Company Overview. February 2014

Transcription

1 Company Overview February 2014

2 DISCLAIMER This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking statements, as defined in the Securities Law , 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 forwardlooking statements appearing in this presentation, and is not required to publish any additional presentations for its shareholders in future. It is to be emphasized that the financial estimations included in this presentation are based on figures which were not audited or reviewed by an auditor and therefore the actual results may differ from these financial estimations.

3 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.

4 Frutarom - A Leading Fast Growing Global Flavor and Fine Ingredient House Global company Broad product portfolio Financial success since 2000 Public company Sales in 145 countries 15,500 customers A Top 10 flavor house 31,000 products 4,000 raw materials Innovative pipeline 9.6x growth in sales (CAGR 19.1%)** 11.1x growth in EBITDA*** 13x growth in net profit*** Listed on London & TLV Stock Exchanges From $13M to approx. $1.2B market cap Renenue, $M * * based on Dec 2013 including the acquisitions made in 2013 as if consolidated from 1 January 2013 * ** (based on Dec 2013 including the acquisitions made in 2013 as if consolidated from 1 January 2013) ***

5 Frutarom - A Global Company Accelerated growth through organic and strategic acquisitions Etol JannDeRee 1996 Tel Aviv stock exchange HK F&F Tohar Ukraine Russia Turkey Kazakhstan Rayner Hong Kong Mexico Canada Flachsmann France IFF FS London stock exchange Poland AM Todd Acatris Nesse Rad Gewurzmuller Abaco Adumim S. Africa CH Hansen DE FSI Corona Oxford Czech Rep. Costa Rica FSI OH Aromco CH Hansen IT Mylner Savoury Flavours PTI Aroma Hagelin Flavour Key Brazil CPL Aroma Raychan EAFI Baltimore Meer India Jupiter Rieber Botanicare Kunshan Belmay Sales office Acquisition 5

6 Frutarom - A Global Company We provide our customers with global and local support Corona, CA Cincinnati, OH New Jersey Georgia Norway Denmark Netherlands UK North Germany UK South Belgium France Switzerland Italy Saint Petersburg Belarus Moscow Ukraine Novosibirsk Poland Perm Slovakia Saratov Serbia Moldova Kazakhstan Slovenia Turkey China Israel Mexico Guatemala Costa Rica India Indonesia Hong Kong Singapore Brazil Production 34 Sites R&D 41 Labs Sales & Marketing 79 Offices South Africa

7 Frutarom - A Profitable Growth Story (Sales, EBITDA, Net Profit, USD M) Tel Aviv stock exchange Baltimore Botanicare HK F&F Tohar Flavour key Meer Kunshan 81 Ukraine Russia Rayner Turkey Kazakhstan Net Profit Brazil India X13 Hong Kong CPL Aroma Mexico Canada Flachsmann France IFF FS 32 London stock exchange Poland AM Todd Acatris EBITDA Profit X Nesse Rad Gewurzmulle r Abaco Adumim Raychan Jupiter Balmey S. Africa CH Hansen DE FSI Corona 80 Oxford 618 Sales Czech Rep. X9.6 Costa Rica FSI OH Aromco CH Hansen IT EAFI Rieber Etol Mylner Savoury Flavours 784* JannDeRee PTI AROMA Heglin Proforma * Dec 2013 including the acquisitions made in FY13 as if consolidated from 1 January

8 A Top-Ten Flavor House Estimated Flavor Sales US$ M 500+ smaller companies * Source: Companies Publications, Leffingwell & Associates, Reuters, Frutarom s estimations * Sep 2013 including the acquisitions made in 2013 as if consolidated from 1 January

9 From Vision to Reality Strategic Milestones Accomplished Accelerating Growth In Emerging Markets. Fastest growing markets Expanding Market Share In The US. World s biggest flavor market Focus on: - Mid Sized Local & Private Label - MNCs with niche-addedvalue solutions Innovation. Novel, natural, higher added value health & taste solutions Unique, diversified products portfolio. Improved mix towards more profitable segments Supply Chain Optimization. Supported also by acquisitions Accelerated Profitable Growth Sales Grew From $10M at 1990 to $784M at 2013* EBITDA Grew From $1M at 1990 to Over $100M at 2012 Solid Cash Flow * Dec 2013 including the acquisitions made in 2013 as if consolidated from 1 January

10 Accelerated Growth and Market Share in Emerging Markets Asia Expanded R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam, Sri Lanka Setting up flavor operation in India Building a state-of-the-art plant in China with both savory and sweet flavors capabilities Evaluating strategic acquisition opportunities Central & South America Acquired Mylner in Brazil and Aroma in Guatemala Set up an independent operation in Costa Rica and Mexico Evaluating strategic acquisition opportunities Central and Eastern Europe Acquired Etol in Slovenia and PTI in Russia One of the only global players with major production sites in Russia Market leadership in Central and East Europe Cross selling and optimization opportunities Africa Fast growing operation in South Africa, reinforced by JannDeRee Acquisition Enhance R&D and sales force in fast growing markets (Kenya, Nigeria and others) Building State of the Art manufacturing facility 10

11 Expanding Flavors Market Share in the US USA Focus on the US as a key strategic market Strengthening US presence through 2 strategic acquisitions Flavor Specialties in the West Coast in 2009 Flavor Solutions in Cincinnati in 2011 Fast, above market rate, internal growth Additional meaningful foothold through the acquisition of Hagelin in 2013 Lucrative beverage market Diversified customer base Technological know how

12 Growing Share of Emerging Markets and the USA Sales by Geography Growth Rate (10%) (11%) 68 (11%) (13%) 41 (9%) 229 (51%) 66 (11%) 262 (42%) 266 (34%) 100% growth in USA** 31% growth in the BRIC countries* 196% growth in the emerging markets*** 361 (46%) 222 (36%) 122 (27%) ** Proforma Emerging Markets Western Europe USA ROW **2013 including the acquisitions made in 2013 as if consolidated on 1 January 2013 vs ***2013 including the acquisitions made in 2013 as if consolidated on 1 January 2013 vs Including China & South East Asia, Central & South America, Central & Eastern Europe and Africa 12

13 Frutarom s Strategy Above-Industry Organic Growth Margin Expansion Proven Acquisition Track Record Continue successful strategy of combining rapid profitable organic growth with strategic acquisitions Reaching revenues of $1 billion Achieving 20% EBITDA in our core business, given the current product mix 13

14 Growing the Core Business Taste Solutions ~72% of sales 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 Value-added functional savory solutions for the food industry (snacks, meat, fish, organic, and culinary segments) Comprehensive sweet and savory food systems Unique technologies for fruit, spice, vegetable, meat and fish preparations Fine Ingredients ~19% of sales Specialty botanical extracts, distillates, essential oils and aroma chemicals 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 Trade & Marketing, ~9% of sales Strengthening Frutarom s partnership and offering to customers 14

15 Flavors - Most Profitable Activity Growing Fast Revenues Growth was driven by (US$ M) 73% 33% (US$ M) % of Flavor sales Operating Profit ** Proforma Above average market growth rates USA, Latin America, Asia, Central and eastern Europe, Africa North America flavor sales grew by X4 times since 2010** % 13.6% 12.7% 12.7% 14.7% Sep 2013 LTM* * based on Frutarom s LTM to Sep 13 as reported in its financial statements ** based on Dec 2013 including the acquisitions made in 2013 as if consolidated from 1 January

16 Fine Ingredients Improved profitability (% Operating Profit) Operating Profit 13.0% 8.8% 8.1% 7.4% YTD Sep 2013 Improvement was driven by Improved product mix Focus on Natural high added value fine ingredients New innovative products successfully launched 14.7% 16

17 Flavors Fine Ingredients We share the Passion for Taste & Health We develop tailored solutions combining excellent taste with health and functionality all under one roof 17

18 Growing Mid-Sized Food & Beverage Market Over 65% of Market Controlled by Mid-Sized and Local Companies Fragmented market The global food market (% of Market Share) Large (>US$ 10B), 15% New mid-sized/local companies emerging Private label Developing markets 2012 Total Market Size $4,600bn US$3-10B 10% US$1-3B 7% Service expectations Small & Local (< US$1B) 68% *Source: Feb, 2012 Datamonitor, Euromonitor and Frutarom s estimations 18

19 F&F Market Fragmented But Consolidating Large F&F players with full service platform, focused on top multinational customers Large number of small niche companies with limited service capability and regional focus only Few mid-sized players with both regional strength and global platform Small & Local (< US$100M) +500 companies Mid Size (US$100-1B) 7 companies 17% 19% Market Share by size 2011 F&F Sales* (% of Market Share) 2012 Total Market Size $23bn Large (>US$ 1B), 6 Companies 64% 65% *Source: Leffingwell & Associates, company s estimations 19

20 Private Label Mid-Sized and Local Private labels expected to hold 50% of the global food market by % of consumers report buying more private label products compared to the year before Private label products held 20.4% of the food sector worldwide, with European market penetration highest in the sector 2 achieving 7.4% global growth 88% of consumers intend to continue purchasing private label products, even after the economy improves 3 (1) Source: from The Nielsen Company, PLMA s 2010 Private Label Yearbook,; (2) Source: The Nielsen Company, August 2009; (3) Source: DataMonitor, January 2011; (4) Source: Rabobank, February

21 Private Label Mid-Sized and Local 50% by 2025 Source: ACNielsen, industry insights, 2008, Private Label: Who will win the battle of the shelf? Branded or private label products? Sep 2009, ACNielsen, The global 21 Staying Power of Private Label, Aug, 2010

22 Consumers Trends Health, Wellness & Functional Food 67% of consumers state they attempt to consume healthier food and beverages either "all" or "most" of the time, but unwilling to forgo taste even for health Growth drivers Aging population and Rising obesity Rising Consumer Awareness Opportunities Avoidance products ("Free-from /"zero ) or Moderation Products with "diet, "low, "less" Positive nutrition and functional foods Lifestyle & Income Shorter Life Cycle of new Launches Convenience and processed food Innovation Natural Healthy and Clean Natural products and clean label Source: DATAMONITOR 2011 REPORT, The NPD Group, 2011

23 Key Market Drivers Unique combinations Traveling created willingness to explore new tastes Natural and clean label Health/Wellness Reduced fat, calories and salt Cost Reduction Functional food Products with illness - preventative properties Speed Timeline to deliver results hypermarkets Convenience food Innovation Frutarom provides Novel and Natural Health & Taste solutions 23

24 Frutarom s Strategy: Clear Focus Going Forward Profitable Internal Growth Customer Focus Market Focus Product Portfolio Core Competencies Mid-sized and local Private label Multinational Developed markets (Europe and USA) Emerging markets (e.g. Asia, Central & South America, Central and Eastern Europe, Africa) Natural (extracts, fruit bases specialty essential oils) Natural functional food ingredients Comprehensive, integrated solutions Cost reduction solutions R&D and innovation internal and external Efficiencies, scale and synergies cross selling Experienced global management Sales-driven organization 24

25 Proven Acquisition Track Record 36 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

26 4 Acquisitions in 2013 in Emerging Markets and the US JannDeRee South Africa PTI Russia & CIS Aroma Guatemala Hagelin USA Strengthening market position in South Africa and Africa. Complementary Savory activity Strengthening Leadership in East Europe Savory Solutions leadership Strengthening market position in Central America. Strengthening market position in the US and EM Expertise in the lucrative beverage segment. Strong management, R&D, sales and operational force. Leverage operational efficiencies. Opportunities for additional rationalization plans and improved margins. Continued implementation of rapid profitable growth strategy 26

27 Optimizing Global Supply Chain R&D Sourcing & Purchasing Production Logistics Sales & Marketing Rationalizing Global R&D Resources - CPM Global Purchasing at countries of origin Production sites integrations Global Logistics integration Sales force integration Final stages of projects leading to the expected savings of USD 10M in H and 2014 Additional optimization projects under way New 4 acquisitions created further potential for optimization and margin and profit expansion

28 Profitable Growth Generates Solid Balance Sheet & Cash Flow from Operations (USD M) Cumulative Cash Flow Cash flow $ 332 M - Cumulative cash flow Since Balance Sheet Net debt ( ): USD M 85 Net debt ( ): USD ~190M Equity ( ) - USD M Sep

29 Positive Outlook for 2014 Profitable internal growth Focus on innovative natural healthy product mix Successful integration of the acquisitions Additional projects to improve efficiency and merge activities and operations Strengthening & leveraging global purchasing Strong acquisitions pipeline 29

30 Frutarom s Vision To Be The Preferred Partner For Tasty And Healthy Success 30