Dumex MalaysiaDumex Malaysia PRODUCTIONlibrary.corporate-ir.net/library/13/138/138567/items/261609/... · Dumex MalaysiaDumex Malaysia PRODUCTION. ... Dumex Malaysia Best Employers

Analyst Visit – 10 Sept03 1

Dumex MalaysiaDumex MalaysiaDumex Malaysia

PRODUCTION

General Manager - Operations


DumexDumex Value ChainValue Chain

Value Chain activities covered by Dumex

Value Chain activities not covered by Dumex

End userRaw material

R&

D / Q

uality Control

Marketing &

Brand O

wnership

Bulk Pow

der Production

Sales & D

istribution

Packaging

Blending

Retail


Improving Production Efficiency Improving Production Efficiency Improving Production Efficiency

1999 (%)

2000 (%)

2001 (%)

2002 (%)

Can Lines Ave. 64 72 79 81

Pouch Lines Ave. 76 87 91 91

Total Weighted Ave 66 77 86 88

Production Efficiency = Actual Output in Cartons / Rated Output in Cartons


Quality CertificationQuality CertificationQuality Certification

ISO 9001: version 2000 : 1997

HACCP : 2000

ISO 14001 (in progress)- Environmental Management System.- Employee Safety.- Certification in 15th Nov 03.

Dumex only one in the industry has ISO 9001:2000, HACCP, ISO 14001 certification.



SUPPLY CHAIN

General Manager – Supply Chain


Warehouse / Distribution Warehouse / Distribution

Meeting delivery schedule required by Marketing/Sales and Export Markets.

Optimize warehouse space.

Stock control to minimize stock variance.

Sourcing of reliable transporters to optimize service level and profit.

Customer satisfaction surveys every 6 months with distributors.


Main Export Markets 2003 Main Export Markets 2003

SingaporePhilippinesBruneiVietnamSaudi ArabiaIndiaThailand (end 2003)



MALAYSIA OVERVIEW

Managing Director


Malaysia OverviewMalaysia OverviewMalaysia OverviewSince independence in 1957, Malaysia has emerged as one of the most stable democratic countries in Asia.Malaysia in 1970’s – producer of raw materials.Malaysia in 1990’s – emerging multi-sector economy.High growth rates almost exclusively driven by exports – incl. electronics.With US and Japan being top export destinations –economy vulnerable.Healthy foreign reserves and small external debt.Declining foreign investments.


Economic Indicators Economic Indicators -- MalaysiaMalaysiaEconomic Indicators

1999 2000 2001 2002 2003fEconomic Growth 5.4% 8.5% 0.4% 3.5% 4.5%Interest Rate (BLR) 7.2% 6.5% 6.4% 6.4% 6.0%Inflation 2.8% 3.0% 1.5% 1.8% 0.9%Unemployment 3.4% 3.1% 3.6% 3.7% 3.5%Birth Rate (per '000) 25.5 24.5 23.5 23.0 21.4Population (in million) 22.86 23.44 24.01 24.53 25.05

Qtr2

Qtr2

Increasing growth rate.High but declining birth rate68% of population are MalaysContinued low unemployment and inflation

*Source: Central Bank & Department of Statistics


Economic Indicators Economic Indicators -- SingaporeSingaporeEconomic Indicators

1999 2000 2001 2002 2003fEconomic Growth 6.9% 10.3% -2.0% 2.2% 2.5%Interest Rate (BLR) 3.3% 2.8% 1.6% 5.4% 5.2%Inflation 0.0% 1.3% 1.0% -0.4% 0.5%Unemployment 4.6% 4.4% 3.4% 4.4% 4.9%Birth Rate (per '000) 12.8 13.7 11.9 11.4 n/aPopulation (in million) 3.95 4.02 4.13 4.17 n/a

Predominantly Chinese population.Very high income and purchasing power.Low and declining birth rate.

*Source: Central Bank & Department of Statistics


DumexDumex Board of DirectorsBoard of Directors

Mark A Wilson, Chairman

Christopher R Stratton

Bjorn Lynggaard Olesen

Chan Hua Eng

Kartini bt Haji Abdul Manaf, PNB (20% ownership)


Business PhilosophyBusiness PhilosophyBusiness Philosophy

Keep it simple(and execute well)


Human Resources(Best Employers in Malaysia 2003)

Human ResourcesHuman Resources(Best Employers in (Best Employers in Malaysia 2003)Malaysia 2003)

General Manager – Human Resources


PREMIER EMPLOYER RECOGNITION

PREMIER EMPLOYER PREMIER EMPLOYER RECOGNITIONRECOGNITION


Objectives of the StudyObjectives of the Study

Examines people management practices

Explores what makes an organization a good place to work

Provide insights into how organizations can achieve a real competitive advantage through their people

Aims to understand and explain the linkages between effective people practices and better business performance


ParticipationRegional

Conducted in 8 markets in Asia:

SEA: Malaysia, Thailand, Singapore, PhilippinesChina Hong KongTaiwanKorea

305 companies participated500,000 employees were represented

ParticipationMalaysia

43 companies participated

56% Foreign / JV44% Local

95,056 employeeswere representedTop 10 Company Ownership

50% Foreign / JV50% Local


Study ToolsStudy ToolsEach company asked to complete three study tools:

A questionnaire completed by the CEO

A People Practices Inventory™ (PPI) completed by Human Resources

An Employee Opinion Survey (EOS) questionnaire to be completed by a representative sample of employees


Engagement Engagement SatisfactionSatisfaction

Satisfaction : how much you like it here

Commitment : how much you want to improve business results

Engagement: how much you want to and actually do to improve business results

Engaged employees are satisfied. Satisfied employees are not necessarily engaged.


The Best Employers in Malaysia 2003The Best Employers in Malaysia 20031. Dumex (Malaysia) Sdn. Bhd.1. The Ritz-Carlton, Kuala Lumpur3. Telekom Malaysia Berhad4. Federal Express Services (M) Sdn. Bhd.5. Tenaga Nasional Berhad6. Maxis Communications Berhad7. Abbott Laboratories (Malaysia) Sdn. Bhd8. Sunrise Berhad9. SP Setia Berhad10. Komag USA (Malaysia) Sdn. Bhd


Overall ResultsOverall Results

Dumex Malaysia vs Best Employers in Malaysia and The Rest

0

10

20

30

40

50

60

70

80

90

100

Engag

emen

t Sco

reAlig

nmen

t Sco

re

Intrin

sic M

otiva

tion

Work

Life Bala

nce

Cowork

ers PayBen

efits

Physic

al Env

ironm

ent

Safety

Senior

Man

agem

ent

Busine

ss Unit

Mgm

t

Immed

iate M

anag

er HRW

ork Task

sPoli

cies

Recogn

ition

Resourc

esW

ork Loc

ation

Value t

o Soc

iety

Influe

nce

Career

Opport

unitie

s

Percentage

Dumex Malaysia Best Employers in Malaysia The Rest in Malaysia Highest Lowest


Best Employers = Better ResultsBest Employers = Better Results

The compound average annual growth rate for The Best Employers in Asia compared to The Rest was almost 30% higher over the two-year period from 1999 to 2001.

Value Added by Employees over the same two-year period was also greater amongst Best Employers with The Bestexperiencing positive growth and The Restgoing backwards.

Source: Hewitt Associates


The FutureWhere to next for Dumex?

To be among thetop 20 employers inAsia.

Remain in the Top 10among Best Employers in Malaysia.


BEST EMPLOYERBEST PEOPLE

BEST PERFORMANCE


Finance & Finance & IT OverviewIT Overview

Regional Financial Controller


Currency Exchange RatesCurrency Exchange RatesCurrency Exchange Rates

Dec Dec Sep2001 2002 2003

USD 3.8005 3.8005 3.8005

DKK 0.4545 0.5079 0.5519

SGD 2.0680 2.1483 2.1615

EUR 3.3859 3.7724 4.1026

MYR is pegged to USD, hence it is currently weakening against other major currencies.


Interest RatesInterest RatesInterest Rates

Dec Dec Sep2001 2002 2003

Bankers Acceptance 3.30% 3.08% 3.09%

Cash Deposit 5.00% 4.80% 4.20%

Overdraft 6.65% 6.65% 6.25%

Interest rate is at an all time low, and bankers expect it to stay low for the next 1 to 2 years.


Government incentivesGovernment incentivesGovernment incentivesTax incentives includes:

Capital AllowanceDouble deduction on export promotionReinvestment Allowance

Other tax incentives:Multimedia Super CorridorPioneer statusInvestment tax allowanceInfrastructure allowanceEtc. etc. …


Significant Improvement : 1997 – 2002 Significant Improvement : 1997 Significant Improvement : 1997 –– 2002 2002

Revenue vs Operating Profit (%)

227217

270

318 314 313

200

250

300

350

1997 1998 1999 2000 2001 2002

Rev

enue

(mM

YR)

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

Ope

ratin

g Pr

ofit

(%)

Revenue Operating Profit (%)


EP Development : 1998 – 2002 EP Development : 1998 EP Development : 1998 –– 2002 2002 EP Index (1999 Base = 100)

180 186

100

236

-

50

100

150

200

250

1999 2000 2001 2002Index based on 1999


Maximum Dividend PayoutMaximum Dividend PayoutMaximum Dividend Payout

1994 - Payout Year 2000 2001 2002 TotalCurrency in kMYR

GROSS 48.7 11.7 42.2 102.6

NET (70%, 72%) 34.9 8.4 37.5 80.8

EAC (60%, 80%) 20.9 6.2 30.0 57.1

PAID-UP CAPITAL 30.0 30.0 30.0 30.0

GROSS PAYOUT % 162% 39% 141% 342%

Dividends paid in 2002 exceeds paid-up capital


IT InvestmentIT InvestmentIT Investment

HR13%

Finance17%

Logistics9%

Nutrition9%

Sales & Marketing

52%

2002 Software Allocation

By Department

61% (majority) of software investment to enhance sales & marketing activities.


Useful government websitesUseful government websitesUseful government websitesBank Negara (Central Bank) - http:// www.bnm.gov.my

Department of Statistics - http:// www.statistics.gov.my

The Treasury, Ministry of Finance -http://www.treasury.gov.my

Malaysian Industrial Development Authority (MIDA) -http://www.mida.gov.my

Malaysian Institute of Economic Research (Mier)

Economic Planning Unit - http://www.epu.jpm.my

Economic Planning Unit - http://www.parlimen.gov.my



MARKETING

General Manager - Marketing


DumexDumex Product CategoriesProduct Categories

IF/FO = Infant Formula/Follow on Formula0 – 3 years

GUM = Growing Up Milk1 – 10 years

FC = Full Cream – general use


Pricing PointsPricing Points

Mamex/Mamil Gold

250%Super Premium

Mamex/Mamil180%Premium

Dumex100%Standard

ExampleIndex


GUM now Biggest Category GUM now Biggest Category -- MalaysiaMalaysia

Std IFFO17%

Premium IFFO9%

Std GUM40%

Premium GUM5%

Full Cream

22%

Adult7%

Volume : 55,000 tonnes

Std IFFO16%

Std GUM36%

Premium GUM7%

Full Cream17%

Adult7%

Premium IFFO17%

Value : RM900 million


Dumex is Clear No. 1DumexDumex is Clear No. 1is Clear No. 1

26.9%

35.5%33.4%32.5%

25.5%24.1%

15.1%

18.2% 17.3%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1996 1999 2001 2002 YTD 03

Dumex

Nestle

Dutch Lady

Corp Share II – West Malaysia (Volume)

* Corp Share II excludes Full Cream & Hi-Calcium/Low Fat/Specialities


Dumex is No. 1DumexDumex is No. 1is No. 1

15.7%

30.7%

27.5%27.9%

23.9%

20.9%

10.0% 9.3%

19.2%

25.9%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

1997 1999 2001 2002 YTD 03

Dumex

Abbott

Nestle

Corp Share II – Singapore (Volume)



Dumex is No. 2 by ValueDumexDumex is No. 2 by Valueis No. 2 by Value

21.4%18.7%

32.2%

15.8%

7.5%

35.1%

21.5%

20.1%

26.8%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

1997 1999 2001 2002 YTD 03

Abbott

Dumex

Nestle

Corp Share II – Singapore (Value)



GUM PERFORMANCEGUM PERFORMANCEHIGHLIGHTSHIGHLIGHTS


GUM MarketGUM MarketStd and Premium GUM CombinedStd and Premium GUM Combined

19

13

12

7

7

9

No. of Products/ variants

4.111Others

8.55BMS

14.56NZM

20.34Dutch Lady

17.75Nestle

34.93Dumex

Total Share (Ytd MJ 03)

No. of Brands

Company


MamexMamex//MamilMamil Gold Gold LaunchLaunch

Motherhood Exhibition25-29 June

Display at Westmall –Guardian Baby Fair

Gondola displayat G-value



OTHEROTHERHIGHLIGHTSHIGHLIGHTS


NEW PRODUCTNEW PRODUCTCONTRIBUTIONCONTRIBUTION


% New Product of Total Sales% New Product of Total Sales

12% 14%

20%

26%

32%

38% 38%

5%

10%

15%

20%

25%

30%

35%

40%

1997 1998 1999 2000 2001 2002 2003 LE

*New products are products launched within last 5 years


Nutrakids Nutrakids Baby CerealBaby Cereal

Baby Cereal business remains small but is a key component in infant and child nutrition.

Investments and plan are in progress to build this category:- Nutrakids Baby Cereal relaunched with maxi –

end 2002- Nutrakids Fine Cereal relaunched with maxi-Q +

DHA – April 2003- Relaunch supported with TV advertising and

strong below line promotion.


NASANASADETAILINGDETAILING


NNutrition utrition AAdvisor dvisor SSystem ystem AAid (NASA)id (NASA)

Objective:

to achieve an edge in competitive selling to HCPs via multimedia detailing using laptops.

Dumex, the first and only company implementing NASA for nutrition business in Malaysia/Singapore since 1999.



CUSTOMER CUSTOMER SATISFACTION SATISFACTION

SURVEYSSURVEYS


Customer Satisfaction Survey Customer Satisfaction Survey -- MedicalMedical

Dumex is No. 1 among Medical Professionals ….

1st1st2ndPreferred Among Doctors1st1st2ndTrusted Brand By Mothers2nd1st2ndProgressive Company1st1st2ndEducation & Support Materials1st1st4thNutrition Services Performance1st2nd3rdOverall Quality1st2nd3rdBest Infant Formula Company

200119991996


Brand EquityBrand Equity

Represents the “added value” endowed to a product / brand as a result of past investments in the marketing of a brand.

The brand is said to command strong equity if it :Is a favourite brand amongst consumersIs a brand that consumers would recommend to their friendsIs a brand that consumers are willing to pay price premium


Brand Equity IndexBrand Equity Index

Dumex is No. 1 among Consumers….

1stD6PGUM (6+)

1stD3PGUM (3+)

1stD1PGUM (1+)

1stDumex Infant Formula

Infant Formula

Brand Equity Ranking

BrandCategory

Source : AC Nielsen; Winning Brands 2002


AC NIELSENAC NIELSENAWARDAWARD


DumexDumex is top 3 Family Brand in Malaysiais top 3 Family Brand in Malaysia


COMMUNITY COMMUNITY PROJECTSPROJECTS


DUMEX National Science Quiz3DUMEX National Science Quiz3

Objective: To promote interest in Science amongst young kids – in line with Government policy.

Annual programme reaching out to 200 primary schools and 100,000 children.

Combination of science demonstrations and quizzes.

12 selected schools in final.

TV broadcast of quiz final.


DUMEX National Science QuizDUMEX National Science QuizPress coverage for launch & snapshots at the finals,

Oct 31,2002


DumexDumex Champion AwardChampion Award

Programme with Ministry of Education.

Annual award to best overall primary school student from each state.

Selection is based on academic and extra curricular activities.

The 14 champions each representing their own state to KL for award giving ceremony.

PR campaign to highlight the Dumex Champion Award.

Dumex champion role models for other students to emulate.


DumexDumex Champion AwardChampion Award



SALES

General Manager - Marketing


Distribution SystemDistribution SystemClosed Market SystemDistributor’s area clearly defined.Encroachment of area is strictly prohibited.Distributor provide dedicated Van Sales team covering lower trade outlets.Coverage of Key Accounts by Dumex Sales Reps.

Accounts & Credit RiskCredit risk borne by Distributor.


Category ManagementCategory Management

Growth of Key Accounts

Increasing importance of category management


Fixed Shelf AllocationFixed Shelf Allocation

Facings based on Dumex store sales with some adjustments



WRAP UP

Managing Director


Key IssuesKey IssuesKey Issues

Mature market.

Overall limited growth –apart from GUM.


Declining birth Declining birth raterate

Declining Birth Rate - SingaporeDeclining Birth Rate Declining Birth Rate -- SingaporeSingapore

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

51,000

39,000

2002


…But Increasing Premium GUM Sales…But Increasing Premium GUM Sales

0.5

1.5

2.5

3.5

4.5

5.5

6.5

7.5

8.5

JF00

MA00

MJ00

JA00

SO00

ND00

JF01

MA01

MJ01

JA01

SO01

ND01

JF02

MA02

MJ02

JA02

SO02

ND02

JF03

MA03

MJ03

Sales Value $mil

Premium/Super Premium Standard

In spite of overall flat market, opportunities still exist.


THANK YOU

Team Malaysia

Documents

Dumex MalaysiaDumex Malaysia PRODUCTIONlibrary.corporate-ir.net/library/13/138/138567/items/261609/... · Dumex MalaysiaDumex Malaysia PRODUCTION. ... Dumex Malaysia Best Employers