Del Monte Pacific Limited · SGX:D03
Del Monte Pacific — Q3 2009 Earnings Presentation
28 slides from Del Monte Pacific's earnings presentation, Nov 11, 2009
Slide 1: Third Quarter and Nine Months 2009 Results
Del Monte Pacific Limited Third Quarter and Nine Months 2009 Results 11 November 2009 1
Slide 2: Cautionary Note on Forward-looking Statements
Cautionary Note on Forward-looking Statements 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 forwa
Slide 3: Contents
Contents Executive Summary 3Q 2009 Results 9M 2009 Results Balance Sheet Business Updates Outlook and Action Plans 3
Slide 4: Executive Summary
Executive Summary 4
Slide 5: Executive Summary
Executive Summary A number of factors negatively impacted 3Q results: Weak demand in export markets plus a negative US$1.1m prior period price adjustments Storm and major flooding in the Philippines had a US$0.8m hit to bottom line Weak demand and changing consumer preference in the Philippine
Slide 6: Non-Recurring Items
Non-Recurring Items In US$m 3Q 2008 3Q 2009 9M 2008 9M 2009 Net income before non- 5.1 4.6 16.0 10.0 recurring items Non-recurring items: Export price adjustment 1.1 (1.1) 1.8 (1.8) Flood impact - (0.8) - (0.8) Fixed cost adjustment - (4.5) - - Total non-recurring items 1.1 (6.4) 1.8 (2.6) Net incom
Slide 7: Executive Summary
Executive Summary But there were still positive developments: Philippines – new product launches (e.g. 3 new flavours for Fit ‘n Right juice drink, pineapple tidbits and sauces in pouches) S&W – strong 3Q sales with higher sales in Korea; first shipment to Vietnam Fresh – up 51% driven by the
Slide 8: 3Q 2009 Results
3Q 2009 Results 8
Slide 9: Third Quarter 2009
Third Quarter 2009 3Q 3Q Chg In US$m Comments 2008 2009 (%) o Lower Philippines and export sales o Currency translation impact from Turnover 98.8 76.3 -22.8 5% Peso depreciation o Foregone sales of former China subsidiary Lower sales and US$4.5m fixed cost adjustment offset better pricing in most Gr
Slide 10: 3Q Turnover Analysis
3Q Turnover Analysis Asia Pac -27% • Philippine sales declined 16% By Market in Peso terms but down 22% in US$ terms • Sales down in other Asia Pacific markets due to weak Asia Pac consumption 73% E&NA • Foregone sales of former China 27% subsidiary which was disposed in September 08 E&NA -11% • Low
Slide 11: 3Q Margins
Gross margin Ð Lower sales and higher costs 3Q Margins Includes US$4.5m cost adjustment Favourable impact of Peso depreciation on the Group’s predominantly Peso costs % Margin Operating margin Ð 30 Lower gross profit Higher selling and other 21.8 expense to support new products Net margin
Slide 12: 3Q Cash Flow Variance Analysis
3Q Cash Flow Variance Analysis Additional Interest 2Q09 Operations Working Tax Capex investment Dividend & others 3Q09 cap FieldFresh -US$109.3m -US$92.0m Net Debt Net Debt -0.9m -2.4m -3.1m -6.8m +38.2m -9.9m +2.2m 12
Slide 13: Peso/US$ Impact
Peso/US$ Impact 3Q 9M Peso/US$ rate in 2009 47.355 48.431 Peso/US$ rate in 2008 45.046 43.262 Y-o-Y depreciation 5% 12% Impact on Net 1Q 2Q 3Q 9M Profit 2009 2009 2009 2009 in US$m Asia Pacific (2.1) (1.4) (0.3) (3.8) Europe & 1.7 1.3 1.2 4.1 North America Net impact (0.4) (0.1) 0.9 0.3 Near Natural
Slide 14: 9M 2009 Results
9M 2009 Results 14
Slide 15: Nine Months 2009
Nine Months 2009 9M 9M Chg In US$m 2008 2009 (%) o Lower export sales o Currency translation impact from Turnover 259.1 215.6 -16.8 12% Peso depreciation o Foregone sales of China subsidiary Lower sales offset better pricing in Gross profit 58.2 45.4 -22.0 most markets and the favourable Peso deprec
Slide 16: 9M Turnover Analysis
9M Turnover Analysis Asia Pac -17% • Lower sales due to lower By Market consumer demand in export markets • Philippine sales up 2% in Asia Pac Peso terms but down 8% in US$ terms 75% E&NA • Foregone sales of US$15.6m 25% from the former Chinese subsidiary E&NA -15% • Lower volume of processed fruits
Slide 17: 9M Margins
Gross margin Ð Higher costs partially offset by 9M Margins better pricing in the export market and favourable impact of Peso depreciation on cost translation % Margin Operating margin Ð 30 Lower turnover 22.5 21.1 Net margin Ð 20 11.1 10 7.4 6.9 3.4 0 Gross Profit Operating Profit Net Profit 9M0
Slide 18: Balance Sheet
Balance Sheet 18
Slide 19: Working Capital Management
Working Capital Management Successfully reduced working capital by US$35m from June 2009 level. Expects another significant improvement by year-end No. of days 2Q 2009 3Q 2009 Chg Comment Actively managed inventory levels for various inputs; Inventory 139 119 (20) stricter implementation of invent
Slide 20: Credit Standing
Credit Standing Loan utilisation: only 45% of bank credit lines Commercial bank lending steadily growing; latest data showing a 6.1% growth y-o-y (Sept) Loan Mix: 60% Peso and 40% US$ to optimise natural hedge 77% Short term and 23% Long term Gearing and Coverage Ratios Net debt equity ratio =
Slide 21: Business Updates
Business Updates 21
Slide 22: Philippines
Philippines 3Q sales declined by 16% in Peso terms US$3.2m sales impact by typhoon Ketsana Weak economic environment Downward shift to lower-priced lower-margin products Del Monte Fit ‘n Right juice drink in PET still posted significant volume increase Continued to launch new innovative
Slide 23: S&W in Asia
S&W in Asia Sales up 60%, reflecting higher sales of processed pineapple and tropical products to Korea and the improved sales to Singapore for processed vegetables, tomatoes and beans First shipment to Vietnam of Philippine produced products (canned pineapple, mixed fruits and juices) started i
Slide 24: FieldFresh in India
FieldFresh in India 3Q sales grew by 26% YoY on stronger performance from Processed Foods under the Del Monte brand and Fresh businesses under the FieldFresh brand Product contribution margin improved significantly to 12% from negative last year due to better sales mix Exports of fresh baby co
Slide 25: Outlook
Outlook 25
Slide 26: Outlook and Action Plans
Outlook and Action Plans Given the third quarter results of the Philippines and export markets, Management now expects full year net income to be significantly lower than last year’s Faced with a challenging operating environment, Management will optimise its sales mix across products and market
Slide 27: Outlook and Action Plans
Outlook and Action Plans Action plans: In the Philippine market, in light of some consumer shifts to lower margin products, the Company will work towards increasing margins and profitability through cost reviews, while stimulating consumption with new product launches and developing new sales chan
Slide 28: 28
28