Ferré & Consulting Blog (English Version)

Kraft Foods Inc. announced plans to change its corporate name to Mondelez International Inc. «Mondelez» (pronounced mohn-dah-leez) is a newly coined word that evokes the idea of «delicious world». «Monde» derives from the Latin word for «world» and «delez» is a fanciful expression of «delicious». In addition, «International» captures the global nature of the business.

As previously announced, Kraft Foods is dividing to create two industry-leading public companies before the end of 2012: a high-growth global snacks business and a high-margin North American grocery business. The North American grocery company will become Kraft Foods Group Inc., retaining the Kraft brand for its corporate identity and as the brand for many of its consumer products. As a result, the global snacks company will require a new name when it launches later this year.

«The Kraft brand is a perfect fit for the North American grocery business and gives it a wonderful platform on which to build an exciting future», said Chairman and CEO Irene Rosenfeld. «For the new global snacks company, we wanted to find a new name that could serve as an umbrella for our iconic brands, reinforce the truly global nature of this business and build on our higher purpose – to ‘make today delicious’. Mondelez perfectly captures the idea of a ‘delicious world’ and will serve as a solid foundation for the strong relationships we want to create with our consumers, customers, employees and shareholders».

«It is quite a job for a single word to capture everything about what we want the new global snacks company to stand for», said Mary Beth West, Executive Vice President and Chief Marketing Officer. «I am thrilled with the name Mondelez International. It is interesting, unique and captures a big idea – just the way the snacks we make can take small moments in our lives and turn them into something bigger, brighter and more joyful».

Last fall, the company invited employees from around the world to suggest names for the new global snacks company. As part of this co-creation process, more than 1’000 employees participated, submitting more than 1’700 names for consideration. Mondelez International was inspired by separate suggestions from two employees, one in Europe and another in North America.

What happens next?

The Board of Directors has approved and will submit an amendment to the company´s Amended and Restated Articles of Incorporation for shareholder approval at the company´s Annual Meeting of Shareholders on May 23, 2012. If shareholders approve the amendment, the company expects the new name to become effective when the global snacks company launches before the end of 2012.

The company has also reserved the stock symbol «MDLZ». If the name change amendment is approved, the company intends to request that its common stock trade under this new stock symbol after the spin-off. The stock symbol for the North American grocery company will be announced at a later date.

Until the new companies launch, however, the name and stock trading symbol for Kraft Foods Inc. will not change. In addition, the name change will not in any way affect the validity or transferability of any currently outstanding stock certificates and the company will not ask shareholders to surrender for exchange any Kraft Foods Inc. certificates presently held by them.

Source: Bakenet:eu

Companies Kraft Foods, Mondelez International

Grupo Bimbo  S.A.B. de C.V. reported results for the fourth quarter and full year ended December 31, 2011. Sales in the fourth quarter reflected three key factors: i) double-digit organic growth; ii) the integration of the Sara Lee operations in the United States and Spain and Fargo in Argentina; and iii) the consolidation of independent operators (IOs) in the United States, as per below. Net sales rose 36,8 percent over the year ago quarter to 41,6 billion MXN, with increases of 14,5 percent in Mexico, 59,5 percent in the United States and 44,6 percent in Latin America.

Organic growth was 14,9 percent. Higher raw material costs on a comparative basis combined with the impact of the Peso (MXN) devaluation on the Mexico operation resulted in a 90 basis point contraction in the consolidated gross margin. At the operating level, gross margin pressure, integration costs and the expected dilution in the US following the Sara Lee integration were further exacerbated by a goodwill impairment charge in Brazil resulting from longer than expected ROI time-frames for certain investments. As a result, there was a 1,8 and 2,2 percentage point decline in the operating and Ebitda margins, respectively.

As of Q4/2011, the Company´s results reflect the consolidation of the IOs in the United States acting as legal entities, which are subject to the Variable Interest Entity (VIE) accounting rules under US GAAP, Mexican GAAP and IFRS. Consolidation was not required prior to 2011 because the impact was deemed immaterial; however, a growing number of IOs have converted to legal entities from sole proprietorships and the Sara Lee acquisition has significantly increased the number of IOs acting as legal entities. It should be noted that Sara Lee had consolidated their IO VIEs for many years. This consolidation is reflected across the entire P+L. However, it has no impact on the net majority income, as the IO effect is offset in the non-controlling interest line. While the current period reporting shows the impact of a full year of IO consolidation, going forward it will be reported on a quarterly basis.

Net majority income of 1,0 billion MXN reflected performance at the operating level and a higher effective tax rate. Net margin contracted by 2,1 percentage points to 2,4 percent.

Mexico

Net sales in the fourth quarter totalled 17,3 billion MXN, a 14,5 percent increase from the year ago period. Growth was driven equally by healthy volume gains across the portfolio, with out-performance in the bread, cookies, sweet baked goods and salted snacks categories, as well as by pricing initiatives taken over the course of the year. All channels registered good sales growth over the year ago period and in particular the modern channel. Sales for the full year rose 11,2 percent to 64,4 billion MXN.

United States

Net sales totalled 19,3 billion MXN in the quarter. Contributing to the 59,5 percent rise over the year ago period was i) the Sara Lee acquisition (32,0 percent); ii) the annual contribution from IOs (14,3 percent); and iii) organic performance driven by favourable FX rates and a limited decline in volume that was fully offset by pricing initiatives over the course of the year (13,2 percent, with 9,9 percent attributable to FX). It should be noted that volume decline was lower than in previous quarters. On a cumulative basis, sales rose 12,4 percent to 53,8 billion MXN, driven by the acquisition (8,1 percent), IOs (3,6 percent) and organic growth (0,7 percent).

Latin America

Net sales rose a strong 44,6 percent from the same quarter of last year, to 5,8 billion MXN, reflecting higher volumes across the region as a result of the Company´s ongoing market penetration efforts combined with better prices in each country (28,5 percent) and the integration of Fargo in Argentina (16,1 percent). On a cumulative basis, sales in the year totalled 18,6 billion MXN, a 30,7 percent rise over 2010 driven primarily by organic growth (25,6 percent), with the contribution from Fargo in the final months of the year (5,1 percent).

Iberia

Results reflected 28 days of consolidated sales.

Gross Profit

Consolidated gross profit in the quarter rose 34,3 percent from the year ago period; however, gross margin contracted by 90 basis points to 51,0 percent as a result of commodity pressures and the impact of the Peso (MXN) devaluation in Mexico. This was somewhat offset by continued improvement in the United States and good performance in Latin America that more than offset start-up costs at the new Brasilia plant. For the full year, the consolidated gross margin fell by 1,6 percentage points as a result of higher commodity costs in all regions, although in the United States this was fully offset by performance in the fourth quarter, reflecting pricing initiatives in the first half of the year.

Operating Expenses

Operating expenses as a percentage of sales increased 90 basis points in the quarter to 44,0 percent. This was primarily due to: i) investments related to expansion and market penetration efforts in the United States and Latin America; ii) the integration of Sara Lee operations in the United States and Spain, which have higher expense structures; and iii) a non-cash goodwill impairment charge of 268 million MXN in Brazil. Nonetheless, operating expenses in Latin America, as a percentage of sales, were lower than in the year ago period due to an extraordinary expense in 2010 for legal contingencies in Brazil. On a cumulative basis, operating expenses comprised 43,1 percent of sales, unchanged from 2010.

Operating Income

Operating income in the fourth quarter of the year rose 8,4 percent, while operating margin declined 1,8 percentage points as a result of gross margin pressure, the aforementioned goodwill impairment charge and the integration of new operations. On a cumulative basis, consolidated operating income for 2011 declined 4,8 percent, with a 1,6 percentage point contraction in the margin to 8,1 percent.

On a regional basis, operational efficiencies in Mexico, mainly in distribution, combined with volume gains helped to absorb fixed costs and partially offset gross margin pressure, driving operating income up 10,5 percent in the quarter and limiting the decline in margin to 60 basis points or 16,4 percent. Similarly, the aforementioned efficiencies over the course of the year contributed to the 2,3 percent rise in full year operating income and minimized contraction in the margin, which declined 1,1 percentage points to 12,7 percent.

In the United States, operating income rose 6,4 percent with the integration of the Sara Lee operation and stronger performance at the gross margin level. However, as expected, there was some dilution in the margin due to the integration and ongoing investments in expanding the distribution network. The operating margin was 3,3 percent, compared to 5,0 percent in the year ago period. On a cumulative basis, gross margin pressure in the first half of the year, investments in distribution, the start-up of a new production plant and the integration of the Sara Lee operation contributed to the 4,5 percent decline in operating income and 120 basis point reduction in the margin, to 6,6 percent.

In Latin America, strong sales growth and healthy gross margin performance contributed to the 3,5 percentage point improvement in the quarterly operating margin. It should be noted that the comparative figures include a non-cash provision in both years attributable to the Brazil operation, of 346 million MXN in 2010 for legal contingencies and 268 million MXN in the current quarter as a goodwill impairment charge. This led to a 480 million MXN operating loss in the current quarter despite strong performance at the gross profit level. For the full year, continued pressure from higher raw material prices, ongoing investment in market penetration and the aforementioned goodwill impairment charge led to a 805 million Peso (MXN) operating loss in 2011 compared to a 345 million MXN loss in 2010.

In Iberia, integration costs and the restructuring of the operations led to a 99 million MXN operating loss for the one month of the quarter in which results were consolidated.

Comprehensive Financing Result

Comprehensive financing resulted in a 570 million MXN cost in the fourth quarter, compared to a 674 million MXN cost in the same period of last year. This decrease is due to lower interest expense, with an average financing cost of 3,6 percent compared to a 6,2 percent in the same period of 2010. On a cumulative basis, comprehensive financing resulted in a 1’313 million MXN cost in 2011, compared to a 2’623 million MXN cost in the same period of last year. This decrease was attributable to: i) lower interest expense due to the refinancing of the Company´s debt and conversion to nearly all Dollar-denominated debt, resulting in an average 4,2 percent financing cost in 2011 compared to 6,7 percent in 2010; and ii) an exchange gain of 629 million MXN, compared to a 94 million MXN exchange loss on the previous year, mainly as a result of the Dollar-denominated cash holdings from 3Q2011 used to acquire the Sara Lee North American Fresh Bakery business.

Net Majority Income

Despite lower financing costs in the period, net majority income in the fourth quarter declined 26,2 percent compared to the fourth quarter of last year, to 1,0 billion MXN, while the margin contracted 2,1 percentage points to 2,4 percent. This reflected operating performance and the higher effective tax rate on a comparative basis, with a deferred tax benefit registered in 2010. For the full year, net majority income declined 1,2 percent, while the margin contracted by 60 basis points to 4,0 percent.

Operating Income plus Depreciation and Amortization (Ebitda)

Ebitda in the quarter rose 14,8 percent to 4,6 billion MXN, while the margin contracted 2,2 percentage points to 11,0 percent. On a cumulative basis, Ebitda declined 1,9 percent for the year and the margin declined by 1,9 percentage points. Results in both periods largely mirrored performance at the operating level.

Financial Structure

As of December 31, 2011, the Company´s cash position totalled 3,9 billion MXN, compared to 3,3 billion MXN in 2010.

Total debt at December 31, 2011 was 47,1 billion MXN, compared to 33,2 billion MXN in the year ago period. The 2011 figure includes: i) the debt secured to fund the Sara Lee acquisitions in the United States and Spain; ii) the depreciation of the Mexican Peso (MXN) and iii) the 688 million MXN of debt attributable to IOs, with the aforementioned effect. The total debt to Ebitda ratio was 3,1 times compared to 2,2 times at December 2010.

It should be noted that the pro forma ratio for December 31, 2011 would be approximately 2,8 times if the prepayment of debt made in early 2012 and a full one year of non-synergized Ebitda of the recent acquisitions were factored in.

Long-term debt comprised 91 percent of the total; separately, 90 percent of the debt was denominated in U.S. Dollars, maintaining a natural economic and accounting hedge and in alignment with the Company´s strong cash flow in Dollars. Average maturity was 4,5 years.

After the close of the quarter the Company issued 800’000’000 USD of 4,50 percent notes due 2022 under the 144A Reg-S Rule and 5’000 million MXN Certificados Bursátiles (domestic bonds) in the local debt market with a 6,5-year tenor and a fixed rate of 6,83 percent. These issues increased the average maturity to 6,5 years with an average cost of debt of 4,5 percent. The Company used the proceeds from both offerings to refinance existing indebtedness.

Source: Bakenet:eu

Companies financial results, Grupo Bimbo

Cargill has unveiled plans to invest close to €20 million in its newly acquired cocoa and chocolate facilities in Berlin, Germany.

This investment will enable Cargill to upgrade, strengthen and expand its cocoa and chocolate capabilities in Germany in order to offer customers superior choice, quality and market reach.

Cargill plans to upgrade both production sites – based in Lichtenrade and Reinickendorf in Berlin – which will increase the capacities of specific product lines and strengthen its ability to provide a high quality cocoa and chocolate portfolio. These expansions will also enable the efficient integration within Cargill’s global network and optimise product flows to customers.

“This investment highlights Cargill’s ongoing commitment to helping our customers meet the growing consumer demand for chocolate particularly in Germany and Eastern Europe,” said Jos De Loor, Managing Director, Cargill Cocoa & Chocolate. “By upgrading, expanding and integrating these two production sites into our wider cocoa and chocolate network, we are better placed to serve our customers and seamlessly provide them with the best quality product from the most appropriate site.”

This investment maintains Cargill’s cocoa and chocolate growth strategy in Europe and the company’s ability to serve its customers. It will continue to enhance Cargill’s leading position in Germany, the largest chocolate market in Europe and will create two state-of-the-art cocoa and chocolate facilities to better serve customers in the bakery, confectionery and ice-cream categories with a broad portfolio of chocolate, cocoa powder, cocoa liquor and cocoa butter.

Cargill’s cocoa and chocolate facilities in Germany are part of its wider cocoa and chocolate network in Western Europe, Co’te d’Ivoire, Ghana, Brazil, Canada and the USA.

Cargill has been supplying quality cocoa and chocolate products to customers around the world in the chocolate, confectionery and food industry for over 50 years.

Chocolate, Companies Cargill, cocoa, manufacturing facilities

The Hershey Company has announced that three of its manufacturing facilities in Pennsylvania US have achieved ‘zero-waste-to-landfill’ (ZWL) status as a result of the company’s ongoing efforts to enhance sustainability through recycling and waste management.

“We are proud of our role as stewards of the environment and of our progress in eliminating waste from our operations,” said Terence O’Day, senior vice president of Global Operations at The Hershey Company. “We achieved ZWL at these facilities through a rigorous process of eliminating waste, recycling and converting waste to energy. Our employees understand the importance of sustainability across our company and are working together to reach our reduction goals.”

The Hershey Company continues to improve its recycling and energy efficiency programmes at all of its US plants. The company has added biogas capturing equipment at four of its US facilities. The equipment captures biogas produced through onsite wastewater treatment and converts it to energy, decreasing the company’s reliance on fossil fuels.

Source: Confectionery Production

Companies Hershey Company

Barry Callebaut , the world´s leading manufacturer of high-quality cocoa and chocolate products, has signed an agreement to acquire 100 percent of the privately owned Spanish nut manufacturer La Morella Nuts S.A. La Morella Nuts is known as a leading nut specialist producing a variety of high quality nut-based ingredients for the food industry in Europe. The company has a wealth of knowledge and experience in the nuts business with regards to sourcing, processing and innovation that allows for a wide range of products.

Mr. Joaquim M. Barriach, La Morella Nuts S.A. CEO

The acquisition of La Morella Nuts underlines Barry Callebaut´s strategic intention to further strengthen its market position in adjacent products for both its Gourmet + Specialties Products and its Food Manufacturers Products business. Many of Barry Callebaut´s customers are asking for combinations of chocolate and nut products. With the acquisition of La Morella Nuts, Barry Callebaut will become a European leader in nut products extending its existing nut offerings with a wide spectrum of high-quality products, including almonds and hazelnuts, as well as specialty nuts like cashews, pecans, pistachios, macadamia and others.

La Morella Nuts manufactures about 8’000 tonnes of nut specialties per year and generated sales revenue of approx. 40 million CHF (33 million EUR) in 2011 with 90 employees. The company was founded in 1986 in Reus, Spain. La Morella Nuts has two state-of-the-art plants in Castellvell del Camp and Reus, where its headquarters are located. La Morella Nuts will be integrated in Barry Callebaut´s business Region Europe as of January 2012.

Companies Barry Callebaut, La Morella Nuts

Alfredo Ortiz, vice-president of foodservice national account sales at CSM Bakery Products , was recently elected to the board of directors for the International Food Manufacturers Association (IFMA ). «We are very proud to welcome Alfredo Ortiz to the IFMA Board of Directors. His innovative thinking and enthusiasm make him an ideal complement to the individuals who guide our association and lead our committees», said Larry Oberkfell, president and Cief Executive Officer, IFMA.

Prior to joining CSM Bakery Products, Alfredo was a consultant at Boston Consulting Group where he worked with various large multi-national customers such as Kraft Foods, Diageo and Samsung. Alfredo also founded Grupo MAS, a business strategy and development consultancy targeting the US Hispanic market which was subsequently acquired by the Zyman Group. His previous work experience includes positions with specialized consultancy firms and the consumer product industry working for companies such as Kraft, Nestle, PepsiCo and Georgia-Pacific.

Source: Bakenet:eu

Companies CSM Bakery Products

The European Commission has cleared under the EU Merger Regulation the proposed acquisition of the Spanish supplier of the baking industry Panrico SAU by US based alternative investment manager Oaktree Capital. The Commission found that the transaction would not raise competition concerns because there are no overlaps between the parties´ activities.

The proposed transaction does not result in horizontal overlaps between the parties activities, since Oaktree has no company in its portfolio that is active in the same markets as Panrico. The Commission examined the vertical relationship between one of Oaktree´s portfolio companies Nordenia with activities in flexible packaging and Panrico´s activities in bakery products.

However, due to Nordenia´s low market share in the upstream market for flexible packaging for bread, biscuits and cakes, the merged entity would lack the ability to shout out competitors from supplies. Moreover, the Commission´s investigation confirmed that the proposed transaction would not lead to any material change in the structure of the market.

The Commission therefore concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. The transaction was notified to the Commission on 16 November 2011.

Oaktree is a global alternative and non-traditional investment manager engaged in businesses in a variety of industries, including packaging, manufacturing, healthcare, clothing, travel, real estate, exploration and mining, food, telecommunications, media and entertainment. Barcelona-based Panrico is active in the manufacture and wholesale distribution of bread, pastries and biscuits in Spain and Portugal.

Source: Bakenet:eu

Companies Oaktree, Panrico

Opening in Xi’An, China marks milestone in Dunkin’ Donuts’ worldwide growth; Dunkin’ Donuts also celebrates additional new restaurant openings this month around the world, including locations in Bogota, Colombia; Riyadh, Saudi Arabia; and Kingsland, Ga.

Dunkin’ Donuts has more than 80 restaurants in Greater China. The newest restaurant in China, the 10th in Xi’An and 10,000th in the world, is being opened by franchisee Shannxi Stellerich Food & Restaurant Management Co., Ltd. The opening of the 10,000th Dunkin’ Donuts location will be celebrated in Xi’An with much fanfare, including a grand opening ceremony complete with local dignitaries, a traditional Chinese lion dance and a jazz band.

“We are proud to have opened the world’s 10,000th Dunkin’ Donuts restaurant in China, a country which we believe offers tremendous opportunity to both our Dunkin’ Donuts and Baskin-Robbins brands,” said Nigel Travis, CEO of Dunkin’ Brands and President of Dunkin’ Donuts. “From its beginnings as a single restaurant in Quincy, Mass., Dunkin’ Donuts is today a global brand located in 32 countries around the world. Our geographic diversity is truly a testimony to the fact that customers everywhere, from China to Saudi Arabia, Colombia and Georgia, appreciate what Dunkin’ Donuts offers – high quality food and beverages served in a friendly, fast environment at a great value.”

During the first nine months of 2011, Dunkin’ Brands, Inc., the parent company of Dunkin’ Donuts and Baskin-Robbins, opened approximately 480 net new locations globally, including 230 net new Dunkin’ Donuts restaurants. Dunkin’ Brands has more than 16,500 restaurants in 56 countries and is one of the largest U.S. quick service restaurant (QSR) companies internationally by unit count.

Dunkin’ Donuts has maintained steady global growth over the past several years, opening new restaurants in the United States, the Middle East, Asia-Pacific, Russia, and Latin and South America. Earlier this year, Dunkin’ Donuts announced an agreement to enter India and plans to open more than 500 restaurants in the country over the next 15 years. Last month, Dunkin’ Donuts surpassed 100 restaurants in Saudi Arabia.

“Because of our strong brand recognition, our differentiated products, innovative marketing and nearly 100 percent franchise business model, we believe Dunkin’ Donuts has significant growth opportunities both in the U.S. and abroad,” concluded Travis. “We are delighted to celebrate the opening of our 10,000th Dunkin’ Donuts restaurant, and look forward to many more openings to come both in existing and new markets around the world.”

For more information about Dunkin’ Donuts, please visit www.DunkinDonuts.com or follow us on Facebook ( www.facebook.com/DunkinDonuts ) and Twitter ( www.twitter.com/DunkinDonuts ).

About Dunkin’ Donuts Founded in 1950, Dunkin’ Donuts is America’s favorite all-day, everyday stop for coffee and baked goods. Dunkin’ Donuts is a market leader in the regular/decaf coffee, iced coffee, hot flavored coffee, donut, bagel and muffin categories. Dunkin’ Donuts has earned the No. 1 ranking for customer loyalty in the coffee category by Brand Keys for five years running. The company has 10,000 restaurants in 32 countries worldwide. In 2010, Dunkin’ Donuts’ global system-wide sales were $6 billion. Based in Canton, Mass., Dunkin’ Donuts is a subsidiary of Dunkin’ Brands Group, Inc. DNKN +2.05% . For more information, visit www.DunkinDonuts.com .

Source: Dunkin’ Brands

Companies Dunkin' Donuts

The Swedish confectionery companies Cloetta and Leaf have announced a merger of the two companies. The combined company will take the well established name of Cloetta and become a leading Swedish confectionery company with a strong base in the Nordic region as well as in Italy and the Netherlands. The new Cloetta will manage a strong portfolio of iconic brands, long established brands including Kexchoklad, Läkerol, Polly, Ahlgrens bilar, Plopp, Malaco and Cloetta in Scandinavia, Jenkki in Finland, Sperlari and Saila in Italy and Red Band and Sportlife in the Netherlands.

Source: Confectionery Production

Companies Cloetta, Leaf

Grupo Bimbo  announced that it has completed its acquisition of Sara Lee Corporation´s  fresh bakery business in Spain and Portugal for 115 million EUR. The acquisition includes bread, pastries and snacks produced under the Bimbo, Silueta, Ortíz, Martinez and Eagle brands, among others.

The business employs more than 1’900 associates, operates seven production facilities and manages more than 800 distribution routes. In fiscal 2011, the business generated net sales of 408 million USD. This acquisition positions Grupo Bimbo as the leading branded bread company on the Iberian Peninsula and enhances the Company´s international growth with a strong and established bakery business.

This transaction was funded with cash holdings. The financial results of Spain and Portugal fresh bakery business will be included in Grupo Bimbo´s consolidated results starting on December 04, 2011.

Source: Bakenet:eu

Companies Grupo Bimbo, Sara Lee Corporation