Passion for Taste & Health

Transcription

1 Passion for Taste & Health Company Overview March 17, 2016

2 DISCLAIMER This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking statements, as defined in the Securities Law , whose occurrence is not certain and which are not solely in the Company's control. These forward-looking statements are included, inter alia, in discussions of strategy, objectives, goals, plans, events, future intentions or other information relating to future events or issues whose occurrence is not certain. By their nature, forward-looking statements involve risk and uncertainty. Whether the forward looking information occurs or not is affected, inter alia, by risk factors characteristic to the Company's operations and developments in the general environment and external factors which impact the Frutarom Group and its area of activities. This forward looking information could include facts and data based on the Company's subjective assessment, including with regards to the current status of the Company and its business, the current situation in the industry in which the Frutarom Group operates, macro-financial facts and information, all as are known to the Company on the date on which this presentation was prepared, some of which were given to the Company by external sources, the content of which was not independently examined by the Company, and therefore the Company is not responsible for their verity. This presentation must be read together with the Company's periodic and immediate reports, and was not meant to replace the need for study of reports the Company has published, including, inter alia, the Company's periodic report for 2014, published on March 2015, and the Company's periodic reports subsequently published. These reports could include, inter alia, updates to the information regarding the Company's activities or of the forward looking statements appearing in this presentation. Subject to the requirements of applicable law, the Company does not intend to update any industry information or forward-looking statements appearing in this presentation, and is not required to publish any additional presentations for its shareholders in future. It is to be emphasized that the financial estimations and the pro-forma figures included in this presentation are based on figures which were not audited or reviewed by an auditor and therefore the actual results may differ from these financial estimations. 2

3 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

4 A Leading Fast Growing Global Flavor & Fine Ingredient House Global Presence Broad Product Portfolio Financial Success Public Company Sales in over 150 countries 28,000 customers A Top 10 flavor house 49,000 products Over 5,000 raw materials Innovative pipeline 13.6x growth in sales (CAGR 19*%) 18x growth in EBITDA 24x growth in net profit Listed on London & TLV Stock Exchanges From $13M to approx. $3B market cap 1100 Renenue, $M *Assuming all of the acquisitions made by Frutarom during 2015 and 2016 to date had been completed on January 1, 2015 and based on current currency exchange rates.

5 Global Expansion throughout the years Amco Vitiva 1996 Tel Aviv stock exchange Baltimore Botanicare HK F&F Tohar Flavour Key Meer Kunshan Sales office Acquisition Ukraine Russia Turkey Brazil India Kazakhsta n Rayner Hong Kong CPL Aroma Sales CAGR of 19%* Mexico Canada Flachsmann France IFF FS London stock exchange Poland AM Todd Acatris Nesse Rad Gewurzmulle r Abaco Adumim Raychan Jupiter Belmay S. Africa CH Hansen DE FSI Corona Oxford Czech Rep. Costa Rica FSI OH Aromco CH Hansen IT EAFI Rieber Etol Mylner Savoury Flavours JannDeRe e PTI Aroma Hagelin CitraSource Montana Ingrenat Food Blenders Taiga Sonarome BSA Foote&Jenks Taura Scandia Nutrfur Inventive Wiberg Algalo Grow *Assuming all of the acquisitions made by Frutarom during 2015 and 2016 to date had been completed on January 1, 2015 and based on current currency exchange rates

6 Global Presence Corona, CA Cincinnati, OH New Jersey Mexico Georgia Guatemala Canada 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 Australia Production - 51 Sites Chile R&D - 66 Labs Sales & Marketing 84 Offices South Africa New Zealand 6

7 A Profitable Growth Story NET EBITDA SALES 1, Current * 2015 Run Rate* *Assuming all of the acquisitions made by Frutarom during 2015 and 2016 to date had been completed on January 1, 2015 and based on current currency exchange rates. 7

8 A Top-Ten Flavor House Estimated Sales of Flavors US$ M 3, smaller companies 2,500 2,000 1,500 1, Source: Companies Publications, Leffingwell & Associates, Frutarom s estimations * Considering only Core Activity 8

9 Our Employees are the Key to Our Success 4,500 employees worldwide North America Israel G&A Sales & Marketing Workforce by Region Europe Workforce by Function R&D Emerging Markets Operations 9

10 Goals & Strategy Above-industry Growth Continue Margin Expansion Continue Acquisitions Strategy $2 Billion in revenues in 2020 Above 22% EBITDA in our core business by 2020 * Unique Offering Natural & Clean Label Taste & Health More profitable segments Customer Focus Added value solutions to MNCs Local Mid Size & Private Label Geographic Focus Expanding Market Share In The North America Accelerating growth in key Emerging Markets Leveraging Cross-selling Opportunities Supply Chain Optimization Integration of operations Global Purchasing * Given current product mix 10

11 Growing Core Business 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-harmaceuticals, nutraceuticals, dietary supplements, functional foods, cosmetics, and personal care Supporting the growing demand for health, wellness and beauty Natural Food protection solutions Natural Colors Strengthening Frutarom s partnership and offering to customers 11

12 Taste Solutions Fine Ingredients Sharing the Passion for Taste & Health We develop tailored solutions combining excellent taste with health and functionality all under one roof 12

13 Frutarom s Unique Offering

14 Consumer Trends Health, Wellness, functional food 79% of consumers indicate that they actively make dietary choices to prevent health conditions such as obesity, diabetes and high cholesterol, but unwilling to forgo taste even for health Growth Drivers Opportunities Aging and rising obesity Consumers preference for Natural and Healthy Awareness and need for transparency Lifestyle & Income - willingness to try new food Snacking and eating meals throughout the day Growing willingness to purchase of Private Label Products Avoidance Products ("Free-from /"zero ) or Moderation Products with "diet, "low, "less" Clean Label Products Natural, Organic and healthy product offering Positive Nutrition and Functional Food Convenience and Processed Food Growing market share in Private Label sector Meeting Consumer Trends Through Artful Creation and Innovation Source: Nielsen, 2015, Euromonitor International 2013, 2014; DATAMONITOR 2011 REPORT, The NPD Group,

15 Food Industry Goes Natural Dropping low-calorie sweetener aspertame from Diet Pepsi due to consumer s preference for soft drinks that are free of artificial sweeteners. Nestle USA removing artificial flavors and FDA certified colors from all Nestle chocolate candy by end of 2015 Nestle UK removing all artificial ingredients from all its confectionary in the UK Removing artificial flavors from most products and replacing them with natural alternatives, as of this year. Removing artificial colors by end of July Replacing artificial preservatives and additives by end of Replacing synthetic colors and artificial preservatives from best selling classic Macaroni & Cheese starting Collaborating with Evolution Fresh to Let Simple Ingredients Shine in New Smoothies and Greek Yogurts, as customers are looking for foods with fewer ingredients that are minimally processed and taste great. Transforming to cleaner label across all brands to meet consumer trends for food made with real, simple ingredients. aiming to stop using artificial colors and flavors in its cereal and snack bars by the end of growing pressure to remove synthetic ingredients from products due to health concerns 14

16 Strategically Positioned to meet Market Trends Creation through Science and Innovation Health & Wellness Reduced fat, calories & salt Functional Food Products with Health properties Natural and Clean Label Natural Taste Solutions Cost Reduction Convenience Ready Meals 16

17 Frutarom s Customer Focus 17

18 Customer in the Centre A Unique product offering Natural Fruit based Ingredients Algae Based Ingredients Natural Taste Ingredients Beverage Base Natural Health Solutions Sweet & Savory Flavors Customer = Partner Natural Colors Food Systems Savory Solutions Food Protection By Nature Starter Culture Functional Ingredients Herbal Extracts Citrus Specialties Culinary Natural Anti-Oxidants 17

19 Growing Mid-Sized Food & Beverage Market The Global Food Market (% of Market Share) New Mid-size & Local Companies Emerging Growing Private Label Sector Developing Markets Service Expectations Fragmented market *Source: Jan, 2016 Datamonitor, Euromonitor and Frutarom s estimations 19

20 F&F Market Fragmented But Consolidating The Global F&F Market (% of Market Share) Large F&F players with full service platform, focused on top multinational customers Many small niche companies with limited service capability and regional focus only Few mid-sized players with both regional strength and global platform * Source: Jan, 2016 Datamonitor, Euromonitor and Frutarom s estimations 20

21 Private Label Mid-Sized and Local Substantial Market Share in EU Growing Penetration Rate in US High Growth Potential in Emerging Markets 35% 30% 27% 5% Value share of Private label averages 35% in Europe Private label accounts for $1 of every $3 spent in the consumer packaged goods (CPG) market in Europe Growth in Private Label Sector n India between Value share of Private Label below 5% in Key Emerging Markets (such as China, India and Brazil) Substantial Growth Potential 62% 67% Source: The Nielsen Company, November 2014 Of consumers say buying private label makes them feel like a smart shopper Of consumers believe private label offers extremely good value for money 21

22 Private Label Mid-Sized and Local 50% 45% 40% Market Share 41% 45% 35% 34% 30% 27% 29% 25% 20% 18% 21% 24% 15% 14% 10% 5% 0% 8% 7% 6% 6% 5% 5% 1% China India Brazil Russia Israel Peru Mexico Turkey USA Australia Poland France Austria Germany UK Switzerland Source: The Nielsen Company, November

23 Frutarom s Geographic Focus 23

24 Accelerated Growth and Gain of Market Share in North America Strengthening US presence through strategic acquisitions Flavor Specialties in the West Coast in 2009 Additional substantial foothold through the acquisition of Hagelin (2013) Lucrative beverage market Diversified customer base Technological know how Acquisition of CitraSource (2014) Citrus capabilities and leadership Presence in Florida Acquisition of BSA (2015) Savory position in North America Acquisition of Scandia (2015) Citrus Expertise Acquisition of Grow (2016) position in Supplement and Nutraceutical market Acquisition of Wiberg (2016) Savory position in North America Flavor Solutions in Cincinnati in

25 Accelerated Growth in Emerging Markets Asia New State-of-the-art plant in China Recent acquisition of Inventive in China & Hong Kong Recent acquisition of Sonarome and BSA in India Expanded R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam, Sri Lanka and India Evaluating strategic acquisition opportunities East & Central Europe Market leadership in Central and East Europe Acquired Etol in Slovenia and PTI in Russia One of the only global players with major production sites in Russia Wiberg acquisition contributes to strengthening Market leadership Central & South America Acquired Mylner in Brazil Acquired Aroma in Guatemala Acquired Montana in Peru and Chile Evaluating strategic acquisition opportunities Africa Fast growing operation in South Africa, reinforced by JannDeRee and Hageline acquisitions Enhanced R&D and sales force in fast growing markets (Kenya, Nigeria etc.) Acquisition of Sonarome with activity in more then 20 African markets New State-of-the-art plant in South Africa 24

26 Above Market Growth in North America & Emerging Markets 1,100~ (7%) (8%) 137 (16%) (17%) (35%) 4.5x growth in North America 3.8x growth in Emerging Markets (32%) 57 (13%) 43 (9%) 229 (51%) 122 (27%) 385 (44%) (41%) 6x growth in Flavors North America Current Run rate* Emerging Markets Western Europe North America ROW *Assuming all of the acquisitions made by Frutarom during 2015 and 2016 to date had been completed on January 1, 2015 and based on current currency exchange rates. 25

27 Frutarom s Growth Strategy 27

28 Frutarom s Strategy: Clear Focus Going Forward Profitable Internal Growth Geographic Focus Developed markets (Europe and USA) Emerging markets (Asia, LATAM, Central and Eastern Europe, Africa) Customer Focus Mid-sized and local Private label Multinational Product Offering Integrated solutions Natural Flavor solutions (extracts, fruit bases specialty, essential oils) Natural health solutions /functional food ingredients Natural color solutions Food Protection by Natural Solutions Cost reduction solutions Core Competencies R&D and innovation internal and external Efficiencies, scale and synergies cross selling Experienced global management Customer-driven organization 26

29 Frutarom s Strategy: Clear Focus Going Forward Proven Acquisition track Record of 53 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 Leveraging Synergies Strong management, R&D and sales Cross-selling opportunities Additional improvement in margins Optimization & Savings 27

30 Realizing Strategy through Acquisitions 28

31 Global Leadership in Savory Solutions Leading Player in the global Savory market Presence in over 120 countries Value-added functional savory solutions for the food industry (snacks, convenient food, meat, fish, organic and culinary) Innovative and diversified product range - flavors, seasoning blends, marinades, functional ingredients, starter cultures, natural food protection and natural colors Over 150 industry-leading experts in R&D and applications State-of-the-art production facilities, modern labs and application centers Highest quality brands, providing innovative solutions and excellent service Innovative solutions - meeting consumer trends of natural, healthy and tasty products 30

32 Resource Optimization Leveraging economics of scale R&D Sales & Marketing Sourcing & Purchasing Production Logistics Rationalizing global R&D resources Sales force integration; Cross-selling opportunities Global Purchasing from countries of origin Production sites integration Global logistics integration Capitalizing on operational synergies arising from recent acquisitions; Other projects underway for optimization and margin improvement; US$ 20-22M expected operational savings, including saving resulting from the integration of Wiberg, which will be realized in 2016 and 2017 Building and strengthening the global purchasing organization that will contribute to improved competiveness, profits and profitability 31

33 Frutarom s 2015 Annual and Q4 Results

34 2015 KPI s Record High Revenues and Profits Net Income* EBITDA* Sales Revenues - $873M - Record High Flavor Business approx. 70% of Revenues % EBITDA core Growth - Reported Growth - 6.4% Total YoY Growth - 4.9% (on LFL basis) * Flavor Business YOY Growth - 5.3% (on LFL basis) * % 21.1% Gross Profit - $340.9M * - Record High 21.8% YoY Growth * 40.9% Core Business Gross Margin * 16.9% % EBITDA - $170.0M * - Record High 26.4% YoY Growth * 21.1% Core Business EBITDA Margin * Net Income - $110.8M * - Record High 33.5% YoY Growth * 12.7% Net Margin * Operating Cash Flow - $91.7M Record High 13.5% YoY Growth * Sales on a constant currency and pro-forma basis, assuming acquisitions performed in 2014 and 2015 had been consolidated as of January 1, 2014; Gross Profit, EBITDA, Net income, their growth rates and profitability margins are net of non-recurrent expenses which reduced reported Gross profit by 2.8M$, the operating profit by 6.8M$ and the Net Profit by 14.7M$, and on a constant currency basis 32 1 Core Business includes Flavor and Fine Ingredients activities

35 Q4/2015 KPI s - Record High Revenues and Profits Net Income* EBITDA* Sales % EBITDA core Revenues - $225.6M Flavor Business approx. 70% of Revenues Growth - Sales Growth % Sales YoY Growth - 4.3% (on LFL basis) * Flavor Business YOY Growth 4% (on LFL basis) * % 20.2% 17.9% % Q Q42013 Q Q Gross Profit - $88.3M * 25% YoY Growth * 40.8% Core Business Gross Margin * EBITDA - $42.6M * 27% YoY Growth * 20.2% Core Business EBITDA Margin * Net Income - $30.8M * 33.6% YoY Growth * 13.6% Net Margin * * Sales on a constant currency and pro-forma basis, assuming acquisitions performed in 2014 and 2015 had been consolidated as of January 1, 2014; Gross Profit, EBITDA, Net income, their growth rates and profitability margins are net of non-recurrent expenses which reduced reported Q4/2015 Gross profit by 1.4M$, the operating profit by 2.2M$ and the Net Profit in 7.2M$, and on a constant currency basis 33 1 Core Business includes Flavor and Fine Ingredients activities

36 Constantly Improving Flavor Division s Profit and Profitability Flavor Activity Demonstrates Higher growth rates 900 Higher profitability 800 Margin improvement EBITDA % 70% of sales Sales, $M 30% of sales % % % % 22.20% Current Run* Rate Major contributors to growth in Profit & Profitability : Successful integration of recent acquisitions Exploiting operational efficiencies Organic growth above market growth rates *Assuming all of the acquisitions in the Flavor Division made by Frutarom during 2015 and 2016 to date had been completed on January 1, 2015 and based on current currency exchange rates. 34

37 Solid Balance Sheet & Cash Flow from Operations ($M) Cumulative Cash Flow Cash Flow $ 535M - Cumulative cash flow $91.7M, 13.5% YoY Growth Balance Sheet Net debt* ( ) - USD 415M Equity ( ) - USD 552M Equity Ratio 1 approx. 42% Leverage Ratio 2 approx. 31.5% 1 Equity ratio = shareholders equity / total assets 2 Leverage ratio = net financial debt / total assets * Net debt amount includes the financing of all the acquisitions preformed in 2015, including the funds of Wiberg's acquisition which were deposited in a trustee on the transaction's signing date 35

38 Positive Outlook for 2016 & 2017 Profitable internal growth in core business Focus on innovative, health oriented, natural 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 36

39 Frutarom s Strategic Goals Above-industry Growth Continue Margin Expansion Continue Acquisitions Strategy Continue successful strategy of combining rapid profitable organic growth with strategic acquisitions $2 Billion in revenues in 2020 Above 22% EBITDA in our core business by 2020 * * Given current product mix 38

40 Frutarom s Vision To Be The Preferred Partner For Tasty And Healthy Success 40