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JB FOODS LIMITED Corporate Presentation & 3Q2012 Financial Results
ABOUT US COMPETITIVE STRENGTHS 3Q2012 HIGHLIGHTS OUTLOOK & PROSPECTS
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Cocoa Liquor
Cocoa Cake
Cocoa Powder
Cocoa Beans
Our key products
We are one of the major cocoa ingredient producers in Malaysia
Cocoa Butter
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CONSUMERS
Chocolate Manufacturers
Processed Foods Manufacturers (i.e. chocolate drinks, bakery
products, chocolate confectioneries, etc.)
PHARMACEUTICALS INDUSTRY (Skin Care products)
FOOD INDUSTRY
CONSUMER PRODUCT INDUSTRIES
Grinding Pressing Milling
COCOA PROCESSING INDUSTRY
The Company's core activities
Food Ingredient Suppliers (i.e. chocolate coatings,
cooking chocolate, cocoa powder)
COCOA BEAN SUPPLIERS
Ordinary Beans Flavour Beans
Legend:
Cocoa Liquor Cocoa Butter & Cocoa Cake Cocoa Powder
COCOA INGREDIENTS
Source: This diagram was prepared by Frost & Sullivan based on desk research and primary interview.
Our role in the cocoa processing industry
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Our cocoa ingredients
Note:
Cocoa Powder
Cocoa Cake
Cocoa Liquor
1. Bean Cleaning
2. Cocoa Shell Removal
3. Alkalising
5. Grinding
8. Pulverising
9. Crystallisation
4. Roasting
14. Tempering 15. Cocoa Liquor Packaging
6. Pressing
Deodorised Cocoa Butter
12. Deodorising
10. Cocoa Powder Packaging
11. Cocoa Butter Packaging
7. Cocoa Cake Packaging
13. Deodorised Cocoa Butter Packaging
Cocoa Butter
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Production Process Flow for the Production of Cocoa Liquor, Cocoa Butter, Deodorised Cocoa Butter, Cocoa Cake and Cocoa Powder
Our production process
14. Tempering
14. Tempering
1980s 2002 2003 2004 2005 2008 2011 2012
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Group founded; processor of wet cocoa beans to dry cocoa beans
Started construction of cocoa processing plant in PTP
Completed construction
Commenced production, sales and exports
Production capacity of 30,000 tonnes(1)
First production output of cocoa butter in July
First production output of cocoa powder in October
As at 17 June, our plant has production capacity of 60,000 tonnes(1)
23 July: Successfully listed on the Mainboard of the SGX-ST
21 August: Incorporated JB Foods Global Pte. Ltd. (principal activities include procurement, sales and marketing of cocoa beans, cocoa ingredients and other related materials/products)
ISO 9001:2000 and HACCP certification
Commenced 2nd alkalising and roasting line
Commenced 3rd grinding line
(1) Production capacity: tonnes in terms of cocoa bean equivalent per year.
Commenced 3rd cocoa butter press
Commenced 4th grinding line; increased production capacity to 50,000 tonnes (1)
Commenced cocoa liquor tempering line
Commenced 3rd roasting line
Commenced 4th cocoa butter press; increased production capacity to 60,000 tonnes(1)
Awarded ‘Best Cocoa Grinder Award 2010’ by Malaysian Cocoa Board
1 June: sub-leased additional 20,707.8 sq m of adjacent land for expansion plans
Expansion of our production capacity in gradual stages
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(tonnes of cocoa bean equivalent)
MAIN TYPE OF ACTIVITIES CARRIED OUT AT THE FACILITY
APPROXIMATE LAND AREA
LOCATION OF FACILITY
Processing of cocoa butter, cocoa powder, cocoa liquor and cocoa cake
36,421.7 sq m Lot CP1, Jalan Tanjung A/6, Pelabuhan Tanjung Pelepas (“PTP”), 81650 Gelang Patah, Johor, Malaysia
In FY2010, our cocoa bean processing accounted for 14.6%(1) of the total cocoa beans processed in Malaysia
We intend to expand our production capacity to 85,000 tonnes of cocoa bean equivalent per year by FY2013
The utilisation rate for 9M2012 is 92.6% based on actual production capacity of 41,685 mt against the prorated maximum production capacity of 45,000 mt
Our production capacity and utilisation
(1) Extracted from the “Independent Market Research Report on the Cocoa Processing Industry” by Frost & Sullivan Malaysia Sdn Bhd dated May 2012.
50,000 50,000
60,000 60,000
85,000
37,99244,293
59,030
41,685
76.0%
88.6%98.4% 92.6%
0
20,000
40,000
60,000
80,000
100,000
FY2009 FY2010 FY2011 9M2012 FY2013
Approximate Maximum Annual Production CapacityActual Annual Production CapacityUtilisation Rate
Expansion of our cocoa processing plant in PTP
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• R&D Lab
ASRS: Automated Storage Retrieval System
• New Production Plant and ASRS
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Expansion of our cocoa processing plant in PTP
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• New Production Plant and ASRS
ASRS: Automated Storage Retrieval System
Granted two call options to acquire equity interest in overseas cocoa processing facilities
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• PT Jebe Koko has commenced initial construction of a cocoa liquor processing facility in Maspion Industrial Estate in Gresik, Indonesia
• Construction expected to be completed by 2nd half of 2013
• Acquisition ensures secure supply to cocoa liquor and mitigates Indonesia’s export tax as cocoa liquor are not taxed, but cocoa beans are taxed up to 15%
PT Jebe Koko
Call Option
(Indonesia)
• Kakao GmbH intends to construct a cocoa butter melting, deodorising and warehouse facility in Valluhn-Gallin, Germany
• Construction expected to be completed by end-2013, subject to the completion of the PT Koko facility
Kakao GmbH
Call Option
(Germany)
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PT Jebe Koko (Indonesia)
11 Artist’s impressions
• Construction of a cocoa liquor processing facility to be located in Maspion Industrial Estate in Gresik, Indonesia
• Approximately 30 km from the port of Surabaya
• Construction in progress; expected to be completed in the second half of 2013
• Audit Committee will evaluate the feasibility and benefit of exercising the PT Koko Call Option
PT Jebe Koko (Indonesia)
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Front view of plant
West view of plant East view of plant
Concrete road (front of plant)
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PT Jebe Koko (Indonesia)
13 Internal view of plant (finished goods warehouse)
External view of plant Internal view of plant
Kakao GmbH (Germany)
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• Construction of a cocoa butter melting, deodorising and warehouse facility located in Valluhn-Gallin, Germany, approximately 65 km from the port of Hamburg
• Construction expected to be completed by the end of 2013, subject to the completion of the construction of a cocoa liquor processing facility by PT Koko
• Audit Committee will evaluate the feasibility and benefit of exercising the Kakao GmbH Call Option
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ABOUT US COMPETITIVE STRENGTHS 3Q2012 HIGHLIGHTS OUTLOOK & PROSPECTS
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Wide customer base and long term relationships with customers and suppliers
Strategically located within a free trade zone in Malaysia
High priority on product quality and manufacturing process
Experienced management team
Existing product development capabilities
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Competitive strengths at a glance
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We have a quality management system and quality assurance programme, which are certified ISO 9001:2008 and HACCP, respectively
Obtained Kosher and Pareve certification and Halal certification for our products produced and manufactured at our processing plant in PTP
Our long standing relationships with international food and beverage companies and trade houses are due to our ability to meet their stringent requirements
1. High priority on our product quality and manufacturing process
Halal Certification (2012)
HACCP Certification (RVA & MOH) (2011)
ISO 9001: 2008 (2011)
Kosher Certification (2011)
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Directors & Management Team Experience (Approximate) Years of Service
Tey Kan Sam @ Tey Hin Ken Non-Executive Chairman
• 30 years (cocoa business) 10
Tey How Keong CEO
• 23 years (cocoa business) 10
Goh Lee Beng Executive Director
• 22 years (cocoa business) 10
Low Kim Poh CFO
• 18 years (finance and accounting) 6
Ong Kim Teck Operations Manager
• 15 years (engineering); oversaw construction of plant in 2002
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Ho Kek Sian Quality Assurance and Development Manager
• 9 years (engineering/working experience) 2
Teo Swee Guan Tax, Costing and Purchasing Manager
• 25 years (finance and accounting) 1
Saw Poh Chin Sales and Marketing Manager
• 10 years (cocoa business) 10
Thian Fong Chen Human Resource and Administration Manager
• 7 years (human resource) 2
Our Executive Directors has collectively over 45 years of experience in the cocoa industry
Our CEO leads an experienced and dedicated management team with multi-disciplinary skills
2. Experienced management team
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We provide customisation of cocoa ingredient products, in particular, cocoa powder, to fulfil the varied requirements of our customers.
Technicians in our operations department together with our product development and process improvement team are able to develop production techniques and process control systems to improve quality and optimise capacity and efficiency of our production facility.
3. Existing product development capabilities
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Western Europe (Includes Denmark, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania, the Netherlands, Portugal, Slovenia, Spain, Switzerland and United Kingdom)
Eastern Europe (Includes Poland, Romania, Russia and Ukraine)
Other Asia (Includes Bangladesh, China, Georgia, India, Iran, Iraq, Israel, Japan, Jordan, Kazakhstan, Korea, Pakistan, Saudi Arabia, Sri Lanka, Syria, Uzbekistan and Yemen)
Africa South East Asia
Oceania (Includes Australia and New Zealand)
North America
Central & South America
4. Wide customer base and long term relationships with customers and suppliers
We export our products worldwide to customers ranging from international trade houses to end users such as food and beverage and confectionery manufacturers.
These include Th eobroma B.V., ADM Cocoa, General Cocoa Company Inc., Transmar Commodity Group Ltd., Olam Europe Limited, ECOM Group, Nestlé Philippines, INC., AB Food & Beverages (Thailand) Ltd, Kraft Foods Manufacturing Malaysia Sdn Bhd, Mitsubishi Corporation, Godrej Hershey Ltd. and Arcor Saic.
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Our production plant is located in Pelabuhan Tanjung Pelepas (“PTP”), a strategic logistic hub within a free trade zone in Johor Bahru, Malaysia
This reduces the travel time by road between our plant to the port, which also significantly reduces land logistics costs and enables us to closely monitor our containers prior to the loading onto vessels for its onward journey to other ports
5. Strategically located within a free trade zone in Malaysia
ABOUT US COMPETITIVE STRENGTHS 3Q2012 HIGHLIGHTS OUTLOOK & PROSPECTS
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3Q2012 summary
Comparisons are made against 3Q2011 ended 30 Sep 2011
•Decreased by 32.9% from RM173.8 million in 3Q2011 to RM116.7 million in 3Q2012 mainly due to lower cocoa bean terminal prices, which resulted in lower average selling prices of our coca ingredient products
Revenue
•Decreased by 1,374 tonnes from 12,248 tonnes in 3Q2011 to 10,874 tonnes in 3Q2012 mainly due to the disruption in production caused by a planned integration of new plant
Sales Quantity
•Slight decrease in gross profit margins from 12.9% in 3Q2011 to 12.6% in 3Q2012
Gross Profit Margins
• In 3Q2012, the Group generated a profit attributable to owners of the parent of RM9.5 million Profitability
3Q2012: Three months ended 30 Sep 2012
0
20
40
60
80
100
120
140
160
180
3Q2011 3Q2012
173.8
116.7
22.414.79.7 9.5
Revenue
Gross Profit ("GP")
Profit attributable to owners of the parent ("PAT")
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RM’million
Order Book:
From 1 January 2012 to 17 June 2012, our order book based on confirmed orders was approximately 50,406 mt, of which approximately 20,502 mt had been fulfilled and RM250.8 million of revenue had been recognised
The remaining orders of 29,904 mt will continue to be delivered continually on a monthly basis until the end of 2013
3Q2012 financial highlights
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Total revenue decreased by 25.2% from RM518.8 million in 9M2011 to RM388.3 million in 9M2012
Sales quantity decreased by 2,917 tonnes from 35,928 tonnes in 9M2011 to 33,011 tonnes in 9M2012, mainly due to disruption in production caused by a planned integration of new plant
Despite lower sales quantity, our gross profit margin improved by 1.5 percentage points from 11.9% in 9M2011 to 13.4% in 9M2012
Maintained gross profit margin of RM1,576 per metric tonne in 9M2012
Generated profit before tax of RM38.9 million in 9M2012
9M2012 financial highlights
RM’million 3Q2012 3Q2011 +/(-) % 9M2012 9M2011 +/(-) %
Revenue 116.7 173.8 (32.9) 388.3 518.8 (25.2)
Gross Profit 14.7 22.4 (34.4) 52.0 61.9 (15.9)
GP Margin (%) 12.6 12.9 (0.3) pts 13.4 11.9 1.5 pts
Profit before income tax 8.4 12.7 (33.9) 38.9 46.1 (15.7)
Net Profit 9.5 9.7 (1.8) 32.0 35.0 (8.8)
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Revenue analysis by product
33.2%
9.1%
4.0%3.4%
50.2%
0.1%
9M2011
Cocoa powder and cocoa butter are our two key products, comprising more than 90.0% of our total revenue in last three years
In 9M2012, cocoa powder and cocoa butter contributed 86.4% to the Group’s revenue
24.6%
8.8%
3.3%
1.4%
61.8%
0.2%
9M2012
Cocoa Butter Deodorised Cocoa Butter Cocoa Liquor
Cocoa Cake Cocoa Powder Others
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Revenue analysis by geographical region
16.9%
19.6%
17.1%8.6%
20.9%
6.8%6.9%
3.3%9M2012
North America Southeast Asia Western EuropeEastern Europe Other Asia AfricaCentral & South America Oceania
35.6%
15.0%14.1%
8.8%
11.0%
6.5%7.5%
1.5%
9M2011
1. Western Europe includes Denmark, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania, the Netherlands, Portugal, Slovenia, Spain, Switzerland and United Kingdom. 2. Eastern Europe includes Poland, Romania, Russia and Ukraine. 3. Other Asia includes Bangladesh, China, Georgia, India, Iran, Iraq, Israel, Japan, Jordan, Kazakhstan, Korea, Pakistan, Saudi Arabia, Sri Lanka, Syria, Uzbekistan and Yemen. 4. Oceania consists of Australia and New Zealand.
Traditionally, North America and Western Europe have been the largest markets between FY2009 and FY2011
Since FY2011, contributions from North America and Western Europe to our revenue have decreased, in percentage terms, due mainly to a diversification of sales to other emerging markets such as Southeast Asia, Eastern Europe and Other Asia
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RM’million As at 31 Dec 2011
As at 30 Sep 2012
Non-current assets 88.0 109.0
Current assets
237.8
229.9
Inventories 138.5 148.4
Current liabilities 214.4 144.2
Trade and other payables 62.0 31.1
Borrowings 142.2 110.5
Shareholders’ Equity
99.8
182.2
Balance sheet highlights
Increase mainly due to capex incurred for PTP plant expansion
Decrease mainly due to decrease in cash and cash equivalents,
partially offset by increase in inventories, trade and other
receivables, prepayment and derivative financial instruments
Build-up of cocoa inventory from disruption in production (planned
integration of new plant)
Decrease mainly attributable to payment of dividends, decrease in
trade payable; partially offset by increase in other payables
Decrease due to repayment of term loan, reduction in utilisation
of trade bills; partially offset by a increased in bank overdraft
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ABOUT US COMPETITIVE STRENGTHS 3Q2012 HIGHLIGHTS OUTLOOK & PROSPECTS
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Outlook & prospects
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• In view of the uncertain global economic situation and the current Eurozone debt crisis, the Group expects the business environment to continue to remain challenging
• Nevertheless, the board remains confident in the long term prospect of the business and will continue to seek out new business opportunities
• This will ramp up our production capacity from 60,000 tonnes to 85,000 tonnes of cocoa bean equivalent per year by FY2013
• Capacity upgrade enables the Group to retain production flexibility and minimise bottlenecks; progressively and simultaneously assess the level of demand required to support the Group’s capacity expansion
Macro environment remains uncertain
Expansion of existing PTP plant on track
• Going forward, the Group will target key market segments and customise products for the premium market, as well as focus on product development and enhancing the quality of its cocoa ingredient products
Product and market expansion
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Lot CP1, Jalan Tanjung A/6, Pelabuhan Tanjung Pelepas,
81560 Gelang Patah, Johor, Malaysia
Tel: +607 504 2888 Fax: +607 507 1388
http://www.jbcocoa.com
Thank You
