Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — Q2 FY2023 Earnings Presentation
48 slides from Del Monte Pacific's earnings presentation, Dec 7, 2022
Slide 1: Del Monte Pacific 2Q FY2023 Results
DEL MONTE PACIFIC 2Q FY2023 RESULTS 7 December 2022
Slide 2: Disclaimer
Disclaimer This presentation may contain statements regarding the business of Del Monte Pacific Limited and its subsidiaries (the “Group”) that are of a forward-looking nature and are therefore based on management’s assumptions about future developments. Such forward-looking statements are typically
Slide 3: Contents
Contents ▪ Summary ▪ 2Q FY2023 Results ▪ 1H FY2023 Results ▪ Market Updates ▪ Sustainability ▪ Outlook 3
Slide 4: Notes to the Results
Notes to the Results ▪ 2Q is from 1 August to 31 October 2022 ▪ DMPL owns 87% of Del Monte Philippines, Inc. and 93.6% of Del Monte Foods, Inc. DMPL recognizes a 13% and 6.4% non-controlling interest (NCI) in these two subsidiaries, respectively. These comprise the NCI line in the P&L. Net profit/(l
Slide 5: 2Q FY2023 Highlights
2Q FY2023 Highlights ▪ Sales grew by 7% to US$698.9m with all key markets - USA, Philippines and International - delivering higher sales ▪ Market shares continued to increase in USA and Philippines on strong fundamentals and commercial execution ▪ Gross margin improved to 29.4% from 27.4% ▪ EBITDA g
Slide 6: Outlook
Outlook ▪ Well-positioned to respond to consumer trends given our nutritious products, supported with campaigns highlighting functional health benefits. ▪ Entry into adjacent and new categories will allow us to maintain our revenue and income growth over the years to come. We also expect a new growt
Slide 7: 2Q FY2023 Results Summary
2Q FY2023 Results Summary ▪ Sales of US$698.9m, +7% Sales % Change Americas +5 Philippines +8 (in peso terms +22) International +13 India (equity accounted) -5 (in rupee terms +3)* *Del Monte Foods Pvt. Ltd. (India) discontinued the fresh business. Del Monte packaged business sales were up 4% in USD
Slide 8: 2Q FY2023 Results
2Q FY2023 Results In US$m 2Q FY2022 2Q FY2023 Chg (%) Comments Higher sales in all key markets of USA, Philippines and Turnover 651.0 698.9 +7.4 international markets Gross profit 178.5 205.3 +15.0 Same as above plus active cost management Gross margin (%) 27.4 29.4 +2.0ppts Price increases covered
Slide 9: 2Q FY2023 Turnover and Operating Profit Analysis
2Q FY2023 Turnover and Operating Profit Analysis Sales Operating 2.0% Profit 2.2% 25.4% Americas 27.7% 72.6% Asia Pacific 70.1% Europe With the profit improvement of DMFI, sales and operating profit split are now almost the same Sales growth Comments Americas +5.3% ▪ Driven by higher branded retail
Slide 10: 1H FY2023 Results Summary
1H FY2023 Results Summary ▪ Sales of US$1.2bn, +4% Sales % Change Americas +4 Philippines -5 (in peso terms +7) International +14 India (equity accounted) +3 (in rupee terms +10)* *Del Monte Foods Pvt. Ltd. (India) discontinued the fresh business. Del Monte packaged business sales were up 20% in USD
Slide 11: 1H FY2023 One-Off Item
1H FY2023 One-Off Item ▪ In May 2022, DMFI raised US$600m through a 7-year Term Loan B facility at Adjusted SOFR, with a floor of 0.5% plus 4.25% p.a., to primarily redeem the US$500m Senior Secured Notes which had an interest rate of 11.875% p.a. ▪ Term Loan B has a much lower interest rate (7.8% p
Slide 12: 1H FY2023 Results – Reported Basis
1H FY2023 Results – Reported Basis In US$m 1H FY2022 1H FY2023 Chg (%) Comments Turnover 1,113.1 1,155.5 +3.8 Higher sales in USA and international markets Gross profit 311.9 337.0 +8.1 Same as above plus active cost management Gross margin (%) 28.0 29.2 +1.2ppts Price increases covered higher costs
Slide 13: 1H FY2023 Turnover and Operating Profit Analysis
1H FY2023 Turnover and Operating Profit Analysis Sales Operating 1.9% Profit 2.4% 28.0% Americas 31.4% 70.2% Asia Pacific 66.2% Europe With the profit improvement of DMFI, sales and operating profit split are almost the same Sales growth Comments Americas +3.7% ▪ Higher branded retail sales which gr
Slide 14: Subsequent Event
Subsequent Event ▪ DMPL plans to redeem the US$100 million Series A-2 Preference Shares on 15 December 2022 ▪ It has a fixed rate of 6.5% per annum with a step-up rate if not redeemed ▪ The redemption will be financed by bank loans with a lower interest rate 14
Slide 15: Market Updates
Del Monte MARKET UPDATES
Slide 16: Del Monte Foods USA 2Q FY2023
Del Monte Foods USA 2Q FY2023 ▪ DMFI’s 2Q sales were US$506.3m or 72% of Group turnover ✓ Sales up 6% on higher retail branded sales, foodservice and Latin America ✓ Retail branded sales were up 11% on pricing taken to address inflation, distribution expansion of Joyba bubble tea and incremental sal
Slide 17: USA Market Shares
USA Market Shares We are Winning the Fight vs. Branded Competitors We must continue to assert our brand message, differentiating vs. Private Label Canned Vegetable (#1) Canned Fruit (#1) Fruit Cup Snacks (#2) Canned Tomato (#3) Broth without and with Kitchen Basics (#2) ▪ Market shares continued to
Slide 18: USA Innovation
take) root organics USA Innovation (PS LC Innovation Platforms Inspired by Consumer Trends Closer Plant-Based Culinary Purposeful Everyday to Fresh Goodness Meal Helpers Snacking Value FY23 i i : i : |= & Multi-Packs Fruit He 3 es Infusions LX : = NOURISHING FAMILIES. ENRICHING LIVES. EVERY DAY. 18
Slide 19: USA 2Q – Unique Veg Restage + New Varieties
USA 2Q – Unique Veg Restage + 2 New Varieties Retailer acceptance has exceeded expectations Specialty Vegetables Social Media Shelf Signage Start of Ship: 1 August 2022 ✓ Restage of 3 Specialty Veg items (Asparagus, Beets, Sauerkraut) with new premium label featuring fresh vegetables to differentiat
Slide 20: USA 2Q – Veggieful Pocket Pie Pizza Launch
USA 2Q – Veggieful Pocket Pie Pizza Launch Strengthening our Plant-Based Heritage Veggieful Pocket Pie Pizza Launch Ongoing Frozen product line support Start of Ship: 15 August 2022 Social Media ▪ 3 New Pocket Pie Pizza SKUs: ✓ Plant-Based Pepperoni ✓ 4 Cheese ✓ Plant-Based Sausage & Mushroom ▪ New
Slide 21: USA Organics
USA Organics We are Unlocking the Organic Opportunity Rooted In Organics At Take Root Organics™️, we know the roots, not the branches, are a plant’s greatest strength So too are our roots… Generations of expertise. Grounded in organic farming. Goodness that is tasted in every harvest. Accessible To
Slide 22: USA 2Q - Take Root Organics Launch
USA 2Q - Take Root Organics Launch Launch Website Social Media 22
Slide 23: USA Broader Consumer Base
USA Broader Consumer Base We are On Trend and Reaching a Broader Consumer Set 23
Slide 24: USA 2Q – Back to School
USA 2Q – Back to School Partnerships/Del Monte Back to School Programs WalMart Partnership Program with Kroger Digital/In Home Mailers Chobani and Sara Lee Ahold Hungry Girl Multi-Brand Partnership Target Digital Ad Publix Digital Ad 24
Slide 25: USA 2Q – Thanksgiving Displays
USA 2Q – Thanksgiving Displays We are a Trusted Brand and a Staple in Thanksgiving celebrations, Visible Retail Presence in Major Retailers 25
Slide 26: USA 2Q – College Inn and Contadina
T USA 2Q – College Inn and Contadina College Inn Holiday Support Contadina Ripe for the Moment Campaign Pinterest Pinterest Partner with Celebrity Chef Michael Symon 26
Slide 27: USA 2Q – Channel Expansion
USA 2Q – Channel Expansion Emerging Channels and Items Launched Value Channel Club Channel Natural Channel 27
Slide 28: USA 2Q – Foodservice
USA 2Q – Foodservice Del Monte Fruit Salsa Launch WHERE THE TANTALIZING FLAVORS New National Contract: OF Approved Supplier for Large COME TOGETHER. Canned Fruit 28
Slide 29: USA Kitchen Basics Acquisition
USA Kitchen Basics USA Acquisition 1Q Foodservice We have also Invested in our Future t t ▪ In August 2022, DMFI acquired the Kitchen Basics brand and its inventory of stocks and broths from McCormick & Company for US$99m ▪ KB products are distributed nationally in the US. The KB brand was founded i
Slide 30: USA Kitchen Basics
USA Kitchen Basics USA 1Q Foodservice The Acquisition Expands Our Broth & Stock t t Footprint Nationwide t 30
Slide 31: DMPL ex-DMFI 2Q FY2023
DMPL ex-DMFI 2Q FY2023 ▪ Sales of US$206.9m, up 9%, on higher Philippine and International sales. ▪ After declining in 1Q, Philippine Market recovered strongly and generated sales of US$107.9m, +22% in peso terms and +8% in US dollar terms. ✓ All product categories delivered higher volume and sales
Slide 32: Philippines – Market Shares
Philippines – Market Shares -0.1pt -2.3pts ( +/- pts vs same Packaged Pineapple (#1) Canned Mixed Fruit (#1) RTD Juices ex foil pouches (#1) period year ago ) +0.3pt +1.1pts +0.3pt Tomato Sauce (#1) Spaghetti Sauce (#1) Drinking Yogurt, DM Vinamilk + Mr. Milk (#2) ( Source for Volume market shares:
Slide 33: Philippines – Quarterly Volume Trends
Philippines – Quarterly Volume Trends Significant Improvement in 2Q 1Q FY2023 2Q FY2023 Volume Growth vs Volume Growth vs (m cases) prior year (m cases) prior year % % TOTAL PHILS 6.1 -13 8.4 +10 Modern Trade 2.5 -13 3.8 +7 General Trade 2.5 -22 3.5 +13 Foodservice 0.8 +18 0.9 +20 Convenience 0.2 +8
Slide 34: Philippines – Beverage Recovery Plan
Philippines – Beverage Recovery Plan Compelling Communication Campaigns Fit n’ Right (FNR): 100% Juice Drinks: “LEVEL UP” Relaunch of Original Line Pineapple Juice: “ALL IN, ALL OUT” • Drive superiority vs. other RTD juices and recover lapsers • Dialed up fun and flavor variety - • Regain FNR lapsed
Slide 35: Philippines Marketing
Value-for-Money Packs: Philippines Marketing 28% of FY23 sales An excellent assortment of value for money… LOW CASH OUTLAY PACKS VALUE BUNDLES TOMATO SAUCE and PASTE SPAGHETTI SAUCE TOMATO SAUCE SPAGHETTI SAUCE 1kg Singles MP Buy 2, Get 1 USD 2.28 90g 115g USD 0.21 USD 0.30 250g USD 0.55 500g Single
Slide 36: Philippines – Innovation
Philippines – Innovation Innovation now accounts for 8% of total Philippine Sales Combined addressable market of these products is US$3.5bn Potato Crisp Flavor Range: Original, Spicy; New in FY2023: Cheese, BBQ, 20g Del Monte Vinamilk Range Flavor Range: Fresh Milk; Wintermelon Milk Tea; IQ Smart Ch
Slide 37: Philippines – Back-to-School Mr. Milk and Fruity Munchsters
Back-to-School Mr. Milk Philippines – and Fruity Munchsters Mr. Milk Digital Advertising and E-commerce Program Mr. Milk and Fruity Munchsters School Activations Sampling activities directed at young kids in 40 different schools around the country as schools re-open 37
Slide 38: Philippines – Holiday Merchandising and Promotions
Holiday Merchandising Philippines – and Promotions Leadership Merchandising in Key Stores Downline displays Promo Packs 38
Slide 39: Philippines – Foodservice
Philippines – Foodservice Strong momentum despite economic pressures Growth as economy opens Gained incremental business from existing and new customers ▪ 2Q sales grew by 21%; sales now at 72% of Fiesta Fruit Cocktail Pineapple Tidbits pre-pandemic level. ▪ 13,538 outlets now open at 96% of pre-pan
Slide 40: Philippines – Convenience
Philippines – Convenience On track to recovery Implemented 7-Eleven consumer programs to drive offtake ▪ 2Q sales grew by 48%. Sales are now at 78% of pre-pandemic level. ▪ 3,880 outlets now open, higher vs pre-pandemic FnR Original at 65% of 7-Eleven FnR business after a month of placement 40
Slide 41: International – Innovation
International – Innovation Innovation now accounts for 11% of Total International Sales Total sales potential of these products is US$100m NICE FRUIT Frozen Snacks Japan Middle East Japan Europe CANADA US Saudi Singapore China Hongkong 7-11 McDonald’s 7-Eleven Lamex/KFC McDonald’s Del Monte Arabia P
Slide 42: S&W Fresh Overview
S&W Fresh Overview ▪ Our high quality, premium MD2 fresh pineapple makes us the largest fresh pineapple exporter to China, with 53% volume share. ▪ One of the 3 biggest fresh pineapple exporters to Japan, South Korea and the Middle East. ▪ Introduced last year, the naturally-ripened extra sweet S&W
Slide 43: S&W Fresh – China
S&W Fresh – China ▪ S&W Deluxe Fresh Pineapple is steadily growing in China was featured in Shanghai News and CCTV (State TV) during China International Import Expo (CIIE), a large-scale event trade fair fully supported by President Xi Jinping and in partnership with World Trade Organization and Uni
Slide 44: Del Monte India
Del Monte India Continued improvement in 2Q ▪ Del Monte India’s sales in 2Q up 3% in Rupee terms, down 5% in USD terms ✓ Increase in sales across core categories particularly B2C on improved market execution for general, modern trade and e-commerce platforms ✓ B2B business also grew driven by recove
Slide 45: Del Monte India – Mayo Range Revamp
Del Monte India – Mayo Range Revamp Launching for the first time – Mayo in PET Jars to cater to the largest market segment Consumer Promo and Visibility Drives to ensure outlet expansion and acceptance of new launch among consumers 45
Slide 46: Sustainability
Sustainability Good Governance Fuel Efficiency ESG Engagement Foundation Programs • DMPL won the Best • Installed GPS in 54% • 20 social media posts • Provided food Managed Board Award of delivery trucks as on ESG products to over 500 (Silver, Mid Cap) at the of 1H FY2023 to • Published 3 ESG organi
Slide 47: Sustainability
Sustainability 2022 ESG Update: Growing a Healthier Tomorrow • DMFI published its 2022 ESG update in October, highlighting its progress towards ESG goals through new and continued partnerships and programs that bolster ongoing commitment to being Growers of Good. • Highlights include: • US$5 million
Slide 48: Outlook
Outlook ▪ Well-positioned to respond to consumer trends given our nutritious products, supported with campaigns highlighting functional health benefits. ▪ Entry into adjacent and new categories will allow us to maintain our revenue and income growth over the years to come. We also expect a new growt