Tiger Brands Limited Brands Limited ... 2010 2011 2012 2013 2014 2015 5 year CAGR: 31% 7 2 ... UAC...
Transcript of Tiger Brands Limited Brands Limited ... 2010 2011 2012 2013 2014 2015 5 year CAGR: 31% 7 2 ... UAC...
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Tiger Brands Limited
Group Results Presentationfor the year ended 30 September 2015
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Index
Strategic review
Operating performance
Financial performance
Outlook
2
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Peter Matlare
Chief Executive Officer
Strategic review
3
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Resolve the future of Tiger Branded Consumer
Goods (TBCG, formerly “DFM”)
Drive improved performance in Exports &
International
Improve Domestic operating performance
Key strategic deliverables
OutlookOperating performanceFinancial performancePerformance review
4
1
2
3
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› Increased innovation at 3.5% of turnover
› Significantly increased marketing investment
› Enhanced collaboration with customers
Improved Domestic operating
performance
5
1
OutlookOperating performanceFinancial performancePerformance review
› Improvement in facilities and manufacturing architecture
› Sustained market leadership in all core categories
› Continuous focus on cost savings and efficiencies
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› Solid performance from Grains
› Strong performance in Groceries
› Reinvestment in HPC delivers encouraging results
› Good performance from balance of portfolio
Highlights of Domestic operating
performance
6
1
OutlookOperating performanceFinancial performancePerformance review
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Exports and International
110
240
432
533
631
431
0
100
200
300
400
500
600
700
2010 2011 2012 2013 2014 2015
5 year CAGR: 31%
7
2
OutlookOperating performanceFinancial performancePerformance review
› Tough environment - impacted consumer sentiment & behaviour
› Cameroon performance consistent – EBIT up 12%
› Haco – progress towards a recovery
› Improved H2 from EATBI
› Exports impacted by Mozambique distributor in second half
› Pleasing performance from LAF
5 year CAGR: 31%
871
1 340
2 237
2 753
3 297 3 327
0
500
1000
1500
2000
2500
3000
3500
2010 2011 2012 2013 2014 2015
(Rm) (Rm)
Exports and International (excluding LAF)
Turnover (Rm)
Exports and International (excluding LAF)
EBIT (Rm)
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› FY15 Capex R882m
› Marketing up 12%
› Consolidation of
manufacturing
architecture
› Enhanced
management
capability
› Improved breadth
and depth
› Certified as Top
employer
› FY12 targeted savings
of R500m in FY15
› Procurement savings
of R520m vs. FY12
base
› Continuous
improvements and
rationalisation of
facilities in FY15 of
R214m
› Service levels of 95%
› Increased investment
in fields sales
technology
› Performance based
trading terms with
customers - drive a
“win-win” outcome
Key enablers to performance
8
People1Cost saving
initiatives2Investment in brands
and facilities3 Go-to-market4
OutlookOperating performanceFinancial performancePerformance review
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Decision on TBCG (DFM)
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OutlookOperating performanceFinancial performancePerformance review
› Rationale for acquisition was to add scale to existing businesses in Nigeria
› Important step towards African expansion
› Initial focus was on integration and consolidation
› Challenges included
‒ Industry over-capacity
‒ Low oil prices
‒ Devaluation of the naira
‒ Inability to recover cost push
› Strategic review conducted
› Fixing, optimising and growing the business
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Decision on TBCG (DFM)No further financial support
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OutlookOperating performanceFinancial performancePerformance review
› Difficult trading environment
› Impairment of R1.7 bn this year
› No known residual exposure
› Retain presence in Nigeria‒ Deli and UAC
› Reviewing options with TBCG board
› Engaging key stakeholders
› Considered all options‒ Outright sale
‒ Partnerships
‒ Joint ventures
‒ Recapitalisation
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Salient features*Solid performance
1 Group operating income before abnormal items
11
3 083
3 556 3 654
0
1 000
2 000
3 000
4 000
5 000
FY13 FY14 FY15
Group operating income (Rm)
Group operating margin (%)
Rm
11.4%
11.8% 11.6%
HEPS
1%
1 786 cents
Adjusted HEPS**
6%
1 920 cents
Total dividend
1%950 cents
** HEPS from continuing operations adjusted for
TBCG once-off tax and other asset write-offs
OutlookOperating performanceFinancial performancePerformance review
1
* From continuing operations
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Funke Ighodaro
Chief Financial Officer
Financial performance
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Operating performance
Group financial highlights*
* From continuing operations
** Before abnormal items and after IFRS 2 charges
*** HEPS adjusted for TBCG once-off tax and other asset write-offs
OutlookFinancial performancePerformance review
13
Turnover
5% to
R31.6 bn
Operating income**
3% to
R3.7 bn
Operating margin
11.6%
HEPS
1%to 1 786 cents
Total dividend per share 950 cents 1%
Adjusted HEPS***
6%to 1 920 cents
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Condensed income statementProfits impacted by TBCG decision
14
Operating performance OutlookFinancial performancePerformance review
* HEPS adjusted for TBCG once-off tax and other asset write-offs
Rm FY15 FY14 % Change
Turnover 31 558 30 072 5%
Operating income before abnormals 3 654 3 556 3%
Abnormals (1 710) (1 056)
Net financing costs (397) (401) 1%
Associate income 603 597 1%
Taxation (1 208) (832) (45%)
Non-controlling interests 785 127
Profit for the year 1 727 1 990 (13%)
EPS (cents) 1 068 1 243 (14%)
HEPS (cents) 1 786 1 804 (1%)
Adjusted HEPS * (cents) 1 920 1 804 6%
Continuing operations
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2015 Financial reviewIncome statement notes
FY15 FY14 % Change
Income from Associates
Empresas Carozzi 207 199 4%
Oceana Group Limited 309 282 10%
UAC of Nigeria 33 44 (25%)
National Food Holdings Ltd 54 72 (26%)
Total income from Associates 603 597 1%
Non-controlling interest
East Africa Tiger Brands Industries (2) 13 (114%)
HACO (29) 18 (262%)
Chococam 19 13 38%
TBCG (previously DFM) (773) (171) 352%
Total Non-controlling interest (785) (127) 521%
Operating performance OutlookFinancial performancePerformance review
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Operating income before IFRS 2*Solid Domestic performance
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Operating income Operating margin
Rm FY15 FY14 % Change FY15 FY14
DOMESTIC OPERATIONS 3 595 3 252 11% 15.2% 14.5%
Grains 2 061 1 919 7% 18.1% 17.5%
Milling and baking 1 681 1 597 5% 20.6% 19.8%
Other Grains 380 322 18% 11.8% 11.1%
Consumer Brands - Foods 1 096 977 12% 10.8% 10.3%
Groceries 411 320 28% 9.6% 8.1%
Snacks & Treats 315 309 2% 14.7% 15.1%
Beverages 138 127 9% 11.8% 11.4%
Value Added Meat Products 146 131 12% 7.0% 6.9%
Out of Home 86 90 (4%) 19.5% 20.6%
HPCB 444 399 11% 20.7% 20.3%
Other (6) (43) - - -
Exports and International 527 691 (24%) 11.4% 15.1%
Nigeria (439) (282) (56%) (13.3%) (9.0%)
Total before IFRS 2 charges 3 683 3 661 1% 11.7% 12.2%
Operating performance OutlookFinancial performancePerformance review
* From continuing operations
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FY14 Group EBIT
R3,6bn
Segmental operating incomeStrong domestic operations offset by International operations
17
Operating performance OutlookFinancial performancePerformance review
* Includes LC losses, IFRS 2 charges and corporate costs
7%
28%
4%11%
12%
(24%)
(8%)
Grains
Groceries
ST&BVAMP
HPCB Exports&
Inter-national
Nigeria
Other*
FY15
Group
EBIT
R3,7 bn
(14%)
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TBCG Significant impact on FY15 group earnings
18
Operating performance OutlookFinancial performancePerformance review
Headline earnings
(Rm)
Headline earnings
per share (cents)
Total headline earnings as reported 2 887 1 786
Once off deferred tax asset write offs 148 91
Other related assets not added back in HEPS 70 43
Adjusted headline earnings 3 105 1 920
HEPS adjusted for Tiger decision on TBCG
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Balance sheet remains strong
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Operating performance OutlookFinancial performancePerformance review
Rm FY15 FY14
ASSETS
Non-current assets 13 237 14 124
Property, plant & equipment 4 641 5 868
Goodwill 2 239 2 411
Intangible assets 1 994 2 116
Investments 4 312 3 422
Deferred taxation asset 51 307
Current assets 11 617 10 728
TOTAL ASSETS 24 854 24 852
EQUITY AND LIABILITIES
Total Equity 13 778 13 947
Non-current liabilities 2 059 1 533
Current liabilities 9 017 9 372
TOTAL EQUITY AND LIABILITIES 24 854 24 852
Net debt 3 788 3 489
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Cash flow statementWorking capital impacted by procurement and stock levels
20
Operating performance OutlookFinancial performancePerformance review
Rm FY15 FY14
Cash operating profit 4 417 4 541
Working capital changes (812) (348)
Cash generated from operations 3 605 4 193
Finance cost net of dividends received (71) (119)
Taxation paid (1 159) (967)
Dividends paid (1 643) (1 467)
Purchase of property, plant and equipment (882) (983)
Participation in Oceana rights issue (525) -
Exercise of share options held in BMT 286 -
Other including effects of exchange rate 90 324
Opening Balance - Net Cash/(Debt) (3 489) (4 470)
Closing Balance - Net Cash/(Debt) (3 788) (3 489)
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Key statistics
FY15 FY14
Net (Debt)/Cash (R'm) (3 788) (3 489)
Net Debt/Equity (%) 27.5 25.0
Working capital per R1 (cents) 22.3 22.1
Net interest cover (times) 9.2 8.8
Operating margin after IFRS 2 charges 11.6 11.8
Effective tax rate (%) (before abnormals and associate income) 37.3 28.1
RONA (%) 26.4 24.6
Net working capital days 95 88
Stock days 84 69
Debtor days 39 43
Creditor days 27 24
21
Operating performance OutlookFinancial performancePerformance review
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FY16 capex commitment of R1.7bn
R270m
R850m
R590m
22
Operating performance OutlookFinancial performancePerformance review
Carry forward from FY15
Strategic investments
Maintenance
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23
Noel Doyle
Chief Operating Officer
Operating performance
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Operating performance
Operational highlights
OutlookFinancial performancePerformance review
24
Group Turnover
5%
Marketing investment
12%More than double the rate of turnover growth
Volumes maintained
Group operating income*
3%
* Before abnormal items
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› Driven by core South African business
› Domestic operating income up 11% despite tough environment
› Groceries and HPC delivered double-digit profit growth
› Solid performance from Grains
› Mixed performance from Exports and International
› TBCG (DFM) – operational improvements not reflected in results
Solid overall performance
25
Operating performance OutlookFinancial performancePerformance review
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GrainsProfits up 7% and margin maintained
› Strong overall performance despite tough
trading conditions
› Albany regains market leadership
- Volume growth in 2H
› Rice and pasta delivered high double-digit
EBIT growth
› Breakfast delivered strong top-line growth
- Innovation - Jungle Ultra
3100
3300
3500
3700
3900
4100
4300Wheat FY2015
1500
2000
2500
3000
3500
White maize FY2015
26
Operating performance OutlookFinancial performancePerformance review
Wheat FY15
White maize FY15
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Bread volume and value shares return to No.1*
Packages**
Market growth Tiger growthMarket share performance
Bread
Maize Meal
Flour
Rice
Pasta
Hot Cereals
27
Operating performance OutlookFinancial performancePerformance review
*6mm average to September 2015
**12mm average to September 2015
Source: Nielsen total South Africa
―
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GroceriesOperating income up 28%
28
320411
0
200
400
600
FY14 FY15
Operating income (Rm)
Operating margin %
8.1%
9.6%
› Volumes maintained despite price
adjustments
› Improved manufacturing performance
› Portfolio strategy implemented
- Relaunch of Hugo’s
› Brand health evident from top brands
awards
Rm
Operating performance OutlookFinancial performancePerformance review
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GroceriesContinued market share growth through iconic brands
Packages
Market growth Tiger growthMarket share performance
Total Grocery
Peanut butter
Tomato sauce
Mayonnaise
Jams
Total Canned Veg ―
Total Beans
Total Chakalaka
29
Operating performance OutlookFinancial performancePerformance review
Source: Nielsen total South Africa 12 month moving average to September 2015
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Home and Personal Care Reinvest and rebuild delivers operating income growth
› Operating income up 24% to R218m
› Innovation rate of 7%
› Marketing investment up by 72%
› Key efficiency benchmarks achieved
› Exceptional performance achieved in
major categories
‒ Body Care and Pest Care
30
175218
0
100
200
300
FY14 FY15
Operating income (Rm)
Operating margin %
15.5%
17.3%
Rm
Operating performance OutlookFinancial performancePerformance review
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Insight
› Consumers mixing glycerine with Body cream for
added moisture
Action
› Ingram’s Triple Glycerine Cream
Results
› Sales FY15 = R31 million
› No 5 ranking SKU in the Creams Category
- Ingram’s has 3 of the Top 5 SKU’s
› Bigger than Ingram's Herbal in the Drug Channel
31
Home & Personal Care Insight to action: Ingram’s Triple Glycerine Cream
Source: Consumer Immersions and Qualitative research
Operating performance OutlookFinancial performancePerformance review
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210 214
0
80
160
240
FY14 FY15
Operating income (Rm)
Baby Care Innovative market leader
32
› Turnover growth of 7%
› Operating income up 2%
› Pouches launched in July 2015
› Provides affordable entry to baby food
› Cereals benefit from downtrading
Operating margin %
28.1% 26.7%
Rm
Operating performance OutlookFinancial performancePerformance review
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Snacks, Treats & BeveragesBeverages achieve excellent growth, S&T impacted by cost push
33
› Turnover growth of 5%
› Beverages operating income up 9%
› Consistent innovation
› Relaunched Beacon brand
› Improvement in manufacturing
architecture 436 453
0
80
160
240
320
400
480
FY14 FY15
Operating income (Rm)
Operating margin %
13.8%13.7%Rm
Operating performance OutlookFinancial performancePerformance review
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Exports and International
› Chococam delivered strong performance
‒ Volume growth up 9%
‒ Operating income up 12%
› Exports and Davita impacted by failure
of Mozambican distributor
‒ R23 million bad debts written off
‒ Volumes impacted quarter 4
› LAF recorded strong earnings growth of
58%
› Haco & EATBI on gradual recovery
34
691527
0
200
400
600
800
FY14 FY15
Operating income (Rm)
15.1%
11.4%
Rm
Operating performance OutlookFinancial performancePerformance review
Operating margin %
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TBCG (DFM)Underlying operational improvement not reflected in results
35
› Positive volume growth
- Flour volumes up 18%
- Pasta volumes up 59%
› Innovation launched in pasta, semolina and wholemeal under Tastic
› Improved efficiencies and enhanced distribution
› Strong management team
› Nigerian economic outlook remains challenging into the medium term
› Results impacted by delay in recovery of cost push from naira devaluation
- Fuel shortages
- Labour disruptions
- Oil price
- Forex shortages
Operating performance OutlookFinancial performancePerformance review
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1.03
1.45 1.33
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
-
200
400
600
800
1 000
1 200
Capex Capex/Depreciation
728
983882
Capex investment ratios
Commitment to ongoing investment in
facilities
Key highlights
› Maintained strong capex investment ratios
› Sustained investment in asset replacement and enhancement
36
Operating performance OutlookFinancial performancePerformance review
2013 2014 2015
Rm
FY14 FY15FY13
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39
245 236
0
100
200
300
FY13 FY14 FY15
Cost saving initiatives executed
Manufacturing Status Saving
Consolidation of manufacturing
architecture
› Tomato, beverages and mayonnaise
consolidationR75 million
› Reconfiguration of HPC for FY16 R30 million
Finance shared service centre › Completion end December 2015 R50 million
37
Procurement savings
Rm
Operating performance OutlookFinancial performancePerformance review
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Key areas for execution FY16
38
Operating performance OutlookFinancial performancePerformance review
› Effective investment in marketing, innovation and improved route-to-market
› Ongoing investment in capex
› Improving effectiveness in manufacturing architecture
› Revenue growth initiatives
› Execution of cost savings and efficiency improvements
› Continue to drive a high performance culture
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39
Peter Matlare
Chief Executive Officer
Outlook
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Financial performance
Outlook Differentiated and resilient portfolio
› Business is on a solid platform
‒ Addressed portfolio weaknesses
‒ Invested in brands and people
‒ Improved processes
› Explore accretive opportunities for growth
› Tough year ahead
OutlookOperating performancePerformance review
40
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41
Questions & Answers
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Appendix
42
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Group turnoverUp 5% - Driven by strong domestic performance
R30.1 bn
4%
1% R31.6 bn
25
26
27
28
29
30
31
32
FY14 Turnover FY15 Turnover
Rbn
43
Turnover
Growth
Price
Inflation
Total
VolumeForex
Domestic operations 6% 6% - -
Grains 4% 4% - -
Consumer - Foods 7% 8% (1%) -
HPCB 10% 9% 1% -
Exports &
International1% 1% (3%) 3%
Nigeria 6% (5%) 14% (3%)
Total Group 5% 4% 1% -
Price inflation
Volume
Appendix
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Contribution to turnover
Appendix
44
26%
10%
14%7%4%
6%
1%
7%
15%
10%
Milling and baking Other GrainsGroceries Snacks and TreatsBeverages Value Added Meat ProductsOut of Home HPCBExports and International Nigeria
27%
10%
13%7%4%
6%1%
7%
15%
10%
FY15FY14
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Contribution to operating incomeBefore IFRS 2 and other operating charges
Appendix
45
46%
10%11%
9%
4%4%
2%
12%
14%
(12%)
Milling and baking Other GrainsGroceries Snacks and TreatsBeverages Value Added Meat ProductsOut of Home HPCBExports and International Nigeria
43%
9%9%8%
3%4%
2%
11%
19%
(8%)
FY15FY14
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Disclaimer Forward-looking statement
46
This document contains forward looking statements that, unless
otherwise indicated, reflect the company’s expectations as at
19 November 2015. 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.