Free Writing Prospectus
To Preliminary Prospectus dated March 14, 2012
Filed pursuant to Rule 433
Registration Statement No. 333-179839
Dated March 15, 2012
Michel Cup
Nationality
Dutch
Current Position
CFO (2011)
Previous Experience
Provimi – 1 yrs
Akzo Nobel – 2 yrs
Numico – 8 yrs
Deloitte – 6 yrs
Disclaimer
DE International Holdings B.V. has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offering to whichthis
communication relates. You should read the prospectus in that registration statement and other documents DE International Holdings B.V. has filed with the SEC for more complete information about DE International Holdings B.V. and this offering. You
may get these documents for free by visiting EDGAR on the SEC website at http://www.sec.gov. Alternatively, you can obtain a copy of the prospectus by writing to DE International Holdings at: DE International Holdings, Attn: Investor Relations,
Vleutensevaart 100, Utrecht, 3532 AD, The Netherlands or by sending an email to coffeeteaco@saralee.com.
These
materials do not constitute an offer to acquire securities or a prospectus within the meaning of the Dutch Financial Markets Supervision Act (Wet op het financial toezicht). In connection with the admission to trading on NYSE Euronext in Amsterdam,
a prospectus approved by the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten or “AFM”) will be made generally available in The Netherlands. Any investor should make his investment decision
solely on the basis of the information contained in the prospectus. When made generally available, copies of the AFM approved prospectus may be obtained at no cost by writing to DE International Holdings at: DE International Holdings, Attn: Investor
Relations, Vleutensevaart 100, Utrecht, 3532 AD, The Netherlands or by sending an email to coffeeteaco@saralee.com.
Some of the information presented herein contains forward looking statements. All statements other than statements of historical fact regarding our business, financial condition, results
of operations and certain of our plans, objectives, assumptions, projections, expectations or beliefs with respect to these items and statements regarding other future events or prospects, are forward looking statements. These statements include,
without limitation, those concerning: the anticipated costs and benefits of restructuring actions taken to prepare for the separation; our ability to complete the separation; the timetable for completion of the separation; the expected benefits of
the separation; CoffeeCo’s ability to declare and pay the CoffeeCo Special Dividend; our access to credit markets; and the funding of pension plans. These statements may be preceded by terms such as “expects,” “anticipates,”
“projects” or “believes.”
In addition, this presentation may include forward looking
statements relating to our potential exposure to various types of market risks, such as commodity price risks, foreign exchange rate risks, interest rate risks and other risks related to financial assets and liabilities. We have based these forward
looking statements on our management’s current view with respect to future events and financial performance. These forward looking statements are based on currently available competitive, financial and economic data, as well as
management’s views and assumptions regarding future events, and are inherently uncertain. Although we believe that the estimates reflected in the forward looking statements are reasonable, such estimates may prove to be incorrect. By their
nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward looking statements. These factors include, among other things, those listed in the section of the prospectus entitled “Risk Factors.”
We urge you to read the sections of the prospectus entitled “Risk Factors,” “Operating and Financial
Review,” “Industry Overview” and “Business” for a discussion of the factors that could affect our future performance and the industry in which we operate. Additionally, new risk factors can emerge from time to time, and it
is not possible for us to predict all such risk factors. Given these risks and uncertainties, you should not place undue reliance on forward looking statements as a prediction of actual results.
All forward looking statements included herein are based on information available to us on the date of this presentation.
We undertake no obligation to update publicly or revise any forward looking statement in this presentation, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and
oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout the prospectus.
Ready to Operate Stand Alone
Teams in place
Systems separated
Started to simplify processes
Stand alone financials prepared
Financial Reporting Objectives
Transparency
Comparability
Minimize volatility
Understanding the Carve Out
Understanding the Carve Out
1. Impact stand alone reporting
2. Conversion to IFRS Main Impacts
3. Minimize
the volatility of adjusted EBIT
1. Impact Stand Alone Reporting
• Carve out financials reflect the ongoing business
• A portion of Sara Lee corporate unallocated costs included
• Inherited liabilities reflected on the Balance Sheet
2. Conversion to IFRS
Main Impacts
• Pensions:
• Reset actuarial
gains/losses to zero within equity
• Future actuarial gain/losses remain in equity
• Impact of asset ceiling test reflected in equity
• Currency Translation Adjustments zero as of transition date
3. Minimize the Volatility
of Adjusted EBIT
• Reclassification from adjusted EBIT to financial income and expense:
Pension interest costs and expected return on pension assets
Mark to market of currency derivatives on raw material purchases
No impact on net result or cash flow
3. Minimize the Volatility of Adjusted EBIT
Gains/(losses) reflected in the reported segment
results by Sara Lee:
(€mln) FY 2009 FY 2010
FY 2011
Pension interest costs and expected return on pension assets 5 6 17
Mark to market of currency derivatives on raw material purchases (6) 23 (33)
Carve Out Financials Explained – FY 2011
Reported segment results by Sara Lee € 358 mln *) € 16 mln
3. Minimize the volatility of adjusted EBIT
Pensions (€ (17) mln)
Mark to market
(€ 33 mln)
*) Equivalent of $ 489 mln as reported in full year earnings release Sara Lee
2. Conversion to IFRS € 8 mln € (19) mln
1. Impact stand alone reporting
Allocated Sara Lee corporate costs (€ (25) mln)
Impact unrealized commodity derivatives (€ 6 mln)
Adjusted EBIT IFRS as reported in F 1 € 363 mln
Comparable Baseline FY 2011
Comparable Baseline FY 2011
• Stranded costs
• Related to divestments H&BC and Bakery prior to spin
• Annualized € 30 mln*
• Partially
reflected in the first half 2012 results of Coffee & Tea Segment by Sara Lee
• Actions
implemented to phase out
* Previous Sara Lee guidance of total Sara Lee stranded costs ($ 50 60 mln) included
approximately € 20 mln for Coffee & Tea Segment
Comparable Baseline FY 2011
• Additional non allocated corporate overhead costs
• Needed to operate as stand alone public company
• Annualized € 10 mln
• Total non allocated corporate overhead costs for
DE Master Blenders expected to be € 43 mln
annualized after spin*
|
*
|
2011 non allocated corporate overhead costs for DE Master Blenders € 33
mln
|
Financial Impact
Comparable Baseline FY 2011
Adjusted EBIT IFRS as reported in F 1 € 363 mln
€ Stranded costs (30) mln
Additional
non allocated corporate overhead € (10) mln
Baseline adjusted EBIT DE Master Blenders € 323 mln
14.0%
12.3%
Going Forward EBIT Margins Will Return to Historical Levels
Mid-term target:
Adj. EBIT Margin
15% - 17%
The Financials Explained
Three Business Segments
Netherlands, Belgium, France, Denmark,
Greece, Germany, UK, Spain
Brazil, Hungary, Czech
Republic, Poland,
Australia, Thailand and Russia Global
Retail Western Europe
Retail Rest of World Out of Home
Corporate
overhead costs
Green coffee export 3rd parties
Green Coffee Export will be
Limited to a Minimum Going Forward
• Non strategic; ancillary to the business
• Profitability driven by tax benefits,
ended January 1, 2012
FY 2011 Explained
(€mln) FY 2011
Net sales 2,602
like for like growth*) 10.1%
Gross profit 985
as a % of sales 37.9%
A&P (138)
as a % of sales (5.3%)
Other usual SG&A (484)
as a % of sales
(18.6%)
Adjusted EBIT 363
Adj. EBIT margin 14.0%
*) Calculated at a
constant exchange rate and adjusted to eliminate the 53rd week and acquisitions during the period
Financials FY 2009 – FY 2011
(€mln) FY 2009 FY 2010 FY 2011
Net sales 2,235 2,315 2,602
like for like growth
N/A (0.9%) 10.1%
Gross profit 901 969 985
as a % of sales 40.3% 41.9% 37.9%
A&P (118) (132) (138)
as a % of
sales (5.3%) (5.7%) (5.3%)
Other usual SG&A (428) (466) (484)
as a % of sales (19.1%) (20.2%) (18.6%)
Adjusted EBIT 355 371 363
Adj. EBIT margin 15.9%
16.0% 14.0%
Top Line Growth FY 2011 Driven by
Pricing and Green Coffee Export Business
• Pricing +6.5%
• Export +4.3%
Like for like
growth
10.1%
• Mix/Volume/Other (0.7%)
Increased Commodity Prices not Fully
Compensated by Pricing
• Pricing € 143 mln
• Commodities
€ (182) mln
• Mix/Volume/Other € 55 mln
GP growth
€ 16 mln
Performance by Segment – FY 2011
(€mln) Retail WE Retail RoW OOH Non
Allocated* Total
Net sales 1,125 655 634 187
2,602
Reported growth 6.8% 15.0% 3.4% N/A 12.4%
Adjusted EBIT 218 51 110 (16) 363
Adj. EBIT margin 19.4% 7.8% 17.3% N/A 14.0%
*Includes non allocated corporate overhead costs of € 33 mln
Adjusted EBIT Margin per Segment
FY 2009 FY 2010 FY 2011
Retail Western Europe 24.5% 24.0% 19.4%
Retail
Rest of World 3.8% 7.2% 7.8%
Out of Home 16.8% 17.7% 17.3%
Total 15.9% 16.0% 14.0%
• WE: strong margins; FY 2011 commodities not yet fully offset
• RoW: margins low but trending up despite commodity prices
• OOH: solid performance despite market challenges
Our Way Forward
Value Drivers – Net Sales
Net sales
• Innovations
• Product and country mix
• Trade spend optimization
• Volume growth
Investments Needed to Deliver Growth
FY 2013/2014
4% 5%
FY 2015
3% 4%
Capex as a % of sales
Value Drivers – Gross Profit
Gross profit
• Premiumization
• Product and country
mix
• Strategic pricing
• Fit 4 Growth – cost savings
Managing Gross Profit
• Pricing
• Innovation and shift towards higher margin products
• Centralized risk management
• Hedging
coffee prices
Gross Profit
Fit 4 Growth – € 40 mln Savings
Blend 0
– 25 mln
Optimization
Optimize Supply
Chain
€ 15 – 20 mln
The investments needed to realize these savings are included in the Capex guidance
Value Drivers A&P and
Other Usual SG&A
A&P
• Increase A&P spend in retail
• Increase effectiveness A&P spend
Other usual
SG&A
• Fit 4 Growth – cost savings
• Simplification
Other Usual SG&A
Fit 4 Growth – € 25 mln Savings
€ 20 – 30 mln
IT Optimization
Streamline
Organization
By FY 2015
DE Master Blenders will not incur any additional costs to realize these savings
Overview Value Drivers
Net sales
• Innovations
• Product and country mix
• Trade spend optimization
• Volume growth
Gross profit
• Premiumization
• Product and country mix
• Strategic
pricing
• Fit 4 Growth cost savings
A&P
Other usual
SG&A
• Fit 4 Growth cost savings
• Simplification
Virtuous Circle of Growth
Going Forward Sustainable Profitable Growth
Mid-term targets:
Net Sales Growth 5%—7%
Adj. EBIT Margin
15%—17%
37
Effective Tax
Rate
ETR stated in the IFRS financial statements impacted by carve out accounting
Initiatives started to optimize ETR on a stand-alone basis:
Mitigate repatriation tax
Implement new business model
Guidance on ETR
FY2013 will follow after spin
ETR FY 2014/2015: ~25%
38
Significant Cash
Opportunities in Operating Working Capital
As a % of sales
FY 2009 15.7%
FY 2010 16.7%
FY 2011 18.3%
Target FY 2015: ~10%
Target: ~5%
39
Significant
Financial Flexibility to Grow the Business
Intended levels at separation
Gross Debt
€ 550 mln
Net Debt
€ 400 mln
40
Dividend Policy
Dividend policy is determined by DE Master Blenders growth profile
Intention is to reach a dividend pay-out ratio of around 30% in the medium term
41
Conclusions
Transformation
FROM TO
Managed for profit
Profitable growth
Limited focus on cash
Cash management
Strong assets underutilized
Unlock their full potential
Complex structures and processes
Simplification
43
Solid Financial
Platform to Support our Growth
Profit & Loss
Sales growth mid-term: 5% - 7%
Adj. EBIT margin mid-term: 15% - 17%
Cash flow
Capex FY 2013/2014: 4% - 5%
Capex FY 2015: 3% - 4%
OWC FY 2015: 10% of sales
ETR FY 2014/2015: ~25%
Balance Sheet
Intended net debt as of spin:
€400 mln
44
Notes
45
Notes
46
Notes
47
Notes
48