Investor Presentation As of 1Q 2017
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(PSE: CNPF) CORPORATE PRESENTATION MAY 2017 Company Overview Snapshot Full-Year Financials • Century Pacific Food, Inc is the largest canned food company in the Philippines Revenues (in USD Mill) • Over its 40 year operating history, it has built a portfolio of leading and well 571 recognized brands in three core segments - marine (37% of sales), meat (27% of 471 413 sales) and milk (11% of sales). It is also the Philippines’ leading exporter of OEM tuna (15% of sales) and OEM coconut products (10% of sales). • The Company listed on the Philippine Stock Exchange in 2014, under the trading symbol CNPF. It currently has a market capitalization of about USD1.2 billion. 2014 2015 2016 • Production facilities: 6 manufacturing facilities across the Philippines, strategically Net Income (in USD Mill) located adjacent to supply sources (Tuna and Coconut in General Santos City, Meat in 54 Laguna City, Dairy in Taguig City, Sardines in Cavite and Zamboanga City) 39 32 • Key Management: Christopher T. Po, President and CEO – 14 years at CNPF (8 years as CEO), 11 years of prior multi-industry experience; Teodoro T. Po, EVP and COO – 25 years experience of running various business units in CNPF; Oscar A. Pobre, CFO – 20 years in CNPF’s corporate finance, treasury, accounting and controllership 2014 2015 2016 2016 Revenue Breakdown Ownership Structure Coconut OEM, GIC Private Domestic, 10% OEM, Equity, 7% Tuna 72% OEM, 25% Export, Marine, 28% Public, 15% Branded, 37% 24% 75% Century Milk, Pacific 11% Group, Meat, 69% 27% 2 Company Overview ProvenM track record in brand-building CENTURY CANNING CORP. CENTURY PACIFIC CENTURY PACIFIC FOOD, INC. AGRICULTURAL VENTURES, INC. 1978 1983 1986 1995 2001 2002 2003 2008 2012 2013 2015 2016 organic via acquisitions 2011 2011 to 2013 2014 2016 2016 Century Canning Marketing Century Tuna and Argentina Gregory Banzon Awardee for CNPF Asia’s Marketing Company CNPF Philippines’ Best Managed Company of the Year Reader's Digest Trusted Brand Marketing Excellence of the Year Company – Small Cap 3 1 Well-positioned to take advantage of rising consumer demand Rising nominal GDP per capita… …to support an emerging middle class 4,327 Distribution of Families and Income 2,863 SE % share of % share of Annual income 2,364 CLASS Families Income in Php AB 1 9 1,857,000 C 9 26 603,000 D 60 56 191,000 E 30 9 62,000 2011A 2015A 2020E Total 100 100 206,000 Nominal GDP per capita (in USD) Source: BPI Securities, Social Weather System Survey 2016 Source: IMF Food accounting for bulk of family expenditure PH shelf-stable market the largest in ASEAN Breakdown of Family Expenditures Shelf-stable food total consumption (US$m) Miscellaneous 24% 670 581 Health Food 4% 42% 213 Education 172 4% 35 Transport Utilities 6% Housing 8% 12% Philippines Indonesia Thailand Malaysia Singapore Source: 2015 PSA data Source: 2016 Euromonitor data 4 2 Dominant market leadership in ambient food in the Philippines Largest and Leading Canned Producer Canned & 54% Canned & Canned 35% #1 Preserved #1 Processed 37% #1 Meat Food Fish 30% 20% 19% 11% 13% 9% 8% 13% 14% CNPF Purefoods Del Monte Liberty CNPF Purefoods CDO Others Gold PSE: PF Foodsphere Dominant Positions in Key Sub-Segments Mar 2017 Mar 2017 Mar 2017 #1 #1 Luncheon #1 Canned Tuna Corned Meat Meat 46% 82% 34% 19% 15% 14% 11% 9% 16% CNPF CDO Purefoods Sunpride CNPF Maling CDO CNPF CDO Foodsphere Foodsphere Foodsphere 5 3 Multiple brands and products catering to all consumers Diverse product portfolio catering to a broad customer base and different customer tastes and needs Positioning Value for Money Mass Market Affordable Premium Canned and Processed Fish Canned and Processed Meat Canned and Drinking Milk; Mixes Current Company Portfolio – 230 SKUs Coconut, Significant benefits of a multi-brand, multi-product portfolio Milk, 24 3 Marine, • Catering to a broad customer base through multiple brands and capturing 135 larger share of the consumers' wallet / stomach through multiple Meat, 68 segments / products • Increased bargaining power with suppliers and distributors • Diversification of risk and facilitate brand consolidation play 6 4 A strong focus on marketing and R&D driven innovation R&D Process Flow Innovative Marketing Campaigns An integral part of launching new products and Enhancing brand recognition through active and targeted improving profitability marketing and promotional campaigns Capitalizing on healthier lifestyles Intuitive and appealing ad-campaigns employing celebrity endorsers to create must have and aspirational brands 7 5 Trusted partner for customers around the world Works closely with long standing international partners to produce private label and branded products for sale in international markets Tuna OEM Market Share Key Customers Celebes, Seatrade, 6% 7% Alliance (PSE: largest single-brand UK’s leading Japan’s leading FOOD), 35% restaurant chain importer of canned manufacturers of food 10% food products Ocean, 8% Source: 2016 Bureau Of Customs data Philbest, 34% Branded Products sold Exclusively for Export Availability of Branded Products 8 6 Experienced and dedicated management team • Previously served as Management Consultant at McKinsey, Managing Director at Guggenheim Highly experienced professionals in Christopher Po Partners, and Corporate Planning Head at JG Summit their respective areas of expertise President and CEO • Summa Cum Laude from Wharton; MBA from Harvard Business School • 23 years experience of running various business units of Century Group; Designed, built and Teodoro Po managed several factories of the group Executive Committee Profile EVP and COO • Summa Cum Laude from Boston University; Owner/President Management Program from Harvard Business School • 19 years managing the corporate finance, treasury, accounting and controllership at Century President & CEO EVP & 8 Vice Presidents Oscar Pobre Group of Companies COO VP and CFO • 17 years in finance functions at RFM, Cosmos, Dole, and Meralco • 22 years of experience in various general management, marketing and sales roles including VP- Gregory Banzon Marketing of Johnson & Johnson ASEAN, Country General Manager of Johnson & Johnson Average Tenure – 11 years VP - GM Canned Fish, Tuna Indonesia, and General Manager at RFM • 29 years of experience in various technical, operations and business development roles at San Average Work Experience – Cezar Cruz, Jr. Miguel and RFM 20 years VP - GM Canned Fish, Sardine • President of the Sardine Association of the Philippines • 18 years of experience in various technical and manufacturing roles at San Miguel, RFM, Rex Agarrado Quaker and California Manufacturing Corporation VP – GM Canned Meat • Director of the Philippine Association of Meat Processors, Inc. • 22 years of experience in general and brand management roles in the Philippines, Taiwan, Edwin Africa Thailand, Singapore, Malaysia and China VP – GM Dairy and Mixes • Procter & Gamble from 1991 to 2001, Nippon Paint from 2001 to 2004, and Pepsico from 2005- 2012 • 21 years of experience in various management, operations and technical roles including Teddy Kho President and General Manager of San Miguel Foods Vietnam and Plant Manager of San Miguel VP – GM Tuna Export Hoecheong • 27 years of experience in various general management roles in fast-moving consumer goods Noel Tempongko companies, including San Miguel Yamamura Packaging Corp and The Purefoods-Hormel VP – GM CPAVI Company Inc Cumulative Professional Experience • 8 years of experience in sales management roles at National Sales and Cadbury, – 280 years Ron Agoncillo Unilever Indonesia & Philippines, 3M, and Shell VP - Sales 9 FIRST QUARTER 2017 FINANCIAL PERFORMANCE Q1 2017 Results Highlights DOUBLE DIGIT 17% 10% Branded Total Net Revenue Revenue Income Growth Growth Growth SUSTAINED PHP 9.4% STRONG 0.20 DEMAND Net Income Q1 2017 OEM Margins Earnings per Exports Share 12 Q1 2017 Financial Performance Q1 Q1 in PHP Mill Change YoY • 10% BRANDED 2016 2017 REVENUE growth Net Revenues 6,397 7,478 17% Cost of Sales 4,464 5,393 21% • 41% growth in OEM Gross Profit 1,933 2,085 8% EXPORT sales Operating Expenses 1,056 1,174 11% Operating Income 860 955 11% • Higher INPUT EBITDA 934 1,074 15% COSTS Income Before Tax 851 933 10% Income Tax 215 231 7% • Change in SALES Net Income 636 701 10% MIX towards lower- EPS (PHP/sh) 0.18 0.20 8% margin OEM Margins (%) Gross 30.2% 27.9% -2.3pps • COST Operating 13.4% 12.8% -0.7pps Net Income 9.9% 9.4% -0.6pps MANAGEMENT Effective Tax Rate 25.3% 24.8% -0.5pps initiatives Note: *Q1 2016 EPS adjusted for 50% stock dividend 13 OPEX Management Softens Lower GPM 30.2% 27.9% • COMMODITY Gross Margin -2.3pps HEADWINDS in tuna, 1Q 2016 1Q 2017 milk and coconut resulted in lower gross 13.4% 12.8% profit margin YoY offset Operating Margin -0.7pps by selective price increases, inventory 1Q 2016 1Q 2017 hedges, and efficiencies 14.6% 14.4% -0.2pps • Improvement in OPEX EBITDA Margin TO SALES RATIO from 1Q 2016 1Q 2017 cost management 9.9% initiatives 9.4% -0.6pps Net Margin • Lower effective TAX 1Q 2016 1Q 2017 RATE 14 Balance Sheet Highlights in PHP mill 2016 Q1 2017 in PHP mill 2016 Q1 2017 Cash 696 1,456 Trade and Other Payables 4,730 5,233 Receivables 3,955 3,981 Notes Payable – Current 671 671 Inventory 7,529 7,931 Long-Term Loan 1,634 1,634 Current Assets 12,758 14,031 TOTAL LIABILITIES 7,393 8,086 PPE 3,945 4,080 Retained Earnings 4,015 4,716 Noncurrent Assets 7,175 7,322 TOTAL EQUITY 12,539 13,267 TOTAL ASSETS 19,932 21,353 BVPS (PHP/sh)* 3.54 3.75 • Increase in CASH due to improved • Increasing costs translated