mln, Alter Eco €5.0 mln and dividend payments
€3.8 mln
Leverage ratio: 2.0XNet debt: €74.6
Piet Hein Merckens (CEO)
• Closing remarks
18
Looking forward
Macro economyEurope has to deal with deteriorated consumer confidence and increased unemployment Organic and natural food markets continue to trend positively
‘Wessanen 2015’Implementation running smoothlyAll progress, including FTE reductions and savings, closely monitored
H1 resultsWe have made significant progress in our core operations and IZICO
Improvement driven by own actions at our various businessesUnfortunately, ABC’s H1 performance was very disappointing. We therefore have initiated immediate short term corrective actions to return ABC to profitability in 2014.
Full year 20132013 will be another challenging year“Store is open while we are renovating and innovating”
19
Appendices
20
A very sound financial position
In € mln Jun 13 Dec 12
Assets
Property, plant and equipment 74.8 77.4
Intangible assets 66.9 66.8
Investment associates/other 1.2 1.1
Deferred tax assets 9.0 9.2
Non-current assets 151.9 154.5
Inventories 74.5 72.3
Income tax receivables 0.2 -
Trade receivables 111.0 85.7
Other receivables / prepayments 17.7 15.7
Cash (equivalents) 14.7 9.7
Current assets 218.1 183.4
TOTAL ASSETS 370.0 337.921
In € mln Jun 13 Dec 12 ¹
Equity and liabilities
Total equity 112.5 110.8
Interest-bearing loans 0.3 60.7
Employee benefits 13.0 15.1
Provisions / Deferred tax liabilities 6.3 5.2
Non-current liabilities 19.6 81.0
Bank overdrafts / current debt 13.9 1.4
Interest-bearing loans/borrowings 75.1 2.5
Provisions 10.7 16.8
Income tax payables 2.9 0.7
Trade payables 72.9 68.3
Non-trade payables/accrued expenses 62.4 56.4
Current liabilities 237.9 146.1
TOTAL EQUITY & LIABILITIES 370.0 337.9
¹ Restated for effect of IAS 19 (revised 2011)
Financials Q2 - guidance 2013
Financials Q2
Net financing costs €(0.6) mln Q2 12: €(0.7) mln ¹
Income tax expenses €(4.1) mln Q2 12: €(2.1) mln
Capex €(2.3) mln Q2 12: €(1.7) mln
Financials H1
Net financing costs €(1.0) mln FY 12: €(1.3) mln ¹
Income tax expenses €(6.8) mln FY 12: €(2.9) mln
Capex €(3.6) mln FY 12: €(3.6) mln
Guidance 2013
Net financing costs €(2) mln
Effective tax rate 53% ²
Capex €(8-10) mln
Depreciation and amortisation €(13-14) mln
Non-allocated expenses (incl. corporate) €(11) mln
22¹ Restated for effects of IAS 19 (revised 2011)² Excludes recognition of provision for uncertain tax positions in Q2 2013 of €1.1 million
Royal Wessanen nv