ANNUAL RESULTS PRESENTATION. for the year-ended 30 September 2015

Transcription

1 ANNUAL RESULTS PRESENTATION for the year-ended 30 September 2015

2 Agenda Pioneer Foods Introduction Phil Roux Financial review Cindy Hess Divisional reviews o Essential Foods Carstens o Groceries Lombard o International Govender Tertius Felix Thushen Outlook Phil Roux 1

3 Pioneer Foods 3 year performance track record Twin objectives: 1. Strengthen the brands 2. Expand the margins HOW 1 Shape a winning portfolio 2 Reset the cost base and improve efficiencies 3 Build Power Brands 4 Strategic customer management 5 Build a high performance team 2

4 3 year Fast Facts: Sept 2012 Sept 2015 Sept 12 Sept 15 Revenue (R bn) 18,6 18,7 EBIT (R bn) 1,15 2,15 EBIT % RONA % ROE % EVA generated % 2 49 Debt equity 16-1 Market cap (R bn) # Corporate market share * * Aztec 12 mm # Share price of R183 ( ) 2012 includes R3,1 bn Quantum Foods revenue 3

5 Financial Highlights For the 12 months ended 30 September 2015 Continuing operations Revenue # Operating profit * 6% to R18,8 bn +28% to R2,153 bn Operating margin * from 9.5% to 11.5% HEPS * Final dividend declared Total dividend declared for year 30.5% to 832 cents +52% to 237 cents +50% to 332 cents * Adjusted for the Phase I B-BBEE charge # 7% excluding Pepsi and biscuits 4

6 2015 Drivers & Inhibitors Bright Spots Inhibitors Maize profitability Bread growth & margin expansion Beverage & cereals volume growth Overall International performance Smaller brands Pepsi & biscuits Rand weakness Low growth environment Cost & efficiency management 5

7 Market share performance Corporate share 1 %, 12mm to September mm October 2014 September 2015 Value share Pioneer Foods Share Pts change Market change (%) 30.7 Sasko Bread Weet-Bix Safari Mat June 2015 Spekko White Star Measured as weighted average of Pioneer's share in 18 categories in which it operates. TEG only. Biscuits and Pepsi removed. 2 MAT June 2015 Liqui-Fruit Ceres International Val Growth: 15% 7.7 6

8 FINANCIALS CINDY HESS

9 SALIENT FEATURES Volume growth and share gains in most key categories Second half recovery in fruit exports Progressive expansion of bakery margins Containment of operating costs Successful exit from biscuits and Pepsi Investment in Food Concepts Nigeria 8

10 REVENUE ANALYSIS Strong volume growth in most categories Volume change Twelve months to 30 September 2015 Rm Change Essential Foods % Groceries % Cereals and other % Beverages % International % Total Revenue %* Bakeries +10% Rice +14% Maize +4% Cereals + 8% Long Life Juice +8% Ice Tea +13% Dilutables +9% Beverage +6% Other Groceries +11% Dried fruit +19% Bokomo Foods UK +20% * 7% growth before biscuits and Pepsi GROCERIES 26% 14% INTERNATIONAL 60% ESSENTIAL FOODS But, Wheat 0% Pasta -9% Local dried fruit -2% Baking aids & deserts -4% 9

11 INCOME STATEMENT SUMMARY Operating margin expands to 11.5% Twelve months to 30 September 2015 Rm Change Revenue % Cost of goods sold (12 774) +4% Gross profit % Gross margin 31.9% F14: 30.4% Net other operating expenses * (3 821) +3% Adjusted * operating profit % Operating margin 11.5% F14:.9.5% * Adjusted for the Phase I B-BBEE charge 10

12 SEGMENTAL ANALYSIS Margin expansion across all segments Operating Profit * Operating Margin * 2015 % Rm Change % % Group % Essential Foods % Groceries % Bokomo Foods % Ceres Beverages % International % Other -4 * Adjusted for the Phase I B-BBEE charge 11

13 INCOME STATEMENT SUMMARY Twelve months to 30 September 2015 Rm Change Adjusted * operating profit % Investment income % Finance costs (142) +3% Share of profit of joint ventures & associates 71 +1% Adjusted profit before income tax % Income tax (589) +30% Income tax per income statement (587) Income tax related to items of a capital nature (2) Adjusted profit for the year from continuing operations % Effective Tax Rate 27.7% * Adjusted for the Phase I B-BBEE charge 12

14 OPERATING PROFIT ANALYSIS Adjusted for the Phase 1 B-BBEE charge and QF impairment Twelve months to 30 September (Rm) Change Net operating profit as reported % Adjustments Phase I B-BBEE transaction % Items of a capital nature % Adjusted operating profit % Adjusted operating profit margin 11.5% 9.5% 13

15 GROUP EARNINGS Impacted by the Phase I B-BBEE Charge and Quantum Foods Twelve months to 30 September (Rm) Change Adjusted headline earnings - continuing operations % Adjusted HEPS for continuing operations 832 cents 637 cents 30.5% Headline earnings - discontinued operations - 73 Adjusted headline earnings - total % Adjusted HEPS 832 cents 678 cents 23% Less Phase I B-BBEE charge (307) (187) 64% Headline earnings for continuing operations % Items of a capital nature (after tax) (97) (90) 8% Earnings % 14

16 CASH FLOW ANALYSIS Investment in working capital Twelve months to 30 September (Rm) Cash profit from operating activities % Change in working capital (546) 28 Inventory (268) (19) Debtors (289) (334) Creditors Other (1) (36) Cash effect from commodity hedging 16 (8) Cash generated by operations % 15

17 CASH FLOW ANALYSIS Cash flow from investment activities Twelve months to 30 September (Rm) Net cash flow from investment activities (423) (393) Additions (186) (270) Replacements (466) (216) Proceeds on disposal Interest and dividends received Investment in joint ventures (126) - Proceeds on disposal of available for sale assets & liabilities 118 (1) 16

18 GROUP NET DEBT AND DEBT EQUITY RATIO Positive net debt position and significant gearing capacity 17

19 DIVIDEND PER SHARE AND COVER Dividend cover

20 ESSENTIAL FOODS TERTIUS CARSTENS 19

21 PERFORMANCE SUMMARY ESSENTIAL FOODS Revenue +6% R11 335m Operating profit +31% R1 279m Operating profit margin 11.3% 2014: 9.2% Value drivers Bakery momentum sustained Maize volume and efficiency gains Rice turnaround Operating cost per unit well below inflation 20

22 PERFORMANCE SUMMARY ESSENTIAL FOODS Main product categories Volume change 1 st half Volume change full year Price change full year Wheaten flour 0% 0% +2% Brand share (TEG) Maize meal +13% +4% 0% Rice +6% +14% 0% Bread +13% +10% +4% Pasta -6% -9% +3% N/A Power Brand share growth in TEG Bread volume growth in all channels pleasing Rice distribution gains Source of share data: Aztec TEG 12MM September 2015, volume share TEG: Top End Grocers L&T: Local and Traditional Change: year-on-year 21

23 ESSENTIAL FOODS BAKERIES PERFORMANCE MOMENTUM SUSTAINED Sasko Bread Execution excellence in an intensifying competitive space Volume growth across regions and channels Enabled by product portfolio Operating cost per unit decreased Sasko brand investment increased Fleet remodelling completed Operating profit +70% and margin expands Aeroton investment approved 22

24 ESSENTIAL FOODS WHEAT DEFENDING THE BASE Sasko Flour Negative growth in industry milled tonnage Industrial segment price sensitivity deepens TEG category volume growth positive Sasko gained volume share Profitability good but lower than PY Pasta 2% category volume growth in TEG Imports up by 13% Local wheat duty negating currency hedge Pasta Grande availability enhanced Profitability maintained 23

25 ESSENTIAL FOODS RICE TURNAROUND GAINING FURTHER TRACTION Spekko, Select, Nice rice 5% Category volume growth in TEG (MAT Sept 15) Bolstered by zero inflation Spekko gained from enhanced depth of distribution and brand portfolio strategy Investment in Spekko paying dividends 8 out of 10 consumers* prepared to switch Profitability turnaround * 2015 Home Tester Club study 24

26 ESSENTIAL FOODS MAIZE White Star SA s No % industry growth at milling level Significant demand swing in second half Inflation driven by poor local crop TEG short-term growth -2% Pioneer Foods total volume growth contracted in 2 nd half White Star voted as SA s No. 1 maize meal brand* Investment maintained Branded flavoured instant porridge innovation Pleasing profit improvement * 2015 Sunday Times Top Brands survey 25

27 ESSENTIAL FOODS COMMODITY OUTLOOK Wheat Global supply adequate, bearish Dollar-based pricing Import tariff at R911 per tonne Rand/Dollar depreciation inflates forward price view Maize Global supply adequate Significant local price inflation in 2 nd half New season planting impaired by weather outlook Pricing expected to remain high until 2016 crop certainty 26

28 ESSENTIAL FOODS MANAGEMENT FOCUS Price/Volume/Margin optimisation In an increasingly contested and constrained trading environment Maintaining performance momentum Cost and efficiency focus Targeted investment in Power Brands Asset care Fixed capital 27

29 GROCERIES FELIX LOMBARD

30 GROCERIES STRONG OVERALL GROWTH Progress in honing a winning portfolio Exited Pepsi, biscuits, vinegar and Hooch Acquired 50% share in Future Life Performance summary Significant volume growth in core categories Share gains in Cereals, Long Life Juice, Dilutables & Ice Tea Material value chain efficiency gains Operating cost well managed Smaller brands underperformed Losses in discontinued biscuit and Pepsi businesses # 29

31 GROCERIES PERFORMANCE IN CONTEXT Results as Reported Revenue +1% R4 797m Operating profit margin 2015: 9.0% 2014: 7.2% Continuing Business Revenue +8% R4 369m Operating profit margin 2015: 10.6% 2014: 9.5% Continuing business: Turnover: Excludes Pepsi, biscuits, Hooch and vinegar Operating Profit: Excludes profit of vinegar, losses of Hooch and 50% of losses of biscuits and Pepsi # 30

32 PERFORMANCE SUMMARY CEREALS AND OTHER GROCERIES Revenue +2% R2 420m Operating profit +14% R252m Operating profit margin 2015: 10.4% 2014: 9.3% Main product categories Volume change Price change Breakfast cereals +8% +7% Dried fruit products -2% +2% Baking aids and desserts -4% +7% 31

33 CEREALS SUSTAINING THE GROWTH MOMENTUM Breakfast cereals: Total category Category reflects good growth Consumers seek value Larger packs stimulate growth Pioneer Foods performance Volume growth ahead of category growth 200 basis points market share gain Conversion efficiencies created positive leverage Attractive operating margin Pioneer cereals value % growth MAT 3 mth MAT 6 mth MAT 12 mth Category PFG Source of share data: Aztec MAT Sept 2015 # 32

34 SNACKS, TREATS & SPREADS FIX AND GROW Category Low single digit growth in most categories Nuts and ready to eat desserts the exception Pioneer Foods Portfolio volumes under pressure Packaged goods and industrial products Loss of private label contract Steep raw material input costs on nuts under recovered # 33

35 PERFORMANCE SUMMARY BEVERAGES (INCLUDING PEPSI) Revenue -1% R2 377m Operating profit +46% R182m Operating profit margin 2015: 7.7% 2014: 5.2% Main product categories Volume change Price change Long life fruit juice +8% +6% Ice tea +13% +3% Dilutables +9% +6% 34

36 LONG LIFE FRUIT JUICE SUSTAINING THE GROWTH MOMENTUM Total category Low single-digit growth Pioneer Foods performance Volume growth ahead of category 130 basis points market share gain Marketing highlights of the year Ceres premiumisation Liqui Fruit Nothing but campaign Fruitree value proposition sharpened Further optimization of distribution network # 35

37 ICE TEA & DILUTABLES PROFITABILITY RATCHETS UP Ice Tea Strong category volume growth Lipton gained market share, amidst intense competition Dilutables No category growth: Squashes grow at the expense of dairy blends Pioneer Foods: Further margin expansion: Volume growth ahead of the category Product reengineering expand margins # 36

38 GROCERIES MANAGEMENT FOCUS Demand side focus: Step up brand investment Grow high margin smaller brands Reduce stay behind fixed costs Realize further route to market efficiencies Manage Weet-Bix capital expansion # 37

39 INTERNATIONAL THUSHEN GOVENDER 38

40 INTERNATIONAL DIVISIONAL PERFORMANCE Revenue +15% R2 616m Operating Profit +22% R 444m Operating Profit Margin 2015: 17% 2014: 16% Volume growth Exports: Essential Foods 177% Dried Fruit Ingredients 18.7% Groceries (Foods) 10.7% Beverages 6.2% United Kingdom 19.7% 39

41 INTERNATIONAL GAINS TRACTION Strategic progress update: Food Concepts Nigeria makes steady progress Beverage regional production on track Innovation in food & beverages with a focus on affordability Successful leverage of the Pioneer beverage route to market Performance inhibitors: Volatile African economies Devaluing currencies impacting margins High cost on tree fruit impacts volumes Local manufacturers capturing market share with affordable propositions 40

42 INTERNATIONAL BEVERAGES AND GROCERIES Beverages 8% volume growth in Africa Increased investment and focus on strategic markets Key Asian markets deliver double digit growth Portfolio strategy and pack format innovation enhanced market penetration Groceries Good volume growth resulted by leveraging beverage route to market In-store activations stimulate trial Legislative issues inhibit performance Focused investment in multilingual packs 41

43 INTERNATIONAL DRIED FRUIT AND UK Dried fruit Significant turnaround in the second half Record SA crop in vine fruit Focused initiatives to improve relationships in key markets Investment in facilities to improve quality UK Record year enabled by organisational redesign New sales leadership benefits sales and customer relations Finalist in FMT Best Manufacturer and winner of Q Award Private label share of granolas at an all time high Focus on development of strategic b2b alliances 42

44 INTERNATIONAL MANAGEMENT FOCUS Continue to drive market penetration Commercialise regional production hubs Invest in route to market capability Expand the industrial ingredients portfolio Invest in UK capacity and identify bolt-on acquisition opportunities Drive profitable growth in Nigeria 43

45 Outlook Economic Headwinds Competitor frenzy EXTERNAL LANDSCAPE Soft commodity vagaries Constrained consumer spending Cost push inflation/rand weakness 44

46 Investment case: headroom for investor value creation in five focus areas Further entrench our Power Brand positions Accelerate a winning diversified portfolio Increased cash returns to shareholders Value creation focus areas Sustain a lean efficient organisation Ensure capital efficiency 45

47 THANK YOU This document contains forward looking statements that, unless otherwise indicated, reflect the company s expectations as at 24 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.