Financial Results Q4 2012
FORWARD-LOOKING STATEMENTS This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking statements, as defined in the Securities Law - 1968, 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 2012, published on March 2013, 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.
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.
Who We Are A Leading Global Flavor and Fine Ingredient House Global Company Broad Product Portfolio Public Company Financial Success Sales in 140+ countries 14,000+ customers 30,000+ products 4,000+ raw materials Listed on London and Tel Aviv Stock Exchanges (FRUT) Since 2000 7.6x growth in sales 11.1x growth in EBITDA 13x growth in net profit 600 500 400 300 200 100 0 Revenues, $M 4
Frutarom - A Global Company Accelerated growth - organic and through strategic acquisitions Etol S. Africa Czech Rep. Mylner 1996 Tel Aviv stock exchange HK F&F Tohar Ukraine Russia Turkey Kazakhstan Rayner Hong Kong Mexico Canada Flachsmann France IFF FS London stock exchange Poland AM Todd Acatris Nesse Rad Gewurzmuller Abaco Adumim CH Hansen DE FSI Corona Oxford Costa Rica FSI OH Aromco CH Hansen IT Savoury Flavours Flavour key Brazil CPL Aroma Raychan EAFI Baltimore Meer India Jupiter Rieber Botanicare Kunshan Balmey 1990-2000 2001-2002 2003 2004 2005 2006 2007 2009 2011 2012 Sales office acquisition 5
A Global Company We provide our customers with global and local support Corona, CA Cincinnati, OH NB, New Jersey Georgia Norway Denmark Netherlands UK North Germany UK South Belgium France Switzerland Italy Saint Petersburg Moscow Ukraine Poland Perm Slovakia Saratov Serbia Kazakhstan Slovenia Turkey Israel China Mexico Costa Rica India Indonesia Hong Kong Singapore Brazil Production 28 Sites R&D 31 Labs Sales and Marketing 50 Offices South Africa
A Top-Ten Flavor House Estimated Flavor Sales US$ M* 2,500 2,000 1,500 1,000 500+ smaller companies 500 - Source: Companies Publications, Leffingwell & Associates, Reuters, Company s estimations * Based on 2012 results and Company s estimations 7
Towards Accelerated Penetration of Emerging Markets Asia Expanding R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam Building a state-of-the art, high-capacity plant in China with both traditional and savory flavor capabilities Central and Eastern Europe Strengthening R&D and Application Centers in Russia, Ukraine, and Kazakhstan Strong base in central Europe Evaluating additional acquisitions and local production opportunities Central & South America Strong base in Brazil Expanding penetration Investment in R&D and Applications Centers in Mexico & Costa Rica Evaluating acquisition opportunities Africa Production, R&D and Application Center Evaluating acquisition opportunities 8
Growing Share of Emerging Markets Sales by Geography Growing share of emerging markets (M US$, % Of Total Sales) 618 451 99 22% 230 51% 136 22% 260 42% 60% growth in the emerging markets of China & South East Asia, Central & South America, Central & Eastern Europe and Africa* 122 27% 222 36% 31% growth in the BRIC countries* Emerging Markets Western Europe ROW (Rest of the world) *2012 vs. 2011 9
Frutarom - A Global Company (Sales, EBITDA, Net Profit, USD M) 1996 Tel Aviv stock exchang e Baltimore Botanicare 10 HK F&F Tohar Flavour key Meer Kunshan 81 Kazakhstan Ukraine Net Profit 2000-2012 Russia X13 Turkey Brazil Rayner Hong Kong CPL Aroma India 9 4 6 108 Flachsmann 14 Mexico Canada 18 197 EBITDA Profit France IFF FS 32 London stock exchange 2000-2012 X11.1 Poland 287 AM Todd 49 Acatris Nesse 30 33 425 Rad Gewurzmuller 66 Abaco Adumim Raychan Jupiter Balmey S. Africa CH Hansen DE FSI Corona Oxford 42 518 Sales 2000-2012 X7.6 80 Czech Rep. Costa Rica FSI OH Aromco CH Hansen IT EAFI Rieber 52 618 Etol 100 Mylner Savoury Flavours 10
In 12 months* Frutarom Accomplished 8 acquisition Strategic move to strengthen Central- and Eastern European leadership; Diversified natural product portfolio Strengthening US activity include. Savory & innovative products, penetration to the food service sector First significant entry to the flavors market in Brazil. Important base for expansion in LA Supporting growth in emerging markets, synergistic to UK activity, diversified technology base Reinforcing Savory position in Europe and emerging markets Reinforcing European savory activity with focus on Scandinavian market Enhancing savory activity in UK market; synergistic to UK savory activity Enhancing savory activity and presence in the UK and emerging markets, synergistic to UK savory activity *Jan 2011- Jan 2012
The Acquisitions Contribution The integration of the 8 acquisitions is progressing successfully as planned: - Merging Sales and R&D activities - Optimizing production, supply chain and logistics infrastructures The acquisitions created opportunities for further improvement in profit and profitability: - Merging production sites/activities - Transfer activities to lower cost countries - Improvement in service and supply chain efficiencies - Global logistics Expected savings of ~ US$ 10 M annually starting H2 2013 but mainly in 2014 - Global purchasing reinforcement including procurement at countries of origin Acquisitions are already contributing to sales & profit - higher contribution to profit and profitability is expected in H2 of 2013, and in 2014
Fast Growth in Sales Record high in sales despite challenging market conditions & Currency effect Revenues Q4 Revenues Full year (US$ M) (US$ M) 108.5 131.6 144.9 425.2 518.4 618.0 72.6 287.2 20.1 40.8 80.5 139.3 Q4/00 Q4/03 Q4/06 Q4/09 Q4/11 Q4/12 * Growth in local currency terms; in dollar term sales grew by 10.1% ** Growth in local currency terms; in dollar term sales grew by 19.2% 13
Flavors - Most Profitable Activity Growing Fast Revenues Full year Growth was driven by (US$ M) Share of total sales 33% 187.0 297.1 71% 369.9 74% 457.3 Internal growth above average market growth rates 26.5 45.3 Operating Profit Full year (US$ M) 46.8 37.7 29.8 14.5% 59.5 14.7% USA, Latin America, Asia, Central and eastern Europe, Africa North America flavor sales grow by 43% in 2012 * Growth in local currency terms; in dollar term sales grew at 23.6% 14
Record in Gross Profit Gross Profit Q4 Improvement is driven by: (US$ M) Gross Margin 35.5% 36.4% (35.5% including Etol s trade & marketing activity and reorganization expenses) Adjusting selling prices Stabilization and some decrease in raw material prices Q4/11 Q4/12 Gross Profit Full year Further actions to improve profitability Harmonization of raw materials (US$ M) Gross Margin 36.4% 37.4% (36.6% including Etol s trade & marketing activity and reorganization expenses) Strengthening global purchasing Substantial increase in purchasing power Operational synergies, including from recent acquisitions Merging production sites/activities and transfer of activities to lower cost countries * Growth based on gross profit in millions, including Etol s trade & marketing activity and re-organization expenses 15
Record in EBITDA (US$ M) EBITDA Q4 EBITDA Full year 11.4 16.0 18.1 13.8% 20.7 14.3% 48.6 66.2 80.4 15.5% 100.4 16.2% 1.6 4.0 9.0 19.1 Q4/00 Q4/03 Q4/06 Q4/09 Q4/11 Q4/12 16
Record in Net Profit and EPS Net Profit Q4 Net Profit Full year (US$ M) (US$ M) 10.5 52.0 7.9 6% 7.3% 42.0 8.1% 8.4% Q4/11 Q4/12 EPS ($) 0.14 0.18 EPS ($) 0.73 0.90 17
Profitable Growth Generates Strong Balance Sheet & Cash Flow from Operations (USD M) Cumulative Cash Flow 274 Cash flow $ 274 M Cumulative cash flow since 2009. Q4: $28.6M vs. $3.1M 183 2012: $91.2M vs. $35.6M 147 85 Balance Sheet Net debt (31.12.2012): USD 136.1M Equity (31.12.2012) USD 453.6 M 18
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 Again doubling our revenue to reach $1 billion within 4 years 19
Taste Solutions ~75% of sales Flavors 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 Savory Solutions Value-added functional savory solutions for the food industry (snacks, meat, fish, organic, and culinary segments) Food Systems Comprehensive sweet and savory food systems Unique technologies for fruit, spice, vegetable, meat and fish preparations Fine Ingredients ~25% of sales Health 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 Flavor and Fragrance Flavor Specialties and Fragrance Specialty Ingredients Natural botanical extracts, distillates and essential oils Specialty Specialty botanical aroma chemicals extracts, distillates, Hydrocolloids essential oils and aroma chemicals Citrus specialties Global supply chain 20
Flavors Fine Ingredients We share the Passion for Taste & Health We develop tailored solutions combining excellent taste with health and functionality all under one roof 21
Frutarom s Strategy: Clear Focus Going Forward Profitable Internal Growth Customer Focus Market Focus Product Portfolio Core Competencies 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 R&D and innovation internal and external Efficiencies, scale and synergies cross selling Experienced global management Sales-driven organization 22
Proven Acquisition Track Record 32 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
Positive Outlook for 2013 Profitable internal growth Successful integration of the 8 acquisitions Additional projects to improve efficiency and merge activities and operations Strengthening & leveraging global purchasing Strong acquisitions pipeline
Frutarom s Vision To Be The Preferred Partner For Tasty And Healthy Success 25