Century Pacific Food, Inc. · PSE:CNPF
Century Pacific Food — 9M 2020 Earnings Presentation
74 slides from Century Pacific Food's earnings presentation, November 2020
Slide 1: CNPF Corporate Presentation November 2020
#TheFilipinoCan CENTURY CNPF CORPORATE PRESENTATION PACIFIC NOVEMBER 2020 FOOD, INC.
Slide 2: Quick Overview
QUICK OVERVIEW
Slide 3: Company Overview
Company Overview ONE OF THE LARGEST BRANDED FOOD COMPANIES IN THE PHILIPPINES, ADDRESSING A BROAD CUSTOMER BASE Positioning Value for Money Mass Market Affordable Premium Marine Meat Milk & Others 3
Slide 4: 2019 Revenue Mix
2019 Revenue Mix BULK OF REVENUES FROM OWN BRANDS, CATERING PRIMARILY TO THE DOMESTIC MARKET Coconut OEM, 7% Export, 27% Tuna OEM, 16% Marine, 30% Domestic, Milk, 73% 23% Meat, 24% OWN BRANDS REPRESENT 77% OF SALES 4
Slide 5: Our Value Chain
Our Value Chain A DOWNSTREAM FOCUS WITH EXPERTISE IN DEVELOPING, MANUFACTURING, DISTRIBUTING, AND MARKETING AFFORDABLY NUTRITIOUS PRODUCTS Research & Manufacturing Marketing & Development of Products Brand Building Sourcing of Domestic Consumers & Raw Materials Distribution & Customers Export Sales
Slide 6: The Big Picture in the Philippines
The Big Picture in the Philippines FOOD CONSUMPTION CONTINUES TO ACCOUNT FOR THE BULK OF FAMILY EXPENDITURES; WILL INCREASE ALONGSIDE INCOMES, ESPECIALLY AT THE BOTTOM BASE OF THE PYRAMID Breakdown of Family Expenditures Food Consumption per Class Animal- Per Capita Total Milk & Milk Wealth Based Ot
Slide 7: Critical Role of Shelf-Stable Products Locally
Critical Role of Shelf-Stable Products Locally A CRITICAL AND IMPORTANT SOURCE OF NOURISHMENT FOR FILIPINOS The Philippines Low agricultural base Prone to natural calamities 7,000+ islands and expensive Imports many food requirements inter-island logistics Long history and cultural Low refrigeration
Slide 8: Significant Market Leadership
Significant Market Leadership Marine & Meat PRIMARY DRIVER OF CANNED TUNA CONSUMPTION DOMESTICALLY 82% #1 5.2x Marine September 2020 Flagship brand Canned Tuna “Century Tuna” is a champion for health 16% and wellness 1% 1% CNPF Competitor 1 Competitor 2 Competitor 3 SIGNIFICANT BRAND EQUITY IN CANNE
Slide 9: Canned Tuna Reinvented
Canned Tuna Reinvented Marine DECADES-LONG BRAND BUILDING AROUND “HEALTH AND WELLNESS” Century Tuna Asia’s Marketing 2011-2013, 2015-2016 Company of the Year 2016 Marketing Company of the Year Century Tuna 2011 Brand of the Year Gregory Banzon Philippine Seafood Category Marketing Excellence 2019 20
Slide 10: Exciting Opportunities in Milk
Exciting Opportunities in Milk MILK CONSUMPTION AND PRODUCT VARIETY IN THE PHILIPPINES STILL VERY LOW Dairy Annual Consumption per Capita in 2018 Source: Euromonitor, UBS 10
Slide 11: Growing Market Shares
Growing Market Shares Milk MARKET SHARE GAINS IN DRINKING POWDERED MILK 11x 22% Milk Heritage brand “Birch Tree” is utilized as a platform to expand and grow #2 2% Jan 2016 Sep 2020 Philippines’ Fastest Growing Brand in 2019 46% 23% 2016 to 2019 of 2019 Revenue Source: Kantar (among all FMCG brands
Slide 12: Further Expansion through Innovation
Further Expansion through Innovation ROBUST PRODUCT INNOVATION PIPELINE IN MILK, LEVERAGING ON BIRCH TREE’S BRAND EQUITY AND POSITIVE MOMENTUM Product launches lined up Birch Tree Birch Tree Fortified Choco Birch Tree Fortified Fortified Adult 2016 2019 August 2020 2021 - 2022 12
Slide 13: Other Branded Businesses
Other Branded Businesses EXPANDING INTO ADJACENT CATEGORIES, BEYOND THE 3M’S Organically Via Acquisitions Leveraging coconut OEM export Entry into condiments capabilities and branding know-how via Hunt’s brand to build a branded domestic coconut acquisition; Also market market (which is still primar
Slide 14: Strategic Priorities
Strategic Priorities Building a portfolio of well-known and trusted brands that will deliver sustainable long-term growth Branded Product Portfolio Innovation pipeline, organic and Faster growth, building Steady growth, healthy inorganic opportunities, existing scale, challengers or cash generation,
Slide 15: Outlook & Guidance
OUTLOOK & GUIDANCE
Slide 16: Full-Year Outlook & Expectations
Full-Year Outlook & Expectations Guidance 2020 Net Income Growth 5-Year Estimated Net Income CAGR 50% AG R C 40% to 15% 31% 32% 14% 30% North Double of 20% 20% digits 15% CNPF Typical 10% Growth Target 0% FY20 GDP -10% BSP Forecast 1Q20 2Q20 3Q20 4Q20E FY20E 2015 2016 2017 2018 2019 2020E • Continue
Slide 17: Full-Year Outlook & Expectations: 2021 Guidance
Full-Year Outlook & Expectations Guidance 2021 Preliminary Guidance 2021 Growth Drivers Core Branded • Demand for essentials to remain resilient Still aiming to grow • Steady growth also driven by favorable shifts in consumer behavior double digits in spite of high base OEM Recovery • Gradual recove
Slide 18: Long-Term Strategy
Long-Term Strategy Performance Positioning High Expansion Efficiency- All-Weather Exploiters Focused CNPF Performance Resilience-Focused in Good Times Resilience Exploiters Low Low High Crisis Performance • Delivering low double-digit to mid-teens growth during good times, and outperforming our grow
Slide 19: Emerging Consumer Trends in the New Normal
EMERGING CONSUMER TRENDS IN THE “NEW NORMAL”
Slide 20: Emerging Consumer Trends
Emerging Consumer Trends Emerging Consumer Trends Fastest-Growing Food Categories* 1. Pet products Cooking at Home 2. Spreads 3. Prepared cooking food 4. Milk Present in 4 out Digital Channels 5. Meat Value for Money of 6 categories 6. Cooking / culinary aids Safety, Health & Wellness Key Critical H
Slide 21: Emerging Consumer Trends: Digital Channels
Emerging Consumer Trends Emerging Consumer Trends Increased Presence in Digital Channels Cooking at Home Digital Channels Safety, Health & Wellness Trusted Brands Value for Money • Enhanced ability to sell via non-traditional or online channels, including having our own delivery service and dedicate
Slide 22: Emerging Consumer Trends: Health and Wellness
Emerging Consumer Trends Emerging Consumer Trends Century Superbods 2020 Cooking at Home Digital Channels Safety, Health & Wellness Trusted Brands Value for Money • Actively communicating the health benefits of our products to address the needs of the more health-conscious consumer 22
Slide 23: Emerging Consumer Trends: Trusted Brands
Emerging Consumer Trends Emerging Consumer Trends Market-Leading* Strong Challenger* Cooking at Home #1 #2 82% 22% Canned Tuna Powdered Milk Digital Channels #1 Safety, Health & Wellness 46% Corned Meat Trusted Brands #1 Philippines’ Fastest- 37% Growing Brand in 2019** by Kantar Emulsified Value fo
Slide 24: Emerging Consumer Trends: Value for Money
Emerging Consumer Trends Emerging Consumer Trends Affordable & Value-for-Money Products Cooking at Home Digital Channels Safety, Health & Wellness Trusted Brands Value for Money • Birch Tree is the go-to value-for-money option in the powdered milk category • Flanker brands Wow! Ulam and Fresca doing
Slide 25: New Product Innovations Leveraging Trends
New Product Innovations Leveraging Trends Recent Product Launches Core Emerging Marine Meat Milk Coconut February April 2019 2019 October 2020 August September (Institutional 2020 2019 Sales) November 2019 (Relaunch) • Proven track record in innovation across core and emerging branded categories • P
Slide 26: New Product Innovations: Coco Mama
New Product Innovations Leveraging Trends Emerging Consumer Trends Coco Mama Before After Cooking at Home Safety, Health & Wellness Trusted Brands Value for Money • Building up the packaged coconut cream category in the Philippines • Benefitted from quarantine period where consumers opted for packag
Slide 27: New Product Innovations: Birch Tree Fortified Adult
New Product Innovations Leveraging Trends Emerging Consumer Trends Birch Tree Fortified Adult Boost NEW Cooking at Home Safety, Health & Wellness Trusted Brands Value for Money • Leveraging brand’s equity in powdered milk with a value-for-money and health proposition • Provides health and nutritiona
Slide 28: New Product Innovations: UnMeat
New Product Innovations Leveraging Trends Emerging Consumer Trends UnMeat Cooking at Home Safety, Health & Wellness Trusted Brands Value for Money • UnMeat is the first vegan plant-based brand in the Philippines • Provides accessibility and affordability of plant-based alternatives to a wider segmen
Slide 29: UnMeat vs. Real Meat
New Product Innovations Leveraging Trends UnMeat vs. Real Meat UnMeat Real Meat • Supply chain of plant- Plant-based Animal-based based products requires lower consumption of Around 98% Production of natural resources less water used real meat entails compared to the a longer supply production proce
Slide 30: Latest Financial Performance
LATEST FINANCIAL PERFORMANCE
Slide 31: 9M 2020 Financial Results Highlights
9M 2020 Financial Results Highlights TOTAL REVENUE BRANDED REVENUE NET INCOME GROWTH GROWTH GROWTH +21% +28% +26% 9M 9M 9M +9% +16% +15% 3Q 3Q 3Q 31
Slide 32: Consolidated Revenues
Consolidated Revenues 9M Revenue Breakdown 9M Revenue Growth Quarterly Revenue Trend In PHP Bill 13.0 28% 12.1 11.7 10.7 9.9 10.2 9.7 21% 77% 81% 9M19 9M20 Consolidated Branded 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Branded OEM Exports Average of 2019 quarterly revenues • Healthy top line growth driven
Slide 33: Branded Revenues
Branded Revenues Branded Quarterly Revenue Growth Trend Metro Manila Quarantine Timeline Pre-Quarantine 50% Jan 1, 2020 – Mar 15, 2020 1Q 39% 40% Enhanced Community Quarantine 31% Mar 16, 2020 – Mar 31, 2020 30% Enhanced Community Quarantine Apr 1, 2020 – May 15, 2020 20% 16% Modified Enhanced Commu
Slide 34: Branded Revenues
Branded Revenues Branded Quarterly Revenue Trend Key Critical Household Items* CNPF participates in 3 out of 6 In PHP Bill 10.1 10.3 9.3 7.7 8.0 7.9 7.4 Canned Canned Milk sardines meat 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Average of 2019 quarterly branded revenues Coffee Instant noodles Rice • Key pr
Slide 35: OEM Exports Revenue
OEM Exports Revenue 9M Revenue Monthly Skipjack Tuna Prices OEM Performance Growth with 3-month delay Drivers Tuna OEM volumes affected by (1) reallocation of 2000 21% capacity to branded and (2) weak foodservice 1500 demand globally USD Flattish revenues also 1000 driven by pass-on of softer commod
Slide 36: Summarized Margins
Summarized Margins 9M Margins 3Q Margins +1.3pps 25.7% +1.2pps 26.7% 25.5% 24.4% Gross Margin +0.2pps 14.4% 14.4% +0.5pps 14.2% 13.9% EBITDA Margin +0.2pps 12.2% +0.1pps 11.8% 12.0% 11.7% Operating Margin +0.3pps 8.9% +0.4pps 8.8% Net Margin 8.6% 8.4% 9M19 9M20 3Q19 3Q20 • Margin expansion across al
Slide 37: Cash Flows
Cash Flows Operating Cash Flow 9M20 Operating Cash Flow Breakdown In PHP Mill Debt Repayment Debt Interest 115% 39% YoY in 9M20 26% YoY in 9M20 YoY in 9M20 5,473 CapEx 36% Plant capacity expansion 2,550 26% 23% Dividends Others, 15% 9M19 9M20 9M20 Doubled cash dividend • Robust earnings and improvem
Slide 38: Other Financials
OTHER FINANCIALS
Slide 39: 9M 2020 Summarized P&L
9M 2020 Summarized P&L In PHP Mill 9M 2019 9M 2020 Change YoY • Revenue growth driven by Net Revenues 30,359 36,794 21% branded outperformance Cost of Sales 22,956 27,352 19% • Robust double-digit growth Gross Profit 7,403 9,442 28% across all branded units as consumers prefer well-known Operating E
Slide 40: 9M 2020 Summarized Cash Flow
9M 2020 Summarized Cash Flow In PHP Mill 9M 2019 9M 2020 • Working capital decline Profit before Tax 3,355 4,267 primarily driven by higher payables Depreciation & Amortization 664 813 Working Capital Change (995) 1,142 • Strong cash generation due to Income Tax (747) (990) robust profitability and
Slide 41: Working Capital Details
Working Capital Details • Build-up of inventory driven by increase in raw material covers • Longer inventory days of 149 offset by stretch in payable days to 122 • Strict monitoring of receivables amidst current economic conditions WORKING CAPITAL RECEIVABLES 15,000 121 101 15,000 80 90 150 150 10,0
Slide 42: 9M 2020 Summarized Balance Sheet
9M 2020 Summarized Balance Sheet In PHP Mill 2019 9M 2020 In PHP Mill 2019 9M 2020 Cash 1,608 2,012 Trade and Other Payables 6,833 11,770 Receivables 7,001 8,171 Notes Payable - Current 2,434 1,966 Inventory 11,782 14,361 Long-Term Loan 3,087 1,578 Current Assets 21,515 25,826 TOTAL LIABILITIES 13,4
Slide 43: Financial Ratios
Financial Ratios 0.29 0.17 • Comfortable level of gearing Gearing (x) ratios maintained 2019 9M 2020 0.20 • Decrease in peso-denominated Net Gearing (x) 0.07 debt led to lower leverage ratios 2019 9M 2020 2.22 Current Ratio (x) 1.80 • Improvement in current ratio implies healthy liquidity 2019 9M 20
Slide 44: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 45: Investment Highlights
Investment Highlights 1 Market • Dominates the canned fish and canned meat categories locally* with a growing presence in milk Leadership • Company’s brands are the brands of choice for Filipino consumers 2 Multiple Brands • A broad product portfolio catering to different tastes and needs to capture
Slide 46: Dominant Market Leadership in Ambient Food in the Philippines
1 Dominant Market Leadership in Ambient Food in the Philippines PRIMARY DRIVER OF CANNED TUNA MARKET LEADER IN CONSUMPTION DOMESTICALLY CORNED MEAT 82% #1 #1 Flagship brand Flagship brand 5x “Argentina” is “Century Tuna” 46% September 2020 September 2020 still the go-to is now a Canned Tuna Corned M
Slide 47: Multiple Brands and Products Catering to All Consumers
2 Multiple Brands and Products Catering to All Consumers Diverse product portfolio catering to a broad customer base and different customer tastes and needs Positioning Value for Money Mass Market Affordable Premium Marine Meat Milk COMPANY PORTFOLIO AS SIGNIFICANT BENEFITS OF A MULTI-BRAND, OF END
Slide 48: Strong Focus on R&D-Driven Innovation and Marketing
3 Strong Focus on R&D-Driven Innovation and Marketing INNOVATIVE MARKETING CAMPAIGNS Enhancing brand recognition through active and targeted marketing and promotional campaigns • Continuous launching of new products and improvements in profitability made possible through intensive R&D • Promotions c
Slide 49: Extensive Market Penetration and Distribution Network
4 Extensive Market Penetration and Distribution Network Availability 163k 1M Equivalent to 16 81 Total Philippine Outlets Serviced Total Philippine Outlets CNPF 88% of All Points Offshore Toll Manufacturers Countries CNPF Products by CNPF Products are of Sale in the for CNPF are Available in Availab
Slide 50: Trusted Partner for Customers Around the World
5 Trusted Partner for Customers Around the World Works closely with long-standing international partners to produce private label products for sale in international markets TUNA OEM CERTIFICATIONS COCONUT OEM CERTIFICATIONS FORECASTED INDUSTRY GROWTH OF COCONUT PRODUCTS* Coconut Milk/Cream Coconut W
Slide 51: Other Company Information
OTHER COMPANY INFORMATION
Slide 52: Company Snapshot
Company Snapshot SNAPSHOT FULL-YEAR FINANCIALS • Century Pacific Food, Inc. is one of the largest branded food companies in the Revenues (In USD Mill) Philippines. It is primarily engaged in the manufacturing, marketing, and distribution of processed marine, meat, milk, and coconut products. 1,004 7
Slide 53: The Big Picture
The Big Picture CNPF is well-positioned to take advantage of rising consumer demand MAJORITY STILL LOW TO MIDDLE FOOD ACCOUNTING FOR BULK CLASS IN THE PHILIPPINES OF FAMILY EXPENDITURE Distribution of Families and Income Breakdown of Family Expenditures % % Annual Annual Per Capita Animal- Milk & SE
Slide 54: Company Milestones: Proven track record in brand building
Company Milestones Proven track record in brand building organic via acquisitions TUNA OEM BUSINESS 1978 1983 1986 1995 2001 2002 2008 2012 2014 2015 COCONUT BUSINESS 2016 2017 2019 2020 54
Slide 55: Company Milestones: Recognized for excellence
Company Milestones Recognized for excellence Philippines’ Best Managed 1000 High-Growth Century Tuna and Argentina Small Cap Company Family Business Award Companies Asia Pacific 2011-2013, 2015-2016 2016 Country & ASEAN Winner 2018 2018 500 High-Growth Companies Asia Pacific 2020 Marketing Company o
Slide 56: Our Experienced and Dedicated Management Team
Our Experienced and Dedicated Management Team • 9 years of experience as Management Consultant at McKinsey, CHRISTOPHER PO Managing Director at Guggenheim Partners, and Corporate Planning Executive Chairman Head at JG Summit Highly experienced TEODORO PO professionals in their • 27 years of experien
Slide 57: ESG Highlights
ESG HIGHLIGHTS
Slide 58: Our Vision
Our Vision The Company Vision was revised in 2018 to incorporate sustainability. Previous Current We will be respected as a team of We are a passionate, consumer-oriented, sustainable and responsible professional entrepreneurs committed global company of entrepreneurs to lead and work together to de
Slide 59: Our Commitment
Our Commitment The commitment to sustainability stems all the way from the top. “Essential to our strategy going forward is our sustainability and ability to balance the needs of all our stakeholders. We believe that sustainability - whether coming up with healthier products, taking care of our peop
Slide 60: Our Engagements
Our Engagements We have engaged a number of third parties to assist us in our sustainability journey. Partnered with Business for Sustainable Engaged with The Purpose Business in late Development in late 2018 to establish a 2019 to create a sustainability strategy and sustainability framework and co
Slide 61: Sustainability Framework
Sustainability Framework Protein Planet People Delivery Preservation Development OUR BUSINESS CORE = Natural Resource Efficiency Employees Freshwater Consumption Reduction Diversity & Inclusion AFFORDABLE NUTRITION Energy Consumption Reduction Talent Development Employee Engagement Profit-Purpose Al
Slide 62: Sustainability Framework
Sustainability Framework Protein Planet People Delivery Preservation Development OUR BUSINESS CORE = Natural Resource Efficiency Employees Reduce freshwater consumption in Improve diversity, especially at the Senior AFFORDABLE NUTRITION Mindanao plants by 30% within three years Management level Prof
Slide 63: Latest Sustainability Projects: Protein Delivery
Latest Sustainability Projects Protein Delivery Roll out healthier formulation of top Introduce “UnMeat”, a healthy meat SKUs Century Tuna Flakes in Oil and alternative made with non-GMO plant-based Argentina Corned Beef, reducing its ingredients, making plant-based products sodium content by at lea
Slide 64: Latest Sustainability Projects: Planet Preservation
Latest Sustainability Projects Planet Preservation Source 20% of power requirements in General Santos through solar energy and reduce emissions by around 123,900 metric tons Support coconut replanting by providing coconut Continue 100% plastic neutrality initiative farmers 100,000 coconut seedlings
Slide 65: Latest Sustainability Projects: People Development
Latest Sustainability Projects People Development Provide free meals to communities via Kain Po program, with over 30 million free meals already distributed Provide seedlings and engage with coconut farmers as partner suppliers Contribute assorted food packs for for coconut requirements, augmenting
Slide 66: About Tuna
About Tuna There are different species of tuna. Bluefin Albacore Yellowfin Bigeye Skipjack We use skipjack tuna 84% of worldwide tuna stocks from the Western Pacific Ocean are in healthy states. where stock is 100% healthy. ABUNDANT and can reproduce year- round in tropical and subtropical waters FA
Slide 67: About ISSF
About ISSF Century Pacific remains a committed FULLY COMPLIANT WITH 21 OF 21 member of global initiatives that address APPLICABLE ISSF CONSERVATION MEASURES sustainability issues, particularly those involving tuna supply. 1) Tuna Regional Fisheries 12) Unique VesseI Identifiers In particular, its on
Slide 68: Stock & Investor Relations Highlights
STOCK & INVESTOR RELATIONS HIGHLIGHTS
Slide 69: Stock Highlights
Stock Highlights MARKET CAPITALIZATION Philippine CNPF Consumer $0.8B $1.3B PER 15.2x Average 19.0x December 2015 Novmeber 2020 PBV 2.8x 3.3x AVERAGE DAILY VALUE TRADED ROE 19.8% 13.7% $0.9M Operating Margin* 12.5% 10.5% $0.2M Net Income Margin* 7.8% 6.5% 2015 Last Three Months Source: BPI Securitie
Slide 70: Stock Highlights
Stock Highlights DIVIDEND HISTORY SHAREHOLDERS** 0.5 40% 40% Others, 21% 0.45 0.4 28% First State Investments ICVC, 1% 24% 24% 25% 30% Century Pacific 0.35 23% JP Morgan Chase & Co, 1% Group, Inc. (CPGI), 0.3 0.25 0.18 20% Franklin Resources Inc., 2% 69% 0.2 • Wholly owned by Royal Bank of Canada, 2
Slide 71: Investor Relations Highlights
Investor Relations Highlights SELL-SIDE ACTIVE COVERAGE** Current Price PHP17.70 Institution Analyst Latest Call 52-Week Range PHP9.53 –18.48 Abacus Frederick Chua BUY BDO Nomura Diane Go BUY YTD Average Turnover* USD0.5 million BPI Miguel Sevidal BUY CLSA Joyce Ramos BUY PHP62.70 billion Market Cap
Slide 72: Investor Relations Highlights
Investor Relations Highlights Investor Conferences 2019 Glossy Annual Report Maybank Kim Eng– Mizuho ASEAN Consumer Seminar November 27 (Virtual) International Winner (Diversified Industrial Food Category), National Winner for the Philippines (Diversified Industrial Food Category & Family Corporatio
Slide 73: Award Highlights
Award Highlights Stock & Investor Relations Milestones Philippines’ Third Best at Investor Relations 2018 Initial Public Offering Philippines’ Third Best Best Deal in the Philippines Investor Relations Professional 2014 2018 Philippines’ Best Investor Relations Program, Best Investor Relations Team,
Slide 74: Contact and Disclaimer
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