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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The information contained herein is not for publication or distribution into the United States, Australia, Canada or Japan.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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Nutreco – who we are
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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Nutreco – who we are
Highlights 2008
Global market developments
Strategy
2008 full year financial results
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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Nutreco – who we are
Highlights 2008
Global market developments
Strategy
2008 full year financial results
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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Nutreco – who we are
Highlights 2008
Global market developments
Strategy
2008 full year financial results
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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Nutreco – who we are
Highlights 2008
Global market developments
Strategy
2008 full year financial results
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)
Avg. capital employed
EBITA/Revenue
Operating result (EBIT)
EBITA*
Revenue
EUR million 20072008
41.0%25.6%
92.4114.9
3.7%2.4%
37.027.8
37.929.4
1,031.81,219.7
14.3%Organic growth:
‐FX effect:
3.9%Acquisitions:
19.5%Price effect:
‐5.2%Volume effect:
* Before exceptional items
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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)
Avg. capital employed
EBITA/Revenue
Operating result (EBIT)
EBITA*
Revenue
EUR million 20072008
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:
‐11.3%Volume 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)
Avg. capital employed
EBITA/Revenue
Operating result (EBIT)
EBITA*
Revenue
EUR million 20072008
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:
‐2.3%Volume effect:
* Before exceptional items
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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)
Avg. capital employed
EBITA/Revenue
Operating result (EBIT)
EBITA*
Revenue
EUR million 20072008
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:
‐9.6%Volume effect:
* Before exceptional items
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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)
Avg. capital employed
EBITA/Revenue
Operating result (EBIT)
EBITA*
Revenue
EUR million 20072008
15.1%‐0.2%
148.1200.3
2.5%0.0%
21.8‐1.8
22.3‐0.4
879.71,086.1
* Before exceptional items
17.1%Organic growth:
‐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
EUR million Delta20072008
‐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
EUR million Delta20072008
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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Nutreco – who we are
Highlights 2008
Global market developments
Strategy
2008 full year financial results
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
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