Wallet Distribution and Bank Relationship Management Interactive PEP session DACT

Transcription

1 Wallet Distribution and Bank Relationship Management Interactive PEP session DACT Klaas Springer Director Corporate Treasury 10 April 2014

2 FrieslandCampina Contents General Introduction Bank Relationship Management: Quid Pro Quo Wallet Distribution Model: Why and How? Application in Combination with Refinancing Adam Smith Award 2

3 General introduction

4 billion euro revenue employees Facilities in Export to over 28 countries 100 countries member dairy farmers own the Company 19,244 Every day Millions of consumers Figures

5 With good results Revenue 10.8% up Revenue in millions of euros 11,418 10,309 9,626 8,972 Operating profit 313 million euro before goodwill impairment 513 million euro Operating profit in millions of euros Operating profit as a % of net revenue 2.7% before goodwill impairment 4.5% Figures 2013 Operating profit as a % of net revenue in percentages before goodwill impairment

6 Worldwide North and South America United States of America Europe Netherlands Germany Belgium Greece Hungary Romania Russia France Spain Italy Austria United Kingdom Africa and the Middle East Nigeria Ghana United Arab Emirates Saudi Arabia Asia and Oceania Indonesia Malaysia Singapore Thailand Vietnam Philippines China Hong Kong India Japan New Zealand 350 revenue * 6,965 revenue * 1,165 revenue * 2,938 revenue * Figures 2013 * in millions of euros 167 employees 6 locations 13,147 employees 68 locations 1,026 employees 19 locations 6,846 employees 30 locations 6

7 Our position in the dairy sector Company Dairy Revenue Figures 2012 in billion of euros 1. Nestlé - Switzerland 2. Danone - France 3. Lactalis - France 4. Fonterra - New Zealand 5. FrieslandCampina Netherlands Dairy Farmers of America - USA 7. Arla Foods - Denmark/Sweden 8. Dean Foods - USA 9. Saputo - Canada 10. Meiji - Japan 11. Unilever - Netherlands/UK 12. Yili - China 13. Morinaga - Japan 14. Sodiaal - France 15. Mengniu - China 16. Kraft Foods - USA 17. DMK - Germany 18. Bongrain - France 19. Schreiber Foods - USA 20. Müller - Germany Source: Rabobank, August

8 Concluding remarks: performance since the merger end 2008 KPI Performance premium (cash + in kind) in per 100 kg Operating profit in % of revenue* EBITDA in million** (in % of revenue) Equity as % of total assets ,77 2,6 543 (5,7) 30, ,04 4,5 961 (8,4) 37,0 * Performance premium included in the costs of goods sold, before goodwill impairment ** Annualized with performance premium added back to EBIT 8

9 Bank Relationship Management: Quid Pro Quo

10 Vision on the role of banks Financing: - Providing the flexible layer on the liability side - Commitment that financing banks will get the opportunity to pitch - In the strategic sense company does not want to rely on banks Service provider: cash management, trade finance, FX, etc. Trusted advisor: - Financial advisor (e.g. M&A, DCM) - Strategic advisor (e.g. Outside-In views, Sustainability) - Research and sector knowledge 10

11 Bank Relationship Management: Quid Pro Quo Participating in RFC s Revolving Credit Facility is the entrance ticket for other banking services Level Playing Field: the opportunity to pitch, but no guarantee for success To keep the balance: the company will strive, to a reasonable extent, to keep the distribution of the wallet aligned with the banks commitments

12 Wallet Distribution Model: Why and How?

13 Why a Wallet Distribution Model? When you make a commitment, you have to manage it! In order to substantiate statements and make adjustments when necessary to create balanced relationships Ability to lead discussion instead of being reactive But: - Keep it simple: can t afford to spend too much time - No structural dependence on consultant - Rather a Golf than a Rolls Request For Proposal

14 How?: Overview of Corporate Treasury s Business Wallet In the overview, all relevant key areas are listed that were considered in the wallet estimation for 2010 FY: Source: RFI Bank Services, dd 4/2/

15 How?: Countries in Scope of the Wallet Distribution Analysis Given our bank relations considered in the wallet distribution exercise the following countries and their respective currencies were taken into consideration: Europe (Greater Area) Asia and Australia Americas The Netherlands Greece Malaysia USA Belgium Hungary Indonesia Africa & Middle East France Romania Thailand Nigeria Spain Russia Vietnam Saudi Arabia UK Switzerland Singapore United Arab Emirates Germany Austria China Italy 15

16 How?: Assumptions regarding pricing What does a bank earn on? Liquidity management: information from RFP s Deposits: interest rate spreads, e.g. Nigeria 0.6%, Malaysia 0.7%, Indonesia 1.0%, Europe 0.15% FX: Spots 1.1 bps and Forwards 1.4 bps IR: IRS 1 bps, Cross Currency IRS 1 bps Credit Cards: EUR 25 fee per card Etc. 16

17 Main Conclusions of Wallet Distribution Exercise 1. Banking wallet is fairly divided between our current banks in the RCF 1 Bank has less wallet due to limited product offering 1 Bank has 4% gap between commitment and wallet, due to fee business Current pricing of products used by FC, are overall below or at the market price, based on insights of Zanders 2. Next steps are To integrate this approach in our Long Term Funding Plan Discuss outcome with all banks Expand the Wallet Sizing tool with none RCF-banks, for Thailand, Nigeria and Vietnam. The process needs to be repeated on a yearly basis 17

18 Application in Combination with Refinancing

19 Discussing with our Banks: Classification and Positioning of our Banks The table below helps us to interpret Zanders classification of banks in their Wallet Distribution Tool with possible actions to be taken (see column Result, Implementation ): Category Result, Implementation Bank # Free Lunchers Balanced Partners Enigmas Goodies It is advisable to ask the bank to participate in a credit facility It is important to keep these banks happy and to nominate them as core bank candidates Greedies have increased participation Inescapables gently pressure to participate or look for alternative solution This discrepancy could trigger relation issues if it is not tackled adequately

20 Refinancing 2011? Q2/Q3 2011: Discussing outcomes with the banks - Openness was highly appreciated - Generally high level of satisfaction with the relationship - Open for new business Summer 2011: GREXIT as dominant theme, EB and Audit Committee wanted to build in more certainty of funds giving increased market volatility Putting 2 and 2 together: - Following up recent discussion with request to discuss doable refinancing transaction - Implement Amend and Extend refinancing (plus two years at improved conditions) 20

21 Early Refinancing 2014? No extensive wallet distribution exercise this time: pretty balanced picture Pitch with core banks to request for their refinancing proposal, discuss relationship and business wallet development Invite to limited number of banks to facilitate at either 150 million (Tier 1) or 50 million (Tier 2) Closing scheduled 3d week of April: - Market (better) pricing - Higher amount: from 1 bln to 1,5 bln - Documentation borrower friendlier - Rebalancing banking group 21

22 Adam Smith Award

23 Adam Smith Award

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25 Questions?