Refresco Holding. Frans Barel Chief Executive Officer, Refresco

Transcription

1 Refresco Holding Frans Barel Chief Executive Officer, Refresco 1

2 Global market drivers Attractive market dynamics Trends in consumer behaviour benefit Juices Amalgamation of traditional soft drinks segments Attractiveness of the Private Label segment Increased consolidation of retailers Increased consolidation of suppliers Evolution of packaging towards Aseptic PET 2

3 Current trends in consumer behaviour The soft drinks market is characterised by an increasing trend towards health, wellness, convenience and indulgence Health Convenience Indulgence Increase in health conscious consumers Carbonates have suffered from this shift Positive perception of organic drinks Increase in snacking / on the go lifestyle Manufacturers have capitalised on this trend by offering single serve and innovative packaging e.g. sports caps Shift to premium priced, added value products e.g. fruit juice smoothie, adult drink, functional drink Constant demand for innovation and diversification Taste for indulgent or luxury food 3

4 European Soft Drinks Market by Region Soft Drinks in Western Europe by Category (US$bn) 50 Soft Drinks in Eastern Europe by Category (US$bn) CSD Juices CSD Juices Source: Euromonitor, Booz Allen analysis 4

5 European Soft Drinks Market by Label Private Label is the clear winner across Europe CAGR Western Europe 3.5% 52.1bn 45.4bn Eastern Europe 7.6% 10.0bn Private Label 7.5bn Non Private Label Western Europe CAGR Eastern Europe CAGR Private Label 6.4% 28.0% Non Private Label 2.9% 7.3% Total 3.5% 7.0% c. 10% growth on average for European Private Label vs less than 4% for branded products Source: Euromonitor, Booz Allen analysis 5

6 Business Overview & Strategy 6

7 Historical Overview Company acquired Rationale Additional gross sales 1999 MBO of Menken Drinks and Refrescos de Sur Europa from Menken Holding 85m gross sales Krings Délifruits Key competitor in the Benelux market for Private Label Juices and still drinks Access to strong Aseptic PET capabilities and direct exposure to the French market 181m 41m 2003 Hardthof Refresco Holding Strengthened position in Germany and relationships with hard discounters Acquisition of Refresco by 3i 121m Sales as at Dec-03: 544m Interfruit VIP- Juicemaker Reinforced position in Iberia and in the hard discounter channel Footprint in Scandinavia and platform for the Baltic States and Russia 16m 41m Combination of strong organic growth and acquisitions to reach 500m of net sales in

8 Refresco today An extremely well positioned portfolio of diversified channels and geographies Refresco key facts 2005 gross sales: 606 million, 2005 EBITDA: 64.1 million (12.8% margin on net sales) Volume: 1.8 billion litres (2.2 billion units) No. of employees: c.1,132 Focus on Juices (about 75% of sales) Majority of sales are Private Label (65% of sales) Serving major food retailers and food companies Strong positions in Germany, The Netherlands, France, Spain and Finland Carton is the largest packaging type (71% of sales), but Aseptic-PET share (12% of sales) is higher than the market and expected to Scandinavia North I & North II Central Iberia grow significantly 8

9 Business Overview Private Label products account for 70% of 2005 gross sales. In addition, Refresco undertakes Contract Manufacturing for a number of A-brand customers, such as Coca-Cola, PepsiCo and Unilever (21% of 2005 gross sales) and manufactures a number of products under its own or licensed brand names (9% of 2005 gross sales) Strong well-established inter-dependent relationships with some of the largest and most successful European retailers Refresco's largest customer is Lidl (29.5%) Europe's fastest growing retailer (17% p.a. CAGR ) but concentration has been actively managed (down from 32.8% 2003) with overall levels of concentration to top customers well below its peers (see over). In the case of Lidl, exposure is also more evenly spread across different geographic markets Gross Sales by Purpose Split, 2005 Source: Fancy Labels/ Licensed Labels 21% Contract manufacturing 9% Refresco, Booz Allen analysis Private Label 70% Gross Sales by Customer Split, 2005 Other 34% Coca Cola 2% SuperUnie 4% Laurus 3% Brookland 2% TSN/Schuitema 3% Dia 4% Lidl 29% ReWe 7% Metro 4% Tengelmann /Plus 3% Ahold/Deli XL 4% Carrefour/GB 2% 9

10 Key success factors Ability to serve key retailers in Europe with innovative packaging technologies and product introductions Quality & security of supply Qualifiers Scale/cost leadership Innovation capabilities Differentiators (International) scope Customers & relationships Flexible organisation 10

11 Strategy No.1 player in European Private Label soft drinks market by 2007 and global expansion thereafter Key success factors Cost leadership Speed of innovation High quality of products Efficiency and certainty of delivery Strategy Follow and support customers in their geographic expansion Organic growth Buy and Build strategy Cherry-pick selected acquisitions in key geographies and product segments Group structure Group of companies with regional strength Synergies and economies of scale Transfer of know-how Consistency in client offering Significant pipeline of further acquisition opportunities Current acquisition opportunities LOI signed with a leading Private Label player in Eastern Europe Advanced negotiations with a key competitor in Germany 11

12 The Buy and Build strategy Building presence in targeted geographies e.g. Interfruit adding capacity in Spain, effectively a start up/ Shell acquisition transformed into a sophisticated state-of-the-art production facility Transportation of Refresco's formula Acquisitions Reinforcing the strengths of the Group through targeted acquisitions: e.g. Délifruits Aseptic PET e.g. Hardthof cost efficiency and Lidl relationship Organic growth Organic investment undertaken when external move assessed to be inappropriate, e.g. Délifruits organic expansion since

13 Historical Performance: P&L, m 2002 (Actual) 2003 (Actual) 2004 (Actual) 2005 (Actual) CAGR Net Sales % Growth (%) 19.6% 2.2% 7.5% % of gross sales Gross Profit % % Net Sales 31.3% 33.0% 37.5% 34.8% EBIT % % Net Sales 5.5% 6.0% 8.1% 7.0% Depreciation % EBITDA % % Net Sales 10.4% 10.9% 13.4% 12.7% Normalisation adjustments (4.7) 0.2 Pro forma adjustments Normalised EBITDA % % Net Sales 12.1% 13.3% 13.0% 12.7% Capex % % Net Sales 5.7% 6.4% 8.5% 3.7% Net Sales have grown from 379.6m in 2002 to 499m in 2005, representing a CAGR of 9.5% Growth has been through organic expansion and acquisitions Key drivers of net sales growth over the period have been increasing volumes to Lidl across the Group acquisitions of Hardthof and Interfruit and the successful expansion of Aseptic market and Refresco in Scandinavia EBITDA has grown at CAGR 17.2% during the period Source: Refresco Management, KPMG due diligence reports 13

14 Summary Key Investment Considerations Market position No.2 manufacturer of private label soft drinks in Europe with 13% market share Strong positioning with key leading European service retailers and hard discounters through a local production network Track record and flexibility in meeting demand and delivering high quality innovative products (e.g. Aseptic PET) High barriers to entry driven by geographic coverage and scalability Strong fundamentals Strong track record in delivering top line sales and EBITDA growth (9.6% and 17.7%, 3 year CAGR respectively) Strong supplier relationships with proven trading skills Low operational gearing and flexible cost base through well invested facilities EBIT margins (7.2% in 2005) ahead of comparable companies (Granini c.5.2%, Gerber Emig c.4.8%) Industry where scale is the absolute driver of profitability Strong conservative business plan with EBITDA CAGR 3.5% vs CAGR 13.6%, based on organic growth and no synergies Growth opportunities A number of attractive possible acquisition targets in different geographic markets Fragmented market dynamics considered suitable for buy and build strategy Build on existing well developed platform Positive private label and hard discount segment forecasts Strong Management team Strong management team who have consistently delivered on a proven strategy Significant personal financial commitment with 20 top managers holding shares in the company Experience of working under a leveraged buyout structure since 1999 Strong local and middle management with established client relationships 14