9MFY24 Financial Performance

• Revenue: 9MFY24 net sales were US$378.5 million, a 7.1% decrease from 9MFY23, primarily due to weaker regional currencies and the termination of an agency brand. The Group achieved record net sales of US$538.2 million in FY23, which represented a 12.7% increase compared to FY22.
• Costs: Gross profit margin for 9MFY24 was 28.1%, down 90 bps year-on-year, primarily due to lower net sales and higher raw material costs impacted by regional currency weakness.
• Net cash: Generated US$46.9 million in net cash from operations in 9MFY24, which was US$9.2 million higher from 9MFY23, indicating strong cash flow generation despite the challenging environment.
• Invested: US$27.1 million in capital expenditures in 9MFY24, primarily directed towards production equipment needed to meet operational needs and expected future growth.

Manufacturing Capabilities:

• Indonesia: Main manufacturing operations are located in Bandung, West Java. The facilities produce a wide range of chocolate products including chocolate bars, dragées, chocolate rice, dark milk chocolate bars, vegan chocolate, bars with yoghurt and white chocolate, enrobed wafers, biscuits, cereal bars, and baking condiments.
• Philippines: Additional manufacturing facility supporting the production of chocolate confectionery products.
• As of the end of 2023, Delfi's production capacity totaled approximately 130,000 metric tonnes, allowing the company to produce a wide range of products.

Value Chain:

• Procurement: Delfi procures intermediate cocoa ingredients from leading global suppliers. 
• Manufactures: a wide range of chocolate and chocolate confectionery products, ensuring high quality and innovation in their offerings
• Packaging: Finished products are packaged using sustainable materials where possible. Delfi has initiatives to reduce the use of non-renewable packaging materials and to implement more eco-friendly options.
• Distribution: Delfi's distribution network ensures that products are delivered efficiently to various retail outlets. They focus on both modern trade (supermarkets, hypermarkets) and traditional trade channels.

Consumer Brands:

• SilverQueen: Focus on maintaining brand equity through strategic promotions and product innovations.
• Ceres: Emphasis on expanding product offerings and enhancing market presence.
• Delfi: Investment in new product development and strengthening distribution channels.
• Selamat: Focus on product quality and expanding distribution networks.
• Van Houten: Continued investment in premium product lines and marketing initiatives.
• Goya: Strengthening brand presence through targeted marketing and promotions.
• Knick Knacks: Focus on product innovation and expanding market reach.
• Take-It: Investment in new product variants and enhancing consumer engagement

Risks:

In August, Lim & Tan maintained key risks for Delfi include the impact of higher cocoa prices and the weakening IDR/USD exchange rate, which have led to increased raw material costs and pressured profit margins. Additionally, the termination of an Agency Brand in Indonesia and reduced consumer spending have further contributed to the decline in revenue.

Company Overview

• Manufacturing and Marketing: Produces and markets a wide range of chocolate, chocolate confectionery, and consumer products.
• Brand Management: Manages a portfolio of global legacy brands as well as heritage national brands.
• Distribution: Strengthens distribution networks across Southeast Asia to ensure product availability and visibility.

Headquarters and Facilities:

• Headquartered in Singapore with 3,000 employees across its various operations and locations as of the end of 2023.
• Production facilities are located in Indonesia and the Philippines, which are strategically positioned close to their primary consumer markets. This proximity ensures freshness and high-quality standards.

Market Position and Achievements:

• Delfi maintains it still holds a leading position in Indonesia despite increased competition and market growth, and focuses on various metrics, including profitability and sales growth, to measure performance.
• Included in the first-ever FORTUNE Southeast Asia 500 list, which highlights the largest companies in the region by revenue.
• Awarded the Most Transparent Company Award (Consumer Staples) at the SIAS Investors’ Choice Awards 2024 and 2023.

Strategic Positioning and Future Outlook:

• Core Brands: Delfi plans to focus on growing its core brands and driving growth in its Premium and Value format categories, with product innovation being key in maintaining competitive edge.
• Innovation: Delfi places a strong emphasis on innovation to meet evolving consumer tastes and preferences. They continuously develop new products and improve existing ones, incorporating healthier ingredients and expanding into new product categories.
• Distribution and Manufacturing: Delfi focuses on raising productivity and efficiency and grow sales profitability in line with or higher than the chocolate market growth in Indonesia, employing strategies like investing in core brands, launching new products, and expanding distribution capabilities.
• E-commerce: Although it is currently at an early stage in developing e-commerce presence, Delfi aims to continue growing its online sales by making its products available on various e-commerce platforms.
• Continued Challenges: anticipated from inflationary pressures, currency fluctuations, high commodity prices (especially cocoa), and ongoing global supply chain disruptions. Despite these challenges, Delfi remains positive about its ability to manage risks proactively, supported by its strong business foundation, leading brands, culture of innovation, extensive distribution capabilities, healthy balance sheet, and cash flow generation.
• Climate Change: The company recognises the ongoing effects of climate change as a significant global challenge and is committed to sustainable practices to mitigate these impacts.
• Forward Cover Strategies: to manage and mitigate rising input costs including cocoa prices, by securing prices in advance, enhancing production efficiency, and adjusting operations to maintain profitability and customer loyalty.
• Cost Mitigation: Delfi will continue to mitigate higher input costs through proactive price adjustments, launching highmargin products, and cost containment initiatives.