Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — Q2 FY2017 Earnings Presentation
32 slides from Del Monte Pacific's earnings presentation, Dec 6, 2016
Slide 1: Del Monte Pacific 2Q FY2017 Results
Del Monte Pacific 2Q FY2017 Results 6 December 2016
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 FY2017 Results 1H FY2017 Results Market Updates Sustainability Outlook 3
Slide 4: Notes to the 2Q FY2017 Results
Notes to the 2Q FY2017 Results 1. Second quarter is 1 August to 31 October. 2. DMPL’s stake in DMFI is 89.4%, hence the non controlling interest line (NCI) in the P&L. 3. Net income is net of NCI. 4. DMPL changed measurement of the cost of inventory from weighted average to FIFO method in April 2016
Slide 5: 2Q FY2017 Results and Outlook
2Q FY2017 Results Revenue was slightly lower at US$636m on USA sales Net income without one-off items improved by 33% to US$21m Del Monte Philippines and S&W in Asia & Middle East continued to deliver strong performance Deleveraging planned with Preference Shares offering – aiming for 1st qu
Slide 6: DMPL 2Q FY2017 Group Results Summary
DMPL 2Q FY2017 Group Results Summary Sales of US$636m down 5%, driven by lower US sales Sales % Change US -9 Philippines +10 (in peso terms +12) S&W +87 OEM Exports -20 FieldFresh India (equity accounted) +15 (in rupee terms +17) All figures below without one-off items and vs prior year quarter:
Slide 7: One-off Expenses/(Income)
One-off Expenses/(Income) In US$ m 2Q FY16 2Q FY17 Booked under Closure of North Carolina plant - 1.2 CGS ERP implementation at DMFI 2.0 - G&A expense Sager Creek integration 1.3 - G&A expense Severance 2.7 0.3 G&A expense Retirement plan amendment (39.4) - G&A expense Total (pre-tax basis) (33.4) 1
Slide 8: DMPL 2Q FY2017 Results – As reported
DMPL 2Q FY2017 Results – As reported 2Q 2Q In US$m Chg (%) Comments FY 2016 FY 2017 Lower DMFI sales partly offset by higher Philippines Turnover 666.8 636.2 -4.6 and S&W Asia sales Lower sales; also includes US$1.2m one-off Gross profit 149.4 146.9 -1.6 incremental cost for a US plant closure Last
Slide 9: 2Q FY2017 Turnover Analysis
2Q FY2017 Turnover Analysis Americas 77% 22% Asia Pacific 1% Europe Americas -9.3% Lower inventory builds on packaged vegetable and plastic fruit cup (as major retailers continued their thrust to optimise cash) Weakness in the canned fruit industry Continued impact of unsuccessful low-margin U
Slide 10: DMPL 1H FY2017 Group Results Summary
DMPL 1H FY2017 Group Results Summary Sales of US$1.1bn down 4%, driven by lower US sales Sales % Change US -8 Philippines +9 (in peso terms +13) S&W +45 OEM Exports -13 FieldFresh India (equity accounted) +13 (in rupee terms +15) All figures below without one-off items, and vs prior year period:
Slide 11: One-off Expenses/(Income)
One-off Expenses/(Income) In US$ m 1H FY16 1H FY17 Booked under Closure of North Carolina plant - 2.7 CGS ERP implementation at DMFI 4.0 - G&A expense Sager Creek integration 2.0 - G&A expense Severance 3.0 3.7 G&A expense Retirement plan amendment (39.4) - G&A expense Total (pre-tax basis) (30.4) 6
Slide 12: DMPL 1H FY2017 Results – As reported
DMPL 1H FY2017 Results – As reported 1H 1H In US$m Chg (%) Comments FY 2016 FY 2017 Lower DMFI sales partly offset by higher Philippines Turnover 1,145.5 1,101.7 -3.8 and S&W Asia sales Lower sales; also includes US$2.7m one-off cost for Gross profit 251.8 240.5 -4.5 a US plant closure Last year inc
Slide 13: 1H FY2017 Turnover Analysis
1H FY2017 Turnover Analysis Americas 76% 23% Asia Pacific 1% Europe Americas -8.0% Continued impact of unsuccessful low-margin USDA bids from 2H FY2016 plus reduced sales in private label and foodservice business lines Asia Pacific +16.5% Sales in the Philippines and S&W in Asia were up double-d
Slide 14: United States of America
United States of America Market Share (#1) Market Share (#1) Market Share (#2) Packaged Core Vegetable Packaged Core Fruit Packaged Cut Tomato Slowly declining canned category: Win through innovation, differentiation and product attributes DMFI had higher market share in packaged vegetables and
Slide 15: Del Monte Foods USA
Del Monte Foods USA DMFI’s 2Q sales down 9% to US$493.3m • Lower inventory builds on packaged vegetable ahead of the holiday season, and on plastic fruit cup coming out of Back-to- School (as major retailers continued their thrust to optimise cash) • Weakness in the canned fruit industry • Continu
Slide 16: Del Monte Foods New Product
Del Monte Fruit Refreshers Del Monte Foods New Product A modern twist on the Fruit Cup… Pineapple in Passionfruit Fruit Water Mandarin Orange in Coconut Water Grapefruit & Oranges in Pomegranate Fruit Water Grapefruit in Pink Guava Fruit Water Brings a number of firsts to the category… new, on tre
Slide 17: Fruit Refreshers Launch - Fully integrated Marketing Plan
Fruit Refreshers Launch - Fully integrated Marketing Plan Key Tactics: Print, Targeted Digital, PR Campaign & Celebrity Spokesperson; Couponing to drive trial and repeat Shopping & Selection Drive Demand Key Tactics: Targeted Mobile Ads & Offers, Display, Sampling, Shelf Signage Experience Key Tacti
Slide 18: Newly Reformulated College Inn Stock & Packaging
Newly Reformulated College Inn Stock & Packaging! Improved Formula – Simple Ingredients Upsized to 32oz packaging 80% more product 35% price value/oz New package design for consistent brand architecture Will be supported with FSI print ads and shelf signage 18
Slide 19: 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 20: Del Monte Philippines
Del Monte Philippines Philippines sales achieved double-digit growth in 2Q Expanded penetration and increased consumption across categories in retail Expanded in the rapidly growing foodservice channel as the Group optimised opportunities Strengthened its culinary portfolio: Launch of the
Slide 21: Contadina launched in the Philippines
Contadina launched in the Philippines Launched own micro site & Facebook page 21
Slide 22: Del Monte Philippines Beverage
Del Monte Philippines Beverage Del Monte Heart Smart is an innovative 100% juice that aids in cholesterol reduction Endorsed by the Philippine Association of Thoracic and Cardiovascular Surgeons Aired new TV ad in September 22
Slide 23: Del Monte Philippines Beverage (cont’d)
Del Monte Philippines Beverage (cont’d) Initial sale of Del Monte Fizzy Juice Drinks in October 2016 Available in 7-Eleven convenience stores Availability in other major convenience stores and select modern trade accounts expected by January 2017 Launch will expand Del Monte beverage footpri
Slide 24: Asia and Middle East
Asia and 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, realise S
Slide 25: S&W Asia and the Middle East
S&W Asia and the Middle East S&W branded business sales in Asia and the Middle East were up double-digit terms in 2Q Driven by both the fresh and packaged segments In fresh fruit, expanded distribution in China and raised brand awareness through in-store sampling In the packaged segment, str
Slide 26: S&W Asia – cont’d
S&W Asia – cont’d HONG KONG - S&W participated in Asia Fruit Congress JAPAN - S&W Fresh Cut Pineapple co-branded with the largest fresh cut producer in Japan; Selling in Inageya supermarket chain 26
Slide 27: S&W Asia – cont’d
S&W Asia – cont’d CHINA – Billboard template KOREA and TAIWAN – Promotion materials 27
Slide 28: FieldFresh India
FieldFresh India DMPL’s share of loss in the FieldFresh joint venture in India for 2Q maintained at US$0.4m Del Monte packaged business was up with strong growth from key accounts and foodservice segments led by improved volume in ketchup, packaged fruit, mayonnaise and olive oil Higher sales
Slide 29: FieldFresh India
FieldFresh India T Campaign on Del Monte Mayo: Works Every Time - highlights the versatile nature of our range, positions it as a quick fix solution to practically any food-related situation 29
Slide 30: Sustainability
Sustainability Del Monte in the USA improved its rating in the Carbon Disclosure Project survey to “B” Feeding America’s Annual Report for 2016 cited Del Monte as one of its Leadership Partners in providing food for Americans in need Del Monte Foundation in the Philippines turned over 10,000 s
Slide 31: Debt Outlook
Debt Outlook Planned issuance of perpetual preference shares US$ perpetual preference shares To be listed on the Philippine Stock Exchange (PSE) To be launched in early 2017 subject to market conditions Received approvals from the Philippine SEC and Bangko Sentral ng Pilipinas (Central Bank)
Slide 32: 2Q FY2017 Results and Outlook
2Q FY2017 Results Revenue was slightly lower at US$636m on USA sales Net income without one-off items improved by 33% to US$21m Del Monte Philippines and S&W in Asia & Middle East continued to deliver strong performance Deleveraging planned with Preference Shares offering – aiming for 1st qu