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| Date: Monday 13th 2008f October 2008 10:57:42 AM |
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EPS Estimation for FDP | ||||
| This is the heart of our analysis. All we try to do is to predict the company's profit for the coming fiscal year. I spent most of the analysis predicting revenue because without it, there will be no profit! Therefore, predicting revenue is essential for other components of the income statement. | ||||
| Revenue Estimation | ||||
| For the 9 months ending Sep 04, FDP reports revenue of $ 2.087 B. In fiscal year ending Dec 03, FDP booked $2.486 B in revenue. For the quarter ending Dec 04, I believe FDP can achieve revenue of $580 M. This is a 0% growth in revenue compared to last year. Considering that the industry is growing between 5-10% a year, I believe revenue prediction of $580 M is conservative. | ||||
| Q1 04 (reported) | Q2 04 (reported) | Q3 04 (reported) | Q4 04 (prediction) | 2004 Total prediction |
| $713.8 M | $763.6 M | $610.4 M | $ 580 M | $ 2.667 B |
| For fiscal year 05, I believe revenue can increase 5% based on the underlying trend in the industry. As the population of developed countries grow older, they will indulge in a healthier lifestyle and consume more produce in their diets. Revenue for fiscal year ending December 2005 is therefore $ 2.801 B. | ||||
| Gross Profit Estimation | ||||
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The produce industry
is highly unstable. Price of the commodity may rise or fall depending on
supply. Consumption trend however is favorable towards producer such as
FDP. For fiscal year 2003, gross profit is 13.2%.For the first 9
months of 2004 however, gross profit fell to 9.4 % due to decline in
banana production and selling price. The company still relies heavily on
banana with 39% of sales in 2003. However, pineapples and other produce
are strong in 2004. My believe is that the banana pricing weakness is
temporary and FDP will be able to achieve around 12% of gross profit
margin in 2005. With estimated sales of $ 2.801 B, gross profit for fiscal year '05 is $ 336 M. |
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| SG&A Estimation | ||||
| We predict SG&A Cost to be $ 120 M for year 2005. This is a rise of 6% year over year. Market for FDP's product is increasing nicely and I believe a little rise in cost structures is warranted. | ||||
| Interest & Income tax expense | ||||
| Long term Debt stood at $12.2 M for FDP. Assuming an interest rate of 8 % per annum, interest expense is $ 1 M. FDP paid around 10% of income tax over the last three years. Based on this, income tax is estimated to be $ 22 M. | ||||
| Shares Outstanding Estimation | ||||
| FDP currently has no stock buy back program. I think that the number of shares outstanding will rise slightly to 58 M shares by next year. | ||||
| Pro Forma Income Statement for FDP (fiscal year ended on December '05) | |
| Revenue | $ 2,801 M |
| Cost of Goods Sold | $ 2,465 M |
| Gross Profit | $ 336 M |
| SG & A | $ 120 M |
| Interest Expense | $ 1 M |
| Profit Before Tax | $ 215 M |
| Income Tax Expense | $ 22 M |
| Net Income | $ 193 M |
| Shares Outstanding | 58 M shares |
| EPS Estimate | $ 3.33 |
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