Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — 3Q FY2019 Earnings Presentation
43 slides from Del Monte Pacific's earnings presentation, Mar 8, 2019
Slide 1: Del Monte Pacific 3Q FY2019 Results
T N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® D E L M O NT E PACIFIC 3Q F Y 2 0 1 9 R E S U L T S 8 March 2019 NOURISHING FAMILIES. ENRICHING LIVES. EVERY DAY. ®
Slide 2: Disclaimer
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® 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 as
Slide 3: Contents
CONTENTS ▪ Summary ▪ 3Q FY2019 Results ▪ 9M FY2019 Results ▪ Market Updates ▪ Sustainability ▪ Balance Sheet and Cash Flow ▪ Outlook 3
Slide 4: Notes to the 3Q FY2019 Results
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® NOTES TO THE 3Q FY2019 RESULTS ▪ Third quarter is 1 November 2018 to 31 January 2019. ▪ DMPL’s effective stake in DMFI is 89.4%, hence the non controlling interest line (NCI) in the P&L. Net income/(loss) is net of NCI
Slide 5: 3Q and 9M FY2019 Highlights
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® 3Q AND 9M FY2019 HIGHLIGHTS ▪ 3Q net income of US$2.6m, reversing the loss of US$38.4m in the prior year period, and a net income of US$14.0m for 9M, a turnaround from the US$40.4m loss in the prior year period ▪ 3Q sa
Slide 6: Outlook
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® OUTLOOK ▪ Barring unforeseen circumstances, the Group is expected to be profitable in FY2019 ▪ Major emphasis on responding to consumer trends through: ✓ Strengthening the core business and innovating -- Healthier opti
Slide 7: DMPL 3Q FY2019 Group Results Summary
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 3Q FY2019 GROUP RESULTS SUMMARY ▪ Sales of US$528.7m, -12% Sales % Change US -15 Philippines -10 (in peso terms -6) S&W +19 FieldFresh India (equity accounted) -2 (in rupee terms +8) All figures below without one-
Slide 8: DMPL 3Q FY2019 One-off Expense/(Income)
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 3Q FY2019 ONE-OFF EXPENSE/(INCOME) In US$ m 3Q FY18 3Q FY19 Booked under Closure of Sager Creek, Arkansas plant 8.1 (0.7) CGS Closure of Plymouth, Indiana plant (0.8) 0.8 G&A/Misc Expense Severance 1.8 1.4 G&A Exp
Slide 9: DMPL 3Q FY2019 Results – As Reported
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 3Q FY2019 RESULTS – AS REPORTED 3Q 3Q In US$m Chg (%) Comments FY2018 FY2019 Mainly due to the divested Sager business and lower Turnover 599.8 528.7 -11.8 USA sales. Excluding Sager, sales down 6% Lower sales, si
Slide 10: DMPL 3Q FY2019 Turnover Analysis
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 3Q FY2019 TURNOVER ANALYSIS 1% 26% Americas 73% Asia Pacific Europe Americas -14.7% ▪ In line with strategy, divested the Sager business and reduced private label sales in retail channel ▪ Lower volume across cate
Slide 11: DMPL 9M FY2019 Group Results Summary
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 9M FY2019 GROUP RESULTS SUMMARY ▪ Sales of US$1.5bn, -10% Sales % Change US -13 Philippines -8 (in peso terms -3) S&W +5 FieldFresh India (equity accounted) +2 (in rupee terms +10) All figures below without one-of
Slide 12: DMPL 9M FY2019 One-off Expense/(Income)
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 9M FY2019 ONE-OFF EXPENSE/(INCOME) In US$ m 9M FY18 9M FY19 Booked under Closure of Sager Creek, Arkansas plant 14.6 6.6 CGS Closure of Plymouth, Indiana plant 13.3 (0.1) G&A/Misc Income Seed operations - (1.1) Mi
Slide 13: DMPL 9M FY2019 Results – As Reported
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DMPL 9M FY2019 RESULTS – AS REPORTED 9M 9M In US$m Chg (%) Comments FY2018 FY2019 Mainly due to lower USA sales and the divested Sager Turnover 1,698.3 1,522.2 -10.4 business. Excluding Sager, sales down 6% Lower sales
Slide 14: 9M FY2019 Turnover Analysis
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® 9M FY2019 TURNOVER ANALYSIS 1% 26% Americas 73% Asia Pacific Europe Americas -12.6% ▪ In line with strategy, divested Sager vegetable business and reduced private label sales in retail channel ▪ Lower volume of retail
Slide 15: Market Updates for 3Q FY2019
15 Market Updates for 3Q FY2019
Slide 16: Del Monte Foods Growth Strategy
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DEL MONTE FOODS GROWTH STRATEGY 16
Slide 17: USA
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® USA Market Share (#1) Market Share (#1) Market Share (#2) Market Share (#2) Canned Vegetable Canned Fruit Fruit Cup Snacks Canned Tomato ▪ Maintained share leadership across core categories ▪ Innovation continues to dr
Slide 18: USA: From macro-trends to behavioural shifts to innovation
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® USA From macro-trends => behavioural shifts => innovation How We Eat Socioeconomic Quality of Food How We Premiumisation The Continued Dynamics (Fresh, H&W, Procure Food Younger Brands Erosion of Food Growth of the Cul
Slide 19: Del Monte Foods New Innovation Goal
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DEL MONTE FOODS NEW INNOVATION GOAL 19
Slide 20: Del Monte Foods USA
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® DEL MONTE FOODS USA DMFI’s 3Q sales down 15% to US$386.2m ▪ Stripping out the Sager Creek business which was divested in September 2017, DMFI sales were down 6% ▪ Lower volume across categories most significantly brand
Slide 21: USA - Innovation: Fruit & Oats, College Inn Bone Broth
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® USA - INNOVATION Fruit & Oats College Inn Bone Broth • Del Monte Fruit & Oats Best New Product of the Year for Breakfast Category! Woman’s Day Newsletter College Inn is off to a strong start: • Now 5% share of the Bone
Slide 22: USA - Retail Marketing Highlights
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® USA - RETAIL MARKETING HIGHLIGHTS Del Monte Growers of 100% Juice Fruit Cup® Contadina Print Pinterest Digital Good Print Snacks FSI OLV • Relaunch, new campaign TV/OLV • Print, Digital, Social, In-store Social Digital
Slide 23: USA – Foodservice Highlights
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® USA – FOODSERVICE HIGHLIGHTS Vending Channel Segmentation Focus Aramark C&U Realignment • Vending channel sales have now been • Foodservice Sales teams are focusing • New placement of Adult Fruit Cup realigned for mana
Slide 24: Philippines
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINES Market Share (#1) Market Share (#1) Market Share (#1) Packaged Pineapple Canned Mixed Fruit Canned and Carton Juices Market Share (#1) Market Share (#1) Tomato Sauce Spaghetti Sauce ▪ Del Monte is the marke
Slide 25: Philippines
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINES How are we strengthening the ▪ 3Q sales were down 6% in peso terms but General Trade? down 10% in US dollar terms due to peso 1 Develop the distributor core depreciation processes (policies, ways of working
Slide 26: Philippine Market – Fruits, Culinary & Beverage
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – FRUITS, CULINARY & BEVERAGE ✓ Online recipe for ✓ SpagSarap Squad sampling ✓ Contadina’s active Fruits during activation of the 5 delicious collaboration with culinary the holiday season spaghetti s
Slide 27: Philippine Market – Quick-Service Restaurants
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – QUICK-SERVICE RESTAURANTS ✓ Optimise growth opportunities behind dispenser juice expansion and meal tie-ups with major QSR chains ✓ Expand portfolio range via menu ideations with strategic QSR clien
Slide 28: Philippine Market – Convenience Stores
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – CONVENIENCE STORES 7-Eleven ✓ Drive aggressive growth in Strong convenience stores (CVS) by Family Mart double-digit increasing market share and share- Lawson growth of-wallet with high-impact Other
Slide 29: Philippine Market – Convenience Stores
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – CONVENIENCE STORES ✓ Drive dispenser juice and condiments sachet expansion to grab opportunities from CVS as emerging channel for ready-to-eat (RTE) meals amongst young, urban professionals ✓ Expand
Slide 30: Philippine Market – FY2019 Recognitions
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – FY2019 RECOGNITIONS ✓ One of only 3 food & beverage companies ✓ Won Gold in the Philstar Packaging Excellence in the Campaigns Asia Top 20 Brands in the Awards for Clear Can Packaging Innovation Phi
Slide 31: DM Kitchenomics Ecosystem
DM KITCHENOMICS ECOSYSTEM N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – DEL MONTE KITCHENOMICS 3+ million strong community on Facebook, one recipe per day post Recipe videos housed on YouTube; Recipe database in consumer site: www.lifegetsbette
Slide 32: Philippine Market – Inflation Busters!
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® PHILIPPINE MARKET – INFLATION BUSTERS! Continue to drive consumption in high-inflationary competitive landscape via: ✓ Relevant value messaging meant to sustain relevance ✓ Supported by discounted multi-packs in-trade
Slide 33: S&W Asia
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® S&W ASIA ▪ Consumers moving towards less processed and more natural food: S&W expanding sales of S&W Sweet 16 fresh pineapple ▪ E-commerce and digital are growing with North Asia having the largest share of E-commerce
Slide 34: S&W Asia
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® S&W ASIA ▪ Sales of the S&W business improved by 19% Creation of S&W’s WeChat account in 3Q due to strong sales of fresh pineapple to engage with in North Asia consumers/followers in China ▪ Offset decline in packaged
Slide 35: S&W Singapore
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® S&W SINGAPORE Chinese New Year promotion of S&W 100% Pineapple Juice in 4S Pack (ad feature in Cheers CNY catalogue). Single can format is also available for sale in the chillers. 35
Slide 36: S&W Partnerships
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® S&W PARTNERSHIPS China Japan South Korea Co-branding with Co-branding with , Partnered with CJ China’s No. 1 Fresh player; Japan’s leading Fresh player Freshway, South Korea’s Our fresh pineapples are biggest foodservi
Slide 37: Nice Fruit
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® NICE FRUIT • Individually-wrapped frozen “Pineapple Stick” sold about 4 million pieces from June 2018 to February 2019 in 7-Eleven Japan outlets • Average sales record of about 300,000 pieces per week for the first 3 w
Slide 38: Nice Fruit
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® NICE FRUIT • Selling soon in: • St. Mamet, France • Migros, Switzerland • Other markets in Europe • Saudi Arabia • Qatar • China • Hong Kong • Singapore Europe and Middle East China and Hong Kong Fairprice Singapore 38
Slide 39: FieldFresh India
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® FIELDFRESH INDIA ▪ FieldFresh sales were up 8% in 3Q due to higher Del Monte packaged product sales ▪ DMPL’s share of profit was US$0.01m, lower than prior year quarter’s US$0.1m due to commodity headwinds and devaluat
Slide 40: India – Sampling in Our Head Office
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® INDIA – SAMPLING IN OUR HEAD OFFICE Gourmet Sauces – Launch Activity Trail mix sampling 40
Slide 41: Sustainability
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® SUSTAINABILITY ▪ Del Monte Pacific’s maiden Sustainability Report, published in Oct 2018, was shortlisted by the Asia Sustainability Reporting Awards as “Asia’s Best First Time Sustainability Report” amongst eight comp
Slide 42: Improved Balance Sheet and Cash Flow
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® IMPROVED BALANCE SHEET AND CASH FLOW ▪ Committed to improve cash flow, reduce debt and interest expense ▪ Raised US$300m from two Preference Share tranches in April and December 2017 to repay loans ▪ In 4Q FY2018 and 1
Slide 43: Outlook
N O U R I S H I N G FA M I L I E S . E N R I C H I N G L I V E S . E VE RY DAY. ® OUTLOOK ▪ Barring unforeseen circumstances, the Group is expected to be profitable in FY2019 ▪ Major emphasis on responding to consumer trends through: ✓ Strengthening the core business and innovating -- Healthier opti