Q4 and FY 2018 results - Amsterdam, 12 February 2019 - Wessanen
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Q4 and FY 2018 results
Amsterdam, 12 February 2019
2018: Progress on key performance measures 2
Good own brands growth in Q4, moderate for FY 2018 3
Comments own brands revenue development in 2018 FY: overall moderate growth Despite more competitive pressure in France from private label, smaller brands and conventional brand entries, Bjorg achieved mid single digit growth Clipper, Alter Eco, Allos, Ecocesta and Whole Earth all achieved good growth Gayelord Hauser continues to decline in a shrinking dietetic market HFS channel losing share to Grocery affecting many of our HFS brands Lack of customer support in the UK, impact on UK portfolio Zonnatura relaunch didn’t produce expected growth in a slowing down market Q4: accelerated growth Strong promotion and activation on Bjorg and Alter Eco in the French Grocery trade Ongoing good growth of Clipper internationally, Ecocesta in Spain Improvements on Kallo in the UK, Whole Earth still positive Brands focused on the HFS channel continue to be under pressure(apart from Allos in Germany) 4
EBITE margin1 development
11.0% Continued growth of EBITE
margin and EBITE overall up
10.0%
9.2% 7.9% to €57.7m
9.0% 8.6%
8.0% Gross margin increases due to
7.2%
better mix (product and channel)
7.0% 6.6%
and lower COGS, partially offset
6.0% 5.5%
by higher promotional
investments.
4.8%
5.0%
4.0% A&P slightly below prior year and
lower overheads, mainly due to
3.0%
impact share based payments.
2013 2014 2015 2016 2017 2018
1Continuing operations only
5
Leveraging Dairy Alternatives internationally
Isola Bio in Brazil
Bjorg extending No.1 position in France and further gaining share
Isola Bio re-launch and international activation, market leader in Brazil
Dairy Alt Extensions of Zonnatura, Allos, Ecocesta all growing fast
6
6
Driving fast growth of Breakfast Cereals
Fastest growing category in 2018, Bjorg and Zonnatura growing and gaining share
In-sourcing of Zonnatura into German production site
First extension into Breakfast Cereals by Isola Bio
Protein enriched Muesli and Granola range
7
Clipper continued International success –
double digit growth
Latest variant First listing at
Strong growth in European countries launched in Benelux Walmart Canada Promotion in Finland
Driving bigger presence in International Markets, e.g.
Scandinavia, North America
First mover in plastic free packaging innovation
Increased A&P support – first national campaign in
Germany
8
8
Leveraging our Tea expertise across brands Based on harmonized mixes out of our UK manufacturing site 9
Green packaging for core categories driving savings,
sustainability benefits and consumer preference
BFC- Pack size reduction&water based inks DA- Bio-based caps Tea – Plastic free
Plastic free pillow
bags(UK)
18MT less polypropylene each FY
Plastic free envelope
Reduced by 11%, 14% less trucks p.a.
33% less waste, goes into paper bin
550T of CO² savings/year Plastic free tea bag and
lighter tag
4 times less CO2
10Clear CSR commitments shaping our agenda 11
Abbot Kinney’s – fastest integration and activation to date Will be handled and expanded by our teams in Germany, France, Italy, Spain and UK from Q1 Plans to double the brand in year 1 Improving Operations 12
Financial Review
Ronald Merckx (CFO)
13Revenue development Q4 2018 (in € millions)
Autonomous growth
Adoption IFRS15 impact of €(0.2)m in Q4
(Full year effect 2017: €(1.4)m)
€ 7.5 € 0.2 € 160.6
Acquisition of Abbot Kinney’s impact €0.5m
€(0.2)
Autonomous growth of Own Brands 5.9%
€ 152.8 € 0.5 € 153.1 Limited impact private label and distribution
brands
€(0.2)
FX effect from the British pound small
5.9% 0.8%
Q4 2017 Adoption Acquisitions Q4 2017 Own brands Other (*) Currency Q4 2018
(reported) IFRS15 (pro forma) (pro forma)
(*) Other including private label, sole agencies and whole sale.
14Revenue development FY 2018 (in € millions)
Autonomous growth Adoption IFRS15 impact of €(1.4)m
€ 11.2
Acquisition of Abbot Kinney’s impact €0.7m
€ 628.4 Autonomous growth of Own Brands +2.1%
€(6.9)
€ 625.8 € 625.1 €(1.0)
€ 0.7 Offset by reduction of private label volumes
€(1.4)
FX effect from the British pound
+2.1% (6.6)%
FY 2017 Adoption Acquisition FY 2017 Own brands Other (*) Currency FY 2018
(reported) IFRS15 (pro forma)
(*) Other including private label, sole agencies and whole sale.
15In € million Q4 2018 Q4 2017 FY 2018 FY 2017
EBITE 14.8 10.1 57.7 53.5
Exceptional items (0.7) (3.6) (6.6) (4.8)
Net financing costs (0.3) (0.2) (1.1) (1.9)
Income tax expense (3.2) 0.9 (14.0) (10.8)
Effective tax rate 28% 23%
Profit for the period 10.6 7.2 36.0 36.0
Exceptional items mainly include impairments in Q2 of €(5.6) million (comprising of
our French dietetic brand Gayelord Hauser in the amount of €(5.2) million and a
smaller German brand of €(0.4) million) and severance expenses
Net financing cost comprising a decrease of interest expenses and lower FX losses
The effective tax rate of 28% in 2018 (2017: 23%) deviates from the weighted average
statutory income tax rate of 32%, mainly as a result of the recognition and partial
utilisation of unrecognised income tax losses in the Netherlands and Germany of €1.3
million and prior year adjustments of €0.8 million.
16Net debt development (in € millions)
€ 59.9
Leverage ratio reduced to 0.7x at
year end
€ 12.8 € 48.0
Working capital flat
€ 9.9
€(1.0)
€ 7.7
Key elements of “Other” relate to
the contingent consideration for the
€ 13.1 Abbot Kinney’s acquisition (c. €5m)
and lease of new building France (c.
€13.1
€6m).
€3.1
€(69.7)
€(1.2)
Working capital
Dividend
Operating cash flow
Provisions
30 June 2018
Other
Acquisitions
Interest / taxes
31 December 2017
Capex
Share capital increase
17IFRS 16 ‘Leases’ – estimated impact
FY2018 reported FY2018 estimate FY2018 estimated
In € million (based on IAS 17) (based on IFRS16)1 impact IFRS161
EBITDA - before Rental payments 71.8 71.8 -
Rental payments (Variable component) (1.3) (1.3) -
Rental payments (Fixed component) (4.4) - 4.4
EBITDA 66.1 70.5 4.4
Depreciation, amortisation and impairments (15.0) (19.3) (4.3)
Operating result (EBIT) 51.1 51.2 0.1
Net financing cost (1.1) (1.6) (0.5)
Profit before income tax 50.0 49.6 (0.4)
1
Based on the contract database as per 31 December 2018.
Numbers are for illustration purposes only; no restatement of 2018 figures.
Balance sheet impact: based on the contract database as at 31 December 2018, the estimated impact of IFRS 16 is
an increase in total assets (= recognition of right-of-use assets) and total liabilities (= recognition of lease liabilities) of
approximately €21 million.
P&L: the impact on operating result and net profit is expected to be immaterial.
Cash flow impact: cash flows from operating activities are estimated to increase and cash flows from financing
activities are estimated to decrease by approximately €5 million.
18Our expectations for FY 2019 We expect low to moderate growth of own brands and a further reduction of private label and distribution brand sales We expect EBITE as % of revenue to be in the range of 8 to 9% for the full year Net financing costs around €2.0-2.5 million. This includes an impact of around €0.5 million regarding the implementation of IFRS 16 and around €0.5 million related to the unwinding discount of the contingent consideration for the Abbot Kinney’s acquisition Tax rate around 30% Capital expenditure of €10-12 million Depreciation and amortisation of €14-15 million. This includes an impact of around €4.3 million related to IFRS 16 and €0.4 million amortisation of the Gayelord Hauser brand after reclassification to a finite life 19
Our priorities 2019
Grow brands in core categories Upgrade Operations
• Strong focus in terms of A&P allocation(near • Step up Value Engineering
80% on top 5 brands) • Continued in-sourcing
• Increased international innovation roll-out • Factory and SC optimization
• Competitive promotional levels • High service level and forecast accuracy
• Core category extensions of key brands
• Clipper international push supported through
new campaign
• Bjorg new competitive communication
campaign
Make selective acquistions Green, attractive, efficient company
• Fast integration and roll-out of Abbot • B Corp certification
Kinney’s • Drive down waste at all levels
• Activation Destination in Sp, It, Benelux, IM
• Continued active screening of market
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