1. Royal Wessanen nv
Q2 2012
Amsterdam, 25 July 2012
www.wessanen.com @RoyalWessanen
2. What is organic?!
Strict criteria to be allowed to be labelled organic
Demonstrably free from GMO, pesticides and growth hormones
Strict rules on animal welfare
Severe restrictions on fertilisers, herbicides and pesticides
Severe restrictions on additives and processing aids
All about being produced and processed in line with organic principles
Organic products promote health and well-being
Holding benefits for the planet and for future generations
All about nutrition and taste !
Organic food is controlled by a unique European certification system
At Wessanen, our vision is to make our organic brands most desired in
Europe
2
4. Q2 highlights
Revenue (in € mln)
Current subdued European economies and consumer
confidence continues to be low
(2.0)%
We set further steps in executing the strategic agenda
in a consistent manner
161.1
150.8
We continued to invest in growth of our core brands
and categories by driving innovation and activation
Autonomous third party revenue growth
EBIT (in € mln)
Q2 showing mixed results
Grocery reconfirmed that we are on right track
HFS disappointing
7.3
Short term measures to improve profitability
2.9
2 strategic steps in transforming Wessanen into fully 2.2 2.2
organic company
ABC divestment process has started Q2 11 Q2 12
Favory minority stake, obtaining full ownership
Reported, Normalised
4
5. Transformation 2010-12
In € mln
1,586
KK, LR, Righi, PANOS
1600
TOL NA
ABC
Frozen Foods
1200
Kalisterra
Tree of Life UK
712 706 694 581
800 Clipper (March '12)
HFS
Grocery
400
0
2009 2010 2011 2011 Pro 2011
Forma continued
operations
From portfolio approach to focus on core 5
6. Tangible steps taken 2010-12
1. A clear vision and mission in place
To make our organic brands most desired in Europe
2. Strategy and strategic direction clear
Strategic priorities 2012-14 in place
‘OGSM’ framework to align plans and objectives
3. Transition from a financial holding to a strategic orchestrator
6
7. Wessanen’s Strategy
ARENAS
Healthy & sustainable nutrition through organic food in Europe
STAGING VEHICLES
Boost growth of current Own/build organic
business and resolve ‘big pioneering brands in all
bets’ (OGSM!) ECONOMIC LOGIC relevant food channels
At least one major Preferred brands that can Focus on sizeable, growing
acquisition p.a. command a premium markets and categories
Divest non-core businesses European scale (COGS, where organic creates
at sensible speed innovation, expertise) 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
7
8. Strategic priorities 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
Profitability • Central sourcing savings
• Pricing strategies towards customers
improvement
• 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
8
9. Strategic objectives 2012-14
Strategic focus Activities
Topline growth • Brand activation
• Bjorg during ‘Atelier bio’ weeks in France
• Gayelord Hauser
9
Atelier bio nut Leclerc Albi
12. Strategic objectives 2012-14
Strategic focus Activities
Topline growth • Acquisitions (Clipper)
• Assortment line-up and brand activation
• Preparing for European roll-out in early 2013
Clipper ‘Congo’ TV ad
aired in spring 12
13. Strategic objectives 2012-14
Strategic focus Activities
Profitability • Gross margin improvement - in particular in Grocery - both in
2011 and 2012
improvement
• Deployment of SAP in France, the Netherlands, UK
• Germany and Clipper planned for
• Filling the factories in Germany with product categories such as
breakfast cereals and pasta sauces
13
14. Strategic objectives 2012-14
Strategic focus Activities
Enablers • Leadership programme in first half 2012 for top-65 of Wessanen
• Practical toolbox to accelerate the execution of the strategy
• 4 CBT teams to boost innovations
• OEC up-and-running
14
15. Ronald Merckx (CFO)
• Financials (p&l, net debt, cash flow, working capital)
• Frozen Foods
• Discontinued operations - ABC
15
16. Q2 2012 key figures
In € mln Q2 2012 Q2 2011
Revenue ¹ 150.8 161.1
Autonomous growth (2.0)%
Gross contribution 59.9 62.5
As % of revenue 39.7% 38.8%
Normalised EBIT ¹ 2.2 7.3
As % of revenue 1.5% 4.5%
EBIT ¹ 2.2 2.9
Result discontinued operations (net of tax) 2.2 4.1
Net result ² 3.1 5.4
Earnings per share (EPS) ² 0.04 0.07
¹ Continuing operations; ² Attributable to Wessanen equity holders
16
17. Bridge - revenue growth
In € mln
175
(4.6)% 2.6% 0.7% (0.7)% (4.3% (6.4)%
165
155
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€161.1 €(7.4) €4.2 €1.0 €(1.0) €(6.9) €150.8
17
19. Cash flow Q2
In € mln
Increase working
(0.4)
capital (*)
Net Investments
(0.7)
(*)
Cash flow
from 4.4
earnings (*)
(6.1)
Sources Dividends paid
Increase of
4.7
net debt
Derivatives and FX
(1.6)
Discontinued
(0.3)
operations
Uses
19
20. Working capital
80
4 quarter average working capital Cont. operations
ABC
60
40
20
0
Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12
40
q-on-q movement working capital
20
0
-20
-40
Q4 08 Q2 09 Q4 09 Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 20
21. Net debt and leverage ratio
In € mln
150
Net debt
€62.0 mln
75
0
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
4
Leverage ratio
2.1x
2
0
Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12
21
22. Frozen Foods
Full ownership Favory Convenience Food Group
Acquired 35.9% stake held by Rabo Capital
Partly deferred consideration of €5 million
Further strategic alignment and process integration to improve results
To execute strategy and maximise shareholder value.
Autonomous revenue (2.4)% (volume (5.8)%, price/mix 3.4%)
Ongoing focus on price, competitive environment with more
promotions
EBIT of (€0.6 mln) lower y-on-y
Operating expenses (incl. marketing) in line with last year
Implemented price increases could not fully compensate increased
purchase price of raw materials
Beckers focused on brand activation in out-of-home and retail channels
22
23. Discontinued operations - ABC
Divestment process officially started, signing targeted in Q4
Q2 2012 another strong quarter
Autonomous growth 30.1% (volume 18.8%; price/mix 11.3%)
Daily’s and Little Hug both grew volumes strongly
RTD cocktail market continued to rapidly grow
• Frozen pouches segment driver
Little Hug clearly gaining market share in single-serve fruit drinks
• Segment growing modestly
EBIT lower at US$ 4.9 million
Strong increase marketing investments
• Supporting 2 key seasonal holidays (Memorial Day, 4th of July)
23
24. ABC - Daily’s
TV commercials
7w sweepstake
4th of July Mobile website
coupon
24
26. ABC - Little Hug
Embossed barrel &
Coupons new brand logo on cap
What did we change in last two years ?!
• New Brand Name New more convenient packaging
• New graphic design for cases
• New bottle with logo
• New higher quality box material
• New Kiwi-Strawberry flavour
• New Improved taste enriched with vitamins B / E
• New communication of product attributes
• New levels of advertising support
• New straws added 26
28. Closing remarks
Clarity, alignment and commitment regarding strategy
Strategic priorities are set out, and being executed
Good progress made in transforming role of HQ from financial
holding to strategic orchestrator
Clear steps to create focus
Better connected leadership throughout the company
Consumer confidence and reduced spending impacted growth
Mixed results between and in different channels
Short term measures will improve business results
Sharpened strategic focus and change in Group composition
cause us to assess our organisation structure and cost base
28
31. Attractiveness organic food markets
European organic food an attractive, growing segment
Size €21 bn; 2011 growth around 6%
<3% of total European food market
Increasing consumer appreciation
Still low per capita consumption
European Union <€30> p.a.
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
31
32. What is organic?!
Strict criteria to be allowed to be labelled organic
Demonstrably free from GMO, pesticides and growth hormones
Strict rules on animal welfare
Severe restrictions on fertilisers, herbicides and pesticides
Severe restrictions on additives and processing aids
All about being produced and processed in line with organic principles
Organic products promote health and well-being
Holding benefits for the planet and for future generations
All about nutrition and taste !
Organic food is controlled by a unique European certification system
32
33. Wessanen Business principles
Compliance with laws: being a responsible partner in society,
acting with integrity towards all stakeholders and others who
can be affected by our activities
Environment: in line with commitment to sustainable
development, we will do all that is reasonable and practicable to
minimise adverse effects on the environment
Product safety: we aim at all times to supply safe products
and services
Free market competition: we support free market
competition as basis of conducting business; we observe
applicable competition laws and regulations
Child, bonded and forced labour: under no circumstances we
are making use of forced or bonded labour; we do not employ
children in violation of relevant conventions of ILO
Human rights: we support and respect human rights and
strive to ensure that our activities do not make it an accessory
to infringements of human rights
We expect suppliers and business partners to comply with the above principles
33
34. Commitment to minimise environmental impact
Committed to minimising impact on environment by
measuring and monitoring the effects of our operations
All our organic products are free of GMO
We are working on reducing our CO2 footprint and usage of
water
Additionally, organic products do not use pesticides,
therefore contributing to a decrease
ISO 14001 is an internationally recognised standard for
embedding processes to analyse and reduce our impact on
the environment
34
36. Palm oil - member RSPO
Palm oil is important, versatile raw material for food
Only be cultivated in tropical areas of Asia, Africa and South America
Concerns that demand causing expansion of plantations into eco-sensitive areas
Since March 2011 Member of Roundtable on Sustainable Palm Oil (RSPO)
Global multi-stakeholder initiative
Encouraging sustainable production/use palm oil
Wessanen commits to organisation’s objectives
In 2011, we developed policy to govern palm oil sourcing and guidelines for implementation in
partnership with our suppliers
Committed to switching palm oil to RSPO certified sustainable palm oil during 2012-13
RSPO certified segregated palm oil for organic
GREEN PALM certificates for conventional
36
37. Organic Expertise Centre (OEC)
We established our internal expertise - named OEC - in 2010
To stimulate exchange of knowledge / experience that is widely available
within Wessanen
To educate and inspire our internal / external stakeholders in organic values
Specialists join forces and work on pan-European issues
To legitimise our position in organic world by championing the organic case
Focal areas will be:
Training (incl. training package for newcomers) and founding Organic
Academy
Knowledge building by teaming up with external researchers and experts
Lobbying to promote organic food
Communication for more general awareness / knowledge of organic food
37
38. Employee engagement
2012 Leadership development programme
Top-65
Focus on strategy execution, connected leadership
Employee turnover is key focus area
Competency model deployed
Defines behaviour expectations for all employees
Translates ambitions/values into behaviour conventions
and skills
100% 120 8
75% 6
80
50% 4
40
25% 2
0% 0 0
Executives Managers Associates 2009 2010 2011 2009 2010 2011
38
Men Women Injury severity rate Injury frequency rate
40. Revenue Q2 - €151 mln
Grocery HFS (Health Food Stores)
Revenue €71.7 mln Revenue €52.0 mln
EBIT €4.3 mln EBIT €(1.1) mln
47%
19%
34%
Frozen Foods Non-allocated & eliminations
Revenue €29.1 mln Revenue € (2.0)mln
EBIT €0.6 mln EBIT € (1.6)mln
Discontinued operations - ABC
Revenue $64.7 mln
EBIT $4.9 mln
40
41. Revenue breakdown per segment
Grocery HFS
2.0%
(5.9)%
68.9
71.1
52.0
65.9
Autonomous third party revenue growth Autonomous third party revenue growth
Frozen Foods
Discontinued operations – ABC
in US$
30.1%
(2.4)%
29.7 29.1 64.7
49.9
Autonomous third party revenue growth Autonomous third party revenue growth
41
