Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — H1 2007 Earnings Presentation
35 slides from Del Monte Pacific's earnings presentation, Aug 7, 2007
Slide 1: Second Quarter and First Half 2007 Results
Del Monte Pacific Limited Second Quarter and First Half 2007 Results 7 August 2007
Slide 2: Cautionary note on forward looking statements
2 Cautionary note on forward looking statements This presentation may contain statements regarding the business of Del Monte Pacific Limited and its subsidiaries (“Group”) that are of a forward looking nature and are therefore based on management’s assumption about future developments. Such forward
Slide 3: Agenda
3 Agenda • Executive Summary • Business Overview • Analysis of 2Q 2007 Results • Analysis of 1H 2007 Results • Cost Savings • Revenue-Building Activities • Outlook for 2007 • Dividend • Appendix
Slide 4: Executive Summary
4 Executive Summary • Del Monte Pacific, a premium branded food & beverage company saw a change in management in March 2006 following a takeover. • New management, experienced in brand marketing, reduced operating costs, improved efficiencies and grew revenue. • A 3-pronged approach to revenue growt
Slide 5: Executive Summary
5 Executive Summary • Initiatives taken by the new management since March 2006 have produced sustained improvement in business results: Revenue grew 13% in 1H07. Net profit jumped 49% in 1H07. In 2Q07, net profit rose 48%. • The full impact of existing and new initiatives will be felt from 200
Slide 6: Business Overview
6 Business Overview • Del Monte Pacific Limited (DMPL): Leading international brand of premium foods & beverages • Owner of the Del Monte brand in the Philippines and India / Subcontinent • DMPL has about 20% global market share for processed pineapple
Slide 7: Del Monte Brand Owners
7 Del Monte Brand Owners Progressive division of Del Monte into 5 entities following KKR takeover of RJR Nabisco from 1989. Each entity given separate, perpetual brand ownership. Company Markets Products Philippines and India / Sub- Del Monte Pacific Processed continent Del Monte Asia/ Asia Pacific
Slide 8: Key Business Segments
8 Key Business Segments • Philippines: processed fruits, beverages, tomato-based sauces and condiments • North America/Europe/Asia ex-Philippines: Del Monte brand through long term supply contracts and private labels • China & India / Subcontinent: Building new markets for existing and new products
Slide 9: Global Reach
9 Global Reach Russia & Eastern North Western Europe America Europe China Apple Middle East DMPL Europe and North America: 30% of Sales India Mango Asia • Del Monte Foods (USA) Phils • Kraft Canada and CanGro Pineapple • Fresh Del Monte Corp. Asia Pacific: 70% of Sales • Philippines • Rest of Asia t
Slide 10: Philippines
10 Philippines • Market leader with 60-90% market share for various categories: Canned Pineapple juice Canned Juice drinks Canned Pineapple/tropical fruits Tomato-based sauces and condiments • Largest integrated pineapple producer: ~19,000 ha of contiguous plantation, global low cost produ
Slide 11: Philippines Integrated Operations
Philippines Integrated Operations Demand Demand Plantation Plantation Cannery Cannery Ocean Ocean Port Port Global Supply ~19,000 ha. of Cannery capacity of Ocean port integrated Contracts with Del contiguous plantation 700,000 tons is ½ hr into cannery allows Monte cos. provide in the Philippines;
Slide 12: Europe and North America
12 Europe and North America • 30% of DMPL revenue in 1H 2007 • Sales of processed fruits & beverages to Del Monte brand owners • Sale to private label buyers • Consistent business flow through long term supply contracts
Slide 13: China
13 China • Acquired a premium juice maker, Great Lakes Fresh Foods and Juice Company Ltd, in China in July 2004 • Strong distribution network in over 60 cities in China • Great Lakes’ turnover almost US$ 14.0m in 2006 • Established portfolio of brands: Great Lakes, Ming Lang • OEM for Welch’s and Ro
Slide 14: India / Subcontinent
14 India / Subcontinent • Wholly-owned Del Monte Foods India (DMFI) formed in 2004 • Production of processed mango products commenced in 2005, export to Middle East, Europe, Asia and Africa • DMFI imports Del Monte products from Philippines and China for sale in the Indian subcontinent (e.g. Pakista
Slide 15: Second Quarter Results
Second Quarter Results Del Monte
Slide 16: Second Quarter 2007
Second Quarter 2007 In US$m 2Q 2006 2Q 2007 Change Turnover 53.9 65.7 +21.9% EBITDA 6.3 10.3 +63.0% PBIT 4.0 8.4 +111.2% Financial expense (net) (0.4) 0.0 n/m Tax 0.1 (3.0) n/m Net Profit 3.7 5.4 +47.8% EPS (US cents) 0.34 0.51 +50.0% Dividend/Share (US cents) 0.49 0.73 +49.0% Operating Cash Flow 1.
Slide 17: 2Q Turnover Analysis
By Market 2Q Turnover Analysis Asia Pacific 68% 25% Europe and North America 32% 16% By Product Processed Product 66% 20% Non-processed 2% Beverages 32% 0.1% 26%
Slide 18: 2Q Margins
2Q Margins Favourable pricing and cost % Margin efficiencies Higher gross 30 margin 23.6 Higher PBIT 22.0 & lower interest exp. 20 12.8 7.4 8.2 10 6.8 0 Gross Profit PBIT Net Profit 2Q06 2Q07
Slide 19: 2Q PBIT Variance Analysis
2Q PBIT Variance Analysis Forex gains Due to Higher sales Higher timing of & Lower IAS Professional and cost 41 media & efficiencies Fees promotional adjustment* expenses 2Q07 +0.8m 2Q06 -0.5m +0.4m US$ 8.4m US$ 4.0m +3.7m PBIT Gross Other General & Marketing PBIT Profit Operating Admin. Exp. Exp. E
Slide 20: 2Q Cash Flow Variance Analysis
2Q Cash Flow Variance Analysis 1Q07 +US$9.9m 2Q07 -11.1m Net Debt Net Cash -1.7m Operations -US$10.4m Capex -10.5m +3.0m Dividend Others & forex
Slide 21: Operating Entities' Performance
Operating Entities’ Performance Philippines • 2Q Turnover +31% YoY (volume +12%, price +17% inclusive of 8% peso appreciation) • Driven by marketing efforts and aided by pipelining to new distributors • Offtake of new products Fit ‘n Right juices and Fried Chicken Mix increasing behind launch advert
Slide 22: First Half 2007
First Half 2007 In US$m 1H 2006 1H 2007 Change Turnover 100.6 113.6 +12.8% EBITDA 11.9 18.8 +57.1% PBIT 8.5 14.9 +76.8% Financial expense (net) (0.6) 0.1 n/m Tax (0.8) (4.5) n/m Net Profit 7.1 10.5 +49.0% EPS (US cents) 0.65 0.98 +50.8% Dividend/Share (US cents) 0.49 0.73 +49.0% Operating Cash Flow
Slide 23: 1H Turnover Analysis
By Market 1H Turnover Analysis Asia Pacific 70% 23% Europe/North America 30% By Product 5% Processed Product 64% 11% Non-processed 2% Beverages 34% 11% 18%
Slide 24: 1H Margins
1H Margins Favourable pricing and cost % Margin efficiencies Improved gross margin 30 & favourable Higher PBIT 24.4 IAS 41 impact & lower 21.2 interest cost 20 13.2 8.4 9.3 7.0 10 0 Gross Profit PBIT Net Profit 1H06 1H07
Slide 25: 1H PBIT Variance Analysis
1H PBIT Variance Analysis Higher Favourable Advertising Higher turnover & IAS 41 campaigns professional cost impact* on new fees efficiency products 1H07 1H06 US$ 14.9m US$ 8.5m +6.4m +1.1m -0.8m -0.3m PBIT Gross Other General & Marketing PBIT Profit Operating Admin. Exp. Exp. Exp. *IAS 41 requires
Slide 26: Capex
Capex 2Q and 1H Capex up versus prior year No major expenditures – improvements of plantation and cannery equipment and leasehold improvement for new offices 5 Capex 4 Depreciation 4.1 3.7 2.9 3 US$m 2 1.9 1.72.1 1.8 0.9 1 0 2Q06 2Q07 1H06 1H07
Slide 27: Cost Savings
Cost Savings 1Q 07 2Q 07 1H 07 Early Retirement US$ 500k US$ 500k US$ 1.0m Program Procurement US$ 200k US$ 650k US$ 850k Savings Cannery US$ 150k US$ 200k US$ 350k Improvements Logistics US$ 100k US$ 100k US$ 200k Rationalisation Others US$ 50k US$ 150k US$ 200k Total US$ 1.0m US$ 1.6m US$ 2.6m
Slide 28: Revenue Building Activities
Revenue Building Activities Implementation Revenue Impact in FY07 International Markets Expansion of fruit in cup sales 2H07 Development of the private label business in Ongoing US$3-5m Asia Expansion of juice exports including sale to 2H07 National Foods
Slide 29: Revenue Building Activities (cont'd.)
Revenue Building Activities (cont’d.) Implementation Revenue Impact in FY07 Philippines Re-launch of beverages, fruits and sauces 2H07 Launch of products in new packaging form 2H07 US$8-10m Addition of major customers in the food service 2H07 segment Continued expansion of store coverage following O
Slide 30: Outlook for 2007
Outlook for 2007 • Barring any unforeseen circumstances, Management continues to expect that the Group’s 2007 results will outperform those achieved in 2006 • The full impact of the cost-saving program started in 2006, coupled with a number of revenue-generating initiatives, will be realised startin
Slide 31: Dividend
Dividend Dividend Book Closure Payment Dividend/ Dividend/ Payout Ratio Date Date Share Share (US cent) (SG cent) Interim 22 Aug 2007 5 Sept 2007 0.73 1.11* 75% of 1H07 profit Vs last year Interim 20 Aug 2006 7 Sept 2006 0.49 0.77 75% of 1H06 profit *Based on an indicative exchange rate of S$1.52/US
Slide 32: Appendix
Appendix Del Monte
Slide 33: Second Quarter 2007 (S$m)
Second Quarter 2007 (S$m) In S$m 2Q 2006 2Q 2007 Change Turnover 85.7 99.9 +16.5% EBITDA 10.1 15.7 +55.8% PBIT 6.4 12.8 +101.9% Net Profit 5.8 8.2 +41.3% EPS (SG cents) 0.54 0.77 +42.6% Dividend/Share (SG cents) 0.77 1.11 +44.2% Operating Cash Flow 2.6 (16.9) n/m Net debt (0.05) (15.79) n/m S$: US$
Slide 34: First Half 2007 (S$m)
First Half 2007 (S$m) In S$m 1H 2006 1H 2007 Change Turnover 162.0 173.7 +7.2% EBITDA 19.2 28.7 +49.3% PBIT 13.6 22.9 +68.0% Net Profit 11.4 16.1 +41.6% EPS (SG cents) 1.05 1.50 +42.9% Dividend/Share (SG cents) 0.77 1.11 +44.2% Operating Cash Flow (6.9) (14.0) +103.8% Net Cash (0.05) (15.90) n/m S$:
Slide 35: DMPL Share Price and Volume
(in m shares) Volume 0.0 0.2 0.4 0.6 0.8 Jul-05 1.0 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 (S$) 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 DMPL Share Price and Volume Share Price