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Royal Wessanen nv
Q3 2012
Amsterdam, 25 October 2012
www.wessanen.com @RoyalWessanen
Revenue and EBIT split Q3>80% revenue in our organic activities
19%
47%
34%
2
GroceryRevenue €65.8 mlnEBIT €5.7 mln
Frozen FoodsRevenue €26.6 mlnEBIT €0.4 mln
HFS (Health Food Stores)Revenue €48.0 mlnEBIT €(0.3) mln
Non-allocated & eliminationsRevenue €(1.9) mlnEBIT €(2.5) mln
9mon 2012
35%
46%
19%
Q3 performance
• Organic food market continues to trend favourably– Growth potential significant and sustainable– Increasing number of consumers appreciating rich taste; healthy nature; and
sustainable production methods– Increased availability and still (too) low per capita consumption
• We also see reduced consumer confidence and related reduction of spending– Result of subdued European economies
• Assessment of structure and cost base well under way– Conclusions to be shared late November– Aim to reduce complexity, streamline processes and improve speed to market
and decision making – As a result substantial costs savings are to be achieved
3
Q3 2012 performance (cont’d)
• Grocery continues to show healthy performance, growing volumes, sales and
operating profits – Addressing issues such as i) stop distributing Italian grocery brands and ii)
reviewing go-to-market approach Germany– Healthy autonomous growth, increased operating result– Our brands (e.g. Bjorg, Clipper, Whole Earth) performing well
• Developments disappointing at health food stores (HFS) – Also first positive signs such as
• Development German brands• New customer wins in France• Positive like-for-like sales Dutch formula stores and independent stores
4
Q3 performance (cont’d)
• At Frozen Foods, both operations combined under single management– Objective to realise further strategic alignment, corporation and process
integration– Performance in line with previous quarters
• Discontinued operations (ABC)– Divesting progressing as planned, signing targeted for the current fourth
quarter – Ready-to-Drink cocktail market continued to grow driven by frozen pouches– Y-on-y comparison distorted due to last year’s allocation
5
Q3 2012 key figures
In € mln Q3 2012 Q3 2011
Revenue ¹ 138.5 136.6
Autonomous growth (0.2)%
Gross contribution ¹ 54.6 52.8
As % of revenue 39.4% 38.7%
Normalised EBIT ¹ 3.3 1.0
As % of revenue 2.4% 0.7%
EBIT ¹ 3.0 (0.8)
Result discontinued operations (net of tax) 2.3 10.1 ²
Net result 3.7 8.1
Earnings per share (EPS) 0.05 0.11
6
¹ Continuing operations² Includes €4.7 mln of deferred tax assets and net reversal impairment losses of €0.8 million.
Q3 revenue
33%
48%
19%
Grocery HFS Frozen Foods
Cash flow Q3
7
In € mln
4.2(8.9)
Sources
(3.9)
Uses
(7.9) Decrease
of net debt (**)
Discontinued operations
Increase working capital (*)
Net Investments (*)
12.6
Cash flow from
earnings (*)
(0.6) Derivatives and FX
4.2 (4.4)
Closing remarks
Macro economy• Organic food market continues to trend favourably• Reduced consumer confidence and related reduction of spending
Q3 results• Grocery continues to grow volumes, sales and operating profits • HFS developments disappointing, although first positive developments visible
Own actions• Non-core activities
– At Frozen Foods new single management– Divestment ABC progressing
• Core activities– Addressing several issues such as
• French distribution and Italian grocery activities– Assessment of structure and cost base well under way
8
Royal Wessanen nv
To make our organic brands most desired in Europe
Strategic priorities 2012-14
Strategic focus Activities
Topline growth • Grow core brands
• Grow core categories
• Build strongholds in new markets
• Country specific growth strategies
• Launch fewer, bigger, better innovations
• Execute acquisitions shortlist
Profitability
improvement
• Central sourcing savings
• Pricing strategies towards customers
• Improve operational excellence with SAP
• Filling own factories
Enablers • Improve talent performance management / building connected
leadership
• Simplify how we are conducting business
• Activate Organic Expertise Centre (OEC), integrate Quality
10
Q3 figures per segment
In € mln Revenue Normalised EBIT
Q3 12 Q3 11 Q3 12 Q3 11
Grocery 65.8 57.5 5.7 3.8
HFS (Health Food Stores) 48.0 54.7 (0.3) (0.5)
Frozen Foods 26.6 27.3 0.4 0.2
Non-allocated * (1.9) (2.9) (2.5) (2.5)
Wessanen 138.5 136.6 3.3 1.0
11* Eliminations for inter-segment revenue (between Grocery and HFS)
Revenue breakdown per segment
48,054,7
12
138,5136,6
(4.2)%
HFS
Autonomous third party revenue growth
65,8
57,5
4.4%
Grocery
Autonomous third party revenue growth
26,627,3
(2.5)%
Frozen Foods
Autonomous third party revenue growth
(0.2)%
Royal Wessanen
Autonomous third party revenue growth
Bridge - revenue growth
120
130
140
150
Q3 11 Volume Price/ mix Currency Acq&div. Q3 12
13
1.5%
In € mln
(1.9)% 1.7% 0.8% 1.0%
€136.6 €2.3€(2.6) €1.0 €138.5€1.2
14
120
130
140
150
Q3 11 Grocery HFS Frozen Foods Intersegment Q3 12
Bridge - segment revenue growth
€138.5
In € mln
€(6.7)€8.3
€1.0€(0.7)€136.6
Bridge - EBITE development y-on-y
0
2
4
6
Q3 11 Grocery HFS Frozen Foods Corporate Q3 12
15
In € mln
€1.0 €3.3€1.9 €0.2 -€0.2
Financials Q3 / guidance 2012
Financials Q3
• Net financing costs €(0.9) mln Q3 2011: €(1.0) mln
• Income tax expenses €(0.7) mln Q3 2011: €(0.2) mln
• Capex €(1.4) mln Q3 2011: €(2.5) 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
16
-40
-20
0
20
40
Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 17
Working capital
0
20
40
60
80
Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12
17
4 quarter average working capital
q-on-q movement working capital
Cont. operations ABC
Net debt and leverage ratio
0
75
150
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
0
2
4
Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
18
Net debt
Leverage ratio
€57 mln
2.0x
In € mln
A very sound financial position
In € mln Sept 12 Dec 11
Assets
Property, plant and equipment 55.1 86.4
Intangible assets 106.8 90.6
Investment associates/other 0.5 1.0
Deferred tax assets 6.8 8.8
Non-current assets 169.2 186.8
Inventories 60.7 67.5
Income tax receivables 0.7 2.2
Trade receivables 77.4 78.9
Other receivables / prepayments 14.8 24.4
Cash (equivalents) 13.9 8.2
Assets classified as held for sale 58.8 -
Current assets 226.3 181.2
TOTAL ASSETS 395.5 368.019
In € mln Sept 12 Dec11
Liabilities
Total equity 164.9 166.1
Interest-bearing loans 64.7 37.4
Employee benefits 23.7 24.0
Provisions / Deferred tax liabilities 6.4 3.9
Non-current liabilities 94.8 65.3
Bank overdrafts / current debt 5.7 3.0
Provisions 2.1 3.3
Income tax payables 2.2 0.5
Trade payables 64.6 70.5
Non-trade payables&accrued expenses 50.3 59.3
Liabilities classified as held for sale 10.9 -
Current liabilities 135.8 136.6
TOTAL EQUITY & LIABILITIES 395.5 368.0
Appendix - Sustainability
20
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 foodregarding 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
21
What is organic?!
Strict criteria to be allowed to be labelled organicDemonstrably free from GMO, pesticides and growth hormonesStrict rules on animal welfareSevere restrictions on fertilisers, herbicides and pesticidesSevere 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
22
“Sustainability is an essential and
natural part of our daily work.”
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 rights
23We expect suppliers and business partners to comply with the above principles
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
24
Additional information at www.wessanen.com for
sustainability, such as
GRI G3 table | Performance fact sheet
Wessanen’s supply chain
25
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
26
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
27
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 skills
0
40
80
120
2009 2010 2011
Injury severity rate
0%
25%
50%
75%
100%
Executives Managers Associates
Men Women28
0
2
4
6
8
2009 2010 2011
Injury frequency rate