INTERIM RESULTS for the six months ended March 2016
PRESENTATION OUTLINE 1 REVIEW OF THE SIX MONTHS 2 FINANCIAL PERFORMANCE 3 TRADING PERFORMANCE 4 OUTLOOK 5 QUESTIONS 2 RHODES FOOD GROUP – INTERIM RESULTS 2016
REVIEW OF THE SIX MONTHS
TRADING ENVIRONMENT AND PERFORMANCE Strong organic growth Market share gains across key product categories Resilience of higher income consumers beneficial in current constrained spending environment Drought had limited impact on volumes and costs to date International benefited from Rand depreciation Significant investment in sales and marketing Acquisitions contributed turnover of R484 million 4 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTEGRATION OF ACQUISITIONS All FY2015 acquisitions stable and performing well FY2016 acquisitions successfully integrated – Deemster; General Mills and Alibaba Foods Initial margin dilution, especially FY2016 acquisitions Acquisitions post listing enabled entry into new product categories: – Fruit juice – Baby food – Bottled salads and pickles – Bakery products 5 RHODES FOOD GROUP – INTERIM RESULTS 2016
CAPITAL INVESTMENT Ongoing investment in production capacity and efficiency R104 million capex in H1 2016 (H1 2015: R90 million) Investment programme 2016 Capex Status Ph 2: H2 2016 Upgrading meat production facility R30m Ph 3: H1 2017 Ph 1: Complete Increasing production capacity at fruit R45m juice facility Ph 2: H2 2016 H2 2016 Increasing production capacity at pie R12m facility 6 RHODES FOOD GROUP – INTERIM RESULTS 2016
FINANCIAL PERFORMANCE
FINANCIAL PERFORMANCE Turnover +53.5% to R2.0 billion Gross profit margin +60 bps to 28.2% Normalised operating margin 30 bps lower at 9.4% Normalised profit after tax +37.6% Diluted HEPS +87.2% to 48.1 cps Normalised HEPS +36.9% to 50.1 cps Normalised metrics exclude once-off listing costs of R21.8 million in FY2015 8 RHODES FOOD GROUP – INTERIM RESULTS 2016
INCOME STATEMENT R’m March 2016 March 2015 % change Turnover 1 988 1 295 54 Cost of goods sold (1 427) (938) 52 Gross profit 561 357 57 Gross profit margin 28.2% 27.6% Other income 13 16 (19) Operating costs (386) (269) 43 Operating profit 188 104 81 Net interest paid (38) (15) 153 Profit before tax 150 89 69 Tax (40) (31) 29 Profit after tax 110 58 89 Normalised HEPS 50.1 36.6 36.9 Normalised diluted HEPS 48.1 35.1 37.0 9 RHODES FOOD GROUP – INTERIM RESULTS 2016
GROUP TURNOVER 10 RHODES FOOD GROUP – INTERIM RESULTS 2016
COMPONENTS OF TURNOVER GROWTH 1 988 +37.4% 2 000 1 800 1 600 +6.4% R'm +3.0% +6.7% 1 400 1 295 1 200 1 000 800 H1 2015 Volume Price Forex Acqui- H1 2016 sitions revenue growth increase impact revenue 11 RHODES FOOD GROUP – INTERIM RESULTS 2016
SEGMENTAL TURNOVER 12 RHODES FOOD GROUP – INTERIM RESULTS 2016
OPERATING PROFIT * Normalised operating profit and margin 13 RHODES FOOD GROUP – INTERIM RESULTS 2016
FOREIGN CURRENCY MANAGEMENT Rand depreciated 24% against trading basket of currencies in H1 2016 14 RHODES FOOD GROUP – INTERIM RESULTS 2016
WORKING CAPITAL MANAGEMENT March 2016 March 2015 Net working capital days* 115 152 Inventory 128 154 Accounts receivable 50 59 Accounts payable (58) (61) Acquisitions increased working capital by R26 million on acquisition Working capital in line with seasonality cycle and increase in trading activity * Normalised for the effect of acquisitions 15 RHODES FOOD GROUP – INTERIM RESULTS 2016
CASH MANAGEMENT 226 119 (98) (58) (65) R'm (57) (100) (123) Operating Working Net interest Dividends Loans Loans Purchase Acquisitions and cashflows capital and tax paid paid raised repaid disposal before changes of PPE working capital changes 16 RHODES FOOD GROUP – INTERIM RESULTS 2016
IMPACT OF ACQUISITIONS Company Deemster General Mills Alibaba Foods Effective date 1 Oct 2015 30 Nov 2015 1 Feb 2016 Purchase price (R’m) 25 58 42 H1 turnover (R’m) 32.5 16.7 6.3 H1 EBIT (R’m) (1.3) 0.2 (0.5) H2 2016 impact - Turnover - EBIT - Interest cost Comment Fully integrated Fully integrated Fully integrated 17 RHODES FOOD GROUP – INTERIM RESULTS 2016
FINANCIAL GUIDANCE AND TARGETS Focus on volume growth and maintaining margins in current inflationary environment Continue foreign exchange hedging strategy Capital expenditure of R150 million in H2 2016 Capacity to raise debt to fund capex Effective tax rate to be in line with corporate tax rate Committed to achieving medium-term targets – Gross profit margin over 30% – Operating margin over 10% 18 RHODES FOOD GROUP – INTERIM RESULTS 2016
TRADING PERFORMANCE
SEGMENTAL TURNOVER 20 RHODES FOOD GROUP – INTERIM RESULTS 2016
INNOVATION Rhodes branded fruit juice range Jam range upgraded Jam in cups range extended Rhodes Squish baby food range 3kg catering range launched 21 RHODES FOOD GROUP – INTERIM RESULTS 2016
INNOVATION Ongoing ready meals Value pie range innovation Snacking 22 RHODES FOOD GROUP – INTERIM RESULTS 2016
TRADING PERFORMANCE: REGIONAL R ’ m March 2016 March 2015 % change Revenue 1 488 950 56.6 Long Life 949 503 88.7 Fresh 539 447 20.5 Operating profit 119 105 13.3 Operating profit margin 8.0% 11.1% Volume growth 10%; price inflation 3%; acquisitions 44% Sustained increase in demand for canned foods Rhodes branded fruit juice sales performing well Continued strong growth in pie category Operating margin impacted by initial dilutionary impact of acquisitions and higher sales and marketing expenses, including approx R10m once-off costs 23 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS
REGIONAL: LONG LIFE FOODS Growth of 87% in sales in Sub-Saharan Africa driven by canned meat and juice products Improved brand share in Bull Brand; final phase of factory upgrade underway Strengthened sales structures, with specific attention on dedicated channel management First TV advertising campaign for Rhodes brand 25 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS – MARKET SHARE March March March March Position Market shares* (%) 2013 2014 2015 2016 Jams 35.5 38.0 39.6 43.5 2 Canned fruit 33.3 34.8 37.4 43.5 1 Canned vegetables 11.7 14.5 14.2 16.8 2 Canned meats 54.6 58.6 59.7 63.5 1 Long life fruit juice - - 9.2 13.2 2 Infant food meals - - 4.3 5.0 2 * Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail channel, in retail prices) 26 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS – BRAND SHARE March March March March Position Brand shares* (%) 2013 2014 2015 2016 Jams 14.2 16.7 18.5 24.1 2 Jam in glass 8.6 15.8 17.8 21.4 1 Canned fruit 20.4 22.4 25.7 25.5 2 Canned pineapple 48.5 49.0 57.9 57.7 1 Canned vegetables 12.3 15.1 15.5 14.5 2 Canned tomato 17.6 22.5 20.5 24.4 2 Tomato paste 19.6 32.8 30.9 31.5 1 Corned meat 37.1 38.7 41.8 48.2 1 * Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail channel, in retail prices) 27 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: FRESH FOODS 28 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: FRESH FOODS Good volume growth Outstanding performance in pie category Investment in capacity and efficiencies at pie factory General Mills and Alibaba integrated into operations Dedicated ‘out of home’ sales channel established Offer comprehensive range of bakery products 29 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTERNATIONAL SEGMENT
INTERNATIONAL: PERFORMANCE R ’ m March 2016 March 2015 % change Revenue 500 345 45.1 Operating profit 71 24 194.3 Operating profit margin 14.2% 7.0% Weaker currency significantly enhancing results, although partially offset by internal hedge and FECs Some of the benefits of the weaker Rand offset by lower foreign prices, particularly in Russia, China and South East Asia Segment includes international sales from Boland Pulp (acquired in FY2015) International managed on a 12 month cycle owing to seasonality of orders and shipping 31 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTERNATIONAL Core range of canned fruit performing well Complemented by range of industrial products ex Boland Pulp Value added fruit cups showing good growth Strong, stable customer base with long- term relationships Traditional markets such as UK currently performing better than Asian markets 32 RHODES FOOD GROUP – INTERIM RESULTS 2016
OUTLOOK
OUTLOOK Organic growth through market share gains, particularly in new categories Ongoing focus on private label ranges for retailers Maintain growth momentum in Sub-Saharan Africa Drought could impact H2 production costs and volumes Expect increased contribution from acquisitions in H2 34 RHODES FOOD GROUP – INTERIM RESULTS 2016
THANK YOU QUESTIONS
Recommend
More recommend
