AVI Limited presentation to shareholders & analysts for the year ended June 2017
AGENDA Key features and results history Group financial results Performance and prospects Questions and answers
KEY FEATURES Sound performance in a challenging environment ; Revenue up 8,2% to R13,18 billion; Gross margin recovered in second semester; Operating profit up 10,7% to R2,39 billion; Cash from operations up 8,4% to R2,99 billion; Capital expenditure of R545,6 million; Return on capital employed of 28,0%; Headline earnings per share up 9,4% to 507,7 cents; Final dividend of 243 cents per share, total normal dividend up 9,5% to 405 cents per share.
RESULTS HISTORY Operating profit history 2 600 2 398 2 400 2 165 2 200 366 1 929 2 000 345 241 1 722 1 800 404 218 1 529 1 600 389 1 386 388 198 1 400 331 410 R million 1 121 172 308 1 200 248 915 892 666 167 245 1 000 236 156 609 806 718 101 166 179 133 533 151 800 95 133 91 475 105 509 147 435 73 388 600 238 74 329 60 160 262 115 117 233 - 400 47 193 51 84 186 735 662 6 157 545 127 105 442 416 200 400 398 330 289 254 237 210 199 - F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 Entyce Snackworks I&J Personal Care Footwear and Apparel Compound annual growth rate from F05 to F17 of 15,2% Operating profit margin increased from 9,9% in F05 to 18,1% in F17
RESULTS HISTORY Return on capital employed 7 000 35% 6 000 30% 5 000 25% R million 4 000 20% % 3 000 15% 2 000 10% 1 000 5% 0 0% F10 F11 F12 F13 F14 F15 F16 F17 Net operating profit after tax Average capital employed ROCE (%) Sustained returns including increasing capital expenditure to support growth and efficiency
RESULTS HISTORY Historical cash conversion 3 000 120% 2 500 100% 550.0 2 000 80% R million 1 500 60% % 226.6 1 000 40% 230.6 201.8 500 20% 0 0% F10 F11 F12 F13 F14 F15 F16 F17 EBITDA Cash generated by operations Cash to EBITDA Sustained strong conversion of earnings into cash
RESULTS HISTORY Historical cash generation 2 400 2 200 2 000 1 694 1 620 1 800 1 548 1 488 1 600 1074 1 400 R million 812 1 097 1 043 1 200 699 1 005 1 000 956 780 530 800 502 101 619 260 595 600 480 454 460 436 108 356 363 622 400 748 567 237 284 92 227 546 541 200 424 410 325 264 256 224 209 196 - F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 Capex I&J vessel replacements Free Cash Flow Continued investment in efficiency, capacity and retail stores
RESULTS HISTORY Dividend yield 14% 12% 12.0% 10% 8% 7.7% 7.4% 6.4% 6.2% 6.5% 5.2% 6% 4.9% 4.5% 4.5% 4.1% 4.4% 4.3% 3.8% 4.1% 4.0% 3.7% 4% 2.8% 2% 0% F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 Normal dividend yield Total dividend yield Based on share price at end of each year Total dividend yield includes payments out of share premium and special dividends Excludes share buy-backs
RESULTS HISTORY Returns to shareholders 1800 1 703.3 1600 1 359.7 1400 638.8 1 318.9 - 1 197.4 1200 - 550.0 550.0 953.5 1000 R million 869.5 791.4 788.3 800 269.9 620.7 319.1 - - 600 1 197.4 1 064.5 226.6 953.5 400 809.7 317.8 230.6 301.1 262.8 620.7 - - 229.4 - - 527.5 201.8 200 166.0 373.0 301.1 262.8 229.4 238.6 166.0 116.0 0 F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 Normal dividend paid Final dividend declared Special dividend paid Share Buyback Effective payout ratio from F05 = 89% of headline earnings R6,53 billion returned to shareholders in last 5 years Gearing within targeted range at end of June 2017
Group Financial Results
GROUP FINANCIAL RESULTS Income statement F17 F16 % Rm Rm Revenue 13 184,6 12 188,9 8,2 Gross profit 5 762,2 5 346,6 7,8 Gross profit margin % 43,7 43,9 (0,5) Operating profit 2 385,3 2 154,6 10,7 Operating profit margin % 18,1 17,7 2,3 Net financing cost (152,4) (129,4) 17,8 Share of Joint Ventures 63,2 58,1 8,8 Effective tax rate % 28,4 28,4 Headline earnings 1 646,0 1 492,2 10,3 HEPS (cps) 507,7 464,1 9,4 Capital items (127,5) (14,3) Return on capital employed % 28,0 27,9
GROUP FINANCIAL RESULTS Movement in group revenue 14 000 13 000 12 000 R million 11 000 10 000 9 000 8 000 7 000 6 000 12 189 1 408 -412 13 185 F16 Price Volume F17 Price increases in all categories taken to offset weaker Rand and higher raw material costs Volume pressure in constrained environment with higher selling prices I&J impacted by lower hake quota and unprotected strike
GROUP FINANCIAL RESULTS Gross profit margin history 50% 45.4% 44.9% 44.6% 43.9% 43.8% 43.7% 43.1% 41.8% 40% 30% 20% F10 F11 F12 F13 F14 F15 F16 F17 Price increases haven’t fully recovered accumulated cost pressure in food and beverages Ongoing focus on cost and efficiencies to protect gross profit margin Rand exchange rates secured at levels that will assist margin in F18
GROUP FINANCIAL RESULTS Operating profit 10,7% up 2 450 2 400 2 350 2 300 2 250 R million 2 200 2 150 2 100 2 050 2 000 2 155 73 57 58 24 20 -1 -1 2 385 F16 Entyce Snackworks I&J Personal Spitz Green Cross Other F17 Care Entyce: Higher selling prices, especially tea; speciality coffee volume growth Snackworks: Higher selling prices and snacks volume growth I&J: Weaker Rand and higher selling prices, offset by unprotected strike in August 2016 Personal Care: Higher selling prices and strong owned-brands performance Spitz: Stronger Rand improved margin; less price inflation eased volume pressure in H2 Green Cross: Sustained discounting by competitors and lower wholesale demand; offset by sales growth from new doors
GROUP FINANCIAL RESULTS Marketing expenditure 18% 16.0% 15.3% 16% 14% 12% 10% 8.5% 8.4% 8.4% 8.1% 7.9% 7.8% 7.7% 7.1% 8% 5.1% 6% 4.7% 4.1% 4.0% 4% 2.3% 1.8% 2% 0% * Excludes Coty F17 F16 Total expenditure for F17 of R760m compared to R728m in F16 Spend focused on core brands, new product launches and line extensions
GROUP FINANCIAL RESULTS Cash generation and utilisation F17 F16 % Rm Rm Cash generated by operations* 2 993,6 2 761,8 8,4 Working capital to revenue % 22,2 20,3 9,4 Capital expenditure 545,6 881,8 (38,1) Depreciation and amortisation 397,4 350,2 13,5 Net debt 1 444,1 1 428,6 Net debt / capital employed % 22,9 24,1 * Before working capital changes Strong conversion of earnings to cash Working capital increase due to strong 4th quarter trading and timing of raw material deliveries Prior year capital expenditure includes I&J vessel payments Gearing in targeted range
GROUP FINANCIAL RESULTS Dividends % F17 F16 Interim dividend - cps 162 150 8,0 Final dividend - cps 243 220 10,5 Total dividend - cps 405 370 9,5 Dividend yield - %* 4,3 4,5 Cover ratio 1,25 1,25 Closing share price - cps 9 500 8 300 * Calculated using the closing share price at 30 June
GROUP FINANCIAL RESULTS Capital expenditure and depreciation F9 F10 F11 F12 F13 F14 F15 F16 F17 1 000 882 900 849 800 101 260 700 567 R million 600 546 541 532 500 108 410 394 400 347 308 283 300 256 217 191 200 100 - F11 F12 F13 F14 F15 F16 F17 Capital expenditure I&J vessel replacement Depreciation charge Continued investment in manufacturing capacity, efficiency and retail stores Expenditure in respect of new I&J vessels included in F14, F15 and F16
GROUP FINANCIAL RESULTS Key capital projects spend summary F17 F18 Actual Planned Rm Rm 18 4 Tea packaging line replacements and upgrades 81 143 Biscuit line capacity and process improvements 33 26 I&J vessel dry-docks and upgrades 19 21 Woodstock processing plant replacements and upgrades 25 11 Abalone farm expansion and upgrades 28 37 Indigo distribution center upgrade 31 60 Retail store additions and refurbishments 42 14 Logistics vehicle fleet replacement 25 - Bryanston campus extension 17 - Backup power generation 319 316 546 564 Total capital expenditure
GROUP FINANCIAL RESULTS Foreign exchange hedges September 2017 to January 2018 to July 2018 to December 2017 June 2018 December 2018 % Cover % Cover % Cover 84% 65% 2% USD imports 77% 67% 4% EUR imports 76% 60% 16% EUR exports Consistent hedging philosophy provides stability to manage gross margins Better import rates give more flexibility to manage demand in constrained environment I&J export rates support sound profitability, although lower than last year
Performance and Prospects
Recommend
More recommend
