H1 2017 RESULTS 14 September 2017 Paris FROM NATURE TO YOU
Agenda 1. H1 highlights A first-half focused on simplification and execution 2. H1 2017 results In line with our roadmap 3. Developments and outlook Activating growth drivers 2
On track for delivering Bright2020 CARE - EXECUTE - GROW 2015 2016 2017 Focus and discipline Governance First levers for profitability Focus on the product portfolio and the business project portfolio 3
H1 2017 financial highlights Sales 207.5m EBITDA 16.6% 34.5m (% of sales) Acceleration of simplification measures Emerging markets 22.2% NPD 6% Inventory-to-sales ratio 40.5% 4
H1 HIGHLIGHTS A first-half focused on simplification and execution 5
Progress in our priority lines of action Care: People & Pathfinder Strong engagement Focus on safety Performance driver Managing talent Promoting the adoption of our culture Increasing ownership of the Pathfinder programme Creating value Improving our environmental footprint People & Culture CARE Sustainable Development 6
Progress in our priority lines of action Execute: Simplification and efficacy Reduction in the number of SKUs Reducing complexity Improving processes and internal flows Lean Management Global management of indirect procurement Implementing an S&OP strategy Improving Working Capital Requirements EXECUTE 7
La SteerVision Center Steering the Bright2020 strategy Steering the Bright2020 strategy Decision-making and implementation of these decisions Monitoring and control of the operations Involvement of all Directions SteerVision Center is a registered trademark of Ka Maté Strategy 8
Analysis of causes and estimates of forecasts WARNING: Red Graph ESTIMATED FORECASTS: Orange Graph Analysis of the Root Causes of Pareto TEAM WORK Action plan based on the Root Causes 9
Analysis of causes and estimates of forecasts WARNING: Red Graph Analysis of the Root Causes of Pareto TEAM WORK Action plan based on the Root Causes 10
Stronger foundations The roadmap has been charted The execution plans have been implemented 11
H1 2017 RESULTS In line with our roadmap 12
H1 2017 financial highlights REVENUE 207.5m -0.3% (current exch. rates) NET INCOME EBITDA* 34.5m 16.6% (% of sales) ACCOUNTS RECEIVABLE 53 DSO INVENTORY-TO-SALES RATIO 10.7m 5.1% (% of sales) 40.5% (current exchange rates) * Recurring operating EBITDA 13
Income statement highlights IFRS In m H1 2017 H1 2016 Change % Revenue 207.5 208.0-0.3% Gross margin on COGS 59.4 57.8 +2.8% Gross margin on COGS (%) 28.7% 27.8% Recurring operating EBITDA 34.5 33.2 +3.8% Recurring operating EBITDA margin (%) 16.6% 16.0% Current operating income 18.1 18.6-2.6% Current operating margin (%) 8.7% 8.9% Net operating income 17.5 19.1-8.3% Operating margin (%) 8.4% 9.2% Net income attributable to Naturex shareholders 10.7 12.2-12.7% Net margin (%) 5.1% 5.9% 14
REVENUE H1 2017 OPTIMISATION OF THE PRODUCT MIX
Revenue by business Reduction of the SKUs Focus on key categories Optimisation of the product mix 34.5% MY NATURAL SELFCARE +0.5% Current Constant MY NATURAL FOOD Current Constant -0.7% -1.7% 51.6% Breakdown of revenue 0.7 By business (% H1 2017 revenue) -2.0% Revenue: 71.5m % H1 2017 vs. H1 2016 OTHER ACTIVITIES Current Constant Revenue: 107.1m % H1 2017 vs. H1 2016 13.9% -0.5% -2.5% Revenue: 28.9m % H1 2017 vs. H1 2016 16
Revenue by region Our strong original organisation is impacted by the disparities and volatility of our markets +0.5% +25.1% North America 91.4m 44.1% (% of sales) Asia Pacific 31.6m 15.2% (% of sales) Latin America 14.6m +4.1% 7.0% (% of sales) Europe Africa Middle East 69.8m -10.3% 33.7% (% of sales) H1 2017 revenue Changes at current exchange rates Currency effect: 3.4m (Positive impact: USD and AUD. Negative impact: GBP) 17
OPERATING PROFITABILITY Activating our performance drivers
Expenses by function Effective cost-containment measures and the allocation of our resources CHANGE IN EXPENSES BY FUNCTION ( m) 18.4 Accelerating innovation 15.2 14.9 16.5 Deploying a regional salesforce 5.9 7.4 Rationalising the support functions Research and Development Marketing and Sales General and Administrative 2.8% 3.6% 7.3% 7.2% 8.8% 7.9% of sales of sales of sales of sales of sales of sales Reduction in operating expenses H1 2016 H1 2017 19
FINANCIAL POSITION Focus and discipline for an improved management of our flows
Working capital requirements Impact of the inventory categorisation process CHANGE IN WORKING CAPITAL REQUIREMENTS ( m) 186.1 196.4 182.4 DSO 53 days Inventories 40.5% of sales (favourable currency effect) 30.06.2016 31.12.2016 30.06.2017 46% of sales 49% of sales 45% of sales 21
Capex Targeted investments to prepare for future developments CHANGE IN CAPEX ( m) BREAKDOWN OF INDUSTRIAL INVESTMENTS Supporting growth 9.6 Extension 33% Growth Lean & Performance 6.9 7.0 S1 2016 S1 2017 3.3%* of sales 3.4% of sales 52% Efficiency Optimisation Maintenance Productivity 15% Health Safety Quality Environment Operational excellence Acquisition of stake in SCI La Pinède * Excluding acquisition of SCI La Pinède shares, increasing its stake in the entire real estate complex of Naturex S.A, valued at 9.6 million; the finance lease liability at 31 December 2016 was 6.8 million. 22
Net financial debt A new structured credit facility providing greater flexibility CHANGE IN NET FINANCIAL DEBT ( m) 173.9 147.0 31.12.2016 30.06.2017 Maximum capacity 280m Full amount repayable on maturity Maturity extended to 2022 Increase flexibility Cost of the structured credit facility: 2.48% Financial leverage: 2.34 vs. 2.83 at 31/12/2016 Gearing 40.3% vs. 46.7% at 31/12/2016 Bank covenants are respected 23
An improving financial position Controlled cost structure and well-managed WCR Negotiation of financial capacities to prepare our future developments 24
DEVELOPMENTS AND OUTLOOK Activating the growth engines 25
Three engines of growth Regional governance and front-line deployments Emerging markets Focus on the 4 key categories Customer focus Investments to strengthen and diversify our businesses Optimisation of the pipeline's value Accelerate innovation GROW 26
US strategy F&V Organic growth and external growth ORGANIC GROWTH EXTERNAL GROWTH Drum dryer capabilities (VJI) Additional technology to transform vegetable and fruit-based juices and purees into powder Buyout of Chile Botanics' minority shareholders Agreement to buy out their stake F&V off-season sourcing synergies and development of application solutions Acquisition of the selected industrial technologies and operations of Haliburton Intl Foods Acquisition of new technologies Natural vegetable-based solutions (purees, sauces, roasted veggies) Acquiring a new industrial footprint Exclusive negotiations to acquire business and manufacturing operations in the US Natural fruit-based specialties 27
US strategy F&V Organic growth and external growth SOURCE OREGON CALIFORNIA MEXICO ILLINOIS FLORIDA EXPANDED F&V SOURCING CAPABILITIES NORTH AMERICA / SOUTH AMERICA Quality, diversity and freshness of fruit and vegetables CHILE Local sourcing Off-season sourcing Operations closer to the harvest zone 28
US strategy F&V Organic growth and external growth CONVERT 3 TECHNOLOGIES Wet Unpasteurized Premium Juice (UPJ) > liquid Dryer > powder Dry Drum Dryer - India Roasted Roasting > roasted veggies 29
US strategy F&V Organic growth and external growth DELIVER CUSTOMER SYNERGIES Beverages MARKET SYNERGIES My Natural Food colours, BabyFood Culinary Snacks My Natural SelfCare Natural nutrition (vitamins, minerals, fibres ) 30
Natural preservatives strategy Organic growth STRONG MARKET TRENDS IN FAVOR OF NATURAL PRESERVATIVES Naturalness Clean label Regulations PROMOTING THE SHIFT FROM SYNTHETIC TO NATURAL Aligning our industrial capabilities with market growth on rosemary Completing our range with antimicrobials Fostering breakthrough innovations Innovation de rupture Rosemary Atlas Mountains, Morocco Acerola Alternative to synthetic ascorbic acid NEW NATURAL ANTIMICROBIAL SOLUTION FOR SAFETY AND CLEAN LABELS IN MEAT 31
Springlabs Driver of performance and differentiation 11 APPLICATION LABORATORIES THROUGHOUT THE WORLD SUPPORTING THE SALE AND DEVLOPMENT OF THE PIPELINE OF SOLD BUSINESS PROJECTS Customer support and market expertise Accelerating innovation and improving time-to-market Promoting our technical expertise in natural ingredients Supporting the development of specific solutions Chicago Illinois - USA Mexico City MEXICO Birmingham UK Avignon FRANCE Mumbai INDIA Moscow RUSSIA Singapore Shanghai CHINA FOOD & BEVERAGE PERSONAL CARE Sao Paulo BRAZIL Sydney AUSTRALIA Latest openings: Chicago (expansion), Mexico, Singapore Springlab Chicago 32
Diversifying our portfolio to expand and strengthen our presence in our markets Bolster the commercial pipeline to create value Investments to fuel and accelerate our organic growth 33
Growth dynamics PHASE 1. PHASE 2. SIMPLIFICATION COMPLETED FY 2017 ENERGISING THE COMMERCIAL PIPELINE Solid foundations for the composition of the organic portfolio Structural efforts applied to the running operations Regional organisation for greater agility and better allocation of resources Optimising our financing capacities in preparation for future developments Fully focused on executing our Bright2020 roadmap Focus on the product portfolio and business pipeline For a gradual return to growth in H2 2017 Supporting momentum of key categories F&V: Organic growth + M&A AOX: Organic growth Replicating the same strategic review process Colours and Phytoactives Focus on innovation and Open innovation 34
THANK YOU Q&A