royal frieslandcampina n.v. cooperative entrepreneurship! jan uijttewaal (frieslandcampina).pdf ·...
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3
Six farmersfound the firstdairy cooperative
1886
Friesland Foodsreceives royaldesignationon its 152thanniversary
2004
Acquisitionof Nutricia
Dairy & Drinks Group
2001
Merger of Coberco,Friesland Dairy Foods,
De-Zuid-Oost-Hoekand De twee Provinciën
1997Founding of Cobercoin Zutphen
1965Founding of CCF
in Leeuwarden
1913
Nine farmerstake over a
cheese factoryin the Dutch
Wieringerwaard
1871
1880Founding of the
first dairycooperatives
1926Founding of the
De Meijerij Veghel/De Melkindustrie Veghel
1947Campina brand
introduced
1979DMV Campina andMelkunie Holland
introduced
1989Founded
Campina Melkunie
2001International launchof formation ofinternational Campinabrand and Cooperative
1993Acquisition ofSüdmilch(Heibronn)
2012Acquisition ofAlaska MilkCorporation,Philippines
Acquisition ofIDB Belgium N.V.
2012
2008
2013Acquisition ofZijerveld enVeldhuyzen B.V.and G. den HollanderHolding B.V.
Friese Flag, Dutch Babyand Bonnet Rougeare registered forinternational markets
1919
Cooperative tradition ofover 140 years
6
Milk is a natural source of
nutrients.
We process the milk,
supplied by our member
dairy farmers, into a wide
range of dairy products
Ambition
Foundation
Growthcategories
Respondto needs
Capabilities
To create the most successful, professional and attractive dairycompany for its member dairy farmers, employees, customersand consumers and for society by providing people around theworld with essential nutrients from dairy products during everyphase of their lives
route2020: sustainable growth andvalue creation
Dairy-basedbeverages
Infantnutrition(B2B, B2C)
Strongholds& geographicexpansion
Brandedcheese
Food-servicein Europe
Basicproducts
Growth &development
Dailynutrition
Health &wellness
Functionality
Talentmanagement
Milkvalorisation
Innovation Business model& cost focus
Chainadvantages
Sustainable dairyfarming &business operations
The way weWork & safety
Goodnessof dairy
8
Our farmers
We are 100 percent owned by ZuivelcoöperatieFrieslandCampina, which has more than 14,000 memberdairy farms in the Netherlands, Germany and Belgium
Cornerstones of the co-operative
Members have the right to● Deliver all the milk to FrieslandCampina● Take part in decision-making process/voting● Pass on membership to successor
Members are obliged to● Deliver all produced farm milk to FrieslandCampina● Take part in the members’ financing of the company● Comply with the regulations
11
Member dairy farms
13,887member dairy farms
19,244member farmers
9,261 millions kgmilk supplied in 2013
12
Company is owned by the Cooperative
Cooperative council
Members
Member council
Supervisory Board
Districts
Board
Executive Board
Zuivelcoöperatie
FrieslandCampina U.A.
Royal
FrieslandCampina N.V.
General Meetingof Shareholders
holding all shares in
13
Four business groups
Executive Board
Corporate Centre
Consumer ProductsEurope, Middle East
& Africa
Consumer ProductsAsia
Cheese, Butter& Milkpowder Ingredients
FrieslandCampina BrandedNetherlands / Belgium
FrieslandCampina Retail Brands Europe
FrieslandCampina Germany
FrieslandCampina Hellas
FrieslandCampina Hungary
FrieslandCampina Romania
FrieslandCampina Russia
FrieslandCampina Professional
FrieslandCampina UK
FrieslandCampina Middle East
FrieslandCampina WAMCO Nigeria
FrieslandCampina West Africa
FrieslandCampina Indonesia
FrieslandCampina Malaysia / Singapore
FrieslandCampina Thailand
FrieslandCampina Vietnam
Alaska Milk Corporation, Philippines
FrieslandCampina China
FrieslandCampina Hong Kong
FrieslandCampina Cheese
FrieslandCampina Cheese Specialties
FrieslandCampina Butter
FrieslandCampina Milkpowder
FrieslandCampina Cheese Germany
FrieslandCampina Cheese France
FrieslandCampina Cheese Spain
FrieslandCampina Export
Yoko Cheese, Belgium
Zijerveld, the Netherlands
Den Hollander Food, the Netherlands
FrieslandCampina Domo
FrieslandCampina DMV
FrieslandCampina Kievit
FrieslandCampina Creamy Creation
FrieslandCampina Nutrifeed
Satro
DFE Pharma
14
In order to valorise the milk supplied
The objectiveof a business withno member milk isto generate profitabove our EBIT
hurdle
Profitability
The objective ofour member milk
intense businessesis to valorise
milk at positiveEBIT margins
Member milk usage
151 before goodwill impairment
With good results
Figures 2013
10.8% up
Revenue
313 million euro
Operating profit
513 million euro
before goodwill impairment
2.7%Operating profit as a % of net revenue
4.5%before goodwill impairment
Revenuein millions of euros
11,41810,309
9,626
8,972
2013
2012
2011
2010
Operating profitin millions of euros
513487
403
434
20131
2012
2011
2010
2013 313
Operating profit as a % of net revenuein percentages
4.54.7
4.2
4.8
20131
2012
2011
2010
2013 2.7
CooperativeCouncil (21)
Clear roles and responsibilitiesin the cooperative
Members(14.132)
District Council(21 x 10)
Members’Council (210)
Board of theCooperative(9)
• Each Member has voting rights based on supplied milk• Right of initiative: 100+ members
• Authorised and responsible for number of activities asmember-involvement nd in the region
• Contact point for Members, knows what moves them
• General Assembly of the cooperative• Approval of specified important decisions taken by the
Board in its role as General Assembly of Shareholders ofthe company
• Sounding Board for Board and Members• Advises Board for larger in-/divestments, acquisitions &
mergers
• Manages the coop., responsible for decisions and process• Form (with 4 externals) Supervisory Board of the company• Voting right for the shares in the company held by the coop.
Milk price
Guaranteed price
● Equal to the average milk prices in Germany,The Netherlands, Denmark and Belgium(46 bn kgs of milk)(reflects the market value for raw milk)
● Independent from the results of FrieslandCampina
● Monthly estimated payment during the year
● Starting point to calculatethe profit of the companyFrieslandCampina
● Performance Premium
● Addition member bonds
Profit appropriation 2014-15-16
Companyprofit
35%
20%
45%
Performancepayment
Fixed memberbonds
General reserve
Evaluation every three years
How members finance their company
General reserve● addition every year● depends on profit of the company
Fixed member bonds● addition every year● depends on profit of the company
● transformed in free member bonds after farmer ends farming
Member certificates● generated once, in Dec 2008, with the merger● transformed in free member bonds after farmer ends farming
Free member bonds● Members can buy and sell free member bonds at an internal market
Companyprofit
35%
20%
45%
Performancepayment
Fixed memberbonds
General reserve
20
2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Revenuein millions of euros
8,160
8,9729,626
10,309
11,418
Performance premium +member bondsin euros per 100 kilos milk
0.94
1.96 1.83
2.37
3.04
Five years of FrieslandCampina
Our position in the dairy sector
21Figures 2012in billion of euros
Company Dairy Revenue
3.3
3.5
4.1
4.4
4.4
4.5
4.5
4.5
5.1
5.8
6.0
6.5
6.9
8.4
9.4
10.5
12.5
14.0
15.1
23.4
20. Müller - Germany
19. Schreiber Foods - USA
18. Bongrain - France
17. DMK - Germany
16. Kraft Foods - USA
15. Mengniu - China
14. Sodiaal - France
13. Morinaga - Japan
12. Yili - China
11. Unilever - Netherlands/UK
10. Meiji - Japan
9. Saputo - Canada
8. Dean Foods - USA
7. Arla Foods - Denmark/Sweden
6. Dairy Farmers of America - USA
5. FrieslandCampina - Netherlands
4. Fonterra - New Zealand
3. Lactalis - France
2. Danone - France
1. Nestlé - Switzerland
5. FrieslandCampina - Netherlands
Source: Rabobank, August 2013
North andSouthAmerica
UnitedStatesaten
Africa and theMiddle East
NigeriaGhanaUnited Arab EmiratesSaudi Arabia
Asia andOceania
IndonesiaMalaysiaSingaporeThailandVietnamPhilippinesChinaHong KongIndiaJapanNew Zealand
Figures 2013* in millions of euro’s
Europe
NetherlandsGermanyBelgiumGreeceHungaryRomaniaRussiaFranceSpainItalyAustriaUnitedKingdom
19locations
30locations
68locations
6locations
69 production locations worldwide
2,5 billion euros of investments
236
261
376
423
559
652
2009
2010
2011
2012
2013
2014
>70%
€ 1,8 billion
€ 2,5 billion
in million euros
Thisim
FrieslandCampina Innovation Centre
400 specialists are working in new R&D Center in Q2 - 2013
Thisim
25
Lay-out Innovation Centre
The new Innovation Centre will be composed of
– Offices 7.100 M2
– Labs 4.600 M2
– Pilot Plant 2.500 M2
– Other facilities 3.800 M2
TOTAL 18.000 M2 (NET)
Ambition
Foundation
Growthcategories
Respondto needs
Capabilities
To create the most successful, professional and attractive dairycompany for its member dairy farmers, employees, customersand consumers and for society by providing people around theworld with essential nutrients from dairy products during everyphase of their lives
route2020: sustainable growth andvalue creation
Dairy-basedbeverages
Infantnutrition(B2B, B2C)
Strongholds& geographicexpansion
Brandedcheese
Food-servicein Europe
Basicproducts
Growth &development
Dailynutrition
Health &wellness
Functionality
Talentmanagement
Milkvalorisation
Innovation Business model& cost focus
Chainadvantages
Sustainable dairyfarming &business operations
The way weWork & safety
Goodnessof dairy
28
Consumer Products Europe,Middle East & Africa
Consumer Products Asia
Cheese, Butter & Milkpowder Ingredients
29
Our customers and consumers
● Consumers around the world
● Retail chains, wholesalers, local shops
● Professionals in the hotel, restaurant, café and bakery
● Food producers and pharmaceutical companies
33
●10,8%
volume growthin infant nutrition
●10,8%volume growthin dairy-basedbeverages inAsia and Africa
●9,5%volume growth inbranded cheese byincreasing exports
● Investments:559 miljoen euro:
Mainly in expansionof productioncapacity for infantnutrition
●Safety and safetyawarenesssubstantially improved
Acceleration ofour strategy route2020
●Ongoingimplementation ofsustainabilityprogrammes
34
Sustainability
● Safety and safetyawarenessimproved
● Progress inprogrammes saltand sugar reduction
● Sino-Dutch DairyDevelopmentCentre in China
● Support of 130.000small farmers inIndonesia, Vietnam,Thailand andMalaysia
● Partnerships RedCross and Agriterra
● Action planfor manureminerals engreenhouse gases
● Sustainable energyprojects memberfarmers and plants
● 80% memberfarmers applyoutdoor grazing
● Vision onsustainabledevelopment ofdairy sector
35
Responsible dairy farming: Actual levelat farm and processing level since 1990
At farm level: At processing level:
Improved animal health, food safety andlandscape quality
Reduction of minerals (N and P to water)
Cross compliance EU: Meadow birds,biodiversity improvements etc
Reduction of GHG 1990 – 2009 -> 20%
Energy agreements -> reduction ofenergy use of >20% since 1995
Reduced: water use, -waterpollution
re-use of waste,
acidified emissions (NOx, SO2)
36
4 pillars of the sustainabilityapproach and objectives
4. Outdoor grazing: at actual level
Reduction of GHGwith 30% between
1990 and 2020
2% energyreduction per year
Visible care for nature
Reductionantibiotics
Mastitis/clawproblems: atnatural level
1. Energy andclimate
2. Animalhealth and -
wellness3. Biodiversity
Responsible soy from2015
Improved mineralbalance
Why merge?
allowing for more power, appeal,stability and continuitySize
Synergy
Strategy
resulting in lower costs, higher revenuesand accelerated knowledge development
converting members’ milk intomore value for consumers, customers,employees, and thus for members
FrieslandCampina will benefit best from the increasingglobal milk product demand and from the liberalisation of theEuropean dairy sector, through:
1
2
3
39
Strategic assessment and target selection
Merger between Friesland Foods and Campina best option
24
26
28
30
32
34
36
2007 2008 2009 2010 2011 2012 2013 2014 2015
EU and WW milk price will convergeThe world is changing
EU price forecast
World price forecast
Consumerdemand
Competitivepressure
Tradeglobalisation
Industrialinnovation
Arranged before the merger
• Chairman of the cooperative board
• Chairman executive board
• Name of the new company and cooperative
• Location headquarters
• Financing structure
• Milk payment system for the members
• Storyline: why merge
Overview merger phases
• Convenant Nov. 2007
• Letter of Intent Dec. 2007
• Merger agreement May 2008
• Pre merger integration planning Dec. 2008
• Merger Dec. 2008
• Post merger implementation Jan 2009onwards
42
Specific topics in cooperatives merger
• Performance price reflectspast
• Milk price future should beequal
• Equity value should beequal per KG milk
• Difficult to obtain additionalpayments from the farmers
Valuation
• Milk price structure
• Financing structure
• Governance structureCooperative
• Relation betweenCooperative (UA) andCompany (NV)
Governance
43
SepJul2008
OctAugApr May Jun Nov Dec
First phase
Activity
Second phase
Pre-notification
EC clearance before year end
Pre-notification phase
• Focal issues:– laborious process with
20 affected markets– very significant
information requestsby EC (just describingBasic Dairy has takenfull month)
• Focal issues:– Filing on June 12 so as to
have a full Phase I and IIbefore year-end
– Goal is to reduce thenumber of critical markets
First phase Second phase
• Focal issues:– Full use of Phase II
results in a decision endDecember
– Early agreement onremedies could advancethis timing
1
44
Transition plan focus on Day 1 and Day 100
Pre – Day 1 First 100 Days
Dec, 2008 Mar 30, 2009
Day 1
Dec 2011
First 1,000 Days
Focustransitionplans
‘Integrate thecompany’• Stabilize
organization• Communicate• Share information
and clarify
‘Capture iniatives’
‘Strengthenperformance’Stabilize organization• Finalize transition• Organize for growth
Integration plan
‘Close deal’• Approval regulator,
unions, members
‘Prepare for post-close’• Prepare for
organization, locationchanges
• Prepare for quick-wins
24
DecNovOctSep
44
AugJul
474645
Jun
434241 484039383736 525150493534333231302928272625
Finalize locationsand prepare impl.
Develop org. transition plan
Develop applications
Prepare impl.
Prepare imp.
EC reaction period
Development Corporate ID
Translate initiativesinto transition plan
Fine tune processes and create process transition plan
B-2 org. andprepare locations
Prepare for Day 1communication
Fill in Form Ro
Prepare impl.
Prepare closure
Pitch
Create change plan
Develop other “deeladviesaanvragen”
Prepare for Form Ro anddecide on all open issues
Design to-be pro-cesses (blueprint)
Review strategy
Develop First 100 Days communication plan
Prepare appointments B-2
Develop “deelaanvraag” and get approval from unions/COR
Brand Key
Define direc-tion (OBT)
B-1 org.
Identify and compare key as-is processes
Confirm old and identify new initiatives, synergies andprocess improvements
Develop com. planQ3/Q4
Prepare appointments B-1
Prepare legal documents and prepare closure
Phase 1
Harmonize cooperation: procedures and processes
Themes / teams
• Way we work(OBT, HR, Com, Corp ID)
• Appointments/talentretention (HR + OBT)
• Cooperationharmonization
• Corporate ID
• Strategy, organization& location(BGs & CC & SS)
• Communication
Exp. ap.ECend Nov
• Medezeggenschap/HR
• Initiatives(BGs & CC & SS +Procurement)
• Mededinging
• Legal
Day 1Dec 20
LegalclosureDec 15
Teams impl.readymid Nov
Form Roto EC
CORC AVCSep 16
Internaldeadlinefor FORMRO Sep 16
Today
• Processes(Functional teams)
Phase 1 - Finalize initiatives and organizationPhase 2 - Develop transition plan and prepare forimplementation
Key interdependencies*Time passed Completed
Behind schedule
Critical
Close Deal
EnableTransition
Createvalue
On schedule
DA
Y1
–D
ecem
ber
20
Pre-merger integration planning
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