Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — Q2 FY2018 Earnings Presentation
41 slides from Del Monte Pacific's earnings presentation, Dec 5, 2017
Slide 1: Del Monte Pacific 2Q FY2018 Results
DEL MONTE PACIFIC 2Q FY2018 RESULTS 5 December 2017
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 FY2018 Results 1H FY2018 Results Preference Shares Market Updates Awards Sustainability Outlook 3
Slide 4: Notes to the 2Q FY2018 Results
Notes to the 2Q FY2018 Results 1. Second quarter is 1 August to 31 October 2017. 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 Plant
Slide 5: 2Q Highlights
2Q Highlights As part of the Group’s strategy to improve operational excellence, it divested its underperforming Sager Creek vegetable business and rationalised plants in the USA, incurring US$23.6m one-off expense. This resulted in a net loss of US$2.8m for the Group. Without this expense, the Gr
Slide 6: Outlook
Outlook The Group is expected to be profitable for FY2018 on a recurring basis Major emphasis on responding to consumer trends through: • Strengthening the core business -- healthier options and new products -- marketing and trade promotion -- channel development • Focusing on businesses that ar
Slide 7: DMPL 2Q FY2018 Group Results Summary
DMPL 2Q FY2018 Group Results Summary Sales of US$624.7m, -1.8% Sales % Change US -1.6 Philippines -2.9 (in peso terms +4) S&W -8 FieldFresh India (equity accounted) +3.6% (in rupee terms +0.2) All figures below without one-off items and vs prior year quarter: EBITDA of US$52.2m, down 28% from US
Slide 8: One-off Expenses
One-off Expenses In US$ m 2Q FY17 2Q FY18 Booked under Closure of North Carolina plant 1.2 - CGS Closure of Sager Creek Arkansas plant - 6.5 G&A/Misc expense Closure of Plymouth, Indiana plant - 14.1 G&A/Misc expense Severance 0.3 0.4 G&A expense Others - 2.6 G&A expense Total expense (pre-tax basis
Slide 9: DMPL 2Q FY2018 Results – As Reported
DMPL 2Q FY2018 Results – As Reported 2Q 2Q In US$m FY2017 Chg (%) Comments FY2018 (Restated) Turnover 636.0 624.7 -1.8 Mainly lower USA sales Gross profit 146.7 128.4 -12.5 Lower sales and higher trade promotion spending Includes one-off expenses of US$23.6m due to EBITDA 71.2 28.6 -59.9 planned pla
Slide 10: 2Q FY2018 Turnover Analysis
2Q FY2018 Turnover Analysis Americas -2.1% Unfavourable pricing in foodservice and USDA, and higher planned trade promotion spending Volume was marginally higher driven by the strong performance of the packaged vegetable and fruit segments ahead of the holiday season Asia Pacific -3.4% Philipp
Slide 11: DMPL 1H FY2018 Group Results Summary
DMPL 1H FY2018 Group Results Summary Sales of US$1.1 billion, -0.4% on lower USA sales Sales % Change US -2.6 Philippines -2.3 (in peso terms +4.5) S&W +25 FieldFresh India (equity accounted) +2.7 (in rupee terms -1) All figures below without one-off items and vs prior year period: EBITDA of US$
Slide 12: One-off Expenses
One-off Expenses In US$ m 1H FY17 1H FY18 Booked under Closure of North Carolina plant 2.7 - CGS Closure of Sager Creek Arkansas plant - 6.5 G&A/Misc expense Closure of Plymouth, Indiana plant - 14.1 G&A/Misc expense Severance 3.7 1.3 G&A expense Others - 2.6 G&A expense Total expense (pre-tax basis
Slide 13: DMPL 1H FY2018 Results – As Reported
DMPL 1H FY2018 Results – As Reported 1H 1H In US$m FY2017 Chg (%) Comments FY2018 (Restated) Turnover 1,103.4 1,098.6 -0.4 Higher Asia sales offset by lower USA sales Gross profit 242.1 226.3 -6.5 Lower sales and higher trade promotion spending Includes one-off expenses of US$24.5m due to EBITDA 96.
Slide 14: 1H FY2018 Turnover Analysis
1H FY2018 Turnover Analysis Americas -3.0% Distribution losses in tomato category, unfavourable pricing in foodservice and USDA, and higher trade promotion spending Asia Pacific +5.0% Philippines grew in local currency terms but down in US$ terms Higher S&W fresh and packaged sales Europe +93.
Slide 15: Preference Share Offering (2nd Tranche)
Preference Share Offering (2nd Tranche) To raise more equity and repay loans, DMPL is offering US$80 million Series A-2 Preference Shares with an oversubscription option of up to US$80 million Coupon rate of 6.5% per annum payable semi-annually The offer period is 28 November to 8 December 201
Slide 16: Market Updates for 2Q FY2018
Market Updates for 2Q FY2018 16
Slide 17: 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 2Q (Canned Vegetable +0.8 pts, Canned Fruit +3.
Slide 18: Del Monte Foods USA
Del Monte Foods USA DMFI’s 2Q sales down 1.6% to US$485.6m • Unfavourable pricing in foodservice and USDA, and higher planned trade promotion spending • Volume was marginally higher driven by the strong performance of the packaged vegetable and fruit segments ahead of the holiday season DMFI con
Slide 19: 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 20: Marketing Highlights
Marketing Highlights Vegetable College Inn Websites lege Inn • Enhanced Digital Partnerships with • New Campaign Launch September • Website Redesigns launched for both premier Food Networks 2017 “Delicious in the Details” Del Monte & College Inn in October • Inspiring usage and reaching younger • Hi
Slide 21: Innovation Highlights
Innovation Highlights Fruit & Chia College Inn Organic Broth Chicken Beef Concentrated Broth Chicken Less Sodium Chicken • Trial to date of 2.0MM+ households • Strong acceptance across top East Coast retailers • Successful attracting new, younger shoppers • Distribution ramping up well in preparatio
Slide 22: Foodservice & E-Commerce Highlights
Foodservice & E-Commerce Highlights Foodservice: Snacking Foodservice: College Inn E-Commerce • Secured supply commitments with large US school districts • Finalised preparation to sell direct to • Completed transition of Foodservice selling/distribution from Kraft-Heinz Amazon Fresh • Readying to e
Slide 23: Del Monte Philippines (DMPI)
Del Monte Philippines (DMPI) DMPI is the Group’s 2nd largest subsidiary Comprises of Philippines sales and exports 2Q sales of US$134.0 million, up 2% versus the same quarter last year Del Monte Tomato Sauce Christmas Promo Pack Del Monte 100% Pineapple Juices now in 1-litre Tetra Pak carton 2
Slide 24: 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 25: Philippines
Philippines Philippines is the largest market of subsidiary Del Monte Philippines, Inc (DMPI) Sales were up 4.0% in peso terms but down 2.9% in US dollar terms due to peso depreciation Better sales of packaged fruit as well as the foodservice channel Continued to invest in driving inclusion
Slide 26: Philippine Market Updates: Del Monte Tomato Sauce
Philippine Market Updates DEL MONTE TOMATO SAUCE Continuous investments on frequency-build, latched on the habit of recipe twists and experimentation National TVC Airing on Free TV Recipe Tutorial Video on YouTube DM Tomato Sauce 3 + 1 Bundle Facebook Link to (Pantry-Loading) Recipe Ads 26
Slide 27: Philippine Market Updates: Ketchup
Philippine Market Updates KETCHUP Highly targeted awareness and trial-build for newly launched premium Del Monte Extra Rich Ketchup targeting young foodies Digital Activation Facebook and YouTube ads Consumer & Trade Initiatives Merchandising Sampling Activities Visibility Programme 27
Slide 28: Philippine Market Updates: Quick 'n Easy
Philippine Market Updates DEL MONTE QUICK ‘N EASY Recruitment of new users into the Del Monte franchise through active promotion of QnE’s expanded range of variants or meals solutions for time-poor women Merchandising ‘Easy as 1-2-3’ Sampling BBQ 80mL Sachet Introduction 28
Slide 29: Fit 'n Right Launches New 'Block Sugar' Campaign
Fit ‘n Right Launches New ‘Block Sugar’ Campaign PACKAGING TV AIRING DIGITAL AIRING SAMPLING TRADE Transitioned to new Sexy 10-Month National TV airing Yearlong digital education Promote meal-pairing via Yearlong merch to bottle starting July 2017. staring Aug. campaign. healthy meal delivery commun
Slide 30: 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 31: S&W Asia and the Middle East
S&W Asia and the Middle East Sales of the S&W business were 8% lower Reduced supply of fresh pineapple But packaged segment continued its double-digit growth Mainly due to higher sales of packaged pineapple and juices in North Asia Launched products in new packaging formats: 100% Pineapp
Slide 32: Launch of Pineapple Juice and Klear Cans (China)
Launch of Pineapple Juice and Klear Cans (China) Launch of Juices in 4S pack, and accompanied by a series of sampling activities Klear Cans are also launched and the visibility has been reinforced by displaying alongside the Pineapple Juices 32
Slide 33: Sampling Activations of Contadina Sauces (China)
Sampling Activations of Contadina Sauces (China) Launch of Contadina Pasta Sauce The launch was supported by in-store sampling activities 33
Slide 34: Foodservice Distribution of Pineapple Juice (Singapore)
Foodservice Distribution of Pineapple Juice (Singapore) Hotels Introduced 100% pineapple juice into the mini bars of Marina Bay Sands by conducting launch trial in about 200 rooms Bars/ Restaurants Schools/ Institutions 100% Pine Juice served on its 100% Pineapple Juice can be own or concocted with
Slide 35: FieldFresh India
FieldFresh India FieldFresh broke even on improved sales and margins DMPL’s share of profit was US$0.01 million, a turnaround from the share of loss of US$0.4 million in the prior year period Tapping the consumer gifting opportunity during Diwali via Del Monte gift packs 6 gifting options – 4 wi
Slide 36: Del Monte Pastabilities: World Pasta Month on Digital
Del Monte Pastabilities: World Pasta Month on Digital Leverage World Pasta month on digital to strengthen our connection with Pasta consumers in India Highlight the versatility of pasta by showcasing infinite recipe options that cut through various meal occasions and moods 36
Slide 37: Del Monte Pastabilities: World Pasta Month on Digital
Del Monte Pastabilities: World Pasta Month on Digital 37
Slide 38: Awards
Awards Won the best IR website from EQS-Investor Relations Professionals Association (Singapore) amongst 700 Singapore-listed companies evaluated in October 2017 Won the Transparency Award from Securities Investors Association (Singapore) in September 2017 Ranked #16 or Top 3% amongst 606 Sing
Slide 39: Sustainability
Sustainability Del Monte in the US was cited by Feeding America as Leadership Partner for its support in providing meals to people in need Del Monte donated various food products for disasters victims in Florida, Texas, California and Mexico In the Philippines, Del Monte Foundation completed a
Slide 40: 2Q Highlights
2Q Highlights As part of the Group’s strategy to improve operational excellence, it divested its underperforming Sager Creek vegetable business and rationalised plants in the USA, incurring US$23.6m one-off expense. This resulted in a net loss of US$2.8m for the Group. Without this expense, the Gr
Slide 41: Outlook
Outlook The Group is expected to be profitable for FY2018 on a recurring basis Major emphasis on responding to consumer trends through: • Strengthening the core business -- healthier options and new products -- marketing and trade promotion -- channel development • Focusing on businesses that ar