International Strategy of AGRANA

CEO DI Johann Marihart, AGRANA Beteiligungs-AG

20.04.2012 | 2

Market position

SUGAR

STARCH

FRUIT

Leading sugar manufacturer in Central, Eastern and Southeastern Europe

Major manufacturer of custom starch products in Europe and largest producer of bioethanol in Austria and Hungary

World market leader in the production of fruit preparations

One of the largest producers of fruit juice concentrates in Europe (new JV with Ybbstaler)

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Beet sugar plant

Raw sugar refinery

Distribution Center

Austria

Czech Rep.

HungaryRomania

Slovakia

Bosnia-Herzegovina Bulgaria

Countries with plants

Other markets

7 sugar beet plants

2 raw sugar refineries

Countries with production sites

main marketsStarch plant

Bioethanol site

4 starch plants

2 Bioethanol facilities

27 Fruit preparation plants

11 Fruit juice concentrate plants

Potential growth regions

Countries with production sites

sugar starch fruit

Int. Production Meets Int. Customers53 production sites worldwide

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AGRANA products you meet everyday

SUGAR.

• Sugar is sold - to consumers via the food trade (20%) and - to manufacturers: e.g. soft drinks industry, confectionery industry, fermentation industry, other food and beverage industries (80%).

STARCH.

• AGRANA produces starch and special starch products.

• Starch is a complex carbohydrate which is insoluble in water. Starch is used in food processing e.g. as thickener and for technical purposes e.g. in the paper manufacturing process.

• Bioethanol is part of our starch business.

• Fruit juice concentrates customers are fruit juice and beverage bottlers and fillers.

• Fruit preparations are special customized products for- the dairy industry, - the baked products industry, - the ice-cream industry.

FRUIT.

AGRANA − At a glance

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560,1 691,4

424,6

587,5

639,7

673,4

Q1-3 2010|11 Q1-3 2011|12

AGRANA’s Revenue by Segment

1,624.4

1,952.2

+5.3 %

+38.4 %

+23.4 %

+20.2%

€mFruit

Starch

Sugar

34.5%

30.1%

35.4%

Q1-3 2011|12

39.4%

26.1%

34.5%

Q1-3 2010|11

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35.4

36.2

43.5

68.2

26.094.3

Q1-3 2010|11 Q1-3 2011|12

+89.6%€m

Fruit

Starch

Sugar

18.2%

34.3%

47.5%

Q1-3 2011|12

33.7%

41.5%

24.8%

Q1-3 2010|11198.7

104.8

Operating margin

4.6%

10.2%

5.5%

13.6%5.4%

11.6%

+2.3%

+56.8%

>+100%

* Operating Profit before exceptional items

AGRANA’s Operating Profit by Segment*

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AGRANA − Volume Split Inbound 9 Mio. tons raw material…

…Outbound 4 Mio. t finished products

Part of totalsugar 58 %

Part of totalstarch 27 %

Part of totalfruit 15 %

Products11 %

Raw Material16 %

Products14 %

Raw Material10 %

Products 5 %

Raw Material 44 %

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Which Volumes Have To Be Handled…

• AGRANA moves ~ 13 mio tons p.y. worldwide

o Would be ~ 520.000 trucks p.y. or > 1.400 trucks/day

o Transport costs of apx. € 150 mio p.y. ~ 8% or our total costs

o Wide range of transport types are used

- railways- vessels- trucks- multimodal solutions

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AGRANA´s Vision and Mission

• Vision and MissionAt AGRANA, we all share one vision - to be the world quality leaderin refining agricultural raw materials into sugar, starch and processed fruits. Our passion for quality and efficiency makes AGRANA the natural choice of food companies and for technical applications worldwide.

AGRANA – The natural upgrade.

• AGRANA is a multinational enterprise based in Austria. AGRANA’s Sugar segment and Starch segment operate in Europe. Its Fruit segment has global presence. In these markets, AGRANA’s goal is to be a leader in the industrial refining of agricultural raw materials.

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Status of Enterprises

Turnaround – crisis• Pace / Speed• Common Sense• Experience

(prejudice)• Clarity• Results• Low Risk• Liquidity

Growth – humble• Quality• Analysis• Creativity• Consensus• Methodical Approach• Opportunity• Profitability

Maturity – pride• Pedantry• Paralysis• Imagination runs wild• Coalition• Rituals• Game• Megalomania

Maturity

Turn-aroun

d

Growth

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AGRANA´s History and Growth Strategy

• AGRANA is a local acting company in 1988

o 1988: AGRANA Holding is founded as a result of the consolidation of

Austria´s sugar and starch industries

• 1st Stage: Internationalisation „more of the same“

o 1990 – 2001: dynamic expansion into the sugar and starch markets of CEE

o 1991: IPO

• 2nd Stage: Growth by Diversification

o 2003: Diversification and start of the fruit business

o 2005: SPO

o 2006: Start of bioethanol activities. Sites in Pischelsdorf/NÖ and

Hungrana/H

o 2008: first JV for apple juice concentrate in Xianyang/ChinaActing proactive vs. Reacting!

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ZBG SüdzuckerRaiffeisen Bank Coop.

Lower Austria

Z & SZucker und Stärke

Holding AGFree Float

~ 50% ~ 50%

75.5%24.5%

~ 10.5%

~ 80%

AGRANA’s Shareholder Structure

• Shares outstanding: 14,202.040• Market capitalization (as of 10 April 2012): ~ 1,120.0 m€

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AGRANA´s Core Competences

• Sourcing agricultural raw materials

• Handle a global raw material flow and be specialized in big quantities

• Manage production processes in a lean way, but with highest quality standards, from commodities up to tailor made products

• Serve industrial customer markets with high customer satisfaction

• Develop innovative processes, methods and products

• Manage and administrate small and mid size operations worldwide

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AGRANA − Strategy = Synergy

Sugar

Central,

Eastern and

Southeastern

Europe

Starch

EuropeFruit

Global

Refining of agricultural raw materials

Investor and customer value from:• Balance of risk• Exchange of know-how• Cost savings through synergies

The strategic goals

SUGAR: Customer- and market-oriented growthin CEE and Southeastern Europe.

STARCH: Organic growth, and adding value by tailor-made products.

FRUIT:Customer- and market-oriented global growth.

SYNERGIES:Use synergies between business segments to position the Group optimally for the increasingly volatile operating environment in the segments.

CAPITAL MARKET:A long-term asset for shareholders.

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The beginning is always soil...

AGRANA refines agricultural raw materials... AGRANA is preferred

supplier for int. brands...

We all consume AGRANA products every day...

AGRANA − Strategic Position

Industrial pre-products„B2B“

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Key Strategic Choices

• Consolidation of the local business• Growth in the core business• Going public• Partnership (if you can‘t beat them, join them)• Diversification• Internationalisation

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AGRANA‘s Competency Wheel

Strategic Orientation

Market & Customer Orientation

Innovation &Change

Team-leadership & Cooperation

Commitment Achievement Orientation

Growth

Competitiveness

Change

Management CompetenciesCommon Values

Challenge

Profitize

Res

pons

ib

ility

Operate

conseq

uen

tly

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How effectiv is our Organisation?

Human Resources Manager

Marketing Manager

Logistic Manager

IT Manager

Security Manager

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More than Management

“Leaders do the right things, while managers do things right.”

Warren G. Bennis

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I was guided by Peter Drucker

• Investigate thoroughly (Due diligence)

• Don‘t pay too much (resist your will to succeed, don‘t pay silly prices, let your competitor do the nonsense)

• Integrate quickly (not hesitating in structuring …)

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The practice of International Management

Management-Tools used

• Cash pooling• Net financial debts report• P&L monthly• Forecasts every quarter• „Quick report“• Sales reports monthly• Production reports daily• Performance indicator

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• Task-and result-orientated approach

• Strategic orientation• Handling complex

relationships• Inspire others• Foster innovation and be

open for change

Leadership competencies in AGRANA

• Making complex decisions• Open minded attitude

towards people and change• Personal commitment• Goal-orientated work style• Evaluate employees• Market and customer

orientation

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People’s skills

• Professional competences as prerequisites

• Focus on Soft Skills:o Empathyo Orientation on the employeeo Personal developmento Team buildingo Positive and encouraging work atmosphereo Social responsibility

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AGRANA − Strategy

StarchSegment

FruitSegment

SugarSegment

• find and manage synergies• standardize best practice• R&D know-how transfer• evaluate potential acquisitions• provide services for divisions

• Energy/CO2-optimization• adopt organisational

structures to given frameworks

• refinement

• focus on speciality strategy• extend bioethanol capacities• entering wheat-starch

production

• organic growth• diversification of customer portfolio• Added Value -> system supplier

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“Don’t react – anticipate and act.”

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Challenges of our Business Areas

• Increase of volatility of agricultural raw materials (soft commodities) driven by weather impacts, growing demand and high speculation

• Customer consolidation process leads to higher pricing pressure• Regulatory changes (opening markets, WTO regulations, increasing

tightening of traceability and labeling etc.)• Increasing competition from global suppliers (from Brazil, China

etc.)• Increasing quality requirements from costumers (without willingness

to compensate the costs)

• A period of slowing global market growth ahead

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Conclusion

• AGRANA has become an international company

• Focus on our strengths -> more of the same, world wide

role out

• Lean cost structure

• Being the branch leader in quality and service

• Specialization where appropriate

• Providing solutions for our customers

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„Future challenges“

• The climate change

• The population growth and its nutrition

• Bioenergy

• Food safety (organic, GMO)

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Disclaimer

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