CHR Hansen Q3 Roadshow Presentation 201819 PDF
CHR Hansen Q3 Roadshow Presentation 201819 PDF
CHR Hansen Q3 Roadshow Presentation 201819 PDF
Hansen Q3 2018/19
Roadshow presentation
AT A GLANCE
59%
Share of revenue (FY 2017/18)
Bioprotection
Sweety® reduces added sugar in yogurt Substitute artificial ingredients with our e-number
by up to 20% without losing sweetness free labeling coloring foodstuffs range FRUITMAX®
QUARTZO® and PRESENCE® are probiotic plant LGG® has been studied in +300 clinical studies that
health solutions that help sugar cane and other crops indicate that the strain may have beneficial effects on
fight off attacks from nematodes immune and gastrointestinal functions
3
AT A GLANCE
Expand
Expand reach
reach of
of Launch
Launch 6 5new
Launch 6 new products
newproducts
products Reduce
Reduce global
global
natural plant
naturalplant
natural protection
plantprotection by
protectionby with a documented
with a documented yogurt
yogurt waste by
waste by
25m
by25m hectares
25mhectares
hectares health
health effect
effect 700k ton
1.2m tons
(2025)
(2025) (2020)
(2022) (2020)
(2022)
4
STRATEGY
Reinforce position Further strengthen global market Human Health: Expansion into Drive US conversion and secure
presence emerging markets and growth APAC growth
in growth markets segments
Application support in core
adjacencies Strengthen route-to-market in Ag
businesses
Generate fuel Drive scalability in supply chain Reinvest in future growth Continue drive to restore
profitability
for growth Digitalize core processes
5
STRATEGY
Bioprotection Designated as
Bacterial solutions for food safety and lighthouse in 2016
FOOD CULTURES
& ENZYMES freshness – target of EUR 200m by 2025
6
FOOD CULTURES & ENZYMES
New
innovation in core food categories and
business near adjacencies
2-3% growth <1% growth
Technologies
Fundamental
market growth,
Existing
Organic growth pricing and
divisional target
Further conversion
7-8 %
market share of dairies
~4% growth ~1% growth
Existing New
Customers/markets
7
FOOD CULTURES & ENZYMES
Dairy a new category for Chinese consumers Customers looking for differentiation Focus on innovation, premiumization & new concepts
Double-digit market growth driven by ambient boom Growth slowing due to saturation in tier-1/2 cities Penetration beyond tier-1/2 cities
SME segment
8
FOOD CULTURES & ENZYMES
Dairy
99 Almond yogurt label
9
FOOD CULTURES & ENZYMES
Traditionally Non-traditionally
fermented food products fermented food products
Food waste
Shelf life extension
targeting
yeasts/mould
3%
2%
Food safety
Additional
protection against
gram-positive food
pathogens (Listeria,
12/13 13/14 14/15 15/16 16/17 17/18 Clostridium)
10
HEALTH & NUTRITION
7%-9% 5-15%
HH Microbial
penetration
7%-9%
10-15%
AH Microbial
penetration
13%-17%
<5%
PH Microbial
penetration
Mega-
Growing world Increasing scientific Resource scarcity creates Need to reduce antibiotic Pressure to curb
trends population and evidence of health benefits productivity squeeze for growth promoter usage in chemicals usage in crop
rapid urbanization from “good bacteria” (and customers Iivestock production production
KOL/consumer awareness)
11
HEALTH & NUTRITION
CDMO pre-clinical to phase II ► Full supply chain offering from development to commercial CDMO
including strict anaerobic capabilities
anaerobes
► Market potential of EUR 150-200m for clinical supply by 2025 and of
LGG® > EUR 1bn for clinical and commercial supply combined by 2035
Strict
End market
Infant
Women
dietary supplements and infant nutrition
► Execute product pipeline and develop new concepts for dietary
Metabolic & other novel health areas
supplements and infant formula
► Development and commercialization of strain X
Strain X
BB-12®
► Drive R&D for other application areas such as women’s health and
LA-5®
LGG®
infant microbiome
Conventional strains New strains
Type of bacteria
12
HEALTH & NUTRITION
► Direct route-to-market
► Optimizing our business
North America ► Introducing our newest partner relationships
innovations
► Launching new products
>60% EMEA
of revenue1
<20%
16% of revenue1
of global meat and
dairy production 37% APAC
► New business partners
of global meat and
dairy production <10% ► More dedicated
of revenue1
resources on the
33% ground
of global meat and
dairy production ► Growing portfolio
LATAM
14
HEALTH & NUTRITION
>EUR 50bn total global crop protection sales ► 2024/25: Presence in all major geographies
APAC EMEA NA
15
NATURAL COLORS
NORTH EMEA
Transformation project AMERICA Market value EUR
completed Market value EUR ~500m
~150m Conversion volume
Limited synergies between Natural Conversion volume ~60% APAC
Colors and our microbial platform ~25% Market value EUR
~225m
Conversion volume
~25%
Projected 2030 market value
of EUR 2.0 - 2.5bn
GLOBAL
Market value EUR
Source: Euromonitor and management estimates.
Note: Market value measured as Food & Beverages Natural Colors including Coloring Foods, and excluding Caramel colors (approximately EUR 200m)
5-7% ~1,000m
Global market Conversion volume
16 growth
~35%
FINANCIAL PERFORMANCE
12%
29.2%
10% 10%
140 0
28.9%
30%
12%
350
130 0
9% 10%
29%
120 0
8% 300
28.2% 29%
8%
110 0
28%
100 0 250
27.1%
900
6%
27.1% 28%
200 27%
4%
800
27%
700
150
2%
26%
756 859 949 1,063 1,097 205 233 268 307 320
600
13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18
Free cash flow before special items and acquisitions in EUR m / CAGR, %
250
Return on invested capital in EUR m / ROIC, % 42%
200 0
230
40%
38.0%
210
190
180 0
170
150
12% 160 0
34.9% 36%
130
140 0
34%
110
90
120 0
32%
124 151 175 188 198 1,214 1,247 1,445 1,581 1,632
70
50 100 0 30%
13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18
17
FINANCIAL PERFORMANCE
13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18
18
FINANCIAL PERFORMANCE
48. 0%
13. 0%
46. 0%
11. 0%
44. 0%
42. 0% 9.0 %
40. 0%
7.0 %
38. 0%
5.0 %
36. 0%
34. 0% 3.0 %
32. 0%
48.3% 48.0% 46.7% 45.6% 45.2% 1.0 % 12.3% 11.8% 11.9% 12.6% 12.7%
30. 0%
-1.0%
13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18
10. 0% 10. 0%
8.0 % 8.0 %
7.0 % 7.0 %
6.0 % 6.0 %
5.0 % 5.0 %
4.0 % 4.0 %
3.0 % 3.0 %
2.0 % 2.0 %
1.0 %
13/14 14/15 15/16 16/17 17/18 13/14 14/15 15/16 16/17 17/18
19
LONG-TERM AMBITION
8-10% organic growth 30+% EBIT margin b.s.i. +10% CAGR FCF b.s.i.a.
with 7-8% organic growth in FC&E
20
CAPITAL ALLOCATION
1 Reinvest for
organic growth 2 Bolt-on
acquisitions 3 Ordinary
dividend
4 Additional cash
to shareholders
Extraordinary
Capacity Technology 40-60%
dividend
Market
Innovation Share buy-back
presence
21
Capacity Innovation People
8.3% 8.2% 8.2% Natural Colors US footprint & Montpellier R&D upgrade 19/20
12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22
~10% of net revenue capex p.a. 2017/18 – 21/22
~9% average ~10% average
22
Capacity Innovation People
Analytical
Discovery
Solutions
250+
Portfolio &
Project
Management
employees
working in R&D
Cultures Process (ex. application)
Development Development
Emerging Technologies
Increase speed of Drive efficiencies Leverage new Invest in new Nurture and Embed
commercialization of in scale-up and technologies to state-of-the-art retain talent sustainability
new products production increase R&D speed R&D facility in R&D into thinking
24
Capacity Innovation People
7-8 %
R&D pipeline fully aligned with Nature’s no. 1
25
EXECUTIVE COMPENSATION
Annual incentive program for CEO and CFO Progressive three-year incentive program
Based on group financial targets and discretionary, personal goals Requires personal investment in Chr. Hansen shares to participate
Bonus is paid as 1/3 of the payout in Restricted Stock Units, and 2/3 in cash; Grant value estimated (based on Black-Scholes) at 20-25% of the
normally accounts for 25-30% of total remuneration package remuneration package
x0.5 Retention
20% Organic growth target
Discretionary,
40% Individual non-financial targets x2 TSR performance relative to peers
personal goals
Matching shares
per 1 invested share
26
OUR SUSTAINABILTY TARGETS
Better farming Expand reach of natural plant solutions Hectares of farmland treated (cumulative)2 6.7m hectares 25m hectares
Commercial
Good health Launch new products with a Number of products (cumulative) 3 products 6 products
documented health effect
Less waste Reduce global yogurt waste Tons of yogurt saved (cumulative)3 0.4m tons 1.2m tons
Human rights and Respect human rights and ensure responsible On site sustainability assessment of high Supplier requirements
and internal training
responsible sourcing practices in supply chain risk suppliers
1 For better farming the target is to be reached by 24/25.
2 Based on sales numbers and application rates of Plant Health solutions and silage inoculants.
3 Based on 7 days extended shelf life and sales numbers for FreshQ®.
4 Frequency of Lost Time Incidents per million working hours.
5 Defined as corporate management teams reporting to VP level and above that include at least one woman and one non-local.
3
J
u
l
y
FINANCIAL HIGHLIGHTS
9% organic growth 28.2% EBIT margin b.s.i. EUR 57m FCF b.s.i.a.
YTD 2017/18: 9% YTD 2017/18: 27.5% YTD 2017/18: EUR 75m
Q3 2018/19
8% organic growth 30.4% EBIT margin b.s.i. EUR 49m FCF b.s.i.a.
Q3 2017/18: 9% Q3 2017/18: 29.7% Q3 2017/18: EUR 64m
29
FINANCIAL HIGHLIGHTS
30
REGIONAL PERFORMANCE
Growth in NA increased but softer quarter for EMEA, and APAC still challenged
NORTH AMERICA APAC
YTD: YTD:
Strong growth in NCD supported by Strong growth in H&N, whilst
conversions and solid growth in FC&E; 6% 9% FC&E was on par with last year
H&N declined due to sluggish market YTD Q3 and NCD declined
conditions in cattle and dietary Q3:
supplements
Q3: 7% 4% Strong growth in H&N, whilst
FC&E declined due to slowing
FC&E and NCD with strong growth; H&N YTD Q3 volume growth in fermented
with solid growth due to customer wins organic milk and challenging customer
in Animal Health and slightly improved growth dynamics (mainly in China); NCD
farmer economics declined due to softer demand
and timing of orders
LATAM
APAC
27% 27% YTD/Q3:
YTD Q3
17% Strong growth in FC&E 4% 3%
and H&N, whilst NCD
EMEA declined YTD and was
EMEA YTD Q3
LATAM Share of 44% flat in Q3 due to a YTD:
13% YTD 18/19 Solid growth in FC&E and H&N; NCD
revenue challenging economic
climate with good growth
EUR pricing accounted Q3:
almost half the organic FC&E with solid growth and flat sales in
NA
growth in Q3 and YTD NCD due to lower demand from Middle
26%
East, whilst H&N declined due to timing
of orders with a key customer
FC&E= Food Cultures & Enzymes, H&N= Health & Nutrition, NCD= Natural Colors (Division)
31
FOOD CULTURES & ENZYMES
165.9
Q3 18/19
176.7
YTD 17/18
474.7
YTD 18/19
503.8
YTD Scalability benefits, mainly from Copenhagen expansion, of Organic growth 11% 8% 12% 9%
around 1%-point on gross margin partly offset by investments
in strategic initiatives Volume/mix 6% 5% 9% 5%
Q3 Margin improvement mainly driven by Copenhagen ramp-up EBIT margin 34.7% 35.1% 32.5% 33.0%
ROIC ex. goodwill 41.6% 41.1%
32
HEALTH & NUTRITION
59.1
Q3 18/19
66.5
YTD 17/18
164.6
YTD 18/19
184.6
YTD EBIT margin on par with last year Organic growth 7% 11% 8% 11%
Volume/mix 7% 10% 8% 10%
Q3 EBIT margin on par with last year; lower gross margin offset
EBIT margin 30.8% 30.8% 29.2% 29.2%
by relatively lower growth in operating expenses
ROIC ex. goodwill 26.0% 26.7%
33
NATURAL COLORS
57.7
Q3 18/19
58.8
YTD 17/18
161.6
YTD 18/19
166.8
YTD Increase in EBIT margin driven by operating efficiencies, soft Organic growth 6% 3% 5% 4%
baseline and declining raw materials, partly offset by
currencies Volume/mix 4% 4% 2% 5%
Q3 1.1%-points improvement in EBIT margin driven by operating EBIT margin 14.4% 15.5% 10.9% 12.5%
efficiencies and declining raw materials, partly offset by FX ROIC ex. goodwill 20.1% 21.7%
34
INCOME STATEMENT
35
CASH FLOW & BALANCE SHEET
Balance sheet
Total assets 1,848.2 1,974.9
Equity 809.5 837.0
Net interest-bearing debt 672.6 740.0
Key ratios
Net working capital 21.9% 23.2%
Capital expenditure 9.1% 11.3%
ROIC excluding goodwill 34.2% 34.3%
NIBD/EBITDA 1.8x 1.8x
36
OUTLOOK
Free cash flow b.s.i.a. EUR 57m Around the same Above ~10% CAGR
level as in 17/183 17/18 level3
1 The outlook is based on constant currencies and stable raw material prices and assumes no acquisitions. The outlook is also based on the current political and economic environment, although there is a risk of increased political and
economic uncertainty – e.g. the economic climate in the Middle East and Latin America, the risk of a ‘hard’ Brexit, and trade tensions between large economies. Any deterioration in these situations might impact the outlook.
2 Baseline 2016/17, updated at Capital Market Day on April 18, 2018.
3 Assumes lower growth in cash flow from operating activities than growth of EBIT before special items, due to a higher level of taxes to be paid in 2018/19, mainly related to the absence of acquisition-driven tax benefits realized in
2017/18.
37
Financial calendar Contacts
October 10, 2019 Martin Riise, Head of Investor Relations
Annual Report 2018/19 +45 53 39 22 50
DKMARI@chr-hansen.com
November 27, 2019
Annual General Meeting 2019 Annika Stern, Investor Relations Officer
+45 2399 2382
DKASTE@chr-hansen.com