Wessanen Q1 12 Analyst&Investors ppt

Royal Wessanen nv

Q1 2012 roadshow

Q1 published: 27April 2012

www.wessanen.com

2

16%

14%

39%

31%

GroceryRevenue €66.4 mlnEBIT €4.8 mln

Revenue Q1 - €171 mln

Frozen FoodsRevenue €27.8 mlnEBIT €0.1 mln

HFS (Health Food Stores)Revenue €53.9 mlnEBIT €0.6 mln

Non-allocated & eliminationsRevenue € (2.2)mlnEBIT € (3.4)mln

ABCRevenue €24.7 mlnEBIT €0.9 mln

3

Content

Page

4. History

7. Vision, mission, strategy

11-12 Clipper

17. Q1 2012

29. Segments

4

A long and rich history2015 will mark 250th anniversary of Wessanen

1765 - Incorporated around river De Zaan

– Adriaan Wessanen started to trade in mustard, canary and other seeds

Around 1910 introducing first consumer products such as

oatmeal and cocoa

1913 - Distinguished title Royal

1959 - Listed on Euronext Amsterdam

Seventies, eighties, nineties - range of acquisitions, such as

1993 - Merger Bols and Wessanen (split 1998)

2000/01 - Acquisition Distriborg, Zonnatura, Natudis

2010 - Divestment Tree of Life, Inc

2009 - Strategic reorientation focus on organic food in Europe

2012 - To make our organic brands most desired in Europe

5

0

400

800

1200

1600

2009 2010 2011 2011 ProForma

Clipper (March '12)

KK, LR, Righi

TOL NA

PANOS

ABC

Frozen Foods

Kalisterra

Tree of Life UK

HFS

Grocery

55

Transformation 2009-2011

712 706

1,586

From portfolio approach to focus on the core

694

In € mln

6

Attractiveness organic food markets

European organic food market is an attractive and growing segment– €21 bn market, 2011 growth est. 6%– <3% of total European food market

Increasing consumer appreciation and still low per capita consumption

– European Union <€30> p.a.

– Germany <€75>, France <€55>, NL <€50>, UK <€30>

Consumers increasingly convinced of benefits of organic food regarding health, taste and environment

Grocery and HFS channels developing at different growth path– Decline percentage of households shopping in HFS channel in

the Netherlands halted

Wessanen has unique selling points;– Active in both channels (HFS and Grocery)– Strong brands in both channels– Increasingly orchestrating our European businesses– One of very few with true European presence

7

Our Vision

“To make our organic brands most desired in Europe”

GROCERY HEALTH FOOD STORES

8

Our Mission

“Our organic food, your natural choice”

9

Wessanen’s Strategy

ECONOMIC LOGIC Preferred brands that can

command a premium European scale (COGS,

innovation, expertise)

VEHICLES Own/build organic

pioneering brands in all relevant food channels

Focus on sizeable, growing markets and categories where organic creates value

Acquire businesses with strong brands and European potential

DIFFERENTIATORS Preferred brands and impactful innovation Superior product quality Orchestration of a fast, flexible and efficient value chain We are Europe’s No 1 and committed to Organic: our people have

credibility and expertise (OEC) and we provide the most comprehensive thought leadership, service, consumer insight, product range

ARENAS Healthy & sustainable nutrition through organic food in Europe

STAGING Boost growth of current

business and resolve ‘big bets’ (OGSM!)

At least one major acquisition p.a.

Divest non-core businesses at sensible speed

10

Strategic objectives 2012-14

Strategic focus Activities

Topline growth • Grow core brands• Grow core categories• Build strongholds in new markets• Country specific growth strategies• Launch fewer, bigger, better innovations• Execute acquisitions shortlist

Profitabilityimprovement

• Central sourcing savings• Pricing strategies towards customers• Improve operational excellence with SAP• Filling own factories

Enablers • Improve talent performance management / building connected leadership• Simplify how we are conducting business• Activate Organic Expertise Centre (OEC), integrate Quality

11

Clipper

• UK based tea and coffee company

– Founded in 1984

• 100% branded business

– Tea, coffee, hot chocolate

– Grocery, HFS, food service, export

• Leading position in UK organic & fair trade tea

– Everyday, green, white, infusion, specialties

• Revenue £16mln, ca 90 employees

• Manufacturing plant (incl. blending) in Dorset (UK)

• Tea is one of our core categories

• Clear potential in UK as well as other European markets

12

13

Financial Holding

Moving to a more integrated, centrally steered business

Strategic Architect

Strategic Orchestrator

Operator

Financial

Strategic guidelines

Strategic development

Operational

Stand-alone business

Shared skillsShared

business systems

Same business systems

Degree of Business Integration

Natu

re o

f C

orp

ora

te G

uid

an

ce

Wessanen in

transit

ion

Maximise value creation by

adapting governance model, decision rules and

effciency and effectiveness HQ support functions

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Link to Performance Management

Corporate OGSM

County and Functional OGSM

Align to individual objectives and development plans

Strategies & Goals

(Top-Down)

Performance Feedback

(Bottom-Up)

Linking corporate level goals to the country and functional goals and ultimately to the individual

Downwards providing clear and definitive direction to supporting functions and employees

Bottom-up providing feedback on the resources and timing required to accomplish the strategies

OGSM to align our plans and objectives

15

Brands in

Grocery

Roadmap focused on 3 business models

DescriptionDescription

Sourcing/developing, marketing and selling of own brands to grocery

• Including distribution to distribution centers and/or stores

Countries, Brands & EntitiesCountries, Brands & Entities

France: BjorgBenelux: Zonnatura, Biorganic, MerzaUK: Kallo, Whole EarthGermany: Whole Earth, Culinessa, BjorgItaly: Bjorg

Sourcing/developing, marketing and selling of own brands to HFS

• Via wholesaler in Germany• Direct to stores (France, NL)

France: Bonneterre, EvernatNL: Ekoland, De Rit, Fertilia

MolenaartjeGermany: Allos, Tartex, De Rit

Brands in HFS

Sourcing, category management, sales and distribution to HFS stores

• Focus on full range (ambient and fresh) of products and high share of products per store

France: Bonneterre, BiodistrifraisNL: Natudis, KroonBelgium: Hagor

Whole-sale

in HFS

BusinessBusiness

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Driving our brands in 2 channels

Profile

Developmen

Opportunity

WessanenFocus

Health Food Specialty Stores Grocery Retail

Small, independent, large exclusively organic assortment

Concentration, modern formats

Attract & activate mainstream consumers, innovative concepts

Professional chains, organic core assortment

Dedicated shelf results in strong growth

Build credibility and profile through strong organic ranges

Building powerful brands, large ranges,moving from push to pull marketing

Wholesale (NL, BEL, FR)

Retail formulas (NL)

Aggressive growth, powerful in-store marketingFocus on fewer, bigger brands

All countries

Profile

Development

Opportunity

WessanenFocus

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Q1 2012

18

Q1 2012 key figures

In € mln Q1 2012 Q1 2011

Revenue ¹ 170.6 178.8

Autonomous growth 1.3%

Gross contribution 65.8 65.8

As % of revenue 38.6% 36.8%

Normalised EBIT ¹ 3.0 7.0

As % of revenue 1.8% 3.9%

EBIT ¹ 3.0 8.1

Net result ² 1.5 4.5

Earnings per share (EPS) ² 0.02 0.06

Operating cash flow ¹ (5.8) (5.2)

¹ Continuing operations; ² Attributable to Wessanen equity holders

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Q1 highlights

• Continued to set further steps on our transformational journey to build our European organic business

• Witnessed comparable trends as seen last year– European consumer confidence remains low– The economy subdued– Organic food market developed relatively

favourably

• Gross margin up– Due to Grocery, ABC and HFS– Central sourcing initiatives and pricing discipline

• EBIT declining, due to step up in costs

• Increased marketing investments

• Acquisition Clipper, UK market leader in organic and fair trade tea

8,1

3,0

7,0

3,0

Q1 11 Q1 12

170,6

178,8

1.3%

EBIT (in € mln)

Revenue (in € mln)

Reported, Normalised

Autonomous third party revenue growth

20

Q1 figures per segment

Revenue Normalised EBIT

Q1 12 Q1 11 Q1 12 Q1 11

Grocery 66.4 61.8 4.8 5.9

HFS (Health Food Stores) 53.9 70.6 0.6 2.3

Frozen Foods 27.8 27.0 0.1 0.8

ABC 24.7 22.3 0.9 0.7

Non-allocated (2.2)* (2.9)* (3.4) (2.7)

Wessanen 170.6 178.8 3.0 7.0

* Eliminations for inter-segment revenue (between Grocery and HFS)

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160

165

170

175

180

185

190

Q1 11 Volume Price/ mix Currency Clipper Divestments Q1 12

Bridge - revenue growth

(4.6)%

In € mln

(1.0)% 2.3% 0.7% (7.6)%

1.3%

Autonomous revenue growth

1.0%

€178.8 €4.1€(1.8) €1.3 €(13.8)€1.8 €170.6

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Bridge - EBIT development y-on-y

0

5

10

Q1 11 Grocery HFS Frozen Foods ABC Corporate Q1 12

In € mln

€7.0 €3.0€(1.1) €(1.7) €(0.7)€0.2€(0.7)

2323

Working capital

0

20

40

60

80

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

-40

-20

0

20

40

Q408

Q109

Q209

Q309

Q409

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

4 quarter average working capital

Q-on-q movement working capital

24

Cash flow Q1

In € mln2.4 (27.5)

Sources

Uses

2.4

(19.3)

I ncrease of net debt

Net I nvestments

25.1

(8.2)

Cash flow from

earnings

I ncrease working capital

25

0

50

100

150

200

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

0

1

2

3

4

5

Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

Net debt

Leverage ratio

€57.3 mln

1.6x

Net debt and leverage ratio

In € mln

26

Financials Q1 / guidance 2012

Financials Q1

Net financing costs €(0.9) mln (Q1 2011: €(0.6) mln)

Income tax expenses €(0.8) mln (Q1 2011: €(3.0) mln)

Capex €(2.0) mln (Q1 2011: €(2.5) mln)

Guidance FY2012

Net financing costs €(3-4) mln

Effective tax rate around 30-40%

Capex about €12-14 mln

Depreciation and amortisation about €15 mln

Non-allocated expenses (incl. corporate) around €12-13 mln

27

24,722,3

Revenue breakdown per segment

53,9

70,6(5.1)%

HFS

Autonomous third party revenue growth

66,4

61,8

5.8%

Grocery

Autonomous third party revenue growth

27,827,0

3.0%

Frozen Foods

Autonomous third party revenue growth

6.5%

ABC

Autonomous third party revenue growth

28

160

165

170

175

180

185

190

Bridge - segment revenue growth

€170.6

In € mln

€(16.7)€4.6 €0.7€0.8€178.8 €2.4

29

Segments

30

• Improve talent performance management / building connected

leadership

• Simplify how we are conducting business

• Activate Organic Expertise Centre, integrate Quality

Enablers

• Central sourcing savings

• Pricing strategies towards customers

• Improve operational excellence with SAP

• Filling own factories

Profitability

improvement

• Grow core brands

• Grow core categories

• Build strongholds in new markets

• Country specific growth strategies

• Launch fewer, bigger, better innovations

• Execute acquisitions shortlist

Topline growth

ActivitiesStrategic focus

• Improve talent performance management / building connected

leadership

• Simplify how we are conducting business

• Activate Organic Expertise Centre, integrate Quality

Enablers

• Central sourcing savings

• Pricing strategies towards customers

• Improve operational excellence with SAP

• Filling own factories

Profitability

improvement

• Grow core brands

• Grow core categories

• Build strongholds in new markets

• Country specific growth strategies

• Launch fewer, bigger, better innovations

• Execute acquisitions shortlist

Topline growth

ActivitiesStrategic focus

Grocery

• Autonomous revenue growth 5.8%– Volume 3.6%, price/mix 2.2%

• Grow core brands and categories– Bjorg gaining market share– Whole Earth spreads (UK) performing well– Kallo soy milk (UK) reversing downward trend– Whole Earth, Bjorg and Culinessa growing in Germany– Gayelord Hauser strong performance (promotion driven)– Dutch Biobest shelf progressing well

• Increased marketing spending – Bjorg TV commercial– Zonnatura follow-up campaign (radio, billboards)

• EBIT decreased due to:- Increased marketing, warehouse, transportation and ICT costs

- Partly phasing, partly temporarily, partly structural - Despite higher volumes and gross margin up

Topline growth

Profitabilityimprovement

31

Grocery examples of activation

Yearly award magazine „Lebensmittel Praxis“Whole Earth Inka Taler (4 varieties)Criteria based on:Quality/Design/Distribution/Communication/Sustainability

Kallo soy launch activityDairy alternatives key categoryKallo core brand, phased out So Good

Bjorg commercialBased on success of Q2 airing, repeated in SeptemberResults: increased awareness, higher sales

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• Rebuilding

33

HFS

• Autonomous revenue growth (5.1)%– Volume (5.9)%, price/mix 0.8%

• Bonneterre (Fr) declined at wholesale and branded, while Bio-Distrifrais reported stable sales

– SAP implementation at Bonneterre early 2012 went well

• German sales stable – Allos slightly declining, Tartex and Export both growing– Tartex continues to gain traction within HFS channel

• Benelux operations showed mixed performance– Continued impact of previously lost customers – Benefitted from previously opened GooodyFooods stores, newly

gained customers– Fresh wholesaler Kroon increasing volumes, moved to premises

Vroegop-Windig– New managing director and finance director

• Operating result lower than last year– Lower volumes and increased operating expenses both contributed

• Improve talent performance management / building connected

leadership

• Simplify how we are conducting business

• Activate Organic Expertise Centre, integrate Quality

Enablers

• Central sourcing savings

• Pricing strategies towards customers

• Improve operational excellence with SAP

• Filling own factories

Profitability

improvement

• Grow core brands

• Grow core categories

• Build strongholds in new markets

• Country specific growth strategies

• Launch fewer, bigger, better innovations

• Execute acquisitions shortlist

Topline growth

ActivitiesStrategic focus

• Improve talent performance management / building connected

leadership

• Simplify how we are conducting business

• Activate Organic Expertise Centre, integrate Quality

Enablers

• Central sourcing savings

• Pricing strategies towards customers

• Improve operational excellence with SAP

• Filling own factories

Profitability

improvement

• Grow core brands

• Grow core categories

• Build strongholds in new markets

• Country specific growth strategies

• Launch fewer, bigger, better innovations

• Execute acquisitions shortlist

Topline growth

ActivitiesStrategic focus

Topline growth

Profitabilityimprovement

34

HFS examples of activation

New GooodyFooods storeOpened early October in Zaandam4th store, new ones in the pipeline

Allos cookiesNew range of cookies launchedAvailable in German HFS stores

35

Frozen Foods

• Autonomous revenue 3.0%

– Volume 1.0%, price/mix 2.0%

– Private label, out-of-home and foodservice sales increased,

whereas retail sales were about stable

• Customers continue to focus on price in Dutch retail and out-of-home

food markets, resulting in a competitive environment and difficulties in

passing on commodity cost prices, especially for private label

• EBIT decreased to €0.1 million mainly due to increased

raw material prices

• Marketing spending in line with last year

• We successfully launched a new concept ‘Broketje’,

thereby also creating entries at new customers

36

Frozen Food examples of activation

Bicky Double Chicken burgerIntroduced in October in Belgian out-of-homeFurther extension Bicky rangeNewly designed carton boxSupported by TV commercials and online campaign

Online campaign in Flanders (Dutch) and Wallonia (French)

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ABC

• Revenue +6.5% (price/mix 7.7% and volume (1.2)%)

• Cocktail business about stable

– Further expanding distribution, increase Daily’s marketing

spending, grow in-store displays and introducing new products

– Competition increasing: new players entering RTD pouches

market, which we consider a normal pattern given its growth

• Juices up driven by Little Hug and single serves

– Despite impact pruning low-margin products

• EBIT up as mixture increased marketing spending, increased

gross contribution (more favourable product mix) and

beneficial impact of low-margin product pruning

38

ABC examples of activation