Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — Q3 FY2018 Earnings Presentation
40 slides from Del Monte Pacific's earnings presentation, Mar 8, 2018
Slide 1: Del Monte Pacific 3Q FY2018 Results
DEL MONTE PACIFIC 3Q FY2018 RESULTS 8 March 2018
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 3Q FY2018 Results 9M FY2018 Results Preference Shares DMPI IPO Market Updates Sustainability Outlook 3
Slide 4: Notes to the 3Q FY2018 Results
Notes to the 3Q FY2018 Results 1. Third quarter is 1 November 2017 to 31 January 2018. 2. 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. 3. DMPL Group adopted the amendments to IAS 16 and IAS 41 (Agriculture: Bearer
Slide 5: 3Q Highlights
3Q Highlights • Sales and market shares in the USA grew with innovation and brand building activities, offset by a decline in DMPL Group’s exports of pineapple juice concentrate. • One-off expenses, mainly the non-cash US$39.8m write-off of deferred tax assets in the USA due to new tax rates, led to
Slide 6: Outlook
Outlook Barring unforeseen circumstances and excluding one-off expenses, the Group is expected to be profitable for FY2018 Major emphasis on responding to consumer trends through: • Strengthening the core business -- healthier options and new products -- marketing and trade promotion -- channel
Slide 7: DMPL 3Q FY2018 Group Results Summary
DMPL 3Q FY2018 Group Results Summary Sales of US$599.8m, -0.7% Sales % Change US +0.2 Philippines +4 (in peso terms +8) S&W -16 FieldFresh India (equity accounted) +8 (in rupee terms +3) All figures below without one-off items and vs prior year quarter: EBITDA of US$46.4m, down 6% from US$49.2m
Slide 8: One-off Items
One-off Items In US$ m 3Q FY17 3Q FY18 Booked under Closure of North Carolina plant 0.9 - CGS Closure of Sager Creek Arkansas plant - 6.8 G&A/Misc expense Closure of Plymouth, Indiana plant - (0.8) G&A/Misc expense Severance 4.5 2.5 G&A expense Others - 2.7 G&A expense Total one-offs (pre-tax basis)
Slide 9: DMPL 3Q FY2018 Results – As Reported
DMPL 3Q FY2018 Results – As Reported 3Q 3Q In US$m FY2017 Chg (%) Comments FY2018 (Restated) Turnover 604.2 599.8 -0.7 Higher USA sales offset by lower PJC exports Gross profit 125.7 119.1 -5.2 Lower sales and higher trade promotion spending Includes one-off expenses of US$11.2m (due to EBITDA 43.8
Slide 10: 3Q FY2018 Turnover Analysis
3Q FY2018 Turnover Analysis Americas +0.4% Higher volume of packaged fruit and broth, and increased retail sales partially offset by higher trade promotion and distribution losses in packaged tomatoes Asia Pacific -0.6% Philippines sales were up driven by expanded penetration and increased consu
Slide 11: DMPL 9M FY2018 Group Results Summary
DMPL 9M FY2018 Group Results Summary Sales of US$1.7 billion, -0.5% on lower USA sales Sales % Change US -1.6 Philippines +0.1 (in peso terms +6) S&W +9 FieldFresh India (equity accounted) +5 (in rupee terms +0.3) All figures below without one-off items and vs prior year period: EBITDA of US$131
Slide 12: One-off Items
One-off Items In US$ m 9M FY17 9M FY18 Booked under Closure of North Carolina plant 3.6 - CGS Closure of Sager Creek Arkansas plant - 13.3 G&A/Misc expense Closure of Plymouth, Indiana plant - 13.3 G&A/Misc expense Severance 8.2 3.8 G&A expense Others - 5.3 G&A expense Total one-offs (pre-tax basis)
Slide 13: DMPL 9M FY2018 Results – As Reported
DMPL 9M FY2018 Results – As Reported 9M 9M In US$m FY2017 Chg (%) Comments FY2018 (Restated) Turnover 1,707.6 1,698.3 -0.5 Higher Asia sales offset by lower USA sales Gross profit 367.8 345.4 -6.1 Lower sales and higher trade promotion spending Includes one-off expenses of US$35.7m (due to EBITDA 14
Slide 14: 9M FY2018 Turnover Analysis
9M FY2018 Turnover Analysis Americas -1.8% Distribution losses in the packaged tomato category, unfavourable pricing in foodservice and USDA, and higher trade promotion spending Asia Pacific +3.0% Philippines expanded penetration and increased consumption of its packaged pineapple product follow
Slide 15: Preference Share Offering (2nd Tranche)
Preference Share Offering (2nd Tranche) DMPL raised US$100m from the offer of Series A-2 Preference Shares in December 2017 Coupon rate of 6.5% per annum payable semi-annually Listed on 15 December 2017 on the Philippine Stock Exchange (PSE) DMPL raised US$200 million from the first tranche
Slide 16: Del Monte Philippines IPO
Del Monte Philippines IPO DMPL plans to sell its 20% stake in its wholly-owned subsidiary, DMPI, through an IPO on the PSE Up to US$320m of proceeds subject to book building and market conditions Consumer companies on the PSE are trading at an average 29x PE To further improve the Group’s ge
Slide 17: Market Updates for 3Q FY2018
Market Updates for 3Q FY2018 17
Slide 18: Del Monte Foods Organisation
Del Monte Foods Organisation Gregory Longstreet was appointed DMFI’s CEO effective 5 September 2017, responsible for DMFI’s strategy, business and overall organisation He has outlined a four-point growth strategy for the brand: building relevance through product differentiation driving innov
Slide 19: United States of America
United States of America Market Share (#1) Market Share (#1) Market Share (#2) Market Share (#2) Canned Vegetable Canned Fruit Plastic Fruit Cup Canned Tomato Remains a brand leader across core categories Grew share in 3 out of 4 core categories in 3Q (Canned Vegetable +1.5 pts, Canned Fruit +0.
Slide 20: Del Monte Foods USA
Del Monte Foods USA DMFI’s 3Q sales up 0.2% to US$451.5m Higher volume of packaged fruit and broth The Del Monte Fruit & Chia cups launched in 2Q are performing well. These are adult fruit cups which combine fruit and chia seeds DMFI followed this launch in 3Q with the introduction of Grab and
Slide 21: Del Monte Foods USA
Del Monte Foods USA In 3Q, DMFI contributed an EBITDA of US$4.0m and a net loss of US$54.8m to the Group As part of the Group’s strategy to improve operational excellence, DMFI divested its underperforming Sager Creek vegetable business last 2Q. This involved shutting the production facility in Si
Slide 22: Del Monte Foods Strategy
Del Monte Foods Strategy Build Relevance: Continually differentiate our brands and products in order to drive consumer preference Reinforce our points of difference (Del Monte’s quality, College Inn’s rich flavourful taste) Elevate our taste, health and convenience credentials (non-GMO, All Natu
Slide 23: Innovation Highlights
Innovation Highlights Introducing New Grab and Go Fruit Cups • Unlocking the On-the-Go usage occasion with nearly 50% of US Food Consumption in Snacking • Portable Grab and Go Fruit Cups with spork in the lid 4 amazing flavours: • Grapefruit & Orange in Pomegranate Water • Mandarin Orange in Coconut
Slide 24: Marketing Highlights
Marketing Highlights Vegetable College Inn Fruit lege Inn • Ongoing Campaign “Delicious in the • Holiday campaign featuring green bean Details” • Ongoing campaign with trial-generating casserole across top 10 customers tactics • Holiday, ongoing media across TV, • Ongoing media across TV, Online Vid
Slide 25: Foodservice Highlights
Foodservice Highlights Non-Commercial National College Inn Buy America Campaign Accounts • Completed 3-year contract with Compass/Foodbuy which forces national distribution through Sysco • Expanding the portfolio by making • Del Monte branded items will now successful retail items available to • Lau
Slide 26: Del Monte Philippines (DMPI)
Del Monte Philippines (DMPI) DMPI is the Group’s 2nd largest subsidiary Comprises of Philippines sales and exports 3Q sales of US$144.2m, down 3% in peso terms due to lower exports of the industrial pineapple juice concentrate 9M sales of US$411.7m, up 7.5% in peso terms Del Monte 100% Pinea
Slide 27: Philippines
Philippines Market Share (#1) Market Share (#1) Market Share (#1) Canned Pineapple Canned Mixed Fruit Canned and Tetra RTD Juices Market Share (#1) Market Share (#1) Tomato Sauce Spaghetti Sauce Del Monte is the market leader across several categories Modern trade and convenience stores are grow
Slide 28: Philippines
Philippines Philippines is the largest market of subsidiary Del Monte Philippines, Inc (DMPI) 3Q sales were up 8% in peso terms but up 4% in US dollar terms due to peso depreciation Expanded penetration and increased consumption of beverage and culinary products into peak Christmas season In
Slide 29: Philippine Market Updates – Juice & Chews
Philippine Market Updates – Juice & Chews Merchandising such as outdoor banners, chiller Achieved high share of shelf stickers, chiller highlight and glorifiers were installed in January 2018 29
Slide 30: Del Monte Juice Drinks continued to excite consumers with seasonal flavours
Del Monte Juice Drinks continued to excite consumers with seasonal flavours in single serve cans! Shipments for its 1L Tetra (2ND wave) and 202 Can SKUs (1ST wave) commenced in January 2018 Made even more exciting via engaging digital shorts and supported in the trade via sampling in supermarkets Sa
Slide 31: Asia and the Middle East
Asia and the Middle East 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 pie: S&W is actively exploring this channel To drive growth, reali
Slide 32: S&W Asia and the Middle East
S&W Asia and the Middle East Sales of the S&W business were 16% lower Lower packaged pineapple sales in North Asia Increased competition from cheaper-priced products from Thailand impacting the Group’s business most notably in China Launched S&W Fruit & Chia cups in 3 variants in NTUC Fairpr
Slide 33: Launch of S&W Fruit & Chia Cups (Singapore)
Launch of S&W Fruit & Chia Cups (Singapore) Launch of Fruit & Chia at NTUC Fairprice - New product launch at the leading retailer of Singapore. Supported by a series of outdoor and in-store roving sampling activations as well as introductory price. 33
Slide 34: Products in Metro and Foodservice (Turkey)
Products in Metro and Foodservice (Turkey) Advertised promotions and sampling of canned fruits and juices at the Metro Chain in Turkey Canned juices on sale at chiller sections of foodservice restaurants 34
Slide 35: FieldFresh India
FieldFresh India FieldFresh broke even in 3Q on improved sales and margins DMPL’s share of profit was US$0.1 million, a turnaround from the share of loss of US$0.5 million in the prior year period Tomato Ketchup Re-branding Del Monte is a key player in the tomato-based sauces space, with a 5% sh
Slide 36: New Product Launches
New Product Launches Sandwich Spread 450g and Pizza Pasta sauce 400g in a stand up spout pack – Building on the success of the spout format on Mayo 900g and 500g – Growth in Pasta/Pizza sauce category after 4 months of launch of the spout Domestic pasta 200g at a per unit price of Rs.49 – Act as
Slide 37: Del Monte @ World Food India
Del Monte @ World Food India • World Food India, a first of its kind event meant to highlight the potential of the Indian food processing industry, was organised by the ministry of food processing of India (MOFPI) from the 3rd to 5th November 2017 at the India Gate lawns in New Delhi. • FieldFresh F
Slide 38: Sustainability
Sustainability Improving Operational Excellence and Sustainability is one of the five strategic pillars of the Group Del Monte Philippines and the Cannery Employees Union signed a Memorandum of Agreement covering wage increases and improved benefits The JY Campos Centre where Manila office is
Slide 39: 3Q Highlights
3Q Highlights • Sales and market shares in the USA grew with innovation and brand building activities, offset by a decline in DMPL Group’s exports of pineapple juice concentrate. • One-off expenses, mainly the non-cash US$39.8m write-off of deferred tax assets in the USA due to new tax rates, led to
Slide 40: Outlook
Outlook Barring unforeseen circumstances and excluding one-off expenses, the Group is expected to be profitable for FY2018 Major emphasis on responding to consumer trends through: • Strengthening the core business -- healthier options and new products -- marketing and trade promotion -- channel