Premier Foods Plc · LSE:PFD
Premier Foods — H1 FY23/24 Earnings Presentation
37 slides from Premier Foods's earnings presentation, Nov 16, 2023
Slide 1: Half year results for 26 weeks ended 30 September 2023
16 November 2023 Half year results for 26 weeks ended 30 September 2023
Slide 2: Alex Whitehouse, CEO
(Cremer FOODS Alex Whitehouse CEO ( enriching life THROUGH FOOD’
Slide 3: Strong progress against all metrics
Strong progress against all metrics Revenue1 Grocery market share Trading profit £484m +113bps £68m +19.2% vs prior year +19.0% Trading profit margin Adjusted PBT Net debt 13.9% £57m £65m In line with prior year +21.2% lower than prior year 1 – Includes The Spice Tailor, excludes Knighton Foods 3
Slide 4: Delivering on all our strategic growth pillars
Delivering on all our strategic growth pillars 1 2 3 4 5 Infrastructure Inorganic Grow the UK core Category expansion International investment opportunities 1 +21% +19%1,2 +15.5% Investing in H1 UK Branded International FUEL10K revenue growth automation, efficiency Revenue up 21% and low energy reve
Slide 5: Duncan Leggett, CFO
\" PREMIER : FOODS Duncan Leggett CFO ( enriching life THROUGH FOOD’
Slide 6: Another period of strong Revenue and profit growth
Another period of strong Revenue and profit growth £m FY23/24 H1 Change vs PY Comments Branded revenue 416 15.8% Particularly strong Grocery performance Non-branded revenue 68 44.8% Pricing and new contracts in Sweet Treats Total revenue 484 19.2% Divisional contribution 102 21.7% Group & corporate
Slide 7: Grocery continued momentum; Sweet Treats weighted to H2
Grocery continued momentum; Sweet Treats weighted to H2 £m FY23/24 H1 Change vs PY Comments Grocery Branded revenue 317 23.1% Broad based growth; Oxo and Nissin particularly strong Non-branded revenue 46 36.2% Largely due to price increases Total revenue 363 24.6% Divisional contribution 90 27.5% St
Slide 8: Net debt £65m lower than a year ago
Net debt £65m lower than a year ago Half year cash flow bridge FY23/24 guidance £m Working capital Outflow £m 350 Depreciation (incl. software amortisation) c.£25m 338 64 Brand & intangible amortisation c.£20m £65m Capital expenditure c.£35m 300 79 10 273 Restructuring c.£20m 274 16 Interest – cash
Slide 9: Pensions – A full resolution expected within 3 years
Pensions – A full resolution expected within 3 years Significant progress since merger 1 2 3 4 5 Segregated Strategy results in Investment Full resolution of merger of RHM Successful RHM buyout strategy deficit when and Premier investment valuation surplus continues, RHM surplus Foods pension strate
Slide 10: Capital allocation principles
Capital allocation principles Context A cash generative business with leading sector margins and increasing marketing investment Change Principles over time Pensions • Current contributions expected to reduce over time as RHM scheme creates further surplus on buyout valuation Capex • Accelerated cap
Slide 11: Alex Whitehouse, CEO
PREMIER FOODS Alex Whitehouse CEO SPICE TAILO ( enriching life THROUGH FOOD’
Slide 12: Our strategy and purpose
Our 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 strong and growing Invest in operational Build sustainable Utilise brand building Leverage proven UK busin
Slide 13: Strong progress in our Enriching Life Plan
Strong progress in our Enriching Life Plan PRODUCT PLANET PEOPLE Sales growth from high nutritional products1 • 47% of our management 47% colleagues are Expect to reduce Female c.4%↓ female +23% Scope 1 emissions managers • Sponsored Scope 1 by c.4% this year GroceryAid Diversity In Grocery Products
Slide 14: Our branded growth model is at the core of what we do
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 core categories • Launch new products linked to key consumer trends • High household penetration • Major focus on health & nutrition 3 Sustained marketing i
Slide 15: Driving sales growth, profit growth and winning market share
1 Driving sales growth, profit growth and winning market share Consistently delivering profitable revenue growth Market share gains1 H1 UK Branded Revenue trend H1 Trading profit £m 400 Pandemic elevated volumes +113bps 350 Grocery market share +8.6% 300 250 5 year CAGR ▪ Strong market share gains i
Slide 16: The UK core benefitting from NPD and upweighted investment
1 The UK core benefitting from NPD and upweighted investment Product innovation well aligned to consumer trends Significantly increased brand investment Health & Nutrition Convenience Indulgence ▪ Seven major brands benefitting from increased TV, digital and outdoor media investment increased invest
Slide 17: Great instore execution and distribution gains
1 Great instore execution and distribution gains Instore KPIs Batchelors Batman Mr Kipling Minions Distribution points Significant gains in recent +2.6% Grocery range reviews Off-shelf display All Grocery +56% categories increasing Source: Circana, 17
Slide 18: Inflation is falling and we've lowered our promotional pricing
1 Inflation is falling and we’ve lowered our promotional pricing Food inflation1 is falling Promotional price2 points % 20 18 70p £1 80-90p 16 14 2021 Jan 2023 Oct 2023 12 10 10.1 8 6 4 £1.25 £1.75 £1.50 2 0 Oct 2021 Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023 2021 Jan 20
Slide 19: Infrastructure investment
2 Infrastructure investment Capex fuels branded growth Efficiency & energy reduction Further automation in cake Knighton site closure Auto-casepackers & Cash Capital Auto-palletisers generation investment 4 ✓ Gross Completed Branded growth margin accretion ✓ Brand ▪ Air compressor investment replace
Slide 20: New categories grew revenue by 21%
3 New categories grew revenue by 21% Ambrosia Porridge Ice Cream Cape Herb & Spice 7.0% 6.2% 1. Revenue in H1 more 6.0% than doubled 2. Distribution 5.0% expansion and 4.0% market share continues to grow 3.0% 2.0% Oxo Rubs & Marinades 1.0% 0.0% Dec Mar Jun Sep Dec Mar Jun Sep 2022 2022 2022 2022 202
Slide 21: International expansion gathering pace in US and Australia
4 International expansion gathering pace in US and Australia US cake: Strong progress building distribution Applying the Branded Growth Model to Australia cake 2,000 Retail sales Market Household +22% growth 16% share 19% penetration No. of stores 1,800 1,600 1,400 1 1,200 1,000 800 Marketing invest
Slide 22: The Spice Tailor: Leveraging the Branded Growth Model
5 The Spice Tailor: Leveraging the Branded Growth Model UK distribution growth and instore execution New product development Overseas market expansion ▪ Doubling Ireland store distribution through Dunnes & Musgraves listings ▪ More than doubled weighted distribution across Asda & ▪ Driving improved
Slide 23: Introducing FUEL10K
5 Introducing FUEL10K 1 A vibrant breakfast 2 3 Differentiated protein-boosted A modern and young orientated brand portfolio brand proposition consumer demographic of granola, oats and drinks • Provides a much larger platform in Breakfast • Brand has a differentiated positioning • Track record of hi
Slide 24: We'll leverage our branded growth model to continue the growth trajectory
5 We’ll leverage our branded growth model to continue the growth trajectory £££ Expand new International Increase Upweight Expand beyond Supply chain product opportunities in distribution in brand breakfast efficiency UK retailers development existing investment heartland opportunities pipeline geog
Slide 25: Strong activity planned for the second half & beyond
Strong activity planned for the second half & beyond 1 UK branded core 2 Infrastructure investment 3 New categories 4 International c.£35m FY23/24 ▪ Continue to build additional capex spend distribution of Mr Kipling in USA with increased sales resource ▪ Continue to build Porridge pots with additio
Slide 26: Summary & outlook
Summary & outlook 1 ― A strong first half of the year and good start to Quarter 3 2 ― Second half will benefit from comprehensive programme of NPD, brand investment & instore execution 3 ― Integration of FUEL10K already commenced 4 ― Now expect full year Trading profit to be in the region of 10% hig
Slide 27: Q&A
PREMIER FOODS Q&A ( enriching life THROUGH FOOD’
Slide 28: Appendix
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Slide 29: Definitions
Definitions ▪ The period ‘FY23/24 H1’ refers to the 26 weeks ended 30 September 2023, unless where otherwise stated. The period ‘FY22/23 H1’ refers to the 26 weeks ended 1 October 2022, unless otherwise stated. ▪ Trading profit is defined as Profit/(loss) before tax before net finance costs, amortis
Slide 30: 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 12% 24% FY23/24 H1 commentary 28% • Hea
Slide 31: Statutory vs Headline Revenue
Statutory vs Headline Revenue Quarter 2 Half 1 £m Knighton Knighton Statutory Headline Statutory Headline Foods Foods Grocery Branded revenue 168 - 168 317 - 317 Non-branded revenue 28 (5) 23 55 (10) 45 Total revenue 196 (5) 191 372 (10) 362 Sweet Treats Branded revenue 49 - 49 100 - 100 Non-branded
Slide 32: Adjusted earnings per share
Adjusted earnings per share £m FY23/24 H1 FY22/23 H1 Trading profit 68 57 Net regular interest (11) (10) Adjusted PBT 57 47 Tax (14) (9) Adjusted earnings 43 38 Weighted average shares in issue (million) 862.5 860.3 Adjusted earnings per share (pence) 5.0p 4.4p 32
Slide 33: Interest and taxation
Interest and taxation £m FY23/24 H1 FY22/23 H1 Change Senior secured notes interest 6 6 - Interest Bank debt interest 4 3 (1) 10 9 (1) Amortisation of debt issuance costs 1 1 - Net regular interest 11 10 (1) ▪ Tax charge of £15m, due to operating activities charge and impact on tax rate changes ▪ No
Slide 34: Pensions
Pensions 30 September 2023 1 April 2023 IAS19 Accounting ▪ Liabilities reduced by £278m valuation (£m) Premier Premier due to discount rate increase RHM Combined RHM Combined from 4.8% to 5.5% Foods Foods ▪ Asset values £386m lower at Assets 2,904 503 3,407 3,240 553 3,793 £3,401m ▪ Accounting pensi
Slide 35: Summarised balance sheet
Summarised balance sheet £m 30 September 2023 1 April 2023 Property, plant & equipment 187 186 Intangibles / Goodwill 964 975 Deferred tax asset 21 22 Retirement benefit assets 837 960 Non-current Assets 2,008 2,143 Working Capital - Stock 137 94 - Debtors 111 103 - Creditors (296) (255) Total Worki
Slide 36: FUEL10K transaction details
FUEL10K transaction details 1 Premier Foods has acquired 100% of FUEL10K shares on completion, on a cash free and debt free basis 2 Enterprise value £34.0m, representing 1.6x current year revenue forecasts of c.£21m 3 Proceeds on completion of £29.6m, funded through available cash reserves ― Further
Slide 37: 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