integrated fresh coconut processing: is this the

GEA Group Aktiengesellschaft

January 31, 2012

The GEA GroupGEA Mechanical EquipmentGEA Westfalia Separator

INTEGRATED FRESH COCONUT PROCESSING:IS THIS THE PHILIPPINES’ SILVER BULLET TO

ERADICATE POVERTY?

efficiency in food and energy processes.

OUTLINE

2 GEA Group Aktiengesellschaft

WHAT IS FRESH COCONUT PROCESSING?

GLOBAL TRENDS AFFECTING THE COCONUT INDUSTRY:WHAT ARE THE FACTORS DRIVING LONG-TERM DEMAND FOR FRESH COCONUT PRODUCTS?

SOCIO-ECONOMIC BENEFITS OF FRESH COCONUT PROCESSING: WHAT ARE THE BENEFITS TO THE FARMERS, COMMUNITY AND THE COUNTRY AND HOW WILL THE SHIFT TO INTEGRATED FRESH COCONUT PROCESSING REDUCE POVERTY IN THE COUNTRYSIDE?

VIABILITY OF GREENFIELD INTEGRATED FRESH COCONUT PROCESSING




IT IS NOT ABOUT YOUNG COCONUT

AND DEFINITELY NOT ABOUT COPRA!!!


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GLOBAL TRENDS


DEMAND FOR NATURAL AND HEALTHY DRINKS DRIVES GROWTH OF NATURAL DRINKS LIKE COCONUT WATER BEVERAGES

HEALTH BENEFITS FROM COCONUT WATER•Immediate rehydration•Kidney cleansing•Low in calories & fat •Hangover fix


GLOBAL TRENDS


GLOBAL PLAYERS LIKE PEPSICO & COCA COLA BELIEVE THE HEALTHY TREND IS FOR LONG TERM


GLOBAL TRENDS


CELEBRITY INVESTMENTS AND ENDORSEMENTS FURTHER PROPEL THE POPULARITY OF COCONUT WATER DRINKS

• MADONNA INVESTED US$ 1.5MILLION IN VITACOCO

• OTHER CELEBRITY ENDORSERSARE DEMI MOORE, KIRK DOUGLAS,MATHEW McCONAUGHEY


GLOBAL TRENDS


ENDORSEMENT BY OUR VERY OWN PRES. AQUINO MADE THE LOCAL MARKET AWARE OF PHIL.-MADE COCONUT WATER BEVERAGES


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MEAT: 44%

WATER: 30%

RESOURCE MAXIMIZATION THRU RECOVERY OF HIGH VALUE, HIGHLY NUTRITIOUS, HEALTHY & NATURAL FOOD PRODUCTS FROM FRESH COCONUT

COPRA INTEGRATED FRESHCOCONUT PROCESSING

MEAT PRODUCTS: MEAT PRODUCTS:COPRA: 22% FROZEN COCONUT MEAT: 36%

COCONUT OIL: 14% DESSICATED COCONUT: 16%COPRA MEAL: 8% PARING OIL: 2%

COCONUT MILK: 17%

SKIM MILK: 9%

VIRGIN COCONUT OIL: 5%

COCONUT FLOUR: 7%

WHITE OIL FROM FLOUR: 1.5%

COCONUT WATER: 0% COCONUT WATER BEVERAGES: 26%

TOTAL: 22% TOTAL: 44%-62%

SOCIO-ECONOMIC BENEFITS




PRODUCTION IN 2010: ABOUT 2.863 MILLION MT COPRA TERMS, OR ABOUT 12MILLION MT NUTS

85

10 3 2NUT UTILIZATION, IN %

COPRA: 85%DCN: 10%FOODNUTS: 3%OTHERS: 2%

COCONUT WATER WASTED FROM COPRA

SKIM MILK WASTED FROM COPRA

ESTIMATED VOL.: 2.65 MILLION MT ESTIMATED VALUE: PhP 98.9 B

ESTIMATED VOL.: 0.92 MILLION MTESTIMATED VALUE: PhP 39.6 B

COCONUT OIL EXPORTS IN 2010: PHP 54 B EQUIV. EXPORTS IF VCO/PARING OIL WERE PRODUCED: PHP 30 B


COPRA VS.INTEGRATED

FRESH COCONUT PROCESSING

MATURED COCONUT

DEHUSKING

BREAKING

DRYING

DE-SHELLING

PACKING

FARM-GATE PRODUCTS COPRA FRESH WHOLE NUTS

FARMER BENEFITS:

• LESS PROCESS STEPSMORE TIME FOR OTHER ACTIVITIES

• LESS TIME FROM HARVESTTO SELLING

• HIGHER PRICE FORFRESH WHOLE NUTS

ALL THESE COULD TRANSLATE TO HIGHER INCOME FOR FARMERS





COPRA: LOW PRICE, LESS PERISHABLE & LESS SHIPPING VOLUMECOPRA & OIL PROCESSING FACILITIES ARE LOCATED AWAY FROM PLANTATIONS

RESULT: COUNTRYSIDE REMAIN BACKWARD AND FARMERS ARE NOT MOTIVATED TO INCREASE FARM PRODUCTIVITY

FRESH COCONUT: HIGHER PRICE, MORE PERISHABLE & MORE SHIPPING VOLUMEVIRGIN COCONUT PROCESSING FACILITIES MUST BE LOCATED NEAR PLANTATIONS

EXPECTED RESULT: INDUSTRIALIZATION OF COUNTRYSIDE AND FARMERS HAVE MORE REASONS TO INCREASE FARM PRODUCTIVITY

COUNTRYSIDE DEVELOPMENT THRU INDUSTRIALIZATIONAND HIGHER FARM PRODUCTIVITY


SOCIO-ECONOMIC BENEFITS FROM VIRGIN COCONUT PROCESSING:

COUNTRYSIDE DEVELOPMENT THROUGH AGRO-INDUSTRIAL DEVELOPMENT

EVERY 30,000 HAS. OF COCONUT FARM CAN SUPPORT FRESH COCONUT FEEDSTOCK REQMT. OF A 400TPD INTEGRATED FRESH COCONUT PROCESSING PLANT

PUTTING UP PROCESSING PLANTS CLOSER TO AREAS WHERE COCONUT IS ABUNDANT MEANS: IMPROVED INCOME IN DEPRESSED AREAS THRU EMPLOYMENT GENERATION AND BETTER PRICES FOR FARMERS WHO CAN SELL DIRECT TO PROCESSORS

ESTIMATED FIGURES:A. JOBS GENERATED BY THE PROCESSING PLANT:• MANAGEMENT/SUPERVISORY : 12

PERSONNEL• BLUE COLLAR JOBS : 36 PERSONNEL• LABOR : 1,200 PERSONNEL

B. FARMER-BENEFICIARY WITHIN 15 KM RADIUS OF PROCESSING PLANT:ABOUT 15, 000 FARMER BENEFICIARIES ASSUMING EACH FARMER HAS 2 HAS. OF FARM LOTS

MULTIPLIER EFFECT OF ITEMS A AND B TO IMMEDATE FAMILY MEMBERS AND UPSTREAM AND DOWNSTREAM SUPPLIERS AND SERVICE PROVIDERS





THRU INCOME IMPROVEMENT OF ABOUT 3.5M FARMERS & 25M FILIPINOS THAT ARE DIRECTLY & INDIRECTLY DEPENDENT ON THE INDUSTRY THRU EMPLOYMENT OPPORTUNITIES IN TOP COCONUT PRODUCING REGIONS CURRENTLY RANKED AS THE POOREST REGIONS IN THE COUNTRY

HIGH IMPACT IN POVERTY ALLEVIATION SINCE PROJECTS BENEFIT THE MOST AFFECTED SECTOR AND AREAS:

THRU TAXES ON EARNINGS FROM RESOURCE MAXIMIZATION W/C COULD FLOW BACK FOR SOCIAL SERVICES AND INFRA DEVELOPMENT IN COCONUT PRODUCING REGIONS




EXTENSION/EXPANSION PROJECTS OF EXISTING DCN PROCESSING FACILITIES: • FOUR EXTENSION/EXPANSION PROJECTS ARE

OPERATIONAL• TWO EXTENSION/EXPANSION PROJECTS ON-

GOING• THREE EXTENSION PROJECTS IN NEGO STAGES

CURRENT DEVELOPMENTS:




GREENFIELD INTEGRATED PROJECTS: • TWO PROJECTS ARE ON-GOING, ONE EACH IN

SORSOGON AND CAMARINES SUR• ONE PROJECT IN CLOSING STAGE WITHIN 3

MONTHS IN ZAMBOANGA• >10 INQUIRIES WITH BUDGETARY QUOTES ALL ARE

LOOKING FOR AREAS WHERE COCONUT IS ABUNDANT LIKE LEYTE, SAMAR, SURIGAO, DAVAO, AURORA, PALAWAN, PANAY, CARAGA, ARMM, SARANGANI

CURRENT DEVELOPMENTS:




CURRENT DEVELOPMENTS IN THE INDUSTRY: • TWO MULTINATIONAL COMPANIES ARE COMING OUT WITH

THEIR OWN BRAND OF COCONUT WATER-BASED DRINKS FOR LOCAL AND FOREIGN MARKETS

• TWO MORE MULTINATIONAL COMPANIES ARE SERIOUSLY CONSIDERING COMING OUT WITH THEIR OWN BRANDS ALSO FOR LOCAL AND FOREIGN MARKETS

• RTD COCONUT WATER IN ASEPTIC PACKAGING IS SALEABLE IN THE LOCAL MARKET EVEN AT PRICE RANGE OF PHP 60-180/LITER

• THE COCONUT FARMERS ARE BECOMING AWARE OF THEIR COLLECTIVE POWER AS FEEDSTOCK SUPPLIER


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FRESH COCONUT PROCESSINGESTIMATED INVESTMENT COST

PROJECT:400 TPD INTEGRATED FRESH COCONUT PROCESSING QTY

UNIT PRICE OR COST

TOTAL PRICE OR COST

INVESTMENTLAND, SQ.M. 50,000 250 12,500,000.00

SITE DEVELOPMENT 10,000 3,000 30,000,000.00 BUILDING & CIVIL WORKS 4,000 17,000 68,000,000.00

PROCESSING PLANT 1 576,701,400 576,701,400.00 INVESTMENT ON INFRA 687,201,400.00

WORKING CAPITAL, DAYS‐CYCLE 60 5,600,000 336,000,000.00

TOTAL INVESTMENT 1,023,201,400.00


FRESH COCONUT PROCESSINGFINANCIAL FORECAST

PROJECT: 400TPD INTEGRATED FRESH COCONUT PROCESSING YEAR 0

YEAR 1‐60% CAP

YEAR 2‐75% CAP

YEAR 3‐90% CAP

YEAR 4‐100% CAP

YEAR 5‐100% CAP

INVESTMENT 687,201,400

SALES 1,684,500,000 2,105,625,000 2,526,750,000 2,807,500,000 2,807,500,000

EXPENSES 1,403,400,000 1,754,250,000 2,105,100,000 2,339,000,000 2,339,000,000

GROSS INCOME 281,100,000 351,375,000 421,650,000 468,500,000 468,500,000

INCOME TAX, 30% 84,330,000 105,412,500 126,495,000 140,550,000 140,550,000

NET INCOME 196,770,000 245,962,500 295,155,000 327,950,000 327,950,000

PAY BACK PERIOD, YEARS 2.8


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efficiency in food and energy processes.26 GEA Group Aktiengesellschaft

integrated fresh coconut processing: is this the

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