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Half year investor conference 2020 Strategy

Half year investor conference 2020 Strategy 15
Half year investor conference 2020 Strategy 27th August 2015 1 Half year investor conference 2015 Half year results 2 2015 Half Year Results Financial summary Sales of CHF 2.2 billion, an increase of 1.3% on a like-for-like basis, briefs pipeline and win rate sustained at a high level Operating leverage and strong cost focus driving improved EBITDA margin Net income of CHF 339 million, up 11.2% versus 2014 Strong cash flow, on track to deliver on 2015 targets Net debt CHF 1,050 million, leverage ratio 23% Confidential and proprietary business information of Givaudan 3 27th August 2015 2015 Half Year Results Operating performance: Consistent improvement Gross 46.6% 46.5% margin Sales of CHF 2,184 million (2014: CHF 2,191 million) Gross margin of 46.5% compared to 46.6% EBITDA 566 (in million Swiss francs) in 2014, lower operational costs in Flavours and supply chain efficiencies, offset by impact of currencies 562 EBITDA of CHF 566 million, up 0.6%, driven by strong cost control. One off net non cash gain of CHF 20 million in 2015, compared to one-off gain of CHF 38 million in 2014 EBITDA margin of 25.9%, up from 25.6% in 2014 Operating income of CHF 428 million, up 1.6% from 2014, driven by higher EBITDA and lower amortisation of intangibles HY 2014 HY 2015 25.9% 25.6% EBITDA margin As % Underlying of sales 25.0% 23.9% EBITDA margin Confidential and proprietary business information of Givaudan 27th August 2015 4 2015 Half Year Results Net income: increasing by 11% as a result of continued strong operating performance Income before tax of CHF 381 million, up from CHF 376 million in 2014, driven by: Net income • Improved EBITDA In CHF million • Flat financial expenses 339 Effective tax rate of 11%, underlying tax rate of 19%, the same as in June 2014 Net income of CHF 339 million, or 15.5% of sales, versus 13.9% in 2014 Basic EPS of CHF 36.82, versus CHF 33.13 in 2014 305 HY 2014 HY 2015 Basic 36.82 33.13 EPS (CHF) Confidential and proprietary business information of Givaudan 27th August 2015 5 2015 Half Year Results Free cash flow: strong underlying performance Operating cash flow of CHF 341 million, up from CHF 218 million in 2014 Free cash flow In CHF million Working capital as a % of sales down slightly versus HY 2014 248 Total investments of CHF 57 million, including the completion of the facility in Nantong, China, compared to CHF 46 million in 2014 178 Net investments as % of sales were 3.4% in 2015, compared to 0.5% in 2014 HY 2014 HY 2015 As % 11.4% 8.1% of sales Confidential and proprietary business information of Givaudan 27th August 2015 6 2015 Half Year Results Leverage ratio: Continuing to de-leverage on a yearly basis • Leverage ratio of 23% as at June 2015 as a result of solid cash flow generation and despite currency impact on equity following the strengthening of the Swiss franc in Jan 2015 • Intention to maintain a medium term leverage ratio target below 25% • Company will exclude from equity definition any impact arising from changes in IAS 19 26% 24% 24% 23% 18% 17% Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 th Confidential and proprietary business information of Givaudan 27 August 2015 7 2015 Half Year Results On track to deliver on our ambitious mid-term guidance 4.5 to 5.5% 14-16% Above 60% Best-in-class organic sales growth free cash flow as % free cash flow return EBITDA 2 1 per annum of sales in 2015 to shareholders Driven by a five-pillar strategy Developing markets Research and Health and wellness Sustainable sourcing Targeted customers development of raw materials and segments 1 FCF (free cash flow), above 60% return to shareholders whilst maintaining a leverage ratio of no more than 25% 2 Sales growth assumes a market growth of 2-3% Confidential and proprietary business information of Givaudan 8 27th August 2015 2020 Strategy Responsible growth. Shared success. 9 Executing our strategy 2010-2015 Increase footprint Expand beyond Deliver innovation Develop innovative in high growth Fragrances and to customers sourcing strategies markets Flavours New Fragrance molecules Origination programme Mako, Hungary Health and wellness taste Strong palette of Long-term partnerships solutions Cimanggis, Indonesia innovative Flavour Fragrance Ingredients ingredients Integrated beverage Nantong, China joint venture in China solutions New technologies Mumbai, India Active cosmetic New delivery systems Singapore ingredients São Paulo, Brazil Buenos Aires, Argentina Pedro Escobedo, Mexico Dubai, UAE New offices Pakistan, Nigeria, Myanmar • SAP • Lean manufacturing Operate with excellence • Supply chain management • Givaudan Shared Services Confidential and proprietary business information of Givaudan 10 27th August 2015 Mega trends Our consumer base is growing. Add date using "Insert" - "Header & Footer" Mega trends We are living longer and more responsibly. Add date using "Insert" - "Header & Footer" Mega trends Our world is interconnected. Add date using "Insert" - "Header & Footer" Our customers’ focus for their brands is consistent …whether global …or local/regional “We will introduce its “Everything our “We will continue to meet family standard of business has done has “We are developing transparency with the the health demands of been based on a new business practices consumers from release of its new ad commitment that grow both our entitled ‘Honesty’. The different regions and of respect for company and ad emphasizes the help consumers to live a the environment and communities, meeting healthy life.” company’s commitment to social people's desire for disclosing the ingredients responsibility.” more sustainable in its products.” products and creating a brighter future.” “Our business revolves “Our ambition for the around ordinary days, “Is committed to coming years is to win supporting cleanliness, increasing the “Healthy and tasty over another one billion health and comfort while nutritional value of natural food. Products consumers around the protecting our global gathered from nature our products whilst world by creating the environment. Dedicated improving taste and to nourish your well- cosmetic products that to creating a future full of being.” pleasure. We believe meet the infinite health, hope and in a balanced healthy diversity of their beauty happiness.” lifestyle and eating needs and desires.” habits, and we actively support their promotion.” Confidential information of Givaudan 27th August 2015 14 What do customers expect? Trust Creative Knowledgeable Partner Transparent 15 Confidential and proprietary business information of Givaudan 27th August 2015 A A Ad d dd d d d d da a at tte e e u u us s siiin n ng g g " " "I IIn n ns s se e er rrt tt" " " - - - " " "H H He e ea a ad d de e er rr & & & F F Fo o oo o ot tte e er rr" " " Sustainable Innovative Agile Insightful Collaborative Responsible Cost-effective Customers at the heart of our business Cu Cus st tomer omer Orders Orders Customer Partnership 16 Confidential and proprietary business information of Givaudan 27th August 2015 Vision To inspire emotion through our creations every day, everywhere, as we strive for a better tomorrow. 17 Confidential and proprietary business information of Givaudan 27th August 2015 Mission Together with our customers, we craft memorable experiences that bring moments of delight to consumers. 18 Confidential and proprietary business information of Givaudan 27th August 2015 A A Ad d dd d d d d da a at tte e e u u us s siiin n ng g g " " "I IIn n ns s se e er rrt tt" " " - - - " " "H H He e ea a ad d de e er rr & & & F F Fo o oo o ot tte e er rr" " " Responsible growth. Shared success. •Shared success. Responsible growth. Shared success. 20 Confidential and proprietary business information of Givaudan 27th August 2015 A A Ad d dd d d d d da a at tte e e u u us s siiin n ng g g " " "I IIn n ns s se e er rrt tt" " " - - - " " "H H He e ea a ad d de e er rr & & & F F Fo o oo o ot tte e er rr" " " 2020 Strategy Flavours 21 Global trends Impact on Flavours Almost 80% of flavours market growth in high growth markets Biggest opportunity is in high growth markets Local and regional brands gaining relevance with consumers Global customers seeing more share from high growth markets Givaudan estimate Confidential and proprietary business information of Givaudan 27th August 2015 22 Global trends Impact on Flavours Customers moving More towards natural and clean label products consumer empowerment & desire for transparency and authenticity Doubling of product launches with “no artificial ingredients” In H&W category, “natural” is the most frequent product positioning, accounting for almost 40% of the category Innova Marketing Insights 2014 2013 Euromonitor International’s health and wellness data Confidential and proprietary business information of Givaudan 27th August 2015 23 Global trends Increased demand for healthier products with Impact on Flavours less fat, sugar, salt. • In H&W category, 21% are better-for-you products. Beverage calories Role of food in school reduced changing with focus 69% on well-being Growing popularity of ‘functional foods’. • In H&W category, 35% are fortified/functional products. Functional food ingredients market worth 2.5 B USD by 2020 2013 Euromonitor International’s health and wellness data Markets and Markets, "Functional Food Ingredients Market…Global Forecast to 2020“, June 2015 Confidential and proprietary business information of Givaudan 27th August 2015 24 Global trends Impact on Flavours Large customers removing costs while seeking to spur innovation Top 25 US food and New local and beverage companies lost equivalent of 18 B USD in market share since Stronger small brands preferred 2009 competitive market by consumers & customer expectations are shifting Small players transform traditional categories Credit Suisse analyst Robert Moskow cited in Fortune, 01/06/15 Confidential and proprietary business information of Givaudan 27th August 2015 25 Market structure Flavours APAC Asia-Pacific EAME Europe, Africa, Middle East 10.5 B CHF Market Potential as of 2015 LATAM Latin America NOAM Market potential as of 2015 North America Givaudan market share as of 2015 Based on Givaudan internal estimates Confidential and proprietary business information of Givaudan 27th August 2015 26 2020 Growth aspirations High growth vs. mature markets +0.3 B CHF Mature markets 2015 2020 % of sales % of sales CAGR +1.4 4-5% 45% 51% B CHF 55% 49% +1.1 B CHF High growth markets Mature markets High growth markets Market growth CAGR Givaudan growth CAGR Givaudan internal estimates Confidential and proprietary business information of Givaudan 27th August 2015 27 Responsible growth. Shared success. 28 Confidential and proprietary business information of Givaudan 27th August 2015 27th August 2015 28 High growth markets Where to play Growing with our customers 1 China Confidential and proprietary business information of Givaudan 29 27th August 2015 High growth markets Where to play Growing with our customers 5 1 India Mexico Thailand Indonesia Brazil Confidential and proprietary business information of Givaudan 30 27th August 2015 High growth markets Where to play Growing with our customers 5 5 1 Pakistan Egypt Vietnam Nigeria Philippines Confidential and proprietary business information of Givaudan 31 27th August 2015 High growth markets How to win Growing with our customers Local Local talent Local infrastructure Localised business model Confidential information of Givaudan 27th August 2015 32 Consumer preferred products Where to play Growing with our customers 01 Beverages 01 02 02 Yogurts 03 Processed meats 03 04 04 Dairy drinks Confidential and proprietary business information of Givaudan 27th August 2015 33 Consumer preferred products How to win Growing with our customers Innovation & Creativity Leverage innovation and creativity Focused investments Refined business model Confidential information of Givaudan 27th August 2015 34 Health and well-being Where to play Growing with our customers Enable ‘positive’ health Reduce ‘negative’ Strengthen our extensive ingredient use ingredient use natural flavour offerings Confidential and proprietary business information of Givaudan 35 27th August 2015 Health and well-being How to win Growing with our customers Health & Wellness Investing in masking and taste technologies Natural products Strengthening our naturals innovation platform Leveraging traditional and emerging technologies Leadership in regulatory landscape Confidential information of Givaudan 27th August 2015 36 Excellence in execution How to win Delivering with excellence Customer Operations experience Ensure the delivery Create differentiation of high quality and competitive products and advantage through a services that are cost superior customer efficient, safe and experience sustainable. Streamlined enterprise Agility Improve efficiency and Be fast, focused and evolve business model agile Confidential and proprietary business information of Givaudan 37 27th August 2015 2020 Growth aspirations Additional growth Growth drivers Integrated solutions Confidential information of Givaudan 27th August 2015 38 Responsible growth. Shared success. 39 Confidential and proprietary business information of Givaudan 27th August 2015 27th August 2015 39 2020 Strategy Fragrances • 27 August 2015 40 Global trends Impact on Fragrances Development of specialty retailers and e-commerce An evolution in retail Local brands have the opportunity to Innovation is moving at quickly increase their relevance with an increasingly fast pace consumers Confidential and proprietary business information of Givaudan 27th August 2015 41 Global trends Impact on Fragrances Consumers want to know more about what is in products More consumer empowerment Consumers “vote with a click” Bloggers have a growing role in shaping Fine Fragrances, Beauty Care and Cosmetics Confidential and proprietary business information of Givaudan 27th August 2015 42 Global trends Impact on Fragrances Cosmetic market expected to have significant growth Strong demand for cosmetic products seen in high Staying growth markets beautiful Growth in cosmetic industry driven by ageing population longer Confidential and proprietary business information of Givaudan 27th August 2015 43 Global trends Impact on Fragrances Strong growth of fine fragrance brands with high fragrance investment Customer investment in Significant demand for encapsulation in fabric conditioner, hair sensorial care, shower gels, deodorants innovation Over-proportional dose of fragrances in high growth markets Confidential and proprietary business information of Givaudan 27th August 2015 44 Market structure Fragrances CP Consumer Products FF 8.7 B CHF Fine Fragrances Market Potential as of 2015 FIB Fragrance Ingredient Business ACI + 1.0 B CHF Market potential as of 2015 Active cosmetic Givaudan market share as of 2015 ingredients Based on Givaudan internal estimates Confidential and proprietary business information of Givaudan 27th August 2015 45 2020 Growth aspirations High growth vs. mature markets +0.4 B CHF Mature markets 2015 2020 % of sales % of sales CAGR +1.4 4-5% 48% 53% B CHF 47% 52% +1.0 B CHF High growth markets Mature markets Market growth CAGR High growth Givaudan share marke ts Givaudan internal estimates Confidential and proprietary business information of Givaudan 27th August 2015 46 Responsible growth. Shared success. 47 Confidential and proprietary business information of Givaudan 27th August 2015 27th August 2015 47 High growth markets Where to play Growing with our customers Consumer Products APAC China, SEA South Asia, Middle East & Africa LATAM Africa, India, Middle Brazil, Mexico East Confidential and proprietary business information of Givaudan 27th August 2015 48 High growth markets Where to play Growing with our customers Fine Fragrances APAC Develop in South Asia, Singapore Middle East & Africa LATAM Expand in Dubai Brazil, Colombia Mexico Confidential and proprietary business information of Givaudan 27th August 2015 49 High growth markets How to win Growing with our customers Consumer Products Increase presence in new markets e.g. Africa Invest in talent e.g. Perfumery School in Singapore Invest in infrastructure Fine Fragrances Establish the Fine Fragrance team in Singapore Invest in talent e.g. Perfumery School in Singapore Invest in infrastructure Confidential information of Givaudan 27th August 2015 50 Consumer preferred products Where to play Growing with our customers Further reinforce the partnerships where we have a strong presence Increase pipeline with selected customers Accelerate in high opportunity categories Confidential and proprietary business information of Givaudan 27th August 2015 51 Consumer preferred products How to win Growing with our customers Consumer Products Reinforce customer partnerships Implement proactive programmes in key categories Focus R&D innovation on ingredients and delivery systems Leverage Global Category Management to build consumer insights Confidential information of Givaudan 27th August 2015 52 Consumer preferred products How to win Growing with our customers Fine Fragrances Expand innovation programmes in naturals Strengthen customer partnerships Implement creative programmess to define future olfactive vision Use consumer insights from Perfume Club to co-create Confidential information of Givaudan 27th August 2015 53 Consumer preferred products How to win Growing with our customers Fragrance Ingredients Innovation in molecules and processes Invest to drive cost effectiveness e.g. joint venture for production in China and expansion of manufacturing in Mexico Confidential information of Givaudan 27th August 2015 54 54 Health and well-being Where to play Growing with our customers Active Asian consumer in close- Cosmetic up treating the skin Ingredients Confidential and proprietary business information of Givaudan 27th August 2015 55 Health and well-being How to win Growing with our customers Active Cosmetic Ingredients Use synergies within Fragrances Exploit Soliance biotechnology Leverage teams in high growth markets Expand through acquisitions Confidential information of Givaudan 27th August 2015 56 56 Excellence in execution How to win Delivering with excellence Customer Operations experience Leverage best practices To provide superior from our Continuous customer partnership Improvement processes from brief to delivery Streamlined enterprise Agility Improve efficiency and Global expertise with evolve business model a focused and agile local execution Confidential and proprietary business information of Givaudan 27th August 2015 57 Responsible growth. Shared success. 58 Confidential and proprietary business information of Givaudan 27th August 2015 27th August 2015 58 2020 Strategy Partnering for shared success Responsible growth. Shared success. 60 Confidential and proprietary business information of Givaudan 27th August 2015 A A A Ad d d dd d d d d d d da a a at t tte e e e u u u us s s siiiin n n ng g g g " " " "I I IIn n n ns s s se e e er r rrt t tt" " " " - - - - " " " "H H H He e e ea a a ad d d de e e er r rr & & & & F F F Fo o o oo o o ot t tte e e er r rr" " " " 60 Innovators Partnering for shared success Existing capabilities New capabilities • Organic chemistry • Enhanced fermentation • Natural isolation and • Design biotransformation concentration • Advanced agricultural Strategic • Fermentation techniques • High through-put screening • Sensory psychology and partnerships neuroscience • Sensory analysis • Natural product chemistry Confidential and proprietary business information of Givaudan 27th August 2015 61 People Partnering for shared success Culture: promote a diverse workforce which operates in an agile and collaborative way Talent: nurture a pipeline of industry experts and future leaders to develop skills for sustained success Performance: create an environment where our people feel empowered to partner with their customers to deliver growth Professional and cultural diversity Givaudan employees from around the world Confidential and proprietary business information of Givaudan 27th August 2015 62 Suppliers Partnering for shared success Apply breakthrough sourcing models to generate competitive advantage Lead the industry in responsible sourcing to best meet customer expectations Manage supply risk effectively while delivering cost and cash leadership Patchouli harvest Borneo, Indonesia Givaudan Origination Confidential and proprietary business information of Givaudan 27th August 2015 63 Communities Partnering for shared success Striving for a better tomorrow • Support locally relevant projects and charitable causes in the communities within which we operate globally • Aim to decouple growth and environmental impact KidStrong Programme Givaudan Shanghai Riverfront Supporting migrant children's access to health services, nutrition and education Confidential and proprietary business information of Givaudan 27th August 2015 64 Stabilizing impact while increasing production volumes Partnering for shared success Ahead of schedule Raising the bar for 2020 2010-2020 Eco-efficiency targets (consumption per tonne of product) • Reduce CO footprint by at least 4% of 2 the absolute CO footprint of the 2 previous year • Reduce waste production and energy consumption per tonne of product by 4% each year as compared to the previous year -15% -20% • Reduce water usage by 15% per tonne -25% of product from 2010 to 2020 -15% Status as of 31 December 2014 Target set in 2010 for 2020 remains the same target as established in 2010 Confidential and proprietary business information of Givaudan 27th August 2015 65 Energy Water CO 2 Waste Responsible growth. Shared success. 66 Confidential and proprietary business information of Givaudan 27th August 2015 A A Ad d dd d d d d da a at tte e e u u us s siiin n ng g g " " "I IIn n ns s se e er rrt tt" " " - - - " " "H H He e ea a ad d de e er rr & & & F F Fo o oo o ot tte e er rr" " " Creating value 15 years of growth 60 2000 50 1800 40 1600 1400 30 1200 1000 20 800 600 10 400 200 0 0 0 Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15 Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15 5 Share Price Dividend per Share 2000-2015 2000-2015 Share price evolution Dividend per share Confidential and proprietary business information of Givaudan 27th August 2015 67 Responsible growth. Shared success. 4–5% 12–17% Partner Average free cash Average organic sales of choice flow as growth % of sales Creating additional value through acquisitions Average over the 5 year period 68 Confidential and proprietary business information of Givaudan 27th August 2015 A A Ad d dd d d d d da a at tte e e u u us s siiin n ng g g " " "I IIn n ns s se e er rrt tt" " " - - - " " "H H He e ea a ad d de e er rr & & & F F Fo o oo o ot tte e er rr" " " 68 2020 Strategy Responsible growth. Shared success. •Shared success. 69 Disclaimer No warranty and no liability: While Givaudan is making great efforts to include accurate and up-to-date information, we make no representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided on this presentation/handout and disclaim any liability for the use of it. No offer and no solicitation: The information provided on this handout does not constitute an offer of or solicitation for the purchase or disposal, trading or any transaction in any Givaudan securities. Investors must not rely on this information for investment decisions. Forward-looking information: This handout may contain forward-looking information. Such information is subject to a variety of significant uncertainties, including scientific, business, economic and financial factors, and therefore actual results may differ significantly from those presented. Copyright © 2015 Givaudan SA. All rights reserved. 2015 Half Year Results Presentation 70
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