Del Monte Pacific Ltd
Corporate Presentation
A Global Heritage Brands Company
16 Dec 2015
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 identified by words such as ‘believe’,
‘estimate’, ‘intend’, ‘may’, ‘expect’, and ‘project’ and similar expressions as they relate to the Group. Forward
looking statements involve certain risks and uncertainties as they relate to future events. Actual results may vary
materially from those targeted, expected or projected due to various factors.
Representative examples of these factors include (without limitation) general economic and business conditions,
change in business strategy or development plans, weather conditions, crop yields, service providers’
performance, production efficiencies, input costs and availability, competition, shifts in customer demands and
preferences, market acceptance of new products, industry trends, and changes in government and
environmental regulations. Such factors that may affect the Group’s future financial results are detailed in the
Annual Report. The reader is cautioned to not unduly rely on these forward-looking statements.
Neither the Group nor its advisers and representatives shall have any liability whatsoever for any loss arising,
whether directly or indirectly, from any use or distribution of this presentation or its contents.
This presentation is for information only and does not constitute an invitation or offer to acquire, purchase or
subscribe for shares in Del Monte Pacific.
2
Agenda
I.
Overview, Brands, History
II.
Del Monte Foods Acquisition
III.
Strategies
IV.
Our Markets
V.
Financials, Outlook
VII.
Corporate Governance
VIII.
Investment Merits
IX.
Appendix – Competitive Strengths
X.
Appendix - Products
3
Company Overview
• Del Monte Pacific Ltd (“DMPL”) is one of the largest and most well-known marketers of premium quality food products globally
• Integrated business model encompassing plantation, processing facilities and sales and distribution networks
• Exclusive rights to premium heritage brands Del Monte and S&W in certain geographies and product categories
• Dual-listed in Singapore (since August 1999) and the Philippines (since June 2013)
• 67% owned by NutriAsia Pacific Ltd (“NutriAsia”) of the Campos family; 5.5% owned by the Lee Pineapple Group
• Singapore Corporate Awards (mid-cap category) Best Managed Board, Best CFO, Best IR, Best Annual Report
Top 5 ASEAN F&B Co. by Sales (CY 2014 USD bn)
DMPL FY2015 Sales
(by geography)
DMPL FY2015 Sales
(by product)
5%2%
14%
8% 6%
19% US$2.2bn
US$2.2bn
5.4
5.0
3.7
2.3
2.2
0.
5
Thai Union
Frozen
Note: Del Monte Pacific is based on FY2015
67%
79%
North America
Philippines
Asia ex-Phils
Europe
Packaged Fruit and Veg
Culinary
Beverage
Fresh Fruit and Others
4
4
Our Key Brands and Brand Ownership
• Del Monte (packaged products): USA, South America, Philippines,
Indian subcontinent and Myanmar
• S&W (for both packaged and fresh products): Globally except Australia and New Zealand
• Contadina and College Inn: Global
Canada
Europe
USA
Middle East
Mexico & Central America
Africa
Rest of Asia
Indian
subcontinent &
Myanmar
Philippines
South America
DMPL’s Del Monte brand ownership
DMPL’s S&W, Contadina and College Inn brand ownership
5
Our Brand Ownership
Heritage Brands :
1896
1892
Asia
EMEA
North and
South America
 Nutritious as fresh
 All natural
 Finest quality
 Healthy
1914
 Italian heritage
 Premium quality
1923
 Premium ingredients
 Taste of home
United States
South America
Central America &
Caribbean
Del Monte
Panamerican
Mexico & Canada
ConAgra
Europe,
Middle East &
Africa
Asia (ex
Philippines, Indian
subcontinent &
Myanmar)
Fresh Del Monte
Kikkoman
Philippines, Indian
subcontinent &
Myanmar
*DMPL’s Del Monte brand ownership is for packaged products
6
Our History
More than 120 years of brand and market leadership
1999
• Del Monte Pacific Limited
(DMPL) incorporated as
parent of Philippine company
• Listed on Singapore Exchange
1980
1892
RJR acquired Del
Del Monte was
Monte USA
born in California
1991
KKR sold Del Monte USA
and broke up the Del
Monte brand
2007
DMPL bought the S&W
brand from Del Monte
USA for Asia and EMEA
2013
• DMPL dual-listed on
the Philippine Stock
Exchange
• NPL down to 67% stake
2006
NutriAsia Pacific Limited
(NPL) acquired 85% of
DMPL
1997
TPG acquired Del Monte USA
1926
Del Monte USA set-up
operations in the
Philippines
1990
KKR bought
RJR-Nabisco
1996
Del Monte USA fully
divested from its
Philippine operations
2014
DMPL acquired Del Monte
USA for US$1.675 bn;
Re-united with US company
2011
KKR reacquired
Del Monte USA
7
Acquisition of Del Monte Foods
8
DMFI Acquisition
• Acquisition of Del Monte Foods, Inc (“DMFI”) completed on 18 February 2014
• Purchase price of US$1.675b or 9x EBITDA (subject to working capital adjustments)
• Financed by:
o Debt: US$970m LBO loans (in the US at DMFI level) and US$480m loans (in Philippines at
DMPL level)
o Equity: US$150m Rights and US$75m equity
• Current gearing will drop with the proposed preference share offering in CY2016
• DMPL aligned its financial year with that of DMFI to end in April
• Recently released 2Q FY2016 (August-October 2015) turnaround results
9
DMPL - DMFI Opportunities
Opportunities in new products, channels, markets and cost savings
Near-term
•
•
•
•
Product/Market: Cross selling (USA to Asia and vice versa) and develop Mexico
Channel: US Ethnic business (Filipino/Asian American)
Cost: Raw material synergy (Pineapple, Tomato)
Cost: Outsourcing of US back office functions to the Philippines
Mid-term
• New Products in USA and Asia
• Channel: US Hispanic business
Long-term
• New products in USA and Asia
• Market: South American Markets
10
10
Strategies
11
Business Strategies
Leverage the integrated
platform with the combined
portfolio of brands to
generate incremental
synergies
Continue to invest in the
portfolio of well recognised
and market leading brands
• Focus on integrating the businesses of DMPL and DMFI and leveraging off this integrated
platform, broad geographic spread and singular focus on the food and beverage sector
• Synergies include the vertical integration of its supply and distribution capabilities for the
packaged pineapple business in the US
• Maintain market leading positions in the major packaged fruit and vegetable categories
and packaged tomato and broth categories
• Leverage strong brand recognition in the USA to grow its core markets
• Spend approximately 2% of revenue on marketing efforts
Invest in R&D to focus on
product innovation and
marketing
Continue to efficiently
manage capital structure and
exercise prudent financial
management
• Continued efforts in research and development to develop and introduce new product
lines and packaging opportunistically
• Efficient financial and cash management policy
• Lower gearing ratio by managing equity and debt levels and undertaking de-levering
exercises as and when necessary (i.e. rights issue completed in March 2015)
12
12
Bringing the Family Back Together
Unites ownership of the iconic Del Monte brand across the US, South
America, Philippines, Indian subcontinent and Myanmar
Del Monte
Pacific
Provides DMPL access to world’s leading packaged food market and
broad US distribution platform
Significant value creation opportunities in the US market especially in
the packaged pineapple segment
Builds upon existing partnership; DMPL has been the sole supplier of
canned pineapple to DMFI for more than 20 years
Del Monte
Foods
Potential realisation of cost synergies for both DMPL and DMFI
Extends brand knowledge and best practices between DMPL and
DMFI
Opportunity to expand to Mexico and South America
13
13
Continue to Leverage on its Strong Brand Equity…
Del Monte is the third largest center-of-the-store brand in the United States...
...but it has not begun to reach its potential due to historic lack of support
Source: Company, Euromonitor
Notes: 1. Reflects top brands by retail sales generated in the Canned/Preserved Food, Dinner Mixes, Dried Processed Food, Oils and Fats, Sauces, Dressings & Condiments and
Spreads categories; excludes bakery, refrigerated and frozen sales
2. Excludes revenue related to cheese sales which was >US$3bn in 2012
14
14
…and Market Leading Brands
USA Market Share
15
15
…and Market Leading Brands
Philippines Market Share
16
16
Invest in Research & Development
Product Innovation
Philippines
India
Marketing Campaigns and Packaging
Philippines
USA
17
Our Markets
18
U.S. Market
FY2015 Net Sales by Brand
Private 19%
Label/Others*
FY2015 Net Sales by Product
Pineapple
Juice/
Concentrate
1%
4%
5%
Other
19%
Packaged
Vegetable
38%
Packaged
Fruit
42%
2%
71%
*Private label sales contributed mainly by Walmart/Sam’s Club;
Others include Sager Creek
19
19
Philippines Market
FY2015 Sales Split
(Total Sales US$303m)
Culinary
(Sauces,
Ketchup,
Pasta)
37%
Packaged
Fruit
23%
Beverage
40%
20
20
Other Markets
Asia and Middle East Market


S&W Asia and Middle East FY 2015 Sales Split
Acquired S&W International in November 2007

S&W entered the fresh pineapple business and is
now ranked Top 3 in China, South Korea, Japan
and Singapore

Offer exceptional quality premium canned fruit
and vegetable products

Brand is extendable to other packaging formats,
and to fresh produce

Adopt asset light strategy: all products
outsourced except packaged pineapple products

For Asia and Middle East, S&W sales of US$50m
in FY2015
For India, acquired 40% of FieldFresh in September
2007, with stake subsequently increased to 47% via
capital call and voting control equally split between
DMPL and Bharti Enterprises (the controlling
shareholder of Airtel India)


In Dec 2010, the Indian operations opened a new
facility near Bangalore to produce culinary
products and fruit drinks
In FY2015, sales amounted to US$61m with
US$49m from Del Monte sales in India
Others (corn,
beans, etc.)
16%
Fresh Fruit
52%
Packaged Fruit
32%
India FY 2015 Sales Split
Packaged
Fruits
18%
Beverage
9%
Culinary
(Ketchup,
Sauces, Mayo)
51%
Italian Range
(Olive Oil,
Olives, Pasta)
22%
21
21
Global – Private Labels/OEM
Private Labels/OEM
DMPL’s branded business is more than 80% of sales. The following are the segments of the
non-branded business:
Export Markets
Customers
Products
USA
Private labels
Packaged vegetable, fruit and tomato
Canada
Del Monte brand
owners
Packaged fruit and pineapple juice
concentrate (PJC)
Europe
Private labels
Packaged fruit and PJC
Asia Pacific
Del Monte Asia/
Kikkoman
Packaged fruit and PJC
Private labels
Packaged fruit, PJC and fresh pineapple
Fresh Del Monte*
Fresh pineapple
*DMPL’s Supply Contract with Fresh Del Monte shifted to market prices starting
1 January 2015
22
22
Financials, Outlook,
Investment Merits
23
Financial Overview
• DMPL aligned its fiscal year with DMFI, ending April instead of December
• FY2015 (May 2014 - April 2015) results were impacted by acquisition related
expenses hence the net loss of US$38m
• Without the one-off items, net income would have been US$25m
• FY2015 was a transition period, including reverting to proven strategy for DMFI,
growing market share, strengthening partnership with key retailers and exiting
from the Transition Service Agreement
 Reverting to competitive pricing levels
 Reintroducing the well-recognised classic Del Monte label
 Reinstating trade support levels
• FY2016 is a return to profitability
Please refer to the 4QFY15 for more details and to the 2QFY16 results presentation for the
latest results
24
Historical Financials
REVENUES
and GROSS
PROFIT
In US$m except as stated
27.0%
27.9%
27.3%
2,159.4
CY2011
CY2012
Revenues
CY2013
Gross Profit
EBITDA
15.0%
NET INCOME
434.2***
134.4
128.4
115.0
20.1%
492.2
459.7
425.2
1H FY2015*
Gross Profit Margin
14.0%
11.2%
7.2%
6.5%
6.9%
7.0%
1.1%
**
*DMPL changed its financial-year end to 30 April from 31 December to align with that of its US subsidiary, Del Monte Foods, Inc (DMFI). FY2015 refers to May 2014 to April 2015.
**EBITDA and Net income in CY2013-FY2015 were impacted by one-off fees relating to the acquisition of DMFI. The figures in the charts are net of one-off items. If inclusive of one-offs, EBITDA
were US$42m and US$96m, and net income was US$16m and net loss of US$38m for CY2013 and FY2015, respectively
***Adjusted Gross Profit
25
Historical Dividend Payout
2.5
5.60%
5.10%
2
3.60%
US$/share
1.5
1
2.30%
1.00%
0.5
0
2009
2010
2011
12-mo Dividend
2012
2013
Yield
Source: Bloomberg, DMPL Annual Reports
*Net profit in 2013 was impacted by one-off fees primarily relating to the acquisition of the consumer food business of Del Monte Corporation in the US. Net
profit would have been US$33.9 million on a recurring basis instead of US$16.1 million without the one-off fees.
26
26
Profit Outlook for FY2016
Barring unforeseen circumstances, the Group expects to sustain profits
in the remainder of the year and return to profitability in FY2016
USA :
• Sustain base business growth
• Accelerate foodservice growth and enter new vegetable segments
through Sager Creek
Asia :
• Continue to expand Del Monte brand in the Philippines
• S&W to gain more traction as it leverages its distribution expansion in
Asia and the Middle East
• JV in India to continue generating higher sales and maintain its positive
EBITDA
• El Niño mitigating measures in the field such as continuous enforcement
of land preparation activities and reinforcing root health
27
Cash Flow and Debt Outlook
1. Stronger cash flow expected in 2H FY2016
• 1H has seasonally lower sales but high working capital needs due
to production season peaking in October
• The opposite happens in 2H with seasonally stronger sales due to
Thanksgiving, Christmas and Easter, with lower working capital needs
• Expect stronger cash flow and deleveraging in 2H
2. Conversion of a substantial amount of loans from short- to medium-term has
significantly improved the Group’s current ratio and liquidity
3. Planned issuance of perpetual preference shares
• Intends to issue US$ perpetual preference shares
• In the Philippines to be listed on the Philippine Stock Exchange
• Launch in CY2016 subject to all regulatory approvals and market conditions
• Amounting to US$360m
• Will result in a further improvement of leverage ratios
28
Corporate Governance
• Received a total of 9 awards between 2010-2015 from the
Singapore Corporate Awards:
 Best Managed Board
 Best Chief Financial Officer
 Best Investor Relations
 Best Annual Report
• Received the Corporate Governance Award (Runner-Up)
from SIAS in October 2014
• Ranked 41st or Top 6% among 639 Singapore-listed
companies in the Governance and Transparency Index in
August 2015
29
Investment Merits
Solid Fundamentals
• Global brand footprint with well-known premium
Del Monte and S&W brands
• Long brand heritage of more than 120 years
• Strong local franchise with leading market
shares in anchor markets of USA and the
Philippines
• Globally competitive integrated pineapple
producer
Growth Drivers
• DMPL-DMFI opportunities (slide 10)
• Strong legs in USA and Philippines with highly
cash generative businesses to:
• fund emerging markets growth (eg rest of
Asia, Mexico and South America) and
• pockets of growth in USA and the
Philippines for new product categories,
channels and geography
• Experienced, dynamic management
Valuations
• DMFI returns to profit in FY2016, and serves
as a platform for future growth of DMPL
Corporate Governance
• Highly ranked (slide 29)
30
Appendix : Competitive Strengths
1 Established consumer brands with market leading positions worldwide
2
Large global business and vertically integrated operations with economies of scale
3
Strong supply chain management
4
Diversified portfolio of blue-chip customers
5
Strong shareholder support and experienced management team with proven track record
31
31
1
Established Consumer Brands with Market Leading
Positions in the US and Globally
United States
Brands
Product
Market
Share
Market
Position
 #1 fruit, #1 vegetable, #2 tomato*
Packaged
Core Fruit
30.6%
#1
 #2 tomato*
Packaged
Core
Vegetable
19.6%
#1
Packaged Cut
Tomato
12.0%
#2
Market Position (Canned Food)
 #2 tomato*, #3 vegetable, #4 fruit
 #2 broth, Leader in US Northeast
•Combined Del Monte, Contadina and S&W
Source: Euromonitor and Nielsen for FY2013 ending April
Source: Nielsen Scantrack, Total US Grocery+WalMart, 12M ending 2May 2015
Philippines
Products
Others
Market Share
Region
Canned pineapple
85% (#1)
Canned mixed fruit
75% (#1)
Japan
Canned RTD juices
92% (#1)
South Korea
Tomato sauce
81% (#1)
Spaghetti sauce
55% (#1)
Source: Nielsen Retail Index, Apr 2015
Products
Market
Share
Within Top 3
Singapore
China
Source: Management Estimates
32
32
2
Large Global Business and Vertically Integrated Operations
with Economies of Scale
Production Facilities
USA
Mexico
Venezuela
India
Philippines
Distribution Reach
13
2
1
1
1
USA
Mexico
Central
America
Venezuela
S. Korea
Japan
Hong Kong
China
Taiwan
Mongolia
Singapore
Indonesia
Production facilities
3rd Party Distribution
Thailand
Philippines
Malaysia
Pacific
Island
Israel
UAE
Iraq
Kuwait
Saudi
Arabia
Nepal
India
Pakistan
One of the largest integrated pineapple processors in the world with an 89-year history in the Philippines
Plantation
Cannery
~23,000 ha. of plantation
in
the
Philippines;
planting & harvesting 24
hour operation year
round
Cannery capacity of 700,000
tons is ½ hr from plantation;
processes fruit within
24
hours of harvest assuring
freshness
Fresh Packhouse
State-of-the-art
fresh
cold storage and packing
house facility
Ocean Port
Ocean port integrated
into cannery allows
shipping directly to
world markets
33
3
Strong Supply Chain Management
 Efficient and integrated supply chain and distribution logistics system allows it to focus on the most attractive markets and
gives it the flexibility to take advantage of changes in product supply and demand
 Maintains long-term relationships with its growers to help ensure a consistent supply of raw fruits and vegetables
 Conducts ongoing reviews of system and sets annual goals in conjunction with its six-sigma techniques and its productivity to cost
efficiency program
 Strong US supply chain management provides opportunities for expansion in other of the Group’s products within the US
United States
Philippines
•
DMFI sources vegetables and fruits from growers, farmers and cooperatives that
operate mainly in the US
•
DMFI processes its products in 16 facilities: 13 across the US, 2 in Mexico and 1 in
Venezuela
Vegetables
Fruit/Tomato
• Close proximity to
growers
• Off-season
production
opportunity
Yakima
• Production
capability to
expand into new
tomato-based
products
• Close proximity to growers
• Off-season production
opportunity
• Production capability to expand
into new products (e.g. frozen
vegetables)
•
In Philippines,
pineapples are
sourced from its
plantation of ~23,000
ha (approximately
one-third the size of
Singapore).
Toppenish
Plover
Sleepy Eye
Rochelle
Lathrop
Modesto
Arkansas
Fontana
Fruit Production
Vegetable Production
Distribution Centre – DMFI operated
Plymout
h
Mendota
York
North Carolina
Hanford
Tomato Production
Markesan
Cambria
Atlanta
Ft.
Worth
Crystal City
McAllen
Distribution Centre – 3rd party
operated
34
4
Diversified Portfolio of Blue Chip Customers
Strong long-term relationships with major retailers across the US
US – FY2015 Net Sales Breakdown by Customers
28%
Others*
48%
9%
7%
8%
(Walmart subsidiary)
*Others include Supervalu, Ahold, Publix, Target and Safeway which have 2-4%
share each
Others
Philippines
(E-Mart Co Ltd)
(Li & Fung Ltd)
35
35
5
Strong Shareholder Support & Experienced
Management Team with Proven Track Record
Strong Shareholder Support
NutriAsia Pacific Limited (“NutriAsia”), owned by the Campos family, has been the
majority shareholder of the Company since 2006 and as of 7 July 2015 maintains
67% ownership. Lee Group owns 5.5% and has been a shareholder since 2003.
Experienced Management Team
Strong core management team across the entities with wide-ranging experience in
the international markets
DMPL Group CEO
DMPL Group COO
DMPL Group CCO
Luis Alejandro
35 Years
Industry
Experience
Joselito Campos, Jr.
35 Years
Industry
Experience
DMFI CEO
Nils Lommerin
25 Years
Industry
Experience
DMPL Group CFO
Parag Sachdeva
20 Years
Industry
Experience
Ignacio Sison
25 Years
Industry
Experience
DMFI CFO
Dave Meyers
35 Years
Industry
Experience
DMFI Operations
Dave Withycombe
40 Years
Industry
Experience
36
Appendix : Products
37
USA
Sales Split FY2015:
42% Packaged Fruit
38% Packaged Veg
1% PJC/Juice
19% Others
38
Philippines
Sales Split FY2015:
40% Beverage
37% Culinary
(Sauces, Ketchup, Pasta)
23% Packaged Fruit
39
India
Sales Split FY2015:
51% Culinary
(Ketchups, Sauces, Mayo)
22% Italian Range
(Olive Oil, Olives, Pasta)
18% Packaged Fruit and
Vegetable
9% Beverage
40
Asia and Middle East – S&W Products
Sales Split FY2015:
52% Fresh Pineapple
32% Packaged Fruit
16% Others
41