ANNUAL RESULTS 2008 Financial Analysts Presentation March 17th, 2009 1 Annual Media Conference FULL YEAR 2008
GROUP MANAGEMENT Group Management Ernst Tanner Duty Free & Country Responsibility Hansjürg Klingler Marketing/Sales & Country Responsibility Uwe Sommer Finance Administration Purchasing Manufacturing Dr. Dieter Weisskopf 2 Annual Media Conference FULL YEAR 2008
CONTENTS 1 Highlights 2008 2 Market Review - Sales Growth Analysis 3 Business Model 4 Financials - Operating Performance - Interest / Taxes - Raw Materials & Packaging 5 Outlook 2009 - Accounting Change 2009 3 Annual Media Conference FULL YEAR 2008 3
Highlights 2008 4 Annual Media Conference FULL YEAR 2008
HIGHLIGHTS - P&L RESULTS CHF Mio. Increase in % vs. 2007 NET TRADE SALES 2.937-0,3% NTS* ORGANIC 5.8% EBITDA 461 EBIT 361 3.6% 3.0% NET INCOME 262 4.4% EPS REG. (CHF) 1.158 3.1% OPER. CASH FLOW 295 35.6% * NTS = Net Trade Sales -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5% 6.5% 7.5% 5 Annual Media Conference FULL YEAR 2008
HIGHLIGHTS BALANCE SHEET Equity CHF Mio Equity B/S ratio in % Net Cash Y/E CHF Mio 1'500 62.0% 120 1'400 1'300 1'200 1'389 1'479 60.0% 58.0% 56.0% 54.0% 56.3% 61.4% 100 80 60 40 70 109 1'100 52.0% 20 1'000 50.0% 0 2007 2008 2007 2008 2007 2008 6 Annual Media Conference FULL YEAR 2008
HIGHLIGHTS KEY MESSAGES Challenging environment Volatility in FX, raw mat. & equity markets Consumer confidence at historic low Trade exposed to low or no liquidity Bankruptcies, chapter 11 and shop closures at peak Price sensitivity among consumers enhances discount / private labels Premium products less impacted, esp. seasonal and gift giving High quality and trusted brands still appreciated by consumers 7 Annual Media Conference FULL YEAR 2008
HIGHLIGHTS KEY MESSAGES Performance vs. long term objectives Organic-/const. currency growth 2008: Other Highlights Negative FX impact on NTS in CHF by -6.1% (= CHF 161 Mio) Continuous high Marketing expenditure Highly Cash Generative: EBITDA margin 15.7 % Rock Solid Balance Sheet: No Goodwill / Leverage Potential - Net Cash at year end: CHF 109 Mio - Equity/B/S Ratio: 61% L/T objective - NTS: + 5.8% 6% to 8% - EBIT: + 8.9% 8% to 10% (20-40 BP) - Net Income: +11.0% 10% to 12% 8 Annual Media Conference FULL YEAR 2008
L&S SHARE PRICE VS. SMI 2008 Share Price Moving in line with SMI CHF 40.000 Lindt Reg. SMI 38.000 36.000 34.000 32.000 30.000 28.000 26.000 24.000 LINDT REGISTERED SHARE VS. SMI - 2008 22.000 Jan. 08 M rz. 08 M ai. 08 Jul. 08 Sep. 08 Nov. 08 9 Annual Media Conference FULL YEAR 2008
OTHER SHARE KEY FIGURES Share Key Figures 1992 2004 2005 2006 2007 2008 Dividend Reg. S. (CHF) 39 180 225 275 330 360* - Increase (CHF) 2 40 45 50 55 30 Dividend Yield Reg. S. 1,4% 1.1% 1.0% 0.9% 0.8% 1.6% Pay-Out Ratio 16.9% 26.5% 28.7% 29.2% 29.5% 31.2% Reg. Share (CHF) 2'800 16'650 21'950 30'700 39'770 22'600 *Proposed by Board of Directors 10 Annual Media Conference FULL YEAR 2008
MARKET REVIEW SALES GROWTH ANALYSIS 11 Annual Media Conference FULL YEAR 2008 11
SALES ANALYSIS ORGANIC absolute in CHF millions increase vs. previous year in local currencies & net of acquisition effects 3'000 2'500 2'000 1'500 1'995 2'247 2'586 2'946 2'937 1'000 500 0 + 12.5% + 11.4% + 13.7% + 11.8% + 5.8% 2004 2005 2006 2007 2008 12 Annual Media Conference FULL YEAR 2008
SALES ANALYSIS - DRIVERS GROWTH 2008 LIMITED BY CONSTELLATION OF UNUSUAL FACTORS 6.00% 5.00% 4.00% 3,9% 5.8% 3.00% -6.1% 2.00% -0,8% 1.00% 0.00% -1.00% 2.3% -0.3% Volume Mix Price Organic Forex Reported 13 Annual Media Conference FULL YEAR 2008
SALES ANALYSIS SWISS FRANCS CHF + 161 MIO IN CONSTANT CURRENCIES absolute in CHF millions increase vs. prev. year in % of CHF 3'000 2'500 2'000 1'500 1'995 2'247 2'586 2'946 2'937 1'000 500 0 + 12.0% + 12.6% + 15.1% + 13.9% - 0.3% 2004 2005 2006 2007 2008 14 Annual Media Conference FULL YEAR 2008
SALES ANALYSIS MARKET SPLIT BALANCED SPLIT OF MARKETS Total NTS: CHF 2 937 Mio 22.9% 8.7% 5.6% 17.7% Switzerland Germany France Italy UK Rest of Europe North America 9.5% 4.6% 12.2% 18.8% Rest of World 15 Annual Media Conference FULL YEAR 2008
SALES ANALYSIS MARKETS POSITIVE SALES DEVELOPMENT ACCROSS MARKETS 20.0% 17.5% 28.5% 21.8% 15.0% 12.5% 12.6% 14.8% 10.0% 7.5% 5.0% 2.5% 0.0% 2.1% 8.9% 9.9% -2.4% 7.0% 3.1% 8.6% 4.6% -2.5% D F CH AUT IT E U.K. POL SWE AUS USA CAN Average 5.8 % 16 Annual Media Conference FULL YEAR 2008
BUSINESS MODEL 17 Annual Media Conference FULL YEAR 2008 17
KEY DRIVERS OF MODEL Strong and uniquely positioned brands Global No. 1 in premium chocolate Focus: one category (chocolate) / one market (premium) Ongoing underlying consumer trend towards premium quality Consumer driven Uncompromising focus upon product quality Exceptionally high rate of innovation Skilled in managing complexity Systematic expansion into high-potential geographies 18 Annual Media Conference FULL YEAR 2008
GROWTH ABOVE MARKET 10 YEARS: DOUBLING OF SALES CONT. MARGIN GROWTH absolute in CHF millions EBIT margin 3'000 2'500 2'000 1'500 1'000 NTS in CHF: CAGR 8.1 % 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% 19 Annual Media Conference FULL YEAR 2008
DELIVERING TO SHAREHOLDERS 1 (compound average growth rate) 2 (basis points) 20 Annual Media Conference FULL YEAR 2008
MODEL Organic Growth significantly above premium chocolate markets Persistency Market Share Growth gains in most major chocolate markets Continuity EBIT Margin Growth Increasing consistently year after year Reliability 21 Annual Media Conference FULL YEAR 2008
FINANCIALS OPERATING PERFORMANCE 22 Annual Media Conference FULL YEAR 2008 22
MATERIAL COSTS IMPACT OF MATERIAL COST INCREASE: 200 BASIS POINTS 1'000 absolute in CHF millions in % of NTS 900 800 901.4 957.6 700 600 500 602.5 686.5 772.1 400 300 200 100 0 30.2% 30.6% 29.9% 30.6% 32.6% 2004 2005 2006 2007 2008 23 Annual Media Conference FULL YEAR 2008
HEADCOUNT & NTS PER EMPLOYEE NTS GROWTH WITH STABLE NO OF STAFF Average number of employees NTS per employee in CHF ('000) 8'000 7'000 6'000 6'293 6'652 7'044 7'793 7'712 5'000 4'000 3'000 317 338 367 378 381 2004 2005 2006 2007 2008 24 Annual Media Conference FULL YEAR 2008
PERSONNEL EXPENSES EFFICIENCY INCREASES IN ALL PROCESSES absolute in CHF millions in % of NTS - 8.6% 600 500 400 453 493 546 596 545 300 200 100 0 22.7% 21.9% 21.1% 20.2% 18.5% 2004 2005 2006 2007 2008 25 Annual Media Conference FULL YEAR 2008
OPERATING/MARKETING EXPENSES DECREASING OPERATING EXPENSES DESPITE ONGOING HEAVY INVESTMENTS IN MARKETING absolute in CHF millions in % of NTS - 3.0% 1'000 800 600 678 769 905 1'055 1'023 400 200 0 34.0% 34.2% 35.0% 35.8% 34.8% 2004 2005 2006 2007 2008 26 Annual Media Conference FULL YEAR 2008
EBITDA 500 450 400 350 300 250 200 150 100 50 0 RESULT OF HIGHER EBIT & DEPRECIATION 295 absolute in CHF millions 325 381 in % of NTS + 3.6 % 444 461 14.8% 14.5% 14.7% 15.1% 15.7% 2004 2005 2006 2007 2008 27 Annual Media Conference FULL YEAR 2008
DEPRECIATION IMPACT OF HIGHER CAPEX 100 90 80 70 60 50 40 30 20 10 0 absolute in CHF millions 79.3 76.5 84.0 in % of NTS 93.5 99.3 4.0% 3.4% 3.2% 3.2% 3.4% 2004 2005 2006 2007 2008 28 Annual Media Conference FULL YEAR 2008
OPERATING PROFIT (EBIT) MARGIN IMPROVEMENT: 40 BASIS POINTS 350 300 250 200 150 100 50 0 absolute in CHF millions in % of NTS + 3.0% 350.8 361.2 297.2 248.6 215.8 10.8% 11.1% 11.5% 11.9% 12.3% 2004 2005 2006 2007 2008 29 Annual Media Conference FULL YEAR 2008
EBIT GROWTH ANALYSIS DRIVERS SUBSTANTIAL IMPACT OF MATERIAL COSTS IN 2008 160.0 140.0 120.0 100.0 80.0 60.0 119.8-117,8 40.0 20.0 41.1-26,7 13.2 29,6 0.0 Vol. & Mix Pricing Materials Operating / Marketing Expenses Other EBIT const.curr. 30 Annual Media Conference FULL YEAR 2008
QUALITY & EFFICIENCY HIGHLIGHTS Production New Praline lines starting up in Germany and Switzerland Bar & Cocoa liquor investments ongoing in USA Start-up of new cocoa liquor line in Olten/Switzerland Supply chain & logistics New central warehouse set up for overseas shipments Logistics studies ongoing for European Road Transport, Sea Freight & Central Warehousing. Extension of finished goods warehouse L&S CH (Altendorf) New combined warehouse L&S Italy / Caffarel (Magenta) 31 Annual Media Conference FULL YEAR 2008
QUALITY & EFFICIENCY HIGHLIGHTS Procurement Agreement for supply of traceable cocoa beans in Ghana including contributions to Social Projects Systems & IT SAP implemented in Australia & Italy (SAP hub) New JDE/Oracle implemented in Canada (US JDE hub) 32 Annual Media Conference FULL YEAR 2008
FINANCIALS INTEREST / FX TAXES & NET CASH 33 Annual Media Conference FULL YEAR 2008 33
FINANCIAL EXPENSES IMPAIRMENT PORTFOLIO & FX IMPACT IN VOLATILE MARKETS 20,0 absolute in CHF millions in % of NTS 2,0% 15,0 10,0 1,0% 5,0 0,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 0,0% 34 Annual Media Conference FULL YEAR 2008
CORPORATE TAX RATE 40,00% TAX RATE DECLINING YEAR-ON ON-YEAR YEAR TO RECORD LOW Tax Rate in % 35,00% 30,00% 25,00% 38,4% 35,8% 33,8% 32,6% 31,4% 29,8% 29,7% 29,0% 28,0% 25,4% 20,00% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 35 Annual Media Conference FULL YEAR 2008
NET INCOME 300 CONTINUOUS GROWTH ABSOLUTE & MARGIN absolute in CHF millions in % of NTS +4.4% 250 200 150 100 149.0 172.7 209.2 250.5 261.5 50 0 7.5% 7.7% 8.1% 8.5% 8.9% 2004 2005 2006 2007 2008 36 Annual Media Conference FULL YEAR 2008
DELIVERING STRONG EARNINGS EARNINGS PER SHARE CAGR 14.7 % 1.200 EPS CHF EPS GROWTH Y-O-Y 1.000 800 600 400 200 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 20,0% 15,0% 10,0% 5,0% 0,0% 37 Annual Media Conference FULL YEAR 2008
OPERATING CASH FLOW & CAPEX RECORD HIGH PERFORMANCE 300 250 Operating Cash flow CAPEX in CHF millions 277 + 36% 295 200 150 190 190 217 100 50 0 99 129 146 235 199 2004 2005 2006 2007 2008 38 Annual Media Conference FULL YEAR 2008
NET CASH POSITION - DEVELOPMENT NET CASH POSITION ENSURES FREEDOM AND FLEXIBILITY CHF MIO 200.0 180.0 160.0 140.0 24-1 -75 120.0 100.0 92 80.0 60.0 40.0 110 70 Net cash & net cash movement in CHF Mio 110 20.0 0.0-20.0 2004 0-1 2005 22 2006 2007 FCF Capital O/shares Dividend 2008 39 Annual Media Conference FULL YEAR 2008
FINANCIALS RAW MATERIALS & PACKAGING 40 Annual Media Conference FULL YEAR 2008 40
COCOA CROP / GRINDING BALANCE Cocoa Beans '000' t 3'900 3'300 2'700 2'100 1'500 3'768 3'520 3'649 3'379 16.2% 5.5% 5.5% 42.4% 3'724 3'684 3'567 3'390 900 300-300 248 15.5% -270-40 05/06 06/07 07/08 08/09-177 Crop Grindings Surpl./Deficit 41 Annual Media Conference FULL YEAR 2008
COCOA PRODUCT PRICES 07-09 COCOA LONDON TERMINAL BUTTER RATIO GBP/TON RATIO MULT. 2.100 3,6 1.900 3,3 1.700 3 1.500 2,7 1.300 1.100 2,4 900 M r z. 0 7 J ul. 0 7 N ov. 0 7 M r z. 0 8 J ul. 0 8 N ov. 0 8 M r z. 0 9 2,1 M r z. 07 Jul. 07 Nov. 07 M r z. 08 Jul. 08 Nov. 08 M r z. 09 42 Annual Media Conference FULL YEAR 2008
MILK PRICES EU 07-09 MILK PRICES SMP EUROPE / SWITZERLAND EUR/100KG SMP SWITZERLAND SMP EUROPE 4.200 4.000 3.800 3.600 3.400 3.200 3.000 2.800 2.600 2.400 Mrz. 07 Jun. 07 Sep. 07 Dez. 07 Mrz. 08 Jun. 08 Sep. 08 Dez. 08 Mrz. 09 43 Annual Media Conference FULL YEAR 2008
MATERIAL COST TRENDS Cocoa Products: - Terminal Market speculative impact - Differentials strengthening - Butter Ratio weakening Other Raw Materials: Packaging: - Milk weakening - Sugar volatile / EU / Brazil - Hazelnuts weakening - Almonds weakening - Paper & Cardboard stable - Metals & Flexibles stable 44 Annual Media Conference FULL YEAR 2008
OUTLOOK 2009 ACCOUNTING CHANGE 45 Annual Media Conference FULL YEAR 2008
ACCOUNTING CHANGE HY 09 STATUS TREATMENT OF TRADE PROMOTION EXPENSES (TPE) Payments to trade partners for counterparts / services Accounting treatment of TPE not specifically defined by IFRS Different treatment by European FMCG companies: - Deduction from sales - or - Component of advertising & promotions expenditure / cost US GAAP TPE to be deducted from sales IFRS rules to be aligned in the future with US GAAP Trend of Europ. FMCG companies to deduct TPE from sales Lindt treating TPE as expense up to actual 2008 46 Annual Media Conference FULL YEAR 2008
ACCOUNTING CHANGE HY 09 TREATMENT OF TRADE PROMOTION EXPENSES (TPE) ACTION L&S Deduction of TPE s from Sales as from 1.1.2009 onwards Reasons: - World-wide comparability within majority of FMCG companies - Expected new more detailed IFRS specifications - Statutory accounting change in France Impact of Reclassification: - Increase of EBIT margin 2008 by + ca. +1.5 % - NTS reduction vs. 2008 by ca. 10 % - First time reporting to new rules by HY 2009 - No impact on volumes - No impact on profit and valuation 47 Annual Media Conference FULL YEAR 2008
48 Annual Media Conference FULL YEAR 2008