Barry Callebaut AG

Good afternoon everybody. Thanks to the many of you who have joined us here in the room and also good afternoon or even good evening to those who have joined us online. My name is Christian Hansen and I'm the head of strategy at Barry Kalabat. It's really a pleasure to welcome you today to Barry Kalabat's Capital Markets Day and fiscal 22-23 results announcement. Before I take you through the agenda, I have to do a little housekeeping. I'd like to remind you of the disclaimer on page two around forward-looking statements and also remind that the event is being recorded. Following my introduction, I will invite Ben DeSchriever on stage to provide the key takeaways of the fiscal 22-23 results. Peter Feld will then join on stage to deliver the Capital Markets Day presentation and share more of the path to sustainable, profitable growth, higher cash flow generation, and shareholder value creation going forward. That presentation will take around 90 minutes. And before we go to Q&A, I'd like to invite all of you to step outside for a 15 to 20 minute coffee and, of course, chocolate break. And then we'll come back in for Q&A before breaking to a reception for which we hope all of you in the room can attend to give you a chance really to interact with some of the other BC leaders that we have in the audience. So let's get into it. Ben, if you'd like to join me on stage.

Thank you, Christian. Good afternoon, everyone. It's great to see so many of you here in person. Today we will go through a much shorter results presentation than you are normally used to. In order to allow us more time to focus on the BC Next level, you will have opportunities to ask questions during the Q&A session later. Let's now take a look at the key developments within our full year results. This year, we experienced challenges in the aftermath of the Wiese factory incident and weaker customer demand in a high raw material market environment. However, we still delivered profitability higher than in prior year. Sales volume recovered in the final quarter at 3.9%, which helped limit the overall decline for the full year to minus 1.1%. Operating profit of 659.4 million increased by 12.2% in local currencies. As did our net profit for the year, up 9.6%, supported by the performance in our global COCO division. This year, our free cash flow was challenged due to high raw material prices and we ended the year with the adjusted free cash flow of 251.8 million Swiss francs. I will now talk through the key metrics in more detail. In this fiscal year, all regions saw challenges related to demand in the high raw material market price environment. In Region EMEA, volume in the first half of the year declined, but we saw a recovery of over 3% growth in the second half, which resulted in a broadly flat performance year-on-year. Food manufacturers' volume in EMEA continued to improve in the fourth quarter due to stronger performance in local accounts and private label, and ended the year flat. Gourmet and specialties also recovered, slightly in Q4. EBIT was strong, up almost 25% in local currencies compared to the prior year recurring figure. In region Americas, volume remained challenged throughout the year in an overall weak market, down minus 4.6%. The region was impacted by a number of factors, including a poor ice cream season and weakness in local brands in Americas, but performance was positive in Latin America. In region Asia Pacific, volumes declined minus 2%. Weaker volumes were mainly attributable to the food manufacturers, which continued to suffer from softer demand, particularly in China. Gourmet and specialty volumes' growth was slightly positive thanks to strong sales of gourmet brands in markets like India, China and Indonesia. Global cocoa saw a 2.4% increase in volume and had a strong increase of 22% in EBIT. Moving on now to our EBIT performance. This year, we delivered EBIT of 659 million Swiss Francs, an increase of 12% in local currencies. As you can see, currency translation had a negative effect of around 42 million. Performance improved in comparison to the softer prior year, which, as you are most likely aware, was heavily impacted by the WESI incident in the final fiscal quarter, which led to lower volumes and related recurring EBIT. In addition, the strong improvements in profitability in the global cocoa business contributed to the year-on-year increase. Our EBIT per tonne improved to 289 Swiss francs per metric tonne, up over 13%. Let's now take a look at our free cash flow. This year, adjusted free cash flow decreased to 251.8 million Swiss francs compared to 358.5 million in the prior year. Before the adjustments for cocoa bean inventories regarded as readily marketable inventories, cash flow generation declined to 113 million Swiss francs compared to a strong prior year figure of 266.2 million. Free cash flow was heavily impacted by the increases in raw material prices, particularly cocoa, which strongly affected our net working capital, as well as higher interest and income tax. Now, this concludes our results overview. Very short result overview, but you will have the opportunity to ask questions later on. Thank you for your time, and I'm pleased now to hand back to Peter to begin our Capital Markets Day. Thank you.

taking us through the 22, 23 numbers. And I really look forward already next week working with you on the North America growth opportunities as you're going into North America as our new president for the North America business. So with that, a good day to everybody here in the room. Good day to everybody online. Thank you very much for joining us on our capital markets presentation today. And thank you for giving me the opportunity to speak to you about our upcoming journey. Be that here in this room, but also as I look forward to the many one-on-one meetings that we have already scheduled with you in Zurich, in Frankfurt, in London, as well as in New York over the next days. Bari Kalibao is a fantastic company and we have ample opportunity to unlock the next level of growth and disproportionate market share growth for our business going into the future. we have the key elements that we need to really win in this game the first one is we are operating in a great market and I will take you through that later on the second one is we already have a significant stronghold in the market space thank you we have a great position in the marketplace as we stand here today and then Thirdly, we now have the funding for our next level program established and set course already on really unlocking that next opportunity for us. Fourth, there is clearly headwinds for our customers, especially also through the increasing regulatory requirements that will drive disproportionate business to Barik Halibao. So we have the mix in our hands to really take this business to unlock the next level of growth and that's exactly what we're doing. I'm happy to say that we're well underway with starting into our next level program and the next level program will build a stronger cash and EBIT generating machine for the future that will benefit our customers, but importantly also our shareholders around the world. We've already started on this journey. After the announcement in September, we have already gone and established the executive leadership team that will be guiding us through the next decade. And we also have already met with the top 200 leaders around the world be that from the commercial side all the way to the plant managers and the enabling functions where we spent three days working in Warsaw and deploying our next level operating model and outlying to them what are those key changes that we will do and what are the things we will hold on to that made us so strong as we are already having such a strong business today. So well underway with doing that. But in my mind, there's three, four things that are really important for you to remember is we're a strong business already today and have clear leadership positions in the market. The market will regain growth. We clearly have an opportunity now with the investments into next level. And we think that there's a disproportional opportunity to grow market shares. Our customers' lives are getting more difficult and they look for the chocolate specialist to help them actually in the next decades going forward. So with that, I would like to take you through a few of my colleagues that are joining today. Ben, you've already seen, but I'm also pleased that Steven Ratzlaff is here. Steven has built the number one, just maybe stand up and wave your hand quickly, that would be great, has built the stronghold of our cocoa business, which is the number one cocoa business in the world that is so complimentary to the chocolate business that we have globally. But he also has established the Cocoa Leadership Program, which drove significant profitability to the business and really delivered outstanding results with that. When you think about the next step, as Stephen also, in addition to cocoa, has global accountability for sustainability, we do feel, and I think we join in that belief or purpose, we both believe that BC owes it to the society to unlock the future farming opportunity. And that's what we will be doing going forward. So I really look forward to doing that with Stephen in the next steps. Vamsemo Antati. Bamsi is our president for APAC and recently also added the accountability for Middle East and Africa. Bamsi has significant CPG operating experience across all of the key markets in APAC. He led complex turnarounds and acquisitions during the time working with Coca-Cola company on very different projects and recently has been the global leader for Coca-Cola in Greater China. Clemens Wörle. who's heading up our global supply and development organization. Clemens and I met long time ago in Baierstorf, where Clemens has just completed an end-to-end supply chain transformation. So going from a very dispersed setup to an end-to-end supply chain design and organization, which is frankly exactly what we will be doing in Barrikalibau going forward. So really glad to have Clemens here on board. After that, joined to WMF, where he gained additional experience next to the B2C world in a B2B environment with a professional coffee machine site. And then last but not least, Peter Farneste, very happy that you're here for your first day today. So you will hear from him in half a year from now more. But I hope you understand that as this is the first day, I'm very happy that you're here joining us today. Peter obviously brings a wealth of experience running global as well as private companies, has been the CFO of Ontex before and then the CFO of JDE, which is very complementary to what we obviously do with our natural ingredients, cocoa, as he's been working so much on the coffee side. So really glad to have you as we go forward. So what you see is that we're adding to our leadership team and to the competencies we have inside Barik Kalibaut, a important element of transformation expertise and expertise how to win the game globally tomorrow. And with that, we are feeling very comfortable that we can take up the next journey and we will deliver this next journey as we go into next level for BC. So with that, let me just summarize a few key messages here for you. We are about creating the best chocolate solutions. When I meet our customers, people are still confused and say, are you actually competing with me? No, we're not. We're here as a service provider for the industry. And that's exactly what we reiterate with our customers as we meet them and as we make sure that they see us as their partner of choice. in the supply chain and in the whole sustainability journey that they have to unlock for their consumers as we go forward. So we're creating the world's best chocolate solutions. We're already leading with global scale, deep capabilities, and we do have fantastic partnerships with our customers around the world, from the very big ones to the very small ones. We're operating in attractive markets, and I will be speaking to that later on. The chocolate market has increased over the past 50 years. There were disruptions in the market, but the market has continuously grown 2.5%, and we'll see that in a minute. And I want to tell you that, you know, as we are obviously seeing that we have such a strong footprint already in Bari Kalibao, we also recognize clear missteps that we had in the company, and we're recognizing the opportunities where we can improve as we go forward into this next life cycle of Bari Kalibao. Ben talked to a few things of that, and it was for us a wake-up call, what happened last year, and I think a great opportunity that, you know, also led to the creation of the Next Level program. So we firmly believe that with Next Level in Barikaliba, we will unlock the next phase of sustainable profitable growth, creating value for our customers and creating value for our shareholders. Just as a reminder, and you've seen hopefully some of the products outside, and if you couldn't taste or try them yet after the lunch, you should try later in the break. I am continue to be surprised about the many solutions that our chefs are creating. And then on the other side, what we're creating on an industrial scale for our large customers. Barry Kalibao serves the entire customer segments from the large FMCGs all the way to the little bakery in France. And that is incredibly robust when you think about the business model, because obviously there will always be some markets that will be behind. And we have a great diversified customer segment where we actually can serve our customers in different ways. But then importantly, we deliver the solutions in chocolate across all of those customer segments that matter to them. And that goes from the very big industrial solutions where you literally talk about tanker trucks of liquid chocolate all the way to the little decorations and inclusions that go into the ice cream or into a dessert at a restaurant. So it is an incredible stronghold that we have here already established that is unparalleled in the way of chocolate ingredients. Second element, the chocolate ingredient market provides significant opportunity for growth and we are convinced and our research with the market intelligence firms that we have been working with clearly shows that the market will rebounce back into growth. We think that we see three to four percent growth topped by another percent on the value side through pricing and mix that is coming up. So very clearly we see the market rebouncing here. BC, let me say only, has 16% value share in that market. There is significant runway for us to go after, and that is what we will unlock. Already today, as I mentioned, we are partner of choice to the global fast-moving consumer goods due to the scale and the footprint we have with factories all the way from Chile to China. There's no other player in the world that has that comprehensive footprint today. Our relative market share is three to four times bigger than the next follower in this industry. And we're leading across the global gourmet market where we have various number one positions and our relative market share is two to three times bigger than the next follower. What I'm personally most excited about, and I mentioned that earlier when I was speaking about Steven and the contribution that the Cocoa team has done over the past years, is this combined strength that we have with cocoa and chocolate. And for us, as sustainability becomes more and more important, That combined capability is fundamentally important to make sure we understand traceability and also where expected can go into segregation as we move into the future and really drive game-changing differentiation with the sustainability capabilities we have for Barikalibao. The third element that we actually have in our mix after the big FMCG opportunity, the gourmet market presence that we have, and the coco, actually the fourth one, the coco that we have, is clearly the specialty solutions that we're offering to the market. And that is across the specialty chocolate solutions, be that in free-from versions, like dairy-free or nut-free, the religious elements that we're providing to our customers on global scale, The sustainability aspects where we have traceability sustainable from origin organic, nutrition with added nutrition and vegan products, and then the indulgence side that you have seen probably outside with the Ruby solutions, but also our whole fruit and the second generation proposals that we have. Vast portfolio of high value generating specialty chocolate solutions that we offer at scale. combined with what I would call the formats, which is the inclusions and the decorations part, that are also sought after from our customers, be that the chocolate sprinkles all the way to the chocolate inclusions in the market. So that is a portfolio that is enriching and frankly enhancing our margins, and it's a great business to operate in. As I said earlier to you, we are recognizing and acting decisively upon key challenges that we have seen over the last year. But, and I had the discussion before in the room, you know, is this an investment that is fixing the issues of the past? It is clearly not. It is setting sales for the next decade of growth. That's really what we're investing in. But what has happened with some of these miscaps is that we started to think about is BC set up well to really conquer the next 10, 15 years of market share growth and take a disproportionate share of that market growth as we go into the future. Our commitment to our customers has never wavered, but we have clearly recognized that the quality issues are not acceptable to our customers. The service levels is an opportunity for us to actually, you know, smoothen the way that we collaborate with customers and take it to the next level. And certainly internal complexity, given the historic setup that we had in BC, is making life difficult for us as an organization to perform. We also did not respond fast enough to some of the challenges that our customers have seen in the post-COVID high inflationary environment. We could have been more agile to fight against that. Ben was showing North America. That's maybe an area where we were a bit slow in reacting on our market strategies. We could have done things differently. And it got us thinking about, OK, how do we rewire the company to make sure that we really go aggressively after the commercial opportunities while being more agile to responding to some of those changes that our customers are seeing. But all in all, and I think that is the key message I want to leave with you, we have the right assets to take significant future market share with Barry Kalibao as we're going onto this next life cycle for our company. We have global leadership and global scale. We're leading in innovation. We have multi-channel, multi-segments resilience. We are vertically integrated, as I was mentioning before, between chocolate and cocoa. We're the number one leader in chocolate. and recognized as a number one sustainability leader. So very strong position and now with the investment program in next level, we can unlock that opportunity of disproportionate market share gains going into the future. So as you've seen this morning, we're delivering attractive profitable growth and our long term objective will be a low single digit plus to mid single digit volume growth and a mid single digit plus to high single digit EBIT growth. All in all, with a step function, and we'll speak to that a little bit later, as we see the synergies from our next level program come to the bottom line, we have mentioned this morning that 75% will fall to the bottom line, we think that we can embark into a 10% EBIT margin as we go forward. So how is this going to be unfolding over the next weeks? And in the introduction here outside, I spoke to a few people who said, well, is this like a two-year, we need to wait for a two-year period? No, it's not. We're already working on it. We expect some of the synergies, some of the initial synergies to fall to the bottom line this fiscal year, 2023-2024. We think that there will be an acceleration in growth in 24-25, combined with a significant drop to the bottom line of our EBIT contribution and coming from the synergies of our next level program in 24-25. And then that will continue to go on in 25-26. However, with a stronger EBIT margin contributing machine, as well as with a better cash generation going forward, because we scale better and we will... be better able to drive cash generation as we go forward. So let me unpack that a little bit for you. We have over the last week spent significant time to analyze the market to be certain that it's worth investing into the company. And it clearly is. It clearly is. So the chocolate and greenery markets, and that's all the evidence we're getting, is re-accelerating. You see that already happening in some of the announcements of our customers in the last quarter, where they see a bit of rebounds, which is great. And it will be the beginning of a resettlement that we see. But it was interesting for me to see this 50-year curve. And you can see that over the 50-year period of time, 2.5% CAGR continuous growth. Through war times, through financial crisis, through energy crisis, chocolate consumption kept on going up. And Wamsi will speak later about the 2.5 billion consumers in APAC that today already can afford chocolate products, which will continue that growth going into the next 50 years. So we clearly see that the market will be getting back to growth. It's driven literally by three things. The growing global demand for chocolate, increasing customer reliance on the established large outsourcing partners, and increasing consumer demand for products that are good for you and the planet. And that's exactly where we come in. So we see this market grow three to four percent in volume, plus another percent points in actually value growth and mix. So you ask yourself the question, where is this coming from? Well, first, the underlying market growth is supported by changing consumer behaviors. The share of consumers who snack has increased by eight percent points. The average number of snack per day has increased by 6% points. The chocolate is increasingly, and that is of course obviously important for Barry Kalibaug, chocolate is increasingly the snack of choice up 5% points. So the chocolate is tracking an increasing share of the growing consumer market. Second, chocolate is increasingly an application of choice. And you can see that across the different product categories that we're showing you. Sweets, cakes, pastries, breakfast cereal, ice cream, cereals, and energy bars. And you see that various customers are actually creating new products that actually contain chocolate products. We have a few examples here on the street. On average, you see that sweets and biscuits, cakes, breakfast cereals, all up 6%, 7% in ice cream, 14% in cereals and energy bars. That's great news for us. And as I mentioned before, we have a clear underlying growth opportunity in front of us, and Vamsa will speak to that later in the APEX section, where we have today already 2.5 billion consumers that can afford chocolate products. They may be small. They may be at kiosks in India or other places. But there's people there that can afford those products and will continue to drive with the growing middle class consumption for chocolate in those areas. And it's also exciting to see that while it is low, there is increased consumption per capita in those markets. So that is also, and you have seen that in some of the announcements of our customers, a clear strategic growth opportunity for our large CPG customers. We obviously want to be there helping them to expand into those markets. We do have the footprint in those markets, and that's what we are attacking. We also see that there's new entrants that are growing the category value. I hope that you've tried a few outside with Tony's and some other solutions that we have put outside. But our customers that are entering new into this industry face very difficult situations as they try to position their brands to new consumers in new countries. And at the same point in time, establish a complicated supply chain. And at the same point in time, deliver against the sustainability expectations. That is very difficult. And frankly, that is driving business to Bari Kalibau because they know that we as a competent cocoa to chocolate integrated supply chain that is caring so much about sustainability can really help them be successful with their new market entrance. Chocolate is clearly premiumizing. We see that, you know, be it the vegan products, gluten-free, low or no sugar solutions, the naturals are all up. And you can see that they command a 20 to 30% premium over the normal solutions. That is really good news for us. It's good news for our customers. And as I mapped out earlier, we have a breadth of opportunity here to take our specialty solutions to our customers. Now, I had a lot of discussion with one of my predecessors where we discussed about innovation versus sustainability. For me, it's pretty clear. The battleground that we have in front of us is about sustainability. People care about it. Regulatory bodies care about it. We need to do the right thing and we've been doing that over the past decade. And for us, it is a clear mission to carry that forward. But it's great to see that six out of 10 consumers are actively seeking sustainable product solutions. They actually drive increased share of sustainable cocoa production globally up 20% points and a higher share of product launches 2.6 times up that actually have a sustainability claim. And they come with a price premium, which is great, again, for us. We have to put effort into it. But on the other side, we will also be rewarded because consumers are actually paying two to three times price premium for chocolate solutions that come from sustainable resource products. So all in all, to sum this up, we clearly see that the market is getting back to growth. We see a 3% to 4% volume growth coming from increased outsourcing and important and underlying demand growth, topped with another premiumization in value growth and mix. So what does that mean for us in Barikalibao? Well, you know, we have already talked about growth opportunities over the past years, but I think with BC Next Level, we will have a very different way to unlock these opportunities, and that is what I will explain to you going forward. The slide that I share here to you is key for me to share with you so that you're clear about our ambition in the markets, but it is also important for our organization so that everybody in BC knows what we're fighting for. We, with deep outsourcing partnerships, aim to get two out of three volume deals for Bari Kalibau. In Gourmet, we want to double the underlying market growth in Gourmet. In specialties, the business I described before, we want to double the business of our core specialties business in Barikaliba. And then we use the term fair share for APAC, which basically means that we're behind our average share globally, and we need to get up to fair share also in APAC as we're tapping into this 2.5 billion consumer base in APAC. That will double the size of our business in APAC. Now, the way that we want to unlock that is that we, you know, obviously carry on with the good work we've been doing in Barik Kalibao while we're creating an agile, tech-enabled organization to really unlock that future growth, combined with the sustainability getting better every day. So what does that mean, best and deeper outsourcing partnerships? Well, you may say we're already big in that sector today. We're actually not. When I met the top customer CEOs, I was frankly surprised as I onboarded into Bari Kalibao. While we say we're the heart and the engine, it felt to me that actually here we're not yet having a fair share of their supply chain when you think it through. And you can see on the right hand side, we actually have a significant runway of opportunity to take more share of the supply chain of our large customers as we go forward. We do about short of 15% between cocoa and chocolate. And in some of those, as you can see, we don't have any business yet. So that is a clear opportunity for us as our customers are shifting into new territories that we can actually take a bigger share in that outsourcing partnership opportunity for our customers. Two-thirds of the deals, that's what we're aiming at. And we believe that we can unlock that probably today better than any time before. And I say that because of the complex regulations that our customers are facing. I've had discussions with some of my top CEOs that are on the customer side who say, Peter, we've made significant commitments to the street on sustainability. How can you help us deliver against those commitments that we've been making? That is a fantastic question that I get from those CEOs. As the pressures are increasing with new entrants, with regulatory forces, it was exciting for me to see how fast they responded, invited me for a one-to-one meeting, and asked and sought and seeked help on how we can actually help as Barik Kalibao to unlock that opportunity. That's exactly where we want to be. And that's what we're fighting for. Now, in working with our global FMCGs, we're creating value for them and we're creating value for us, and hence we're creating value for our shareholders. There's clear opportunities in the partnerships to co-create innovation at scale, collaborate on productivity as we're jointly discussing how we combine our supply chain and we create in BC a customer-driven supply network. We'll enable our sustainability commitments and localize our customer supply chains. With that, we're focusing on four things. Best value for our customers, best service for our customers, best sustainability, and best quality. That's the battlegrounds that we're going after. On the other side, it will create value for Barik Kalibau. We will see high return business leveraging the scale that we have in those large deals. It will drive durable recurring growth, support right to win across all market segments, and will unlock a platform for full portfolio of innovative and sustainable offerings. With that, we're creating stickiness and relevance for our customers. We just had some discussions outside where people were saying, can people really walk away from Barry Callebaut? Yes, they will do that if we're not delivering the best value, the best service, the best sustainability, and the best food safety. But that is what we're fighting for, and that's what we will do for our customers. And hence, we firmly believe that we have an opportunity to step up the stickiness and relevance with the industry leaders. We've done that already. And you can see the Tony Chocolonis, which has gone through a phenomenal growth over the past 10 years. And Barry Kalibaugh has literally enabled that growth opportunity up 73 times versus the starting point in 2013. And we're very happy, and I'll share that later, that we have already agreed on the next outsourcing agreement with Tony's as they go globally, especially into the US. Now, the way that we will unlock those strategic partnerships is embedded in our next level program. Closer to markets, simplify and digitize. So here is closer to markets, have the right portfolio that really matters for our customers and unlock the opportunity with an agile tech enabled organization. We need to start on the top to top. We have, in the first discussions that I had with my organization, clearly seen that we're having too many transactional discussions with the chief procurement officers of our customers. But they may not know where the CEO of our customers want to take the company. They may not know if they want to have cash investments going into confectionery or into another category in that big group that we're working with. And they do not know if the CEO wants to build more factories or maybe even divest the business segment. So for me and for us, it is fundamentally important that we have top-to-top engagements, that we understand what is the long-term strategies three years out, five years out of our customers, so we can tailor our solutions and our response in the right way to that customer. We have recently won a few large agreements that are fundamental and it shows that even despite the miscaps that we had with Wiesel, we see that customers come back to Bari Kalibao and they're very happy about that, but it also makes us think, because we can't have that happen again. That's very obvious. But it is very nice to see that we could renew our agreements with Unilever, with Tony's, as I mentioned, with including the global expansion, with Mars, as well as with Mondelez, As we sit here. So it's great to see that we have four large trajectories. And I can tell you there's many more regional ones that we actually rewarn back and that we expanded coming out of the visa incidents last year. Gourmet is literally the second chapter for us. So let me talk you through that again here. Oh, the chart somehow doesn't show the graph. Gourmet market fundamentals are very attractive for us. We also see here 3% to 4% growth that we see in the market. It's driven by three things. Premiumization, increased use of chocolate in end products, and a growth of out-of-home consumption. It's a great opportunity for us as we're already number one around many markets in the world. However, we're not number one in all of the markets. And so there's a great opportunity to really catch up. And these are smaller markets, but importantly also very big markets where we're not number one yet. And that is where we will focus on. We obviously have just quantified here where we have number three or less market positions. There's 120,000 metric ton opportunity just going from the lower ranks to a number one market position in those markets. Great opportunity for us to grab. And that is combined with the aspect that we're not playing across all of the price tiers by respective markets. And that will be explained later when I talk about the next level strategy going closer to the markets. We have to really understand where do we operate? Are we having all the price tiers filled in the right way to be able to capture the number one leading market positions in the future in the gourmet market? Again, the strategy is in place to unlock the market growth opportunity here, getting closer to markets. I will explain that later with the country cluster focus that we have. We will push the decision making to the country cluster leaders to define their go-to-market strategy locally. Belgium is very different in the gourmet market versus Italy, versus the Nordics, versus Spain. Very obvious. So we have to really understand that, and the local leaders have to define their go-to-market strategy, understand the competitive set in the market to drive growth for BC. We also look at our portfolio. Do we have the right portfolio that aspires to our customers? And do we have the right brand propositions that aspire to our customers? So we took time over the last five months to step back and think through how can we propose a portfolio that really matters to the local needs, that matters to our customers to unlock that growth opportunity. Last but not least, direct to customer. There's a great opportunity to unlock a digital opportunity as we can connect with the end customer rather than going only through distributors. Great opportunity for us to unlock value and to unlock for especially the value creation that we do for the end customer rather than talking to distributors. Third element of our growth strategy is scaling up specialties. It's great to see that across the FM market as well as the global gourmet markets, we see that there's increasingly a need for specialty products. All of these specialty products are outgrowing the overall chocolate market. They're sold at a premium and they're becoming important to brand differentiation for our customers. With that, we think we can double the size of our core specialty business going into the future. Now, we are the only company globally that has on one side the customer access from FM all the way to the little bakery around the corner. But then on top of that has the breadth of a portfolio of specialties on hands that can deliver to those markets on a global level. So for us, that is unmatched core specialty chocolate portfolio. underpinned by the sustainability that we're delivering to our customers, but then also with a global scale where we have manufacturing operations that can deliver those specialty products and formats to our customers. Great opportunity to co-create and to game change innovations for our customers from the very big ones to very small ones. And we're investing into that opportunity. One example is our new Brentford Canada facility. You can see that that is a recent shot as the factory is coming out of the ground. We're investing about 100 million in a new factory, 50,000 metric tons specialty facility in Canada. Again, we're applying the strategy of the next level program. Closer to market, simplify and digitize our portfolio. So very clear that as we're trying to scale the size of the specialty business, we have to think through our really enabling that cross and upsell into the established accounts. And when we did the analysis just recently, you'll be surprised to find that we're only incentivizing some of our sales teams at a very low level, single digit, in their bonus for cross and upselling the specialty portfolio into the large deals. That's obviously a massive opportunity. You have to have the right sales incentivation to ensure that we cross an upselling into those accounts that we already have business with. Just one example. And then, Vamsi, I would like for you to come forward and maybe talk a bit about APAC and the opportunity that we have there.

Thank you, Peter. Peter spoke about doubling the size of our APAC business. Achieving that objective will get us to a share number which is in line with the share we enjoy in the rest of the world. Achieving that doubling goal will also get us to ensure that APAC plays its rightful and proportionate role for BC globally. I joined BC just seven months ago, but I have worked all my career in Asia Pacific and enjoyed the dynamism and the growth possibilities within this region. Also learned over the years how digital application and how digital can be used to propel the growth ambitions of corporates in Asia-Pacific. Peter spoke about this large consumer base. It's a very evident point. Everyone knows Asia-Pacific has got a very large population. It's got also a large population which can afford chocolate products. But the problem is low per capita consumption. The per capita consumption of chocolates in Asia Pacific in the bigger emerging markets like India, China, and Indonesia is only a fraction of what you see in Europe and in North America. Can you imagine when those populations start consuming chocolate at the consumption rates in the developed markets? You will double, triple, quadruple company sizes, not just for us, but most companies think of Asia Pacific that way. The interesting thing is there's a very strong correlation to rising per capita income levels with chocolate consumption. And everyone knows that Asia per capita incomes are rising fast, the fastest in the world. And as that income levels grow, the per capita consumption of chocolates also grow. So there's a good tailwind there from a consumption perspective. And the proof of the pudding is that our customers are also prioritizing on APAC as a growth cluster, growth markets. And we are a B2B company. We humbly follow our customers. And we stay behind them, gently supporting their growth aspirations. And if we do that well, we'll gain share. In Asia Pacific, we are number one. But that's because we aggregate the number two positions across various countries. And then that gets us to a mathematical number one. The relative market share that we enjoy in the rest of the world, in other geographies and channels, is not what we have in Asia Pacific. But that's clearly an area which we want to grow by focusing on a few important markets which are mentioned on the chart. The other way we will try to gain share is to play in different price tiers in Asia Pacific. Take the gourmet market as an example. There's a premium segment, which is imported Gourmet products from Europe, with the Belgian claim. But there's a very large mainstream and mass premium segment in these markets. We call it an affordable luxury, which grows very fast. Our traditional focus has been in the premium space, and we have not played in the mainstream space. And as we consolidate our brand portfolios, We have the brands to range versus different price tiers in the market and to grow every price tier in Asia Pacific. That's an opportunity for us. Chocolate is a very geographic business. You need to be closer to customers. Peter mentioned one of the biggest principles for next level is being closer to the market and closer to customers. So take this example here from India. We have already two factories in India. And we are now opening up next year a third factory in India, which will double the capacity of India. That will help us double the India's business as well. So we are putting our money where our mouth is in terms of investing behind manufacturing footprint. If you take a look at Asia Pacific across the continent, both for cocoa and for chocolate, we are very close to our customers in many places right next to them or a short drive away. So as our customers grow their Asia-Pacific business, we are right behind them, right next to them, supporting their growth aspiration. And to wrap it all up, again, staying true to BC Next Level principles, we want to be closer to the markets. I've given you the manufacturing example. But the other way we are trying to get closer to our customers is by adding more salespeople. You might be wondering what's different in this APAC plan versus before. This is one of the differences. We probably were not too good on investing behind sales resources in the past. But now, we are adding to sales resources account managers. Global corporate accounts have a big presence in Asia Pacific. We already have account managers servicing them. But the new account managers we are hiring will go after the opportunities in the large local and regional key accounts, which are a significant segment in Asia Pacific. That's how we will get closer and break in to the business which the large local and regional customers offer us. The other way we will try to get closer to our gourmet customers is to de-layer a complicated distribution system. As we de-layer our distribution system, we get to them faster and in a broader way in this vast geography. Peter spoke about portfolio. We have the portfolio to go across and service the needs of all the price tiers in the market. But I also want to talk to you about compound in Asia Pacific. There could be an impression that compound is low value. Asia Pacific needs compound for a few reasons. One is temperature. Compound holds better. But also it affords affordable chocolate solutions. But that's not where the story ends. Compound is what lends our product to show up across different products of our customers. Peter showed a chart which talked about bakery, ice cream, cereals. Compound chocolate is what lends itself to this broad range of application. It is because of compound that chocolate can show up in so many product formats. And that provides the customers a chance to differentiate their product versus their competitors. And that gives us the entry because we have deep capability in compound oils and fats. And to wrap it up, Asia Pacific is an extremely large geography. We can have manufacturing facilities across the geography. We can put in a lot of salespeople. But unless we deploy digital, we won't be extending BC's reach into this vast geography using digital marketing to market to the chefs around Asia Pacific, using digital route to market to make sure that we are amplifying the reach provided by our salespeople. We're also using the large and proliferating digital commerce channels in Asia-Pacific. We also want to leverage digital internally to put digital in the hands of our account managers so that they can give pricing and chocolate solutions in front of the customers right there in the first meeting or the second meeting to provide quick service to customers. So, net-net, Asia-Pacific has got a lot of tailwinds. Our customers are focusing on Asia Pacific as a priority. There is an increasing push towards outsourcing. Peter explained those reasons well. So there's external tailwinds for us pushing towards Asia Pacific and the growth possibilities. But internally, we realize that we need to change a few things. Peter mentioned a few. I mentioned a few just now, which is about how we execute in Asia Pacific will be different this time. Thank you. Now, Peter will speak about sustainability.

Thank you, Vamsi. I think what you can see is that, you know, we're being more focused on our growth priorities with the outsourcing partnerships, Gourmet 2.0, double down on the specialty, and APAC. But we're changing a lot in how we actually address those opportunities and I'll go to that as we unfold the opportunity with next level in the next chapter. Before I do that, I would like to say that none of those four growth priorities in my mind would really matter if we not continue to do the great work and actually accelerate forward the great work that the teams have done in Barri Kalibao and sustainability already. And over the past years, the team has done tremendous improvements going from very early stage to where we are today to become a recognized leader in sustainability. We're deploying capabilities with global FMCGs through all the different programs and take that forward and really be an irreplaceable partner to our customers in this journey. In fact, they consider us as a thought leader for sustainability, and that's great. But most importantly, we're creating an impact to the society here. 270,000 cocoa farmers lifted out of poverty. 81% of farmers sourced from are empowered to protect children's rights. We have an 18% reduction in carbon intensity per ton since 2016. And nearly half of all our products are fully sustainable products. So we are really unlocking and creating an impact to the society here. And that's what we ought to be doing and that's what we're doing and we'll take forward. For us, this is getting better every day. This is a never-stopping story. We learn more about it, we see new opportunities in the different regions that we operate in, we understand better the challenges of the farming growing population, and we find ways to better create an impact. And that's what we will continue doing going forward. So when you think about it, we'll continue to advance end-to-end traceability as one of the key pillars in the next level program to make sure that people understand what is actually in my chocolate that I have here on the table. Where is it coming from? It's something that is, I would say, normal in the pharmaceutical industry, when you think about how they trace ingredients that go in the final product. And it ought to be normal in our industry, and that's what we're investing against. We will deliver on our sustainability targets that we have set ourselves and that we're working on with our customers, and we will, and that is an important aspect, I mentioned that earlier, power the future of sustainability where we know so much about it already. We have a massive opportunity to inspire modern cocoa farming practices. As you will know, we have a pilot farm in Ecuador with about 600 hectares. We have learned how to quadruple the yield in that farm compared to what is happening on our core sourcing countries in Western Africa. And so for us, that is a great opportunity and an obligation to do much more with that knowledge. Don't want to be farmers, but we can inspire modern farming, and you will hear more about that as we go forward with Stephen. So all in all, in my mind, it is very clear. This is a battleground. We will win. It's a clear priority for us that we embed in all of our game plans as we go forward. Combine traceability with sustainability, deliver sustainability impact. Those two things have come together. We produce sustainability. We don't buy sustainability. And that's a key promise that we give to our customers and to ourselves and to the society that we have. Now, technology will unlock that opportunity and that's what we're convinced about and that's why we're investing into next level. So I've now taken you and we've taken you with Wamsi through our growth priorities underpinned by sustainability. But when we look back coming out of the visa incidents and going through last year, it was very clear that what got us here may not be good enough to unlock the full potential for Barry Caliban. And so we were looking at our entire value chain to think through where can we improve? What are the things we need to propel forward? And what are the things that maybe we need to stop doing? And that's what we've done with about 50 leaders around the world since May, leading up to the announcement of Next Level Program in September. So we worked with them intensively on our portfolio, on our go-to-market strategy, on the way we operate internally. And it became very clear that we have an opportunity to set up, invest in new capabilities while holding on and propelling the existing good capabilities to actually take us on the next life cycle with Bari Kalibao. We're operating in a very attractive market. And then it's also great to see that we have great pockets of excellence. We do things really well in one place of the world, but because of the setup that we had with some of the regions and fully embedded organizations in the regions, we didn't scale that opportunity into another place. We may have done a great innovation in Brazil that never reached China. That's something that obviously we want to change as we establish our end-to-end supply and development organization. So we're creating, with the investment program Next Level, the platform to unlock the full potential of Barik Khalifa at a higher margin and cash contribution going forward. And as Wamsi was mentioning earlier, it's really simple about two things. getting closer to the markets, which is, in fact, where Barik Kalibao was coming from. Really close to the markets and the customers. Food is local. But on the other side, simplify and digitize Barik Kalibao's machine, if you want, or operating room. And we do that with various steps. So closer to markets and customers, strengthen our focus on the country cluster, Elevate gourmet and specialties from startups to the general mix. What does that mean? That means that in any country cluster, we would like our general managers to actually offer all of the portfolio of Barry Callebaut to the various customers we have in these country clusters. That's what we mean with that. Food is local. The gourmet distribution strategy has got to be different in Poland versus in China versus in other places. That's why we take that out of a centralized setup that we had before into a very local setup. And on the other side, we want to scale faster the innovation as well as our cost. And hence, we have created our global supply and development organization under Clemens Wörle to really take up that opportunity to scale cost better and scale innovation faster to our customers. And then on the other side, simplify and digitize B.C. We will eliminate complexity that does not matter to our customers. That may be brands, that may be SKUs, that may be things that are not so close to our core chocolate and chocolate compound solutions that we really would like to operate in. We will reset our manufacturing footprint for best-in-class service and quality and establish digital platforms that boost speed to market and the connectivity with our customers. So let me unpack that a little bit more. So country clusters in the future will operate, and we did not have that before. We had it in some regions, but again, we didn't scale it globally. And we know it actually creates an impact because food is so local. We will continue really with a focus on local excellence and ask our general managers by country cluster to develop their go-to-market strategy that serves them best to gain exponential market share growth in their respective countries across all of BC's solutions. But we're combining that with what we call a global commercial excellence organization. There is the scaling aspect of really understanding how to do distributor contracts, understanding how to put SLAs into service contracts with customers, how do we actually drive pricing on a global level in the right way, and how do we drive portfolio choices on a global level in the right way. So we're combining the local go-to-market with a commercial excellent unit, by the way, that is run by one of our legacy GMs, Paul Halliwell, who has just been leading over the past four to five years, I think. Our Latin America business, he's been in Asia before and has run businesses in Europe before. So an expert from within the company that knows how to put best practice at work commercially, and that's what we will be doing there. But then we're combining it to Vamsi's point with modern marketing concepts. We need to move to lead marketing, which we're not applying in BC. It's something that's very standard in the B2B industry, and we'll obviously attack that space aggressively going forward. On Clemens' area, we will scale globally with the customer supply and development organization in order to truly optimize our capital asset allocation globally so that we really understand where to put capacity, where we built the respective solutions that we have to have by factory to really meet our customer needs. We will step change our service levels as we go into this and put a new planning organization in place globally, accelerate speed to market of customer relevant innovation. And we literally do that in two streams and I'll speak to that in a minute. But for us, this establishment on one side of going closer to markets on the commercial side, but scaling innovation faster to our customers globally is a massive opportunity that we will unlock with our global customer supply and development organization. Now, already in May, we started to put technology to work to figure out where should we have capacity for the customers that we have in a certain region, which production lines should we have for those customers in a certain place. And we're obviously finding that we can optimize our manufacturing footprint on a global level. It's very obvious. We haven't done that in the past because we had regional setups where the regions would oversee the manufacturing sites. And as one example, we're shipping today from Łódź in Poland to Pakistan, which obviously is a great opportunity for us when you think about how we leverage global tech, global platform and manufacturing platforms and scale the assets that we have invested in certain places for a global business footprint. It will of course improve our safety and quality, but it will also allow us to really get going with end-to-end traceability that is so important for the sustainability expectations of our customers. So we are clear that we will see operational improvements that will be significant coming out of the global end-to-end customer supply and development organizations. We will double digit improvements on our on-time and full delivery. We will double digit decreases on our cost per ton. We see double digit run rate capex reductions as we go to a better footprint and scale improvements. capital investments more effectively, and we see through continuous improvement, mid-single-digit cost out per annum actually come to the bottom line. Better scalability, better delivery, clearer accountabilities, and fewer duplications. On the innovation side, we're thinking about two things. As I mentioned before, we invent great things in Brazil, but we'll never tell China that we've invented something great in Brazil. So there's a great opportunity by product segment to think about global product leadership that makes sure that what we have invented in one place comes to another place. And then On the other side, we need to be very close with what we will call our technical services organization to be by region available for our customers to apply chocolate, our chocolate, more effective on their production lines. And that's the two trajectories that we see with our global customer innovation organization as we scale innovation faster globally across the product segments, but we're local with our technical services teams to help our customers run our chocolate more effectively on their production lines. Technology, again, will play a huge role here. Today, and we'll speak to that later, we're lacking opportunity to visualize the capabilities we have across BC, and that obviously is an investment element in our next level investment program. in that we'll focus on the portfolio that matters most for our customers. And as I mentioned today, we have a very vast historically grown portfolio of SKUs and brands across BC where some customers actually struggle to find the differentiation points. What is the price tier? What are the benefits? We have a great opportunity to make that more transparent to them. And that's what we're doing in two steps. First, in a bit of a house cleaning exercise where we just look at our portfolio and we let go of the portfolios and SKUs that do not matter to our customers today. But then more importantly, create a product lifecycle model that allows us to develop those innovations at scale and make sure we drive the right portfolio for our customers by local market. Another element in our next level program will be our global business services. So as we have, and I want to maybe give that one example, Steven, we have great initiatives underway where, for example, we establish a great operating process in cocoa that then isn't scaled into chocolate. That doesn't make sense. If we know that there's a good process to be standardized and digitized, and we have best practice process already in one place of BC, we should scale that. And that's exactly the purpose behind global business services. We will standardize and then automate the business processes that we know are best practices in one size, in one part of the world, and make that the global standard for BC globally. It will clearly open up much better service for our customers, but also smoothen the way how we operate inside of Bari Kalimba and obviously take a ton of cost out. Last but not least, the BC Next level program will not work if we don't work with our organization. We have a great company and great talent in our business. We really know how to make great chocolate and I'm really excited to see that. But we need to become tech enabled and agile. And I think that's the opportunity going forward. And that's a journey we'll take our organization on over the next years. There's technology at scale. All of our employees are using technology as private consumers, if you want so. We should put that at work as we go forward with the organization. And that's what we will be doing across the world. I must tell you, I don't think we have yet understood the opportunity that data management will reflect for Barikalibao, but we're going after that as we speak. So to really unlock our understanding from the beans and the farms all the way to the customer and the other way around is in my mind an untapped opportunity that we haven't even articulated to you today. But we think that that is a massive opportunity for us to go after and we will do that as we start into our next level program. So with that, let me open the next chapter for our discussion here. What is the financial journey that we're actually going into? So you've seen already the announcements this morning. And what I want to do is take you through this curve of development that you see on the right hand side. So literally, as we're starting to embark into this fiscal year, as we've told you, we're already starting with the investments in our next level program to get closer to markets and simplify and digitize Barik Kalibao. We will already in this fiscal year see the first benefits falling to the bottom line of that activity. We will then go into 24-25 where we'll see an acceleration of growth as we have now our leadership team in place, the country managers are in place, they put their organization at work as we go into local customer management. And then really we see that unlocking growth as we go into 24-25, but more so see significant EBIT contribution from the next level Synergy product falling through to the bottom line. That will carry on as we go into 2025-2026, both with a higher growth rate, but importantly also there still seeing contribution from that growth to the bottom line as we have created a better scalable engine, but on the other side also having this one-time impact of the fall-through of our cost synergies. As we've explained this morning, 75% of our synergies we're expecting to fall to the bottom line over that period so that we'll see a significant step up that takes us in the direction of a 10% EBIT margin business. That's a journey that we're on. As we mentioned to you, during the transition period, our dividend per share will not be lower than the prior year. We're giving you guidance for next year because obviously it's a bit, you know, depending on what are the things happening over the next years, also with the social dialogue that we have already started with our European Works Council, obviously very important as we unlock our manufacturing footprint and as we're getting ready to shift roles into the global shared service center and automate and digitize those opportunities. But for next year, we are guiding to a flat volume growth. And the underlying growth actually in there is net of actions taken part of the next level program. So we're already here anticipating a reduction of growth because we take SKUs out as we're streamlining our portfolio and see some slight underlying growth already coming into the business in this fiscal year. More importantly, we see bottom line impacts already coming through the activities index level program falling to the bottom line this fiscal year. Next, we are on the EBIT side, clearly also seeing that we have benefits coming there, and we are aiming to push forward to see some of these benefits that are, despite the headwinds of SKU rationalization, allowing us to already see a good contribution on EBIT for our next level program here. That is excluding the one-time benefits. Expenses that we have obviously with the next level program, we anticipate OPEX expenses of about 110 to 130 million to go into this fiscal year and then obviously followed into 24 with further investments. And we think that on the CAPEX side, on our standard burn rate of 280 million, we anticipate roughly 90 to 110 million additional capex as we're resetting our factories to really make sure they are fit for quality, but also we're realigning our manufacturing following the network study that we have done. So with all of that post-transition, we will deliver attractive, profitable, long-term growth objectives of low single-digit plus to mid-single-digit on the volume growth side, and mid-single-digit plus to high single-digit on the EBIT side. So we're building a stronger cash-generating and EBIT-contributing machine versus what we had before, but we also have this one-time step up in the transition period. And that will lead us to the 10% margin ambition that we have set out for the company to go after as we're pushing forward over the next years here. Now to just give you that background again, the 250 million of cost synergies represents about 15% of our cost excluding raw materials. That's roughly the range that we're talking about. We will invest significantly in areas that matter most to our customers, but the cost savings will come from reduced cost to serve by streamlining our factories and improving our performance. Second, by eliminating complexity in our supply chain. And then third, streamlining our SG&A, strongly leverage our global business service, and automating and digitizing our workflows. That's the three areas where we see the cost savings actually coming through. 80% of those synergies we would like to hardwire by March 2025. For me, that is very important, not just for you, for the financial interested community, but also for my organization. I think it is key that people see an end of this journey. They need to understand that we would like to get this work done to the largest degree by March 2025. The synergies will then roll into the bank later, but we need to make sure that we've announced the factory changes that we do, that we have found all the agreements with the European Works Councils, that we found all the necessary steps and capabilities so that we can really roll these savings in from there on. But we want to hardwire them to 80% by March 2025. We're investing 500 million in this business. That is a unseen number that we are investing into Barikalibao's future. And again, as I had discussions outside in the room here, this is not to fix issues from the past. This is to set sales for the next life cycle of growth journey of Barikalibao. That's what we're investing against. We'll do that decisively in areas that are most important for our customers. And the things that you see here is about 290 in OPEX And we will have net capital investments of 210 in areas that are most important, be that the IT programs that we push forward, reset of the manufacturing optimization and upgrades, digitizing BC, and traceability and segmentation. So that the net investment is 500 million as we go forward. So in that, we can see that we have OPEC expenses 290, net capital investment of 500, capital investments partially offset by 280 million in capital benefits. And what you can see there is that the majority of the 280 in capital benefits are driven by working capital improvements as we're creating a better end-to-end supply chain, we have better visibility on our planning, that will obviously unlock a massive opportunity as we go forward. The operational step-up drives capital benefits significantly, and they come from four areas. Improved planning, lower cost to serve, lower capital needs, and driving continuous improvements. And that will support about 280 million that we expect from better capital efficiency rolling into the bend with this one-time program that we're running with BC Next Level. So to wrap it up, we will go in a journey with you and we will come back in April to give you an update on what we have achieved in the next six months. But we're already well underway. We have already put our executive leadership team in place. We've already deployed the next level program to our top 200 leaders globally. We're working now to announce our new organization to get live down to level 3 by January 1. And we will then cascade further into 23-24 to execute on our next level investment program. and unlock the opportunity as we push into 2024-25 where we see return back to growth and significant EBIT contribution coming to the bottom line. That will carry on in 2025-26 as we will deliver on our long-term growth objective. So I want to stop where I started. We have a clear opportunity for disproportionate growth to grab significant market share in the future in the chocolate ingredients markets. We have the right assets and global scale in Bari Kalibao. We are now funded with our next level program and we now have also the leadership capabilities, as I was introducing the colleagues, to really build a more scalable and tech-enabled platform for Bari Kalibao, for our customers, but also internally. And we see clear tailwinds for growth and drive stickiness and relevance for our customers, as many of our customers are suffering from some of the regulatory requirements that are put to them. to unlock a chocolate ingredients opportunity. They do look for that global scale of to help them navigate through this more complex regulatory environment, and that should drive disproportionate market share growth for us. So with that, thank you very much. We'll do a short break, as Christian was mentioning earlier, and very much looking forward to your questions, both from the room as well as online after that. Thank you.