INTERIM RESULTS PRESENTATION

Transcription

1 INTERIM RESULTS PRESENTATION for the six months ended 31 March 2016

2 Agenda Strategic Update Financial Performance Divisional Performance Outlook and Imperatives 1

3 Strategic Update Phil Roux CEO 2

4 Environmental Discontinuities Cause Political instability Effect Rand weakness Drought Low growth Hyper inflation and raw material shortages Increased rivalry Cost and margin pressure Consumer weakness Evolving shopper habits Africa instability Currency devaluation 3

5 Financial Highlights For the 6 months ended 31 March 2016 Revenue** Operating profit* for continuing operations 9% to R10.01 bn 6% to R1 236 m Operating margin* 12.3% HEPS* Interim dividend declared 6% to 479 cents 11% to 105 cents * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature ** Excluding biscuits, Pepsi & Maitland Vinegar 4

6 Financial Highlights 1H 2013 * 1H 2016 Operating profit (R m) yr CAGR 29% Gross Margin 29.3% 31.0% Operating Margin 7.2% 12.3% Headline earnings per share (cents) Share price (cents) yr CAGR 25% * Excludes Quantum Foods Excluding Phase I B-BBEE income/charge and items of a capital nature 5

7 Our Strategy Drive above-market growth Enhance competitiveness Shape a winning portfolio Focus on power brands Strategic customer management Reset the cost base Build a high performance team Cost and margin pressure Sustainability Adopt sustainability best practices in all we do 6

8 Shaping a Winning Portfolio Strategic Pillars: Progress Update Portfolio mix optimisation Future Life Integration and innovation FCP Nigeria Bakeries Sustained growth and leverage Aggressive SKU rationalisation Step change in rice performance Robust acquisition funnel SKU Stock keeping unit 7

9 Costs & Efficiencies Strategic Pillars: Progress Update Containment of manpower costs < 60% of Revenue growth Delivered enhanced manufacturing efficiencies Elimination of residual costs on disposals COE s increase < 10% of Revenue growth rate COS increase > Revenue growth rate (Raw material inflation) COE Cash operating expenses COS Cost of sales 8

10 Power Brands Market Share Performance TEG (modern trade) Corporate share 1 %, 6 mm to March mm October 2015 to March 2016 Pioneer Foods Value share Share Pts change Category Growth (%) 31.8 Sasko Weet-Bix Safari Spekko White Star Liqui-Fruit Measured as weighted average of Pioneer's share in 18 categories in which it operates. TEG only. Including DOB s. Source: Aztec Brand investment maintained 9

11 Financial Performance Cindy Hess CFO 10

12 Salient features Group margin maintained despite strong headwinds Pleasing revenue growth Significant raw material cost push constrains Essential Foods Cash operating costs stringently managed Exceptional performance from Groceries and International Operating margin maintained amidst severe discontinuities Working capital management intensifies Positive cash flow sustained 11

13 Revenue analysis Pleasing revenue growth across all segments SEGMENTAL REVENUE MIX Six months to 31 March 2016 Rm Change Essential Foods % Groceries % * International % Total Revenue % * Groceries R2 508m 25% International R1 448m 15% Essential Foods R6 054m 60% * Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures 12

14 Segmental analysis Group maintains operating margin despite external vagaries Operating Profit * Operating Margin * 2016 % Six months to 31 March Rm Change Group % 12.3% 12.3% Essential Foods 645-8% 10.6% 12.4% Groceries % 13.7% 9.6% International % 17.4% 18.0% Other (Group Costs) (4) * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature Segmental results are reflected after the reallocation of corporate costs 13

15 Income statement summary Cost and efficiency benefits kick in Six months to 31 March 2016 Rm Change Revenue ** % Cost of goods sold (6 905) +8% Gross profit % Gross margin 31.0% F15: 32.3% Net other operating expenses * (1 869) -1% Operating profit * % Operating margin 12.3% F15: 12.3% * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature ** Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures 14

16 Income statement (continued) Joint ventures perform well Six months to 31 March 2016 Rm Change Operating profit * % Investment income % Finance costs (75) +11% JV equity-accounted earnings % Profit before tax * % Income Tax (348) +9% Profit for the period * % * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature 15

17 Net operating profit reported Six months to 31 March (Rm) Change Adjusted operating profit * % Add/Less 155 (249) Phase I B-BBEE transaction 143 (203) Items of a capital nature 12 (46) Impairment of BEE SPV QF shares (18) (51) Profit on disposal of subsidiary 24 - Other 6 5 Net operating profit as reported % * Adjusted for the Phase I B-BBEE income/charge and items of a capital nature 16

18 Group earnings Effect of the Phase 1 B-BBEE income/(charge) Six months to 31 March (Rm) Change Adjusted headline earnings % Adjusted HEPS 479 cents 451 cents +6% Add/less Phase I B-BBEE income/(charge) 143 (203) Headline earnings % HEPS 556 cents 341 cents +63% Add/less Items of a capital nature 7 (82) Earnings* % EPS 560 cents 296 cents +89% Adjusted EPS 493 cents 434 cents +14% * 2015 includes discontinued operations 17

19 Cash flow analysis Strong cash generation despite soft commodity inventory Six months to 31 March (Rm) Cash profit from operating activities % Change in working capital (780) (838) -7% Inventory (571) (208) Debtors (225) (333) Creditors 16 (297) Cash effect from commodity hedging 42 (11) Cash generated by operations % 18

20 Group net working capital Working capital relatively stable % of revenue 20% 18% 16% 14% 12% 17.1% 14.9% 17.1% 12.9% 17.1% 11.5% 15.6% 14.0% 17.7% 10% 8% 6% 4% 2% 0% Mar 12 Sep 12 Mar 13 Sep 12 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 19

21 Cash flow analysis Cash flow from investing activities Six months to 31 March (Rm) Net cash flow from investing activities (394) (231) PPE additions (217) (64) PPE replacements (132) (232) Proceeds on disposal of PPE Proceeds on disposal of subsidiary 74 - Investment in joint ventures (201) (81) Proceeds on disposal of and changes in available-for-sale financial assets and JV loans (15) 77 Interest and dividends received Net cash and cash equivalents at end of period

22 NET debt (Rm) and debt equity ratio (%) Significant gearing capacity Net Debt to Equity Rm Ratio R'm 25% 15% 22% 3% 8% -1% 6% 4,000 3,500 3,000 Debt capacity 2,500 2,000 1,500 1, , , Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar Excludes B-BBEE (third party) debt 21

23 Interim dividend per share 11% increase in interim dividend cents per share yr CAGR +32% Year 22

24 Divisional Performance Phil Roux CEO 23

25 Essential Foods: Back drop White maize crop shortfall estimate -1,2 m tons White maize raw material price increase +90% Maize category volume contraction -5.8% * Maize import regulations limiting Wheat category contraction -1.1% * Wheat duty increases by R1 068/ton over 12 months Indications of carbohydrate substitution * SAGIS: 6 months March

26 Divisional Performance: Essential Foods Solid delivery amidst headwinds Volume -5% Revenue +8% Operating Profit -8% Margin 10.6% (F15: 12.4%) Category leadership on maize retained Bakeries - Sustained volume growth and leverage Rice share gains and profitability improvements Volumes +14% Maize and wheat volumes decline Pasta and legumes satisfactory performance 25

27 Groceries: Back drop Major raw material inflation Soft commodities Concentrates Flavours Increased competitor intensity Sizzling summer bolsters beverages Value offers gain momentum 26

28 Divisional Performance: Groceries Margin excellence Volume * 5% Revenue * 7% Operating Profit 35% Margin 13.7% (F15: 9.6%) Gross margin expansion Exit of low margin businesses Business volume growth and leverage Prudent cost management Conversion efficiencies Fixed overheads eliminated per plan Logistics savings Smaller categories show improvement * Volume and revenue excludes biscuits, Pepsi & Maitland Vinegar from the comparative figures 27

29 Performance Summary Groceries Cereals & other groceries Revenue +6%* Revenue R1 208m Operating Profit Operating Profit +26% R162m +6% * +26% Operating Profit Margin Operating Profit Margin 13.4% (F15: 10.2%) 13.4% (F15:10.2%) Beverages Revenue +9% * Operating Profit +44% Operating Profit Margin 13.9% (F15: 9.1%) * Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures 28

30 Divisional Performance: International Good performance in tough environment Volume 8% Revenue +20% Operating Profit +16% Margin 17.4% (F15: 18.0%) MARKET CONDITIONS Currency devaluation impacts volume growth Hard currency shortages Pricing pressure mounts HOWEVER Solid beverage performance Basket selling gains momentum FCP Nigeria shows steady improvement Excellent fruit growth and profitability UK factory relocation and upgrade 29

31 Outlook and Imperatives Phil Roux CEO 30

32 Outlook Protracted currency weakness? Inflationary pressure Intense competition EXTERNAL Uncertain legislation/ duties Household Pressure 31

33 Pioneer Foods remains well positioned Strategic coherence and people excellence Portfolio optimisation continues Maize augmented by imports Residual self-help potential Capital projects on track Ungeared balance sheet 32

34 THANK YOU This document contains forward looking statements that, unless otherwise indicated, reflect the company s expectations as at 23 May Actual results may differ materially from the company s expectations if known and unknown risks or uncertainties affect the business, or if estimates or assumptions prove to be inaccurate. The company cannot guarantee that any forward looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward looking statements. The company disclaims any intention and assumes no obligation to update or revise any forward looking statement even if new information becomes available as a result of future events or for any other reason, save as required to do so by legislation and/or regulation.