ANNUAL RESULTS PRESENTATION

Transcription

1 ANNUAL RESULTS PRESENTATION FOR THE YEAR ENDED 30 SEPTEMBER 2016

2 CONTENTS 2 Annual Results Presentation 8 Financial Performance 19 Divisional Performance 19 Essential Foods 26 Groceries 35 International 45 Outlook 2017 II PIONEER FOODS

3 ANNUAL RESULTS PRESENTATION

4 ANNUAL RESULTS PRESENTATION for the year ended 30 September PIONEER FOODS

5 What a year!! Salient Features: Massive discontinuities Drought Rand volatility Wheat duty So Portfolio and brand strength matters (size counts) Cost and efficiency management must be a given Invest always and above all in people Sustain momentum with a big dream Africa stumbles Consumer weakness Political instability ANNUAL RESULTS PRESENTATION

6 Highlights Acquisition of Streamfoods Excellent raisin exports Refurbishment of UK facility Investment in growth capex Groceries margin expansion Bakeries sustained momentum Cost and efficiency extraction 4 PIONEER FOODS

7 Fast facts: Sept 2012 Sept 2016 Sept 12 Sept 16 Revenue (R bn) EBIT (R bn) EBIT % RONA % ROE % EVA generated (R m) Debt equity (exclude RMB) % 9 6 Market cap (R bn) # # Share price of R ( ) 2012 numbers include Quantum Foods (R3.1 bn for revenue) ANNUAL RESULTS PRESENTATION

8 Financial Highlights For the 12 months ended 30 September 2016 Revenue# Operating profit* for continuing operations 10% to R20.6 bn 6% to R2 273 bn Operating margin* from 11.5% to 11.0% HEPS* Final dividend declared Total dividend declared for year 6% to 883 cents 10% to 260 cents 10% to 365 cents * Adjusted for the Phase I B-BBEE gain/(charge) and hedge and for items of a capital nature # 12% excluding biscuits, Pepsi & Maitland Vinegar 6 PIONEER FOODS

9 Market share performance - TEG Corporate share 1 %, 12 mm 4 to Sept mm 4 October 2015 to September 2016 Value share Pioneer Foods Share Pts change Category growth (%) 31.8 Sasko Weet-Bix Safari Mat Sept2016 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. 2 All other categories 12 mm to Sept Flat on a category basis (incl. Futurelife) 4 Value share ANNUAL RESULTS PRESENTATION

10 FINANCIAL PERFORMANCE Cas Lamprecht Acting CFO 8 PIONEER FOODS

11 Revenue analysis Strong volume growth in cereals, LLJ and export dried fruit Twelve months to 30 September 2016 Rm Change Essential Foods % Groceries %* International % Total Revenue %** INTERNATIONAL 15% * 7% growth before biscuits, Pepsi & Maitland Vinegar **12% growth before biscuits, Pepsi & Maitland Vinegar GROCERIES 23% ESSENTIAL FOODS 62% ANNUAL RESULTS PRESENTATION

12 Income statement summary Twelve months to 30 September 2016 Rm Change Revenue % Cost of goods sold (14 517) +14% Gross profit % Gross margin 29.5% F15: 31.9% Net other operating expenses * (3 810) -0.3% Adjusted * operating profit % Operating margin 11.0% F15: 11.5% * Adjusted for the Phase I B-BBEE gain/(charge) and hedge and for items of a capital nature 10 PIONEER FOODS

13 Segmental Analysis Operating Profit * Operating Margin * 2016 % Rm Change % % Group Essential Foods Groceries International Other -2 * Adjusted for the Phase I B-BBEE gain/(charge) and hedge and for items of a capital nature ANNUAL RESULTS PRESENTATION

14 Income statement summary Twelve months to 30 September 2016 Rm Change Adjusted* operating profit % Investment income % Finance costs (167) +18% Share of profit of joint ventures & associates % Adjusted* profit before income tax % Income tax (616) +5% Income tax per income statement (629) Income tax on BEE hedge 6 Income tax related to items of a capital nature 7 Adjusted* profit for the year from continuing operations % Effective tax rate 27.3% * Adjusted for the Phase I B-BBEE gain/(charge) and hedge and for items of a capital nature 12 PIONEER FOODS

15 Operating profit analysis Twelve months to 30 September (Rm) Change Net operating profit as reported % Adjustments (66) 356 Phase I B-BBEE transaction and hedge (45) 307 Items of a capital nature (21) 49 Adjusted operating profit % Adjusted operating profit margin 11.0% 11.5% ANNUAL RESULTS PRESENTATION

16 Group earnings Twelve months to 30 September (Rm) Change Adjusted* headline earnings - total % Adjusted* HEPS 883 cents 832 cents +6% Phase I B-BBEE gain/(charge) and hedge 39 (307) Headline earnings - total % Capital items from continuing operations (post tax) 14 (52) Earnings from continuing operations % EPS from continuing operations 912 cents 637 cents +43% Capital items from discontinued operations (post tax) - (45) Earnings - total % Total EPS 912 cents 613 cents +49% * Adjusted for the Phase I B-BBEE gain/(charge) and hedge 14 PIONEER FOODS

17 Cash flow analysis Twelve months to 30 September (Rm) Change Cash profit from operating activities % Change in working capital (775) (546) Inventory (490) (268) Debtors (49) (289) Creditors (240) 12 Other 4 (1) Cash effect from commodity hedging (175) 16 Cash generated by operations % ANNUAL RESULTS PRESENTATION

18 Cash flow analysis Twelve months to 30 September (Rm) Net cash flow from investment activities (983) (423) Additions of PPE and intangible assets (469) (186) Replacements of PPE and intangible assets (340) (466) Proceeds on disposal of PPE and intangible assets Net proceeds on disposal of subsidiary (Maitland Vinegar) 62 - Interest and dividends received Business combinations (UK Streamfoods) (147) - Investment in joint ventures (Futurelife) (200) (126) Proceeds on disposal of available-for-sale assets & loans (29) PIONEER FOODS

19 Group net debt and debt equity ratio Net Debt Equity Ratio Rm excl RMB 9% 15% 3% -1% 6% Rm 1,200 1, (200) (97) * Excludes B-BBEE (third party) debt ANNUAL RESULTS PRESENTATION

20 Dividend per share and cover* Dividend cover Cents per share % % % % c Final Interim * Adjusted headline earnings divided by total dividend (inclusive of treasury shares) nal 18 PIONEER FOODS

21 DIVISIONAL PERFORMANCE Tertius Carstens Essential Foods ANNUAL RESULTS PRESENTATION

22 Divisional performance: Essential Foods Multiple discontinuities Volume -2% Revenue +13% Operating Profit -2% Margin 9.7% (F15: 11.3%) Weak demand and continuing inflation Maize price breached R5 000/ton Wheat import duty increased to R1 592/ton Bakeries delivered operating leverage Double digit operating margin maintained Maize volume claw back in second half Profitability impacted by inflation and lower volumes White Star brand leadership strengthened Operating costs contained 20 PIONEER FOODS

23 Divisional performance: Essential Foods Category overview Wheat consumption growth at industry level muted at +1%* Sasko brand growth delivered share gain in TEG Category profitability maintained Bread volume growth in TEG improved by +3.1%** Muted volume growth due to refurbishments Good operating leverage White maize consumption declined at an industry level by -4.5%* Category inflation accelerated to 38%*** in the short term White Star brand leadership strengthened Category profitability declined Rice volume growth in TEG marginally positive at +0.8%** Volume growth ahead of category, but tempered in 2H as competition responds Profitability enhanced * SAGIS: 12 months Aug 2016 ** Iri: 12 months - Sept 2016 *** Iri: 3 months - Sept 2016 ANNUAL RESULTS PRESENTATION

24 Divisional performance: Essential Foods Outlook Wheat ITAC review of import duty regime in process Ample international supply Raw material deflation evident, but exchange rate and duty dependent Bakeries TEG short term volume growth (as proxy for category) positive Aeroton expansion coming on stream Category remains a critical growth vector Rice Spekko brand will increase competitive stature 22 PIONEER FOODS

25 Divisional performance: Essential Foods Outlook - Maize Short crop harvested - limited volume non-gm imports available La Nina weather pattern anticipated High probability of increased plantings Anticipation of early deliveries in Feb - Apr 2017 high risk? Early, and sufficient rain? Market pricing under pressure due to: Supply risk management through imports Short crop availability Speculative positions liquidated Risk too much good news priced in too early? Margin/volume pressure likely in 1H2017 with anticipated respite in 2H ANNUAL RESULTS PRESENTATION

26 Divisional performance: Essential Foods Investment outlook Commitment to focussed brand investment sharpened Building on White Star leadership credentials White Star Instant Sasko execution Baking together since 1930 Spekko share gaining strategy Capital expenditure for long term growth Weighted towards bakeries Value enhancement in maize 24 PIONEER FOODS

27 Performance overview: Essential Foods At a glance Division Volume Revenue EBIT Rm Maize Wheat Bread Pasta Rice Legumes EBIT % Market share * * ** ** ** ** * SAGIS: 12 months Aug 2016 ** Iri: 12 months Sept 2016, volume ANNUAL RESULTS PRESENTATION

28 DIVISIONAL PERFORMANCE Felix Lombard Groceries 26 PIONEER FOODS

29 Strong overall growth: Groceries Volume +2%* Revenue +7%* Operating Profit +25% Margin 11.5% (F15: 9.0%) Performance summary Good performance in challenging environment Major input inflation Increased competitive environment Solid volume growth in cold cereals and 100% juice Operating costs very well managed Second half impacted by severe cost push * Adjusted for biscuits, Pepsi & Maitland Vinegar ANNUAL RESULTS PRESENTATION

30 Performance in context: Groceries Revenue Growth as reported -2.1% Growth excl. biscuits, Pepsi & Vinegar +7.5% Operating profit margin Operating margin 2015 as reported * 9.0% Elimination of businesses sold 1.0% Adjusted operating margin % Cost elimination 0.7% Other margin improvement initiatives 0.8% Operating margin % 28 PIONEER FOODS

31 Cereals Sustaining the growth momentum Breakfast cereals: Total category Category reflects strong volume growth Consumer inflation below producer inflation Strong growth in wheat biscuits, corn flakes and porridges Pioneer Foods performance Value growth tracks ahead of the market Weet-Bix, South Africa s No. 1 cereal brand gains further share 8% volume growth GP% maintained despite high input inflation Double digit operating profit growth Weet-Bix capacity Dec. commissioning 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% Breakfast Cereal Market in Value 10.3% 9.9% 9.6% 8.9% 8.8% 8.9% 12 MM 6 MM 3 MM Category Pioneer Foods Source of share data: Aztec MAT Aug 2016 ANNUAL RESULTS PRESENTATION

32 Long Life Fruit Juice Strong category growth Total category Excellent volume growth Niche new products and brand activity drive growth Further wave of concentrate inflation Pioneer Foods performance Good volume growth but lagged the market Major raw material inflation compressed the margin Deleverage at an EBIT level as brand and innovation investment steps up Price increases into the season 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Long Life Juice Market in Volumes 12.3% 8.1% 9.4% 3.7% 16.0% 14.7% 12 MM 6 MM 3 MM Category Pioneer Foods Source of share data: Aztec MAT Aug PIONEER FOODS

33 Snacks, treats & spreads Profitability ratchets up Category Low single digit growth in most categories Desserts and rusks the exception Pioneer Foods Excellent volume performance Share of Market in Value Sustained progress: Focused marketing initiatives 40.0 Rationalisation of SKU s Rusks Bakings Aids Desserts Nuts Spreads Dried Fruit Salads Formulation re-engineering Consolidation of facilities Material improvement in profitability Category Pioneer Foods Source of share data: Aztec 3MM Aug 2016 ANNUAL RESULTS PRESENTATION

34 Ice tea & dilutables Optimise and grow Ice Tea Deceleration in category growth Lipton gained further market share Summer flavours well accepted Dilutables Strong category growth in current year Driven by dairy blends and squashes Pioneer Foods: Good volume growth by Wild Island and Fruitree Squash 32 PIONEER FOODS

35 Groceries The Year Ahead Further opportunities to unlock value: Consolidation of factories Logistics cost benefits Increased brand focus defend heartland Deepened innovation focus Opportunities for bolt-on acquisitions Rationalisation of the portfolio Sugar tax readiness Well positioned for future growth ANNUAL RESULTS PRESENTATION

36 Performance overview: Groceries At a glance Division Volume Revenue EBIT Rm EBIT % Market share Cereals Beverages Baking aids & desserts Spreads Snacks & treats 34 PIONEER FOODS

37 DIVISIONAL PERFORMANCE Thushen Govender International ANNUAL RESULTS PRESENTATION

38 Performance overview Volume +4% Revenue +17% Operating Profit +9% Margin 15.9% (F15: 17.0%) Solid performance despite economic volatility Record year for vine fruit exports UK contribution pleasing despite facilities move & Brexit Nigerian turnaround continues to gain traction African markets remain challenging Acquisitive growth strategy on track 36 PIONEER FOODS

39 Exports Food and Bev Portfolio management Fruit Juice & 1 Food Focus on credit risk management Alignment of brand and product portfolio strategy Increased brand investment to drive penetration Basket selling gains traction Beverage sales in Asian markets makes progress Renewed focus on the Middle East, delivers results ANNUAL RESULTS PRESENTATION

40 Exports Dried Fruit Managing volatility 2 Dried Fruit 2015 record crop delivers a stellar first half performance Rand weakness in the first half well leveraged Second half performance muted Growing demand in Europe for SAD quality Investment into facilities to improve efficiency and quality Innovation of value added fruit products 38 PIONEER FOODS

41 In-country operations - UK Building scale 3 United Kingdom Peterborough factory relocation & upgrade completed Wheat biscuit line upgrade Streamfoods integration well on-track Focused innovation in breakfast cereals and fruit snacking ANNUAL RESULTS PRESENTATION

42 In-country operations - Nigeria Business turnaround 4 Nigeria Business integration and turnaround delivers profitability Facilities optimization program enhances margins Bread product re-engineering delivers consistent quality Investment into distribution hubs and vehicles Baked goods innovation as Phase 2 40 PIONEER FOODS

43 East African partnership Acquisitive growth strategy Kenya Weetabix East Africa Company overview Largest Breakfast Cereals producer in East Africa Strong double digit operating margin High levels of brand equity Strategic rational Strong breakfast category growth Access to high growth COMESA/EAC region Local management and expertise Develop leading breakfast proposition Offers a route to market solution ANNUAL RESULTS PRESENTATION

44 Management focus Outlook Tough 1 st half Smaller raisin crop New market development in Africa & Asia Capitalize on Streamfoods acquisition Develop East African breakfast opportunity Accelerate Nigeria, FCPL profit growth 42 PIONEER FOODS

45 Performance overview: International Division Volume Turnover Rm EBIT Rm EBIT Margin SA Exports Fruit Beverages Foods UK Nigeria (FCPL) ANNUAL RESULTS PRESENTATION

46 JV Performance Division Volume Turnover Rm EBIT Rm EBIT Margin Heinz Future Life Alpen Foods Bokomo Botswana Bokomo Namibia Bowman Ingredients 44 PIONEER FOODS

47 Outlook: 2017 SA and balance of continent remain under pressure Essential Foods hiatus will correct in the 2 nd half Growth capex will enable a step change Self help initiatives remain robust Power Brands poised for defence and growth Newly acquired ventures must deliver Acquisitive growth remains a focus ANNUAL RESULTS PRESENTATION

48 Thank you This document contains forward looking statements that, unless otherwise indicated, reflect the company s expectations as at 21 November 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. 46 PIONEER FOODS

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