Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue for H1 2024 reached EUR1.055 billion, showcasing strong financial performance.
- EBITDA margin improved to 14.2%, driven by active portfolio management and innovation strategy.
- Significant investments in innovation, including new production lines in Malaysia, Switzerland, Germany, and Perth, expected to drive future growth.
- Solid organic growth performance in key markets like France, Switzerland, Denmark, and Poland.
- Free cash flow reached EUR53 million, demonstrating consistent cash generation despite higher CapEx.
Negative Points
- Organic growth was slightly negative at -0.7%, impacted by subdued consumer sentiment and geopolitical events.
- Volume growth was flat, with a 2.5% negative impact from active portfolio management.
- Pricing and mix were slightly negative, with some tactical pricing reductions in Europe.
- Cost inflation trends remain unchanged, with labor cost increases impacting margins.
- EBITDA margin in the rest of the world was below last year, primarily due to geopolitical impacts on the QSR business.
Q & A Highlights
Q: What has changed in the environment since the start of the year regarding the organic growth development?
A: Urs Jordi, Chairman and CEO: The geopolitical environment has become more dynamic, and consumer sentiment has been more stressed. Despite these challenges, we have a strong pipeline of new customers, listings, and products, which gives us confidence in achieving our year-end targets.
Q: What is your best guess for organic growth in 2025 with new lines going live?
A: Urs Jordi, Chairman and CEO: While we don't provide specific guidance for 2025, the new investments in Malaysia, Switzerland, Germany, and Perth are expected to significantly contribute to incremental turnover and organic growth.
Q: Given the seasonality, should we expect H2 EBITDA margin to be higher than H1?
A: Martin Huber, CFO: We expect to deliver the 14.5% EBITDA margin in two equal steps. While H2 is typically stronger, we maintain our guidance of a gradual improvement towards the 14.5% target.
Q: Can you provide more details on the portfolio optimization in the UK and Ireland?
A: Urs Jordi, Chairman and CEO: The portfolio optimization mainly affected the retail and bulk discount channels in the UK, Germany, and Hungary. We exited lower-margin businesses to focus on higher-value products.
Q: What gives you confidence that we are not entering a deflationary environment?
A: Urs Jordi, Chairman and CEO: Despite some tactical price adjustments, we do not see a long-term deflationary trend. Factors like labor cost inflation and volatile input costs, such as wheat and cocoa, suggest that prices will remain stable or slightly increase.
Q: How much of the new capacity from additional lines is already sold out?
A: Paul Meade, Head of Investor Relations: A significant portion of the new capacity is already projected to be sold or will cover current capacity shortages. This varies from line to line but can be as high as 60%.
Q: What is a reasonable CapEx level for the medium term?
A: Martin Huber, CFO: We maintain a CapEx guidance of 3.5% to 4% of revenue. This level is sufficient to support our growth and innovation projects without significant swings in our invested capital base.
Q: Does the new RCF limit your ability for M&A in the medium term?
A: Urs Jordi, Chairman and CEO: Our primary focus remains on organic growth and balance sheet restructuring. While we have addressed significant hybrid financing, we do not foresee major M&A activities in the near term.
Q: What is your target ROIC for new investments?
A: Urs Jordi, Chairman and CEO: We aim to maintain and slightly improve our current ROIC levels, which are already approaching top-quartile levels in the bakery industry.
Q: Can you comment on the trends you've seen so far in the third quarter?
A: Martin Huber, CFO: We have seen some recovery in the QSR channel and positive trends in foodservice. We expect these improvements to continue, supported by our strong pipeline of growth projects with existing customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
