preliminary results 2012investors.fyffes.com/.../prelims_2012_070313_pres.pdfpreliminary results...

Fyffes plc Preliminary Results 2012

7 March 2013

Preliminary Results 2012 | Page 1

Fyffes overview

Operates in the international tropical produce sector:

Product categories – bananas, pineapples and melons.

Areas of activity – Europe, US, Central & South America.

Market leader in 2 of our 3 product categories. Turnover in excess of €1 billion.

Integrated supply chain – production, procurement, shipping, ripening, distribution and marketing.

Oldest fruit brand in the world dating back to 1929. History extends to 120+ years.

Dual listing on Irish (ESM) and London (AIM) stock exchanges.


Financial highlights

Total revenue

EBITDA

EBITA

EBIT

Adjusted EPS

€850.0m

€29.6m

€23.2m

€20.3m

6.05c

+19.7%

+38.4%

+36.1%

+44.9%

+45.8%

2011 2012 % Change

Total dividend 1.925c +7.5%

€1,017.8m

€41.0m

€31.6m

€29.4m

8.82c

2.07c

Adjusted EPS excludes amortisation charges.

ROIC includes JVs.

2013 target EBITA range of €27m-€33m

Return on invested capital (ROIC) 13.3% +24.8% 16.6%


Earnings growth 2008 - 2013

31.6

23.221.320.7

15.3

0

10

20

30

40

2008 2009 2010 2011 2012 2013

8.82

6.055.505.19

3.95

0

2

4

6

8

10

2008 2009 2010 2011 2012 2013

Target Range

Target Range

Target Range

Growth rate 2008 - 2012

Absolute CAGR

EBITDA 118% 21.5%

EBITA 107% 19.9%

EPS 123% 22.2%

EBITDA - €’M EPS - € cent

EBITA - €’M

41.0

29.626.925.7

18.9

0

10

20

30

40

50

2008 2009 2010 2011 2012 2013

Earnings have more than doubled since 2008

36.0-

42.0

7.5 –

9.2

27.0 -

33.0


Operating performance

2012

€’M

2011

€’M

%

Total turnover 1,017.8 850.0 +19.7%

EBITDA 41.0 29.6 +38.4%

Depreciation (9.5) (6.5)

EBITA 31.6 23.2 +36.1%

Amortisation (2.2) (2.9)

EBIT 29.4 20.3 +44.9%

c.20% increase in turnover driven by

organic growth in all categories, price

inflation plus some translation and

acquisition contribution.

€8.4m (36.1%) increase in Adjusted

EBITA as a result of sales growth

combined with operational efficiencies.

EBITDA up 38.4%. Higher depreciation

charge due to significant investment,

especially in melons in recent years.


Operating performance | banana category

Strong performance in banana category, especially in second half, as a result of supply constraints.

Further organic growth with new and existing customers – low double digits.

Clear No.1 in European market with 46m cases (incl vanWylick JV).

Fruit and fuel costs higher, combined with adverse currency movements due to strength of US Dollar.

Lower shipping costs as a result of change in logistics.

Some price inflation driven by higher costs, adverse exchange rates and supply constraints in second half, caused by lower yields as a result of poor weather and other production issues.


Operating performance | pineapple category

Small profit in pineapple category.

Modest improvement in market conditions in 2012 and some reduction in fruit and

shipping costs. Not sufficient to offset significant adverse exchange rate movements.

Continuing yield improvement in farming operations.

17% increase in volumes in 2012 to over 9m cases.

Produced 42% of volumes sold in 2012.

Committed to category. Seeking improvements in logistics and distribution channels

in US market.


Operating performance | melon category

Strong performance in 2011/12 import season.

Strong increase in sales driven by additional production capacity added in Guatemala

in second half of 2011 and early 2012.

Positive trading conditions in 2011/12 season as a result of supply constraints and

warmer winter weather.

Increase in operating costs, including shipping and fuel, reflecting wider distribution,

and higher production costs including labour and depreciation.

More than doubled in size since initial acquisition in 2008. Volumes c.15m cases,

produced on c.6,000 hectares, owned and leased. Full year revenue in excess of

€120m.


Summary cash flow

Strong cash generation – operating cash flows of €42.3m (14.2 cent per share).

Free cash flow after capex, tax and working capital of €18.4m. Yield of 10.7%.

Significant investment in working capital as a result of strong organic growth.

Expect further significant investment in 2013 including deferred consideration payments and other development expenditure.

€’M €’M

Operating cash Inflows

EBITDA 41.0

Impairment charges 3.3

Joint ventures operating profit (2.0)

42.3

Investment and other expenditure

Capex (incl leased assets) (9.2)

Deferred consideration (1.0)

Tax paid (2.5)

Pension deficit payments / MNOPF (3.0)

Dividends paid (5.9)

Working capital (12.1) (33.7)

Translation / other 1.2

Net cash generated 9.8

Opening net debt (1.2)

Closing net funds 8.6


Balance sheet

Significant high quality asset base, including c.4,000

hectares owned in Central / South America.

Provisions include €11.3m deferred consideration

expected to be paid in 2013.

Increase in pension deficit due to reduction in bond

rates. Recovery plans in place.

Shareholders’ funds unchanged. €24.8m retained

profits offset by actuarial loss on pension schemes,

dividends and currency and hedging reserve

movements.

2012

€’M

2011

€’M

Intangible assets 22.2 22.4

Property, plant and equipment 69.6 75.4

Investment in joint ventures 37.1 36.9

Investment in Balmoral 0.1 0.1

Working capital / hedging 51.2 49.6

Current / deferred tax (12.5) (14.4)

Provisions (16.8) (16.0)

Pension deficit (net of DT) (23.0) (16.3)

Net cash/(debt) 8.6 (1.2)

136.5 136.5

Shareholders’ funds 135.7 135.8

Minority interests 0.8 0.7

136.5 136.5


Business overview | Supply chain

Source / Produce

Pack

Ship

Ripen

Market & Distribute

Producer Retailer

Increased integration into production in recent years – particularly in melon and pineapple categories.


Overview of operations | Production

Fyffes sources bananas under long term supply agreements with third party producers.

Annual agreement on volumes and price.

Production Profile Bananas Pineapples Melons

Growing cycle 9 months 14 months 6-10 weeks

Harvesting Year round Year round Seasonal

Fyffes’ own production 5% - 10% 40% - 50% c.100%

http://fyffesworld/SiteDirectory/FyffesBananas/Pictures/Banana Production and Tropics Images/Green Bananas hanging in Packhouse 2.jpg

http://fyffesworld/SiteDirectory/FyffesBananas/Pictures/Banana Production and Tropics Images/Banana Farm 3.jpg

http://fyffesworld/SiteDirectory/FyffesBananas/Pictures/Banana Production and Tropics Images/Worker Tagging Bananas.jpg


Overview of operations | Logistics

Fruit shipped in dedicated reefer ships or

container ships in reefer containers.

Ensures freshness of produce and delays

banana ripening process.

4 week round trip to / from Tropics.

Weekly deliveries to multiple European ports.

Shipping efficiencies critical to cost structures.

Bunker fuel has become a significant factor.


Overview of operations | Distribution

Supply ripened (yellow) bananas to customers in UK / Ireland, mainly larger retailers.

Fyffes only operator in UK with national distribution coverage.

Ripening process takes 5-9 days.

Traditionally only unripened (green) bananas sold to customers in Continental Europe.

Increasing amount of Continental ripening including by Weichert and vanWylick JV’s.

Bananas are a key category for retailers.


Key drivers of short term performance

Selling price

Influenced by many factors, particularly volume.

UK market – fixed pricing.

Continental market – weekly spot market.

Cost of fruit Annual contracts and production costs.

Shipping / fuel Shipping contracts vary from 1-3 years. Fuel purchased weekly.

Exchange rates Costs US Dollar denominated.

Revenue in Euro and Sterling.

Import duty Programmed reduction in banana import duty.


Bananas | Global marketplace

Europe

280m cases

marketed

N. America

250m cases

marketed Asia

120m cases

marketed

Russia

c.60m cases

marketed

Middle East

c.60m cases

marketed

Key Producers

Ecuador 250m

Philippines 150m+

Costa Rica 100m+

Colombia 90m+

Guatemala 75m

Key Distributors

Dole (pre-disposal) 154m

Chiquita 120m

FDP 117m

Fyffes 57m


Pineapples | Global marketplace

In excess of c.190 million 12kg cases marketed annually.

Europe - largest market with 75+ million cases annually.

North America – second largest market with 68 million cases annually.

Key distributors Cases ‘M

Fresh Del Monte 60

Dole 30

Fyffes 9

Chiquita 2

Key producers Cases ‘M

Costa Rica – 75% 144

Philippines – 10% 19


Melons | US market

US imports c.50m cases of melons from November to May.

Fyffes is No.1 in this category, importing c.15m cases.

Also now supplies domestically produced melons.

Volumes and sales have more than doubled since acquisition

in 2008.

Production capacity increased in Honduras and Guatemala

each year.


Fyffes | Market position

#1 #4 280m 250m

#3 #3 75m 68m

- #1 - 50m

Europe USA Market size

(Cases)

Market size

(Cases)

Fyffes 42m 10m (JV)

Fyffes 7m 2m

Fyffes N/A 15m


Our competitive advantages

Scale of business No.1 banana importer in Europe

No.1 melon importer in US

Long-term relationships with best-in-class

suppliers

Relationships going back 40 years in some cases

Strong brand recognition

Oldest fruit brand globally

Strong balance sheet

No net debt

Valuable asset base

c.4,000 hectares of land in Central/South America

State of the art infrastructural network

6 distribution centres in UK/Ireland / 1 in Florida

Strong relationships with diversified customer

base

No.1 market share in several countries


Increased focus on production

Farmed land in Central / South America

Land values appreciating in Central / South America

Owned

Leased (or JV)

Total

-

2006

Hectares

1,800

1,800

3,900

2013

Hectares

5,000

8,900


Shareholder return

Dividends

€’M

Buybacks

€’M

Total

€’M

2007 5.3 1.7 7.0

2008 5.2 5.4 10.6

2009 5.7 - 5.7

2010 5.9 5.3 11.2

2011 5.9 12.7 18.6

2012 5.9 - 5.9

Total 33.9 25.1 59.0

May repurchase further shares.

2012 full year dividend of 2.07 cent is up 7.5%.

Compound annual growth in dividend per share 2008-2012 of 8.4%.

Dividend yield 3.5% based on 60 cent share price.

Capital returned to shareholders – post demerger


Focus on efficient capital allocation

Uses of capital:

Progressive dividend policy

Opportunistic share buy-backs

Acquisitions at all points in the supply chain and organic growth /

working capital investment


Summary

Strong performance in 2012 reaching €1 billion turnover and 46% increase in EPS.

Similar 2013 target EBITA range of €27m-€33m.

Strong balance sheet.

Low valuation multiples.

Focus on further development opportunities:

Farming businesses

Distribution businesses


Appendices


Attributable profit

2012

€’M

2011

€’M

Adjusted EBITA 31.6 23.2

Net interest expense (incl joint ventures) (1.3) (1.0)

Adjusted PBT 30.3 22.2

Share of Balmoral’s result (incl impairment) - (5.9)

Amortisation (2.2) (2.9)

Profit before tax 28.1 13.4

Taxation (incl share of joint ventures) (3.4) (2.2)

Minority interest (0.1) 0.2

Profit attributable to shareholders 24.6 11.4

Underlying tax rate 13% (2011: 13%).

Retained statutory profit up 115%.


Adjusted earnings per share

2012

€’M

2011

€’M

%

Increase

Adjusted profit before tax 30.3 22.2 +36.2%

Less:

- Underlying tax (3.9) (2.9)

- Minority interests (0.1) 0.2

Adjusted earnings 26.2 19.5 +34.2%

Diluted weighted average shares (M) 297.4 322.9

Adjusted diluted earnings per share (cent) 8.82 6.05 +45.8%

Includes positive impact of 10% shares bought back in 2011.

Excludes share of Balmoral 2011 loses and amortisation charges.


Major shareholders

Holder No. of ordinary

shares

% of shares in issue

(excl treasury shares)

InterTech – South Carolina 39.0m 13.1%

Balkan Investment Company

(& related companies)

37.2m 12.1%

Fidelity International – Boston 31.2m 10.5%

Sparinvest SA – Copenhagen 18.6m 6.3%

Farringdon Capital Management -

Copenhagen

14.3m 4.8%


Contact

Seamus Keenan

Company Secretary

Tel: +353 1 8872700

E-mail: [email protected]

mailto:[email protected]

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