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Analyst Visit – 10 Sept03 1
Dumex MalaysiaDumex MalaysiaDumex Malaysia
PRODUCTION
General Manager - Operations
Analyst Visit – 10 Sept03 2
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
Analyst Visit – 10 Sept03 3
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
Analyst Visit – 10 Sept03 4
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.
Analyst Visit – 10 Sept03 5
Dumex MalaysiaDumex MalaysiaDumex Malaysia
SUPPLY CHAIN
General Manager – Supply Chain
Analyst Visit – 10 Sept03 6
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.
Analyst Visit – 10 Sept03 7
Main Export Markets 2003 Main Export Markets 2003
SingaporePhilippinesBruneiVietnamSaudi ArabiaIndiaThailand (end 2003)
Analyst Visit – 10 Sept03 8
Dumex MalaysiaDumex MalaysiaDumex Malaysia
MALAYSIA OVERVIEW
Managing Director
Analyst Visit – 10 Sept03 9
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.
Analyst Visit – 10 Sept03 10
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
Analyst Visit – 10 Sept03 11
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
Analyst Visit – 10 Sept03 12
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)
Analyst Visit – 10 Sept03 13
Business PhilosophyBusiness PhilosophyBusiness Philosophy
Keep it simple(and execute well)
Analyst Visit – 10 Sept03 14
Human Resources(Best Employers in Malaysia 2003)
Human ResourcesHuman Resources(Best Employers in (Best Employers in Malaysia 2003)Malaysia 2003)
General Manager – Human Resources
Analyst Visit – 10 Sept03 15
PREMIER EMPLOYER RECOGNITION
PREMIER EMPLOYER PREMIER EMPLOYER RECOGNITIONRECOGNITION
Analyst Visit – 10 Sept03 16
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
Analyst Visit – 10 Sept03 17
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
Analyst Visit – 10 Sept03 18
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
Analyst Visit – 10 Sept03 19
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.
Analyst Visit – 10 Sept03 20
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
Analyst Visit – 10 Sept03 21
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
Analyst Visit – 10 Sept03 22
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
Analyst Visit – 10 Sept03 23
The FutureWhere to next for Dumex?
To be among thetop 20 employers inAsia.
Remain in the Top 10among Best Employers in Malaysia.
Analyst Visit – 10 Sept03 24
BEST EMPLOYERBEST PEOPLE
BEST PERFORMANCE
Analyst Visit – 10 Sept03 25
Finance & Finance & IT OverviewIT Overview
Regional Financial Controller
Analyst Visit – 10 Sept03 26
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.
Analyst Visit – 10 Sept03 27
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.
Analyst Visit – 10 Sept03 28
Government incentivesGovernment incentivesGovernment incentivesTax incentives includes:
Capital AllowanceDouble deduction on export promotionReinvestment Allowance
Other tax incentives:Multimedia Super CorridorPioneer statusInvestment tax allowanceInfrastructure allowanceEtc. etc. …
Analyst Visit – 10 Sept03 29
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 (%)
Analyst Visit – 10 Sept03 30
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
Analyst Visit – 10 Sept03 31
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
Analyst Visit – 10 Sept03 32
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.
Analyst Visit – 10 Sept03 33
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
Analyst Visit – 10 Sept03 34
Dumex MalaysiaDumex MalaysiaDumex Malaysia
MARKETING
General Manager - Marketing
Analyst Visit – 10 Sept03 35
DumexDumex Product CategoriesProduct Categories
IF/FO = Infant Formula/Follow on Formula0 – 3 years
GUM = Growing Up Milk1 – 10 years
FC = Full Cream – general use
Analyst Visit – 10 Sept03 36
Pricing PointsPricing Points
Mamex/Mamil Gold
250%Super Premium
Mamex/Mamil180%Premium
Dumex100%Standard
ExampleIndex
Analyst Visit – 10 Sept03 37
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
Analyst Visit – 10 Sept03 38
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
Analyst Visit – 10 Sept03 39
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)
* Corp Share II excludes Full Cream & Hi-Calcium/Low Fat/Specialities
Analyst Visit – 10 Sept03 40
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)
* Corp Share II excludes Full Cream & Hi-Calcium/Low Fat/Specialities
Analyst Visit – 10 Sept03 41
GUM PERFORMANCEGUM PERFORMANCEHIGHLIGHTSHIGHLIGHTS
Analyst Visit – 10 Sept03 42
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
Analyst Visit – 10 Sept03 43
MamexMamex//MamilMamil Gold Gold LaunchLaunch
Motherhood Exhibition25-29 June
Display at Westmall –Guardian Baby Fair
Gondola displayat G-value
Analyst Visit – 10 Sept03 44
Analyst Visit – 10 Sept03 45
OTHEROTHERHIGHLIGHTSHIGHLIGHTS
Analyst Visit – 10 Sept03 46
NEW PRODUCTNEW PRODUCTCONTRIBUTIONCONTRIBUTION
Analyst Visit – 10 Sept03 47
% 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
Analyst Visit – 10 Sept03 48
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.
Analyst Visit – 10 Sept03 49
NASANASADETAILINGDETAILING
Analyst Visit – 10 Sept03 50
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.
Analyst Visit – 10 Sept03 51
Analyst Visit – 10 Sept03 52
CUSTOMER CUSTOMER SATISFACTION SATISFACTION
SURVEYSSURVEYS
Analyst Visit – 10 Sept03 53
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
Analyst Visit – 10 Sept03 54
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
Analyst Visit – 10 Sept03 55
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
Analyst Visit – 10 Sept03 56
AC NIELSENAC NIELSENAWARDAWARD
Analyst Visit – 10 Sept03 57
DumexDumex is top 3 Family Brand in Malaysiais top 3 Family Brand in Malaysia
Analyst Visit – 10 Sept03 58
COMMUNITY COMMUNITY PROJECTSPROJECTS
Analyst Visit – 10 Sept03 59
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.
Analyst Visit – 10 Sept03 60
DUMEX National Science QuizDUMEX National Science QuizPress coverage for launch & snapshots at the finals,
Oct 31,2002
Analyst Visit – 10 Sept03 61
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.
Analyst Visit – 10 Sept03 62
DumexDumex Champion AwardChampion Award
Analyst Visit – 10 Sept03 63
Dumex MalaysiaDumex MalaysiaDumex Malaysia
SALES
General Manager - Marketing
Analyst Visit – 10 Sept03 64
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.
Analyst Visit – 10 Sept03 65
Category ManagementCategory Management
Growth of Key Accounts
Increasing importance of category management
Analyst Visit – 10 Sept03 66
Fixed Shelf AllocationFixed Shelf Allocation
Facings based on Dumex store sales with some adjustments
Analyst Visit – 10 Sept03 67
Dumex MalaysiaDumex MalaysiaDumex Malaysia
WRAP UP
Managing Director
Analyst Visit – 10 Sept03 68
Key IssuesKey IssuesKey Issues
Mature market.
Overall limited growth –apart from GUM.
Analyst Visit – 10 Sept03 69
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
Analyst Visit – 10 Sept03 70
…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.
Analyst Visit – 10 Sept03 71
THANK YOU
Team Malaysia