Annual results 2011 14 March 2012
2011 a good year
A record milk price: 38.77 euro per 100 kilos of milk
+13%
Higher milk prices and prices other raw materials almost fully passed on to the market
Robust growth in infant & toddler nutrition
Net revenue +7.2%
Economic conditions in Europe led to increasing pressure on volumes and disappointing results
Good results Ingredients and Consumer Products International
2011 a good year Operating profit influenced by: •
Costs
•
Investments in the organisation for realisation route2020
•
Economic developments in Europe
•
Negative currency translation
• • • • •
Volume mix Sales Milk Other raw materials Depreciations
2011 a good year Profit influenced by: •
Incidental higher tax liabilities (Hungary, Germany)
•
Amendment reservation policy
Due to a broad product portfolio and geographical spread of activities FrieslandCampina is capable of offsetting disappointing results in certain markets
Key figures Results
in millions of euros 2011
2010
Variance
9,626
8,972
+7.2%
403
434
-7.1%
Profit
216
285
-24.2%
Profit before amended reservation policy
248
285
-13.0%
Net cash from operating activities
508
444
+14.4%
Revenue Operating profit
Balance sheet
2010
in millions of euros 2011
2010
Variance
Balance sheet total
5,739
5,299
+8.3%
Equity
2,264
2,071
+9.3%
699
776
-9.9%
39.4
39.1
Net debt Solvency %
Key figures Value creation for member dairy farmers
Guaranteed price Performance premium Registered reserve member bonds Milk price
2010
in euros per 100 kilos 2011
2010
Variance
36.94
32.39
+14%
1.10
1.23
-11%
0.73
0.73
38.77
34.35
+13%
Key figures Additional information 2011
2010
Variance
(average number of FTEs)
19.036
19.484
-2.3%
Number of member dairy farms at year end 2010
14.391
14.829
-2.9%
Number of members at year end
19.848
20.375
-2.6%
Total milk processed
10.140
10.266
-1.2%
8.838
8.821
+0.2%
Employees
(in millions of kilos)
Milk supplied by members
(in millions of kilos)
Results per Business Group
Consumer Products Europe
Consumer Products International
Cheese, Butter & Milkpowder
Ingredients
Consumer Products Europe Revenue Operating profit Operating profit as % of revenue
2011
2010
3,395
3,269
55
126
1.6
3.9
• Revenue growth through higher selling prices • Disappointing profit due to declining consumer confidence and disappointing results in Germany and Hungary • Market share of most dairy brands maintained *
Sooo delicious
In Campina you can taste the best from the land. Joep agrees. He has been helping around the farm for many years. He doesn’t do it just to help his father, he also does it for himself because he finds Campina custard sooo delicious.
Consumer Products International Revenue Operating profit Operating profit as % of revenue
2011
2010
2,460
2,277
353
356
14.3
15.6
• Revenue up due to increased volume and price increases • Higher costs of raw materials offset • Market position of Friso infant & toddler nutrition strengthened *
Made-to-measure solutions
FrieslandCampina WAMCO in Nigeria developed a special, small sachet packaging for Peak evaporated milk. The sachets enable mothers to buy the milk in small doses.
Cheese, Butter & Milkpowder Revenue Operating profit Operating profit as % of revenue
• • • •
2011
2010
2,822
2,641
-97
-92
-3.4
-3.5
Revenue growth due to higher selling prices Margin improvement of foil cheese Pressure on brands due to economic developments in Europe Investments in efficiency improvements *
At home in every country
However tastes, traditions and habits may differ around the world, in many countries family and friends gather together around the table to share a meal. People from the Netherlands to Japan and from Australia to Mexico enjoy Frico cheese, including this Egyptian family.
Ingredients *
*
2011
2010
1,930
1,669
Operating profit
189
128
Operating profit as % of revenue
9.8
7.7
Revenue
• Good profits in all operating companies • High demand dairy ingredients, especially from Asia and US • Kievit’s margins under pressure due to higher raw materials costs • Capacity expansion of infant & toddler nutrition in full swing * • Acquisition Brahmar Cellulose in India by DMV-Fronterra Excipients
Added value
The Ingredients business group adds value with nutritious ingredients to products of B2B partners, in the infant & toddler nutrition sector, the food industry, the pharmaceutical undustry and the young-animal feed industry.
Revenue by business group and sales market 2011, in millions of euros
Consumer Products Europe
Ingredients 1,930 18%
3,395 32%
9,626 2,822 27%
Cheese, Butter & Milkpowder
Africa and the Middle East
North and South America
324 999 3% 10%
Asia and Australia
1,996 21%
2,435 25%
The Nederlands
9,626 1,317 14%
2,460 23%
Consumer Products International
2,555 27%
Rest of Europa
Germany
Cows in the meadow
FrieslandCampina has taken the initiative to stimulate cows being put out in the meadow by making a sum of up to 45 million euro per annum available in order to contribute towards keeping cows in the Dutch landscape.
Income statement in millions of euros 2011
2010
9,626
8,972
20
20
Operating income
9,646
8,992
Total expenses
-9,243
-8,558
8.0%
403
434
-7.1%
Revenue Other operating income
Operating profit Share of profit of joint ventures and associates
13
13
-72
-69
Profit before tax
344
378
Income tax expense
-128
-93
Profit for the year
216
285
Finance income and costs
7.2%
-24.2%
Profit development Operating profit influenced by: • Increased milk and other raw material costs, almost fully passed on in sales prices • Investments in the organization for realization route2020 • Occasional higher tax burden in Hungary and Germany • Change reserve policy and milk pricing system
Condensed balance sheet in millions of euros 2011
2010
Non-current assets
3,091
2,865
Current assets
2,648
2,434
Total assets
5,739
5,299
Equity
2,264
2,071
Liabilities
3,475
3,228
5,739
5,299
Total equity and liabilities
39.4%
39.1%
Development ratios
criteria banks
2011
2010
Interest coverage ratio
> 3.5
7.9
9.3
Senior Net debt / EBITDA
< 3.5
0.6
0.6
39.4%
39.1%
Solvency
Cash flow in millions of euros 2011
2010
Profit before tax
344
378
Depreciation and amortisation
187
231
65
65
1
-182
-94
-91
5
43
Net cash from operating activities
508
444
Net cash used in investing activities
-340
-239
Net cash used in financing activities
-42
-198
126
7
Addition member bonds Movement working capital Income tax paid Movements provisions & other
Net cash flow
Milk price development 38.77
36.66
34.35 27.34
2008
2009
2010
2011
in euros per 100 kilos
2008 60-40
2009 60-40
2010 60-40
2011 50-50
Guaranteed price
35.89
26.40
32.39
36.94
Adjustment guaranteed price
2011 60-40
0.06
Addition member bonds
0.29
0.35
0.73
0.73
0.55
Performance premium
0.48
0.59
1.23
1.10
0.91
36.66
27.34
34.35
38.77
Milk price
Enjoying together
Hundreds of millions of people around the world use FrieslandCampinaâ&#x20AC;&#x2122;s products on a daily basis. Every day growing children, teenagers and adults in Malaysia, Singapore and Vietnam enjoy a wide range of dairy products from the Dutch Lady range.
Strategy route2020: Growth & value creation Aspiration To bring the essential nutrients of natural dairy to people worldwide
To be the most attractive dairy company for member farmers
Value drivers
Dairy-based beverages
Infant & toddler nutrition (B2B, B2C)
Branded cheese
Strongholds & geographic expansion
Foodservice in Europe
Basic products
Benefit platforms
Growth & development
Health & wellness
Functionality
Milk valorisation
Innovation
Business model & cost focus
Chain advantages
Sustainability
The way we work & safety
Daily nutrition
Capabilities
Talent management
Foundation
Goodness of dairy
Achievement of route2020 on schedule
‘One face to the customer’ for business-tobusiness keyaccounts Revamped sustainability programme formulated for the Company and the Cooperative as an important cornerstone of route2020
Growth in infant & toddler nutrition in both business-tobusiness and business-toconsumer
130 million euro invested in capacity expansion for infant & toddler nutrition in 2010-2012
Long-term investment plans: heavy investment in the expansion of milk processing capacity in preparation for the ending of milk quota in 2015
FrieslandCampina encourages cows being put in the meadow with a financial stimulus for dairy farmers of up to 45 million euro a year Acquisition of: Alaska Milk Corporation, Imlek and Subotica to strengthen FrieslandCampina’s position
‘Global category teams for dairy-based beverages, infant & toddler nutrition and branded cheese focus on accelerating growth and innovation
Steps in CSR
Sustainable palm oil, soy, cocoa and FSC certified packaging material
5-year partnership with the Netherlands Red Cross Launch Foqus Planet for sustainable dairy farming
ISO 26000 guideline for CSR implemented
Cooperation with Unilever, Essent in building and others for a sustainable dairy chain
Dairy Development: supporting 40.000 small farmers
Outlook • Dynamic market and market surroundings • Consumers in Europe remain cautious in their spendings • Light increase of the demand for dairy globally (Asia) • Balance in supply and demand? • No definite statement on results 2012
Naturally healthy and delicious
in Hungary and Romania Milli dairy products, including a range containing special ingredients, such as omega-3fatty acids and probiotics, offer products that fit in a healthy lifestyle.
Strengthening position South East Europe Production facilities in six countries
Slovenia
14 production companies
Moldova Hungary Romania Croatia
Net sales of about â&#x201A;Ź 850 million
Serbia Bosnia and Herzegovina
Profitability of approx. â&#x201A;Ź 100 million
Bulgaria
Montenegro
Kosovo Macedonia
Turkey
Albania
76 million consumers
Greece
Approx. 3,900 employees
FrieslandCampina
Valorisation potential 80 - 200 million kg milk
FrieslandCampina central office FrieslandCampina production company Imlek Imlek head office Imlek production company Imlek new production Subotica production / head office
650 million litres of raw milk annually
Size
South East Europe is an attractive market
• Two independently operating dairy businesses • Regional spread (Imlek operates in five South East European countries under various brand names) • Approximately 1,470 employees • Seven production plants (including one under construction) Financial • Revenue of approximately € 270 million • Robust and profitable (EBIT margin >10%) • Growth potential Market • Strong market positions • Access to 25 million consumers • Familiar brands with good reputation
Imlek and Subotica: strong on the Balkans IMLEK FRESH MILK / UHT
Merk
IMLEK FERMENTED PRODUCTS
MK Moja Moja Vitalia Bello Choco/ Kravica Kravica Bitolsko Max
Moja Kravica
SUBOTICA MILK PRODUCTS
Merk
Subotičko
5+
Ella
Balans+
Viva
Fit
Jogood
Vitalia
SUBOTICA FERMENTED PRODUCTS
5+
VitaMilk
Ella
Croatia
Bosnia and
Serbia
Herzegovina Montenegro
Plant In construction Subotica
Macedonia
AB
Subotičko
34
Acquisition contributes to growth in South East Asia • • • • • •
Indonesia Malaysia Singapore Hong Kong Thailand Vietnam
Nearby: • China • India
A market of 100 million consumers
Alaska Milk Corporation: 2nd dairy company in the country • Approximately € 200 million in revenues • Autonomous growth of 9%, between 1999-2010 • Average double digit EBIT margins since 2001 • Brands rank 1st and 2nd • 2nd dairy company in the country • Employees about 1.000 • One factory
Market positions Alaska in 2011 Evaporated milk Others
Sweetened condensed milk Others 32%
16%
AMC 85%
AMC 68%
Powder Milk APMD 21%
Others 79% Source : Nielsen Retail Index
Brands of Alaska Milk Corporation
After acquisitions: offices in 30 countries, 116 locations, turnover around 10 billion euro 6,307 Europe revenue (in millions of euros)
12,662 employees
71
locations
324
revenue (in millions of euros)
140
employees
5
locations
North and South America United States of America
999
The Netherlands Germany Belgium Hungary Romania BosniaHerzegovina Serbia Montenegro Macedonia Greece Russia United Kingdom France Spain Italy Austria
revenue (in millions of euros)
Africa and 1,996 revenue The Middle East (in millions
Asia and Australia
1,032
Ghana Nigeria
China Hong Kong Indonesia Singapore Malaysia Thailand The Philippines Vietnam India
employees
4
locations
of euros)
Saudi Arabia United Arab Emirates
5,202 employees
23
locations
1.000 days after the merger
More value added products
Nr. 2 milk price over last 3 years Acquistion 4 companies, from 25 to 30 countries
Solid foundation: solvency 39.4%
Net revenue from 8.2 to 9.6 billion euro
Investing in professionalism & talent
Annual results 2011 14 March 2012