#thefilipinocan - century pacific food

CNPF FULL YEAR 2020RESULTS PRESENTATIONMARCH 2021

CENTURYPACIFICFOOD, INC.

#TheFilipinoCan

LATESTFINANCIAL PERFORMANCE

TOTAL REVENUE GROWTH

FY 2020 Financial Results Highlights

3

BRANDED REVENUE GROWTH

+19%FY

+13%4Q

NET INCOME GROWTH

+25%FY

+16%4Q

+24%FY

+18%4Q

77%81%

FY 2019 FY 2020

∙ All branded units – Marine, Meat, and Milk – benefitted from outperformance in 2020

∙ Marine and Meat saw biggest lift from COVID-related spikes

∙ Milk maintained extraordinary multi-year growth momentum driven by Birch Tree

4

6 ppsGrowth Differential

Revenue Growth and Branded Split

FY Revenue Growth

Marine

33%

Meat

24%

Milk and Others

24%

OEM

19%

19%

25%

Consolidated Branded

4 ppsIncrease YoY

% Share of Branded Branded Business Split

Sustained demandAmidst loosened

restrictions

∙ Robust demand for branded products all throughout 2020, even before COVID

∙ Continued double-digit growth in the second half reflects resilient and essentials nature

of our portfolio

5

Branded Revenue Growth Trend

7.7 7.48.0 7.9

10.1 10.3

9.3 9.2

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

In PHP Bill

Average of 2019 quarterly branded revenues

Branded Quarterly Revenue Trend

31%

39%

16% 16%

-10%

0%

10%

20%

30%

40%

50%

1Q20 2Q20 3Q20 4Q20

CNPF TypicalGrowth Target

FY20 GDP

Branded Quarterly Growth Trend

∙ Products are staples of the Filipino household through tough times and better ones

∙ Brands and product portfolio reflect consumer themes of value-for-money, trusted

brands, health and safety

6

Resilient Demand for Our Products

Key Critical Household Items*

*Source: Department of Social Welfare and Development

Canned sardines

MilkCanned

meat

Instant noodlesCoffee Rice

CNPF participates in 3 out of 6

Emerging Consumer Trends

Emerging trends have shifted many consumer behaviors in our favor

∙ Flattish tuna OEM top line due to reallocation of capacity to domestic demand,

weakened global foodservice sector and lower pass-on tuna prices

∙ Segment continues to contribute positively to net income and cash flows

FY RevenueGrowth

7

OEM PerformanceDrivers

OEM Exports Revenue

19%

-1%

Consolidated OEM Exports

*Source: http://investor.thaiunion.com/raw_material.html

Tuna OEM volumes affected by (1) reallocation of

capacity to branded and(2) weak foodservice

demand globally

Flattish revenues also driven by pass-on of softer

commodity prices and stronger peso

OEM business still a consistent profit driver

1000

1200

1400

1600

1800

Mar-20 Jun-20 Sep-20 Dec-20 Mar-21

USD

Skipjack Tuna Price per Ton*

Current

Monthly Skipjack Tuna Priceswith 3-month delay

FY Margins

8

Profitability and Cash Flows

• Margin expansion across all profit line items due to stable input prices and outperformance of higher-margin branded business

• Strong bottomline growth and better working capital management lead to cash flow improvement

Gross Margin

EBITDA Margin

Operating Margin

Net Margin

24.0%

24.6%

FY19 FY20

+0.6pps

+0.3pps

13.2%

10.9%

7.8%

13.4%

11.1%

8.1%

+0.2pps

+0.2pps

3,656

5,078

FY19 FY20

In PHP Mill

Free Cash Flow

39%YoY in FY20

Operating Cash Flow

In PHP Mill

1,882

3,342

FY19 FY20

78%YoY in FY20

9

Cash Flows and Dividends

• Elevated dividends maintained in 2021, reflecting confidence in continued good business performance

Others, 2%

25%

34%

39%

FY20

Plant capacity and cost-saving initiatives

PHP2.0b in Debt Repayment

27%Interest YoY inFY20

36%DebtYoY inFY20

PHP1.3b in Dividends

Doubled cash dividend

PHP1.7b in CapEx

0.10

0.18 0.18

0.08

0.18 0.18

2019 2020 2021*

Regular Special

Operating Cash Flow Breakdown Dividends Per Share

0.18

0.36 0.36

*Record date: April 12, 2021; Payment date: May 6, 2021

Php5,078m

33%Payout Ratio

In PHP

2020A 2021E

10-15%Topline and Bottomline

Full-Year Expectations

10

• 2021 target to grow 10-15% to be driven by:

2021 Growth Drivers2021 Guidance

Aiming to grow double digits in spite

of high base

Resilient Demand for Core Branded

OEM Export Recovery

New Products & Emerging Categories

• Demand for essentials to remain resilient• Steady growth also driven by favorable shifts in

consumer behavior

• Gradual recovery expected for tuna OEM; Maximize capacity of new plant

• Coconut benefiting from health trends; Much needed new capacity to go online mid-2021

• Recent innovations gaining momentum; Full-year impact in 2021

• Roll out of other new products over the next few months

Outlook & Guidance

• Resilient demand for core branded products given favorable shifts in consumer habits• OEM export recovery• Aggressive pipeline of new product innovations

∙ Product innovations in line with mission of providing affordable nutrition to Filipinos

∙ Strong, reliable and proven platform to successfully launch new products and enter new

categories

11

New Product Innovations

Recent Product Launches

Meat Milk Coconut

August2020

September 2019

April2019

February2019

December2020

(Relaunch)

Marine

Core Emerging

November 2019 (Relaunch)

December 2020

Real MeatUnMeat

Plant-based Animal-based

Around 88% less land used

Around 82% less greenhouse gas emissions

Around 30% less energy used

Around 98% less water used

*Source: EMBO Reports, “The Eco-Friendly Burger,” December 2018UNESCO-IHE Institute for Water Education, December 2010

Production of real meat entails a longer supply chain versus plant-based meat alternatives

Entry into Plant-Based

VS

12

Supports Sustainability StrategyRetail Launch of UnMeat Products

1st Vegan Brand in the Philippines

Institutional Launch (Oct 2020); Retail Launch (Feb 2021)


13

Entry into Refrigerated Food:What You Need to Know

CNPF is acquiring 100% of PMCI for a total consideration of PHP650

million, and PHP275 million in inventory

PMCI is an emerging player in the large refrigerated food category. It

comes with its own manufacturing capabilities, cold chain distribution,

and a robust innovation pipeline of refrigerated better-for-you products

The acquisition is expected to provide CNPF with capabilities in a

completely different food segment which is growing and will have

synergies with the shelf-stable part of our portfolio

Valuation, at less than book value and at a discount to key metrics, is

minority shareholder friendly


14

Pacific Meat Company is an emerging player in the

fast-growing category of Refrigerated Food

Fast FactsBusiness Overview

Leading capabilities in

refrigerated food R&D,

manufacturing, and

marketing

Extensive cold chain

distribution network across

the Philippines

Large portfolio and pipeline

of innovative refrigerated

products

Manufacturing

Plant

Plant

Location

Biñan, Laguna

Adjacent to

CNPF’s meat plant

Plant Area

3,700 sqm

Partner

Distributors

1.4

18

1

2021F Revenue

in PHP billion

123 Employees

158

4,000

Positive

SKUs

sold

Retail

Distribution

Points

2021F

EBITDA


15

Diversified sources of revenue provide multiple

pathways of growth

Licensed Brands

Established

Century Argentina

Emerging

Wow UnMeat Peri

Own Brand

Shakey’sSwift

Toll Manufacturing

Food Service

Toll manufacturer for

Refrigerated

Food domestically

Supplier of Refrigerated Food

ingredients to

domestic food service outlets


16

A 4-pronged strategy focused on premiumization, brands, institutions, and capabilities in better-for-you products

● 15+ years of experience in

various general

management, marketing,

and sales roles in the FMCG

industry, including Country

Head of Froneri Philippines

(Nestle’s ice cream JV)

● Proven expertise in turning

around brands and

businesses via strategy and

operations transformation

NIKKI DIZONGeneral Manager


17

Subsequent improvement in profitability reflects

new successful strategy

in PHP million in PHP million


18

Business is expected to double revenues and

grow EBITDA by 14x in 5 years

in PHP billion in PHP million


19

Why is PMCI a

good acquisition

for CNPF?

Refrigerated Food Potential

Diversified Innovation

Pipeline

Capabilities in Plant-Based & Better-for-you

Products

Improved Corporate

Governance


20

Growth & diversification opportunities within a more

premium segment of packaged food...

Refrigerated Food Potential

● Gives CNPF growth opportunities in the more premium

refrigerated food industry

● Beneficiary of rising incomes, cold chain logistics

improvement, and modern retail expansion

● Winner in the post-COVID world given increased demand

for in-home food products

Diversified Innovation

Pipeline

● Diversifies CNPF’s business and expands its profit and revenue streams

● PMCI’s robust innovation pipeline adds to CNPF’s own stream of new products

● Supports CNPF’s ambition of consistently growing 10 to 15% a

year

Source: Euromonitor


21

...whilst consolidating plant-based capabilities and

improving corporate governance

● Enables CNPF to own the manufacturing, R&D, and

distribution of UnMeat

● Supports UnMeat’s ambition of expanding its line both

domestically and abroad

● Builds CNPF’s capabilities to create even additional healthier and better-for-you products

● Consolidates all FMCG units of the Po family under CNPF

● Eliminates related party transactions and removes all

conflicts of interest in both time and resources

● With PMCI breaking even, in line with rationale of excluding

the business during the IPO, at which time PMCI was still sub-

scale

Source: Citi Research

Capabilities in Plant-Based & Better-for-you

Products

Improved Corporate

Governance

12 billionGlobal market

size of plant-based

(in USD)


22

Acquisition to be done at a discount to all

relevant metrics

Retained as a separate

legal entity

Deal expected to close on March 31 2021

*Plus PHP275M worth of inventory

**Independent valuation done by BDO Capital


23

PMCI will further build CNPF’s innovation pipeline,consistent with the Company’s growth strategy


24

Leveraging on CNPF’s established track record inbuilding businesses and brands

Built one of the leading coconut

exporters in the Philippines

Leveraging these coconut OEM

export capabilities and branding

know-how to build a branded

domestic coconut category

Taking advantage of exciting

opportunities in milk via

heritage brand Birch Tree

Capitalizing on brand’s equity and momentum thru a robust

product innovation pipeline

Primary driver of canned tuna

consumption domestically

Decades-long tuna brand-

building around “health and “wellness”

7%coconut

as % of

CNPF’s 2020 sales

38%2016 -

2020

Revenue

CAGR

11.5xincrease in

powdered

milk market

share

2016 - 2020

13%2016 -

2020

Revenue

CAGR

84%CNPF

market

share as

of Dec

2020

New Products Emerging Core Branded


26

PMCI hits scale in 2019 and achieves EBITDA breakeven in 2020, marking the turnaround of the business

PMCI is established as

the refrigerated food

unit of Century Pacific Group

PMCI hits

scale

PMCI crosses Php1 billion in

sales

Achieves

EBITDA breakeven

in 2020

CNPF lists on the PSE;

PMCI, operating at

subscale at that time,

was kept private

Developed

higher margin,

premium,

innovative

products

Release of

Argentina’s

refrigerated

meat product

line

Launch of

Shakey’s

Take & Bake

Full launch

of plant-based

brand UnMeat


27

Moving forward, the four key priorities will be integral to PMCI’s success

1Differentiated and

Affordably

Premium Products 2 3 Partner-of-Choice 4Leverage Strong

Brands

Forefront of Plant-

Based and Health

and Wellness


28

Plans for new product launches already in place


29

Acquisition to include all key assets of the business


30

Plant-based meat potential

31

FY 2020 Summarized P&L

• Earnings momentum sustained at +24%, exceeding normal target of 10-15%

• Revenue growth driven by branded outperformance

• Robust double-digit growth across all branded units as consumers prefer well-known and trusted shelf-stable products

• Improvement in gross margin driven by subdued raw materials, favorable FX, and faster growth of higher-margin branded business

• Elevated operating expense due to enhanced health and safety measures

In PHP Mill FY 2019 FY 2020 Change YoY

Net Revenues 40,560 48,322 19%

Cost of Sales 30,836 36,444 18%

Gross Profit 9,724 11,878 22%

Operating Expenses 5,333 6,315 18%

Operating Income 4,408 5,378 22%

EBITDA 5,340 6,470 21%

Financing Cost - Net 369 270 -27%

Income before Tax 4,039 5,108 26%

Income Tax 890 1,193 34%

Net Income 3,149 3,915 24%

Earnings per Share 0.89 1.11 24%

Margins (%)

Gross Profit 24.0% 24.6% +0.6 pps

Operating Expenses 13.1% 13.1% 0 pps

Operating Income 10.9% 11.1% +0.2 pps

EBITDA 13.2% 13.4% +0.2 pps

Net Income 7.8% 8.1% +0.3 pps

32

FY 2020 Summarized Cash Flow

• Working capital improvement primarily driven by strict monitoring of receivables

• CapEx program continues in spite of COVID-19; some expansion programs accelerated

• Decline in financing cost due to decrease in debt and lower interest rates

• Debt repayment supported by significant increase in free cash flows

• Strong cash generation due to robust profitability and reduced working capital

In PHP Mill FY 2019 FY 2020

Profit before Tax 4,039 5,108

Depreciation & Amortization 932 1,092

Working Capital Change (713) 199

Income Tax (890) (1,193)

Others 288 (129)

OPERATING CASH FLOWS 3,656 5,078

Additions to PPE (1,774) (1,736)

INVESTING CASH FLOWS (1,743) (1,703)

Interest Paid (369) (270)

Change in Debt (792) (1,987)

Dividends (638) (1,275)

FINANCING CASH FLOWS (1,981) (3,753)

NET CHANGE IN CASH (69) (378)

CASH, ENDING 1,608 1,229

FREE CASH FLOW 1,882 3,342

11,782 10,550 11,633 14,361 14,313

0

50

100

150

0

5,000

10,000

15,000

Dec 19 Mar 20 Jun 20 Sep 20 Dec 20

Inventory Inventory days

6,833 8,060 10,558 11,770

9,680

0

50

100

150

0

5,000

10,000

15,000


Payables Payable days

7,001 8,539 8,668 8,171 7,644

0

50

100

150

0

5,000

10,000

15,000


Receivables Receivable days

139 122

6369

PHPm

PHPm PHPmDays

Days

Days

81

111

WORKING CAPITAL

INVENTORY

RECEIVABLES

PAYABLES

33

11,950 11,029 9,743 10,762

12,277

0

50

100

150

0

5,000

10,000

15,000


Working Capital WC DaysPHPm Days

12180

Working Capital Details

• Build-up of inventory in 2H 2020 driven by increase in raw material covers• Shorter payable days offset by improvement in receivable days• Strict monitoring of receivables amidst current economic conditions

101

72

12091

63

149122

90 103

55

131

83

34

FY 2020 Summarized Balance Sheet

• Improvement in cash conversion cycle to 103 days versus 121 days as of end-2019

• Build-up of inventory driven by increase in raw material covers

• Loans totaling PHP3.5 billion all peso-denominated

• FY 2020 consolidated net income of PHP3.9 billion


Cash 1,608 1,229

Receivables 7,001 7,644

Inventory 11,782 14,313

Current Assets 21,515 24,196

PPE 6,415 7,290

Non-Current Assets 11,074 11,817

TOTAL ASSETS 32,589 36,013


Trade and Other Payables 6,833 9,680

Notes Payable - Current 2,434 3,533

Long-Term Loan 3,087 0

TOTAL LIABILITIES 13,434 14,652

Retained Earnings 10,611 12,819

TOTAL EQUITY 19,154 21,361

BVPS (PHP/share) 5.41 6.03

Gearing (x)

Current Ratio (x)

Net Gearing (x)

Return on Equity

Notes: Gearing Ratio = (Interest-Bearing Liabilities) / EquityNet Gearing = (Interest-Bearing Liabilities Less Cash) / Equity

Return on Equity uses trailing 12 months’ earnings and average equity35

0.20 0.11

2019 2020

2.22

1.77

2019 2020

17.6% 19.3%

2019 2020

0.29 0.17

2019 2020

Financial Ratios

• Comfortable level of gearing ratios maintained

• Decrease in peso-denominated debt led to lower leverage ratios

• Decline in current ratio due to maturity of long-term loans

• Attractive return ratios with ROE in the high teens

This document is highly confidential and being given solely for your information and for

your use and may not be, or any portion thereof, shared, copied, reproduced or

redistributed to any other person in any manner. The statements contained in this

document speak only as of the date which they are made, and the Company expressly

disclaims any obligation or undertaking to supplement, amend or disseminate any

updates or revisions to any statements contained herein to reflect any change in events,

conditions or circumstances on which any such statements are based. By preparing this

presentation, none of the Company, its management, and their respective advisers

undertakes any obligation to provide the recipient with access to any additional

information or to update this presentation or to correct any inaccuracies in any such

information which may become apparent.

This presentation contains statements, including forward-looking statements, based on

the currently held beliefs and assumptions of the management of the Company, which

are expressed in good faith and, in their opinion, reasonable. Forward-looking

statements in particular involve known and unknown risks, uncertainties and other

factors, which may cause the actual results, financial condition, performance, or

achievements of the Company or industry results, to differ materially from the results,

financial condition, performance or achievements expressed or implied by such forward-

looking statements. Given these risks, uncertainties and other factors, recipients of this

document are cautioned not to place undue reliance on these forward-looking

statements.

Any reference herein to "the Company" shall mean, collectively, Century Pacific Food, Inc.

and its subsidiaries.

Ortigas Center, Pasig City, Philippines

www.centurypacific.com.phhttp://edge.pse.com.ph

[email protected]

+632 8633 8555

www.linkedin.com/company/century-pacific-food-inc-/

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#thefilipinocan - century pacific food

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