Premier Foods plc · LSE:PFD
Premier Foods — H1 2012 Earnings Presentation
36 slides from Premier Foods's earnings presentation, Aug 7, 2012
Slide 1: 2012 Half Year Results & Growth Strategies Update
2012 Half Year Results & Growth Strategies Update 7 August 2012
Slide 2: Forward looking statements
Certain statements in this presentation are forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by those statements. Forward look
Slide 3: Agenda
Agenda • Introduction • 2012 Half Year Results • Growth Strategies Update • Outlook • Q&A 3
Slide 4: Delivering stabilisation and growth strategies on track
Delivering stabilisation and growth strategies on track • Underlying sales (ex Milling) up 1.1% • Power Brand sales up 2.0%, Grocery Power Brands up 4.9% • Trading Profit up 3.2% • Marketing investment increased 40%, supporting share gains • Cost reduction programme of £40m savings by year end, ahea
Slide 5: 2012 Half Year Results
2012 Half Year Results Mark Moran Chief Financial Officer 5
Slide 6: Underlying business
Underlying business • ‘Underlying business’ excludes the following items: – Milling revenue – Fluctuations in the cost of wheat can influence reported revenue, but not necessarily profit in this commodity-led business – Commercial adjustments – 2011 H1 element of aged receivables write-off and assoc
Slide 7: Net loss due to financing & restructuring costs
Net loss due to financing & restructuring costs £m 2012 H1 2011 H1 Underlying business sales 757 749 Underlying business Trading profit 53 52 Ongoing business Trading profit 72 70 Add: Canned grocery 1 8 Add: Irish Brands - 4 Continuing Trading profit 73 82 Amortisation of intangible assets (26) (36
Slide 8: Power Brands sales up 2.0%
Power Brands sales up 2.0% Sales (£m) 2012 H1 2011 H1 Growth (%) Power Brands 419 410 2.0% Support brands 182 189 (3.6%) Total branded 601 599 0.3% Non-branded 156 150 4.3% Total 757 749 1.1% Power Brands Sales % 55.3% 54.8% +0.5ppt • Power Brands up 2.0% due to improved focus on customer collaborat
Slide 9: Underlying business trading results
Underlying business trading results £m 2012 H1 2011 H1 % Branded sales 601 599 0.3% Non-branded sales 156 150 4.2% Total sales 757 749 1.1% EBITDA 73 71 2.9% Trading profit 53 52 3.2% Net Regular Interest (42) (59) 28.9% Adjusted PBT 11 (7) - Tax @ 24.5%/26% (3) 2 - Adjusted profit 8 (5) - Underlyin
Slide 10: Grocery division
Grocery division £m 2012 H1 2011 H1 Growth (%) Branded sales 417 410 1.7% Non-branded sales 87 82 6.5% Total sales 504 492 2.5% Power Brands sales % 48.7% 47.6% +1.1ppt Divisional contribution* 95 100 (4.4%) • Power Brands sales growth in Grocery up 4.9%, with strong sales growth from Loyd Grossman,
Slide 11: Bread division
Bread division £m 2012 H1 2011 H1 Growth (%) Branded bread sales 184 190 (2.9%) Non-branded bread sales 69 68 1.7% Total bread sales 253 258 (1.7%) Milling sales 95 103 (8.3%) Total sales 348 361 (3.6%) Power Brands Sales % 68.6% 68.6% 0.0ppt Divisional contribution* 23 31 (27.0%) • Hovis maintained
Slide 12: Group Trading profit
Group Trading profit £m 2012 H1 2011 H1 Growth (%) Grocery divisional contribution 95 100 (4.4%) Bread divisional contribution 23 31 (27.0%) Group SG&A costs (65) (79) 18.1% Group Trading profit 53 52 3.2% • Cost savings programme is well underway • Achievement of previously announced £40m savings w
Slide 13: Recurring Cash Flow
Recurring Cash Flow £m 2012 H1 2011 H1 Underlying business Trading profit 53 52 Adjustments 19 18 Ongoing business Trading profit 72 70 Depreciation 20 20 Other non-cash items (27) 0 Interest (35) (41) Taxation 0 0 Pension contributions (24) (40) Regular capital expenditure (27) (33) Working capital
Slide 14: Cash Flow
Cash Flow £m 2012 H1 2011 H1 Recurring cash flow from ongoing business (22) (28) Trading profit & other cash flows– disposed businesses (1) (25) Restructuring activity relating to disposed businesses (9) (0) Operating cash flow from total Group (32) (53) Net disposal proceeds 35 196 Financing fees &
Slide 15: Net debt
Net debt £m Net debt at 31 December 2011 995 Additional term loan 188 Securitised debtors programme 74 Pro forma Net debt at 31 December 2011 1,257 Cash outflow 2012 H1 22 Other (10) Net debt at 30 June 2012 1,269 • Additional term loan crystallised at £188m, lower than the £199m originally estimate
Slide 16: Growth Strategies Update
A Growth Strategies Update 16
Slide 17: Priorities set to stabilise the business
Priorities set to stabilise the business • Focus investment behind Power Brands – Seven Power Brands back on TV in H1, more to come in H2 • Strengthen capabilities – New leadership in place, focus on execution & delivery • Divest selected businesses to sharpen focus – Vinegar & sour pickles and Elep
Slide 18: Continuing to invest in Power Brands
Continuing to invest in Power Brands 18
Slide 19: New product innovation
New product innovation 19
Slide 20: Brand health measures improving
Brand health* measures improving 30% % Increase Post vs Pre Advertising Campaign 25% 20% 15% 10% 5% 0% Power Brands Average Advertising Awareness Better Quality Than Others Brand You Love • Significantly improved brand health measures following H1 advertising campaigns * Source: Millward Brown, June
Slide 21: Building customer partnerships
Building customer partnerships MAJOR MULTIPLE RETAILERS & DISCOUNTERS Focus Focus on the right things Engagement • Stronger • Category growth • Building collaboration dedicated teams • Value Creation across all categories • Service – Efficiency – Effectiveness Process Impact • Joint Business Plans P
Slide 22: Smarter promotional investment
Smarter promotional investment 22
Slide 23: Power Brand portfolio consistently growing share
Value Share Point Change -2.5 -1.5 -0.5 0 1 2 -2 -1 0.5 1.5 17 Sep 2011 24 Sep 2011 1 Oct 2011 8 Oct 2011 15 Oct 2011 22 Oct 2011 29 Oct 2011 5 Nov 2011 12 Nov 2011 19 Nov 2011 26 Nov 2011 3 Dec 2011 10 Dec 2011 17 Dec 2011 24 Dec 2011 growing share 31 Dec 2011 7 Jan 2012 14 Jan 2012 21 Jan 2012 28
Slide 24: Increasing portfolio focus
Planned disposals on track Meat Free Canned grocery Chilled Retail Brands Irish Brands Vinegar & Sour Pickles Ethnic Flour ….increasing portfolio focus 24
Slide 25: Accelerating overhead savings
Accelerating overhead savings • Reduce complexity through greater focus • Adjust cost base to smaller business • £40m cost reductions by end 2012 (vs 2013) • Further cost reductions in 2013 25
Slide 26: On track to deliver supply chain cost reductions/productivity
On track to deliver supply chain cost reductions/productivity • Gross 4% reduction in manufacturing controllable costs on track • Grocery logistics consolidated • Addressing opportunities for more efficient bread supply chain • Best in class procurement 26
Slide 27: 2012 outlook remains unchanged
2012 outlook remains unchanged • Delivering on all our strategic priorities, and growing share • Continue stabilisation of operational performance • Sharpening focus through selected disposals • Macro economic climate creates uncertainty • Challenging consumer and retail environment • Full year expe
Slide 28: Q&A
Q&A 28
Slide 29: Appendices
Appendices 29
Slide 30: Definitions
Definitions • Trading profit is defined as operating profit before refinancing costs, restructuring costs and losses associated with divestment activity, amortisation and impairment of intangible assets, the revaluation of foreign exchange and other derivative contracts under IAS 39 and pension cred
Slide 31: Results basis definitions
Results basis definitions • Reported (statutory) basis – Brookes Avana is treated as discontinued – Canned grocery operations are treated as continuing and identified as ‘Disposed of Canning operations’ – Irish Brands business included in the results of the Grocery division • Ongoing Business – Excl
Slide 32: Ongoing - Underlying business
Ongoing - Underlying business £m Ongoing Milling Commercial Contract Other Underlying Business revenue Adjs. Loss Credits Business 2012 H1 Sales 852 (95) - - - 757 Trading 72 N/A - - (19) 53 profit 2011 H1 Sales 873 (103) (12) (9) - 749 Trading 70 N/A (6) (2) (11) 51 profit 32
Slide 33: Interest charges
Interest charges £m 2012 H1 2011 H1 % Bank debt interest (19) (22) 13.2% Securitisation interest (1) (1) - Swap contract interest (14) (29) 51.2% Cash interest (34) (52) 34.1% Amortisation and deferred fees (8) (7) (13.2%) Regular net interest charge (42) (59) 28.7% Unwind of provision discount (1)
Slide 34: Taxation
Taxation • 2012 H1 charge on continuing activities - £0.5m – Tax arising on disposal of Irish Brands - £1.2m – Deferred tax - £2.0m – Credit of £2.7m reflecting reduction in statutory tax rates • UK Cash tax for 2012 and 2013 is expected to be minimal as a result of: – Capital allowances in excess o
Slide 35: Pension valuation and assumptions
Pension valuation and assumptions Key IAS 19 assumptions 30 June 2012 25 June 2011 31 Dec 2011 Discount rate 4.70% 5.45% 4.80% Inflation rate 2.90% 3.50% 3.15% (CPI 1.70%) (CPI 1.95%) Expected salary increases 3.9% 4.5% 4.15% Mortality assumptions LTI +1.0% LTI +0.75% LTI +1.0% Pension deficit (£m)
Slide 36: Balance Sheet
Balance Sheet £m 2012 H1 2011 H1 Fixed Assets – Property, plant & equipment 464.8 530.0 Fixed Assets – Intangibles / Goodwill 1,589.9 2,018.6 Total Fixed Assets 2,054.7 2,548.6 Assets less liabilities held for sale 32.5 166.1 Working Capital Stock 149.1 160.3 Debtors 274.2 308.4 Creditors (351.7) (4