Annual results 2011 14 March 2012
2011 a good year
A record milk price: 38.77 euro per 100 kilos of milk +13%
Economic conditions in Europe led to increasing pressure on volumes and disappointing results
Higher milk prices and prices other raw materials almost fully passed on to the market
Good results Ingredients and Consumer Products International
Robust growth in infant & toddler nutrition
Net revenue
+7.2%
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
2011 a good year
Due to a broad product portfolio and geographical spread of activities FrieslandCampina is capable of offsetting disappointing results in certain markets
2010
2011 2010 Variance
Revenue 9,626 8,972 +7.2%
Operating profit 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%
Results in millions of euros
2011 2010 Variance
Balance sheet total 5,739 5,299 +8.3%
Equity 2,264 2,071 +9.3%
Net debt 699 776 -9.9%
Solvency % 39.4 39.1
Balance sheet in millions of euros
Key figures
Key figures
2010
2011 2010 Variance
Guaranteed price 36.94 32.39 +14%
Performance premium 1.10 1.23 -11%
Registered reserve member bonds 0.73 0.73
Milk price 38.77 34.35 +13%
Value creation for member dairy farmers in euros per 100 kilos
Key figures
2010
2011 2010 Variance
Employees (average number of FTEs) 19.036 19.484 -2.3%
Number of member dairy farms at year end 14.391 14.829 -2.9%
Number of members at year end 19.848 20.375 -2.6%
Total milk processed (in millions of kilos) 10.140 10.266 -1.2%
Milk supplied by members (in millions of kilos) 8.838 8.821 +0.2%
Additional information
Results per Business Group
Consumer Products Europe
Consumer Products
International
Cheese, Butter & Milkpowder
Ingredients
*
Consumer Products Europe
2011 2010
Revenue 3,395 3,269
Operating profit 55 126
Operating profit as % of revenue
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
2011 2010
Revenue 2,460 2,277
Operating profit 353 356
Operating profit as % of revenue
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
2011 2010
Revenue 2,822 2,641
Operating profit -97 -92
Operating profit as % of revenue
-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
Revenue 1,930 1,669
Operating profit 189 128
Operating profit as % of revenue
9.8 7.7
• 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
2,435 25%
1,317 14%
2,555 27%
1,996 21%
999 10%
324 3%
Africa and the Middle East The
Nederlands
Asia and Australia
Rest of Europa
Germany
North and South
America
2011, in millions of euros
9,626
3,395 32%
2,460 23%
2,822 27%
1,930 18%
Ingredients
Consumer Products Europe
Cheese, Butter &
Milkpowder Consumer Products
International
9,626
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
2011 2010
Revenue 9,626 8,972 7.2%
Other operating income 20 20 Operating income 9,646 8,992
Total expenses -9,243 -8,558 8.0%
Operating profit 403 434 -7.1%
Share of profit of joint ventures and associates
13 13
Finance income and costs -72 -69 Profit before tax 344 378 Income tax expense -128 -93 Profit for the year 216 285 -24.2%
in millions of euros
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
Profit development
Condensed balance sheet
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
Total equity and liabilities 5,739 5,299
in millions of euros
39.4% 39.1%
Development ratios
2011 2010
Interest coverage ratio 7.9 9.3
Senior Net debt / EBITDA 0.6 0.6
Solvency 39.4% 39.1%
> 3.5
< 3.5
criteria banks
Cash flow
2011 2010
Profit before tax 344 378 Depreciation and amortisation 187 231 Addition member bonds 65 65 Movement working capital 1 -182 Income tax paid -94 -91 Movements provisions & other 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 Net cash flow 126 7
in millions of euros
in euros per 100 kilos 2008 60-40
2009 60-40
2010 60-40
2011 50-50
2011 60-40
Guaranteed price 35.89 26.40 32.39 36.94
Adjustment guaranteed price
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
Milk price 36.66 27.34 34.35 38.77
36.66
27.34
34.3538.77
2008 2009 2010 2011
Milk price development
Enjoying together
Hundreds of millions of people around the world use FrieslandCampina’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.
Aspiration
Value drivers
Benefit platforms
Capabilities
Foundation
Goodness of dairy
Chain advantages
Sustainability
The way we work & safety
To bring the essential nutrients of natural dairy to people worldwide
To be the most attractive dairy company for member farmers
Dairy-based beverages
Infant & toddler nutrition (B2B, B2C)
Branded cheese
Strongholds & geographic expansion
Foodservice in Europe
Basic products
Growth & development
Daily nutrition
Health & wellness
Functionality
Talent management
Milk valorisation
Innovation
Business model & cost focus
Strategy route2020: Growth & value creation
‘Global category teams for dairy-based beverages, infant & toddler nutrition and branded cheese focus on accelerating growth and innovation
Acquisition of: Alaska Milk Corporation, Imlek and Subotica to strengthen FrieslandCampina’s position
‘One face to the customer’ for business-to-business keyaccounts
Revamped sustainability programme formulated for the Company and the Cooperative as an important cornerstone of route2020
FrieslandCampina encourages cows being put in the meadow with a financial stimulus for dairy farmers of up to 45 million euro a year
Achievement of route2020 on schedule
Long-term investment plans: heavy investment in the expansion of milk processing capacity in preparation for the ending of milk quota in 2015
130 million euro invested in capacity expansion for infant & toddler nutrition in 2010-2012
Growth in infant & toddler nutrition in both business-to-business and business-to-consumer
Steps in CSR
Sustainable palm oil, soy, cocoa and FSC certified packaging material
Cooperation with Unilever,
Essent in building and others for a sustainable dairy chain
5-year partnership with the Netherlands Red Cross
Dairy Development: supporting 40.000 small farmers
Launch Foqus Planet for sustainable dairy farming
ISO 26000 guideline for CSR implemented
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-3-fatty acids and probiotics, offer products that fit in a healthy lifestyle.
Production facilities in six countries
14 production companies
Profitability of approx. € 100 million
650 million litres of raw milk annually
Approx. 3,900 employees
Slovenia
Croatia
Serbia
Montenegro
Albania
Macedonia
Romania
Bulgaria
Moldova
Greece
Turkey
Hungary
Bosnia and
Herzegovina
FrieslandCampina
Imlek
FrieslandCampina production company
FrieslandCampina central office
Imlek production company
Imlek head office
Kosovo
Imlek new production Subotica production / head office
76 million consumers
Net sales of about € 850 million
Valorisation potential 80 - 200 million kg milk
Strengthening position South East Europe
South East Europe is an attractive market
Size • 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
5+ Ella AB Subotičko Merk Subotičko 5+ Ella VitaMilk
IMLEK FRESH MILK / UHT IMLEK FERMENTED PRODUCTS
Merk Moja Kravica Bello
MK Choco/
Max
Moja Kravica
Vitalia Bitolsko
Moja Kravica Balans+ Viva Fit Jogood Vitalia
Croatia
Bosnia and
Herzegovina
Serbia
Montenegro
Macedonia
Plant In construction
Imlek and Subotica: strong on the Balkans
Subotica
SUBOTICA MILK PRODUCTS SUBOTICA FERMENTED PRODUCTS
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
AMC 85%
Others
16%
Source : Nielsen Retail Index
AMC 68%
Others 32%
APMD 21%
Others
79%
Evaporated milk Sweetened condensed milk
Powder Milk
Market positions Alaska in 2011
Brands of Alaska Milk Corporation
6,307 revenue
(in millions of euros)
12,662 employees 71
locations
Europe
The Netherlands Germany Belgium Hungary Romania Bosnia-
Herzegovina Serbia Montenegro Macedonia Greece Russia United Kingdom France Spain Italy Austria
Africa and The Middle East Ghana Nigeria Saudi Arabia United Arab Emirates
Asia and Australia China Hong Kong Indonesia Singapore Malaysia Thailand The Philippines Vietnam India
North and South America United States of America
1,996 revenue (in millions
of euros)
5,202 employees
23 locations
999 revenue (in millions
of euros)
1,032 employees
4 locations
324 revenue (in millions
of euros)
140 employees
5 locations
After acquisitions: offices in 30 countries, 116 locations, turnover around 10 billion euro
1.000 days after the merger
Net revenue from 8.2 to 9.6 billion euro
More value added products
Acquistion 4 companies, from 25 to 30 countries
Investing in professionalism & talent
Solid foundation: solvency 39.4%
Nr. 2 milk price over last 3 years
Annual results 2011 14 March 2012