Bell Food Group, first half of 2020

Broadly supported business model and high productive capacity ensure a good operating result

Financial analysts' presentation

13.08.2020 | Bell Food Group, first half of 2020

Overview of first half of 2020.

13.08.2020 | Bell Food Group, first half of 2020

Seite 2

Key facts at a glance and important events

Results for first half of 2020

Sales revenue

Half-year profit

in CHF million

in CHF million

1,995

34.9

+ 2.9 % adjusted*

Previous year reported

- 9.6

Number of

EBIT

employees

in CHF million

FTEs as at 30.06

12,141

59.4

- 3.1 %

+ 2.4 %

65 locations in 15 countries

*Adjusted for currency effects and acquisitions/divestments

13.08.2020 | Bell Food Group, first half of 2020

Seite 3

Key facts at a glance and important events

Operating growth in first half of 2020

  • Broadly supported business model and high productive capacity ensured attractive operating

sales growth

Operating sales growth

  • In Switzerland, large increases in meat and charcuterie retail sales made up for the sharp decline in food service sales; changes to the product range/channel mix had a positive effect
  • Excellent performance by Bell International: concentration of international business on air- dried ham and poultry had a positive effect on earnings
  • Development of the Convenience business area was curbed by the coronavirus pandemic; decline in sales and profit could not be prevented

13.08.2020 | Bell Food Group, first half of 2020

Key facts at a glance and important events

Coronavirus pandemic - effects on markets

  • Effects of the pandemic on work processes
    • Implementation of protective measures such as social distancing, remote working, travel restrictions and meetings generated additional expenses
    • Restrictions to travelling/border crossings complicated the commute to work for employees
  • Multi-weeklockdown and restricted mobility had a severe impact on consumers' shopping and eating habits
    • Substantially increased consumption by private households as consumers prepared more meals at home
    • Strong decline in demand for to-go products and meals to eat at the office
  • Closure of many catering establishments led to the collapse of the food service market during lockdown
  • In Switzerland, retailers benefited from the complete standstill of shopping tourism

13.08.2020 | Bell Food Group, first half of 2020

Seite 5

Key facts at a glance and important events

Coronavirus pandemic - significant changes in demand, depending on product group

Development of retail product groups in Switzerland

+/- in %

60

50

40

30

20

10

0

-10

Meat / charcuterie Non-perishable convenience Fresh convenience

Bread / baked goods Fruit / vegetables Sweets / snacks

January

February

March

April

May

June

13.08.2020 | Bell Food Group, first half of 2020

Seite 6

Key facts at a glance and important events

Coronavirus pandemic - great distortions in the retail and food service markets

Index of retail and food service markets

Retail

Food service

130

120

110

Index

100

90

80

70

60

50

January

February

March

April

May

June

13.08.2020 | Bell Food Group, first half of 2020

Seite 7

Key facts at a glance and important events

Coronavirus pandemic - effective reaction by the Bell Food Group

  • Timely and efficient implementation of protective measures - the health of employees has the highest priority
    • Consistent implementation of protective measures such as social distancing has prevented the spread of the virus in facilities to date
    • Additional relief and benefits for employees in recognition of their great commitment
  • Production and delivery readiness could be guaranteed at all times - delivery and supply mandate fulfilled
    • Strong fluctuations in order volumes mastered thanks to the high productive capacity and great commitment of employees
    • Product ranges adjusted to market needs at short notice; e.g. limited to one core product range
  • Retail market posts substantial increase in all product groups except fresh convenience
    • Slump in food service sales compensated by meat and charcuterie thanks to guaranteed delivery readiness at all times
    • Cost levels immediately adjusted to new sales conditions

13.08.2020 | Bell Food Group, first half of 2020

Strategic directions.

13.08.2020 | Bell Food Group, first half of 2020

Seite 9

Update on strategic directions

Systematic implementation of the Group strategy

1

Construction of a new deep-freeze store

Strengthening of

started; state-of-the-art store in Oensingen

to be finished by the beginning of 2023

the leading

position in the

It will allow the concentration of current

traditional meat,

internal and external storage facilities in a

poultry, seafood

single location while substantially

and charcuterie

expanding productive capacity and halving

segment

resource requirements

Seite 10

Update on strategic directions

Systematic implementation of the Group strategy

1

Internationally, focus on segments with

Strengthening of

intact perspectives that can achieve critical

mass

the leading

position in the

Clear focus on air-dried ham specialities

traditional meat,

and poultry

poultry, seafood

In this context, two production locations in

and charcuterie

Hungary and France and the logistics

segment

centre in Belgium were sold

Seite 11

Update on strategic directions

Systematic implementation of the Group strategy

1

Strengthening of

the leading position in the traditional meat, poultry, seafood and charcuterie segment

  • Bell Food Group is to increase its investment in the Dutch start-up Mosa Meat, which is the world's leading company for cultured beef with some 40 employees
  • Mosa Meat wants to be the first to launch a cultured meat product on the European market
  • Bell Food Group highlights its commitment to sustainability and publishes a complete Sustainability Report in accordance with the GRI standard for the first time

www.bellfoodgroup.com

Seite 12

Update on strategic directions

Systematic implementation of the Group strategy

2

Expansion of our market share in the high-growthand high-margin convenience

  • Successful launch of "The Green Mountain" plant-based burger in the Swiss retail channel further expanded our leading position in vegetarian and vegan products in Switzerland

market

Further expansion of vegetarian

ranges is ongoing

Seite 13

Update on strategic directions

Systematic implementation of the Group strategy

2

Expansion and modernisation of the

Expansion of our

production infrastructure

progressed further - construction of

market share in the

the new Hilcona building in Schaan

high-growth and

on schedule

high-margin

convenience

Various innovations to further

market

enhance the attractiveness of the

product range and gain market share

Growth momentum curbed by the

coronavirus pandemic, but fresh

convenience and to-go segments

remain medium- and long-term

drivers of the convenience business

Seite 14

Update on strategic directions

Systematic implementation of the Group strategy

3

Strengthening of the food service

Substantial

channel with tailored "Smart Cuisine"

product and concept solutions

strengthening of

From the end of June 2020, a path-

the food service

channel

breaking cooperation with the

University Hospital of Basel (UHB) for

the marketing of nutritional solutions

based on the promising MicroPast

technology for hospitals and frail care

centres

UHB is a pioneer in this field and

boasts a wealth of expertise in the

challenging nutritional aspects of frail

care nursing

Hilcona division will in future market

menus produced by UHB and will thus

considerably expand its service

portfolio for this growing segment

Seite 15

Update on strategic directions

Systematic implementation of the Group strategy

4

Expansion of geographic presence

  • Foray into the DACH region with fresh convenience thanks to new production capacities
  • Restructured export organisation made further progress; exports to China and other world regions picked up speed

Sites Convenience DACH-Länder (CH/DE/AT)

Seite 16

Comments about financial reporting.

13.08.2020 | Bell Food Group, first half of 2020

Seite 17

Details and explanations for first half

Sales development

Sales revenue

Breakdown of sales by product group

in CHF million

in %

17

18

25

27

26

2,061

2,023

1,995

Convenience

1,734

25

27

1,616

809

700

International

25

767

25

27

552

Poultry,

473

seafood

1,252

1,256

11,295

58

55

1,182

Switzerland

50

48

Fresh meat,

1,143

47

charcuterie

HY2016

HY2017

HY2018

HY2019

HY2020

HY2016

HY2017

HY2018

HY2019

HY2020

13.08.2020 | Bell Food Group, first half of 2020

Seite 18

Details and explanations for first half

Influences on sales

Sales revenue

in CHF million

First half of 2019

Currency effect

Acquisition/divestment

First half of 2019 adjusted

Bell Switzerland BA

Bell International BA

Convenience BA

First half of 2020

2,023

    • 45
  • 42

1,936

+ 38

+ 42

- 20

1,995

Operating growth + CHF 59 million

  • Organic sales growth of 2.9 %
  • Encouraging performance by Bell International; revenue lost through the sale of the German sausage business in 2019 could be compensated
  • Coronavirus fallout burdens the development of Convenience sales

13.08.2020 | Bell Food Group, first half of 2020

Seite 19

Details and explanations for first half

Development of gross profit and EBIT

Gross operating profit

in CHF million and in % of net income

36.7% 37.5% 38.2% 38.7% 38.8%

EBIT

in CHF million and in % of net income

3.8%

3.8%

2.7%

3.0%

0.6%

585

772 768 761

642

61

65

59

55

11

HY2016 HY2017 HY2018 HY2019 HY2020

HY2016 HY2017 HY2018 HY2019 HY2020

13.08.2020 | Bell Food Group, first half of 2020

Seite 20

Details and explanations for first half

Operational progress

EBIT

in CHF million

First half of 2019 reported

Reorganisation of Bell Germany

Once-off expenses and costs of idleness

Raw material prices

Start-up costs

1st HY 2019 adjusted

Organic growth 1st HY 2020

First half of 2020

11.0

  • 37.0
    • 6.0
      • 4.0

58.0

+ 1.4

59.4

  • Encouraging organic EBIT growth of 2.4 %
  • Positive development of the retail channel compensated for the decline in food service
  • Additional cost measures implemented

13.08.2020 | Bell Food Group, first half of 2020

Seite 21

Details and explanations for first half

Reconciliation of half-year profit

2019

2020

reported

adjusted

reported

EBIT

11.0

58.0

59.4

Result from associates

1.1

1.1

1.0

Financial result

-7.5

-7.5

-9.9

of which foreign currency losses

-2.8

-2.8

-5.7

of which other financial result

-4.6

-4.6

-4.2

Taxes

-14.3

-12.3

-15.6

Third-party interest in profit

0.1

0.1

0.0

Half-year result

-9.6

39.4

34.9

  • Financial result down on the prior year due to higher foreign currency losses
  • Improved earnings lead to higher tax expenses
  • Prior year impacted negatively by the tax reform in Switzerland

13.08.2020 | Bell Food Group, first half of 2020

Seite 22

Details and explanations for first half

Balance sheet and cash flow for first half of 2020

Cash and cash

Net financial

equivalents

liabilities

in CHF million

in CHF million

143 724

Share of total assets 5.4 %

Operating cash flow

Investments in

in CHF million

property, plant and

equipment/software

in CHF million

86

82

-11.9 %

Equity

in CHF million

1,273

Share of total assets 48.5 %

  • No material changes to the balance sheet compared to the end of 2019
  • Focus on securing the liquidity situation for all Group companies
  • Very steady equity ratio of 48.5 % and stable net financial liabilities
  • Bell Food Group has a very solid financial foundation and is ready for the future

13.08.2020 | Bell Food Group, first half of 2020

Seite 23

in CHF million

Details and explanations for first half

Investments

Capex for property, plant and equipment/software

93

82

New construction projects

48

39

Investments in modernisation

45

43

and replacements

HY 2019

HY 2020

  • Curtailment of investments due to the coronavirus where this is possible without negative fallout
  • Expected capex in property, plant and equipment for 2020 in the lower range of the announced bandwidth of CHF 200 to 250 million

13.08.2020 | Bell Food Group, first half of 2020

Seite 24

Performance of business areas.

13.08.2020 | Bell Food Group, first half of 2020

Seite 25

Performance of business areas

Bell Switzerland business area

  • Substantially higher retail sales compensated for the slump in food service sales
  • High productive capacity in spite of short-term changes in the mix of product ranges and channels
  • Delivery readiness guaranteed at all times
  • Very solid core business and better operating result than previous year

Sales revenue

Sales volume

Net investments

in CHF million

in million kg

in property, plant and

equipment/software

in CHF million

1,020

62.6

22.1

+ 3.8 %

+ 1.6 %

+ 22.8 %

13.08.2020 | Bell Food Group, first half of 2020

Performance of business areas

Bell International business area

  • All three divisions of this business area made operational progress and contributed to the improvement in results
  • Strong organic growth in the poultry business, driven by the retail market for Bell Germany
  • Sale of the German sausage business considerably reduced exposure to the food service sales channel and thus weakened the impact of the coronavirus pandemic
  • Situation for raw material prices relaxed a little and the required and long overdue price increases could be realised
  • Measures to enhance efficiency in the poultry business initiated last year have taken effect

Sales revenue

Sales volume

Net investments

in CHF million

in million kg

in property, plant and

equipment/software

in CHF million

482

102.4

17.4

+ 8.1 % adjusted*

+ 2.0 % adjusted*

- 43.3 %

*Adjusted for currency effects and acquisitions/divestments

13.08.2020 | Bell Food Group, first half of 2020

Performance of business areas

Convenience business area

  • Hitherto growth drivers in the food service segment and to-go and fresh convenience in the retail segment harshly affected by the coronavirus fallout
  • In contrast to Bell Switzerland and Bell International, the loss of earnings in food service could not be compensated to the same extent
  • New production plants in Marchtrenk and Bad Wünnenberg laboured under the effects of the pandemic and have not yet achieved their planned volumes
  • Product ranges and cost levels were immediately adjusted to the new sales conditions but a decline in earnings could not be prevented

Sales revenue

Sales volume

Net investments

in CHF million

in million kg

in property, plant and

equipment/software

in CHF million

515

96.9

42.8

- 3.6 % adjusted*

- 2.5 % adjusted*

- 4.3 %

*Adjusted for currency effects and acquisitions/divestments

13.08.2020 | Bell Food Group, first half of 2020

Outlook.

13.08.2020 | Bell Food Group, first half of 2020

Seite 29

Outlook

Outlook for second half of 2020

Bell Food Group

  • Further effects of the coronavirus pandemic are difficult to gauge; careful crisis management to continue in order to limit the fallout
  • Step-by-stepimprovement in food service expected while retail is expected to return to more or less the same levels as before the pandemic
  • Further operational progress has to be achieved for all business areas

Bell Switzerland business area

  • Securing of the earnings situation thanks to reaction and production capacity
  • Implementation of strategic projects

Bell International business area

  • Tension will remain high with regard to raw material prices due to volatile developments
  • Focus still falls on air-dried ham and poultry as well as successful initiatives to improve efficiency and performance

Convenience business area

  • On the strength of its strategic direction and high powers of innovation, it will benefit from the expected recovery of food service and out-of-home eating
  • Will offer more added value to customers with innovative product ranges and food solutions

13.08.2020 | Bell Food Group, first half of 2020

Outlook

Outlook for second half of 2020

Bell Food Group

The pandemic-dominated first half of 2020 has shown that the Bell Food Group's robust and sustainable business model and its commitment to performance can stand firm in unusual situations. Thanks to its very solid core business with meat and meat products and its innovative and growth-driving convenience business, the Group is ideally equipped to weather extraordinary circumstances.

13.08.2020 | Bell Food Group, first half of 2020

Bell Food Group, first half of 2020

Broadly supported business model and high productive capacity ensure a good operating result

Financial analysts' presentation

13.08.2020 | Bell Food Group, first half of 2020

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Bell AG published this content on 13 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 August 2020 07:42:17 UTC