Premier Foods Plc · LSE:PFD
Premier Foods — Q2 2023 Earnings Presentation
38 slides from Premier Foods's earnings presentation, Nov 16, 2022
Slide 1: Half Year Results for 26 Weeks Ended 1 October 2022
HALF YEAR RESULTS FOR 26 WEEKS ENDED 1 OCTOBER 2022 16 NOVEMBER 2022
Slide 2: Alex Whitehouse, CEO
ALEX WHITEHOUSE CEO
Slide 3: Strong revenue and profit growth in challenging environment
Compelling consumer proposition delivered strong revenue and profit growth in challenging environment Revenue1 Branded revenue1 Trading profit2 Adjusted PBT Net debt/EBITDA Performance +6.2% +3.9% H1 H1 +6.2% 0.1x compared to last +6.4% +3.6% Margins in line +11.9% lower than year with prior year pr
Slide 4: Continued progress against our strategic priorities through H1
Continued progress against our strategic priorities through H1 1 2 3 4 5 Infrastructure Inorganic Grow the UK core Category expansion International investment opportunities +5.0% +11%1 3yr average UK Branded Investing in Revenue more International Completed The Spice revenue growth automation & effi
Slide 5: Duncan Leggett, CFO
DUNCAN LEGGETT CFO
Slide 6: Group headline results
Group headline results – strong revenue and profit growth with margins maintained £m FY22/23 H1 Change vs PY Comments Branded revenue 359 3.9% Branded growth model benefits and pricing Non-branded revenue 60 22.8% Pricing, contract wins, and recovery of B2B volumes post pandemic Total revenue 419 6.
Slide 7: Broad based sales and profit growth and resilient Divisional contribution
With broad based sales and profit growth and resilient Divisional contribution £m FY22/23 H1 Change vs PY Comments Grocery Branded revenue 256 4.6% Strong growth from cooking sauce brands, Batchelors and Nissin. Includes pricing Non-branded revenue 47 19.5% Pricing on existing contracts and higher v
Slide 8: Adjusted eps growth reflects stronger trading and lower interest costs
Adjusted eps growth reflects stronger trading and lower interest costs £m FY22/23 H1 Change vs PY Comments Trading profit 57 6.2% Strong trading performance and resilience of branded growth model Net regular interest (10) 14.7% 275bps saving on new Fixed Rate Notes partly offset by higher SONIA on R
Slide 9: H1 Net debt in line with expectations, full year guidance unchanged
H1 Net debt in line with expectations, full year guidance unchanged Net debt 1.7x 1.7x 2.0x 2.1x /EBITDA 345 350 44 338 £m 3 294 300 69 13 285 21 10 6 250 25 200 150 Net debt EBITDA Working Capex Interest Pensions Dividends Restructuring Cash flow pre M&A Net debt Net debt FY21/22 capital / Other &
Slide 10: A reminder of our financial resilience
A reminder of our financial resilience Leverage to be well below 2.0x by year end even after M&A Leverage Substantially fixed interest cost Forex Instrument Bond RCF 1.5x Medium-term target Quantum £330m £175m 1.7x Coupon/margin 3.5% 2.5% + SONIA £€$ FY21/22 Tenor October 2026 May 2025+1yr ▪ Strong
Slide 11: Pensions update
Pensions update Continued pensions progress 552 427 2022 ▪ Prospect of pathway to full buyout in medium term unchanged £m Actuarial valuation ▪ RHM section now approaching buyout valuation level Due early 2023 ▪ RHM section likely to continue with investment 2019 2021 strategy to generate surplus on
Slide 12: Guidance
Guidance FY22/23 guidance £m • Working capital investment reflects higher value of stock holding Working capital Outflow • Low to mid-single digit £m cash tax payable from FY23/24 Depreciation (including software amortisation) c.£25m due to tax legislation changes on brought forward losses • Origina
Slide 13: Alex Whitehouse, CEO
Shar voods STIR FRY SAUCE J Sharwoods
Slide 14: A reminder of our growth strategy and purpose
A reminder of our growth strategy and purpose 1 2 3 4 5 Continue Supply chain Expand UK into Build International Inorganic to grow the UK core investment new categories businesses with opportunities critical mass A solid and growing UK Invest in operational Build sustainable Utilise brand building L
Slide 15: A year on from our ESG strategy launch
A year on from our ESG strategy launch and we’ve made great progress PRODUCT PLANET PEOPLE • Exciting range of ‘Deliciously • Submitted our GHG Good’ non-HFSS Mr Kipling • Mental health awareness emissions targets to SBTi training completed by cakes now in market and coalition for validation 93% of
Slide 16: Our Branded growth model is at the core of what we do
1 Our Branded growth model is at the core of what we do 1 Leading brand positions 2 Insight driven new products • Our brands are leaders in their categories • Launch new products linked to key consumer trends • High household penetration • Major focus on health & nutrition 3 Sustained marketing inve
Slide 17: The Branded Growth Model in the UK delivers consistent top line growth
1 The Branded Growth Model in the UK delivers consistent top line growth UK Branded Revenue H1 progression UK Branded Revenue 3yr CAGR £m Pandemic elevated 350 volumes ▪ Consistent branded revenue 5.0% progression over last 4 years driven 300 by success of growth model ▪ Peak in FY20/21 due to eleva
Slide 18: Majority of brands increasing share and strong distribution gains
1 Majority of brands increasing share and strong weighted distribution gains Market share1 Weighted average distribution points YoY1 269 ▪ Majority of brands gaining share ▪ Resilient market share at a total level Grocery Improving ▪ Grocery share growth with particularly trend 113 strong gains from
Slide 19: Product innovation & investment delivering branded revenue growth
1 Product innovation & investment delivering branded revenue growth Insight driven new products Brand investment Six major brands on TV this year Sweet Treats Grocery ▪ Homepride no added sugar pasta bakes provide ▪ Mr Kipling Deliciously Good range, initially excellent value for families 7 product
Slide 20: Successfully navigating macro and industry-wide challenges
1 Successfully navigating macro and industry-wide challenges Effective mitigation of input cost inflation Consumer behaviour: A highly relevant proposition ▪ Inflation seen so far covered by cost savings and price increases already implemented ▪ We are seeing further inflation in H2 ▪ We will contin
Slide 21: Investing in our infrastructure to drive growth and efficiency
2 Investing in our infrastructure to drive growth and efficiency Capital investment fuels branded growth Investment examples Stoke Carlton Cash Capital generation investment Gross Branded margin growth accretion ▪ Mr Kipling Fondant Fancies auto ▪ Auto case packer at end of packing palletiser Brand
Slide 22: New category launches sales doubled and gaining share
3 New category launches sales doubled and gaining share in their markets Oxo Rubs & Marinades Ice-cream Porridge +16% No. 2 11% 4.6/5.0 ▪ Rubs & Marinades performed well especially in warmer months, +167% in H1 Market share in ▪ Range expanded with new variants in 2nd largest branded Market share in
Slide 23: International sales up 11% with progress in all markets
4 International sales up +11%1 with progress in all markets Australia Ireland Europe USA Canada +30% Sales growth +80% Growth drivers ▪ Sharwood’s healthier ▪ Record branded share ▪ Sharwood’s focus ▪ Soba noodles +80% ranges innovation for cake in Australia markets include ▪ Strong major retailer p
Slide 24: The Spice Tailor opportunity – First acquisition in 15 years
5 The Spice Tailor opportunity – First acquisition in 15 years 1 +20% 1 2 3 4 Highly 5 Closely aligned to High growth brand Strong complementary to Great opportunity consumer trends, 20% Revenue CAGR geographical fit Sharwood’s & Loyd for further growth Foodie, Convenience Grossman 1 – Revenue compo
Slide 25: Applying our branded growth model to The Spice Tailor
5 We will apply our branded growth model to accelerate growth of The Spice Tailor Applying the Branded Growth Model Key benefits 1 • An on trend brand in Ethnic Foods • Strong potential to deliver Leading brands demonstrating high growth significant growth in both potential revenue and profit expans
Slide 26: Strong innovation and investment planned for H2
Strong innovation and investment planned for H2 Brand investment New product development TV and digital activation Sweet Treats Grocery ▪ Mr Kipling & Cadbury sharing treats ▪ New Plantastic cooking sauces and snack pots ▪ Expanding Plantastic range to include plant-based ranges Millionaire Flapjack
Slide 27: Our strategy is delivering and our outlook is unchanged
Our consumer proposition and strategy are delivering for us and our outlook is unchanged +5.0% 1.5x Revenue Leverage target Profit +3.5% FY22/23 £ Strong H1 Fixed Notes Expectations €$ performance in Navigating due Oct 2026 on track tough Growth strategy inflationary Financial environment delivering
Slide 28: Angel Slices
mn 6 ANGEL SLICES =
Slide 29: Appendix
APPENDIX
Slide 30: Cautionary statement
Cautionary statement This presentation may contain "forward-looking statements" that are based on estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements are all statements other than statements of historical fact or statements in the present tense, and can b
Slide 31: Definitions
Definitions ▪ The period ‘FY22/23 H1’ refers to the 26 weeks ended 1 October 2022, unless where otherwise stated. The period ‘FY21/22 H1’ refers to the 26 weeks ended 2 October 2021, unless otherwise stated. ▪ The period ‘Q2’ refers to the thirteen weeks ended 1 October 2022, unless where otherwise
Slide 32: Our ESG strategy, the 'Enriching Life Plan'
Our ESG strategy, the ‘Enriching Life Plan’ Major, ambitious, targets introduced in 2021 Pillar PRODUCT PLANET PEOPLE GREAT TASTING NUTRITIOUS AND CONTRIBUTING TO A HEALTHIER NOURISHING THE LIVES OF OUR SUSTAINABLE FOOD PLANET COLLEAGUES AND COMMUNITIES Our ambitions • Healthier Nutrition • Taking a
Slide 33: Capital allocation to evolve over medium-term
Capital allocation to evolve over medium-term Context A cash generative business with leading sector margins, progressive marketing investment and lower interest costs Today Medium-term 1 1 • Current contributions expected to reduce over time as • Investment programmes focused on cost Pensions RHM s
Slide 34: Non-branded
Non-branded Non-branded revenue by type Key principles & criteria • Retention of branded IP Knighton B2B & flour • Application of a Capex light approach • Strict financial hurdles apply for new business • Assists in supporting Manufacturing overhead recoveries 20% 24% FY22/23 H1 commentary • FY22/23
Slide 35: Quarter 2 sales
Quarter 2 sales Quarter 2 (excluding The Spice Tailor) Quarter 2 (including The Spice Tailor) £m FY22/23 Change vs 1 year ago FY22/23 Change vs 1 year ago Grocery Branded revenue 137 +4.6% 138 +5.6% Non-branded revenue 25 +21.8% 25 +21.8% Total revenue 161 +6.9% 163 +7.8% Sweet Treats Branded revenu
Slide 36: Interest and taxation
Interest and taxation £m FY22/23 H1 FY21/22 H1 Change Senior secured notes interest 6 8 2 Interest Bank debt interest 3 2 (1) 9 10 1 Amortisation of debt issuance costs 1 1 - Net regular interest 10 11 1 ▪ Tax charge of £6m, due to operating activities charge and impact on tax rate changes ▪ Notiona
Slide 37: Combined Pensions Schemes – combined surplus of £962m
Combined Pensions Schemes – combined surplus of £962m 1 October 2022 2 April 2022 IAS19 Accounting valuation (£m) Premier Premier RHM Combined RHM Combined Foods Foods Assets 3,251 584 3,835 4,274 826 5,100 Liabilities (2,155) (718) (2,873) (3,135) (1,020) (4,155) Surplus/(Deficit) 1,096 (134) 962 1
Slide 38: Summarised Balance sheet
Summarised Balance sheet £m 1 October 2023 2 April 2022 Property, plant & equipment 188 191 Intangibles / Goodwill 981 940 Deferred tax asset 22 23 Retirement benefit assets 1,108 1,149 Non-current Assets 2,299 2,303 Working Capital - Stock 117 78 - Debtors 95 97 - Creditors (260) (254) Total Workin