Nutreco Holding N'V' 2004 Annual Results

1
Nutreco Holding N.V.2004 Annual Results

• February 2005

2
Nutreco Business Highlights

• Strategic choices form solid base for further
  growth
• Good performance animal nutrition business and
  fish feed
• Disappointing results salmon, pork and poultry 
• Significant progress made with Rebalancing for
  Growth strategy
• Agenda set for 2005

3
Financial review
4
Nutreco Financial performance
EUR million
In 2004
2001
2002

• EBITA vs. 2003 3
• Exchange rate -2
• Price/Opex -13
• Volume 5
• Incidentals 13

2003
2004
EBITA
Net Sales
EBITA 2003 before impairment
5
Nutreco Net sales

• EUR million

2004
2003
?
Aquaculture
1,178 1,147 3 2,680 2,527
6 3,858 3,674 5
Agriculture
Exchange Rate
Volume
Price
Total
Aquaculture
8 0 3
-2 6 3
3 6 5
-3 0 -1
Agriculture
Total
6
Nutreco Net sales per activity
EUR million
2002
2003
2004
Compound feed
Premix
Breeding
Poultry
Pork
Fish
Fish feed
Agriculture
Aquaculture
Animal Nutrition
Fish and meat products
1,215 1,147 1,178
2,007 1,905 1,965
1,721 1,696 1,812
2002 2003 2004
2,595 2,527 2,680
7
Nutreco EBITA

• EUR million

2004
?
2003
Aquaculture
40.8 69.9 (42) 77.0 63.0
22 (16.9) (15.1)
(12) 20.5 - 121.4 117.8 3
Agriculture
Corporate
Book gain HMG
Exceptional items EUR million
2004
2003
Aquaculture - supply agreements and -
35.0 partnerships -
restructuring provision - (6.6) Agriculture
- supply agreements and 11.0 -
partnerships - restructuring
provision (3.0) (15.4) Total 8.0 13.
0
EBITA 2003 before impairment
8
Nutreco EBITA excluding exceptional items

• EUR million

?
2003
2004
Aquaculture
40.8 41.5 (2) 69.0 78.4
(12) (16.9) (15.1)
(12) 92.9 104.8 (12) 20.5 -
8.0 13.0 (38) 121.4 117.8 3

Agriculture
Corporate
Book gain HMG
Exceptionals
EBITA 2003 before impairment
9
Nutreco Agriculture
2004
Main activities

• Meat poultry and pork
• Feed compound feed, premix, feed specialities
  and companion feed
• Breeding

• Improved result compound feed in Benelux and
  Spain
• Result premix activities in line with 2003.
  More activities in selected growth areas
• Lower results poultry activities in
  Benelux and Spain
• Improving result for breeding
• Disappointing pork meat result

2004
2003
EUR million
Net sales
2,680 2,527 69.0 78.4 359
348 19 23
EBITA1
Capital Employed2
ROACE
1 EBITA excluding exceptional items 2 Average
capital employed
10
Nutreco Aquaculture
2004
Main activities

• Improved result of salmon farming in Europe
  as a result of restructurings and better
  salmon prices
• Salmon prices in America affected by lower
  demand
• Significant loss in Canada (EUR 15m)
• Good result in salmon feed, slightly
  lower due to overcapacity and increased
  competition
• Continuing good result in feed for other fish
  species

• Fish salmon and other fish species
• Feed feed for salmon and other fish species

2004
20031
EUR million
Net sales
1,178 1,147 40.8 41.5
748 831 5 5
EBITA2
Capital Employed3
ROACE
1 Figures 2003 before impairment 2 EBITA
excluding exceptional items3 Average capital
employed
11
Nutreco Net income
EUR million
20031
2004
EBITA 121.4 117.8 Amortisation goodwill
-6.9 -12.2 EBIT
114.5 105.6 Financial income and charge -27.7
-30.2 Tax -10.6 -14.5 Net result
76.9 56.0
Effective tax rate2 16.0 19.2
EPS 2.13 1.54Cash EPS 2.33 1.91
1 2003 before impairment 2 2004 Excluding book
gain HMG
12
Nutreco Strong Cash flow
2003
2004
EUR million
EBIT 115 106 Depreciation and amortisation
of (in)tangibles fixed assets 102 116 EBITDA 21
7 222 Changes in working capital 1 (8) Changes
in provisions (18) (8) Cash flow from business
operations 200 206 Interest paid (28) (31) Inc
ome taxes paid (25) (30) Other
movements (1) (1) Cash flow from operating
activities 146 144 Investment in fixed
assets (99) (67) Free cash flow before
acquisitions 47 77 Acquisitions/divestments 43 (4
7) Free cash flow 90 30
13
Nutreco Solid Balance sheet
2004
2003
2004
2003
EUR million
EUR million
Equity 604 536 Minority interest 14 14 Provisions
28 43 Deferred tax 12 20 Long-term
debt 434 396 Short-term debt 11 28 Creditors /
liabilities 656 666 1,759 1,703 Net
debt 309 392
Fixed assets - intangible 180 199 -
tangible 474 514 - financial 40 27 Inventories 42
1 398 Receivables 508 533 Cash and
equivalents 136 32 1,759 1,703
14
Nutreco Ratios
2004
2003

• Net-debt / equity 51 73
• Equity / total assets 34 31
  
• Net-debt / EBITDA 1.4 1.8
  
• EBITDA / interest 7.8 7.4
  
• Investments / depreciation 1.0 0.9
  
• EBITA / net sales
  3.1 3.2
• Aquaculture
  3.5 6.1
• Agriculture
  2.9 2.5

EBITA 2003 before impairment
15
Nutreco Reporting in 2005

• Nutreco will report in 2005 according to new
  organisational structure
• Net sales, EBIT, assets and liabilities
• After Closing Nutreco will account for its
  holding in Marine Harvest according to the equity
  method
• The shareholding in Marine Harvest and
  shareholders loan will be reported as financial
  fixed assets on the balance sheet
• Nutrecos interest will be reported in share in
  result of non-consolidated companies

16
Nutreco Impact IFRS

• Valuation of livestock
• From variable cost to full cost/fair value
• Pensions
• Impact defined benefit pension schemes
• In 2004 Nutreco implemented a defined
  contribution pension plan in the Netherlands
• Cumulative preference shares are classified as
  financial liability (Dutch GAAP equity)

17
Impact IFRS on equity per January 1, 2005
(excluding tax effects)
EUR million

• Equity Dutch GAAP 604
• - Impact livestock 65-70
• - Impact cumulative preference shares (68)
• - Impact pensions (45) -(50)
• - Impact other items 3-5
• Total IFRS impact (40) -(45)
• Equity according to IFRS 555-565
• The impact of IFRS on the result for 2005 is
  expected to be not material

18
Nutreco Pro forma (PL 2004 balance sheet
December 31, 2004)
HMG1
Nutreco 2004
Nutreco Fish Farming2
Nutrecopro forma
EUR million
Net sales
3,858 484 588 2,988 933 6 -18 105 1,104 44 481
1,0604 2.4 1.2 -3.1 3.5 8.4 13.6 -3.7 9
.94 18.1
EBITA

Capital employed
EBITA/SALES
ROACE
ROACE5
1 HMG divested in 2004 2 Proposed merger with
Stolt Seafarm3 EBITA excluding incidentals 4
Including pro forma investment in Marine Harvest
Joint Venture at book value Nutreco Fish
Farming 5 ROACE excluding pro forma investment
in Marine Harvest Joint Venture
19
Nutreco Strategy
20
Nutreco Strategy

• Strategic considerations 2003
• Active portfolio management should ensure
• A higher return on capital employed
• Strong cash flow generation
• Leading positions cannot be maintained in all
  markets
• Nutreco opts for activities with growth potential
  in combination with good and less volatile
  results
• November 3, 2004
• Announcement of the strategic plan Rebalancing
  for Growth

21
Nutreco 2004
Major producer of pork meat intheNetherlands
Major producer ofpoultry meat in theBenelux
Clear world leader in salmon farming
Market leaderin poultry in Spain
Global leader in fish feed and Europe's largest
compound feed, premix and specialties producer
22
Nutreco Results
Historical results
23
Nutreco will rebalance for growth

• Nutreco will focus on growth in Animal Nutrition
  and Fish Feed
• Organic growth in salmon feed, expansion in
  marine species feed
• Growth in compound feed through consolidation and
  leverage of
• leadership positions
• Growth and geographical expansion in premix and
  specialty feed
• Nutreco will reduce its exposure in the value
  chains
• Reduction of exposure to salmon volatility
• 2004 sale of Hendrix Meat Group to Bestmeat
  (Sovion)
• Improve position for poultry and breeding

24
Divestment of Pork Processing

• Rapid consolidation in EU industry
• Major acquisitions by competitors
• Danish Crown
• Bestmeat (Sovion)
• Smithfield
• Market shifts from local to international,
  (purchasing, sales marketing)
• Major investments by HMG would be required to
  maintain a leading position

• 1994
• Hendrix Vlees Druten
• 1 factory
• 1998
• Creation Hendrix Meat Group
• Joint venture with Murris and Smit
• 3 factories
• 2001
• Acquisition Laurus pre-packing
• 2003
• 100 ownership
• Specialisation of plants
• 2004
• Sale to Bestmeat (Sovion)

Hendrix Meat Group is divested above book value
(book gain EUR 20.5 million)
25
Reduction of exposure to salmon volatility

• Less volatile operating result (EBITA)
• After reduction shareholders interest (IPO)
• Less volatile net profit
• Improved return on capital employed
• Improved growth opportunities for compound feed,
  premix and fish feed through
• Third party financing and repayment shareholder
  loans by Marine Harvest
• Potential value creation by IPO of Marine Harvest
• New risk profile improved financial
  possibilities

26
Marine Harvest

• Combining the strengths of both companies
  Nutreco Fish Farming and Stolt Seafarm
• Reducing volatility
• Reliable supply and service to customers
• Focus on stable product margins
• Unique competitive position
• Increasing supply of value added products
• Core competence in quality control, tracking
  tracing and leadership food safety

27
Status joint venture Marine Harvest

• Nutreco shareholders unanimously approved the
  proposed merger
• Merger is subject to approval competition
  authorities Europe and US
• Nutreco will own 75 of the shares and
  Stolt-Nielsen will own 25 of the shares
• Nutreco has a three-year contract for fish feed
  supplies to the joint venture

28
Average Norwegian prices in 2004 above the 2003
levels
Source FHL
29
Pressure on the US prices
Source Urner Barry
30
Poultry Genetics

• Poultry Benelux (Pingo Poultry)
• Growth in value added products
• Strong position in Benelux retail- channel
• Strengthen business
• Poultry Spain (Sada)
• Market leader in Spain
• Further strengthen position
• Genetics (Euribrid)
• Good position in turkey, layers and pigs
• Strengthen business

31
Skretting fish feed

• Continue partnerships with global customers
• Further develop services and speciality products
• Expand feed range for new species
• Future growth based on RD capabilities

32
Compound feed (Hendrix UTD and Nanta)

• Total management concept
• Focus on feed supply and services
• Setting standards in quality, safety and
  innovation
• RD capabilities drive product innovation
• NuTrace, TrusQ in feed safety
• Optimise efficiency in supply-chain
• Organic feeds

33
Food safety remains top priority
The Netherlands, February 2005
The Netherlands, February 2005
34
Premix speciality feeds(Trouw Nutrition
International)

• Growth in Latin America, Asia and Eastern Europe
• Full ownerships of activities in China and Mexico
  
• Start up in Russia
• Initiated new activities in India and Turkey
• New products in premix
• Milkiwean piglet feed
• MilkiVit vegetable-based milk replacer
• Petfood offers interesting potential
• Arion dog and cat food
• Pavo, Equiral and EQuites horse feeds

35
Nutreco strategic objectives
36
Global growth for animal nutrition and fish feed

• Total animal nutrition production is approx. 600
  millions tons (EUR 150 billion) with an annual
  growth of 1-2
• EU-15 represent 20 of the total production
• Consolidation in EU-15 from gt 4,000 factories in
  1994 to lt 3,000 in 2004
• Latin America, Asia and Eastern Europe are the
  major growth regions in agriculture (gt 5)
• Opportunity in petfood markets
• Fish feed is a strong growing segment gt 5 a year

( Source Feed International -Jan, 2004)
37
Nutrecos competitive position offers growth
opportunities in animal nutrition and fish feed

• RD capabilities drive product innovation
• NuTrace, TrusQ in feed safety
• Feed formulation
• Global scale in purchasing leads to cost
• advantages
• Growth in feed for other fish species

Nutreco has a leading edge in feed technology and
feed to food safety

• Gain market share
• Better results with our products
• Service and advice
• Optimise efficiency through consolidation
• Grow in new segments
• New, innovative products
• Penetrate new markets
• Utilise competencies, infrastructure and cost
  advantages

Local/regional scale in sales and manufacturing
leads to low cost positions (specialisation) and
stable customer relations
38
Strategy to lead to a more attractive Nutreco

• Restructuring of capital employed to less
  volatile activities
• No significant growth in capital employed
  expected
• Capital employed in animal nutrition and fish
  feed will increase from 1/3 to 2/3 of the total
• Total return on average capital employed (ROACE)
  will increase from 10 to15-20
• Nutreco maintains upside potential to value
  creation in Marine Harvest through its 75
  interest

39
Agenda for 2005

• The legal and organisational separation of Marine
  Harvest from Nutreco
• Establishing the Marine Harvest and Stolt Sea
  Farm joint venture that has been announced
• Refinancing Nutreco and the Marine Harvest joint
  venture
• Improving Nutrecos position in the poultry and
  animal breeding markets
• Further expanding the groups position in the
  animal nutrition and fish feed markets, both
  existing and new
• Active portfolio management
• Adapting the Nutreco organisation to reflect the
  focus and structure which follow from the new
  strategy

40
Cautionary Statement regarding Forward-Looking
Statements This announcement contains
forward-looking statements. Forward-looking
statements are statements that are not historical
facts, including statements about our beliefs and
expectations. Any statement in this announcement
that expresses or implies our intentions,
beliefs, expectations or predictions (and the
assumptions underlying them) is a forward-looking
statement. These statements are based on plans,
estimates and projections, as they are currently
available to the management of Nutreco.
Forward-looking statements therefore speak only
as of the date they are made, and we take no
obligation to update publicly any of them in
light of new information or future events.
  Forward-looking statements involve inherent
risks and uncertainties. A number of important
factors could therefore cause actual future
results to differ materially from those expressed
or implied in any forward-looking statement. Such
factors include, without limitation, the market
conditions in Europe, the United States and
elsewhere from which we derive a substantial
portion of our revenues potential defaults of
borrowers or trading counterparties the
implementation of our restructuring including the
envisaged reduction in headcount, the reliability
of our risk management policies, procedures and
methods and other risks. For more information on
these and other factors, please refer to our
Annual Report. The forward-looking statements
contained in this announcement are made as of the
date hereof, and the companies assume no
obligation to update any of the forward-looking
statements contained in this announcement.
41

• Questions and Answers