Company Overview. November 2014

Transcription

1 Company Overview November 2014

2 Frutarom s Foundations Founded in 1933, Frutarom combined the cultivation of aromatic plants and flowers with the extraction and distillation of flavors, fine ingredients and essential oils. 3

3 Frutarom - A Leading Fast Growing Global Flavor and Fine Ingredient House Global company Broad product portfolio Financial success since 2000 Public company Sales in 150 countries 15,500 customers A Top 10 flavor house 31,000 products 4,000 raw materials Innovative pipeline 9.8x growth in sales (CAGR 19.2%) 14.9x growth in EBITDA 17.7x growth in net profit Listed on London & TLV Stock Exchanges From $13M to approx. $1. 5B market cap Renenue, $M *Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1,

4 Frutarom - A Global Company Accelerated growth through organic and strategic acquisitions Citrasource 1996 Tel Aviv stock exchange HK F&F Tohar Ukraine Russia Turkey Kazakhstan Rayner Hong Kong Mexico Canada Flachsmann France IFF FS London stock exchange Poland AM Todd Acatris Nesse Rad Gewurzmuller Abaco Adumim S. Africa CH Hansen DE FSI Corona Oxford Czech Rep. Costa Rica FSI OH Aromco CH Hansen IT Etol Mylner Savoury Flavours JannDeRee Montana PTI Aroma Hagelin Flavour Key Brazil CPL Aroma Raychan EAFI Baltimore Meer India Jupiter Rieber Botanicare Kunshan Belmay Sales office Acquisition 5

5 Frutarom - A Global Company We provide our customers with global and local support Corona, CA Cincinnati, OH New Jersey Mexico Georgia Guatemala Florida Norway Denmark Netherlands UK North Germany UK South Belgium France Switzerland Italy Saint Petersburg Belarus Moscow Ukraine Novosibirsk Poland Perm Slovakia Saratov Serbia Moldova Kazakhstan Slovenia Turkey China Israel India Hong Kong Costa Rica Peru Indonesia Singapore Brazil Production 35 Sites Chile R&D 42 Labs Sales & Marketing 81 Offices South Africa 6

6 Frutarom - A Profitable Growth Story (Sales, EBITDA, Net Profit, USD M) Tel Aviv stock exchange Baltimore Botanicare HK F&F Tohar Flavour key Meer Kunshan 81 Ukraine Kazakhstan Russia Rayner Net Profit Turkey Hong Kong X17.7 Brazil India CPL Aroma Mexico Canada Flachsmann France IFF FS 32 London stock exchange Poland AM Todd Acatris EBITDA Profit X Nesse Rad Gewurzmulle r Abaco Adumim Raychan Jupiter Balmey S. Africa CH Hansen DE FSI Corona 80 Oxford 618 Sales Czech Rep. X9.8 Costa Rica FSI OH Aromco CH Hansen IT EAFI Rieber Etol Mylner Savoury Flavours 71* 792* 134* JannDeRee PTI AROMA Heglin *Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1,

7 A Top-Ten Flavor House Estimated Sales of Flavor US$ M +700 smaller companies Source: Companies Publications, Leffingwell & Associates, Reuters, Frutarom s estimations * Sales in Core Business on a pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1,

8 Continued Focus on Achieving Strategic Goals Accelerating Growth In Emerging Markets. Fastest growing markets Expanding Market Share In The US. World s biggest flavor market Constantly improving product mix. Towards more profitable segments Supply Chain Optimization. Supported also by acquisitions Accelerated Profitable Growth Sales Grew From $10M at 1990 to $792M at 2013* EBITDA Grew From $1M at 1990 to $134M at 2013* Solid Cash Flow *Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1,

9 Accelerated Growth and Market Share in Emerging Markets Asia Expanded R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam, Sri Lanka Setting up flavor operation in India Building a state-of-the-art plant in China with both savory and sweet flavors capabilities Evaluating strategic acquisition opportunities Central & South America Acquired Mylner in Brazil, Aroma in Guatemala and Montana in Peru and Chile Set up an independent operation in Costa Rica and Mexico Evaluating strategic acquisition opportunities Central and Eastern Europe Acquired Etol in Slovenia and PTI in Russia One of the only global players with major production sites in Russia Market leadership in Central and East Europe Cross selling and optimization opportunities Africa Fast growing operation in South Africa, reinforced by JannDeRee acquisition Enhanced R&D and sales force in fast growing markets (Kenya, Nigeria and others) Building state-of-the-art manufacturing facility 10

10 Expanding Flavors Market Share in the US USA Focus on the US as a key strategic market Strengthening US presence through 2 strategic acquisitions Flavor Specialties in the West Coast in 2009 Flavor Solutions in Cincinnati in 2011 Fast, above market rate, internal growth Additional meaningful foothold through the acquisition of Hagelin in 2013 Lucrative beverage market Diversified customer base Technological know how

11 Growing Share of Emerging Markets and the USA Sales by Geography Growth Rate 79 (10%) 86 (11%) 68 (11%) 66 (11%) 272 (34%) 60 (13%) 41 (9%) 229 (51%) 262 (42%) 355 (45%) 2x growth in the USA** 31% growth in the BRIC countries* 3x growth in emerging markets** 222 (36%) 122 (27%) Proforma * Emerging Markets Western Europe USA ROW * Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013 ** 9 months to Sep 2014 compared to 9 months in

12 Growing the Core Business Taste Solutions ~72%* of sales Fine Ingredients ~19%* of sales Unique, high quality creation of sweet and savory flavors for food and beverage products Expertise in local and global tastes Operational flexibility and local global supply chain Value-added functional savory solutions for the food industry (snacks, meat, fish, organic, and culinary segments) Comprehensive sweet and savory food systems Unique technologies for fruit, spice, vegetable, meat and fish preparations Specialty botanical extracts, distillates, essential oils and aroma chemicals Innovative, science-based health ingredients for phyto-pharmaceuticals, nutraceuticals, dietary supplements, functional foods, cosmetics, and personal care Supporting the growing demand for health, wellness and beauty Trade & Marketing, ~9%* of sales Strengthening Frutarom s partnership and offering to customers *Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1,

13 Taste Solutions Fine Ingredients We share the Passion for Taste & Health We develop tailored solutions combining excellent taste with health and functionality all under one roof 14

14 Consumers Trends Health, Wellness & Functional Food 67% of consumers state they attempt to consume healthier food and beverages either "all" or "most" of the time, but unwilling to forgo taste even for health Growth drivers Aging population and Rising obesity Rising Consumer Awareness Opportunities Avoidance products ("Free-from /"zero ) or Moderation Products with "diet, "low, "less" Positive nutrition and functional foods Lifestyle & Income Shorter Life Cycle of new Launches Convenience and processed food Innovation Natural & Healthy Natural products and clean label Source: DATAMONITOR 2011 REPORT, The NPD Group,

15 Key Market Drivers Natural and Clean Label Health & Wellness Reduced fat, calories & salt Innovation Functional Food Products with Health properties Cost Reduction Convenience Ready Meals Frutarom provides Novel and Natural Health & Taste solutions 16

16 Flavors - Most Profitable Activity Growing Fast (Revenues in US$ M) EBITDA Margin Full Year (Revenues in US$ M) EBITDA Margin 9M % % 18.7% % % 19.0% 20.4% * % of total sales % 72% Above average market growth rates Increasing market share in Emerging Markets - Latin America, Asia, Central and Eastern Europe, Africa North America flavor sales grew by more than 5x times since 2010** * Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013 ** based on sales in 9M of 2014 compared with 9M of

17 Fine Ingredients Improved profitability EBITDA Margin Improvement was driven by Enhanced product mix Focus on Natural high added value taste and health fine ingredients New innovative products successfully launched 14.7% 18

18 Growing Mid-Sized Food & Beverage Market Over 65% of Market Controlled by Mid-Sized and Local Companies The Global Food Market (% of Market Share) Fragmented market New mid-sized/local companies emerging Private label Developing markets Service expectations *Source: Feb, 2014 Datamonitor, Euromonitor and Frutarom s estimations 19

19 F&F Market Fragmented But Consolidating Large F&F players with full service platform, focused on top multinational customers Market Share by size 2013 F&F Sales* (% of Market Share) Large number of small niche companies with limited service capability and regional focus only 2013 Market Size $24bn Few mid-sized players with both regional strength and global platform *Source: Leffingwell & Associates, company s estimations 20

20 Private Label Mid-Sized and Local Private labels expected to 2009 Private label products held 20.4% of the food sector worldwide, with European market penetration highest in the sector 2 achieving 7.4% global growth(4) 1-in-4 of European consumers said they will buy a larger amount of private label brands than currently(3) hold 50% of the global food market by 2025(1) 8-in-10 of European consumers said that after the economy improves they would not stop purchasing private label(3) In the USA, 39% of consumers indicating plans to increase their purchase of private label products(2) (1) Source: Rabobank report: Private label vs. Brands: An Inseparable Combination, February 2011 (2) IRi: Private Label, Balancing Quality and Value, NOVEMBER 2013; (2) PLMA Industry News 2014 (4) Source: The Nielsen Company, August 2009; 21

21 Private Label Mid-Sized and Local 50% by 2025 Source: ACNielsen, industry insights, 2008, Private Label: Who will win the battle of the shelf? Branded or private label products? Sep 2009, ACNielsen, The global 22 Staying Power of Private Label, Aug, 2010

22 Frutarom s Strategy: Clear Focus Going Forward Profitable Internal Growth Customer Focus Market Focus Product Portfolio Mid-sized and local Private label Multinational Developed markets (Europe and USA) Emerging markets (e.g. Asia, Central & South America, Central and Eastern Europe, Africa) Natural (extracts, fruit bases specialty essential oils) Natural functional food ingredients Comprehensive, integrated solutions Cost reduction solutions Core Competencies R&D and innovation internal and external Efficiencies, scale and synergies cross selling Experienced global management Sales-driven organization 23

23 Proven Acquisition Track Record 38 successful acquisitions Strict acquisition criteria: Highly valuable and experienced employees Major synergies and cross-selling potential Additional unique products and technology Positive impact on EPS Focus on integration execution Optimization of cross selling opportunities Optimization and harmonization of resources

24 2013 & 2014: 6 Acquisitions in Emerging Markets and the US JannDeRee South Africa PTI Russia & CIS Aroma Guatemala Hagelin USA CitraSource USA Montana* Peru & Chile Strengthening market position in South Africa and Africa. Complementary Savory activity Strengthening Leadership in East Europe Savory Solutions leadership Strengthenin g market position in Central America Strengthenin g market position in the US & EM Expertise in beverages Strengthening Citrus capabilities and leadership Presence in Florida world center for citrus Strengthening market position in South America Complementary Colors activity Strong management, R&D, sales and operational force Cross selling opportunities Leverage operational efficiencies Opportunities for additional rationalization plans and improved margins Continued implementation of rapid profitable growth strategy * Agreement signed on Sep 30, closing is under process. Frutarom s Q results do not include this acquisition 25

25 Ongoing Projects for Resource Optimization Leveraging economy of scale R&D Sourcing & Purchasing Production Logistics Sales & Marketing Rationalizing Global R&D Resources - CPM Global Purchasing at countries of origin Production sites integration Global Logistics integration Sales force integration Capitalizing on the operational synergies created by the acquisitions made since May 2013; Other projects for optimization and margin improvement under way; Building and strengthening the global purchasing organization; 26

26 Frutarom Presents Strong Q3 of ($M) Net Income EBITDA Sales 13.8% 13.7% 18.6 % EBITDA core* % 16.7% % EBITDA % 18.3% % 18.5% Q Q Q Q * Core Business includes Flavor and Fine Ingredients activities Revenues Growth Gross Profit EBITDA Net Profit Reached $210.8 M Revenues grew 30.9% 5.7% YoY Pro-forma growth 1 (net of currency effect) Reached $ 81.6 M Gross Profit 40.8% gross margin in Core Business* Reached $ 39.0 M 20.2% EBITDA margin in Core Business* Reached $24.2M 11.5% net margin Results driven by: Organic growth above average market growth rates Successful integration of the acquisitions Improved product mix New acquisitions that are already contributing to sales and profits and expected further contribute to growth and margin improvement 1 Pro- forma growth - assuming acquisitions performed in 2013 had been consolidated as of January 1, 2013 and that CitraSource, which was acquired during the first quarter of 2014, had been consolidated as of March 1, 2013 EBIT 27

27 Constantly Improving Core Business Margins & Profits ($M, Core business) Margin Q3 Gross Profit ($M, Core business) Margin Q3 EBIT ($M, Core business) Margin Q3 EBITDA 40.8% 20.2% 38.1% 40.3% 12.8% 14.6% 16.0% 17.3% 19.1% Q Q Q Q Q Q Q Q Q Major contributors to growth in Profit & Profitability : Organic growth Improved product mix Recent acquisitions Successful integration of the acquisitions Exploiting operational efficiencies 28

28 Frutarom Presents Strong 9 Months of 2014 Gross Profit Net Income EBITDA Sales % EBITDA core* % EBITDA Revenues Reached $617.3 M ($M) % 16.1% % 16.9% 18.9% 18.2% % 18.5% YTD 2011 YTD 2012 YTD 2013 YTD 2014 * Core Business includes Flavor and Fine Ingredients activities Growth Gross Profit EBITDA Net Profit Revenues grew 28.1% 4.7% YoY Pro-forma growth 1 (net of currency effect) Reached $241.0 M 41.1% gross margin in Core Business* Over $ 114 M 20.1% EBITDA margin in Core EBIT Business* Reached $67.9 M 11.0% net margin Results driven by: Organic growth above average market growth rates Successful integration of the acquisitions Improved product mix New acquisitions that are already contributing to sales and profits and expected further contribute to growth and margin improvement 1 Pro- forma growth - assuming acquisitions performed in 2013 had been consolidated as of January 1, 2013 and that CitraSource, which was acquired during the first quarter of 2014, had been consolidated as of March 1,

29 Constantly Improving Core Business Margins & Profits ($M, Core business) Margin 9M Gross Profit ($M, Core business) Margin 9M EBIT ($M, Core business) Margin 9M EBITDA 41.1% 15.8% 20.1% 37.9% 39.9% 12.8% 14.3% 17.3% 18.9% YTD 2012 YTD 2013 YTD 2014 YTD 2012 YTD 2013 YTD 2014 YTD 2012 YTD 2013 YTD 2014 Major contributors to growth in Profit & Profitability : Organic growth Improved product mix Recent acquisitions Successful integration of the acquisitions Exploiting operational efficiencies 30

30 Profitable Growth Generates Solid Balance Sheet & Cash Flow from Operations Cumulative Cash Flow ($M) $ 413 M - Cumulative cash flow since 2009 to the end of Sep 2014 Balance Sheet Net debt ( ) - USD 165.7M Equity ( ) - USD M Net Debt/EBITDA Currently 1.16x (based on LTM EBITDA) Historically below 2x 31

31 Positive Outlook for 2014/5 Profitable internal growth Focus on innovative natural healthy product mix Successful integration of the recent acquisitions Additional projects to improve efficiency and merge activities and operations Strengthening & leveraging global purchasing Strong acquisitions pipeline * EPS LTM Sep

32 Frutarom s Strategy Above-Industry Organic Growth Margin Expansion Proven Acquisition Track Record Continue successful strategy of combining rapid profitable organic growth with strategic acquisitions Reaching revenues of $1 billion Achieving 20% EBITDA in our core business, given the current product mix 33

33 Frutarom s Vision To Be The Preferred Partner For Tasty And Healthy Success 34