nutreco annual results 2008 · |4 nutreco –who we are a leading global player in animal nutrition...

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Nutreco annual results 2008

Amsterdam, 12 February 2009

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Disclaimer

The information contained herein shall not constitute or form any part of any offer or invitation to subscribe for, underwrite or otherwise acquire, or any solicitation of any offer to purchase or subscribe for, securities including in the United States, Australia, Canada or Japan.

The information contained herein is not for publication or distribution into the United States, Australia, Canada or Japan. Neither this announcement nor any copy of it may be taken or distributed or published, directly or indirectly, in the United States, Australia, Canada or Japan.

The material set forth herein is for informational purposes only and is not intended, and should not be construed, as an offer of securities for sale into the United States or any other jurisdiction. Securities may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or an exemption from registration. The securities of the company described herein have not been and will not be so registered. There will be no public offer of securities in the United States, Australia, Canada or Japan.

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Content

Nutreco – who we are

Highlights 2008

Global market developments

Strategy

2008 full year financial results

Strategic agenda

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A leading global player in animal nutrition and fish feed

Founded in 1994 and a public company since 1997

Revenue in 2008 EUR 4.9 billion

Over 100 production and processing plants, sales in more than 80 countries

Multinational workforce of 9,300 employees

Nutreco ranks the top 3 of the global animal nutrition industry in revenues

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Nutreco – where we come from

18991899

19371937

19311931

19511951

19751975

19681968

19881988

1994‐19971994‐1997

1991‐19941991‐1994

1997

1999

1998

2004

2000

2007

2008

Skretting – fish feed

Trouw – premix & fish feed

Hendrix – compound feed

Euribrid breeding

Nanta – compound feed

Formation of BP Nutrition

Trouw – Chile fish feed

BP Nutrition divestment process

Formation of Nutreco

Family

busine

ssFamily

busine

ssPa

rt of B

P Nutrition

Part of B

P Nutrition

Private

equity

Private

equity

Public com

pany

Public com

pany

IPO on Amsterdam stock exchange

Acquisition UTD / Formation Hendrix Meat Group

Rebalancing for Growth

Acquisitions BASF Premix & Maple Leaf animal nutrition

Acquisitions Copaga, Silver Cup, Biofaktory, Marinet

Acquisition Hydro Seafood

Divestment Euribrid

Divestment Marine Harvest

2005

2006

Divestment Pingo Poultry

Divestment Hendrix Meat Group

Acquisition of Marine Harvest

Acquisition Tenusa

Acquisition Sloten and Dejia

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Highlights 2008


Strategy


Strategic agenda

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Solid performance in a volatile year

Revenue up 22.9% to EUR 4.9 billion driven by higher raw material prices and the contribution of acquisitions

Operating result (EBITA) up 14.7% to EUR 182 million with strong results in premix and feed specialities

Spread of activities and strategic positioning provides stability in challenging times

Doubling of 2006 EBITA to EUR 230 million expected to be met in 2010 ‐ 2012

Profit after tax from continuing operations decreased by 6.6% due to higher financing costs and tax rate

Sound balance sheet and healthy capital structure to support future growth

Dividend EUR 1.43; pay out ratio 45%

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Highlights 2008


Strategy


Strategic agenda

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Increased demand for raw materials

Sharp increase in commodity prices

Significantly higher vitamin prices

Higher feed costs pressured farm margins

2008 a challenging year

First half 2008: Global food crisis Second half 2008: Global financial crisis

Record high harvest quantities of commodities

Sharp decline in raw material prices

Pressure on liquidity in value chain

Shift in consumption of food products

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Global feed volume development

Growth of animal feed production of 2.9% in 2008 vs 2007

Global output of animal nutrition has grown nearly 18% in the last 10 years

World feed volumes have grown to over 700 million MT in 2008

Salmonid feed volumes approximately 2.5 million MT

Salmonid feed volumes impacted by downscaling fish farming activities in Chile due to ISA virus

Average annual growth salmonid feed 1999 ‐ 2008: >7%

Global salmonid feed volume development

Source: Feed International, Kontali

Global animal feed production development

0

150

300

450

600

750

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

1.7% 2.0%2.9%

mio MT

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E

10%

11% ‐1%

mio MT

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Global salmonid feed volume development 2006 ‐ 2009E

2006

2006

2006

2006

2007

2007

2007

2007

2008

E

2008

E

2008

E

2008

E

2009

E 2009

E

2009

E

2009

E

Chile Norway Other regions Total industry

16%5%8%

‐9%

8% 0%

11%‐1%

mio MT

‐4%

12%

‐26%4%

Source: Kontali

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0

100

200

300

400

500

600

700

Soy Wheat

market priceUSD/ MT

2006 20082007

High volatility in raw material pricesSoy and wheat price development Fish oil and meal price development

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Peruvian Fish meal Peruvian Fish oil

market priceUSD/MT

2006 20082007

0

5

10

15

20

25

30

35

40

45

Vit A 1000 Vit E ads.50%

2006 2008

market priceEUR/KG

2007

Vitamin price development Poultry meat prices and production cost in Spain

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Avg. broiler production cost Broiler real spot price

2006 20082007

market priceEUR/KG

Source: FAO, Crystal Ocean, TNI GPG, MAYPA Spain, Company data

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Highlights 2008


Strategy


Strategic agenda

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Nutreco: a global player in animal nutrition and fish feed

Global animal feed market is fragmented

Top 10 suppliers have a 13% worldwide market share

Leading local positions in compound feed industry

Market shares Nutreco: Canada 23%, The Netherlands 14%, Spain 10%

Premix and feed specialities industry is more consolidated

4 global players, with a joint global market share of about 50%

Nutreco’s Trouw Nutrition has a global number 2 position in premix with a 12% market share

Global salmon feed industry is concentrated: top 3 >90%

Nutreco’s Skretting is the number 1 salmon feed producer with about 35% market share

Leading position in fish feed for other species in developed markets

Nutreco ranks the top 3 of the global animal nutrition industry in revenues

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Animal nutrition/fish feedAnimal nutrition/fish feed

An attractive position in the value chain…

Protein producers/processorsProtein producers/processorsPlant growers/co‐productsPlant growers/co‐products

Scarce raw materials

High price volatility

Climate change

Low stocks

Government policies

Bio‐energy

Global growth of food demand

850 mio people undernourished

Obesity patients

‘Slow food’ vs ‘Laboratory food’

Higher food prices

Nutritional know‐how

Global presence

Feed‐to‐Food safety

Quality assurance

Leading and responsible

Innovation and technology

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Global developments Farmer and animal needs

Raw material volatility

Scarce raw materials

Ecological awareness

Population growth

Increasing health

awareness

Socio‐demographic

change

Climate change

Government policies

...with a strong response to global developments and customer needs

Feed safety and sustainability

Yield and profit improvement

Animal health

Animal welfare

Multi species full range feeding programs

Single ingredient feed supplements

Nutritional knowledge and technology

Raw material substitution know‐how

Feed‐to‐Food safety and CSR

Global sourcing

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Creating value by active portfolio management

Increasing scarcity and volatility of raw

materials → Feed additives become more important

Population growth from 6.6 to 9.2 billion in 2050: demand increase for food, fish and meat in particular → Increasing animal

feed and fish feed demand

Meat & fish producers and processors Plant growers and ingredient producers

at a critical junction

Animal nutrition and fish feed

2007 ‐ 2008Leader in animal nutrition and

‘one Nutreco’make the core stronger

2004 ‐ 2007Rebalancing for growth

‘back to the core’

2009 ‐ 2012Innovation and focus on feed additives

Meat & dairy processor

Meat & dairy processor

Farmers / animal producers

Farmers / animal producers

Complete feed producer

Complete feed producer

Formulator / producer premix and specialities

Feed additive distributor

Feed additive distributor

Ingredient producerIngredient producer

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Nutreco’s portfolio will grow to higher margin products

Premix

Concentrate

Complete feed

Basic feed additives (e.g. vitamins)

High concentrate

premix

Feed additives

Feed ingredients

Feed products

Macro minerals (e.g. salt) Protein (e.g. soya) Energy (e.g. grains)

Volume* Inclusion rate: percentage of inclusion in final product

Add

ed value

0.1‐1%

*1‐5%

*5‐10

%*

100%

*

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Feed specialitiesFeed specialities Feed additives specialitiesFeed additives specialities

A closer look at Nutreco’s feed specialities portfolio

Milk replacers, mineral supplements and

transition feeds

Milk replacers, mineral supplements and

transition feeds

Piglet feed and transition feedsPiglet feed and transition feeds

Starters including zooplankton diets and

medicated feed

Starters including zooplankton diets and

medicated feed

Nutritional feed additives

Digestive enhancers

Disease preventing

Flavours and pigments

Nutritional feed additives

Digestive enhancers

Disease preventing

Flavours and pigments

Hatchery and breeder feedsHatchery and breeder feeds

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The leading animal nutrition and fish feed company

Our VisionIn a world with limited natural resources and a growing population, Nutreco plays a leading role in developing and supplying the most efficient and sustainable feed solutions.

Our MissionNutreco is a global leader in animal nutrition. We deliver high‐quality and sustainable feed solutions and add value to our customer’s business by developing and supplying innovative products and concepts that support the best performance of farmed animals and fish.

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Highlights 2008


Strategy


Strategic agenda

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Revenue development 2008

4,0214,021

FY2007

4,9434,943

FY2008

607607

‐114‐114

Organic growth +12% Currency ‐2%

Acquisitions +13%

Volume ‐ 3%

‐81‐81510510

Price +15%

EUR mio

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Revenue and EBITA by segment

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Revenue by region and segment

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Premix and speciality feed

The acquired BASF premix business accounted for 22% increase in revenue and an excellent EBITA

Changing market circumstances have led to significant higher prices of vitamins; the sourcing and procurement initiative enabled Nutreco to benefit from this situation

Focus on feed specialities and additives, food safety and quality assurance

40.8%

118.3%

117.3%

96.8%

42.7%

Delta

47.292.9EBITDA*

ROACE (EBITA/ACE)

Avg. capital employed

EBITA/Revenue

Operating result (EBIT)

EBITA*

Revenue

EUR million 20072008

21.7%33.5%

178.5251.3

5.2%7.9%

37.281.2

38.784.1

749.21,069.4

23.1%Organic growth:

‐2.5%FX effect:

22.1%Acquisitions:

19.6%Price effect:

3.5%Volume effect:

* Before exceptional items

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Compound feed Europe

Volume decreased ‐5%, mainly due to lower livestock population in Spain

Improved market position in The Netherlands with slightly higher volumes

High raw material prices had a positive impact on the 2nd half of 2007 and 1st half of 2008 results

The EUR 5 million positive impact on raw materials in the 1st half of 2008 was neutralised in the 2nd half of 2008

24.4%

‐24.9%

‐22.4%

‐15.5%

18.2%

Delta

47.239.9EBITDA*

ROACE (EBITA/ACE)


EBITA/Revenue


EBITA*

Revenue


41.0%25.6%

92.4114.9

3.7%2.4%

37.027.8

37.929.4

1,031.81,219.7


‐FX effect:

3.9%Acquisitions:

19.5%Price effect:

‐5.2%Volume effect:


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Animal nutrition Canada

Good margins and volumes in poultry and dairy feed market

Pressured swine and beef market in 1st half of 2008 due to low meat prices, the strength of the Canadian dollar and high production costs for animals, resulting from high raw material prices

Improved swine and beef market in 2nd half 2008

Extensive exchange of knowledge with other Nutreco companies and a strong focus on cost savings and procurement

‐7.6%

147.7%

127.2%

124.3%

137.6%

Delta

11.525.8EBITDA*

ROACE (EBITA/ACE)


EBITA/Revenue


EBITA*

Revenue


3.4%8.4%

270.7250.2

5.5%5.3%

6.516.1

9.220.9

167.5398.012.6%Organic growth:

‐6.1%FX effect:

131.1%Acquisitions:

23.9%Price effect:


Financial figures are consolidated from 20 July 2007 onwards* Before exceptional items

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Animal nutrition

13.8%

55.0%

56.6%

49.8%

37.9%

Delta

105.9158.6EBITDA*

ROACE (EBITA/ACE)


EBITA/Revenue


EBITA*

Revenue


15.8%21.8%

541.6616.4

4.4%5.0%

80.7125.1

85.8134.4

1,948.52,687.117.6%Organic growth:

‐1.5%FX effect:

21.8%Acquisitions:

19.9%Price effect:



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Fish feed

Volume decline primarily due to the health challenges in the Chilean salmon farming market

Maximising the utilisation of production capacity, by closing one of three Chilean fish feed plants in September 2008 and optimising the other two plants

Revenue fish feed for other species increased by +4%

High attention for working capital management

28,0%

‐4.7%

‐4.6%

‐2.0%

‐1.9%

Delta

85.383.7EBITDA*

ROACE (EBITA/ACE)


EBITA/Revenue


EBITA*

Revenue


30.6%22.8%

232.2297.3

6.0%5.8%

70.266.9

71.067.7

1,192.91,169.9

0.1%Organic growth:

‐4.1%FX effect:

2.1%Acquisitions:

9.7%Price effect:



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Meat and other

Acquisition effect of 6.7% relates to the Canadian hatchery business and Copaga acquisition in Spain

The Spanish meat business reported a loss in 2008 due to:

Difficulties to compensate on average 25% higher feed prices in Spain

The Spanish economic situation made consumers shift to cheaper products

The poultry hatchery activities in Canada contributed well and above expectations

35.2%

‐108.3%

‐101.8%

‐71.2%

23.5%

Delta

29.58.5EBITDA*

ROACE (EBITA/ACE)


EBITA/Revenue


EBITA*

Revenue


15.1%‐0.2%

148.1200.3

2.5%0.0%

21.8‐1.8

22.3‐0.4

879.71,086.1



‐0.3%FX effect:

6.7%Acquisitions:

11.9%Price effect:

5.2%Volume effect:

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Operating result (EBITA) by activity

117.3%38.784.1Premix and speciality feed

‐101.8%22.3‐0.4Meat and other

‐4.6%71.067.7Fish feed

56.6%85.8134.4Animal nutrition

127.2%9.220.9Animal nutrition Canada

5.610.2Negative goodwill

‐11.1‐9.4Restructuring

14.7%158.8182.1Operating result before exceptional items

‐3.4%‐20.3‐19.6Corporate

Total operating result cont. operations

Total exceptional items

Other

Compound feed Europe

EUR million Delta20072008

17.8%155.2182.9

‐1.2‐3.60.8

1.9‐

‐22.4%37.929.4

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Net result and EPS

34,31734,365Numbers of shares outstanding (average)

15.5%149.0172.1EBIT from continuing operations

0.82.1Share in results of associates

208.9%‐10.1‐31.2Net financing costs/income

6.210.8Amortization

17.8%155.2182.9EBITA

7.411.1Discontinued operations

‐6.6%113.3105.8Profit for the period continuing operations

‐26.4‐37.2Income tax expense

EPS total Nutreco

EPS continuing operations

Depreciation

EBITDA


‐3.5%3.463.34

‐6.8%3.243.02

20.8%41.950.6

18.5%197.1233.5

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Balance sheet

585706Trade receivables

208228Cash and cash equivalents

1512Other current assets

342384Inventories

9577Other non‐current assets

1,9932,172Total

Intangible assets

Fixed assets

Assets (EUR mio) 31.12.0731.12.08

319286

429479

1,9932,172Total

3512Provisions

5963Other liabilities

750836Trade payables

498595Interest bearing debt

Equity

Equity & liabilities (EUR mio) 31.12.0731.12.08

651666

‐290‐367Net debt

177254Net working capital

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Cash flow continuing operations

346.0%‐5.0‐22.3Other movement (provisions)

15.7%67.678.2Free cash flow

4.4%‐77.9‐81.3Capital expenditure / divestments of assets

10.9%‐46.6‐51.7Working capital movement

18.5%197.1233.5EBITDA

‐85.3%‐526.5‐77.2Change in net debt / cash position

‐82.4%‐379.2‐66.9Acquisitions and divestments

Depreciation and amortization

EBIT continuing operations


27.7%48.161.4

15.5%149.0172.1

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Key ratio’s from continuing operations

4.4%5.1%Net working capital % revenue

3.243.02Basic earnings per share continuing operations

3.653.18Earnings per share for dividend calculation

1.641.43Dividend per share

1.471.57Net debt / EBITDA

20.9%18.0%ROACE (annualized)

0.450.56Net debt / equity

19.57.5Interest coverage

17.9%17.5%Return On Equity (ROE)

4.9%4.7%EBITDA/Revenue

3.9%3.7%EBITA / Revenue

20072008EUR million

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Additional financial remarks

Financial room:

Solid balance sheet

Healthy capital structure

Pension obligations

Mainly defined contribution plans

Limited exposure defined benefit plans

Currency

Translation impact on equity EUR 33.9 million

Impact on EBITA result EUR 3.6 million

Expected effective tax rate 2009: 26% ‐ 27%

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Highlights 2008


Strategy


Strategic agenda

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Stability in challenging times

Strategic choices in recent years have strengthened the business

Nutreco well‐positioned in the value chain

Spread of activities provides stability

Nutreco has a strong balance sheet and a healthy capital structure

Nutreco is more cautious in the allocation and usage of the financial room resulting in a prudent approach in acquiring new companies

The EBITA result of EUR 182 million in 2008 is a step forward to double 2006 EBITA

Doubling of 2006 EBITA to EUR 230 million expected to be met by 2010 ‐ 2012

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Doubling EBITA remains the target

FY2006

FY2007

FY2008

115115155155

183183

OrganicGrowthOrganicGrowth

M&AM&A

BASF premix (global)Nutreco CanadaInterkim (Turkey)

Marine Net (Japan)Silver Cup (US)Biofaktory (Czech)Copaga (Spain)

Volume growth fish feed >5%Volume growth animal feed 2‐3%

Organic22%

Acquisitions13%

Organic‐3%

Acquisitions21%

230230

FY2010 ‐ 2012

Volume growth fish feedVolume growth animal feed

Note: Currency effects included in organic growth

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Agenda

Nutreco will continue to focus on growth in animal nutrition and fish feed

In particular, in 2009 Nutreco will:

Strengthen market positions in feed specialities and additives by organic growth and acquisitions

Strengthen R&D and new product pipeline through focus on innovation

Sharpen working capital management and reduce cost

Maintain a healthy capital structure to support future growth

Nutreco will start giving quarterly trading updates in 2009

Financial calendar:

21 April: Annual General Meeting of shareholders

29 April: Q1 trading update

30 July: Half‐year results

29 October: Q3 trading update

nutreco annual results 2008 · |4 nutreco –who we are a leading global player in animal nutrition...

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