Tiger Brands Limited · JSE:TBS
Tiger Brands — H1 2016 Earnings Presentation
28 slides from Tiger Brands's earnings presentation, May 24, 2016
Slide 1: Group Results Presentation
Group Results Presentation for the six months ended 31 March 2016
Slide 2: Index
Index Overview Financial performance Operational performance Outlook Group Results Presentation for the six months ended 31 March 2016 2
Slide 3: Overview
Overview Noel Doyle Chief Operating Officer
Slide 4: Disclaimer
Disclaimer Forward-looking statement This document contains forward looking statements that, unless otherwise indicated, reflect the company’s expectations as at 24 May 2016. Actual results may differ materially from the company’s expectations if known and unknown risks or uncertainties affect the b
Slide 5: Defensive portfolio delivers growth
Defensive portfolio delivers growth Resilient domestic performance in highly inflationary environment o Strong turnover growth with positive volume leverage o Operating margins impacted by foreign exchange and soft commodity headwinds o Increased marketing investment to support brands o Continued fo
Slide 6: Strong underlying performance
Strong underlying performance* Overall volume growth of 1% o Turnover growth of 9% Rbn 18 15.9 o Operating income up 7% despite significant 16 14.6 inflationary pressures 14 12 o Marketing investment ahead of turnover growth 10 8 − up 23% to R502m 6 13.2% 12.9% 4 o Group operating margins at 12.9% 1
Slide 7: Dividend growth in line with EPS
Dividend growth in line with EPS Interim dividends Cents EPS* 365 363 7% 360 to 1 021 cents 355 HEPS* 350 345 flat at 978 cents 340 339 335 Interim dividend 330 7% 325 H1 15 H1 16 to 363 cents * From continuing operations Group Results Presentation for the six months ended 31 March 2016 7
Slide 8: Financial performance
Financial performance Funke Ighodaro Chief Financial Officer
Slide 9: Group financial highlights
Group financial highlights* Strong underlying performance Volumes ▲ 1% Turnover Operating income** Marketing investment ▲ 9% to ▲ 7% to ▲ 23% to R15.9bn R2.1bn R502m Total gross margin Total operating margin** Effective tax rate*** ▼ -0.7% to ▼ -0.3% to ▼ +4.7% to 32.2% 12.9% 30.6% Share of income f
Slide 10: Solid growth despite inflationary pressures in Grains
Solid growth despite inflationary pressures in Grains Consumer Exports & Grains Brands Food HPCB International Group* Volume flat ▲ 5% ▲ 5% ▼ 8% ▲ 1% growth Turnover R6.2bn R5.8bn R1.3bn R2.6bn R15.9bn growth ▲ 10% ▲ 8% ▲ 13% ▲ 8% ▲ 9% Operating R0.9bn R0.6bn R0.3bn R0.3bn R2.1bn income** ▼ 1% ▲ 4%
Slide 11: Margin compression reflects investment in growth
Margin compression reflects investment in growth Operating margin* 13.2% 0.8% 12.9% (0.7%) (0.4%) o Significant inflationary pressures due to rand weakness and effects of drought in Southern Africa o Responsible price / volume management o Good progress on cost containment initiatives o Increased in
Slide 12: Income from associates
Income from associates Associates deliver strong growth Total income from 238 299* 267* associates (Rm) Y-Y growth (%) (11%) 26% Contribution (%)** 16% 19% 42 26 32 26 21 16 133 111 133 85 98 81 H1 2015 H1 2016 H1 2016 constant currency Empresas Carozzi Oceana Group UAC of Nigeria National Food Hold
Slide 13: Cash flow statement
Cash flow statement Disciplined working capital management and debt reduction post TBCG exit Rm 31 Mar 2016 30 Sept 2015 31 Mar 2015 Cash operating profit 2 344 4 396 2 164 Working capital (483) (811) (744) Finance costs net of dividends received 16 (71) (39) Taxation paid (601) (1 159) (606) Cash a
Slide 14: Key statistics
Key statistics Improved balance sheet position 31 Mar 2016 30 Sept 2015 31 Mar 2015 Net (debt) / cash (Rm) (2 696) (3 788) (3 972) Net debt / equity (%) 18 28 28 RONA 30 26 24 Financial ratios restated for impact of TBCG exit Net interest cover (times) 14 17 18 Operating margin* after IFRS 2 charges
Slide 15: Operating performance
Operating performance Noel Doyle Chief Operating Officer
Slide 16: Grains
Grains Overall volumes maintained despite unprecedented inflation o Responsible price / volume management Rm 8 000 o Volumes unchanged despite decline in Maize & Sorghum 6 158 5 612 o Earnings maintained in Millbake wheat value chain 6 000 o Strong growth from other Grains 4 000 • Revenue up 11% 15.
Slide 17: Grains: soft commodity prices
Grains Soft commodity prices impacted by weak rand and effects of drought Mar 2016 Mar 2015 % Change Safex wheat price (R/t) 5 000 US wheat price (USD) 207 250 (17%) Exchange rate (R/USD) 15.45 12.07 28% 4 000 US wheat price (ZAR) 3 198 3 018 6% Duty 1 224 461 166% 3 000 Mar-15 Apr-15 May-15 Jun-15
Slide 18: Groceries
Groceries Consolidates recovery o Turnover up 12% Rm 3 000 • Driven by solid volume growth 2 565 2 289 • Prudent pricing in a competitive environment 2 000 o Operating income up 12% o Marketing investment up 12% 1 000 9.2% 9.1% o Further price increases in H2 likely to negatively impact 210 234 volu
Slide 19: Snacks, Treats & Beverages
Snacks, Treats & Beverages Beverages deliver strong growth o Revenue up 17% Rm 2 000 1 874 • Strong volume growth 1 762 - Oros - Energade 1 000 - Ready-to-drink Rose’s led by new innovation iced tea 14.9% 13.5% • Underpinned by brand strength 262 252 0 Revenue in Snacks & Treats unchanged H1 15 H1 1
Slide 20: Home, Personal & Baby Care (HPCB)
Home, Personal & Baby Care (HPCB) Home Care and Baby deliver strong growth in operating income o Strong performance underpinned by Home Care* Rm 2 000 • Revenue up 27% largely driven by Pest o Baby delivers satisfactory performance driven by strong 1 162 1 317 in-store presence 1 000 • Increased sha
Slide 21: Exports and International
Exports and International Strong revenue and operating income growth o Mixed underlying performance Rm 3 000 2 641 o Chococam sustains strong performance 2 451 • Revenue up 26% 2 000 • Operating income up 33% driven by innovation & increased market penetration 1 000 11.1% 8.9% o East Africa operatio
Slide 22: Outlook
Outlook Noel Doyle Chief Operating Officer
Slide 23: Outlook
Outlook Operating environment remains challenging o Full impact of rand depreciation in second half will result in further inflationary pressures • Negative impact on volumes and margins o Disciplined price / volume management o Focus on costs Group Results Presentation for the six months ended 31 M
Slide 24: Appendices
Appendices
Slide 25: Contribution to turnover
Contribution to turnover* 17% 17% 27% 27% 8% 8% 1% H1 16 2% H1 15 7% 7% 12% 11% 5% 4% 7% 8% 16% 16% Milling and baking Other grains Groceries Snacks and treats Beverages Value added meat products Out of home HPCB Exports and international * From continuing operations Group Results Presentation for t
Slide 26: Contribution to operating income
Contribution to operating income* Before IFRS 2 charges 14% 11% 36% 12% 38% 13% 2% H1 16 H1 15 4% 2% 4% 5% 5% 8% 9% 7% 8% 11% 11% Milling and baking Other grains Groceries Snacks and treats Beverages Value added meat products Out of home HPCB Exports and international * From continuing operations, b
Slide 27: Income from associates
Income from associates Carozzi includes R72m of capital profits Rm H1 2016 H1 2015 % Change Carozzi 170 85 100% Oceana 133 111 20% UAC Foods 26 16 63% National Food Holdings 42 26 62% Total 371 238 56% Group Results Presentation for the six months ended 31 March 2016 27
Slide 28: Investor Relations
Investor Relations Nikki Catrakilis-Wagner Group Investor Relations Executive Nikki.wagner@tigerbrands.com T: +27 11 840 4841