Slide 1: AVI Limited presentation to shareholders & analysts
AVI Limited presentation to shareholders & analysts for the year ended 30 June 2022
Slide 2: Agenda
AGENDA Key features and results history Group financial results Performance Prospects Questions and answers
Slide 3: Key Features
KEY FEATURES Constrained macro and consumer environment Material global and local supply chain disruptions July 2021 unrest Direct costs of R38,1 million in Spitz and Snackworks SASRIA insurance recovery of R69,7 million Group revenue increased by 4,3% Gross margins protected by pricin
Slide 4: Key Features
KEY FEATURES I&J impacted by stronger Rand exchange rate and fuel price increases Strong post COVID-19 recovery in I&J’s Abalone business R15,3 million benefit from lower tax rate Headline earnings per share up 6,1% to 530,6 cents Strong cash generation despite challenges Acquisition of
Slide 5: Results History: Operating profit history
RESULTS HISTORY Operating profit history 2 800 Operating profit history 2 568 2 534 2 564 2 600 2 397 2 347 2 430 2 400 395 328 303 230 2 165 202 2 200 366 237 150 170 193 2 000 1 928 250 345 241 306 1 800 1 722 408 238 342 404 218 425 1 600 1 529 R million 1 388 388 389 1 400 198 331 410 910 815 88
Slide 6: Results History: Return on capital employed
RESULTS HISTORY Return on capital employed 8 000 35% 7 000 30% 6 000 5 000 25% R million 4 000 20% 3 000 2 000 15% 1 000 0 10% F11 F12 F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 Net operating profit after tax Average capital employed ROCE (%) Improving return despite difficult environment
Slide 7: Results History: Cash conversion
RESULTS HISTORY Cash conversion 3 500 120% 3 000 100% 2 500 80% 2 000 R million 60% 1 500 40% 1 000 20% 500 0 0% F11 F12 F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 EBITDA Cash generated by operations Cash to EBITDA (%) Sustained strong conversion of earnings to cash
Slide 8: Results History: Dividend yield
RESULTS HISTORY Dividend yield Based on share price at end of each year (R65,72 at end June 2022) Total dividend yield includes payments out of share premium and special dividends Special dividend of 280 cents per share paid in April 2021 Excludes share buy-backs
Slide 9: Results History: Returns to shareholders
RESULTS HISTORY Returns to shareholders 2 500 2 364 2 253 2 000 926 1 704 823 1 529 1 500 1 360 1 322 1 368 1 354 639 R million 1 197 550 953 967 1 000 870 789 270 621 1 430 1 368 1 354 1 438 319 1 322 1 197 500 227 1 065 953 318 231 301 810 229 263 621 562 202 166 301 373 166 229 239 263 0 116 F05
Slide 10: Group Financial Results
AN | Group Financial Results
Slide 11: Income statement
GROUP FINANCIAL RESULTS Income statement F22 F21 Rm Rm %∆ Revenue 13 845,3 13 269,2 4,3 Cost of sales (8 506,7) (8 101,2) 5,0 Gross profit 5 338,6 5 168,0 3,3 Gross profit margin % 38,6 39,0 (1,0) Selling and administrative expenses (2 798,5) (2 758,7) 1,4 Operating profit 2 540,1 2 409,3 5,4 Operat
Slide 12: Change in operating profit F22 vs F21
GROUP FINANCIAL RESULTS Change in operating profit F22 vs F21 150 131 100 95 67 72 56 50 41 34 33 36 29 26 23 16 8 - (10) (21) (50) (35) (69) (100) Entyce Beverages Snackworks I&J Personal Care Footwear & Apparel AVI Group H1 H2 FY H1 disrupted by civil unrest and supply chain challenges Resilie
Slide 13: Business unit financial results
GROUP FINANCIAL RESULTS Business unit financial results Segmental Segmental Operating Revenue Operating Profit Margin F22 F21 F22 F21 F22 F21 Δ% Δ% Rm Rm Rm Rm % % Food & Beverage brands 11 157,8 10 650,3 4,8 2 068,2 2 029,0 1,9 18,5 19,1 Entyce Beverages 3 981,6 3 777,1 5,4 880,6 872,8 0,9 22,1 23,
Slide 14: Movement in group revenue
GROUP FINANCIAL RESULTS Movement in group revenue 14 000 13 500 13 000 12 500 R million 12 000 11 500 11 000 10 500 10 000 13 269 754 (178) 13 845 F21 Price Volume F22 Price increases across the Group to recover significant input cost inflation Abalone recovery with improved pricing and demand i
Slide 15: Gross profit margin
GROUP FINANCIAL RESULTS Gross profit margin 39,2% 39,0% 38,8% Gross Profit 38,6% 38,4% 38,2% 38,0% 39,0% (0,2%) (0,4%) 0,2% 38,6% F21 Civil unrest Food & Beverage brands Fashion brands F22 Stock write-off costs of R31,6 million associated with July’s unrest Significant pressure from higher input
Slide 16: Operating profit 5,4% up
GROUP FINANCIAL RESULTS Operating profit 5,4% up 2 600 2 550 2 500 R million 2 450 2 400 2 350 2 300 2 409 8 67 (35) 23 72 (4) 2 540 F21 Entyce Snackworks I&J Personal Footwear & Other F22 Care Apparel Entyce: Recovery in Ciro and good creamer performance partly offset by lower volumes in coffee
Slide 17: Cash flow, gearing and return on capital
GROUP FINANCIAL RESULTS Cash flow, gearing and return on capital F22 F21 Rm Rm %∆ Cash generated by operations 2 999,4 3 021,0 (0,7) Cash / EBITDA % 96,9 101,8 (4,8) Working capital to revenue % 23,5 23,1 1,7 Capital expenditure (240,8) (315,7) (23,7) Acquisition of intangibles (165,3) (8,5) Special
Slide 18: Dividends
GROUP FINANCIAL RESULTS Dividends F22 F21 Rm Rm %∆ Interim dividend – cps 170,0 160,0 6,3 Final dividend - cps 292,0 275,0 6,2 Ordinary dividend – cps 462,0 435,0 6,2 Dividend yield - %* 7,0 6,1 Special dividend – cps - 280,0 Total dividend - cps 462,0 715,0 (35,4) Total dividend yield - %* 7,0 10,1
Slide 19: Performance
j ICE BEVERAGES A DIVISION OF NATIONAL BRANDS LIMITED SS" Go wey mnco mgm A G2 SGT) win Performance
Slide 20: Entyce Beverages income statement: tea
Income statement F22 F21 %∆ Rm Rm Revenue 3 981,6 3 777,1 5,4 Operating profit 880,6 872,8 0,9 Operating profit margin % 22,1 23,1 (4,3) Tea profit slightly lower Rooibos volume growth from lower selling prices supported by reduced raw material costs Black tea growth from higher selling prices
Slide 21: Entyce Beverages income statement: coffee
Income statement Income statement F22 F21 %∆ Rm Rm Revenue 3 981,6 3 777,1 5,4 Operating profit 880,6 872,8 0,9 Operating profit margin % 22,1 23,1 (4,3) Coffee profit growth due to Ciro out-of-home recovery Selling price increases in response to commodity input cost pressures Pressure on mix
Slide 22: Entyce Beverages income statement: creamer
Income statement Income statement F22 F21 %∆ Rm Rm Revenue 3 981,6 3 777,1 5,4 Operating profit 880,6 872,8 0,9 Operating profit margin % 22,1 23,1 (4,3) Creamer profit improvement due to increased selling prices supported by higher volumes Effective upgrade of packaging and formats Volume gr
Slide 23: Sales volume and selling prices
Sales volume and selling prices %Δ Comments F22 vs F21 Tea revenue decline (0,4) Volume 2,3 Growth in both black tea and Rooibos volumes Ave. selling price (2,6) Lower Rooibos pricing in line with cheaper raw materials offset by higher black tea selling prices Coffee revenue decline (2,4) Volume (13
Slide 24: Market shares – 12 months value
Market shares – 12 months value 70,0% 60,0% 57,6% 54,5% 50,0% 40,8% 40,0% 38,3% 29,8% 30,7% 30,0% 20,0% 17,7% 15,2% 15,3% 14,6% 10,0% 0,0% Five Roses Freshpak Frisco Ellis Brown Trinco F21 F22 Short term market shares reflect targeted price / volume balance Market share reflects formal retail on
Slide 25: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (F22 vs F21): 70 65 60 50 40 30 R million 20 17 14 12 10 5 - (10) (20) (30) (23) Palm oil Casein Robusta / chicory Glucose Arabica Tea Impact net of hedging
Slide 26: Snackworks Performance
Snackworks That’s Good Times! & Willord* er, BPE MAZE CIPS ee
Slide 27: Snackworks income statement: biscuits
Income statement F22 F21 %∆ Rm Rm Revenue 4 702,4 4 267,8 10,2 Operating profit 881,4 814,6 8,2 Operating profit margin % 18,7 19,1 (2,1) Growth in biscuit profit due to increased volumes and higher selling prices Resilient demand supported by strong festive season, improved lunchbox and on-the-
Slide 28: Snackworks income statement: snacks
Income statement F22 F21 %∆ Rm Rm Revenue 4 702,4 4 267,8 10,2 Operating profit 881,4 814,6 8,2 Operating profit margin % 18,7 19,1 (2,1) Snacks profit impacted by input cost pressures not fully recovered by price increases Materially higher distribution inflation caused by higher fuel prices
Slide 29: Sales volume and selling prices
Sales volume and selling prices %Δ Comments F22 vs F21 Biscuits revenue growth 9,9 Volume 3,0 Strong festive season, improved lunchbox and on-the-go volumes and demand for lower priced formats Ave. selling prices 6,7 Price increases in April 2021 and March 2022 Snacks revenue growth 11,1 Volume 2,7
Slide 30: Market shares – 12 months value
Market shares – 12 months value 45,0% 40,3% 39,4% 40,0% 35,0% 30,0% 25,0% 20,0% 17,7% 18,1% 14,4% 14,4% 15,0% 10,0% 5,0% 0,0% Bakers (Sweet) Bakers (Savoury) Willards F21 F22 Balanced price / volume Market share reflects formal retail only Good growth of affordable formats in wholesale Growt
Slide 31: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (F22 vs F21): 100 90 90 80 70 60 R million 50 40 30 20 13 10 7 6 4 3 0 Palm oil Flour Sugar Maize Butter Potatoes Impact net of hedging
Slide 32: Performance
Performance
Slide 33: I&J income statement
Income statement F22 F21 %∆ Rm Rm Revenue 2 473,8 2 605,4 (5,1) Operating profit 306,2 341,6 (10,4) Operating profit margin % 12,4 13,1 (5,3) Profit decline driven by lower fishing performance offset by abalone recovery Fishing performance Reduction in FRAP quota and total allowable catch Re
Slide 34: I&J operating profit
Operating profit 500 450 400 350 300 R million 250 200 150 100 50 - 342 125 (29) (67) (40) (25) 306 F21 Abalone Forex Fuel Catch rate Costs / other F22 Abalone growth primarily supported by selling prices and improved mix Stronger Rand negatively impacted export revenue despite hedges Fishing
Slide 35: I&J profit history
Profit history 479 480 453 450 62 389 73 52 380 67 98 345 72 71 350 347 305 280 69 309 300 255 123 255 R million 19 24 0 248 53 180 236 178 182 80 (20) (2) F15 F16 F17 F18 F19 F20 F21 F22 Fishing Abalone Simplot Robust recovery of abalone post COVID-19 impact in the prior two years F22 fishing p
Slide 36: Fishing performance
Fishing performance 12,0 10,2 10,1 9,9 10,0 9,5 9,4 9,2 9,0 8,5 8,3 8,1 8,0 Hake tons per sea day 6,0 4,0 2,0 0,0 F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 I&J catch rate Decline due to wet and freezer vessel catch rates partially offset by better utilisation of fleet
Slide 37: Sales volume and selling prices (Hake)
Sales volume and selling prices (Hake) %Δ Comments F22 vs F21 I&J Domestic revenue growth 4,8 Volume (1,9) Reduced TAC and quota; decrease in whole fish volumes with lower 3rd party landings Ave. selling prices 6,9 Favourable mix and price increases to mitigate cost pressure I&J Export revenue decli
Slide 38: Performance
bd ~ YARQLEY LenTHemc SOTY Rimmer fh nailene. SalyHansen
Slide 39: Personal Care income statement
Income statement F22 F21 %∆ Rm Rm Revenue 1 176,5 1 152,9 2,0 Operating profit 193,4 170,4 13,5 Operating profit margin % 16,4 14,8 10,8 Indigo profit growth driven by improved revenue and cost savings Improved demand through second semester as lockdown restrictions eased Colour cosmetics and
Slide 40: Sales volume and selling prices
Sales volume and selling prices %Δ Comments F22 vs F21 Personal Care revenue growth* 3,1 Volume (3,9) Improved demand in H2, better colour cosmetic and fragrance volumes, lower aerosol in constrained and competitive environment Ave. selling price 7,0 Price increases in response to cost pressure * Ex
Slide 41: Market shares – 12 months value
Market shares – 12 months value 34,0% 32,1% 32,0% 31,0% 30,9% 30,9% 30,0% 28,0% 26,0% 24,0% 22,0% 20,0% Body sprays - Female * Body sprays - Male * F21 F22 * Excludes Coty Balanced price / volume in constrained environment Good performance from Yardley and Lentheric male brands
Slide 42: Footwear and Apparel Performance
FOOTWEAR AND APPAREL Performance
Slide 43: Footwear and Apparel income statement
F O O T W E A R A N D A P PA R E L Income statement F22 F21 %∆ Rm Rm Revenue 1 511,0 1 466,0 3,1 Operating profit 302,5 230,4 31,3 Operating profit margin % 20,0 15,7 27,4 Operating profit growth with higher selling prices, effective cost management and insurance recoveries notwithstanding disrupt
Slide 44: Business unit financial results
F O O T W E A R A N D A P PA R E L Business unit financial results Segmental Segmental Operating Revenue Operating Profit Margin F22 F21 Δ F22 F21 Δ F22 F21 Rm Rm % Rm Rm % % % Footwear & Apparel 1 511,0 1 466,0 3,1 302,5 230,4 31,3 20,0 15,7 Spitz, Kurt Geiger and Gant 1 359,8 1 308,8 3,9 300,3 253
Slide 45: Sales volume and selling prices
F O O T W E A R A N D A P PA R E L Sales volume and selling prices Sales volume and selling %Δ prices F22 vs F21 Comments Spitz and Kurt Geiger Footwear revenue 2,2 growth Volume (7,8) Volume decline due to July unrest, constrained consumer environment and supply challenges Ave. selling price 10,9
Slide 46: International Performance
AN | International Performance
Slide 47: AVI International operating profit history
AVI INTERNATIONAL Operating profit history 300 271 273 253 250 213 194 197 200 189 159 R million 150 129 132 103 100 92 50 - F11 F12 F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 Profit growth from main subsidiary markets Shipping delays and supply chain constraints negatively impacted distributor mar
Slide 48: Non RSA sales
AVI INTERNATIONAL Entyce, Snackworks and Indigo – Non RSA sales F22 F21 %∆ Rm Rm International Revenue 1 219,7 1 185,4 2,9 % of Grocery and Personal Care brands 12,4 12,9 (3,9) International Operating Profit 273,0 271,1 0,7 % of Grocery and Personal Care brands 14,0 14,6 (4,1) % % International Oper
Slide 49: F23 Prospects
AN | F23 Prospects
Slide 50: Prospects for F23
AVI GROUP Prospects for F23 Protect Entyce and Snackworks margins in a tough environment Demand pressure from constrained consumers exacerbated by high inflation Tactile price / volume management essential to protect market shares and long-term profitability Cost / margin pressure if commodi
Slide 51: Prospects for F23
AVI GROUP Prospects for F23 Protect Entyce and Snackworks margins in a tough environment Raw material and exchange rates secured provide protection and certainty for H1 Ongoing innovation to support constrained demand environment Continued project activity to improve efficiency and capacity
Slide 52: Prospects for F23
AVI GROUP Prospects for F23 I&J performance dependent on exchange rates, catch rates and fuel prices Price optimisation in domestic and international markets Quota volume loss of 4,4% following conclusion of long-term fishing rights application Exchange rates hedged at better levels than F22
Slide 53: Prospects for F23
AVI GROUP Prospects for F23 Footwear and Apparel Risk of cost / margin pressure if recent Rand weakness persists Hedge position provides a degree of certainty for H1 Earlier buy-in to alleviate supply chain risks and improve stock availability for December trading Improved seasonal availab
Slide 54: Prospects for F23: capital projects
AVI GROUP Prospects for F23 Capital investment projects to improve capability, product quality and customer service levels Approved & Planned Projects Rm Creamer capacity increase – packaging automation 78 Biscuit line capacity and process improvements 44 Snack line replacements and upgrades 43 I&
Slide 55: Investor proposition
AVI GROUP Investor proposition Ongoing review and simplification of business model to accommodate a challenging macro environment Focus on relevant innovation for constrained consumers Group initiatives – margin management, procurement, cost savings and production efficiency Manage our uniqu
Slide 56: Questions
AV | GROWING GREAT BRANDS Questions
Slide 57: Revenue 4,3% up
INFORMATION SLIDES Revenue 4,3% up 14 000 13 800 13 600 R million 13 400 13 200 13 000 12 800 13 269 204 435 (132) 24 45 13 845 F21 Entyce Snackworks I&J Personal Footwear & F22 Care Apparel Entyce: Growth due to creamer and Ciro, offset by declines in coffee and tea Snackworks: Selling price in
Slide 58: Gross profit 3,3% up
INFORMATION SLIDES Gross profit 3,3% up 5 400 5 350 5 300 5 250 R million 5 200 5 150 5 100 5 050 5 168 34 115 (36) 16 42 5 339 F21 Entyce Snackworks I&J Personal Footwear & F22 Care Apparel Entyce: Revenue growth partly offset by margin pressure with higher commodity input costs not fully recover
Slide 59: Key restructuring projects
INFORMATION SLIDES Key restructuring projects F22 F21 Realised Net Net Savings Savings Rm Rm Ciro 5,3 28,1 Abalone 5,8 13,2 Personal Care - 6,6 Footwear & Apparel - 19,0 11,1 66,9 Year-on-year impact of restructuring activities undertaken last year Abalone benefit from improved efficiency and re
Slide 60: Civil unrest – direct costs and insurance proceeds
INFORMATION SLIDES Civil unrest – direct costs incurred and insurance proceeds recognised F22 Rm Cost of sales - stock written off (31,6) Gross profit (31,6) Selling and administrative expenses including other income SASRIA insurance proceeds 66,7 Store restoration and other costs (4,6) Operating pr
Slide 61: Marketing expenditure
INFORMATION SLIDES Marketing expenditure 14,0% 12,3% 12,7% 12,0% 10,0% 8,3% % of Revenue 8,0% 8,0% 7,0% 6,9% 6,6% 6,6% 6,0% 5,9% 6,2% 6,2% 6,0% 4,5% 4,3% 4,0% 2,0% 1,4% 1,5% 0,0% * Excludes Coty F21 F22 Total expenditure for F22 of R732,3 million compared to R677,9 million in F21 Increased spend
Slide 62: Capital expenditure and depreciation
INFORMATION SLIDES Capital expenditure and depreciation (excluding depreciation on right-of-use assets) 1 000 900 882 800 700 600 R million 500 546 400 473 394 420 408 411 388 377 388 388 300 347 316 200 241 100 - F16 F17 F18 F19 F20 F21 F22 Capital expenditure Depreciation charge Focused investme
Slide 63: Cash flows
INFORMATION SLIDES Cash flows 3 500 3 000 2 500 2 000 R million 1 500 1 000 500 - 3 127 (126) (648) (241) (165) (158) (111) (205) (1 473) Cash from Working Taxation Capital Acquisition of Lease Net interest Decrease in Ordinary operations capital and expenditure intangibles liabilities paid paid net
Slide 64: Foreign exchange hedges
INFORMATION SLIDES Foreign exchange hedges September 2022 to January 2023 to July 2023 to December 2022 June 2023 December 2023 % Cover % Cover % Cover USD imports 68% 11% 0% EUR imports 77% 27% 0% USD exports 56% 65% 37% EUR exports 63% 50% 28% Consistent hedging philosophy provides stability to
Slide 65: I&J period end fair value adjustments
INFORMATION SLIDES I&J period end fair value adjustments F22 F21 Actual Actual ∆ Rm Rm Rm Fuel hedge unrealised loss / (gain) 5,2 (15,6) 20,8 Opening mark-to-market asset / (liability) 5,0 (10,6) Closing mark-to-market (liability) / asset (0,2) 5,0 Abalone – increase in unrealised profit in stock (2
Slide 66: I&J fishing quota
INFORMATION SLIDES I&J fishing quota CY16 CY17 CY18 CY19 CY20 CY21 CY22 Quota (tons) South African Total Allowable Catch (TAC) 147 500 140 216 133 120 146 430 146 430 139 119 132 163 % change in TAC - (5,0) (5,0) 10,0 - (5,0) (5,0) I&J 41 245 37 901 36 013 39 517 39 517 37 543 34 143 % 28,0 27,1 27,
Slide 67: Trading space and trading density: Spitz
INFORMATION SLIDES Trading space and trading density Spitz F22 F21 Number of stores 69 72 Turnover (Rm) 1 102,4 1 079,4 Average m2 18 681 19 034 Trading Density (R /m2) 59 013 56 711 Closing m2 18 394 18 956 Like-for-like metrics* F22 F21 Number of stores 67 67 Turnover (Rm) 1 067,4 1 033,9 Average
Slide 68: Trading density – Spitz stores
INFORMATION SLIDES Trading density – Spitz stores Closed four Spitz stores and opened one new store
Slide 69: Trading space and trading density: Kurt Geiger
INFORMATION SLIDES Trading space and trading density Kurt Geiger F22 F21 Number of stores 31 34 Turnover (Rm) 187,0 174,3 Average m2 4 222 4 219 Trading Density (R /m2) 44 295 41 321 Closing m2 3 934 4 287 Like-for-like metrics* F22 F21 Number of stores 30 30 Turnover (Rm) 172,9 160,8 Average and cl
Slide 70: Trading density – Kurt Geiger stores
INFORMATION SLIDES Trading density – Kurt Geiger stores Closed three Kurt Geiger stores
Slide 71: Trading space and trading density: Green Cross
INFORMATION SLIDES Trading space and trading density Green Cross F22 F21 Number of stores # 18 22 Turnover (Rm) 102,7 103,5 Average m2 2 494 3 450 Trading Density (R /m2) 41 196 30 000 Closing m2 2 326 2 745 Like-for-like metrics* F22 F21 Number of stores # 18 18 Turnover (Rm) 98,4 76,3 Average and
Slide 72: Closing number of stores and trading space
INFORMATION SLIDES Closing number of stores and trading space at the end of each period Period Spitz Kurt Geiger Green Cross End # of stores Closing m² # of stores Closing m² # of stores Closing m² December 2009 56 15 220 3 346 June 2010 56 15 012 3 346 December 2010 57 15 124 7 1 047 June 2011 57 1
Slide 73: Growing Great Brands
GROWING GREAT BRANDS • .....af.- � freshp