Harm de Wildt MD TNI Nutreco Capital Markets Day Derbyshire, UK 17 September 1 2013
Agenda 1 2 3 Market overview Animal Nutrition Europe Animal Nutrition strategic priorities Application Solution Centres Go to market Higher value added portfolio Unite 2
Premix & Feed Specialties Nutreco s subsidiaries Trouw, Sloten and Selko produce and market premixes, farm minerals, young animal feeds, preventive animal health products and feed additives. Market position Presence Customers Suppliers Trouw is no. 2 global premix producer with an estimated market share of 12% Main competitors are DSM, Cargill (Provimi) and Invivo Trouw has 15 production facilities in Europe, 17 plants in the Americas and 3 plants in Asia Feed compounders, integrators, distributors, farmers, companion animal industry and home mixers Producers of amino acids, trace elements & minerals, vitamins, dairy products, preventive animal health products, organic acids among others 3
Product groups Margin 10% 0.1 0.3%* Pure/blended feed additives High concentrate premix Feed additives e.g. preventive health products Basic feed additives e.g. vitamins Macro minerals e.g. feed phosphates Global 6% 1 5%* Premix/farm minerals Protein e.g. soya Energy e.g. grain 4% 5 10%* Concentrates 3% 100%* Complete feed 1% 5% 10% 100% Local * Inclusion rate: percentage of inclusion in final product Volume 4
Livestock numbers EU 28: dairy cows & sows 25 25 24 24 23 23 22 22 21 18 16 14 12 10 8 6 4 2 0 24.3 Number of dairy cows (x million) CAGR ( 06 11): 1.2% 2006 2007 2008 2009 2010 2011 2012 (E) 2013 (E) 2014 (E) 2015 (E) 2016 (E) 15.6 Number of sows (x million) CAGR ( 06 11): 3.4% 2006 2007 2008 2009 2010 2011 2012 (E) 2013 (E) 2014 (E) 2015 (E) 2016 (E) 12.1 22.3 5
Livestock numbers EU 28: poultry 350 Number of layers (x million) 300 250 200 150 268 237 100 50 0 5,600 5,400 5,200 5,000 4,800 4,600 4,400 4,200 4,000 CAGR ( 06 11): 0.8% 2006 2007 2008 2009 2010 2011 2012 (E) 2013 (E) 2014 (E) 2015 (E) 2016 (E) 4,707 Number of broilers (x million) CAGR ( 06 11): +1% 5,355 2006 2007 2008 2009 2010 2011 2012 (E) 2013 (E) 2014 (E) 2015 (E) 2016 (E) 6
Livestock numbers: Russia 10,000 9,800 9,600 9,400 9,200 9,000 8,800 8,600 8,400 8,200 Number of dairy cows (x 1,000) 8,863 9,545 CAGR ( 6 11): +2.5% 2010 2011 2012 2013 (E) 2014 (E) 2015 (E) 2016 (E) 600 500 400 300 200 100 0 Number of breeding sows (x 1,000) 400 449 CAGR ( 6 11): +3.4% 2010 2011 2012 2013 (E) 2014 (E) 2015 (E) 2016 (E) 700 Number of poultry (x million) 600 565 500 400 438 300 200 100 CAGR ( 6 11): +12% 0 2010 2011 2012 2013 (E) 2014 (E) 2015 (E) 2016 (E) 7
Focus towards growing segments Home mixing farmers and integrators are the fastest growing segments in Europe With increased farm size and consolidation, distributor s role will gradually diminish, and the needs of farmer segment will change (fewer and bigger farms) Compound feed industry in the future will only remain strong in countries where: Farmers make purchase decisions on feed Farmers have relatively poor access to raw materials 8
Animal Nutrition strategic priorities Focus Solid positions ASCs Go tomarket Growth geographies EBITA margin Higher value added globally branded nutritional solutions Growth geographies, secure mature markets Link between R&D and customer needs Improve the commercialisation of our value proposition 50% of EBITA in Premix & Feed Specialties from growth geographies EBITA operating margin Premix & Feed Specialties >7% 9
Our value proposition and competitive advantage Swine Poultry Ruminant YOUR LOGO Premix Feed specialties Feed additives Preventive animal health Young animal feeds Quality assurance Ingredient optimisation 10
The innovation cycle Application and Solution Centres are the interface between local marketplaces and Nutreco s global marketing and innovation teams Customers Operating companies ASC R&D Needs Business input Interface Nutritional and technical know how Technology transfer & training Innovation Strategic marketing Branding & communication 11
Go to market Improving the commercialisation of our value proposition Where to compete and customer selection Customer and market segmentation Where How to compete Organisational and sales Capabilities improvement How Margin Improvement What What value proposition do we compete with Portfolio of nutritional products, models & services 12
Go to market in action Animal Nutrition Europe s YAF ruminant strategy Ruminant sales profit Young animal feed ruminant sales profit 52% Other 48% YAF 67% Nutreco brands 33% Private labels 13
Higher value added product brands Feed additives Preventive animal health products Young animal feeds Clear product group portfolio with strong brands 14
Feed additives cover a broad spectrum of ingredients Indicative evaluation of feed additives specialty vs. commodity characteristics. Prebiotics strong Taste & flavor substances Probiotics Market growth medium Carotenoid pigments Vitamins Antioxidants Enzymes Minerals Toxin solutions Anti caking agents Organic acids Plant origins Organic trace elements low Antibiotics Amino acids Emulsifiers Market growth high medium Competition intensity low Markets Nutreco is active in Size of market value Note: May vary based on markets and geography. Sources: Droege study (2008), Frost & Sullivan, D&C Research 15
Selko Feed Additives added value Food safety Animal health Economic value 16
Selko markets: throughout feed to food value chain 17
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Presan development A collaborative effort AgResearch, CA Swine Research Centre, NL Ingredients Research Centre, NL Poultry Research Centre, ES Complete dossier built on in vivo measurements and results from more than 20 trials 19
Presan improves animal performance And the performance of our customer Customer return on investment (ROI) with Presan: Reduced use of antibiotics & zinc oxide Similar or better performance for lower price: Increased weight Increased value Better life Improved feed conversion Up to 5 ROI for every 1 invested in Presan* * Clinical data on file 20
Trouw AO mix: natural blends of anti oxidants Anti oxidants are used against ageing and diseases Trouw AO mix Result Natural blends of anti oxidants Tailored to the species digestive system Trouw AO mix for ruminants Trouw AO mix for monogastrics Compounder: cost price reduction and differentiator for their customers Farmer: effective anti oxidant protection to support productive livestock 21
Trouw AO mix strategy Europe Central launch April 2013 Sales forecast: Next steps: Trouw AO mix sales team Trials in poultry and ruminants Execution media plan Global Indonesia and China in launch preparation phase Expected launch 2014 Further global roll out to be planned when supply chain secured 22
Unite foundation for better business performance Unite is a challenging journey to standardisation and optimisation of all business processes leading to improved business performance. Unite will: 1. Promote cost leadership through standardisation and operational excellence 2. Enable organic growth with organisational agility 3. Support growth by acquisitions 4. Enhance management information 5. Improve procurement performance 6. Provide a single Unite Solution with M3 as a basis Rolling it out in the business 23
Conclusion Strategic priorities translated into executionable roadmap to 2016 Globally branded specialty products drive growth & margin improvement Go to market and ASC improves commercialisation value proposition Value propositions aligned with customers needs Drive for sustainability and excellence Strengthen market leadership in mature markets Unite program to further improve business performance 24
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