(Registration no C) (Registration no C) Financial Results. (unaudited) 11 November 2009

Transcription

1 3 rd Quarter and 9-Month Financial Results (unaudited) 11 November

2 Important note on forward looking statements The presentation herein may contain forward looking statements by the management of Petra Foods Limited ( Petra ) that pertain to expectations for financial performance of future periods vs past periods. Forward-looking statements involve certain risks and uncertainties because they relate to future events. Actual results may vary materially from those targeted, expected or projected due to several factors. Such factors are, among others, general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management s representation on the future performance of Petra. Therefore, the actual performance of Petra may differ significantly from expressions provided herein. 2

3 Scope of Briefing 3Q and 9M 2009 Financial Highlights 9M 2009 Business Performance Outlook for 2009 Appendices Financial Highlights Branded Consumer Division Cocoa Ingredients Division (excluding Europe) Cocoa Ingredients Division (Europe) Group Financial Strategy and Balance Sheet & Cash Flow Analysis FRS 39 and its Impact Petra s Investment Highlights 3

4 Financial Highlights Strong 3Q and 9 month 2009 Performance (In US$ Million) 9M M 2008 % chg YoY In Local Currency Terms 3Q Q 2008 % chg YoY In Local Currency Terms Revenue Branded Consumer % % % % Cocoa Ingredients (Asia & Latin America) % + 8.8% % 10.5% Core Businesses % % % 0.8% Europe % + 3.3% % % Group Revenue % % % + 4.7% PATMI Core Businesses % % % % Europe (7.2) (5.7) 26.2% 26.2% (2.9) (2.8) 2.5% 2.5% Group PATMI % % % % Figures may not add due to rounding. 4

5 9 Month 2009 Business Performance Core Businesses The strong PATMI growth for the 9 month period driven by Higher sales revenue of US$646 million Higher volume growth Higher margin achieved Higher EBITDA yield for Core Cocoa (US$227/mt 17.5% YoY) and for Branded Consumer, higher Own Brands margin Q on Q Good performance achieved in 3Q 2009 Our margins still increasing driving EBITDA growth of 24.5% Y o Y Cocoa Ingredients (Europe) The new Hamburg facility started commercial production in May 2009 with 3Q 2009 loss reflecting higher depreciation and operating costs Production in September almost at full production capacity Quality accreditation already secured from some customers and we are in the process of securing more approvals 5

6 Outlook for 2009 With the strong earnings momentum of our Core Businesses, the Group is on track to deliver strong FY 2009 PATMI growth, notwithstanding the loss in Europe 6

7 Thank You

8 Appendices

9 Financial Highlights

10 Group 3 rd Qtr Financial Highlights At a glance In US$ Million 3Q Q 2008 Change (%) In Local Currency Terms Sales Branded Consumer Cocoa Ingredients Cocoa Ingredients (excl. Europe) % 7.9% 0.2% 10.5% 4.7% 18.5% 0.2% 10.5% EBITDA (excluding Hedge Charge) * Branded Consumer Cocoa Ingredients % 7.2% 61.5% 33.3% 19.9% 61.5% EBITDA (including Hedge Charge) * Branded Consumer Cocoa Ingredients % 7.2% 95.6% 41.2% 19.9% 95.6% Finance Cost (4.8) (4.2) 16.4% 18.6% Profit Before Tax (including Hedge Charge) * % 53.0% Profit After Tax & MI (including Hedge Charge) * Core Businesses (excluding Europe) % 6.5% 24.0% 15.7% * Refers to the negative effect of Hedge Charge of US$0.8 million in 3Q No similar charge in 3Q Figures may not add due to rounding. 10

11 Group 9 Month 9 Financial Highlights At a glance In US$ Million 9M M 2008 Change (%) In Local Currency Terms Sales Branded Consumer Cocoa Ingredients Cocoa Ingredients (excl. Europe) % 9.7% 6.7% 8.8% 11.2% 25.4% 6.7% 8.8% EBITDA (excluding Hedge Charge) * Branded Consumer Cocoa Ingredients % 2.6% 24.9% 22.0% 20.4% 24.9% EBITDA (including Hedge Charge) * Branded Consumer Cocoa Ingredients % 2.6% 88.3% 39.1% 20.4% 88.3% Finance Cost (13.2) (12.1) 9.3% 12.0% Profit Before Tax (including Hedge Charge) * % 82.9% Profit After Tax & MI (including Hedge Charge) * Core Businesses (excluding Europe) % 32.4% 60.5% 48.9% * Refers to the negative effect of Hedge Charge of US$5.2 million in 9M 2008 s cost of sales. No similar charge in 9M Figures may not add due to rounding. 11

12 Group 9 Month 9 Financial Highlights 9M M 2008 Change (%) In Local Currency Terms EPS 2.87 US cents 2.12 US cents 35.5% 60.5% Core Businesses (excluding Europe) 4.23 US cents 3.20 US cents 32.4% 48.9% Capex (US$ Million) (27.5%) - As at 30 Sept 2009 FY 2008 Audited Figures Net Debt/Equity 1.94 x 1.50 x Adjusted Net Debt/Equity (excluding Trade Finance and MTN) 0.69 x 0.66 x 12

13 Group 3 rd Qtr Financial Highlights (cont d) 3Q Q 2008 Change (%) In Local Currency Terms EPS 0.92 US cents 0.84 US cents 9.0% 24.0% Core Businesses (excluding Europe) 1.46 US cents 1.38 US cents 6.5% 15.7% Capex (US$ Million) (72.7%) - 13

14 Branded Consumer Division

15 Branded Consumer 3Q 2009 Results (in US$ Million) 3Q Q 2008 YoY change 3Q Local Currency Performance (% chg YoY) Revenue % % - Indonesia % + 9.7% - Regional Market % % Gross Profit Margin 30.1% 32.0% -1.9% pt Weighted lower by new 3 rd Party Agencies EBITDA % % Profit from Operations % % Key Comments Performance in local currency basis more representative of underlying strength of Branded Consumer business Weaker regional currencies vs US Dollar distorts performance when translated to US Dollar reporting currency Revenue growth driven by higher Own Brands and 3 rd Party Brands sales The benefit of sales momentum traditionally associated with the run up to Lebaran (Muslim festive period) in Indonesia for 2009 was in 2Q 3Q 2009 Gross Profit Margin of Own Brands higher Q on Q and Y o Y 15

16 Branded Consumer 9M 2009 Results (in US$ Million) 9M M 2008 YoY change 9M Local Currency Performance (% chg YoY) Revenue % % - Indonesia % % - Regional Market % % Gross Profit Margin 29.3% 30.9% -1.6% pt Weighted lower by new 3 rd Party Agencies EBITDA % % Profit from Operations % % Key Comments Performance in local currency basis more representative of underlying strength of Branded Consumer business Weaker regional currencies vs US Dollar distorts performance when translated to US Dollar reporting currency Revenue growth driven by growth in Own Brands and 3 rd Party Brands Gross Profit Margin of Own Brands achieved above 30% and higher Q on Q benefiting from price increase in March

17 Branded Consumer Diversification Strategy Own Brands vs 3 rd Party Brands FY M 2009 Own Brands (US$93.5m) 79.5% 3 rd Party Brands (US$24.1m) 20.5% Own Brands (US$106.4 m 9 mths) 48.2% 3 rd Party Brands (US$114.3 m 9 mths) 51.8% We have built a successful 3 rd Party Brands distribution business complementing our Own Brands Increasing overall returns for the business Increasing our scale and selling power with the Modern Trade Geographic Revenue Breakdown FY M 2009 Singapore 9.5% Successfully developed the regional business complementing strong growth in Indonesia Indonesia 93.0% Indonesia 66.7% Malaysia 16.1% Sing/Mal 7.0% Philippines 7.7% 17

18 Branded Consumer Gross Profit Margin Analysis 40% 35% 30% 25% 20% 33.1% 31.1% 32.0% 30.7% 31.3% 30.9% 30.4% 30.9% 30.0% 29.5% 30.1% 28.9% 28.6% 1Q 07 2Q 07 3Q 07 Gross Profit Margin Trends Own Brands gross profit margin was higher Q on Q (above the 30% level) 4Q 07 FY Q 08 2Q 08 3Q 08 4Q 08 FY Q 09 2Q 09 3Q 09 The increasing contribution from 3 rd Party Brands whilst making a significant profit contribution has a dilutive effect on the overall gross profit margin computation Operating Profit Performance (in US$ Million) Divisional profit performance would have been significantly stronger if not for the weakness in the regional currencies vs US$ foreign currency translational impact Q Q Q Q 07 FY Q 08 2Q 08 3Q 08 4Q 08 FY Q 09 2Q Q 09 For 3Q 2009, operating profit growth (in local currency terms) of 20.2% YoY driven by the strong growth in Indonesia 18

19 Cocoa Ingredients Division (excluding Europe)

20 Cocoa Ingredients (excluding Europe) 3Q 2009 Financial Results (excluding Europe) (in US$ Million) 3Q Q 2008 YoY change Revenue % Before FRS 39 Accounting Charge * EBITDA % EBITDA/MT (6-month moving average) in US$ % Profit from Operations % After FRS 39 Accounting Charge * EBITDA % EBITDA/MT (6-month moving average) in US$ % Profit from Operations % Sales Volume (MT) 42,529 41, % * Refers to the US$0.8 million FRS 39 Accounting Charge in 3Q No similar charge in 3Q

21 Cocoa Ingredients (excluding Europe) 9M 2009 Financial Results (excluding Europe) (in US$ Million) 9M M 2008 YoY change Revenue % Before FRS 39 Accounting Charge * EBITDA % EBITDA/MT (6-month moving average) in US$ % Profit from Operations % After FRS 39 Accounting Charge * EBITDA % EBITDA/MT (6-month moving average) in US$ % Profit from Operations % Sales Volume (MT) 124, , % * Refers to the US$5.2 million FRS 39 Accounting Charge in 9M No similar charge in 9M

22 Cocoa Ingredients Financial Highlights (Metric tonnes) 170,000 60,000 50,000 40,000 30,000 20,000 10,000 34,711 41,867 35,860 35,419 Sales Volume 147,857 40,493 38,238 41,181 40, ,820 41,905 40,315 42,529 3Q sales volume growth of 3.3% YoY achieved through new markets penetrated and strong demand from global customers, despite the weak global economy 0 1Q 2Q 3Q 4Q FY 1Q 2Q (NB: Sales volume for Asia and Latin America operations) 3Q 4Q FY Q Q 3Q EBITDA/mt of Sales Volume Excluding Europe (6 month moving average) Improving trend of EBITDA yield reflecting higher product pricing for customised cocoa ingredients and the strong demand from global customers 50 1Q Q 3Q 4Q FY 1Q 2Q Q 4Q FY Q Q 3Q (NB: EBITDA/mt for FY07 and FY08 are calculated using full year data) For 1Q, 2Q, 3Q & 4Q 2008, EBITDA/MT excludes the impact of the Hedge re-designation 22

23 3,140 (US$/Metric Tonne) 2, ,669 2,143 2,121 2,043 2,023 2, ,500 3,000 2,500 2,000 1,500 3,206 2,628 2,605 2,536 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 FY 07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Sep-09 FY 08 Aug-09 Jan-09 Feb-09 Mar-09 Jul-09 Apr-09 Jun-09 May-09 Strict Hedging minimises impact to EBITDA yield Policy of strict hedging of cocoa bean prices minimises impact to EBITDA yield from volatility in bean prices Q07 2Q07 3Q07 4Q07 FY07 1Q08 2Q08 3Q08 4Q08 FY08 1Q Cocoa Beans Price EBITDA/MT of Sales Volume 197 3Q09 2Q09 (US$/Metric Tonne)

24 Cocoa Ingredients Division (Europe)

25 Cocoa Ingredients Europe The net loss of US$7.2 million in 9M 2009 reflects pre operating phase of the Hamburg facility. We have begun delivering products (albeit generic in nature) to our customers We are increasing the plant s production to full capacity Already received quality accreditations from some of our major customers and we are working to secure more customer approvals The ISO certification obtained by our Hamburg plant has played a major part in the achievement of these accreditations 25

26 Group Financial Strategy and Balance Sheet & Cash Flow Analysis

27 Group Financial Strategy Re balanced debt portfolio to strengthen our Balance Sheet Reduced reliance on short term debt (55% of total Debt vs 79% two years ago) and extended debt maturity profile to match financing/investment needs Minimal exposure to credit refinancing risk with only US$38 million due for repayment over 2009/2010 Secured additional credit facilities in 3Q 2009 Increasing financing headroom to US$168 million (or 28% of available credit lines) Locate windows of opportunity to increase proportion of Group Debt to fixed rate loans to lock in interest rate Generate positive Free Cash Flow by tight management of working capital and reducing capital expenditure to only the most critical and immediately income generating Positive Free Cash Flow of US$3.0 million generated for 9 month 2009, notwithstanding capex of US$35 million 27

28 Balance Sheet & Cash Flow Analysis Total assets US$ million comprised mainly: US$81.3 million increase in inventories due to higher bean inventories (seasonal) and new 3 rd Party Agency Additional receivables of US$53.8 million in line with sales growth Capital expenditure of US$35.0 million of which US$23.7 million was for Europe investment programme Mainly funded by: 9M 2009 EBITDA generation of US$46.8 million Additional term loans and MTN of US$16.3 million Continue to focus: Generate more operating cash flow by tighten working capital management Reduce capital expenditure to only the most critical and immediately income generating Funding of inventories/receivables for enlarged Group led to: Increase in net debt/equity ratio from 1.5x to 1.94x Excluding financing of cocoa beans, adjusted 2 net debt/equity ratio increased marginally from 0.66x to 0.69x 1 Affected by foreign exchange translation 2 Exclude trade finance and MTN 28

29 Balance Sheet Analysis (Figures are at period end) (US$ Million) 30 Sep Dec 08 Highlights Cash and Cash Equivalents Trade Receivables Inventories Other Assets Fixed Assets, Intangible Assets & Investments Total Assets Trade Payables Other Liabilities Total Borrowings Working Capital Facilities Medium Term Note (MTN) Term Loan Increase in line with sales growth. Increase due to higher bean inventories, higher bean prices and new 3 rd Party Agency secured. Include Capex of US$23.7 million for Europe plant. Increase in line with business growth & Europe expansion. Increase in line with receivables and capex. Increase in Trade Finance corresponding with higher inventories carried. To fund capital expenditure. Total Equity Key Ratios Net Debt / Equity 1.94 x 1.50 x Adjusted Net Debt/Equity (excl Trade Finance & MTN) 0.69 x 0.66 x Current Ratio Inventory Days Receivable Days Payable Days Increase due to new 3 rd Party Agency & higher bean inventories (seasonal). Transitioning of new 3 rd Party Agency. Strong financial position with adequate credit headroom 29

30 Cash Flow Applications (US$ Million) 9 Months (2009) EBITDA 46.8 Less: Changes in operating cash flow Working capital - Net of Trade Finance 12.4 Tax expense paid (7.9) Interest expense (13.4) Operating Cash Flow 37.9 Less: Investing activities Capital Expenditure - Net of Disposal (34.9) Free Cash Flow 3.0 Financing activities Borrowings - Net of Repayment 16.3 Payment of 2008 final dividend (10.9) Increase in Cash 8.4 Footnote Borrowings at 30 Sep Total Credit Facilities (committed) Headroom Utilization 72.1% NB: In addition, we have untapped MTN umbrella facilities of US$130 million. Adequate headroom and liquidity 30

31 Profile of Group Loan Portfolio Breakdown of Debt Facilities Loan Repayment Schedule Working Capital 54.7% Term Loans and MTN 45.3% Repayment 2011 Repayment 15.6% from % Repayment over 4Q 2009 & % The working capital facilities are revolving credit facilities to finance highly liquid assets (cocoa bean inventory) Furthermore, the beans inventory are for committed sales contracts to credit worthy counterparties For the portion, this can be funded through our strong internal cash flow Repayment schedules are back ended and evenly spread Floating & Fixed Rate Components of Loan Breakdown of Loans in Respective Currencies Euro 29.2% Floating Rate 50.3% Fixed Rate 49.7% USD 56.9% IDR 6.1% Others 6.2% Effective interest rate for Group - approx. <5.0% pa Lock-in fixed interest rate when window of opportunity arises The currency profile of the Group s debt matches the revenue profile The objective of this financing strategy is to mitigate foreign currency debt exposure risk 31

32 FRS 39 and its Impact

33 Impact of FRS 39 3rd Quarter 9 Months (In US$'000) Income Statement (a) Change in Hedge Re-designation from FVH to CFH - (797) - (5,202) (b) Fair value loss/(gain) on cocoa bean derivatives (12,304) 6,754 (10,245) (1,042) (c) Transfer from Cash Flow Hedge Reserve (CFH) - Cocoa bean and FX derivatives (280) 1,359 12,585 7,078 (d) Fair value loss/(gain) on foreign exchange derivatives (1,740) 122 (4,210) (1,090) (14,324) 7,438 (1,870) (256) 2. Cash Flow Hedge Reserve (Other Reserves - Balance Sheet) (2,179) 2,503 33

34 Petra s s Investment Highlights Quality Earnings Branded Consumer Dominant market share and strong brand equity Extensive distribution network Replicate our success to fast growing regional markets Cocoa Ingredients Strong earnings fundamentals driven by: (a) Well established customer base (b) Compelling outsourcing trend Well positioned to capture regional chocolate consumption growth Doubled capacity to capture growth (c) (d) Scalability of growth model European expansion Business Model that Mitigates Risk Product customization and partnerships with customers build barriers to entry The key for Cocoa Ingredients division is to focus on Value Add and build partnerships with its customers Strict adherence to risk management practices mitigates exposure to cocoa bean price fluctuations Strong Management Team Diverse team with international F&B and MNC experience Proven track record in executing growth strategy A business model with two quality earnings streams 34