INTERIM RESULTS For the six months ended 31 March 2019
PRESENTATION OUTLINE REVIEW OF THE SIX MONTHS 1 FINANCIAL PERFORMANCE 2 3 TRADING PERFORMANCE 4 NEW PRODUCTS CAPITAL INVESTMENT PROGRAMME 5 6 OUTLOOK
REVIEW OF THE SIX MONTHS
REVIEW OF THE SIX MONTHS Improving performance with turnover +9.3%; operating profit +6.0% and diluted HEPS +2.2% Strong regional volume growth in low inflationary environment Continued market share gains across core product categories Regional segment impacted by once-off costs of approx R14 million relating to relocation of pulps and purees plant to Groot Drakenstein International posted a small profit for H1 Major two-year capital investment programme completed
FINANCIAL PERFORMANCE
FINANCIAL PERFORMANCE Turnover +9.3% to R2.7 billion Regional +8.8% International +12.3% Gross profit margin 25.0% (2018: 25.3%) Impact of approx R23 million from lower international selling prices due to drought related quality issues Costs of approx R14 million from relocation of pulps and purees plant Margin pressure due to low levels of inflation Benefit of approx R22 million from 10.5% weakening in currency Operating cost growth contained to 5.2%
FINANCIAL PERFORMANCE Operating profit +6.0% and operating margin 6.3% (2018: 6.5%) Margin impacted by factors which diluted gross profit margin EBITDA +7.2% and EBITDA margin 9.1% (2018: 9.3%) Net interest payments 12.1% higher at R58 million Increased capital expenditure programme over last two years Diluted headline earnings per share +2.2% to 32.1 cps
INCOME STATEMENT R’m H1 2019 H1 2018 % change Turnover 2 741 2 507 9.3 Cost of goods sold (2 056) (1 874) 9.7 Gross profit 685 633 8.1 Gross profit margin 25.0% 25.3% Other income 21 36 (41.8) Operating costs (533) (507) 5.2 Operating profit 173 162 6.0 Impairment (3) - Net interest paid (58) (52) 12.1 Profit before tax 112 110 0.6 Tax (31) (30) 4.5 Profit after tax 80 80 (0.8) Diluted HEPS (c) 32.1c 31.4c 2.2 WAN shares in issue (‘m) 261.6 252.6 3.6
GROUP TURNOVER GROWTH 2 741 2 507 2 151 1 988 R'm 1 295 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019
DRIVERS OF TURNOVER GROWTH 3,000 2 741 +1.8% +1.3% +6.2% 2 507 2,500 R'm 2,000 1,500 H1 2018 Volume Price Forex H1 2019 revenue growth increase impact revenue
SEGMENTAL TURNOVER 861 845 689 539 1 419 R'm 447 1 251 949 1 066 503 500 461 396 411 345 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 International Regional - Long Life Regional - Fresh
OPERATING PROFIT 250 30.0% 208 25.0% 200 186 173 162 20.0% 150 126 15.0% 100 10.0% R'm 9.7% 9.7% 9.4% 50 5.0% 6.5% 6.3% - 0.0% H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 Operating profit Operating profit margin
INTERNATIONAL REVENUE BY CURRENCY ZAR 0% AUD 10% (2018: 2%) (2018: 18%) CAD 6% (2018: 3%) GBP 13% (2018: 13%) USD 57% (2018: 53%) EUR 14% (2018: 11%)
BALANCE SHEET - ASSETS R’m H1 2019 H1 2018 % change Non-current assets 2 514 2 334 7.7 Property, plant & equipment 1 820 1 659 9.7 Intangible assets & goodwill 668 647 3.2 Other non-current assets 26 28 (7.0) Current assets 2 395 2 260 6.0 Inventory 1 369 1 394 (1.7) Accounts receivable 978 779 25.5 Other current assets 35 70 (49.4) Bank balance & cash on hand 13 17 (21.7) Total assets 4 909 4 594 6.9
BALANCE SHEET – EQUITIES AND LIABILITIES R’m H1 2019 H1 2018 % change Capital and reserves 2 345 2 240 4.7 Non-current liabilities 1 097 847 29.5 Long-term loans 865 651 32.9 Other non-current liabilities 18.3 232 196 Current liabilities 1 467 1 507 (2.6) Accounts payable & accruals 878 738 19.0 Current portion of long-term loans 241 237 1.8 Other current liabilities 61 51 20.8 Bank overdraft 287 481 (40.3) Total equity and liabilities 4 909 4 594 6.9
WORKING CAPITAL MANAGEMENT H1 2019 H1 2018 Net working capital days 129 139 121 Inventory days 137 Debtor days 57 51 Creditor days (49) (49) Increase in net working capital contained to 2.4% Inventory levels 1.7% lower Ongoing focus on working capital efficiency
NET WORKING CAPITAL MOVEMENT 168 1,700 141 1 469 1,500 1 435 (177) 1 337 37 31 1,300 (166) 1,100 R'm 900 700 500 H1 2018 Inventory Debtors Creditors FY2018 Inventory Debtors Creditors H1 2019
CASH MANAGEMENT 300 248 100 (132) (38) (53) 4 R'm -100 (120) (159) -300 Operating Net Net Dividends Loans Other Purchase cashflows working interest paid repaid of PPE capital and tax and changes paid * intangibles * Net of income tax refunds received during the period of R35m
DEBT PROFILE 1 106 Existing long-term debt 980 754 R'm 188 104 62 22 2 H1 2019 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Planning to convert portion of overdraft to long-term debt by end FY2019 Bullet repayments of R450m payable by end FY2021 Bank facilities H1 2019 H1 2018 Working capital facilities: R950m with interest rates varying Net debt R’m 1 380 1 352 between prime and prime minus 1.5% Net debt to equity % 58.9 60.4 Revolving long-term debt facilities: R1.3bn with interest rates varying Net debt to EBITDA x 5.52 5.80 between prime minus 1.25% and 1.55%
TRADING PERFORMANCE
REVENUE CONTRIBUTION 17% (2018: 16%) 52% (2018: 50%) 31% (2018: 34%) Long Life Foods Fresh Foods International
TRADING PERFORMANCE: REGIONAL R’m H1 2019 H1 2018 % change Revenue 2 096 8.8 2 280 Long Life 1 251 13.4 1 419 Fresh 845 1.9 861 Gross profit margin 27.5% 26.9% Operating profit 164 2.8 169 Operating profit margin 7.8% 7.4% Components of turnover growth Volume growth 7.3% Price/mix 1.5% Operating margin diluted by once-off costs
TRADING PERFORMANCE: REGIONAL Strong volume growth of 9.2% in Long Life Foods Good growth in fruit juice , especially under the Rhodes brand in wholesale and out-of-home channels Dry foods continues to perform well Good recovery in canned vegetables , particularly in baked beans which are now being produced in the new plant Strong performance from canned meat Fresh Foods volumes flat year-on-year Ready meals and pie category still resilient in tough economic times Ma Baker settled
TRADING PERFORMANCE: REGIONAL Trading in sub-Saharan African markets remains challenging Sales account for 10.2% of regional long life category Electricity load shedding disruptive in H1 but most facilities are fully backed-up by diesel generators Acquisition of protein snack foods business from RCL completed and integrated into Western Cape ready meals facility
MARKET SHARE (RFG as manufacturer) March March March Position Market shares* (%) 2017 2018 2019 Jams 48 48 49 1 Canned fruit 46 46 49 1 Canned vegetables 19 16 17 2 Canned meats & meals 66 76 80 1 Long life fruit juices 17 22 22 2 Salads and pickles 21 30 30 1 Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined retail channel, in retail prices)
BRAND SHARE March March March Position Brand shares (%) Brand 2017 2018 2019 Jams 27 29 29 2 Canned fruit 26 26 30 1 Canned pineapple 55 54 61 1 Canned vegetable 16 13 14 2 Canned tomato 29 31 27 1 Corned meat 50 59 61 1 Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined retail channel, in retail prices)
BRAND SHARE March March March Position Brand shares (%) Brand 2017 2018 2019 100% fruit juice 10 16 16 2 Infant meals 6 8 10 2 Salads and pickles 13 15 15 3 Dry gravy - 31 28 2 Moving annual total. Retailers scanning data processed by IRI Worldwide (market shares in the defined retail channel, in retail prices)
TRADING PERFORMANCE: INTERNATIONAL R’m H1 2019 H1 2018 % change Revenue 411 12.3 461 Gross profit margin 16.8% 17.3% Operating profit/(loss) (1) 4 Operating profit margin (0.5%) 0.8% Components of turnover growth Volumes 2.7% Price/mix (0.9)% Forex 10.5% R23m impact from lower selling prices due to quality of canned fruit Tailwind of approx R22m from weakening currency
TRADING PERFORMANCE: INTERNATIONAL Deciduous fruit production season (canned fruit, pulps and purees) recently completed and early indications of improved fruit quality Market for industrial products (purees and concentrates) has remained weak but margins improved through cheaper inputs Early signs of recovery in industrial market , with increasing demand Approx 50% of industrial product output now used internally Good growth in fruit snacks in plastic cups to USA
NEW PRODUCTS
NEW PRODUCTS: OWN BRANDS Bisto instant gravy range launched Rhodes Hinds flavoured custard powder Bull Brand flavoured seasoning
NEW PRODUCTS: PRIVATE LABEL
NEW PRODUCTS: PRIVATE LABEL Plant powered protein range (chilled and frozen)
CAPITAL INVESTMENT
CAPITAL INVESTMENT 487 480 R'm 80 H2 planned 238 176 129 H1 spend FY2015 FY2016 FY2017 FY2018 FY2019
Recommend
More recommend
