2. Frutarom - A Leading Fast Growing Global Flavor and Fine Ingredient House
3
Global company
Broad product
portfolio
Public company
Financial success
since 2000
•Sales in 145
countries
•15,500 customers
• A Top 10 flavor
house
•31,000 products
•4,000 raw
materials
•Innovative
pipeline
•Listed on London
& TLV Stock
Exchanges
•From $13M to
approx. $1.45B
market cap
•9.8x growth in sales
(CAGR 19.2%)
•14.9x growth in
EBITDA
•17.7x growth in net
profit
10
81 108
197
287
425
518
618
792
0
200
400
600
800
1000
Renenue, $M
*Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013
3. Sales & Marketing – 79 Offices
Production – 34 Sites
R&D – 41 Labs
Frutarom - A Global Company
We provide our customers with global and local support
Belgium
Brazil
China
Denmark
France
Germany
India
Indonesia
Israel
Italy
Kazakhstan
Mexico
Netherlands
Norway
Poland
Serbia
Singapore
Slovakia
Slovenia
South Africa
Turkey
Ukraine
UK South
UK North
Corona, CA New Jersey
Cincinnati, OH Switzerland
Moscow
Saint Petersburg
PermSaratov
Hong Kong
Costa Rica
Georgia
Guatemala
Novosibirsk
Belarus
Moldova
Florida
4. Frutarom - A Profitable Growth Story
(Sales, EBITDA, Net Profit, USD M)
1996 Tel
Aviv stock
exchange
IFF FS
Gewurzmulle
r
Adumim
Raychan
Rieber
EAFI
Savoury
Flavours
Oxford
Balmey
Jupiter
FSI Corona
Nesse
CH Hansen
DE
CH Hansen
IT
Etol
Mylner
Aromco
FSI OH
Acatris
Flachsmann
Abaco
Tohar
Meer
Rayner
HK F&F
CPL Aroma
Flavour key
Baltimore
Botanicare
Kunshan
AM Todd
Rad
London
stock
exchange
Russia
Canada
Turkey
France
Mexico
Ukraine
Poland
Kazakhstan
Hong Kong
Costa Rica
Czech Rep.
S. Africa
India
Brazil
JannDeRee
PTI
AROMA
Heglin
Net Profit
2000-2013
X17.7
EBITDA Profit
2000-2013
X14.9
Sales
2000-2013
X9.8
108
81
10
197
287
425
518
618
792*
4 6
18
30
33
42
52
71*
9
14
32
49
66
80
100
134*
1990 2000 2002 2004 2006 2009 2011 2012 2013
*Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013
5. 5.9
10.1
12.3
17.6
25.5
11.8
17.4
22.2
32.5
43.4
91.7
106.7
130.6
168.6
218.1
-
50.0
100.0
150.0
200.0
250.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Q2/07 Q2/09 Q2/11 Q2/13 Q2/14
NET EBITDA SALES
(17.0%)
(16.3%)
(12.9%)
(19.9%)
(19.3%)
(EBITDA Margin)
6
Frutarom Presents Strong Q2 for 2014
Reached $218 M
Revenues grew 29.3%
6.2% YoY Pro-forma growth1
Over $ 85 M
41.6% gross margin in core activities
Reached $43.4 M , 19.9% EBITDA margin
21.6% EBITDA margin in core activities
Over $25M
11.7% net margin
Gross
Profit
EBITDA
Growth
Revenues
1Pro- forma growth - assuming acquisitions performed in 2013 had been consolidated as of January 1, 2013 and that CitraSource, which was acquired during the first
quarter of 2014, had been consolidated as of March 1, 2013
Net Profit
Results driven by:
• Organic growth above average market growth rates
• Successful integration of the acquisitions made in 2011-2012
• Improved product mix
• New acquisitions already contributing to revenues – Successful implementation is expected to improve margins
($M)
7. 13.5 15.7
25.4
31.6
43.8
25.1
31.9
43.7
58.3
75.5
172.2
205.1
251.6
320.8
406.5
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
H1 2007 H1 2009 H1 2011 H1 2013 H1 2014
NET EBITDA SALES
8
Frutarom Presents Strong First Half for 2014
Reached $406 M
Revenues grew 26.7%
4.6% YoY Pro-forma growth1
Reached $159.4 M
41.3% gross margin in core activities
Over $ 75 M, 18.6% EBITDA margin
20.1% EBITDA margin in core activities
Reached $43.8 M
10.8% net margin
1Pro- forma growth - assuming acquisitions performed in 2013 had been consolidated as of January 1, 2013 and that CitraSource, which was acquired during the first
quarter of 2014, had been consolidated as of March 1, 2013
Gross
Profit
EBITDA
Growth
Revenues
Net Profit
(17.4%)
(15.5%)
(14.6%)
(18.6%)
(18.2%)
(EBITDA Margin)
($M)
9. Profitable Growth Generates Solid
Balance Sheet & Cash Flow from Operations
• $ 392 M - Cumulative cash flow since
2009 to end of H1 2014
Balance Sheet
• Net debt (30.06.14) - USD 188M
• Equity (30.06.2014) - USD 557 M
• Net Debt/EBITDA – consistently below 2x
10
($M)
Cumulative Cash Flow
85
147
183
274
362
392
2009 2010 2011 2012 2013 2014 H1
10. From Vision to Reality
Strategic Milestones Accomplished
Sales Grew From $10M at 1990 to $792M at 2013*
Accelerating Growth
In Emerging Markets.
Fastest growing
markets
Expanding Market
Share In The US.
World’s biggest flavor
market
Supply Chain
Optimization.
Supported also by
acquisitions
Accelerated Profitable Growth
Solid Cash Flow
EBITDA Grew From $1M at 1990 to $134M at 2013*
11
Constantly improving
product mix.
Towards more
profitable segments
*Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013
11. Accelerated Growth and Market Share in Emerging Markets
Asia
Central & South America Africa
Central and Eastern Europe
• Acquired Etol in Slovenia and PTI in Russia
• One of the only global players with major
production sites in Russia
• Market leadership in Central and East Europe
• Cross selling and optimization opportunities
• Fast growing operation in South Africa,
reinforced by JannDeRee acquisition
• Enhanced R&D and sales force in fast growing
markets (Kenya, Nigeria and others)
• Building state-of-the-art manufacturing facility
• Expanded R&D and sales force in China,
Indonesia, Philippines, Thailand, Vietnam, Sri
Lanka
• Setting up flavor operation in India
• Building a state-of-the-art plant in China with
both savory and sweet flavors capabilities
• Evaluating strategic acquisition opportunities
• Acquired Mylner in Brazil and Aroma in
Guatemala
• Set up an independent operation in Costa Rica
and Mexico
• Evaluating strategic acquisition opportunities
12
12. Expanding Flavors’ Market Share in the US
USA
Focus on the US as a
key strategic market
Fortifying US
presence through 2
strategic acquisitions
Fast, above market
rate, internal growth
Strengthening foothold
through the
acquisitions of Hagelin
& CitraSource
• Flavor Specialties in the
West Coast in 2009
• Flavor Solutions in
Cincinnati in 2011
• Lucrative beverage market
• Diversified customer base
• Technological know how
• Strong position in Florida’s
Citrus Hub
13. 122 (27%)
222 (36%)
355 (45%)
229 (51%)
262 (42%)
272 (34%)
41 (9%)
66 (11%)
86 (11%)
60 (13%)
68 (11%)
79 (10%)
2010 2012 2013 Proforma
Emerging Markets Western Europe USA ROW
14
196% growth in
the emerging
markets**
31% growth
in the BRIC
countries*
100% growth
in USA**
451
618
792*
Growth Rate
Growing Share of Emerging Markets and the USA
Sales by Geography
*
*Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013
** 2013 on Pro-forma basis vs. 2010
14. Fine Ingredients
~19%* of sales
Taste Solutions
~72%* of sales
• Unique, high quality creation of sweet
and savory flavors for food and beverage
products
• Expertise in local and global tastes
• Operational flexibility and local global
supply chain
• Value-added functional savory solutions
for the food industry (snacks, meat, fish,
organic, and culinary segments)
• Comprehensive sweet and savory food
systems
• Unique technologies for fruit, spice,
vegetable, meat and fish preparations
• Specialty botanical extracts, distillates,
essential oils and aroma chemicals
• Innovative, science-based health
ingredients for phyto-pharmaceuticals,
nutraceuticals, dietary supplements,
functional foods, cosmetics, and personal
care
• Supporting the growing demand for
health, wellness and beauty
15
Trade & Marketing, ~9%* of sales
Strengthening Frutarom’s partnership and offering to customers
Growing the Core Business
*Pro-forma basis - had the acquisitions made in 2013 and the beginning of 2014 been consolidated starting from January 1, 2013
15. We share the…
Passion for Taste & Health
Taste Solutions Fine Ingredients
We develop tailored solutions combining excellent
taste with health and functionality all under one roof
16
16. 6.6 11.9
49.5
75.8
92.7
122.5 125.1
156.7
2000 2002 2006 2009 2011 2012 2013 2014
13.4 22.7
94.2
143.1
172.9
231.4 235.7
290.9
2000 2002 2006 2009 2011 2012 2013 2014
Flavors - Most Profitable Activity Growing Fast
17
Q2 2014
• Above average market growth rates
• Increasing market share in Emerging Markets - Latin America, Asia, Central
and Eastern Europe, Africa
• North America flavor sales grew by X5.5 times since 2010*
H1 2014
(US$ M)
18.5%
* based on sales in 1H 2014 compared with 1H 2010
15.4%
14.7%
72%32%
16.3%
14.3%
13.8%
Operating
margin
(US$ M)
% of total sales
Operating
margin
17. Fine Ingredients – Improved profitability
18
Operating Profit
• Enhanced product mix
• Focus on Natural high
added value fine
ingredients
• New innovative
products successfully
launched
Improvement was driven by
(% Operating Profit)
14.7%
9.6%
13.0%
13.1%
H1 2012 H1 2013 H1 2014
18. Frutarom’s Strategy: Clear Focus Going Forward
Profitable Internal Growth
Customer
Focus
Mid-sized and local
Private label
Multinational
Market
Focus
Developed markets (Europe and USA)
Emerging markets (e.g. Asia, Central & South America, Central
and Eastern Europe, Africa)
Product Portfolio
Natural (extracts, fruit bases specialty essential oils)
Natural functional food ingredients
Comprehensive, integrated solutions
Cost reduction solutions
Core
Competencies
R&D and innovation – internal and external
Efficiencies, scale and synergies – cross selling
Experienced global management
Sales-driven organization
19
19. 37 successful acquisitions
Strict acquisition criteria:
Highly valuable and experienced
employees
Major synergies and cross-selling
potential
Additional unique products and
technology
Positive impact on EPS
Focus on integration execution
Optimization of cross selling
opportunities
Optimization and harmonization
of resources
Proven Acquisition
Track Record
20. 21
2013 & 2014: 5 Acquisitions in Emerging Markets and the US
• Strengthening
market position
in South Africa
and Africa.
• Complementary
Savory activity
JannDeRee
South Africa
PTI
Russia & CIS
• Strengthening
Leadership in
East Europe
• Savory Solutions
leadership
Aroma
Guatemala
• Strengthening
market position
in Central
America.
Hagelin
USA
• Strengthening
market position
in the US & EM
• Expertise in
beverages
Strong management, R&D, sales and operational force.
Leverage operational efficiencies.
Opportunities for additional rationalization plans and improved margins.
Continued implementation of rapid profitable growth strategy
CitraSource
USA
• Strengthening
Citrus capabilities
and leadership
• Presence in
Florida – world
center for citrus
21. Ongoing Projects for Resource Optimization
Leveraging economy of scale
Production
Sourcing &
Purchasing
Logistics
Sales &
Marketing
R&D
Rationalizing
Global R&D
Resources - CPM
Global Purchasing
at countries of
origin
Production sites
integration
Global Logistics
integration
Sales force
integration
• Capitalizing on the operational synergies created by
the 5 acquisitions completed since May 2013;
• Other projects for optimization and margin
improvement under way;
• Building and strengthening the global purchasing
organization;
22. Above-Industry
Organic Growth
Frutarom’s Strategy
Proven
Acquisition
Track Record
Margin
Expansion
23
Reaching revenues of $1 billion
Continue successful strategy of combining rapid
profitable organic growth with strategic acquisitions
Achieving 20% EBITDA in our core business , given the
current product mix
23. Positive Outlook for 2014/5
Profitable internal growth
Focus on innovative natural healthy
product mix
Successful integration of the recent
acquisitions
Additional projects to improve efficiency
and merge activities and operations
Strengthening & leveraging global
purchasing
Strong acquisitions pipeline
24
(EPS)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60 Market Cap ($ B)
EPS ($)
* EPS LTM June 2014, Market Cap 30 June, 2014
