Company_Report_Bell_2013-02-20_E

Rat

ing

Buy (unchg.)

Bell Food & Beverages

20�02�13 Pri

ce T

arg

et

CHF 2,500 (CHF 2,150)

Turnaround in international business in FY13 and consolidation of Hilcona in FY15 will boost margin

FY12 EBITDA margin 80bp to 7.4% in part impacted by restructuring in Germany

Whereas sales were up +0.4% (organic +0.6%), the EBITDA margin contracted �80bp to

7.4%, impacted by restructuring costs of CHF 9 mn in Germany as well as a one�time

insurance payment in FY11. Excluding the extraordinary items, the margin would have

narrowed �30bp to 7.7%, mainly affected by higher raw material prices in the European

operations.

Higher margins again in FY13 but Swiss business to feel higher raw material prices

For FY13, we estimate an EBITDA margin of 8.0% as we believe the European business will

improve and restructuring costs will no longer be incurred. On the other hand, raw material

prices in Switzerland rose sharply in 4Q12, which will only be passed on in the charcuterie

business with a delay.

First step in turnaround in the loss making European business in FY13

We estimate that the European business generated a negative EBIT of CHF �18 mn (margin

�2.3%), impacted by restructuring costs of CHF 9 mn and increased raw material prices in

FY12. Price increases were partly passed on at the end of FY12 and we believe the merger of

the German operations (18% of group sales) will have a positive impact. We estimate a

margin of 0.3% in FY13. European competitors have an average EBIT margin of 4% and Bell

is targeting a similar margin level in Europe.

Hilcona will be fully consolidated in FY15 adding 20% to sales but also higher margin

Currently, Bell owns a 49% stake in the convenience food company Hilcona, which acquired

the leading Swiss fresh salad convenience food producer Gastro Star in FY12. Sales amounted

to CHF 500 mn in FY12 and we estimate that the company has an EBIT margin of 6%, clearly

above Bell's current margin (4.0%). The stake will only be equity�consolidated until FY14

and following another increase in the stake by 2%, it will be fully consolidated as of FY15.

Solid Swiss business with turnaround in Europe attractive valuation new PT CHF 2,500

With its leading position in Switzerland, Bell has a very solid business and the turnaround in

Europe in FY13 will act as a catalyst. On a P/E 14E of 9.7x (P/CE 14E 8.5x) and an

EV/EBITDA of 4.8x, we believe the stock is attractively valued and reiterate our Buy rating

(new PT CHF 2,500, old CHF 2,150).

Key data CHF mns 2011 2012 2013E 2014E

Sales 2,483 2,508 2,530 2,570

Sales growth (%) �3.90 1.00 0.90 1.60

EBITDA 204 185 203 215

EBITDA margin (%) 8.20 7.40 8.00 8.40

EBIT 89.8 99.2 115 125

EBIT margin (%) 3.60 4.00 4.50 4.90

Net profit 71.6 75.9 83.0 92.0

ROE (%) 7.25 11.6 11.8 12.0

Net debt 248 249 180 138

Gearing (%) 39.3 36.8 24.5 17.2

Equity ratio (%) 50.2 51.4 55.7 59.6

CF op. activities 128 141 162 168

Capex �63.2 �74.3 �80.0 �100

Share valuation CHF 2011 2012 2013E 2014E

EPS (reported) 180 191 209 231

EPS growth (%) 10.1 5.92 9.41 10.8

EPS adj 180 191 209 231

EPS adj growth (%) �7.50 73.4 9.40 10.8

P/E 9.79 10.5 10.8 9.73

P/E adj 9.79 10.5 10.8 9.73

EV/EBITDA 4.64 5.65 5.30 4.81

BV per share 1,585 1,697 1,847 2,014

P/B 1.11 1.18 1.22 1.12

Dividend per share 60.0 60.0 65.0 70.0

Dividend yield (%) 3.41 2.99 2.89 3.11

Payout ratio (%) 54.6 31.5 31.2 30.3

FCF yield (%) 9.21 8.43 9.12 7.54

Analysts

Rene Weber

+41 (0)58 283 77 57

[email protected]

Jean�Philippe Bertschy

+41 (0)58 283 76 48

jean�[email protected]

Share information (CHF) Ticker BELL SW

Share price 19�02�13 2,250

Market cap (mns) 895

Free float 34.0%

Daily volume (mns) 0.13

Performance

© 2013 Vontobel Equity Research. The objectivity of this report may be compromised by existing or planned business relationships between the producer and the analysed company and potential conflicts of interest arising thereof. Investors should therefore on no account use this report as the sole basis on which to make a decision. Please see the end of the document for more details on potential conflicts of interest and disclaimer information. V

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Bell Buy

Switzerland/Food & Beverages 20�02�13

2 Vontobel Research

Key financials

Top shareholders Capital Voting Coop 66.3 66.3

Revenues by division 2013E

General Market capitalization (CHF mns) 895

Enterprise value (CHF mns) 1,075

Daily traded volume (CHF ‘000) 127

Reporting currency CHF

Income statement (mns) 2011 2012 2013E 2014E Revenues 2,483 2,508 2,530 2,570

Gross profit 823 827 835 855

EBITDA 204 185 203 215

Depreciation & amortization �72.1 �72.0 �74.0 �76.0

EBIT 89.8 99.2 115 125

Adjusted EBIT 89.8 99.2 115 125

Taxes �28.9 �24.1 �34.0 �38.0

Shareholders' net profit 71.6 75.9 83.0 92.0

Adjusted net profit 71.6 75.9 83.0 92.0

Growth & margins (%) 2011 2012 2013E 2014E Revenue growth �3.90 1.00 0.90 1.60

Organic growth 0.60 0.60 1.00 1.00

Gross margin 33.2 33.0 33.0 33.3

EBITDA margin 8.20 7.40 8.00 8.40

EBIT margin 3.60 4.00 4.50 4.90

Adjusted EBIT margin 3.60 4.00 4.50 4.90

Tax rate 28.5 24.0 28.9 29.1

Cash flow statement (mns) 2011 2012 2013E 2014E Op. CF (before chng in NWC) 182 164 172 183

Inc. (�)/decr. (+) in NWC �54.2 �22.8 �9.84 �15.0

CF from operating activities 128 141 162 168

Capex �63.2 �74.3 �80.0 �100

Operating free cash flow (FCF) 64.6 67.2 81.7 67.5

CF from investing activities 174 111 77.3 100

CF from financing activities 36.3 15.6 83.6 85.9

Incr.(+)/decr. (�) in cash �11.0 15.1 0.74 �18.4

Cash flow analysis (%) 2011 2012 2013E 2014E Operating cash flow margin 5.10 5.60 6.40 6.50

Capex/revenues 2.50 3.00 3.20 3.90

Capex/depreciation 87.6 103 108 132

Upcoming events Date AGM 17�04�13

Revenues by region 2013E

Balance sheet (mns) 2011 2012 2013E 2014E Cash and cash equivalents 28.3 37.8 47.2 28.8

Total current assets 526 555 575 583

Tangible assets 552 549 545 577

Other intangible assets 76.7 64.2 50.2 36.2

Goodwill 0.00 0.00 0.00 0.00

Total non current assets 732 760 745 763

Total assets 1,258 1,315 1,320 1,346

Total current liabilities 392 395 375 359

Total non�current liabilities 234 245 215 185

Total liabilities 626 640 590 544

Total interest�bearing debt 282 290 230 170

Shareholders' equity 630 675 735 801

Total liabilities and equity 1,257 1,315 1,325 1,346

Balance sheet analysis (%) 2011 2012 2013E 2014E Net working capital (NWC, mns) 262 282 285 296

NWC/revenues 9.70 10.8 11.2 11.3

Net debt (+) / net cash (�) (mns) 248 249 180 138

Equity/total assets 50.2 51.4 55.7 59.6

Net debt/equity (gearing) 39.3 36.8 24.5 17.2

Net debt/EBITDA 121 134 88.6 64.3

Per share data (CHF) 2011 2012 2013E 2014E EPS (reported) 180 191 209 231

EPS (adjusted) 180 191 209 231

Net cash (+) / net debt (�) �623 �625 �452 �347

BVPS (reported) 1,585 1,697 1,847 2,014

Dividend 60.0 60.0 65.0 70.0

Payout ratio (%) 54.6 31.5 31.2 30.3

Valuation & profit. ratios (x) 2011 2012 2013E 2014E P/E (reported) 9.79 10.5 10.8 9.73

P/E (adjusted) 9.79 10.5 10.8 9.73

P/Book (reported) 1.11 1.18 1.22 1.12

EV/EBITDA 4.64 5.65 5.30 4.81

FCF yield (%) 9.21 8.43 9.12 7.54

Dividend yield (%) 3.41 2.99 2.89 3.11

ROIC (%) 7.20 7.80 9.10 9.80

ROE (%) 7.25 11.6 11.8 12.0

Bell Buy


3 Vontobel Research

Our perspective

No. 1 in the Swiss meat industry and a niche player in EU

In FY12, group sales increased +0.4% (organic +0.6%) to CHF 2.52 bn with

Switzerland (70% of group sales) up +0.6% (volume +1.4%, price/mix �0.8%).

In CHF terms, sales increased +1.5% (volume �2.5%) in Germany (19% of

group sales) and +4.7% (volume +6.2%) in France (4% of group sales). In

Eastern Europe/Benelux (7% of group sales), they declined �6.1% (vol.

�13.4%) mainly due to a loss of a product category in Benelux. EBITDA was

slightly below expectation at CHF 185 mn and margin of 7.4% (�80bp), but

due to a lower tax rate net profit reached our estimate at CHF 75.8 mn (+6%).

The closure of the site in Bochum had an impact of CHF 9 mn and last year

there was a positive impact from an insurance case of CHF 6 mn. Excluding

these impacts, the margin would have been 7.7% (�30bp), with the decline

mainly attributable to higher raw material costs in Germany. Like last year, a

dividend per share of CHF 60 will be proposed to the AGM.

Bell: FY12 results (CHF mns)

(CHF mns) VT Cons Reported YoY (%) vs VT (%)Sales 2'520 2'520 2'526 1.7 0.2� organic (%) 0.6 0.6 0.6

EBITDA 192.0 195.0 185.1 �9.2 �5.1EBITDA margin (%) 7.6 7.7 7.4 �80bpsEBIT 105.0 110.0 99.1 10.4 �9.9EBIT margin (%) 4.2 4.4 4.0 +40bps

Net profit 74.0 76.0 75.8 5.9 �0.2

EPS (in CHF) 186 191 191 6.1 0.0Dividend (in CHF) 60 60 60 5.9 0.0Source: Bell, Vontobel Equity Research

Source: Bell, Vontobel Equity Research

Switzerland is still by far the most important unit, accounting for 70% of group

sales or 55% of total volume in tons. With a market share of 25%, Bell is the

leading producer of meat and no. 2 in poultry (35% market share) in

Switzerland. Bell now also has a co�lead position in fresh seafood with a market

share of 25%. The international expansion was started in 2008/2009 with

several acquisitions in France and Germany. While Bell is a vertically integrated

meat producer in Switzerland, its position in Europe is focused on niche markets

in the charcuterie segment. In Eastern Europe, Bell has a production site in

Poland and Hungary. In addition, it operates 100 sales outlets in the region (70

in the Czech Rep. and 30 in Slovakia/Rumania).

Bell: Overview by region (FY12) Switzerland Germany France East.EU/BL Total

Sales (CHF mns) 1,756 484 97 189 2,527

Volume (in '000 tons) 122.5 66.0 12.6 20.6 221.7

No. of employees 3,302 1,245 411 1,209 6,248

No. of production units 10 9 6 2 27


EBITDA slightly below expectations,

margin decline of 80bp due to

restructuring in Germany

Bell: Sales by country 2012

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Leading meat producer in

Switzerland, niche charcuterie player

in Europe

Bell: Sales by product 2012

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Bell Buy


4 Vontobel Research

The no. 2 retailer in Switzerland, Coop, owns 66% of Bell and is responsible for

52% of group sales or 74% of Bell Switzerland's sales. Sales to the Coop group

outside Switzerland amounted to CHF 13 mn (+165%), which reflects the

acquisition of Transgourmet (no. 2 cash & carry/food service company in

Europe). Sales with this customer have further potential.

In FY12, Bell implemented a new brand strategy with focus on five brands,

compared to 35 before. Especially in France, several local brands/subbrands

were united under the "Mossieur Polette" brand. The Bell brand has until now

only been used in Switzerland. The Abraham (ham specialities), Hoppe

(convenience) and Zimbo brands are primarily used in Germany as well as

Eastern Europe and Benelux.

Bell: Five brands

Source: Bell

In terms of the raw material situation, in Switzerland, prices increased especially

for pork at the end of 2012 (+21% compared to Dec. 2011). Although

Switzerland has opened the market for some imports, raw material prices will

stay higher in FY13 compared to FY12. In Germany, pork prices were up +22%

(y�o�y) in October 2012 but came down a little in November (+12% y�o�y). In

France, prices were up +16% in October but rose only +6% y�o�y in

November.

For FY13, we estimate a sales increase of +1% to CHF 2.55 bn and an EBITDA

of CHF 203 mn (margin 8.0%, +60bp). The increase is, on the one hand, due

to the absence of restructuring costs (CHF 9 mn in FY12) and, on the other, we

expect a margin improvement in the German operations. Equity�consolidated

earnings will also improve to CHF 8.0 mn (FY 12 CHF 5.5 mn), especially as

restructuring costs of CHF 2 mn were included in FY12. The tax rate will rise

again to a normalised level of 29% (FY12 24%). We consequently forecast a

net profit increase of +9% to CHF 83 mn (EPS CHF 209) as well as a higher

dividend of CHF 65 per share (FY12 CHF 60).

Major shareholder Coop accounts for

74% of Bell Switzerland

Focus on five brands

Raw material prices set to rise in

Switzerland in FY13, some cooling

down in Germany in November

Margin improvement in FY13E

(EBITDA +60bp to 8.0%) due to

absence of restructuring costs and

improvement outside Switzerland

Bell Buy


5 Vontobel Research

Turnaround in the loss making European business in FY13

Bell does not publish operating profits by region but it is obvious that the

European business is heavily loss making with Germany the major contributor,

although Hungary and France are also making negative EBIT contributions. We

estimate a negative group EBIT of CHF �18 mn in FY12 in Europe, which means

that, at 6.7%, Switzerland's EBIT margin is clearly above the group level of

3.9%. The European business also includes a goodwill amortisation of CHF 9

mn in FY12 as well as a restructuring charge of CHF 9 mn. At EBITDA level, we

estimate that the European business was just positive, compared to 7.4% for

the group.

In FY12, raw material prices rose sharply in Germany. The higher costs could

not be passed on with price increases or only with a certain time lag. At the end

of FY12, raw material prices came down roughly �10% although they have

risen again in recent weeks.

At the end of FY11 already, Bell closed down a production site in Germany

(Steinheim) and concentrated its convenience business at the modern plant

owned by the acquired company Hoppe. In FY12, the German activities

(Abraham, Zimbo, Hoppe, since 1 Sept. 2012) were merged and administration

was concentrated in Hamburg. The closure of the administrative site in Bochum

will be completed by 31 March 2013. Together with the focus on three brands,

the company is also reducing the number of products and will drive thereby

efficiency gains. The merger will also entail synergies in production, purchasing,

logistics and IT. While the production sites (9) will be more specialised in terms

of products, marketing/sales will be centralized.

In the years 2009�2011, the European business's EBIT was also affected by an

annual goodwill amortisation of CHF 15 mn as well as goodwill write offs for

the various acquisitions. There were impairments of CHF �17 mn for the

Abrahams brand in 2010 and CHF 26 mn for the Zimbo brand in 2011. At the

end of 2012, goodwill amounted to CHF 51 mn, which also includes the

goodwill for Hilcona. We expect further goodwill amortisations of CHF 10 mn

p.a. going forward.

We believe that the margin at Bell's European business will turnaround in FY13,

supported by the merger of the German operations. We estimate FY13 EBIT of

CHF 5 mn for the European business, which implies an improvement of CHF 20

mn compared to FY12. This improvement is attributable to the restructuring in

FY12 (at a cost of CHF 9 mn) as well as other measures initiated in FY11. This

would result in an EBIT margin of 0.3% for FY13, which can only represent a

first step in the turnaround of the European operations. We expect margins of

1.3% in FY14 and 1.6% in FY15.

European business generates 30% of

group sales, with Germany the most

important contributor; but loss

making in FY12

FY12 impacted by higher raw material

prices; price increases with a lag but

will help in FY13

Restructuring in Germany started in

FY11 operations merged in FY12

Goodwill amortisation with an impact

but extraordinary write offs already in

2010/11

FY13 with first step in turnaround

Bell Buy


6 Vontobel Research

Bell: Sales and EBIT breakdown by region 2008 2015E (EBIT estimated by Vontobel, CHF mns)

(in CHF mn) 2008 2009 2010 2011 2012 2013E 2014E 2015E

Switzerland

Sales 1'791 1'779 1'808 1'746 1'756 1'770 1'795 2'220 � change (%) 14 �1 2 �3 1 1 1 24

� as % of total 93 68 69 69 70 70 69 71

EBIT (Vont E) 77.9 97.0 123.2 117.8 117.1 113.0 115.0 145.0 � margin (%) 4.4 5.5 6.8 6.8 6.7 6.4 6.4 6.5 � as % of total 99 102 122 131 118 98 92 91

International

Sales 141 819 810 771 770 775 800 910 � change (%) NM 478 �1 �5 0 1 3 14

� as % of total 7 32 31 31 30 30 31 29

EBIT (Vont E) 1.0 �2.0 �22.0 �28.0 �18.0 2.0 10.0 15.0 � margin (%) 0.7 �0.2 �2.7 �3.6 �2.3 0.3 1.3 1.6 � as % of total 1 �2 �22 �31 �18 2 8 9

Group

Sales 1'933 2'598 2'618 2'517 2'527 2'545 2'595 3'130 � change (%) 19 34 1 �4 0 1 2 21

EBIT 78.9 95.0 101.2 89.8 99.1 115.0 125.0 160.0 � margin (%) 4.1 3.7 3.9 3.6 3.9 4.5 4.8 5.1Source: Bell, Vontobel Equity Research


Bell: EBIT margin by region 2008 2015E (as %, Vontobel estimates)

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Source: Vontobel Equity Research

Bell Buy


7 Vontobel Research

If we compare Bell's group EBIT margin of 4.0% (FY12) with other European

meat companies, the company is in the mid field. The highest margin is

generated by the Swiss refinement/convenience company Orior, with an EBIT

margin of 7.4% (Vontobel FY12E), thanks to its convenience food division's

higher margin. The comparison shows an average EBIT margin of 3.9% for this

universe and we consider this average to be a target for Bell's European

business.

EU meat industry: EBIT margin 2004 2012 (as %)

EU meat producer: EBIT margin

Company Country 2004 2005 2006 2007 2008 2009 2010 2011 2012

Bell Switzerland 3.4% 3.0% 3.9% 4.5% 4.1% 3.7% 3.9% 3.6% 4.0%

Orior Switzerland 7.6% 7.1% 7.8% 8.0% 7.9% 7.4%

Campofrio Spain 4.8% 6.5% 6.6% 7.5% 5.2% 4.3% 5.8% 4.8% 4.3%

Cremonini Italy 3.5% 3.4% 3.7% 3.8% 3.4% 3.3% 4.0% 4.5% 4.5%

Fleury Michon France 3.6% 5.1% 4.2% 4.4% 3.0% 4.9% 3.8% 4.0% 4.5%

Atria Group Scandinavia 4.7% 4.1% 3.8% 4.7% 2.8% 2.3% 0.9% 0.6% 2.3%

Cranswick UK 6.5% 6.0% 6.2% 6.5% 5.3% 5.8%

Ter Beke Netherlands 2.6% 3.3% 2.9% 3.8% 4.4% 3.8% 3.5%

HKScan Scandinavia 4.3% 2.6% 1.7% 2.6% 2.3% 1.6% 2.0%

L.D.C. France 3.8% 4.0% 3.1% 4.5% 3.5% 3.4%

Danish Crown Denmark 3.5% 0.4% 3.9% 4.2% 3.9% 3.7% 4.1% 3.9% 3.8%

Vion Netherlands 1.9% 1.9% 2.1% 2.9% 1.5% 1.9% 2.1% 0.9% 1.5%

Average 3.6% 3.5% 3.9% 4.7% 3.8% 4.0% 4.2% 3.7% 3.9%

Source: Companies, Vontobel Equity Research

EU meat industry: EBIT margin 2012 (as %)

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Average EBIT margin in EU meat

industry 4%; a target for Bell's

European business

Bell Buy


8 Vontobel Research

Hilcona consolidation in FY15 will add close to 20% to sales and positively impact margins

At the beginning of 2011, Bell acquired a 49% stake in Hilcona (price E CHF

132 mn), the leading convenience food company in Switzerland, and integrated

its own convenience food business (sales CHF 82 mn, price CHF 55 mn) into

Hilcona (sales CHF 330 mn). In FY12, sales reached CHF 400 mn and the

acquired fresh convenience food company Gastro Star (price CHF 50 mn) added

sales of CHF 100 mn.

In FY12, Bell reported an equity�consolidated profit of CHF 5.5 mn, compared

to CHF 6.3 mn in FY13. The FY12 figure includes a restructuring charge of CHF

2 mn for the closure of a Hilcona plant (Schaffisheim) in 2012. It also includes a

small goodwill write off (E CHF 2 mn).

After the closure of the Schaffisheim plant, Hilcona has three locations (Schaan,

Orbe, Lupfig) with Schaan (Liechtenstein) being the biggest plant. Gastro Star

added two facilities (Dällikon, Villigen). Roughly one quarter of sales (excluding

Gastro Star) are conducted outside Switzerland with focus on Germany, Austria

and France. The product range comprises sandwiches, pasta, salads, fresh meals,

pizzas, sauces, potato and vegetable products. Gastro Star added products such

as fresh ready�to�use salads, fruits and vegetables and holds the leading

position in Switzerland in these product segments.

In 2011, it was agreed that Bell would at the start of 2015 acquire an additional

2% of the share capital from the Hilty family, who currently still hold 51% of

the company. With the acquisition of the 2%, Bell will gain a majority stake of

51% and therefore fully consolidate Hilcona in its accounts. With sales of CHF

500 mn, it will add close to 20% to group sales. In terms of EBIT, we estimate a

margin of 6% for Hilcona/Gastro Star which is above the level at Bell. Hilcona

will contribute 19% to Bell's EBIT in FY15 and the margin will widen from 4.9%

in FY14 to 5.2% in FY15. On the bottom line, there will be a minority interest

due to the 49% stake still owned by the Hilty family.

Bell: Hilcona integration in FY15 (CHF mns) (CHF mns) Bell Hilcona New Bell

Sales 2,610 500 3,110

� as % of total 84% 16% 100%

EBIT 130 30 160

� margin (as %) 5.0% 6.0% 5.2%

� as % of total 81% 19% 100%


Acquisition of a 49% stake in the

leading convenience food company

Hilcona; strengthened by the

acquisition of Gastro Star in FY12

Only equity consolidated until FY14

Some restructuring in FY12, Gastro

Star added a leading position in fresh

salad/fruit/vegetables

Additional 2% stake in FY15 will

allow full consolidation; margin

increase for Bell group due to higher

margin at Hilcona

Bell: New Hilcona brands

Source: Companies

Bell Buy


9 Vontobel Research

No bigger acquisitions in FY13/14

Bell has completed several acquisitions in recent year, starting with the build up

of the European charcuterie business in 2008. Although several acquisition

targets would still be available, Bell will first focus on the successful

restructuring of its existing business. In Switzerland, there are no longer any

larger acquisition opportunities due to monopoly reasons as Bell already has a

market share of 25% in the meat market and even 35% in the poultry market.

But the European meat market is still very fragmented and we believe the

consolidation will continue. As Bell has a strong free cash flow, the already

strong balance sheet will be improved further and at the end of FY15 the

company could be almost debt�free. Further acquisitions could therefore become

an issue again after FY14.

Bell: Acquisitions 2008 2012 (CHF mns)

Price (E) Sales

Date Company Country Products % owned (in CHF mn) (in CHF mn)

Jul�08 Groupe Polette France Charcuterie 100% 75 88

Oct�08 Zimbo Germany, Eastern EU Charcuterie 100% 86 450

Jan�09 Abraham Germany, Spain Charcuterie 75% 90 270

Aug�09 Salaisons de St�André France Charcuterie 100% 0 22

Jul�09 Stastnik Poland Charcuterie 100% 0 �

Jan�10 Marco Polo Benelux Charcuterie 100% 14 90

Jan�11 Hilcona Switzerland/EU Convenience 49% 132 330

Mar�11 Hoppe Germany Meat Convenience 100% 13 26

Jan�11 Kocherhans & Schär Switzerland Charcuterie 100% 5 �

May�12 Gastro Star (by Hilcona) Switzerland Convenience 100% 50 100

Jan�10 Maurer Frères France Charcuterie 50% �1 �25

Jan�11 Bell Convenience Switzerland Convenience 100% �55 �84


Acquisitions

Divestments/Merger

Bell has some bigger investment in its production facilities in Switzerland ahead.

In FY12/13, the doubling of capacity at the acquired Bündnerfleisch producer

Kocherhans & Schär by the end of 1Q13 involved capex of CHF 8 mn and will

allow the insourcing of Bündnerfleisch sales to Coop. The modernisation of

charcuterie production in Cheseaux (capex CHF 30�35 mn) will be more

significant and is planned for 2013�2015. The expansion of poultry production

in Zell (capex CHF 30�25 mn) is scheduled for 2014�2016 and a new fresh meat

facilities (in Oensingen, capex CHF 20�25 mn) is being projected for 2016�2018.

Bell: Bigger investment projects 2012 2018 (CHF mns) Date Location Segment Capex (CHF mns)

2012�2013 Churwalden Charcuterie/Bündnerfleisch 8

2013�2015 Cheseaux Charcuterie 30�35

2014�2016 Zell (LU) Poultry 30�35

2016�2018 Oensingen Fresh Meat 20�25


Acquisition strategy in Europe started

in 2008, but focus on turnaround in

FY13/14

Some bigger investments in

Switzerland in the coming years

Bell Buy


10 Vontobel Research

Bell: Sales by segment 2007 2015 (CHF mns)

(in CHF mn) 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

SWITZERLAND

Fresh Meat 692.2 788.0 775.4 809.6 815.8 828.6 835.0 845.0 855.0

Change (%) 5 14 �2 4 1 2 1 1 1

as % of Switzerland 42 41 44 45 47 47 47 47 39

Charcuterie 389.1 446.0 453.8 445.1 442.7 430.2 430.0 435.0 440.0

Change (%) 3 15 2 �2 �1 �3 0 1 1


Poultry 309.4 340.9 339.6 334.6 344.8 349.3 355.0 360.0 365.0

Change (%) 28 10 0 �1 3 1 2 1 1


Seafood 67.9 77.3 86.6 103.8 115.1 119.8 125.0 130.0 135.0

Change (%) 22 14 12 20 11 4.0 4.4 4.0 3.8


Convenience 65.8 78.8 81.5 84.1 400.0

Change (%) 15 20 3 3 NA

as % of Switzerland 4 4 5 5 18

Others 53.8 60.3 42.3 30.7 27.5 28.4 25.0 25.0 25.0

Change (%) na 12 �30 �28 �10 3 �12 0 0


Total Switzerland sales 1'578.2 1'791.3 1'779 1'808 1'746 1'756 1'770 1'795 2'220

Change (%) 6.4 14 �1 2 �3 0.6 1 1 24

organic (%) 1.6 1.2 0.6 1.0 1.0 1.0

Akq./Dev. (%) 0 �4.6 0 0 0 23.0

as % of total 97 93 68 69 69 70 69 69 71

EUROPE

Charcuterie 35.5 115.5 720.7 742.0 704.7 702.6 710.0 725.0 740.0

Change (%) NA 226 524 3 �5 0 1 2 2

as % of Europe 2 6 88 92 91 91 91 91 81

Convenience 16.3 26.0 100.0

Change (%) NA 59 NA

as % of Europe 1 1 11

Others 16.3 26.0 97.8 67.8 66.4 67.6 70.0 70.0 70.0

Change (%) NA 59 277 �31 �2 2 3 0 0

as % of Europe 1 1 12 8 9 9 9 9 8

Total Europe sales 51.8 141.5 819 810 771 770 780 795 910

Change (%) NA 173 478 �1 �5 0 1 2 14

organic 2.0 3.2 0.7 1.0 1.0 1.0

Akq./Dev. (%) 7.0 2.3 1.1 0.0 0.0 13.0

Currency (%) �7.5 �10.5 �2.0 0.0 0.0 0.0

as % of total 3 7 32 31 31 30 31 31 29

Group sales 1'630 1'933 2'598 2'618 2'517 2'527 2'550 2'590 3'130

Change (%) 10 19 34 1 �4 0 1 2 21

Organic 1 1.5 1.8 0.6 1.0 1.0 1.0

Acq./Dev. (%) 5.8 �2.5 0.3 0.0 0.0 20.0

Currency (%) �2.3 �3.2 �0.7 0.0 0.0 0.0


Bell Buy



Valuation

On a P/E 14E of 9.7x, a P/CE 14E of 8.5x and an EV/EBITDA 14E of 4.8x, Bell

shares are attractively valued. The average EV/EBITDA 14E for European meat

companies is 5.4x and small/mid�sized Swiss food companies are valued on an

average EV/EBITDA 14E of 5.8x. The dividend yield is 3.0%, but we consider

the payout ratio of 31% to be on the low side, also in comparison to other food

companies. We believe Bell has, on the one hand, an interesting turnaround

potential in its European operations and, on the other, the full consolidation of

Hilcona in FY15 will add another interesting, higher margin business to the Bell

group. We therefore reiterate our Buy rating and increase our PT from CHF

2,150 to CHF 2,500.

With a market cap of CHF 830 mn, Bell belongs to the bigger listed meat

companies in Europe. With an interest of 66%, Swiss retailer Coop is the major

shareholder. Free float of 34% nevertheless still reflects a capitalization of CHF

280 mn, which compares well to other companies.

International valuation comparison Price EV/ Div. Market

as of Perf. EPS P/E P/E P/E EBITDA yield P/B cap. in

Company Curr. 19 02 13 YTD high low 2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E 2014E 2012E 2012E CHF mns

Swiss Small Caps

weighted average 10.3 11.7 12.9 11.6 5.5 3.5 1.3

average 8.5 12.6 12.8 11.6 9.3% 9.5% 9.8% 5.8 3.3 1.5

Bell CHF 2250 12.2 2'250 1'804 191 209 231 11.8 10.8 9.7 7.4% 8.0% 8.4% 4.8 3.0 1.2 830Emmi CHF 256 11.3 258 179 21.2 17.8 19.8 10.9 14.4 12.9 8.6% 8.2% 8.5% 5.3 3.8 1.3 1'264Hügli CHF 537 7.4 670 480 30.7 35.9 40.4 16.3 15.0 13.3 10.6% 11.1% 11.5% 7.6 2.9 2.1 240Orior CHF 52.7 2.9 52.7 44.2 4.65 4.84 5.12 11.3 10.9 10.3 10.6% 10.7% 10.8% 6.4 3.9 1.5 288

European meat industry weighted average 4.2 6.8 11.6 8.9 2.2 1.1

average 1.4 3.6 11.2 8.7 6.6% 7.1% 7.3% 5.4 3.0 1.5 Atria Plc EUR 7.29 �19.0 7.49 4.80 �0.12 0.48 0.79 �63.4 15.3 9.2 4.7% 6.1% 6.8% 7.1 2.0 0.4 255

Campofrio Food EUR 4.59 �5.4 7.15 4.20 0.25 0.34 0.54 18.7 13.4 8.5 7.8% 8.6% 9.2% 5.0 0.6 0.8 580Cranswick GBP 1000 17.8 1'001 733 0.68 0.77 0.82 11.7 10.4 9.8 8.1% 7.4% 7.5% 6.0 3.5 NA 599Fleury Michon EUR 42.4 8.3 44.8 29.20 4.51 4.90 5.24 9.4 8.7 8.1 8.3% 10.0% 9.5% NA 2.4 1.0 230HK Scan EUR 4.05 11.6 6.20 3.22 0.16 0.39 0.56 26.1 10.4 7.3 4.5% 4.4% 4.8% 5.1 3.8 0.5 275Ter Beke EUR 50.4 �17.4 53.0 46.5 5.19 6.12 6.80 9.7 8.2 7.4 8.6% 9.1% 9.4% 3.9 4.8 0.9 108Hilton Food Group GBP 314.0 14.2 320 235 0.24 0.27 0.30 12.9 11.8 10.5 4.3% 4.1% 4.0% 4.5 3.9 5.2 276

European convenience industry weighted average 3.2 16.8 15.4 13.7 11.3% 11.4% 11.8% 10.2 1.0 3.2

average 7.6 13.4 13.0 11.4 9.9% 10.6% 10.8% 8.2 1.6 2.2

Bonduelle EUR 80.8 12.9 81.2 64.9 7.29 6.82 7.77 9.4 10.0 8.8 8.3% 9.7% 9.6% 5.9 2.3 1.0 753Kerry Group EUR 41.0 2.4 41.5 30.8 2.35 2.58 2.91 17.5 15.9 14.1 11.5% 11.5% 11.9% 10.5 0.9 3.4 8'895

US meat industry weighted average 18.9 12.4 12.7 11.0 6.0 1.2 1.9

average 17.1 11.2 11.5 10.0 8.7% 7.9% 7.3% 5.7 0.9 1.6 Hormel Foods USD 36.5 17.1 36.5 27.5 1.86 1.95 2.09 16.8 16.1 15.0 10.7% 10.5% 10.4% 8.1 1.9 3.0 8'887

Tyson Foods USD 24.1 24.4 24.2 14.2 1.80 1.58 2.09 9.4 10.7 8.1 5.8% 5.1% 4.4% 4.2 0.9 1.0 7'893Smithfield Foods USD 23.7 9.9 24.1 17.8 2.65 2.47 2.73 7.3 7.8 7.0 9.6% 8.1% 7.2% 4.8 � 0.8 3'034Source: Vontobel Equity Research, Bloomberg Consensus

Price

12 mth. EBITDA margin %

Attractively valued on an EV/EBITDA

14E of 4.8x ;

Buy rating reiterated;

PT new CHF 2,500 (old CHF 2,150)

Bell Buy



DCF model

Explicit forecast period Transition period Terminal DCF/EVA valuation 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E Invested capital (average) CHF mns 887 895 965 1,012 1,009 1,019 1,028 1,035 1,040 1,044

ROIC % 9.1 9.8 11.6 11.0 11.0 11.0 11.0 11.0 11.0 11.0

ROIC�WACC % 2.1 2.8 4.6 3.5 3.4 3.4 3.3 3.2 3.1 3.0

Economic profit (EVA) CHF mns 19.0 25.0 45.0 36.0 35.0 34.0 34.0 33.0 32.0 31.0

Discounted EVA CHF mns 18.0 22.0 37.0 27.0 24.0 22.0 20.0 18.0 16.0 15.0

NWC intensity % 11.3 11.5 11.3 11.5 11.6 11.7 11.8 11.8 11.9 12.0

Implied P&L and FCF 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E Revenues CHF mns 2,530 2,570 3,105 3,136 3,162 3,183 3,199 3,210 3,215 3,215

Revenue growth % 0.9 1.6 20.8 1.0 0.8 0.7 0.5 0.3 0.2 0.0

EBIT CHF mns 115 125 160 164 163 165 166 167 168 169

EBIT margin % 4.5 4.9 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.3

Cash tax rate % 30.0 30.0 30.0 32.0 32.0 32.0 32.0 32.0 32.0 32.0

NOPLAT (Invested capital * ROIC) CHF mns 81.0 88.0 112 111 111 112 113 114 114 115

Depreciation CHF mns 74.0 76.0 95.0 93.0 94.0 95.0 95.0 95.0 96.0 96.0

Other non�cash items CHF mns 17.0 19.0 17.0 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Change in NWC CHF mns �10.0 �15.0 0.00 �11.0 �6.00 �5.00 �5.00 �4.00 �3.00 �3.00

Capex CHF mns �80.0 �100 �90.0 �65.0 �99.0 �99.0 �98.0 �98.0 �97.0 �96.0

FCF to the firm CHF mns 82.0 68.0 134 129 100 103 105 108 110 112

Discounted FCF CHF mns 77.0 60.0 111 98.0 70.0 67.0 63.0 60.0 56.0 53.0

Weighted cost of capital 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E Cost of equity % 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

After�tax cost of debt % 2.8 2.8 2.8 2.7 2.7 2.7 2.7 2.7 2.7 2.7

Equity/assets (market value) % 80.0 80.0 80.0 90.0 91.7 93.3 95.0 96.7 98.3 100

WACC % 7.0 7.0 7.0 7.5 7.6 7.6 7.7 7.8 7.9 8.0

Net present value (NPV) 2013E Sensitivity analysis for NPV per share (avg. WACC vs. term. RONIC) Explicit and transition period FCF CHF mns 661

RONIC\WACC 7.2% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5%

Discounted continuing value of FCF CHF mns 731 5.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Terminal value as % of EV % 52.5 6.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Terminal revenue growth assumption % 0.0 7.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Enterprise value (EV) CHF mns 1,392 8.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Net debt CHF mns 239 9.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Minorities CHF mns 0.00 10.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Associates CHF mns 0.00 11.0% 3,241 3,368 3,095 2,857 2,647 2,461 2,294

Other adjustments to EV CHF mns 0.00

Implied market cap CHF mns 1,153

Equivalent total number of listed shares mns 0.40

Reporting currency to CHF rate x 1.00

Net present value (NPV) per share CHF 2,899

Bell Buy



Financials P/E EV/EBITDA

ROIC/Invested capital Cash flow/CAPEX

Revenues/EBIT margin Revenue breakdown for 2013

Bell Buy



Income Statement 2007 2008 2009 2010 2011 2012 2013E 2014E Revenues CHF mns 1,643 1,940 2,548 2,584 2,483 2,508 2,530 2,570

Gross profit CHF mns 535 610 859 864 823 827 835 855

Total operating expenses CHF mns �391 �468 �669 �651 �619 �633 �632 �640

EBITDA CHF mns 143 143 189 213 204 185 203 215

Depreciation of tangible assets CHF mns �57.4 �55.7 �79.9 �74.2 �72.1 �72.0 �74.0 �76.0

EBITA CHF mns 86.1 87.0 110 138 132 113 129 139

Amortization of intangibles CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Impairment and amortization of goodwill CHF mns �6.56 �8.11 �14.5 �37.2 �42.3 �14.0 �14.0 �14.0

EBIT CHF mns 79.5 78.9 95.0 101 89.8 99.2 115 125

Total operating one�off items CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted EBIT CHF mns 79.5 78.9 95.0 101 89.8 99.2 115 125

Net financial result CHF mns 1.36 �4.77 �9.21 �3.00 5.14 �4.33 �5.50 �3.50

Extraordinary result CHF mns 0.00 0.00 0.00 �17.6 �27.9 0.00 0.00 0.00

Pretax profit CHF mns 80.9 76.1 84.0 99.2 101 100 118 131

Taxes CHF mns �17.6 �17.9 �27.8 �33.1 �28.9 �24.1 �34.0 �38.0

Group net profit CHF mns 63.2 58.2 56.2 66.1 72.4 76.2 83.5 92.5

Minority interests CHF mns �0.12 0.86 �0.63 �1.55 �0.78 �0.36 �0.50 �0.50

Shareholders' net profit CHF mns 63.1 59.1 55.6 64.5 71.6 75.9 83.0 92.0

Total one�off items CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted net profit CHF mns 63.1 59.1 55.6 64.5 71.6 75.9 83.0 92.0

Growth 2007 2008 2009 2010 2011 2012 2013E 2014E Revenues % 9.8 18.1 31.4 1.4 �3.9 1.0 0.9 1.6

Organic revenues % 9.4 12.6 �0.7 1.5 0.6 0.6 1.0 1.0

Gross profit % 10.1 14.1 40.7 0.6 �4.7 0.5 0.9 2.4

EBITDA % 19.6 �0.5 32.7 12.3 �4.0 �9.4 9.6 5.9

EBIT % 36.2 �0.7 20.4 6.5 �11.3 10.4 16.0 8.7

Net profit % 43.8 �6.4 �5.9 �15.5 �6.8 73.4 9.4 10.8

Net profit adjusted % 43.8 �6.4 �5.9 �15.5 �6.8 73.4 9.4 10.8

Margin analysis 2007 2008 2009 2010 2011 2012 2013E 2014E Gross margin % 32.5 31.5 33.7 33.4 33.2 33.0 33.0 33.3

EBITDA margin % 8.7 7.4 7.4 8.2 8.2 7.4 8.0 8.4

EBITA margin % 5.2 4.5 4.3 5.4 5.3 4.5 5.1 5.4

EBIT margin % 4.8 4.1 3.7 3.9 3.6 4.0 4.5 4.9

Adjusted EBIT margin % 4.8 4.1 3.7 3.9 3.6 4.0 4.5 4.9

Tax rate % 21.8 23.5 33.1 33.4 28.5 24.0 28.9 29.1

Net profit margin % 3.8 3.0 2.2 2.5 2.9 3.0 3.3 3.6

Adjusted net profit margin % 3.8 3.0 2.2 1.8 1.8 3.0 3.3 3.6

Bell Buy



Balance Sheet 2007 2008 2009 2010 2011 2012 2013E 2014E Cash and cash equivalents CHF mns 67.4 26.5 81.4 33.7 28.3 37.8 47.2 28.8

Marketable securities CHF mns 17.8 9.74 7.05 4.51 5.58 3.27 3.00 3.00

Inventories CHF mns 74.8 113 167 152 170 185 195 210

Accounts receivable CHF mns 142 210 272 287 305 318 320 325

Prepayment and accrued income CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other current assets CHF mns 5.23 3.89 10.9 17.8 16.9 10.7 10.0 16.0

Total current assets CHF mns 307 363 538 495 526 555 575 583

Tangible assets CHF mns 434 560 598 556 552 549 545 577

Other intangible assets CHF mns 8.86 86.6 115 76.3 76.7 64.2 50.2 36.2

Goodwill CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Financial assets CHF mns 37.1 128 57.1 39.2 103 147 150 150

Other non�current assets CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total non current assets CHF mns 480 775 770 672 732 760 745 763

Total assets CHF mns 788 1,138 1,307 1,167 1,258 1,315 1,320 1,346

Accounts payable CHF mns 90.9 142 139 160 164 168 170 175

Short�term interest�bearing debt CHF mns 30.4 251 110 107 117 114 80.0 50.0

Accrued expenses and deferred income CHF mns 27.3 69.5 51.3 59.8 48.6 53.6 60.0 64.0

Other current liabilities/provisions CHF mns 24.8 27.6 70.8 58.4 61.9 59.3 65.0 70.0

Total current liabilities CHF mns 173 491 371 386 392 395 375 359

Long�term interest�bearing debt CHF mns 39.2 47.8 274 121 165 176 150 120

Pension liabilities (long�term portion) CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other non�current liabilities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Provisions CHF mns 53.2 60.6 68.0 69.8 68.9 69.2 65.0 65.0

Total non current liabilities CHF mns 92.3 108 342 191 234 245 215 185

Total liabilities CHF mns 266 599 713 577 626 640 590 544

Total interest bearing debt CHF mns 69.5 299 384 228 282 290 230 170

Ordinary share capital CHF mns 1.99 1.96 1.97 1.97 1.99 1.99 1.99 1.99

Share premium & retained earnings CHF mns 516 533 574 575 628 673 733 799

Shareholders' equity CHF mns 518 535 576 576 630 675 735 801

Minority interests CHF mns 4.56 3.29 18.6 14.0 0.79 0.36 0.50 0.50

Group equity CHF mns 523 539 595 590 631 675 735 802

Total liabilities and equity CHF mns 788 1,138 1,307 1,167 1,257 1,315 1,325 1,346

Balance sheet analysis 2007 2008 2009 2010 2011 2012 2013E 2014E Net working capital (NWC) CHF mns 98.9 111 248 219 262 282 285 296

NWC/revenues % 6.4 5.4 7.1 9.0 9.7 10.8 11.2 11.3

NWC/total assets % 12.6 9.8 19.0 18.8 20.8 21.4 21.6 22.0

Inventory days days 25 26 30 34 35 39 41 43

Receivables days days 29 33 34 39 44 45 46 46

Payables days days 26 32 30 32 36 36 36 37

Net debt (+) / net cash ( ) CHF mns 15.6 263 295 190 248 249 180 138

Equity/total assets % 66.4 47.3 45.5 50.6 50.2 51.4 55.7 59.6

Net debt/equity (gearing) % �3.0 48.8 49.7 32.2 39.3 36.8 24.5 17.2

Net debt/EBITDA x 0.1 1.8 1.6 0.9 1.2 1.3 0.9 0.6

Bell Buy



Cash flow statement 2007 2008 2009 2010 2011 2012 2013E 2014E Group profit CHF mns 56.7 58.2 56.2 66.1 72.4 76.2 83.5 92.5

Depreciation + Amortization CHF mns 57.4 55.7 79.9 74.2 72.1 72.0 74.0 76.0

Goodwill impairment CHF mns 6.56 8.11 14.5 37.2 42.3 14.0 14.0 14.0

Non�cash financial income (�)/expenses (+) CHF mns �2.66 �1.74 1.85 �2.69 0.00 0.00 0.00 0.00

Inc. (+)/decr.(�) in deferred taxes CHF mns 0.00 0.00 0.81 0.57 0.00 0.00 0.00 0.00

Inc. (+)/decr.(�) in pension provisions CHF mns �2.57 1.11 �0.69 �0.09 0.00 0.00 0.00 0.00

Inc. (+)/decr.(�) in other provisions CHF mns 1.30 �0.54 �0.94 4.88 �4.83 2.10 0.00 0.00

Other non�cash changes/adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Operation cash flow (before chng in NWC) CHF mns 117 121 152 180 182 164 172 183

Inc. (�)/decr. (+) in NWC CHF mns 11.7 �31.5 �33.6 �0.60 �54.2 �22.8 �9.84 �15.0

CF from operating activities CHF mns 128 89.3 118 180 128 141 162 168

Capex CHF mns �50.5 �49.8 �61.1 �61.9 �63.2 �74.3 �80.0 �100

Operating free cash flow (FCF) CHF mns 77.9 39.5 56.9 118 64.6 67.2 81.7 67.5

Invest.(�)/disp.(+) of tang./intang. CHF mns 1.15 2.96 2.90 0.00 11.9 0.59 0.00 0.00

Invest.(�)/disp.(+) of associates CHF mns �1.60 9.88 2.69 5.26 0.55 �41.1 2.70 0.00

Invest.(�)/disp.(+) of non�core assets CHF mns 0.00 0.00 1.00 1.19 0.00 4.15 0.00 0.00

Acquisitions CHF mns 0.00 �251 �13.7 �7.48 �124 0.00 0.00 0.00

Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CF from investing activities CHF mns 50.9 288 68.2 62.9 174 111 77.3 100

Proceeds from issue of share capitals CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Disposal (+)/ purchase (�) of shares CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Inc. (+)/decr. ( ) in equity CHF mns 0.61 10.5 1.83 2.37 5.52 0.01 0.00 0.00

Dividend paid CHF mns �13.2 �15.9 �15.7 �16.5 �20.7 �24.7 �23.9 �25.9

Inc. (+)/decr.(�) in interest bearing debt CHF mns �39.1 185 19.0 �147 51.4 9.02 �59.7 �60.0

Other adjustments CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

CF from financing activities CHF mns 51.8 159 5.13 161 36.3 15.6 83.6 85.9

Translation impact CHF mns 0.00 0.00 �0.06 �3.41 �0.54 �0.06 0.00 0.00

Inc. (+)/decr. ( ) in cash CHF mns 25.7 39.8 54.9 47.7 11.0 15.1 0.74 18.4

Cash flow analysis 2007 2008 2009 2010 2011 2012 2013E 2014E Operating cash flow margin % 7.8 4.6 4.6 6.9 5.1 5.6 6.4 6.5

Capex/revenues % 3.1 2.6 2.4 2.4 2.5 3.0 3.2 3.9

Capex/depreciation % 87.9 89.4 76.4 83.4 87.6 103.2 108.1 131.6

Bell Buy



Price 2007 2008 2009 2010 2011 2012 2013E 2014E Price (year�end or current) CHF 1,925.00 1,300.00 1,551.00 1,766.00 1,762.00 2,005.00 2,250.00 2,250.00

High CHF 2,163.00 1,950.00 1,745.00 1,875.00 2,264.00 2,040.00 2,250.00 NA

Low CHF 1,449.00 1,101.00 1,310.00 1,481.00 1,700.00 1,725.00 1,985.00 NA

Average basic shares outstanding ('000) 398 392 393 395 398 398 398 398

Year�end basic shares outstanding ('000) 398 392 393 395 398 398 398 398

Average fully diluted shares ('000) 398 392 393 395 398 398 398 398

Market capitalization CHF mns 767 509 610 697 701 798 895 895

Enterprise value CHF mns 751 772 905 887 949 1,046 1,075 1,033

Per share data 2007 2008 2009 2010 2011 2012 2013E 2014E EPS (reported) CHF 158 151 141 163 180 191 209 231

EPS (adjusted) CHF 158 151 141 163 180 191 209 231

FCF CHF 196 101 145 298 162 169 205 170

Net cash (+) / net debt (�) CHF 39.2 �671 �751 �482 �623 �625 �452 �347

BVPS (reported) CHF 1,301 1,367 1,466 1,461 1,585 1,697 1,847 2,014

Dividend CHF 40.0 40.0 40.0 50.0 60.0 60.0 65.0 70.0

Payout ratio % 25.2 26.5 28.3 42.0 54.6 31.5 31.2 30.3

Valuation 2007 2008 2009 2010 2011 2012 2013E 2014E P/E (reported) x 12.1 8.62 11.0 10.8 9.79 10.5 10.8 9.73

P/E (adjusted) x 12.1 8.62 11.0 10.8 9.79 10.5 10.8 9.73

P/Op. free cash flow x 9.8 12.9 10.7 5.9 10.9 11.9 11.0 13.3

P/Book (reported) x 1.48 0.95 1.06 1.21 1.11 1.18 1.22 1.12

EV/Sales x 0.5 0.4 0.4 0.3 0.4 0.4 0.4 0.4

EV/EBITDA x 5.23 5.41 4.78 4.17 4.64 5.65 5.30 4.81

EV/EBIT x 9.4 9.8 9.5 8.8 10.6 10.6 9.3 8.3

EV/Op. free cash flow x 9.6 19.5 15.9 7.5 14.7 15.6 13.2 15.3

EV/Equity free cash flow x 9.7 �3.9 18.2 7.6 �20.3 33.9 12.7 15.3

EV/Invested Capital x 1.4 1.0 0.9 1.0 1.1 1.2 1.2 1.1

FCF yield % 10.2 7.76 9.34 16.9 9.21 8.43 9.12 7.54

Dividend yield % 2.08 3.08 2.58 2.83 3.41 2.99 2.89 3.11

Profitability ratios & ROIC 2007 2008 2009 2010 2011 2012 2013E 2014E Average invested capital CHF mns 555 650 859 906 871 893 887 895

NOPLAT CHF mns 55.7 55.3 66.5 70.9 62.9 69.4 80.5 87.5

Economic profit (EVA) CHF mns 3.33 �5.98 �14.4 �14.6 �19.2 �14.7 �3.14 3.17

ROIC % 10.0 8.5 7.7 7.8 7.2 7.8 9.1 9.8

ROE % 12.7 11.2 10.00 8.14 7.25 11.6 11.8 12.0

ROA % 8.3 6.0 4.6 5.3 6.0 5.9 6.3 6.9

Enterprise value 2007 2008 2009 2010 2011 2012 2013E 2014E Market capitalization CHF mns 767 509 610 697 701 798 895 895

Net Debt (+) / net cash (�) CHF mns �15.6 263 295 190 248 249 180 138

Value of minorities CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Value of associates CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other adjustments for EV calculation CHF mns 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Enterprise value CHF mns 751 772 905 887 949 1,046 1,075 1,033

Disclaimer & Disclosures Vontobel Research

Disclaimer

1. Analyst declaration This Vontobel Report has been produced by the organizational unit responsible for investment research (Research unit, sell�side analysis) of Bank Vontobel AG, Gotthardstrasse 43, CH�8022 Zurich, tel. +41 (0)58 283 71 11 http://www.vontobel.com/. Bank Vontobel AG is subject to supervision by the Swiss Financial Market Supervisory Authority (FINMA), Einsteinstrasse 2,3003 Bern, http://www.finma.ch. The authors listed on page 1 confirm that this report gives a complete and precise reflection of their opinion of the analysed company and that they have neither directly nor indirectly received compensation for their assessment or opinion. The compensation of the authors of this report is not directly related to the investment banking volume generated between Vontobel Group and the analysed company.

The author(s) of this document owns securities in the analysed companies: Bell

The document was not submitted to the analysed companies before publication or distribution

2. Disclosure of conflicts of interest As an internationally active company, Vontobel Group is subject to a number of provisions in drawing up and distributing its investment research documents. The maker and distributors of this financial analysis point out the following potential conflicts of interests: The author and its associated companies

• will or are attempting to generate investment banking business with the analysed companies within the next three months,

• conduct transactions with securities of the analysed companies from time to time • have participated in capital market transactions/the issue of securities of the following analysed companies in

the last 12 months: None • have been active as Market Maker in equities of the following analysed companies in the last 12 months:

None • have provided other publicly known Investment Banking services for the following companies mentioned in

this report in the last 12 months: None • have received compensation for products and services outside Investment Banking from the following

analysed companies: None • hold mandatory disclosable (%) of the voting rights of the following analysed companies: None • have executives who are members of the board of the analysed companies: None and • have executives who are members of the board of Bank Vontobel AG or affiliated companies: None • have no significant financial interest in the analysed companies and • have reached no agreement with the analysed companies regarding this financial analysis.

3. Research rating history The Ratings and/or Rating Outlook of the analysed companies were last changed as follows: Bell[BELN.S] was last changed from Hold to Buy on 18�02�11

4. Global rating breakdown Share of VT IB clients

VT Research universe VT Research universe in rating category

No. As % As %

Buy 29 23 38

Hold 87 71 34

Reduce 7 6 43

The table above is revised at the beginning of each quarter, i.e. it currently reflects the status as at 31st of December 2012.

5. Rating plotter charts The data used for the share price and/or price target chart may have to be adjusted to reflect corporate actions undertaken by the company. Not Rated: Currently no rating assigned to company due to e.g. review of rating, advising of analysed company in a capital market transaction or a similar reason.


6. Methodology/Rating system Bank Vontobel’s financial analysts apply a variety of valuation methodologies (e.g. DCF and EVA modelling, 'sum�of�the�parts', break�up and event�related analysis, peer group and market multiple comparisons) to their own financial projections for the companies they cover. Overall, our investment recommendations take into consideration an assessment of the company in its entirety and of the sector to which it belongs ("bottom�up approach"). Price target calculation is based on a number of factors, observations and assumptions, including but not limited to: key business performance indicators and ratios, public and private valuation multiples, comparison with one or more peer groups of comparable companies, overall equity market valuations, and with the company's own history and track record.

The stock recommendations published by Vontobel’s research team are defined as follows:

Rating Definition

Large Cap SLI Index (inc. tolerance)/non�Swiss stocks of similar market capitalisation

Buy Price target (when set) implies 10% or more upside on a 12�month horizon

Hold Price target (when set) implies 0�10% upside on a 12�month horizon

Reduce Price target (when set) implies downside on a 12�month horizon

Mid & small cap Other Swiss stocks/non�Swiss stocks of similar market capitalisation

Buy Price target (when set) implies 15% or more upside on a 12�month horizon Hold Price target (when set) implies 0�15% upside on a 12�month horizon

Reduce Price target (when set) downside on a 12�month horizon

Analysts are required to review their recommendations under the following conditions: Buy: When upside to price target falls below 5% (all caps).

Hold: When upside to price target reaches or exceeds 15% for large caps or 20% for mid & small cap;

when downside to price target reaches or exceeds 5% (all caps).

Reduce: When upside to price target reaches or exceeds 5% (all caps).

We reserve the right to waive repeated changes of recommendation during periods of unusually high equity market or specific stock price volatility

Share prices used in this financial report are closing prices on the date given. Deviations from this rule are disclosed. The underlying figures of a company valuation, i.e. the profit and loss statement, capital flow and balance sheet are estimates based on date and thus bear certain risks.

The use of the valuation methods do not rule out the risk that the stock fails to achieve the "fair value" within the projected period. Numerous factors influence share price performance. Unforeseen changes can arise from the emergence of competitive pressure, from a change in demand for the products of an issuer, technological development, from macroeconomic activity, exchange rate fluctuation or from a shift in society’s moral concept. Changes in taxation law or supervisory regulations can often have a grave, unforeseen impact. This discourse on valuation methods and risk factors does not claim completeness.

For more information on our methodology and rating system see www.vontobel.ch.

7. Disclaimer & Sources Although Vontobel Group believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report

This research report is for information purposes only and does not constitute a solicitation to invest or investment advice. This report has been written without regard for the financial interests of individual recipients. The author maintains the right to change and/or revoke all opinions expressed in this report at any time. The author also points out that the statements contained in this report are on no account to be considered as advice on tax, accounting, legal or investment matters.

The author neither guarantees that the equities discussed in this report are accessible to recipients nor that they are suitable for them. This research report has been produced for institutional investors only.

If non�institutional investors receive this report it is recommended they seek advice from an asset manager or investment advisor prior to making an investment decision.

The maker of this report does not regard recipients of this report as clients if there are no other business or contractual relations.

No part of this material may be reproduced or duplicated in any form, by any means, or redistributed, without acknowledgement of source and prior written consent from Vontobel Research.

Bank Vontobel AG has taken internal organisational measures to prevent potential or, if unavoidable, to disclose existing conflicts of interest. For more details on handling conflicts of interest and maintaining the independence of financial analysis as well as other disclosures relating to the recommendations of Bank Vontobel AG, see www.vontobel.com


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Additional information for US institutional clients In the United States of America, this publication is being distributed solely to persons that qualify as "major US institutional investors" under SEC Rule 15a�6. Vontobel Securities, Inc. accepts responsibility for the content of reports prepared by its non�US affiliate when distributed to US institutional investors. US investors who wish to effect any transaction in securities mentioned in this report should do so with Vontobel Securities, Inc. at the address hereafter and not with Bank Vontobel AG: Vontobel Securities, Inc., 1540 Broadway, 38th Floor, New York, NY 10036, Tel: 1 212 792 5820, fax: 1 212 792 5832, e�mail: [email protected]

Vontobel Securities Inc. New York, with headquarters at Vontobel Securities AG, Gotthardstrasse 43, 8022 Zurich, Tel +41 (0)58 76 17, Fax +41 (0)58 283 76 49, is a broker�dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA). Bank Vontobel Zurich is a foreign broker dealer which is not delivering services into the USA except for those allowed under the exemption of SEC Rule 15a�6.

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Company_Report_Bell_2013-02-20_E

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