Company Overview
FORWARD-LOOKING STATEMENTS This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking statements“, as defined in the Securities Law - 1968, whose occurrence is not certain and which are not solely in the Company's control. These forward-looking statements are included, inter alia, in discussions of strategy, objectives, goals, plans, events, future intentions or other information relating to future events or issues whose occurrence is not certain. By their nature, forward-looking statements involve risk and uncertainty. Whether the forward looking information occurs or not is affected, inter alia, by risk factors characteristic to the Company's operations and developments in the general environment and external factors which impact the Frutarom Group and its area of activities. This forward looking information could include facts and data based on the Company's subjective assessment, including with regards to the current status of the Company and its business, the current situation in the industry in which the Frutarom Group operates, macro-financial facts and information, all as are known to the Company on the date on which this presentation was prepared, some of which were given to the Company by external sources, the content of which was not independently examined by the Company, and therefore the Company is not responsible for their verity. This presentation must be read together with the Company's periodic and current reports, and was not meant to replace the need for study of reports the Company has published, including, inter alia, the Company's periodic report for 2010, published on March 24, 2011, and the Company's quarterly reports subsequently published. These reports could include, inter alia, updates to the information regarding the Company's activities or of the forward looking statements appearing in this presentation. Subject to the requirements of applicable law, the Company does not intend to update any industry information or forward-looking statements appearing in this presentation, and is not required to publish any additional presentations for its shareholders in future.
Frutarom’s Foundations Founded in 1933, Frutarom combined the cultivation of aromatic plants and flowers with the extraction and distillation of flavors, fine ingredients and essential oils.
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Who we are? A Leading Global Flavor and Fine Ingredient House Global Company
• Sales in 130+ countries • 13,000+ customers
Broad Product Portfolio
• 20,000+ products • 4000+ raw materials
Public Company
• Listed on London and Tel Aviv Stock Exchanges (FRUT)
Financial Success
* 2011LTM 30.9.2011 ** 2000-2010 growth
Revenue, $M 600
500
400
• Since 2000**: • 6x growth in sales • 8x growth in EBITDA • 11x growth in net profit
300
200
100
0
* 4
Frutarom Becoming Global Frutarom has grown dramatically organically and via acquisitions
FSI USA acquired
Nesse acquired
Oxford acquired
Savoury Flavours Rieber Industrial Savory Solutions acquired
Belmay UK acquired
Mylner
Switzerland Flachsmann acquired
CPL Flavours and Ingredients divisions acquired
EAFI acquired
Abaco USA acquired
A.M. Todd Flavors Extracts business acquired
Israel: Baltimore Spice Israel acquired
Chr. Hansen’s Savory Solution German activity acquired
Reychan acquired
Frutarom listed on TA 100 Index of top 100 Israeli shares
China: Kunshan Flavours acquired
Christian Hansen
Aromco acquired
Acatris acquired
USA: Meer acquired
UK: HK Flavours & Fragrances acquired
Jupiter UK acquired
Food systems business in Switzerland, Germany and France acquired
Rayner industrial flavours activity acquired
Etol
RAD acquired
FSI USA acquired
Adumim acquired
Botanicare acquired ArtChem activity established
USA: Flavour Key acquired Israel: Tohar acquired (seasonings)
Gewurz acquired
Frutarom Europe established
1990-2000
2001
2002
Note: Acquisitions appear in squares. New locations appear as the flag of the relevant country.
2003
2004
2005
2006
2007
2009
2011 2012
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A Global Company We provide our customers with global and local support
UK- North UK - South
Slovenia
USA-Cincinnati Switzerland
Production – 27 Sites R&D – 28 Labs Sales and Marketing – 50 Offices
South Africa
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Towards Accelerated Penetration of Emerging Markets Asia • Expanding R&D and sales force in China, Indonesia, Philippines, Thailand, Vietnam • Building a state-of-the art, high-capacity plant in China with both traditional and savory flavor capabilities
Central & South America • Investment in R&D and Applications Centers in Mexico & Costa Rica • Strong base in Brazil Expanding sales force • Evaluating acquisition opportunities
Central and Eastern Europe • Strengthening R&D and Application Centers in Russia, Ukraine, and Kazakhstan • Strong base in central Europe • Evaluating acquisitions and local production opportunities
Africa • Production, R&D and Application Center • Evaluating acquisition opportunities
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Jan. 2011- Jan. 2012 M&A activity accelerates growth 2010 Total revenues – over $145M* Strategic importance Strategic move to strengthen Central- and Eastern European leadership; Diversified natural product portfolio Strengthening US activity, initiating Savory activity in the USA, innovative products (flavored coffee and shakes), and penetration to the food service sector First significant entry to the flavors market in Brazil. Important base for expansion in Latin America Reinforcing Savory position in Europe and emerging markets Enhancing savory activity in UK market
Enhancing our savory activity and presence in the UK and emerging markets, synergistic to UK savory activity (close to EAFI) Reinforcing European savory activity with focus on Scandinavian market
Supporting growth in emerging markets, synergistic to UK activity, extensive and diversified technology base * Based on acquired companies revenues for 2012 as reported in Frutarom’s immediate reports
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Continued Growth in Sales and Profits Revenues $M
Average CAGR
600
2000-10 500
20%
425
400
368
300
244 184
200 101
100 0
451
67 4
16
85
90
* 2011LTM 30.9.2011
95
01
03
05
07
09
10
11E* 9
Financial Highlights 10 Years of Profit Development
Shareholders’ Return
Operating Profit 2000-2010
2000-2010
60
63
37
50 40
25 7
Net Profit
10
40 72
30
30 49
60
18
20
32
40 14 20
44 37
82
80
30 20
X11
EBITDA
Operating Profit 57
2000-2010
X9
1300% 70
Net Profit
6
10 4
9
10 0
0
0 2000 2002 2004 2006 2008 2010
2000
2002
2004
2006
2008
2010
2000
2002
2004
2006
2008
2010
10
A Top-Ten Flavor House Estimated Flavor Sales US$ M
500+ smaller companies
Source: Public reports of relevant companies, Leffingwell & Associates. JP Morgan, Deutsche Bank
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Frutarom’s Strategy
Above-Industry Organic Growth
Margin Expansion
Proven Acquisition Track Record
• Continue successful strategy of combining rapid profitable organic growth with strategic acquisitions
• Again doubling our revenue to reach $1 billion within 4 years, while continuously expanding margins 12
Taste Solutions
Fine Ingredients
~70% of sales
~30% of sales
• Unique sweet & savory Flavors
• Innovative, science-based Health Ingredients
• Value-added functional Savory Solutions • Sweet and savory Food Systems • Unique technologies
• Expertise in local & global tastes
• Natural Botanical Extracts
• Flavor & Fragrances Specialties • Distillates & Essential Oils
• Citrus Specialties • Specialty Aroma Chemicals • Supporting the growing demand for taste, health, wellness & beauty 13
Flavors
Fine Ingredients
We share the…
Passion for Taste & Health
We develop tailored solutions combining excellent taste with health and functionality all under one roof
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Our Employees: Our Key Asset
~1,900 employees worldwide* * Including Etol employees
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Growing Mid-Sized Food & Beverage Market Over 65% of Market Controlled by Mid-Sized and Local Companies
• Fragmented market
The global food market is estimated at US$1,640 billion (% of Market Share)
• New mid-sized/local companies emerging
Private label
Developing markets
• Service expectations 67.8%
Source: Feb, 2011 Datamonitor, Euromonitor and Frutarom’s estimations
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F&F Market Fragmented but Consolidating 2010 Total Market Size $20.5bn • Large F&F players with full service platform, focused on top multinational customers • Few mid-sized players with both regional strength and global platform
• Large number of small niche companies with limited service capability and regional focus only
Market Share by size 2010 F&F Sales* (% of Market Share) Below $100mm +500 companies
Above $1 bn 5 companies Small & Local 30%
Large 53%
Mid-Size 17%
$100-1 bn 7 companies *Source: Leffingwell & Associates
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Private Label – Mid-Sized and Local A US$86.4B Industry1
Private labels expected to hold
50% of the global food market by 20254 2010
48% of consumers report buying more private label products compared to the year before2
88%
of consumers intend to continue purchasing private label products, even after the economy improves3
2009 Private label products held
20.4% of the food sector worldwide, with European market penetration highest in the sector 2 achieving
7.4% global growth
(1) Source: from The Nielsen Company, PLMA’s 2010 Private Label Yearbook, (2) Source: The Nielsen Company, August 2009 (3) Source: DataMonitor, January 2011 (4) Source: Rabobank, February 2011
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Private Label – Mid-Sized and Local A US$86.4B Industry
Source: ACNielsen, industry insights, 2008, Private Label: Who will win the battle of the shelf? Branded or private label products? Sep 2009, ACNielsen, The global Staying Power of Private Label, Aug, 2010
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Health, Wellness & Functional Food
“
~85 million adults indicate that nutritional value / wellbeing is criteria #1 or #2 when deciding what to eat or drink*
Growth Drivers
Opportunities
• Aging population
• Unwilling to forgo taste - even for health • Preference for convenience food
• • • • •
Rising obesity Nutrient deficiency Consumer demand Lifestyle & income Consumer awareness
*Source: The NPD Group, 2011
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Key Market Drivers – Food Growth in demand for: Natural and clean label Convenience food
Health/Wellness • reduced fat, calories and salt
Speed • Timeline to deliver results – hypermarkets
Functional food • Products with illness preventative properties
Unique combinations • Traveling opens consumer to trying new flavors
Innovation Cost reduction
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Frutarom’s Strategy: Clear Focus Going Forward Profitable Internal Growth Customer Focus
Market Focus
Mid-sized and local Private label Multinational 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
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Proven Acquisition Track Record 32 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 and harmonization of resources Optimization of cross selling opportunities
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Frutarom’s Vision To Be The Preferred Partner For Tasty And Healthy Success
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