January December 2019 February 28, 2020 January-December 2019 - - PowerPoint PPT Presentation

1 January-December 2019 results

January– December 2019

February 28, 2020

2 January-December 2019 results

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1 MORE TO BE Progress 2 2019 Results 3 Initiatives and 2020 outlook

3 January-December 2019 results

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1 MORE TO BE Progress 2 2019 Results 3 Initiatives and 2020 outlook

4 January-December 2019 results

Cellulose

Collagen

Plastics

Fibrous Casings market

Veggie Technology Service Cost

Vision: The Casing Company Leadership in the three key strategic axis

Reinforce leadership in Cellulose and Collagen Reach leadesrship in Plastics and Fibrous

A transformation to change the industry of casings

2019 Landmarks

Turnover record Growth above the market Exploring new opportunities Acquisition of Nitta Casings

5 January-December 2019 results

Service

Largest commercial launch of new products: Natur, Veggie, Marathon, among others…

Diversification

Completion of the project

• f a new cellulose

technology Development of a new veggie technology Higher productive speed Employee productivity

• Cardiomesh. First implant in a

human being Commercialization of collagen hydrolysates Sustainability Action Plan

Technology Cost

MORE TO BE 2019. Progression

2019 Proyectos

6 January-December 2019 results

Russia UK Thailand Costa Rica USA Nittay Vector Fibrous technology improvement Canada Transform Pack and Nitta Mexico Energetic model shift Plastic production stability Uruguay Higher capacity and speed Brazil Higher converting capacity Production stability Germany Veggie technology Supralon Production improvement Czech Republic Improvement of productivity 4.0 Industry - converting Serbia Small-caliber collagen capacity. Large-caliber collagen technology improvement France Supralon Belgium Vector Spain New cellulose and fibrous technology Increased collagen capacity Australia and New Zealand China Self-sufficiency Higher flexibility and production speed

MORE TO BE 2016-2019. A renewed industrial park, more efficient and global.

2016-2019 Progress

7 January-December 2019 results

1.45

2016 54% 2017

1.55

60%

1.60

2018 59%

Ordinary remuneration

Pay-out*

1.35

2015 52%

+1.3% +20.0%

2019 vs. 2015

MORE TO BE. Increasing shareholder remuneration

1.62

2019

71%

ORDINARY DIVIDEND(€ per share)

+€5.3 Millon

cancellation of treasury shares in 2019

€0.13 Extraordinary dividend

8 January – December 2019 results

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1 MORE TO BE Progress 2 2019 Results 3 Initiatives and 2020 outlook

9 January – December 2019 results

Revenue EBITDA EBITDA margin Operating profit Net Profit

Recurring 1

Casings Canada Inc., the impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination of businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

€ million

Guidance

+5.9% +0.5%

• 1.2 p.p.

849.7 +8.1% 2019 % y-o-y 198.0 +4.4% 23.3% -0.8 p.p. 127.4 +0.1 % 101.5

• 6.4%

% y-o-y

Like-for-like2

Profit before taxes 127.2

• 0.9 %

Taxes

• 25.7

+29.6 %

Outperformance In line In line

2019 Main financial figures

10 January – December 2019 results

Business combination

net of relate expenses

Goodwill impairment Strike in the USA Mivisa claim

Million €

2018 +€3.7Mn

EBITDA contribution Net Profit contribution

+€15.4Mn +€19.1Mn +€15.3Mn

Globus

2019 +€8.7Mn

• €3.5Mn
• €2.3Mn

+€2.9Mn +€4.1Mn

NittaCasings

Non-recurring impacts

11 January – December 2019 results

New all-time in revenue driven by volume growth in all technologies, price/mix improvement, Globus and forex strength.

REVENUE 2019. Growth contribution (€ million)

849.7

786.0

2018 Guidance July Forex Co-generation Like-for-like 1 casings +46.4MN 2019 vs. 2018

+8.1%

+0.1 MN +17.1MN +5.9 p.p. +0.0 p.p. +2.2 p.p.



2019

825/840



Guidance February

833/850

12 January – December 2019 results

EUROPE AND ASIA PACIFIC NORTH AMERICA LATAM 56.5% 14.9%

+7.3% +8.6% +10.3%

+3.2% +6.3%

+9.7%

• vs. 2018
• vs. 2018
• vs. 2018

Like-for-like2 Like-for-like2 Like-for-like2

126.4

114.6

243.1

223.8

2018 2019 2018 2019 2018 2019

480.1 447.6

REVENUE 2019. Breakdown by geographical area 1 (€ million)

+8.1% +5.9%

• vs. 2018

Like-for-like2

GROUP

Growth in all reporting areas combining volumes and price/mix growth.

28.6%

13 January – December 2019 results

1Q 3Q 2018 2019

CO-GENERATION REVENUE (€ million)

10.5

• REVENUE. Viscofan Group (€ million)

2Q 1Q 3Q 4Q 2Q 1Q 3Q 4Q 2Q

CASING SALES (€ million)

2018 2019

177.3

4T

187.8 197.9 186.8 11.1 192.2 180.3 11.9 197.0 11.2 201.2 191.2 10.0 197.0 11.6 208.6 208.2 204.4 11.6 215.9 +3.1% +3.7% 223.9

• vs. 4Q18

+7.5%

211.9 +3.7%

• vs. 4Q18

+7.6%

12.0

• vs. 4Q18

+6.9%

Speeding up revenue in the second half of the year…

14 January – December 2019 results

Forex Co-generation

• REVENUE. Quarterly growth contribution

Like-for-like1 casings

• 0.3p.p.

+2.1p.p.

+ 2.9p.p. +4.6p.p. +3.1p.p. +0.2p.p.

1Q 2Q 1Q 2Q 1Q 2Q

• vs. 4Q18

+6.3%

Like-for-like1 4Q19

+7.5%

+10.0p.p.

3Q 3Q

• 0.2p.p.

+ 2.6p.p.

3Q

+6.0p.p.

4Q

+0.3 p.p.

4Q

+ 1.2p.p.

4Q

…driven by higher volume and price.

15 January – December 2019 results

Europe, Asia and Pacific

• REVENUE. Quarterly change

Like-for-like1 Reported

2.5% 4.2% 13.7%

8.7%

1Q 2Q 3Q 4Q

1.2% 3.5% 12.9%

7.7%

1Q 2Q 3Q 4Q

Volume recovery consolidation in China, pig gut susbtitution Progress in Continental Europe

Growing in Europe and Asia

16 January – December 2019 results

North America

• REVENUE. Quarterly change

Like-for-like1 Reported

Recovery in cellulose volume Growth in collagen products

10.6% 7.5% 8.8% 7.8% 2.9% 1.7% 4.1% 4.3%

Growing in North America

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

17 January – December 2019 results

Latam

• REVENUE. Quarterly change

Like-for-like1 Reported

Demanding comparative base due to the strong volumes performance in 4Q18 Maintaining a solid performance with higher volumes in all technologies

19.1% 6.1% 14.7%

2.4%

19.6% 5.9% 9.9%

4.3%

Growing in Latam

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

18 January – December 2019 results 2 Cost of consumption = Net purchases +/- Change in inventories of finished and unfinished products.

Revenue Cost of consumption2 Personnel costs Other operating costs Revenue like-for-like1 EBITDA like-for-like1 D&A Recurring3 EBIT

Revenue growth offsets higher energy costs and wage inflation.

+6.4% +0.4% +19.4% +13.2% +0.1% +8.1%

+4.4%

+5.9%

+0.5%

P&L 2019. % year-on-year change

Recurring3 EBITDA

impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination of businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

• Energy costs and CO2 emission

allowances (+14.4% vs. 2018)

• Globus incorporation
• Growth mix

EBITDA

• 3.7%
• Investments in the

new Cáseda plant

19 January – December 2019 results

46.3 48.6 44.6 50.3 45.9 48.9

1Q 2Q 3Q 4Q 2018

Quarterly recurring1 EBITDA. (€ million)

2019

Nitta Casings Canada Inc., the impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination

• f businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

50.8

52.5

• 0.8% -8.3%
• vs. 1Q18

Like-for-like2

+0.7% -1.7%

• vs. 2Q18 Like-for-like2

+13.8%+9.5%

• vs. 3Q18

Like-for-like2

+4.4% +2.8%

• vs. 4Q18 Like-for-like2

Recovering profitability in the second half of the year…

20 January – December 2019 results

Recurring1 EBITDA 2019. y-o-y growth contribution (€ million)

189.7

2018 Like-for-like 2 +1.0MN +0.5 p.p. Forex +7.3MN +3.9 p.p. 2019

198.0

+4.4%

2019 vs. 2018

… offsetting a lower growth in the first half of the year.

Nitta Casings Canada Inc, the impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination

• f businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

21 January – December 2019 results

The main transformation projects are on track

CAPEX 2016-2019. Breakdown by type (€ million)

Capacity Process upgrade Others EHS*

CAPEX 2019. Breakdown by region (€ million)

Spain Other Europe, Asia Pacific Latam North America

12% 45% 32% 11%

71,6

€62,1Mn

*Environment, Health and Safety

62,1

86,7 107,2

2016 2017 2018 2019

22 January – December 2019 results

79, 7

• 198.0

26.7 62.1

• 6.1

1.5 74.3 6.5

• 4.1

42.5 19.3 27.6 89.4

Net bank debt1 Dec’18 Capex Working capital change Forex and

• thers

Acquisitions Share buyback Direct shareholder remuneration3 Net bank debt1 Dec’19 Leasing IFRS 16 Other net financial liabilities Net financial debt 2 Dec’19

79.6

Recurring EBITDA Tax paid



Results strength, lower capex needs and the reduction in working capital lead to lower indebteness.

Leasing impact – Non-current and current financial assets.

share 2019 FY interim dividend paid in December 2019

NET BANK1 AND NET FINANCIAL DEBT2 bridge (€ million)

23 January – December 2019 results

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1 MORE TO BE Progress 2 2019 Results 3 Initiatives and 2020 outlook

24 January – December 2019 results

Acquisition EV: €12.8 Mn

2020e figures: Revenue €33 Mn, EBITDA €1 Mn, Capex €6 Mn

€

€3/4 Mn savings goal in 2021

Higher sproduction speed, lower waste, savings in Raw Materials and Other Operating expenses

Collagen casings leadership in the US

Viscofan + Nitta Casings

Completing our footprint

Collagen casings, coextrusion and biomaterials

Nitta Casings acquisition drives up our positioning and leadership in collagen casings.

25 January – December 2019 results

Extrusion Converting Served market

All markets benefit from a local service thanks to our global presence in collagen casings

26 January – December 2019 results

Cellulose Collagen Fibrous Plastic VISCOFAN´S FOOTPRINT. Available capacity Africa Asia Pacífic Latam Europe North America Vegetable

Extrusion Converting

Long term “share”

• pportunity

Long term "growth”

• pportunity

We have built the most comprehensive commercial and productive footprint of the market.

27 January – December 2019 results

Higher animal protein consumption

FAO: Annual estimated growth at 1/2% in 2020-2025

Searchig for a larger product offer

Feeding habits globalization

Searching for industralization

Uncertainty and inflation in animal gut supply

Emerging areas. Focused on organic growth

Casings market in € 30% 33% 24% 11% 2%

28 January – December 2019 results

Global footprint

Facilities and broad commercial experience in Asia and Latam

The only one with the main technologies

The largest product portfolio in the industry, more than 13,000 sold references in 2019

Suitable product to replace pig gut

Natur casing launched in May 2019.

Viscofan´s approach

Emerging areas. Focused on organic growth

Higher animal protein consumption

FAO: Annual estimated growth at 1/2% in 2020-2025

Searchig for a larger product offer

Feeding habits globalization

Searching for industralization

Uncertainty and inflation in animal gut supply

29 January – December 2019 results

Consumer looking for “convenience”

Higher variety, flavours, food safety, health,…

Higher vegetable protein

More vegetarian, vegan and flexitarian

Searching high added value products

to save on costs, production stages and to offer a wider product portfolio.

Developed areas. Focused on high value addedproducts

Casings market in € 30% 33% 24% 11% 2%

30 January – December 2019 results

More casings variety

Eg) New casings transfering flavours, aromas, colours, …

New Veggie technology

Sales growth and great acceptance in the market

Viscofan´s approach

Consumer looking for “convenience”

Higher variety, flavours, food safey, health,…

Higher vegetable protein

More vegetarian, vegan and flexitarian

Searching high added value products

to save on costs, production stages and to offer a wider product portfolio.

Developed areas. Focused on high added value products

The only one with the main technologies

The largest product portfolio in the industry, more than 13,000 sold references in 2019

31 January – December 2019 results

Diversification and new products

Marathon Natur Functional solutions Sustainable plastics Veggie

Take production yields to the next level with extra-long sticks Collagen casings with extra glossy appearance and superior productivity. A natural, edible choice Casings adding new colour, flavour, and species in food Casings with reduced thicknessand developmentof a natural-based casing

Titanium fibrous

The next generation of fibrous casing

32 January – December 2019 results

Soluble Collagen Hydrolysate. Nutritional supplement to improve the health of the skin, bones or joints Collagen hydrolysate plant installed in Weinheim Commercial drive through distributors. Device safety test phase A sample of 10 patients with myocardial insufficiency

Expanding borders with new uses of collagen

33 January – December 2019 results

Cáseda. The best technology in the industry in cellulose and fibrous has become a reality

€86 million investment

Carried out in the period 2016-2019

• Cellulose. Producing 50% of the Group total capacity

Year-on-year savings of €10 million + Improvements in the learning curve

• Fibrous. Looking for leadership…

…in a market worth €300 Mn with a better product, technology and time- to-market to the European customers

34 January – December 2019 results

2015 2016 2017 2018 2019 694.7 691.2

734.1 741.4 804.5

CASINGS REVENUE AND MARKET SHARE (€ million)

30%

36%

Nitta Casings

+4 p.p.

Viscofan´s market share gain

34% 2%

A stronger leader…

35 January – December 2019 results

100 99 106 107 116 96 101 99 103 94 98 94 95 2015 2016 2017 2018 2019 e**

Top 6 players Top 6 ex Viscofan

CASINGS PLAYERS* REVENUE (Base 100 year 2015)

…in a growing market.

36 January – December 2019 results

100 95 99 98 94 87 88 78 72 78 77 58 49 2015 2016 2017 2018

2019 e** CASINGS PLAYERS* EBITDA (Base 100 year 2015)

Top 6 players Top 6 ex Viscofan

Improving leadership also in EBITDA within and adverse environment.

37 January – December 2019 results

Raw materials stability Improvement of the efficiency of plants New technology in Cáseda Integration of acquired companies

Optimise

• perations

Challenge

Challenge 2020. Optimise our operations and improve our margins

38 January – December 2019 results

Capacity

27%

Process upgrade

19%

Recurring

28% 26%

€54Mn

Capex 2020e

Sustainability

Adapting cogeneration engines for hydrogen fuel Water treatment plant expansion in Cáseda Use of non-fossil gases Safety and ergonomics projects

CAPEX BREAKDOWN 2020e (€ million)

Optimising our operations

39 January – December 2019 results

A year characterized by cash flow expansion.

204 211 209 201 215-220

EBITDA - CAPEX Operating Cash Flow (Mn €) =

OPERATING CASH FLOW (€ Million) 117 104 137

>160

87 107 72 62

2016 2017 2018 2019 2020e

139 54

+16%

vs 2019

40 January – December 2019 results

33 1

• 1

6 870-888

(+2%/4%)

214-219

(+6%/9%)

113-116

(+7%/10%)

48

(-23%)

Guidance 2020

Revenue EBITDA Net Profit Capex

Million €

Nitta Casings Traditional Viscofan

903-921

(+6%/8%)

215-220

(+7%/9%)

112-115

(+6%/9%)

54

(-13%)

Viscofan Group

US$/€: 1.13

41 January – December 2019 results

• The acquisition of Nitta Casings reinforces our leadership in collagen casings

and completes our productive portfolio in North America.

• Robust finantial position and shareholder remuneration
• A unique position in the industry that makes us await revenue, EBITDA

and net result growth for 2020, together with a lower need for investment.

Conclusions

• New all-time high in annual revenue led by the exceptional performance in the second half
• f the year that allow us to keep gaining market share.
• We have carried out a transformation that puts us in a unique position for the future of the

Group at the same time as we continue taking advantage of growth opportunities in the casing market and other business.

42 January – December 2019 results

Reported +6.3% +2.8%

• 0.8p.p.

223.9 +7.5% 4Q19 % y-o-y 52.5 +4.4% 23.5%

• 0.7p.p.

35.3 +3.1% 27.1

• 10.3%

4Q19 % y-o-y 223.9 +7.5% 57.7 +5.3% 25.8%

• 0.5p.p.

40.5 +4.5% 32.9

• 6.0%

Recurring 1 Revenue EBITDA EBITDA margin Operating profit Net profit

% y-o-y

Like-for-like 2

• Appendix. 4Q19. Main financial figures

(€ million)

Casings Canada Inc., the impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination of businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

43 January – December 2019 results

Reported +5.9% +0.5%

• 1.2p.p.

849.7 +8.1% 2019 % y-o-y 198.0 +4.4% 23.3%

• 0.8p.p.

127.4 +0.1% 101.5

• 6.4%

2019 % y-o-y 849.7 +8.1% 201.0

• 3.7%

23.7% -2.9p.p. 130.3

• 11.0%

105.6

• 14.7%

Recurring 1 Revenue EBITDA EBITDA margin Operating profit Net profit

% y-o-y

Like-for-like 2

• Appendix. 2019. Main financial figures

(€ million)

Casings Canada Inc., the impairment of goodwill for Nanopack Technology & Packaging S.L. and the impact of the strike in the U.S. In 2018 +€19.1 million from the combination of businesses from the acquisition of the Globus companies in Australia and New Zealand, and the lawsuit with Mivisa.

44 January – December 2019 results

• Appendix. Alternative Performance Measures

The Alternative Performance Measures included in this report are as follows:

• The EBITDA, or operating profit before depreciation and

amortisation, is calculated excluding depreciation and amortisation costs from the operating profit. The EBITDA is a measure that is commonly reported and widespread among analysts, investors and other stakeholders in the casing

• industry. The Viscofan Group uses this measure to monitor the

business' development and to establish operational and strategic objectives in Group companies. However, it is not a defined indicator in IFRS and, therefore, it may not be compared with other similar indicators employed by other companies in their reports.

• Cost of consumption: This is calculated as the net amount of

supplies plus the change in finished and unfinished products. Management monitors cost of consumption as one of the main cost components for Viscofan. The weight of net revenue for this cost component on revenue or gross margin is also analysed to study the operating margin's development. However, it is not a defined indicator in IFRS and cost of consumption must not be considered a substitute for the different items in the profit and loss account that comprise

• them. Furthermore, it may not be compared with other

similar indicators employed by other companies in their reports.

• Net bank debt: This is calculated as non-current borrowings

plus current borrowings netted from cash and cash

• equivalents. Management considers net bank debt to be

relevant to shareholders and other stakeholders as it provides an analysis of the Group's solvency. However, net bank debt should not be considered a substitute for gross bank debt in the consolidated balance sheet, nor other liability or asset items that may affect the Group's solvency.

• Like-for-like revenue and EBITDA: This measure excludes the

impact of exchange rate variations on the comparable previous period and the non-recurring impacts of the business in order to present a homogeneous comparison of the Viscofan Group's development. However, like-for-like revenue and EBITDA are not defined indicators in IFRS and, therefore, they may not be compared with other similar indicators employed by other companies in their reports, nor may they be considered a substitute for the business development indicators defined in IFRS.

45 January – December 2019 results

• Appendix. Disclaimer

This document may include statements about intentions, expectations or forecasts

• f the Company additional to the

mandatory financial reporting whose sole purpose is to provide information more accurately about the perspectives of future behaviours. Such intentions, expectations or forecasts do not constitute any guaranties of compliance and involve risks, uncertainties and other relevant factors that could cause actual developments and results to differ materially from those states in such forward-looking statements. This circumstance must be taken into account mainly for all persons or entities that may have to take decision, develop or spread opinions relative to values issued by the Company and particularly by analysts and investors that handle this document. The financial statements contained in this document have been prepared under International Financial Reporting Standards (IFRS). This financial statements has not been audited and consequently is susceptible to potential future modifications.