PRODUCTIVITY IMPROVEMENT Flour Milling Consolidation Process in the

PRODUCTIVITY IMPROVEMENT Flour Milling Consolidation Process in the EU and Strategic Options to grow profitably! Siegfried Meyer, SGS-Geneva

DISCLAIMER n The information provided by SGS does not represent an offer, investment advice, or any kind of financial service. n Although SGS has obtained the information provided from sources that should be considered reliable, it cannot guarantee its accuracy or completness. The information provided is purely of an indicative nature and is subject to change without notice at any time. n The information provided does not confer any rights. SGS cannot guarantee that this presentation does not contain errors and does not accept any liability for the information contained in this presentation. 2

CHALLENGES FOR EU FLOUR MILLING n Export market n Domestic demand n Margin profitability n Productivity 3

CONSOLIDATION The number of mills in the EU is constantly decreasing 2007 -2015 Source: European Flour Millers 2016, Rabobank 2017 4

MARGIN Weighted average EBITDA margins of key European flour millers, 2000 -2017 5

STRATEGIC OPTIONS FOR GROWTH n Expand into EU n Specialize on niche products with added value n Improve Productivity 6

EXPAND INTO EU Flour-milling capacity density in 2017 and average soft-wheat surplus by country, 2014/15 -2016/17 7

SPECIALIZE ON NICHE PRODUCTS Weighted average EBITDA margins in wheat-flour milling below most of those in niche or specialty segments, 2006 -2015 8

IMPROVE PRODUCTIVITY Capacity utilisation and market share of top 3 millers in selected countries, 2015 9

PRODUCTIVITY OF YOUR FLOUR MILL IS KEY n Utilisation rate n Yields and losses n Energy consumption n Headcount n Maintenance n Quality n Monitoring, reporting and record keeping n Safety 10

OUR EXPERTISE IS HANDS-ON! Experience • 25 Years Comprehensive Experience in the Food Industry Experts • Trading-, Procurement-, Market-, Technology-, Production Experts, . . Success • Holistic Approach with Success Guarantee 11

INCREASING PRODUCTIVITY?

OUR 5 STEPS TO SUCCESS! Initial Fact Finding Pre-Diagnosis Turn Around Management Audits • < 1 day visit at the Client‘s Plant, proposing possibel Solutions • 2 days visit at the Client‘s Plant, with rough Evaluation and Final Report, proposing possible Solutions • Detailed Action Plan, which is the Blueprint for the Turn Around Management, >20 mandays • During 2 -6 months, on-site, Implementation of Action Plan • Verification of Actions implemented, over a period of 12 months, with Audits every 4 to 6 weeks. 13

2 DAYS VISIT AT THE CLIENT‘S PLANT, WITH ROUGH EVALUATION AND FINAL REPORT, PROPOSING POSSIBLE SOLUTIONS n Visit of the Production Plant n Review of Production-, Maintenance- & Quality-, Records n Review of Input/Output Balances – Products/Utilities n Review of Job Descriptions & Organisation n Review of Yields/Losses and Benchmark n Qualified Meetings with the Management & Operators & Summarize with possible Savings Potentials n Preparation of Final Report, addressing Savings Potentials 14

Report Client Expert Pool Field Expert 15

OUR SHOW CASE PROJECTS

TASK: SUPPLY CHAIN OPTIMIZATION MEASURES INPUTS Evaluation of Transport Logistics Assessment of current Procedures <20 md Analysis of Warehouse Logistics Assessment of current Procedures <20 md SAVINGS -15% € 450 k/anno € 80 k costs Payback 2, 1 months 17

TASK: INCREASING PRODUCTIVITY OF WORKFORCE MEASURES INPUTS Assessment of Job Descriptions and Application Assessment of current Procedures <5 md Restructuring <30 md SAVINGS -50% € 600 k/anno € 70 k costs Payback 1, 4 months 18

TASK: REDUCING ENERGY INPUT MEASURES INPUTS Evaluation of Energy Input & Savings Potential <10 md Implementation Extended Maintenance <40 md SAVINGS -30% € 700 k/anno € 200 k costs Payback 3, 4 months 19

AMORTISATION OF OUR COSTS IN ABOUT 6 MONTHS! Q 1 Q 2 Q 3 € Savings Q 4 Q 1 Q 2 € Turn Around 20

THANK YOU! For more information contact us : Siegfried Meyer Productivity Improvement Consulting Phone: +43 699 110 29 494 E-mail: siegfried. meyer@sgs. com agriculture@sgs. com www. sgs. com 21