San Miguel 4Q 2017 E Earnings Conference Call ll March 9, 2018 - - PowerPoint PPT Presentation

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San Miguel 4Q 2017 E Earnings Conference Call ll March 9, 2018 - - PowerPoint PPT Presentation

San Miguel 4Q 2017 E Earnings Conference Call ll March 9, 2018 Disclaimer This presentation contains forward looking statements that are based on our current expectations, assumptions, estimates and projections about us and our industry. These


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San Miguel

4Q 2017 E Earnings Conference Call ll March 9, 2018

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This presentation contains forward looking statements that are based on our current expectations, assumptions, estimates and projections about us and

  • ur industry. These forward looking statements can be identified by words or phrases such as “anticipate,” “forecast”, “believe,” “continue,” “estimate,”

“expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions. These forward-looking statements may include statements regarding the intent, belief, plans, current expectations or objectives of San Miguel and its management, including statements with respect to San Miguel’s future financial condition, financial, operating and other ratios, results of operations, business strategy, geographic concentration, business concentration, production and marketed volumes, as well as San Miguel’s plans, expectations or

  • bjectives with respect to future capital expenditures, investments, expansion and other projects, ownership interests, divestments, cost savings and

dividend payout policies. These forward-looking statements may also include assumptions regarding future economic and other conditions, such as future fresh fruit and other prices, processing and commercial margins and exchange rates. These statements are not guarantees of future performance, prices, margins, exchange rates or other events and are subject to material risks, uncertainties, changes and other factors which may be beyond San Miguel’s control or may be difficult to predict. San Miguel’s actual future financial condition, financial, operating and other ratios, results of operations, business strategy, geographic concentration, business concentration, production and marketed volumes, capital expenditures, investments, expansion and other projects, ownership interests, divestments, cost savings and dividend payout policies, as well as actual future economic and other conditions, such as future fresh fruit and other prices, processing margins and exchange rates, could differ materially from those expressed or implied in any such forward- looking statements. Important factors that could cause such differences include, but are not limited to, fresh lemon, mandarin, orange and other price fluctuations, supply and demand levels, currency fluctuations, production results, success in partnering with third parties, loss of market share, industry competition, environmental risks, physical risks, the risks of doing business in developing countries, legislative, tax, legal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, wars and acts of terrorism, natural disasters, project delays or advancements and lack of approvals. In light of the foregoing, the forward-looking statements included in this document may not occur. The forward looking statements made in this presentation related only to events or information as of the date on which the statements are made in this presentation. San Miguel undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Disclaimer

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2017 Context

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  • In march 2017, San Miguel successfully completed the issue of new shares to

finance its expansion projects

  • The Subscription Price defined by the company was $105 ARS for every 10 new

shares

  • The result of the quotation under the offer: A total of 67,275,000 New Shares were

awarded, which meant 100% of the maximum amount, already increased

  • The amount adjudged was $ 706,387,500 Argentine pesos
  • The number of received offers reached 123,595,021

new shares, or 211.3% of the shares to be issued

2017 – Equity Issuance

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2017 – Acquisition in Peru

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The Company & Transaction

  • # 1 Mandarin producer in Peru
  • 1.704 hectares (38% Mandarin; 25% Avocados; 18% Table

Grapes)

  • Enterprise Value: USD 64 mm
  • Take over date: August 15th, 2017
  • Seller: Grupo Breca

EBITDA multiple paid between

4x and 5x of 2018

flows Selected Metrics

  • 2017 Production: 25.000 MT (forecast 2018 +60%)
  • 2017 Sales: USD 31 mm (forecast 2018 +75%)
  • 2017 EBITDA: USD 5,5 mm (forecast 2018 +3x)
  • 2017 Margin: 18%

We expect margins to reach

33% by

2021 Identified Synergies

  • Commercial Synergies including new clients, new markets

new categories.

  • We can apply best practices learned in existing origins to

boost production

  • San Miguel will lever its size with suppliers to optimize

existing agricultural, operational and SG&A costs Quick wins achievable within

1 year

window

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Production

  • Higher production of

late variety in Spain due to an extraordinary climate event

  • Lower production

yields in Argentina, Uruguay and South Africa

  • Greater supply from

strategic producers

Market

  • Fresh Fruit: shorter

commercial window from the northern hemisphere

  • Processed Food: lower

processing volumes, higher prices and a demand that was stable for oil, increasing in juice and adjusting in peel

Contingencies

  • Cyber-attack suffered

by global shipping line Maersk impacted

  • perations, affecting
  • ur business model

2017 – Business Context

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Q4 2017 Results

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2017 – Macroeconomic Context

Exchange Rate Inflation

Full year rate (%) Average year rate vs. USD

5 40% 8% 7% 3% 25% 4% 5% 1%

Argentina Uruguay South Africa Peru 2016 2017

14,9 30,2 14,7 3,4 16,6 28,5 13,2 3,3

Argentina Uruguay South Africa Peru 2016 2017 11%

  • 6%
  • 10%
  • 3%

Sources: Ámbito Financiero, INE Uruguay, Inflation.eu, Reuters, finanzas.com, BCRP

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Fourth Quarter 2017 Highlights

  • Sales of ARS 3,863 millions
  • 4% YoY / + 19% QoQ
  • EBITDA of ARS 214 millions
  • 73% YoY / + 16% QoQ
  • Net Income of ARS 169 millions
  • 27% YoY / + 730% QoQ
  • Net Debt of ARS 2,759 millions

+ 148% YoY / + 148% QoQ

  • Total Production Volume of 204.377 MT - 18% YoY / - 50% QoQ

Total production includes only our own production and excludes the annual production of Peru (25,122 MT) and from strategic producers

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Consolidated income

Volumes Revenues Breakdown

Breakdown by Origin

In ARS Millions / Margin in % Total sales for 2017 exclude intercompany sales for ARS 126 MM. Volumes refer to the total volume of fruit operated in our system, including our own production and the one from strategic producers. For Peru includes volumes from August to December 2017

Breakdown by Origin

In thousand MT

2.863 349 812 4.024 2.551 332 882 224 3.863

Argentina Uruguay South Africa Peru Total 2016 2017

  • 11%
  • 5%

9% n.a.

  • 4%

309 37 65 411 271 36 68 13 388

Argentina Uruguay South Africa Peru Total 2016 2017

  • 12%
  • 3%

5% n.a.

  • 5%

41% 19% 15% 7% 24% 16% 36% 19% 30% Var. Revenues Var. Margin

  • 22%
  • 8%
  • 8%

n.a.

  • 17%

Var. Volume

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Fresh Fruit

Volumes Revenues Breakdown

Breakdown by Origin

In ARS Millions

Breakdown by Variety

In thousand MT

70 66 136 57 66 0,68 124

Lemon Soft Citrus Grape Avocado Total 2016 2017

  • 18%

0% n.a. n.a.

1.334 262 743 2.339 865 296 774 224 2.159

Argentina Uruguay South Africa Peru Total 2016 2017

  • 35%

13% 4% n.a.

  • 8%
  • 8%

Var. Revenues Var. Volume

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Processed Foods

Volumes Revenues Breakdown

Breakdown by Product

In US$ Millions

Breakdown by Origin

In thousand of processed MT

213 36 57 306 193 34 68 295

Argentina Uruguay* South Africa* Total 2016 2017

  • 9%
  • 6%

19% 2%

542 648 332 1.522 650 723 292 1.665

Oil Juice Other products Total 2016 2017 20% 12%

  • 12%

9%

Var. Revenues Var. Volume

*Processed volumes in Uruguay and South Africa correspond to operations in which San Miguel participates through Joint Ventures

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Selected Financials

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Breakdown by Origin

In ARS Millions

EBITDA Evolution

In ARS Millions

EBITDA Breakdown EBITDA Evolution

675 3 128 805 59 47 108 214

100 200 300 400 500 600 700 800 900 Argentina Uruguay y Perú Sudáfrica Total 2016 2017

  • 91%

1590%

  • 16%
  • 73%

418 435 805 214

25% 19% 20% 5% 37% 30% 36% 19%

0% 10% 20% 30% 40% 50% 60% 100 200 300 400 500 600 700 800 900 2014 2015 2016 2017 EBITDA EBITDA Margin Gross Margin

Var. EBITDA

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Composition

In ARS Millions

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Selected Financials

2017 Debt Evolution

Structural Debt Vs. Working Capital Debt

In ARS Millions

Net Financial debt´s evolution

Net Financial Debt EBITDA

  • High seasonality in cash flows.
  • Diversified Debt by Country of Origin and debt instrument.

0,9x 1,8x 1,3x 13x

  • 1.112

161

  • 647
  • 364 -292
  • 1.112

687

  • 80
  • 2.759

763 599 981 385 1.145 1.074 2.330 1.112 2.073 2.759

500 1000 1500 2000 2500 3000

jun-13 dic-13 jun-14 dic-14 jun-15 dic-15 jun-16 dic-16 jun-17 dic-17 The Evolution of Debt includes the effects of the acquisition of Agricola Hoja Redonda issolated

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Summary

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We anticipate that 2018 will present a completely different backdrop: 1. Lemons production growth in Tucuman and South Africa, and in mandarins, avocados and grapes in Peru 2. A longer and more favorable commercial window in the northern hemisphere and the inclusion of the United States market will support lemon prices 3. Improvements in the Processed Foods margins, due to higher processing volumes 4. Important reduction of indebtedness 5. Favorable macroeconomic context in Argentina, neutral in Peru and Uruguay, and slightly adverse in South Africa

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Summary

2017 was an extraordinary and challenging year in every aspect of our operation, however:

  • 1. San Miguel delivered positive Net Income and EBITDA for the year
  • 2. Achieved two major milestones that support its long term growth strategy and

business plan. We reiterate our commitment to become the leading company of fresh citrus fruit in the Southern Hemisphere and of processed fruit and vegetable products with added value

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Questions & Answers

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