Tiger Brands Limited · JSE:TBS
Tiger Brands — H1 FY2024 Earnings Presentation
38 slides from Tiger Brands's earnings presentation, May 27, 2024
Slide 1: Nourish and Nurture More Lives Every Day: Interim Results Presentation
NOURISH AND NURTURE INTERIM RESULTS PRESENTATION MORE LIVES EVERY DAY 27 May 2024
Slide 2: Index
INDEX Update on First half Transformation performance Journey Strategic Operational update & Review outlook
Slide 3: Disclaimer: Forward-looking statement
Disclaimer Forward-looking statement This document contains forward looking statements that, unless otherwise indicated, reflect the company’s expectations as at 27 May 2024. Actual results may differ materially from the company’s expectations if known and unknown risks or uncertainties affect the b
Slide 4: Update on Transformation Journey
UPDATE ON TRANSFORMATION JOURNEY Tjaart Kruger CEO
Slide 5: Turnaround initiatives gaining momentum and driving progress
Turnaround initiatives gaining momentum and driving progress First 5 months of transformation journey – key milestones ✔ 1 November 2023 ✔ 1 January 2024 ✔ 1 February 2024 Underway – Appointment of Appointment of Streamlined operating May 2024 Tjaart Kruger Thushen Govender model & appointment Restr
Slide 6: Streamlined operating model to enhance decision making and speed of execution
Streamlined operating model to enhance decision making and speed of execution Chief Executive Officer Chief Financial Officer Tjaart Kruger Thushen Govender Elimination of senior level of management and consolidating business units To result in significant annualised cost savings MD MD MD MD HPC MD
Slide 7: Restoring cost leadership is the foundation of the transformation journey
Restoring cost leadership is the foundation of the transformation journey Improve gross & operating profit margins > Process innovation & automation > Procurement optimisation > SKU Rationalisation Enhance returns on invested capital > Supply chain optimisation > Value engineering > Manufacturing fo
Slide 8: Our turnaround plans are focused on businesses that will yield the highest return over time
Our turnaround plans are focused on businesses that will yield the highest return over time Execute GT recovery by enhancing Business simplification & value engineering to drive quality through improved processes margin enhancement & build on current momentum > Value engineering (recipe & packaging)
Slide 9: Bakeries' turnaround plan is focused on stabilising operations & restoring margins
Bakeries’ turnaround plan is focused on stabilising operations & restoring margins Issues Initiatives implemented Improvements to date > Loss of maintenance discipline > Focused executive with strong > Improved dispatch times resulted in abnormal breakdowns, late operational track record deliveries
Slide 10: Next phase for Bakeries is to restore margins
With the fundamentals receiving attention, the next phase for Bakeries is to restore margins Focus going forward Further optimisation of the cost base Clear targets for product availability Kick start general trade growth with diligent pricing strategy Timely pass through of inflationary costs Terri
Slide 11: First Half Review
FIRST HALF REVIEW Thushen Govender, CFO
Slide 12: Strong profit recovery in Consumer Brands offset by Grains
Strong profit recovery in Consumer Brands offset by Grains, while group earnings benefit from higher associate income & once-off items Pricing 8% Revenue Volumes 9% Revenue 1% Gross profit 3% to Operating income* 3% at R19,2bn R5,4bn R1,3bn Gross margin 91bps to Operating margin* flat at
Slide 13: A mixed operational performance while turnaround plans begin to take hold
A mixed operational performance while turnaround plans begin to take hold HIGHLIGHTS HEADWINDS Bread volumes impacted by deliberate strategies Easter trade slower than expected to restore plant efficiency & improve realisations Solid top-line performances from Snacks & Under-recoveries due to lower
Slide 14: Inflation accelerates in the first half; volumes reflect deliberate strategies
Inflation accelerates in the first half driven by volatile soft commodity & agricultural pricing, while volumes reflect deliberate strategies & lower demand Revenue H1 F23 vs H1 F24 8% (9%) Price inflation Volume H2 F22 vs H2 F23 5% (2%) 1% 19,4 Price inflation Volume Forex 19,2 17,3 18,0 H1 FY23 H2
Slide 15: Conversion-cost efficiencies help mitigate gross margin compression
Conversion-cost efficiencies & reduced loadshedding help mitigate gross margin compression, while earnings boosted by non-operational items & income from associates Rm H1 FY24 H1 FY23 Total revenue 19 230 19 381 Reduced loadshedding & conversion cost Cost of sales (13 853) (14 139) efficiencies part
Slide 16: Cash generated from operations increases
Cash generated from operations increases due to better cash operating profit & lower working capital outflows relative to the prior period Major contributors to movements in cash for the period (R’m) 2 110 1 021 776 760 1 996 (1 349) (379) (1 079) (489) (147) (417) Cash Working Cash Dividends Tax pa
Slide 17: Capex spend for H1 focused on commissioning of new facilities
Capex spend for H1 focused on commissioning of new facilities & improved efficiencies FY24 Capex profile Capex spend focus R1,1bn R1,1bn > Automation > Capacity expansion > Efficiency optimisation H2e* R568m Most significant investments > Bakeries - Cooler replacement & automation > Consumer Brands
Slide 18: Operational Review
OPERATIONAL REVIEW Thushen Govender, CFO
Slide 19: Strong recovery in Groceries, Beverages, Personal Care, Baby & Exports offset by Grains
Strong recovery in Groceries, Beverages, Personal Care, Food Services, Baby & Exports offset by Grains' underperformance Grains (R’m) Consumer Brands (R’m) H1 FY23 H1 FY24 7 225 7 037 8 959 8 168 555 694 343 171 Revenue Operating income Revenue Operating income Home and Personal Care (R’m) Exports a
Slide 20: Grains' share declines in the short-term
Grains’ share declines in the short-term driven predominantly by Grains Maize, due to regional disruptors while, Rice experiences lower demand due to inflation Grains value shares (% market share) 27,2 Bread 29,0 40,8 Dry Pasta 38,8 51,0 Rice 55,4 19,0 Cereals 19,6 24,0 Flour 31,1 7,1 Maize 10,7 26,
Slide 21: Grains: Deliberate strategies in Bread impact volumes
Deliberate strategies in Bread to improve realisations impact Grains volumes, corrective maintenance delivering positive results Milling & Baking (R’m) > Operational challenges impact bread sales across all channels - Q1 marked by operational challenges due to unplanned stoppages H1 FY23 - Resulted
Slide 22: Consumer Brands market shares
Groceries market share declines driven predominantly by peanut Consumer Brands butter due to plant relocation disruptions while mayonnaise supply impacted by egg shortages Consumer Brands value shares (% market share) 10,8 Personal Care 11,6 61,4 Home Care (Pest) 61,5 38,4 Baby 37,4 48,8 Beverages 5
Slide 23: Groceries
Groceries deliver a satisfactory profit improvement while Groceries value engineering initiatives gain traction Groceries (R’m) > Diligent price point management driving naked & gross margin improvement > Profitability also aided by softer base due to prior year supply chain challenges 3 414 3 344 H
Slide 24: Snacks & Treats and Beverages
Snacks & Treats Snacks & Treats achieves R1.5 billion in revenue while profit and Beverages in Beverages benefits from factory efficiencies Snacks & Treats (R’m) > Profit regression mitigated despite significant cost inflation in sugar and cocoa > Overall category declines led to de-stocking resulti
Slide 25: Home & Personal Care (HPC) and Baby
Home & Personal HPC improves profits by 8%, while Baby benefits from improved Care (HPC) and Baby factory efficiencies and cost saving initiatives Home and Personal Care (R’m) > Home Care volumes hindered by delayed pest season relative to last year H1 FY23 > Commissioning of aerosol lines during th
Slide 26: Exports and International
Sustained volume growth and improved profitability by Exports Exports and International and Chococam Exports and International (R’m) > Exports benefit from key distributor model gaining traction - Investment in resources re-prioritised behind core markets & products H1 FY23 2 111 2 567 H1 FY24 > Dec
Slide 27: Strategic Update and Outlook
STRATEGIC UPDATE AND OUTLOOK Tjaart Kruger CEO
Slide 28: Steadily advancing our key focus areas
Steadily advancing our key focus areas Completed Leadership streamlining of our Deployed category- GT store expansion on in place & teams operating model into 6 specific services back Restored cost track to achieve 90 000 fully operational business units to the businesses leadership stores in FY24 >
Slide 29: Pillars to restore Tiger Brands to its full potential
PILLARS TO RESTORE TIGER BRANDS TO ITS FULL POTENTIAL Cost Consumer Portfolio optimisation Invest in a leadership obsession & capital allocation sustainable future > Process & value > Relevant value > Increased focus on > Health and nutrition engineering propositions for our capital allocation to co
Slide 30: New framework to improve capital allocation discipline
New framework to improve capital allocation discipline, targeting ROIC ahead of WACC in the short term Principals underlying the improved capital Portfolio Uses of cash and allocation framework optimisation returns to shareholders > Target ROIC and ROE above > Exit value destructive & non-strategic
Slide 31: Clear strategies to restore Tiger Brands to its full potential
Clear strategies to restore Tiger Brands to its full potential with execution gaining momentum Key competitive advantage Solidify the Accelerate Highly disciplined operating model strategic imperatives capital allocation approach Agility to respond to category dynamics Business simplification to red
Slide 32: Q&A
Q&A NOURISH AND NURTURE MORE LIVES EVERYDAY
Slide 33: Inflation accelerates in the first half; revenue by segment
Inflation accelerates in the first half driven by volatile soft commodity & agricultural pricing, while volumes reflect deliberate strategies & lower demand Revenue Price inflation 8% Forex R19,4bn - R19,2bn Volume (9%) Total Price Volume Forex Grains (9%) 6% (15%) - Consumer Brands 3% 11% (8%) - HP
Slide 34: Grains: long-term market shares hold steady
Long-term market shares hold steady while short-term Grains trends reflect specific category dynamics Grains value shares (% market share) 29,9 Bread 29,0 29,1 41,3 Dry Pasta 40,8 41,0 47,1 Rice 51,0 47,7 19,2 Cereals 19,0 20,0 24,2 Flour 24,0 22,8 7,2 Maize 7,1 7,2 25,7 Grains 26,9 26,0 3MM 6MM 12M
Slide 35: Consumer Brands: some market share regression in the short term
Some market share regression in the short term, while value Consumer Brands shares stabilise over the medium-term Consumer Brands value shares (% market share) 10,4 Personal Care 10,8 11,1 61,2 Home Care (Pest) 61,4 61,8 37,9 Baby 38,4 36,8 47,3 Beverages 48,8 49,0 24,9 Snacks & Treats 23,2 22,8 35,
Slide 36: Summary of ratios
Summary of ratios Cash generated from operations (R’m) >100% Cash and cash equivalents (R’m) 55% Rm H1 FY24 H1 FY23 Net (debt) (R’m) (2 674) (1 664) 760,4 Return on equity (ROE) 16,4% 13,9% Return on invested capital (ROIC) 13,0% 12,7% 1 020,9 WACC rate 14,2% 14,5% Working capital per R1 24,8 21
Slide 37: Income from associate companies
Income from associate companies Rm H1 FY24 H1 FY23 Carozzi 342,4 240,9 National Foods Holdings Ltd 53,8 33,9 Other - (0,2) Total 396,2 274,6 37
Slide 38: Segmental contribution to revenue and operating income
Segmental contribution to revenue and operating income Revenue Operating Income * H1 FY23 H1 FY24 21% 31% 20% 20% 19% 17% 27% 15% 13% 14% 12% 9% 8% 8% 18% 17% 6% 6%7% 15% 16% 5% 13% 3% 3% 11% 7% 8% 7% 7% 6% 7% -1% 2% 2% 3% 3% -6% Groceries Groceries Other costs Beverages Food Services Beverages Food