Fyffes plc Preliminary Results 2014 27 February 2015 Fyffes - - PowerPoint PPT Presentation

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Fyffes plc Preliminary Results 2014 27 February 2015 Fyffes - - PowerPoint PPT Presentation

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Fyffes plc Preliminary Results 2014 27 February 2015 Fyffes overview Operates in the international tropical produce sector - Product categories bananas, pineapples, melons - Areas of activity Europe, US, Central & South America

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SLIDE 1

Preliminary Results 2014

27 February 2015

Fyffes plc

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SLIDE 2

Preliminary Results 2014

Fyffes overview

Operates in the international tropical produce sector

  • Product categories – bananas, pineapples, melons
  • Areas of activity – Europe, US, Central & South America

Market leader in 2 of our 3 product categories Integrated supply chain – production, procurement, shipping, ripening, distribution and marketing Oldest fruit brand in the world dating back to 1929 History extends to 125+ years Dual listing on Irish (ESM) and London (AIM) stock exchanges

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SLIDE 3

Preliminary Results 2014

2014 summary Fyffes delivers strong growth in earnings

EBIT up 28.1% to €40.1m EPS up 26.6% to 11.17 cent Sixth consecutive year of earnings growth Compound annual growth in EPS of 18.9% since 2008 Strong return on invested capital of 18.4% Final dividend increased by 12.3% Target EBIT* range for 2015 of €36m-€42m

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SLIDE 4

Preliminary Results 2014

Financial highlights

Total revenue EBITDA1 EBITA1 EBIT1 EPS2

Total dividend per share

ROIC3

2014

€1,090.9m €48.2m €40.1m €40.1m 11.17c 2.387c 18.4%

2013

€1,082.0m €40.0m €32.7m €31.3m 8.82c 2.17c 16.6%

% Change

+0.8% +20.5% +22.9% +28.1% +26.6% +10.0% +10.8%

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1. Before exceptional items, amortisation and share of joint venture tax. 2. Before exceptional items, amortisation. 3. ROIC after tax, including JVs.

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SLIDE 5

Preliminary Results 2014

Earnings growth 2008 - 2014

4 4 EPS - € cent

15.3 20.7 21.3 23.2 30.5 32.7 36.0- 42.0 10 20 30 40 50 2008 2009 2010 2011 2012 2013 2014 2015

EBITA - €’M

40.1

Growth rate 2008 - 2014 Absolute CAGR EBITDA 156% 16.9% EBITA 163% 17.5% EPS 183% 18.9%

18.9 25.7 26.9 29.6 40.0 40.0 44.0– 50.0 10 20 30 40 50 60 2008 2009 2010 2011 2012 2013 2014 2015 48.2

EBITDA - €’M

3.95 5.19 5.50 6.05 8.55 8.82 10.0- 11.8 0.00 2.00 4.00 6.00 8.00 10.00 12.00 2008 2009 2010 2011 2012 2013 2014 2015 11.17

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SLIDE 6

Preliminary Results 2014

Operating performance

2014 €’M 2013 €’M % Total turnover 1,090.9 1,082.2 +0.8% EBITDA 48.2 40.0 +20.5% Depreciation (8.1) (7.3) EBITA 40.1 32.7 +22.9% Amortisation

  • (1.3)

EBIT 40.1 31.3 +28.1%

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  • c.1% increase in turnover. Organic

growth in pineapple and melon

  • categories. Price deflation in bananas

and pineapples

  • €7.4m (23%) increase in Adjusted EBITA

– analysed by category on following slides

  • EBIT up 28% reflecting elimination of

amortisation charges

  • Net €4.3m exceptional gain re CQB

break fee less costs incurred. Separate €4.2m exceptional impairment charge in relation to one pineapple farm.

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SLIDE 7

Preliminary Results 2014

Operating performance

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Bananas

  • Satisfactory performance in banana category. Modest increase in EBITA
  • Positive exchange rates due to US Dollar weakness but much of this benefit

absorbed in lower average selling prices

  • Higher fruit costs, continuing multi-year trend
  • Other costs including logistics and import charges, slightly lower
  • Marginal increase in volumes
  • Exchange rates unfavourable entering 2015 due to strengthening of US Dollar.

Partly offset by lower fuel costs. Targeting higher average selling prices

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SLIDE 8

Preliminary Results 2014

Operating performance

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Pineapples

  • Good result in pineapple category – closer to target returns
  • Improved farming result with successful integration of second farm in Costa Rica

acquired in early 2013

  • Exceptional €4.2m impairment charge recognised in respect of one farm
  • Positive exchange rate impact in 2014, as in banana category. Benefit largely

absorbed in lower average selling prices

  • As in bananas, exchange rates unfavourable entering 2015. Targeting higher

average selling prices

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SLIDE 9

Preliminary Results 2014

Operating performance

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Melons

  • Strong performance in 2013/14 US import season
  • Further double digit organic growth, consolidating No.1 market position in US
  • Some price inflation year on year
  • Continued effective cost management with lower farming and logistics charges
  • Positive start to 2014/15 import season
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SLIDE 10

Preliminary Results 2014

Summary cash flow

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€’M €’M Operating cash flows Adjusted EBITDA 48.2 Chiquita break fee, less costs 4.3 Share option gain (net) (0.8) Exclude JV EBITA (2.2) 49.5 Investment and other expenditure Maintenance Capex (7.2) New UK depots (2) (19.7) Purchase of own shares (3.0) Dividends paid (6.6) Tax paid (4.9) Pension / MNOPF (1.4) Deferred consideration payments (2.5) Investment in JVs (0.9) Working capital / other (15.4) (61.6) Net cash outflow (12.1) Opening net cash 0.4 Closing net debt (11.7)

  • Strong cash generation in period.

Operating cash flows of €49.5m (16.6 cent per share)

  • Free cash flow before non-recurring Capex
  • f €14.1m
  • €19.7m non-recurring Capex includes

construction of replacement depot in UK and buy-out of leased depot, also in UK

  • Working capital build-up includes €5.8m

loan to supplier which may be part payment for a banana farm

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SLIDE 11

Preliminary Results 2014

Balance sheet

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2014 €’M 2013 €’M Intangible assets 24.5 20.9 Property, plant and equipment 101.6 78.0 Investment in joint ventures 40.1 38.9 Investment in Balmoral 0.1 0.1 Working capital / hedging 77.9 49.1 Current / deferred tax (10.2) (10.1) Provisions (4.0) (5.6) Pension deficit (net of DT) (34.0) (22.8) Net (debt)/cash (11.7) 0.4 184.2 148.9 Shareholders’ funds 182.7 147.6 Minority interests 1.6 1.3 184.2 148.9

  • Significant high quality asset base – owns

c.4,000 hectares of land in Central America

  • Now also own 4 large distribution centres

– 3 in UK and 1 in Florida

  • €35.1m increase in shareholders’ funds,

includes €15.6m translation gain

  • €11.2m increase in pension deficit due to

reduction in bond rates

  • Market value of investment in Balmoral now

€3.5m

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Preliminary Results 2014

Overview of operations |production

Production Profile Bananas Pineapples Melons Growing cycle 9 months 14 months 6-10 weeks Harvesting Year round Year round Seasonal Fyffes’ own production c.7% c.65% c.100%

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  • Fyffes sources bananas under long term supply agreements with third party producers
  • Annual agreement on volume and price
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SLIDE 13

Preliminary Results 2014

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Key Producers Ecuador 280m Guatemala 115m Costa Rica 100m+ Philippines 100m+ Colombia 90m+ Key Distributors - Global Chiquita 125m Fresh Del Monte 117m Dole (post disposal) 110m Fyffes 54m Key Distributors - Europe Fyffes 44m Chiquita 33m Fresh Del Monte 23m Dole 19m

Bananas | Global marketplace

N America 250m cases marketed Europe 300m cases marketed Russia c.60m cases marketed Asia 120m cases marketed Middle East c.60m cases marketed China* 500m cases 15% imported

* Fyffes has new ripening JV in China. Targeting 3m+ cases per annum

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SLIDE 14

Preliminary Results 2014

Key drivers of short term performance

  • Influenced by many factors, particularly volume
  • UK market – fixed pricing
  • Continental market – short term fixed deals more prevalent

Selling price

  • Annual contracts and production costs

Cost of fruit

  • Shipping contracts vary from 1-3 years
  • Fuel purchased weekly

Shipping / fuel

  • Costs US Dollar denominated
  • Revenue in Euro and Sterling

Exchange rates

  • Programmed reduction in banana import duty

Import duty

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SLIDE 15

Preliminary Results 2014

Overview of operations

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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 had become a significant factor but rates significantly lower now
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Preliminary Results 2014

Overview of operations

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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 JVs
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SLIDE 17

Preliminary Results 2014

Pineapples | Global marketplace

c.190 million cases marketed annually

  • North America – largest market with 80 million cases annually
  • Europe – 2nd largest market with 75+ million

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Key producers Cases ‘M Costa Rica (80%) 150 Philippines (10%) 20 Key distributors Cases ‘M Fresh Del Monte 60 Dole 35 Fyffes 10 Chiquita 9

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SLIDE 18

Preliminary Results 2014

Melons

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  • US imports c.50m cases of melons from Nov – May
  • #1 in this category –importing c.17m cases
  • Volumes / sales doubled since acquisition
  • Production capacity increased in Honduras and Guatemala each year

US market

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SLIDE 19

Preliminary Results 2014

Fyffes | Market position

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Europe USA Market size (Cases) Market size (Cases)

Fyffes 44m 9m (JV) Fyffes 8m 2m Fyffes N/A 17m

#1 #3

  • 300m

75m

  • 250m

80m 50m #3 #1 #4

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Preliminary Results 2014

Competitive advantages

Scale of business #1 banana importer in Europe #1 melon importer in US Relationships with “best in class” suppliers Relationships going back 40 years Strong brand recognition Oldest fruit brand globally Strong balance sheet Minimal debt Valuable asset base c.4,000 ha in Central America State of the art infrastructural network 6 distribution centres in UK / Ireland 1 in Florida Strong customer relationships #1 market share in several countries

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SLIDE 21

Preliminary Results 2014

Increased focus on production

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  • Farmed land in Central America
  • Land values appreciating in Central America
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SLIDE 22

Preliminary Results 2014

Focus on efficient capital allocation

Increasing dividend Share buy-backs Acquisitions at all points in the supply chain and

  • rganic growth

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  • Key medium term focus is on growing the business through M&A.
  • Believe further consolidation is needed in industry
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SLIDE 23

Preliminary Results 2014

Shareholder return

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Dividends €’M Buybacks €’M Total €’M 2007 5.3 1.7 7.0 2008 5.2 5.3 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

2013 6.2

  • 6.2

2014 6.6 3.0 9.6 Total 46.7 28.1 74.8

  • May repurchase further shares
  • 2014 dividend 2.387 cent (+10.0%)
  • Compound annual growth in dividend 2008-2014 was 7.8%
  • Dividend yield 2.0% based on 119 cent share price
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SLIDE 24

Preliminary Results 2014

Summary

Strong performance in 2014. EPS up 27% Similar target range for 2015 Strong balance sheet Focus on future development and shareholder value

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SLIDE 25

Preliminary Results 2014

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Appendix

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SLIDE 26

Preliminary Results 2014

Attributable profit

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2014 €’M 2013 €’M Adjusted EBITA

40.1

32.7 Net interest expense (incl joint ventures)

(1.1)

(1.5) Adjusted PBT

39.0

31.1 Exceptional items

0.1

  • Amortisation
  • (1.3)

Profit before tax

39.1

29.8 Taxation (incl share of joint ventures)

(5.0)

(3.6) Minority interest

(0.2)

(0.5) Profit attributable to shareholders

33.9

25.6

  • Underlying tax rate 12.7% (2013: 12.9%)
  • Retained statutory profit up 30.6%
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SLIDE 27

Preliminary Results 2014

Adjusted earnings per share

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2014 €’M 2013 €’M % Adjusted profit before tax 39.0 31.1 +25.3% Less:

  • Underlying tax

(5.0) (4.0)

  • Minority interests

(0.2) (0.5) Adjusted earnings 33.8 26.6 +27.3% Diluted weighted average shares (M) 302.7 301.1 Adjusted fully diluted earnings per share (cent) 11.17 8.82 +26.6%

  • Excludes exceptional items, amortisation charges and share of Balmoral result in earlier years

where relevant

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SLIDE 28

Preliminary Results 2014

Major shareholders

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Holder

  • No. of ordinary

shares % of shares in issue (excl treasury shares) InterTech – South Carolina 39.0m 13.2% Balkan Investment Company (& related companies) 37.2m 12.6% Fidelity International – Boston 31.2m 10.6% Sparinvest SA – Copenhagen 14.3m 4.8% Farringdon Capital Management – Copenhagen 13.9m 4.7%

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SLIDE 29

Preliminary Results 2014

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Contact

Seamus Keenan Company Secretary Tel: +353 1 8872700 Email: skeenan@fyffes.com