FINANCIAL ANALYSTS PRESENTATION ANNUAL RESULTS 2009

Transcription

1 FINANCIAL ANALYSTS PRESENTATION ANNUAL RESULTS 2009

2 GROUP MANAGEMENT Group Management Chairman and CEO Ernst Tanner Duty-Free, Country Responsibility Hansjürg Klingler Marketing, Sales, Country Responsibility Uwe Sommer Finance, Administration, Procurement, Operations Dr Dieter Weisskopf 2

3 MEDIA CONFERENCE CONTENTS 1 RESULTS HIGHLIGHTS BUSINESS REVIEW _ Business Environment _ Key Figures _ Sales Analysis _ Market Review _ Sustainability 3 FINANCIALS _ Operating Performance 4 OUTLOOK _ External Environment _ Full Year Guidance 2010 & Growth Expectation

4 HIGHLIGHTS

5 2009 RESULTS HIGHLIGHTS I SOLID BUSINESS MODEL PROVEN IN ECONOMIC DOWNTURN ORGANIC SALES GROWTH _ First full year sales reporting made according to new definition _ 2.3 % organic growth for full year & share gains in most markets despite weak consumer sentiment _ Increasing sales growth during the year: From +0.2 % in 1 st to 3.6 % in 2 nd half 09 _ Sales Growth in all markets, except Export/Duty Free, Spain and Italy _ LINDT & GHIRARDELLI continue to be the fastest growing brands in the USA PROFITABILITY _ Profitability impacted by FX & material price increase _ Priority on market share gains & marketing investments (i.e. advertising) with positive impact on sales development _ Personnel cost margin increasing vs. exceptionally low 2008 and conscious retention of specialized staff _ Non-recurring restructuring charges/impairments of approx. CHF 40 mio. 5

6 2009 RESULTS HIGHLIGHTS II RESTRUCTURING/IMPAIRMENTS _ Successful re-structuring of US store chain reduction to ca. 30 stores by June 2010 _ Write-off of obsolete Italian warehouse to market level _ Additional write-offs of fixed assets & IT investments CAPEX _ Successful start-up of cocoa liquor and chocolate tablet lines in USA CASH & DIVIDENDS _ Record high operating cash generation of CHF 470 mio. _ Net liquidity of CHF 360 mio. at year end _ Proposed dividend of CHF / reg. share increase of CHF 40.- or +11 % vs. p.y. 6

7 BUSINESS REVIEW BUSINESS ENVIRONMENT 7

8 BUSINESS ENVIRONMENT 2009 CHALLENGING ENVIRONMENT _ Global economic and financial crisis _ Volatility in FX, raw material & equity markets _ Volume of chocolate market declined for the 1st time in more than 10 years _ Rising unemployment and progressive worsening of consumer confidence _ Price sensitivity among consumers enhances discount/private labels (short term) _ Distributors exposed to low or no liquidity _ Only very strongly positioned branded products as LINDT were less impacted, esp. for seasonal and gifting business _ High quality and trusted brands still appreciated by consumers 8

9 BUSINESS ENVIRONMENT : TRANSITIONAL YEAR FOR L&S _ L&S confronted with challenging economic background, streamlining organization _ Operations: Appropriate measures taken to safeguard long-term sales and profit growth _ Structural reorganization of LINDT retail network in USA _ Major investments in our USA facilities to satisfy growing demand from the wholesale _ Logistic synergies in Italy by merging the warehouses of both subsidiaries _ Other steps to optimize efficiency and costs _ Focus on gaining market shares and securing competitiveness rather than profit maximization _ Focus on keeping a high innovation path with substantial product news _ Marketing: Further increase of advertizing and other brand building investments _ Appointment of Roger Federer as global brand Ambassador 9

10 BUSINESS REVIEW KEY FIGURES 10

11 KEY FIGURES SOLID SET OF RESULTS WITH RECORD HIGH CASH GENERATION CHF mio. Net Net Trade Sales EBITDA EBIT NET INCOME OPER. CASH FLOW NET LIQUIDITY Organic growth 2.3 % Margin: 15.1% / Excl. non-recurring 16.3% Margin: 10.5% / Excl. non-recurring 12.1% Improved Financials / Slightly higher tax rate Improvement Working Capital Excellent Base for future growth and returns to shareholders 11

12 NON-RECURRING ITEMS 2009 RESULTS 2009 IMPACTED BY EXTRAORDINARY ITEMS Item CHF mio. P&L Line Impairment Warehouse Italy 11.5 Store Closures 16.0 Extraordinary Impairments 9.0 Others 3.5 Depreciation Diverse Depreciation Diverse TOTAL % 12

13 KEY FIGURES ROCK SOLID BALANCE SHEET & RECORD NET CASH POSITION Equity CHF mio. Equity B/S ratio in % Net Cash Y/E CHF mio. 1'600 1'500 1'400 1'479 1' % 64.0% 62.0% 60.0% 61.4% 65.3% ' % 200 1' % 54.0% ' % 50 1' %

14 KEY FIGURES Lindt & Sprüngli SHARE PRICE vs. SMI ' '000 26'000 24'000 22'000 20' ' Jan 09 Feb 09 Mar 09 Apr 09 May 09 June 09 July 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 LINDT REG. (blue scale) SMI (grey scale) 14

15 KEY FIGURES SHARE KEY FIGURES Dividend Reg. S. (CHF) * Increase (CHF) * Dividend Yield Reg. S. 1.4% 1% 0.9% 0.8% 1.6% 1.6% Pay-Out Ratio 16.9% 28.7% 29.2% 29.5% 31.2% 47.3% Reg. Share (CHF) * PROPOSED BY BOARD OF DIRECTORS 15

16 BUSINESS REVIEW SALES ANALYSIS 16

17 SALES ANALYSIS ORGANIC GROWTH 5 YEARS 3'000 Absolute in CHF mio. Increase vs. previous year in local currencies & net of acquisition effects '500 2'000 2'009 2'312 2'606 2'573 2'525 1'500 1' % 13.4% 10.7% 4.9% 2.3%

18 SALES ANALYSIS - DRIVERS MODERATE PRICE INCREASES & STABLE VOLUME 3.00% 2.00% -0,2% 2.5% 2.3% 1.00% - 4.2% 0.00% -1.00% Price Volume/Mix Organic Forex -1.9% Reported in CHF -1.9 % -2.00% 18

19 SALES ANALYSIS DEVELOPMENT BY HALF YEAR INCREASED SALES DYNAMICS IN 2nd HALF % 3.00% 3.60% 2.00% 2.30% 1.00% 0.00% 0.20% 1st Half 2nd Half Full Year 19

20 SALES ANALYSIS - MARKETS WEIGHT OF NORTH-AMERICAN MARKET MOVING TO 30% Total NNTS: CHF mio. 9.8% 9.0% 12.0% 4.6% 6.2% 13.0% 26.8% 18.6% North America Germany France Italy Rest of the World Rest of Europe Switzerland UK 20

21 SALES ANALYSIS MARKETS POSITIVE GROWTH EXCEPTIONS: HARD HIT ECONOMIES 25.0% 25% 102% 20.0% 15.0% 10.0% 5.0% 0.0% 14.5% 15.0% 7.9% 8.2% 4.4% 1.9% 3.8% 0.1% 0.1% -5.0% -10.0% -7.8% -8.9% -4.4% E CH IT CH D AUT F U.K. US CAN AUS POL SW CZ Exp. Dom. 21

22 BUSINESS REVIEW MARKET REVIEW 22

23 MARKET REVIEW L&S SWITZERLAND (incl. Export) STABLE DOMESTIC MARKET KEY FACTS 350 CHF mio. _ L&S with market share gains in a declining overall Swiss chocolate market _ Difficult situation in export & duty-free segment _ Nervous trade; Entry of another harddiscounter; Advance of private labels _ Launch of Petits Carrés Inspiration _ Extension of Petits Desserts line with a Mousse au Chocolat Blanc tablet _ Positive development of seasonal business (LINDOR, GOLD BUNNY) _ Expansion in convenience market _ Voted most trusted brand by Reader s Digest in Switzerland

24 MARKET REVIEW L&S SWITZERLAND HIGHLY TRUSTED BRAND LINDT IS THE MOST TRUSTED CHOCOLATE BRAND IN SWITZERLAND Once a year, Reader s Digest accomplishes a consumer study in 16 European countries. LINDT chocolate was voted most trusted chocolate brand Source: Reader s Digest HOLD and EXTEND MOMENTUM The official seal was therefore implemented on various LINDT tablets. 24

25 MARKET REVIEW L&S GERMANY HOLDS RESULT OF PY IN DIFFICULT MARKET KEY FACTS _ Chocolate market was flat despite price increases and aggressive promotions _ Decline in dark chocolate segment for 2nd year in a row _ Line extensions of EXCELLENCE line and promising launch of LES GRANDES tablets _ LINDOR: 60-year-anniversary, increased advertising, double-digit growth _ Positive development of seasonal business, especially with the GOLD BUNNY _ Launch of Pralinés Finesse with new TVadvertising campaign EUR mio

26 MARKET REVIEW L&S FRANCE FASTEST GROWING PREMIUM CHOCOLATE MANUFACTURER IN FRANCE KEY FACTS _ Intensified price competition due to change in regulation _ Excellent market share in tablet segment thanks to introduction of innovations such as EXCELLENCE 90%, Sea Salt, Fin Coeur, Petits Desserts-Mousse au Chocolat Blanc and Maxi Plaisirs _ Continuous progress with our improved Christmas praliné range _ Seasonal: Strengthened position of LINDOR and GOLD BUNNY EUR mio

27 MARKET REVIEW L&S ITALY CHALLENGING SPECIALTY CHANNELS KEY FACTS LINDT _ Good progress in modern trade channels _ Most dynamic company on Italian chocolate market _ Best-selling product: LINDOR _ Promising launch of EXCELLENCE 90% and LES GRANDES _ Most successful brand in the tablet segment EUR mio CAFFAREL _ Ongoing shift from traditional to modern trade _ Managed to maintain its leadership in the traditional channel _ NOCCIOLOTTO and GIANDUIOTTO leading products in traditional channels 27

28 MARKET REVIEW L&S U.K. CONSOLIDATION OF MARKET POSITION GBP mio. KEY FACTS _ Consistent focus on key brands EXCELLENCE and LINDOR with introduction of EXCELLENCE 90% & Sea Salt and LINDOR White _ EXCELLENCE fastest growing brand _ Successful launch of Mousse au Chocolat _ Seasonal business: Further growth with the GOLD BUNNY

29 MARKET REVIEW NORTH AMERICA SALES DOUBLED WITHIN 5 YEARS KEY FACTS LINDT & GHIRARDELLI once again fastest growing brands in USA LINDT USA _ LINDT gained substantial market shares _ Leader in the Premium chocolate segment _ LINDOR balls universally popular GHIRARDELLI USA _ SQUARES signature product _ Dynamic development of tablet ranges LINDT Canada _ Continued substantial growth above market _ Leadership in most important categories USD mio

30 MARKET REVIEW L&S AUSTRALIA ONGOING GROWTH AT HIGH LEVEL KEY FACTS _ Growth in all segments, incl. seasonal _ LINDOR remains most important brand _ EXCELLENCE 70% proved to be a sales hit _ Chocolat Café concept increasingly popular, opening of 2 new stores in Melbourne _ Roger Federer participated at store opening in Melbourne AUD mio

31 BUSINESS REVIEW SUSTAINABILITY 31

32 SUSTAINABILITY INHERENT PART OF THE LINDT PREMIUM BRAND HIGH COMMITMENT IN EVERY ASPECT OF CORPORATE ACTION _ Ethics _ Social responsibility _ Careful dealing with the environment CLEARLY FORMULATED COPRPORATE POLICIES _ Corporate CREDO _ Health & Safety Policy _ Business Code of Conduct & Supplier Code of Conduct _ Environmental Policy _ Regular employee surveys COMPLETE CONTROL OF THE SUPPLY CHAIN FROM BEAN TO PREMIUM CHOCOLATE _ Traceable sourcing _ Proprietary production process _ Stringent quality control TRANSPARENT COMMUNICATION ON CSR ACTIVITIES _ Launch of new CSR website in

33 SUSTAINABILITY COCOA BEAN SOURCING EXAMPLE: LINDT COCOA BEAN SOURCING PROJECT GHANA _ All Consumer beans sourced exclusively from Ghana _ Ghana offering best quality of West African origins & stable political-/social environment _ Lindt able in Ghana to trace origin of each bag of beans back to farmer village _ Traceability allowing to control social environment of farmers and quality of beans _ Lindt supporting infrastructure projects in villages supplying us with cocoa beans via a premium paid for each bag which goes into a Ghanese foundation _ Total contribution paid in 2009 >USD 1 mio. _ Additional support of farmer education projects (STCP: Sustainable Tree Crops Program) _ Flavor Cocoa beans sourced from Latin American origins & Madagascar. 33

34 FINANCIALS OPERATING PERFORMANCE 34

35 MATERIAL COSTS MATERIAL COSTS +/- INVENTORY CHANGE: ANOTHER INCREASE OF COST MARGIN 1'000 Absolute in CHF mio. In % of NNTS % 33.0% 33.2% 35.8% 36.2%

36 HEADCOUNT & NNTS PER EMPLOYEE REDUCTION OF STAFF IN OPERATIONS (SHOP CLOSURES USA) Average number of employees NNTS per employee in CHF (`000) 8'000 7'793 7'712 7'000 6'000 6'652 7'044 7'409 5'000 4'000 3'

37 NNTS/EMPLOYEE & PERSONNEL EXPENDITURE INCREASE OF COST MARGIN FOLLOWING EXTRAORDINARY LOW LEVELS Personnel exp. in CHF mio. Personnel exp. in % NNTS % 23.6% 22.9% 21.2% 22.6%

38 OPERATING EXPENSES ADDITIONAL INCREASE IN ADVERTISING EXPENSES Absolute in CHF mio. In % of NNTS % 27.3% 27.4% 25.6% 26.6%

39 EBITDA MARGIN REMAINING AT GOOD LEVELS IN CHALLENGING YEAR 500 Absolute in CHF mio. In % of NNTS % 16.5% 17.1% 17.9% 15.1%

40 DEPRECIATION IMPAIRMENTS CHF 21 mio. whereof CHF 20.5 mio. NON-RECURRING Absolute in CHF mio. In % of NNTS % 3.6% 3.6% 3.9% 4.6%

41 OPERATING PROFIT (EBIT) EBIT DEVELOPMENT 5 YEARS Absolute in CHF mio. In % of NNTS % 12.9% 13.5% 14.0% 10.5%

42 EBIT GROWTH ANALYSIS - DRIVERS EBIT DECREASE EXPLAINED BY: MATERIALS, ADVERTISING INCR., PERSONNEL COSTS & NON-RECURRING Pricing Volume Materials Operating Marketing Exp. Personnel -33 Others & Nonrecurring -40 Currency -13 EBIT

43 NET INCOME NET INCOME AT CHF 193 mio. IN MOST CHALLENGING YEAR Absolute in CHF mio. In % of NNTS % 9.0% 9.6% 10.2% 7.6%

44 OPERATING CASH FLOW & CAPEX HIGHEST EVER OPERATING CASH FLOW LOWER CAPEX Operating Cash Fow in CHF mio. CAPEX in CHF mio

45 QUALITY & EFFICIENCY HIGHLIGHTS PRODUCTION _ Successful implementation & start-up of tablet line as well as cocoa liquor manufacturing at L&S USA in Stratham, NH SUPPLY CHAIN & LOGISTICS _ Successful auction of logistic services for European road transport & global sea freight _ Ongoing improvements in supply chain management / planning PROCUREMENT _ Implementation of supplier Code of Conduct SYSTEMS & IT _ Start-up of central group-wide consumer contact system (CRM) _ Further build-out of European SAP hub in Kilchberg 45

46 FINANCIALS INTEREST / FX TAXES & NET CASH 46

47 NET FINANCIAL EXPENSES POSITIVE EFFECTS OF PORTFOLIO / FX & HIGHER CASH POSITION Absolute in CHF mio

48 CORPORATE TAX RATE TAX RATE TO STABILIZE AROUND 26 % Tax Rate in % 35% 33% 30% 35.8% 33.8% 32.6% 31.4% 28% 29.8% 29.7% 29.0% 28.0% 25% 23% 25.4% 26.6% 20%

49 DELIVERING STRONG EARNINGS EARNINGS PER SHARE EPS CHF EPS GROWTH Y-O-Y 1'200 1'000 1'091 1' % 20.3% 11.1% 20.0% 20.9% 12.9% 20.0% 18.3% 4.5% -26.5%

50 NET CASH POSITION - DEVELOPMENT NET CASH POSITION ENSURES FREEDOM AND FLEXIBILITY Net cash & net cash movement in CHF Mio Operating Cash Flow Capital Incr. Purch. Own Shares CAPEX Dividend Paym

51 FINANCIALS RAW MATERIALS & PACKAGING 51

52 COCOA CROP / GRINDING BALANCE COCOA BEANS 000 T Source: ICCO (06-09) 3'900 3'300 2'700 2'100 1'500 3'661 3' % 5.5% 16.2% 3'694 3' % 3'480 3'508 3'551 3' % / /08 08/09 09/10 Crop Grindings Surpl./Deficit 29 52

53 COCOA PRODUCT PRICES COCOA LONDON TERMINAL BUTTER RATIO GBP/TON RATIO MULT ' ' ' '700 1' ' ' Fe b. 0 7 Jun. 0 7 O kt. 0 7 Fe b. 0 8 Jun. 0 8 O kt. 0 8 Fe b. 0 9 Jun. 0 9 Okt. 0 9 Fe b F e b. 0 7 Ju n. 0 7 O kt. 0 7 F e b. 0 8 Ju n. 0 8 O kt. 0 8 F e b. 0 9 Ju n. 0 9 O kt. 0 9 F e b

54 NUTS PRICES HAZELNUTS TURKEY ALMONDS USD/TON CHF/TON 8'500 8'500 8'000 8'200 7'500 7'900 7'000 7'600 6'500 7'300 6'000 7'000 5'500 6'700 5'000 6'400 4'500 6'100 4'000 5'800 3'500 Apr. 0 7 Aug. 0 7 De z. 0 7 Apr. 0 8 Aug. 0 8 De z. 0 8 Apr. 0 9 Aug. 0 9 De z '500 A p r. 0 7 A u g. 0 7 D e z. 0 7 A p r. 0 8 A u g. 0 8 D e z. 0 8 A p r. 0 9 A u g. 0 9 D e z

55 MILK PRICES EU MILK PRICES SMP EUROPE / SWITZERLAND 4'500 EUR/TON SMP SWITZERLAND SMP EUROPE 4'000 3'500 3'000 2'500 2'000 1' Jan-08 Feb-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Dec-09

56 SUGAR PRICES USD/Ton EU / CH WORLD USA 1'200 1'100 1' Feb. 07 Apr. 07 Jun. 07 Aug. 07 Okt. 07 Dez. 07 Feb. 08 Apr. 08 Jun. 08 Aug. 08 Okt. 08 Dez. 08 Feb. 09 Apr. 09 Jun. 09 Aug. 09 Okt. 09 Dez

57 MATERIAL COSTS TRENDS COCOA PRODUCTS -Terminal Market short term correction ongoing - Differentials stable - Butter Ratio correction after weakness OTHER RAW MATERIALS - Milk stable - Sugar volatile / EU / Brazil - Hazelnuts stable at high levels - Almonds correction after weakening PACKAGING - Paper & Cardboard stable - Metals & Flexibles stable 57

58 OUTLOOK

59 OUTLOOK - EXTERNAL ENVIRONMENT CHANGE IN TRADE AND INDUSTRY LANDSCAPE AS A CHANCE ECONOMY / CONSUMERS / RETAIL LINDT S ANSWER _Slow recovery of global economy _Rising unemployment to be expected _Still high volatility in raws and FX _Progressive improvement of trade attitude _Slow recovery of consumer sentiment _Price sensitivity remains _Private labels & aggressive promotions _Focus on strengthening position of the LINDT brand & gaining market shares by: _Innovation and brand management _Marketing activities and advertizing _Development of new growth markets _Take advantage of LINDT s unique worldwide market position in the global premium chocolate segment 59

60 OVERALL CHOCOLATE MARKET TOP 20 CHOCOLATE MARKETS 2009 REPRESENT 80% OF TOTAL WORLD MARKET (100 bn CHF) CHF bn / Consumer Value LINDT with own Organization US A UK GE RM AN Y Source: Euromonitor RU SS IA FRA NCE BR AZIL JA PA N ITALY CA NA DA P OLAN D AU STR ALIA UK RA IN E AR GE NTINA S PA IN TUR KE Y CH IN A S W ITZE R L M E XICO NE THE RL S W E DE N 60

61 PREMIUM CHOCOLATE MARKET In Europe*, growth of premium chocolate market is outpacing growth of overall chocolate market in value terms Overall European* chocolate consumer value (US$m) Standard Premium % which is premium Market value (US$m) 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10, % 19.9% CAGR 4.7% CAGR 6.1% CAGR 1.6% CAGR 1.7% 25.5% % 20.0% 15.0% 10.0% 5.0% 5,000 - *Europe = 29 countries in Western and Eastern Europe % Source: Datamonitor 61

62 PREMIUM CHOCOLATE: SHARE IN 6 EUROPEAN COUNTRIES SHARE OF 6 EUROPEAN COUNTRIES IN % (2007) Share in Chocolate 40.0% 20.0% 26% 19% 24% 26% 23% 23% 0.0% Switzerland UK Germany France Share of US premium segment: < 10% Spain Italy huge growth potential Source: Datamonitor 62

63 RANKING OF TOP 7 CHOCOLATE MANUFACTURERS Source: Euromonitor and own estimates Mars Inc. 1 2 Nestlé SA 2 3 Kraft Foods Inc. 3 1 (after merger with Cadbury) Ferrero Group 4 4 Cadbury Plc Hershey Co. 6 5 Lindt & Sprüngli 7 6 LINDT is No. 1 in Premium Chocolate Segment 63

64 PREMIUM CHOCOLATE MARKET LINDT: CLEAR No. 1 COMPANY IN WORLDWIDE PREMIUM CHOCOLATE MARKET AND COMPETES BASICALLY WITH LOCAL BRANDS ONLY Anthon Berg Cailler Côte d`or Feodora Godiva Guylian Jeff de Bruges Leonidas Neuhaus Niederegger Reber Richart Thorntons Valrhona Examples of an arbitrary classification of premium brands by Datamonitor 64

65 OUTLOOK 2010 FINANCIAL GUIDANCE FOCUS IS TO INVEST FOR FUTURE GROWTH MARKET FOCUS 2010 _ Limited price increases only _ Priority on market share gains _ Participate in strategic promotional activities to grow volume _ Continue investments behind new subsidiaries (i.e. Czech Rep./Sweden) _ Re-gain momentum in export business / Italian and Spanish market _ Opening of L&S Japan / LINDT Chocolat Café operation _ Excellence in planning and execution CONTINUATION OF MARKET INVESTMENTS IN 2010 _ Marketing spending: Further increase of market spending in all markets _ New geographies: Explore expansion potential of Russia, Japan, China, Scandinavia _ High growth potential in USA, Canada, UK, Australia _ Mature markets: Preserve premium brand positioning and build market shares 65

66 FINANCIAL GUIDANCE 2010 & GROWTH EXPECTATIONS 2011 RE-GAIN TOP LINE GROWTH MOMENTUM EBIT CURBED BY COCOA PRICE INCREASE Topics Organic Growth EBIT CAPEX Full Year Guidance 5 7 % CHF mio. CHF mio. Continued high cash generation 2011: Top line growth back to mid/long-term rate of 6 8 % 66

67 QUESTIONS & ANSWERS 67

68 FINANCIAL ANALYSTS PRESENTATION ANNUAL RESULTS 2009