2017 Financial Results Presentation 14 March, 2018

Transcription

1 2017 Financial Results Presentation 14 March, 2018 Website:

2 Presentation Outline Operating Environment Performance Highlights Volume and Revenue Review Financials Strategy & Outlook 2

3 Operating Environment 3

4 Operating Environment o Demand firmed spurred by SI64 and improved performance in agriculture and mining o GDP growth estimated at 3.7% from 0.7% in 2016 while manufacturing output, increased by 5.5%. o Product supply constraints on account of foreign currency shortages o All items Year on Year (Y-o-Y) inflation at the end of 2017 was at 3.46% (F16: -0.93%) while the foods and non-alcoholic beverages inflation was 6.60%. o The ZAR appreciated by 20% vs. the USD negatively impacting ZAR denominated imports o National milk production flat on 2016 due to floods and incidents of Foot and Mouth

5 Performance Highlights 5

6 2017 Performance Drivers Brand competitiveness remained strong across key lines Line extensions were well received by the market [Maheu Flavors, Fun n Fresh and Natural Joy] Leveraged installed capacity to meet increased demand [UHT milk, Pfuko, Tomato Sauce, Yoghurts]. Potential demand was however not fully satisfied due to forex supply challenges. Realignment of the business model resulting in reduction in overheads and head count Significant improvement in internal control environment 6

7 2017 Performance Highlights Sales volume Price Per Litre Revenue ($) Other Overheads EBITDA Operating profit 89.4 m ltrs $1.15 $103.1 m $25.1 m $9.5 m $4.1 m 8% 2% 10% 16% 657% 204% 7

8 Volumes and Revenue Review 8

9 Portfolio Performance Volumes (Litres) 7% 8% 30.4 m 46.9 m Liquid Milks o Volumes driven by the Chimombe 1 litre carton and Steri milk Foods o Volumes drivers were yoghurt, tomato sauce, salad cream and mayonnaise 10% 12.1 m Beverages o Pfuko Flavoured Maheu, Fun n Fresh and Natural Joy 1 litre cartons well received by the market. - LIQUID MILK - FOOD - BEVERAGES 9

10 Average Selling Prices Per Litre vs Liquid Milk % - Food % - Beverages % Consolidated % Moderate price adjustments to maintain competitiveness were effected during the year 10

11 Portfolio Performance Revenue ($) 9% 11% $41.9 m $33.3 m 14% $27.8 m 10% revenue growth a result of volume growth and moderate price adjustments - LIQUID MILK - FOOD - BEVERAGES 11

12 Portfolio Contribution to Volumes and Revenue PORTFOLIO CONTRIBUTION TO TOTAL VOLUMES SOLD - Liquid Milk - Food - Beverages PORTFOLIO CONTRIBUTION TO TOTAL REVENUE - Liquid Milk - Food - Beverages 52% 53% 14% 13% 34% 34% 41% 41% 27% 26% 32% 33% Balanced portfolio no risk of concentration in one category 12

13 Our Brands: Liquid Milks

14 Our Brands: Beverages

15 Our Brands: Foods

16 Market Share By Key Brands Liquid Milks Foods Beverages Long-life milks (Steri & Chimombe) 55% 50% Cultured milks 15% 18% Yoghurt 52% 60% Ice creams 60% 68% Sauces and condiments 65% 42% Pfuko 57% 48% Cascade 70% 63% Quench 4% 9% Aqualite 6% 8% **Source: Retail Statistics 16

17 2017 Financials 17

18 Income Statement US$' vs Revenue 103,147 93,423 10% Cost of sales (74,272) (67,581) 10% Gross Profit 28,875 25,842 12% Other income % Overheads (25,086) (29,955) -16% Operating profit/(loss) 4,058 (3,898) 204% Restructuring costs (847) - - Net finance costs (740) (983) -25% Profit/(loss) before tax 2,471 (4,880) 151% Income tax (1,116) (570) 96% Profit/(loss) after tax 1,355 (5,450) 152% EBITDA 9,522 1, % Volume sold - 000L 89,423 82,859 8% 18

19 Statement of Financial Position $ Dec Dec 2016 Assets Non-current assets Property, plant and equipment 42,201 45,248 Other non-current assets ,683 46,009 Current assets Inventories 12,120 13,304 Prepayments 1, Trade and other receivables 10,043 10,332 Cash and cash equivalents 5,819 3,467 29,536 27,958 Assets classified as held for sale ,536 28,527 Total assets 72,219 74,536 19

20 Statement of Financial Position Cont. $ Dec Dec 2016 Equity and liabilities Equity Equity attributable to owners of the parent 45,468 43,858 Non controlling interest (48) 207 Total equity 45,420 44,065 Non-current liabilities Interest - bearing borrowings 3,831 6,651 Other non-current liabilities 5,641 4,458 9,473 11,109 Current liabilities Trade and other payables 13,278 15,523 Interest - bearing borrowings 3,953 3,066 Other non-current liabilities ,326 19,363 Total liabilities 26,799 30,472 Total equity and liabilities 72,219 74,536

21 Statement of Financial Position Cont. 31 Dec Dec 2016 Borrowings $'000** (including overdraft) 7,785 10,450 Net Debt $'000 1,966 6,983 Average "All in" Cost of borrowing 8% 9% Gearing Ratio 18% 19% Current Ratio o Fairly strong financial position o The business can leverage the balance sheet to take advantage of opportunities as they arise 21

22 Cashflow Statement Operating activities: Profit /(loss) before tax 2,471 (4,881) Depreciation and amortisation 5,463 5,155 Other non-cash items (91) 2,464 Working capital adjustments (1,465) 1,964 Income tax paid (139) (207) Net cashflows from operating activities 6,239 4,496 22

23 Cashflow Statement Cont. Investing activities: Acquisition of property, plant and equipment and intangible assets (1,972) (5,183) Proceeds from sale of property, plant and equipment and assets classified as held for sale Other investing cash flows Net Cash flows used in investing activities (874) (4,559) Financing activities: Movement in borrowings (2,370) (25) Net cash used in financing activities (2,370) (25) - - Increase /(decrease)in cash and cash equivalents 2,995 (89) Net foreign exchange difference - 14 Cash and cash equivalents at beginning of period 2,735 2,810 Cash and cash equivalents at the end of period 5,730 2,735 23

24 Investments $2.4 million was invested in Property, Plant and Equipment in the year. Significant investments in sachet packing line, refrigeration equipment and water reservoir for the Chitungwiza factory. 24

25 Dairibord Malawi The business continues to have a negative impact on Group performance. Operating loss of $0.551 million posted in 2017 The board is in the process of assessing the investment to inform next steps for the business The process will be concluded in the next 6 months 25

26 Dividend 26

27 Dividend Considering the performance of the business and improved cash generation, the board resolved to declare a dividend of 0.20 US cents per share for the year. The dividend is payable on or around 28 May 2018 to shareholders registered in the books of the company at the close of business on 18 May

28 Performance vs. Guidance to the Market Plan Actual Capital Investments $2.5 million $2.4 million Investment in Chitungwiza Water Reservoir 1.5 million litres capacity with 5 days cover 1.5 million litres capacity with 5 days cover Selling prices In line with inflation % 2% Overhead cost reduction $2 million $4.9 million ($2.1 million excluding once offs) Restructuring cost $1 million $847k 28

29 Outlook 29

30 Outlook The outlook is still uncertain However, demand is expected to remain firm in a market with a demand supply imbalance Volume growth will be driven mainly by cartonised milks and beverages 2017 Q4 prices expected to hold in 2018 Margins will remain under pressure due to forex constraints and inflation

31 Focus Areas for 2018 and Beyond 1. Enhanced Milk Supply Strategy Growing output to close the demand supply gap and substitute imports Growth will also leverage the existence of bankable 99 year leases Feed Veterinary Support Herd Growth Input Procurement Support Enhanced Quality Premium Scheme 31

32 Focus Areas for 2018 and Beyond Cont. 2. Brand Building 3. Human Capital 4. Cost Management Invest in support key brands Enhance route to market Invest in cold chain equipment, distribution vehicles, trade support and sales force automation Strengthening business continuity and skills retention strategy Partnering global business schools for Executive leadership development Graduate Trainee Program to develop skills pipeline Enhancing manpower productivity riding on the leaner structure and performance based remuneration model Cost containment and reduction remain a priority area of attention Potential areas are: procurement of materials, manufacturing efficiencies, sales and distribution 32

33 Thank You 33