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INVESTOR PRESENTATION
HALF YEAR 2014HALF YEAR 2014
AGENDA
• Performance Highlights HY2014
• Environment HY2014
• P&L and B/S Details HY2014• P&L and B/S Details HY2014
• Acquisiton Russell Stover Candies, Inc., USAq , ,
• RawMaterials
• Outlook 2014
• Questions & Answers
2 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
Performance Highlights HY2014
3 1H2014 - Investor Presentation – August 19, 2014
Performance Highlights HY2014
Net Net Trade Sales 1‘200 • Organic + 9.2%
CHF million
EBITDA 128.0
g• Swiss Francs + 6.0%
CHF +14.0 million vs. p.y. + 12.3%
EBIT 77.1 CHF +11.6 million vs. p.y. + 17.7%
NET INCOME 55.8 CHF +7.0 million vs. p.y. + 14.3%
NET LIQUIDITY 644.2 CHF -79.3 million vs. 31.12.2013
4 1H2014 - Investor Presentation – August 19, 2014
Key Figures
NET LIQUIDITY ABSORBTION VS. YEAR END - DUE TO CAPEX AND DIVIDEND PAYMENTS
2'800 74.0% 750
Equity(in CHF million)
Net Financial Position (in CHF million)
Equity B/S ratio(in %)
2'635 2'631
2'500
2'600
2'700
67.9%
70.6%
66 0%
68.0%
70.0%
72.0% 724
644600
650
700
2'300
2'400
2'500
60 0%
62.0%
64.0%
66.0%
450
500
550
2'100
2'200
54.0%
56.0%
58.0%
60.0%
300
350
400
2'000
31.12.2013 30.06.2014
52.0%
5 0%
31.12.2013 30.06.2014
250
31.12.2013 30.06.2014
5 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
Environment HY 2014
6 1H2014 - Investor Presentation – August 19, 2014
Environment
ECONOMIES• Positive economic signals in North America & U.K.• Stabilisation in rest of EuropeStabilisation in rest of Europe
CONSUMERS• Continued trend to premium productsContinued trend to premium products• Consumers ready to spend for quality & innovation• Slightly improving consumer sentiment in Southern Europe
CHOCOLATE MARKETS• Low growth in volume & mix – no price increases despite raw material hikes• Continued trend to premium products
FX & RAW MATERIAL • Stable FX environment except US$, AU$ and CA$ weak vs. CHF• Significant increase of raw material prices
7 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
P&L and B/S Details HY2014
8 1H2014 - Investor Presentation – August 19, 2014
S O G O O O O G GOO S S G O
Overview – P&L and B/S Details HY2014
Net Net Trade Sales EBIT Net Income
STRONG PROFIT IMPROVEMENT FOLLOWING GOOD SALES GROWTH
Net Net Trade SalesCHF 1‘200 million
EBIT CHF 77.1 million
Net IncomeCHF 55.8 million
+6.0% in CHF+9 2% in local curr
+ 17.7 % + 14.3 %
77.1
80
1'2001'200 55.8
50
60
+9.2% in local curr.
65.560
70
1'1321'10048.8
40
50
501'000 30
40
2013 2014
900
2013 2014
20
2013 2014
9 1H2014 - Investor Presentation – August 19, 2014
CONTINUED SOLID GROWTH IN SWISS FRANCS
Sales Analysis – 5 Years in Swiss Francs
CONTINUED SOLID GROWTH IN SWISS FRANCS
1'200
Absolute in CHF million Growth in CHF
1'0571'007 1'033
1'1321 200
900
1'100
700
500
6.0%7.9% -4.5% 2.6% 9.6%300
2010 2011 2012 2013 2014
6.0%7.9% 4.5% 2.6% 9.6%
10 1H2014 - Investor Presentation – August 19, 2014
ORGANIC GROWTH RECORD HALF YEAR GROWTH
Sales Analysis – 5 Years in Local Currencies
ORGANIC GROWTH: RECORD HALF YEAR GROWTH (EXCLUDING EXTRAORDINARY 2010)
2‘520In local currencies
1'200
Absolute in CHF million
90960
1'0111'099
1 200
900
1'100
905
700
500
8.7% 9.2%9.2% 6.1% 5.3%300
2010 2011 2012 2013 2014
8.7% 9.2%9.2% 6.1% 5.3%
11 1H2014 - Investor Presentation – August 19, 2014
Sales Analysis – Drivers
ORGANIC SALES GROWTH MAINLY DRIVEN BY VOLUME INCREASE -(LOW PRICE / MIX EFFECTS)
9 2%0.7% 3 2%9.0%
10.0%
8.5%9.2%0.7% 3.2%
6 0%
7.0%
8.0%
6.0%
3 0%
4.0%
5.0%
6.0%
1.0%
2.0%
3.0%
0.0%Volume Price/Mix Organic Forex Reported in CHF
12 1H2014 - Investor Presentation – August 19, 2014
O S C
Sales Analysis – Split of Markets
TOTAL NNTS: CHF 1’200 million
7.6% North America
26.8%
6.4%
7.3% Germany
CH incl. Exports
9.2%
France
Italy
2014CHF 1‘200 million
19.1%
12 1%
11.5%UK
Rest of Europe
R t f th W ld12.1% Rest of the World
13 1H2014 - Investor Presentation – August 19, 2014
ACCELERATED GROWTH IN EUROPE AND NAFTA DOUBLE DIGIT IN THE
Sales Analysis – Markets
ACCELERATED GROWTH IN EUROPE AND NAFTA, DOUBLE DIGIT IN THE REST OF THE WORLD
Europe Rest of WorldNAFTA
16.0% 16.0%8.0%
12.0% 12.0%6.0%
8.0% 8.0%4.0%
4.0% 4.0%
11 3%4.0% 12.7% 13.7% 14 1%
2.0%
5.8% 6.9%
0.0%
1H 2013 1H 2014
0.0%
1H 2013 1H 2014
11.3%12.7% 13.7% 14.1%
0.0%
1H 2013 1H 2014
5.8% 6.9%
14 1H2014 - Investor Presentation – August 19, 2014
INCREASE OF COST MARGIN MAINLY DRIVEN BY HIGHER PRICES FOR
Material Costs including +/‐ Change in Inventory
INCREASE OF COST MARGIN MAINLY DRIVEN BY HIGHER PRICES FOR COCOA PRODUCTS
423425
In % of NNTSAbsolute in CHF million
383
354 358379
423
350
375
400
354 358
300
325
350
225
250
275
35.2%36.2% 35.2% 34.7% 33.4%
200
225
2010 2011 2012 2013 2014
35.2%36.2% 35.2% 34.7% 33.4%
15 1H2014 - Investor Presentation – August 19, 2014
LOW PERSONNEL EXPENSE RATIO THANKS TO EFFICIENCY GAINS
Personnel Expenditure
LOW PERSONNEL EXPENSE RATIO THANKS TO EFFICIENCY GAINS
350
Personnel exp. in CHF million Personnel exp. in % NNTS
279 277
306 309300
279267
277
200
250
15025.8%26.4% 26.5% 26.8% 27.0%
1002010 2011 2012 2013 2014
25.8%26.4% 26.5% 26.8% 27.0%
16 1H2014 - Investor Presentation – August 19, 2014
AVG NO OF EMPLOYEES INCREASING BY 558 FTE ( 6 8%) MAINLY IN
Headcount & NNTS / Employee
AVG. NO OF EMPLOYEES INCREASING BY 558 FTE (+6.8%) – MAINLY INMANUFACTURING DUE TO VOLUME GROWTH
9'000
Average number of employees
7'450
8'187
8'745
7'500
8'000
8'500
6'984 7'1607'450
6'000
6'500
7'000
4'500
5'000
5'500
4'000
4 500
2010 2011 2012 2013 2014
17 1H2014 - Investor Presentation – August 19, 2014
CONTINUED INCREASE IN BRAND SUPPORT UNDERPROPORTIONAL
Operating / Marketing Expenses
CONTINUED INCREASE IN BRAND SUPPORT - UNDERPROPORTIONAL GROWTH IN SALES AND ADMINISTRATION
Absolute in CHF million In % of NNTS
348350
318309
338348
300
325
301
275
300
225
250
29.0%30.1% 29.9% 30.0% 29.8%200
2010 2011 2012 2013 2014
29.0%30.1% 29.9% 30.0% 29.8%
18 1H2014 - Investor Presentation – August 19, 2014
EBIT DEVELOPMENT DRIVEN BY OPERATING EFFICIENCY GAINS AND
Operating Profit (EBIT)
EBIT DEVELOPMENT DRIVEN BY OPERATING EFFICIENCY GAINS AND VOLUME GROWTH
Absolute in CHF million In % of NNTS
7780
66
77
60
70
3442
46
30
40
50
34
10
20
30
6 4%3 2% 4 2% 4 5% 5 8%0
2010 2011 2012 2013 2014
6.4%3.2% 4.2% 4.5% 5.8%
19 1H2014 - Investor Presentation – August 19, 2014
SOUND PROFITABILITY IN FIRST HALF 2014
Net Income
SOUND PROFITABILITY IN FIRST HALF 2014
60
Net income in CHF million In % of NNTS
49
56
40
50
25
323530
40
25
10
20
02010 2011 2012 2013 2014
4.7%2.3% 3.2% 3.4% 4.3%
20 1H2014 - Investor Presentation – August 19, 2014
HIGH INVESTMENT IN CAPEX TO SUPPORT FURTHER GROWTH
Operating Cash Flow & CAPEX
HIGH INVESTMENT IN CAPEX TO SUPPORT FURTHER GROWTH
Operating Cash Flow in CHF million CAPEX in CHF million
250
226 228211
1 1
200
159171
100
150
50
10540 42 65 840
2010 2011 2012 2013 2014
10540 42 65 84
21 1H2014 - Investor Presentation – August 19, 2014
NET FINANCIAL POSITION DECREASED VS YEAR END BY 80 MILLION DUE TO
Net Financial Position ‐ Development
NET FINANCIAL POSITION DECREASED VS. YEAR END BY 80 MILLION DUE TO DIVIDEND PAYMENT & HIGH CAPEX
1'000 0
1'100.0
Net cash and net cash movement in CHF million
895839
797171
49 10542
148700 0
800.0
900.0
1'000.0
486543
724 724649 644 644
1485
400 0
500.0
600.0
700.0
100 0
200.0
300.0
400.0
0.0
100.0
FY2011 FY2012 FY2013 OperatingCash Flow
CapitalIncrease
CAPEX Sharebuyback
DividendPayment
CTA/Other 1HY 2014
22 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
Acquisiton Russell Stover Candies,
Inc., USA
23 1H2014 - Investor Presentation – August 19, 2014
Acquisition Russell Stover Candies, Inc., USA
COMPANY FACTS
• Head-Office in Kansas City
R ll St G ith 2‘700 l• Russell Stover Group with 2‘700 employees
• 4 Plants 2 in Kansas1 in Texas1 in Colorado
• NNTS 2013 USD 502m
• 3 Brands: Russell StoverWhitman‘s Pangburn‘s
NEXT STEPS
• Expected closing after approval of antitrust authorities (September / October 2014)
• IFRS 3 accounting rules impact on first months of business
24 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
RawMaterial
25 1H2014 - Investor Presentation – August 19, 2014
Cocoa Crop / Grinding Balance
5.5%
16.2%
42.4%5.5%
15.5%-180
26 1H2014 - Investor Presentation – August 19, 2014
Cocoa Product Prices 2011 ‐ 2014
27 1H2014 - Investor Presentation – August 19, 2014
Nut & Almond Prices 2011 ‐ 2014
28 1H2014 - Investor Presentation – August 19, 2014
Milk Prices Europe, Switzerland & World 2010 ‐ 2014
29 1H2014 - Investor Presentation – August 19, 2014
Sugar Prices 2010 ‐ 2014
30 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
Outlook 2014
31 1H2014 - Investor Presentation – August 19, 2014
INVESTING FOR FUTURE GROWTH
Outlook 2014 – Financial Guidance
MARKET FOCUS 2014• Focus on market share gains
INVESTING FOR FUTURE GROWTH
• Focus on market share gains• Build on good growth trend in all markets• Continue strong support of newly opened markets Brazil, China, Japan• Dynamic growth and strong expansion of „Global Retail“
CONTINUATION OF MARKET INVESTMENTS IN 2014M k ti di St th b d d iti i l b ll i f th• Marketing spending: Strengthen brand and positioning globally via further increase of advertising spending
• New geographies: explore expansion potential
INTERNAL• Continued cost saving measures via process- and efficiency improvements• Optimize management of transactional FX-exposure / raw material prices
32 1H2014 - Investor Presentation – August 19, 2014
Mid to Long Term Financial Guidance
UNCHANGED MID TO LONG TERM FULL YEAR SALES AND PROFIT TARGETSUNCHANGED MID-TO LONG TERM FULL YEAR SALES AND PROFIT TARGETS
Organic Growth 6 – 8 % p.a. (*)Organic Growth 6 8 % p.a. ( )
EBIT margin + 20 to 40 basis points (*)
CAPEX 2014 CHF 250 illiCAPEX 2014 CHF > 250 million
C ti d hi h h tiContinued high cash generation
(*) Present Lindt business i.e. excluding sales and profit impact of the Russell Stover acquisition
33 1H2014 - Investor Presentation – August 19, 2014
Disclaimer
This presentation contains forward looking statements which reflectManagement‘s current views and estimates. The forward lookingstatements involve certain risks and uncertainties that could cause actualstatements involve certain risks and uncertainties that could cause actualresults to differ materially from those contained in the forward lookingstatements. Potential risks and uncertainties include such factors as generalgeconomic conditions, foreign exchange- and commodity price fluctuations,competitive product and pricing pressures and regulatory developments.
34 1H2014 - Investor Presentation – August 19, 2014
HALF YEAR 2014
Questions & Answers
35 1H2014 - Investor Presentation – August 19, 2014