Slide 1: AVI Limited presentation to shareholders and analysts
AVI Limited presentation to shareholders and analysts for the six months ended 31 December 2019
Slide 2: Agenda
AGENDA Key features and results history Group financial results Performance and prospects Questions and answers
Slide 3: Key features
KEY FEATURES Revenue growth of 1,0% Constrained consumer demand environment Aggressive competitor pricing in certain categories December trading weaker than anticipated, exacerbated by load-shedding Value versus volume across key categories carefully balanced Gross profit margins protect
Slide 4: Results history: Operating profit history
RESULTS HISTORY Operating profit history 1600 1 530 1 456 1457 1 408 1400 1 302 342 287 247 1 152 310 1200 306 94 140 128 1 021 309 140 169 1000 921 153 124 179 854 296 167 R million 800 303 103 160 674 231 97 98 452 430 489 600 520 512 170 86 91 74 412 450 47 369 402 82 67 101 340 111 3 400 99 42 2
Slide 5: Results history: Return on capital employed
RESULTS HISTORY Return on capital employed 7 000 35% 6 000 30% 5 000 25% 4 000 R million 3 000 20% 2 000 15% 1 000 0 10% F11 F12 F13 F14 F15 F16 F17 F18 F19 F20* Net operating profit after tax Average capital employed ROCE (%) * F20 represents a rolling 12 month period to 31 December 2019 High ret
Slide 6: Results history: Cash conversion
RESULTS HISTORY Cash conversion 3 500 120% 3 000 100% 2 500 80% 2 000 60% R million 1 500 40% 1 000 500 20% 0 0% F11 F12 F13 F14 F15 F16 F17 F18 F19 F20* EBITDA Cash generated by operations Cash to EBITDA * F20 represents a rolling 12 month period to 31 December 2019 Sustained strong conversion of
Slide 7: Results history: Dividend yield
RESULTS HISTORY Dividend yield (Year end) 14% 12.0% 12% 10% 7.7% 7.4% 8% 6.4% 6.5% 6.3% 6.2% 6% 5.2% 5.5% 4.5% 4.9% 4.5% 3.8% 4.1… 4.4% 4.5% 4.3% 3.7% 4.0% 4.1% 4.0% 4% 2.8% 2% 0% F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 F18 F19 Current dividend Normal dividend yield Total dividend yield
Slide 8: Results history: Returns to shareholders
RESULTS HISTORY Returns to shareholders 2 500.0 2 253 2 000.0 1 704 823 1 500.0 1 360 1 368 639 1 322 1 197 R million 550 953 1 000.0 870 789 270 621 1 430 1 368 319 1 322 528 1 197 500.0 227 953 1 065 318 231 263 301 810 229 621 528 202 166 263 301 373 166 229 239 - 116 F05 F06 F07 F08 F09 F10 F11
Slide 9: Group Financial Results
Group Financial Results GROWING GREAT BRANDS
Slide 10: Income statement
GROUP FINANCIAL RESULTS Income statement H1 F20 H1 F19 Rm Rm % Revenue 7 141,7 7 068,6 1,0 Cost of sales (4 174,8) (4 103,6) 1,7 Gross profit 2 966,9 2 965,0 0,1 Gross profit margin % 41,5 41,9 (1,0) Selling and administrative expenses (1 509,7) (1 509,4) 0,0 Operating profit 1 457,2 1 455,6 0,1 Op
Slide 11: Business unit financial results
GROUP FINANCIAL RESULTS Business unit financial results Segmental Segmental Operating Revenue Operating Profit Margin H1 F20 H1 F19 Δ H1 F20 H1 F19 Δ H1 F20 H1 F19 Rm Rm % Rm Rm % % % Food & Beverage Brands 5 391,9 5 345,1 0,9 1 118,0 1 051,0 6,4 20,7 19,7 Entyce Beverages 1 967,8 2 032,7 (3,2) 459,
Slide 12: Movement in group revenue
GROUP FINANCIAL RESULTS Movement in group revenue 7 500 7 000 R million 6 500 6 000 7 069 177 -104 7 142 H1 F19 Price Volume H1 F20 Price increases in biscuits and snacks, supported by effective management of discounts Volume pressure materially in footwear
Slide 13: Gross profit margin history
GROUP FINANCIAL RESULTS Gross profit margin history 60% 50% 44.5% 45.3% 45.0% 44.3% 43.8% 44.3% 41.9% 41.5% 40% 30% 20% H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F19 H1 F20 Old basis New basis Adoption of new accounting standards in F19 resulted in lower margin Gross profit margin largely pro
Slide 14: Operating profit
GROUP FINANCIAL RESULTS Operating profit 0,1% up 1 550 1 500 1 450 R million 1 400 1 350 1 456 -8 59 16 -35 -41 3 7 1 457 H1 Entyce Snackworks I&J Personal Spitz Green Cross Other H1 F19 Care F20 Entyce: Lower sales volumes partly offset by lower raw material costs, particularly tea Snackworks:
Slide 15: Marketing expenditure
GROUP FINANCIAL RESULTS Marketing expenditure 18.0% 16.7% 16.0% 14.9% 14.0% 12.0% 10.0% 8.6% 8.4% 8.0% 6.8% 7.1% 7.4% 6.2% 6.2% 6.2% 5.5% 6.0% 4.8% 5.1% 4.9% 4.0% 2.2% 1.7% 2.0% 0.0% H1 F19 H1 F20 * Excludes Coty Total expenditure for H1 F20 of R405,2 million compared to R387,7 million in H1 F19
Slide 16: Cash flow and gearing
GROUP FINANCIAL RESULTS Cash flow and gearing H1 F20 H1 F19 F19 Rm Rm % Cash generated by operations 1 646,4 1 677,6 (1,9) Working capital to revenue % 25,8 23,0 12,2 Capital expenditure (187,0) (290,4) (35,6) Special dividend - (822,9) Proceeds from disposal of Simplot (after costs) 631,8 - Net de
Slide 17: Capital expenditure and depreciation
GROUP FINANCIAL RESULTS Capital expenditure and depreciation (excluding depreciation on right-of-use assets) F14 F15 F16 F17 F18 F19 F20 1 000 900 882 849 800 700 322 600 546 532 623 R million 500 473 480 420 408 420 262 394 388 400 347 183 332 308 283 293 212 300 227 200 182 206 200 158 181 146 100
Slide 18: Key capital projects spend summary
GROUP FINANCIAL RESULTS Key capital projects spend summary H1 F20 H2 F20 F20 Total Actual Planned Planned Rm Rm Rm Rooibos expansion project 33 - 33 Tea packaging line replacements and upgrades 4 12 16 Biscuit line capacity and process improvements 9 16 25 Snack line replacements and upgrades 14 7 2
Slide 19: Foreign exchange hedges
GROUP FINANCIAL RESULTS Foreign exchange hedges February 2020 to July 2020 to January 2021 to June 2020 December 2020 June 2021 % Cover % Cover % Cover USD imports 80% 36% 1% EUR imports 82% 39% 3% EUR exports 68% 37% 9% Consistent hedging philosophy provides stability to manage gross margins H2
Slide 20: I&J period end fair value adjustments
GROUP FINANCIAL RESULTS I&J period end fair value adjustments H1 F20 H1 F19 Actual Actual Var Rm Rm Rm Fuel hedge unrealised loss / (gain) 1,2 23,7 (22,5) Opening mark-to-market asset / (liability) (1,4) 12,0 Closing mark-to-market asset / (liability) (2,6) (11,7) Abalone – movement in unrealised pr
Slide 21: Performance and Prospects
Performance Performance and prospects and Prospects
Slide 22: Entyce Beverages: Income statement (tea)
Income statement H1 F20 H1 F19 % Rm Rm Revenue 1 967,8 2 032,7 (3,2) Operating profit 459,7 468,1 (1,8) Operating profit margin % 23,4 23,0 1,7 Growth in tea operating profit supported by lower raw material prices Gross profit margin improvement Rooibos raw material supply materially improved
Slide 23: Entyce Beverages: Income statement (coffee)
Income statement H1 F20 H1 F19 % Rm Rm Revenue 1 967,8 2 032,7 (3,2) Operating profit 459,7 468,1 (1,8) Operating profit margin % 23,4 23,0 1,7 Coffee profit decrease due to sustained competitor activity Lower volumes in all categories Some relief from lower coffee bean prices, partly offset
Slide 24: Entyce Beverages: Income statement (creamer)
Income statement H1 F20 H1 F19 % Rm Rm Revenue 1 967,8 2 032,7 (3,2) Operating profit 459,7 468,1 (1,8) Operating profit margin % 23,4 23,0 1,7 Creamer profits sustained at high level, although lower than last year Volume decline due to better on-shelf availability of competitor product Raw m
Slide 25: Sales volume and selling prices
Sales volume and selling prices %Δ Comments H1 F20 vs H1 F19 Tea revenue growth (3,5) Volume (2,7) Rooibos volume decline due to competitor discounting Ave. selling price (0,8) Increased discounting to support volumes, taking lower raw material into account Coffee revenue growth (9,1) Volume (11,7)
Slide 26: Market shares – 12 months value
Market shares – 12 months value 60.0% 57.1% 56.0% 50.0% 46.5% 43.8% 40.0% 29.9% 29.7% 30.0% 20.8% 20.3% 20.0% 11.4% 11.9% 10.0% 0.0% Five Roses Freshpak Frisco Ellis Brown Trinco H1 F19 H1 F20 Balanced price / volume in constrained environment
Slide 27: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (H1 F20 vs H1 F19): 20 13 10 4 0 -1 -0.1 -4 -10 R million -20 -30 -40 -50 -60 -55 Robusta / chicory Glucose Arabica Casein Palm oil Rooibos/black tea
Slide 28: Snackworks
Snackworks That's Good Times! GER ° 1 PANS Gy Wilar eMir, GROWING GREAT BRANDS
Slide 29: Snackworks: Income statement (biscuits)
Income statement H1 F20 H1 F19 % Rm Rm Revenue 2 242,6 2 130,6 5,3 Operating profit 489,3 430,1 13,8 Operating profit margin % 21,8 20,2 7,9 Growth in biscuit profit due to improved price realisation and factory performance Price increase in second semester of F19 in response to accumulated cos
Slide 30: Snackworks: Income statement (snacks)
Income statement H1 F20 H1 F19 % Rm Rm Revenue 2 242,6 2 130,6 5,3 Operating profit 489,3 430,1 13,8 Operating profit margin % 21,8 20,2 7,9 Strong snacks performance Profit margins remain healthy Price increase in second semester of F19 in response to accumulated cost pressures; lower levels
Slide 31: Sales volume and selling prices
Sales volume and selling prices %Δ Comments H1 F20 vs H1 F19 Biscuits revenue growth 4,8 Volume growth (3,1) Volume decline due to category pressure Ave. selling prices 8,1 Price increases in F19 and lower discounting Snacks revenue growth 6,9 Volume growth 0,1 Volume growth in export markets Ave. s
Slide 32: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (H1 F20 vs H1 F19): 10 9 6 5 3 1 0,3 0 R million -5 -10 -12 -15 Palm oil Sugar Flour Maize Potatoes Butter
Slide 33: Market shares – 12 months value
Market shares – 12 months value 45.0% 41.8% 40.9% 40.0% 35.0% 30.0% 25.0% 20.0% 18.6% 17.9% 14.1% 14.1% 15.0% 10.0% 5.0% 0.0% Bakers (Sweet) Bakers (Savoury) Willards H1 F19 H1 F20 Volumes resilient in constrained environment
Slide 34: I&J
+ SINCE 1910 - GROWING GREAT BRANDS
Slide 35: I&J: Income statement
Income statement H1 F20 H1 F19 % Rm Rm Revenue 1 181,5 1 181,8 0,0 Operating profit 169,0 152,8 10,6 Operating profit margin % 14,3 12,9 10,9 Revenue flat Higher hake sales volumes and favourable Rand exchange rate Offset by lower non-core volumes and pressure on selling prices in some export
Slide 36: I&J: Operating profit
Operating profit 200 150 100 R million 50 - 153 26 -13 11 22 -31 1 169 H1 Forex Export prices Vessel Fuel mark- Abalone Other H1 F19 utilisation to-market unrealised F20 profit Pressure on some export prices from increased competition Lower unrealised profit included in valuation of live abalone
Slide 37: Profit history
Profit history 250 207 204 200 189 185 176 50 29 40 25 25 22 150 5 34 27 153 154 35 R million 102 130 100 117 114 13 19 50 70 0 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 H1 Fishing Abalone Simplot Abalone contribution decrease due to lower export prices and resultant lower unrealised profit in valuat
Slide 38: Fishing Performance
Fishing Performance 14.0 12.0 11.6 11.4 10.9 10.0 10.0 9.3 9.6 9.1 8.9 8.5 8.2 8.3 Hake tons per sea day 8.0 6.0 4.0 2.0 0.0 H1 F10 H1 F11 H1 F12 H1 F13 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 I&J catch rate Decline mainly due to change in fleet utilisation - increase in wet vessel fishin
Slide 39: Sales volume and selling prices (Hake)
Sales volume and selling prices (Hake) %Δ Comments H1 F20 vs H1 F19 I&J Domestic revenue growth 5,0 Volume 3,1 Improved wet fleet fishing performance and higher quota Ave. selling prices 1,9 Price increases taken to mitigate cost pressure I&J Export revenue growth 3,0 Volume 4,2 Improved wet fleet f
Slide 40: Indigo Brands
au aa indigo brands YARDLEY LeNTHEMIC COTY RimMeL gf nailene. SalyHansen “W YARDLEY} GROWING GREAT BRANDS
Slide 41: Indigo: Income statement
Income statement H1 F20 H1 F19 % Rm Rm Revenue 687,8 584,2 17,7 Operating profit 93,5 128,4 (27,2) Operating profit margin % 13,6 22,0 (38,2) Higher revenue mainly due to change in Coty business model Lower gross profit and operating profit margins Owned brand revenue up Growth in lotions a
Slide 42: Operating profit
Operating profit 200 150 100 R million 50 - 128 -15 -24 5 94 H1 F19 NPD marketing costs Gross margin Coty contribution H1 F20 pressure
Slide 43: Sales volume and selling prices
Sales volume and selling prices %Δ Comments H1 F20 vs H1 F19 * Personal Care revenue growth* 2,5 Volume growth 5,2 Growth mainly from new product launches in lotions and roll-ons; aerosol volumes slightly up Ave. selling price (2,6) Lower realised prices due to change in sales mix; selling prices co
Slide 44: Spitz
SPITZ SPIT2 CARVELA KURTGEIGER LACOSTE GANT /Aninaroche FTOSONI Performance and Prospects GROWING GREAT BRANDS
Slide 45: Spitz: Income statement
Income statement H1 F20 H1 F19 % Rm Rm Revenue 941,6 985,4 (4,4) Operating profit 259,2 301,8 (14,1) Operating profit margin % 27,5 30,6 (10,1) Footwear volume decline Lower demand in constrained environment December trading negatively impacted by extended “Black Friday” in November, shift in
Slide 46: Sales volume and selling prices
Sales volume and selling prices %Δ H1 F20 vs Comments H1 F19 Spitz & KG Footwear revenue growth (6,0) Sales volume (8,5) Constrained consumer environment; tough December trading conditions Ave. selling price 2,8 Inflation in non core lines and lower volumes sold on sale KG Clothing revenue growth 6,
Slide 47: Green Cross
fs GREEN CROSS Performance and Prospects GROWING GREAT BRANDS
Slide 48: Green Cross: Income statement
Income statement H1 F20 H1 F19 % Rm Rm Revenue 120,4 153,9 (21,8) Operating profit (11,8) (15,3) 22,9 Operating profit margin % (9,8) (9,9) (1,0) Revenue decline of 21,8% Aggressive discounting across the category Loss of sales due to store conversion to new GX & Co multi-brand format Late
Slide 49: International
AN | International Performance and Prospects GROWING GREAT BRANDS
Slide 50: AVI International: Operating profit history
AVI INTERNATIONAL Operating profit history 140 117 120 109 100 92 94 93 82 80 73 77 70 R million 60 56 46 40 20 0 H1 F10 H1 F11 H1 F12 H1 F13 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 Volume growth in all categories apart from personal care Strong growth in Botswana as well as distributor
Slide 51: Entyce, Snackworks and Indigo – Non RSA sales
AVI INTERNATIONAL Entyce, Snackworks and Indigo – Non RSA sales H1 F20 H1 F19 % Rm Rm International Revenue 572,7 534,5 7,1 % of Grocery and Personal Care brands 11,7 11,3 3,5 International Operating Profit 117,3 108,8 7,8 % of Grocery and Personal Care brands 11,3 10,6 6,6 International Operating
Slide 52: Prospects for H2
AVI GROUP Prospects for H2 Target Entyce and Snackworks profit growth in a tough environment Sustain medium term approach Careful price / volume management in market expected to remain constrained and competitive Raw material prices and exchange rates secured support consistent gross profit
Slide 53: Prospects for H2 continued
AVI GROUP Prospects for H2 continued Target H2 recovery in Indigo profit Leverage H1 product launches and marketing investment Focus on achieving price points necessary to protect gross profit margin Ongoing review of structure and fixed costs Improve performance of Coty ranges
Slide 54: Prospects for H2 continued
AVI GROUP Prospects for H2 continued I&J performance dependent on catch rates Exchange rates at levels that support sound export profit margins Depend materially on catch rates and size mix Fuel costs effectively hedged, lower than H1 Quota for CY20 unchanged at 39 616 tons Increased com
Slide 55: Prospects for H2 continued
AVI GROUP Prospects for H2 continued Spitz Price increase implemented in February to protect gross profit margin Promotion of specific stock to manage inventory levels Focus on costs Review store refurbishment plans to minimise disruption Mitigate impact of load shedding Continued focu
Slide 56: Investor proposition
AVI GROUP Investor proposition Continue adapting to changing macro environment Ongoing review of business model Group initiatives keep focus on margin management, procurement, cost savings and efficiency Manage our unique brand portfolio to its long term potential Target real earnings grow
Slide 57: Questions
Questions GROWING GREAT BRANDS
Slide 58: Information slides: Revenue 1,0% up
INFORMATION SLIDES Revenue 1,0% up 7 250 7 200 7 150 7 100 7 050 R million 7 000 6 950 6 900 6 850 6 800 7 069 -65 112 -0 104 -41 -34 -3 7 142 H1 Entyce Snackworks I&J Personal Spitz Green Cross Other H1 F19 Care F20 Entyce: Volume declines partly offset by higher realised prices in creamer and co
Slide 59: Information slides: Gross profit 0,1% up
INFORMATION SLIDES Gross profit 0,1% up 3 100 3 000 2 900 2 800 R million 2 700 2 600 2 500 2 965 -10 67 5 -13 -40 -5 -2 2 967 H1 Entyce Snackworks I&J Personal Spitz Green Cross Other H1 F19 Care F20 Entyce: Lower volumes offset by favourable tea raw material costs Snackworks: Revenue growth an
Slide 60: Cash flows
INFORMATION SLIDES Cash flows 2 000 1 800 1 600 1 400 1 200 1 000 R million 800 600 400 200 - 1 753 -77 -341 -187 -88 -101 -825 632 -766 Cash from Working Taxation Capital Lease liabilities Net interest Odinary Simplot sale Decrease in operations capital and expenditure paid paid Dividends net debt
Slide 61: I&J fishing quota
INFORMATION SLIDES I&J fishing quota CY14 CY15 CY16 CY17 CY18 CY19 CY20 Quota (tons) South African Total Allowable Catch (TAC) 155 308 147 500 147 500 140 126 133 120 146 430 146 430 % change in TAC (0,5) (5,0) - (5,0) (5,0) 10,0 0,0 I&J 43 471 41 223 41 245 37 901 36 013 39 616 39 616 % 28,0 27,9 2
Slide 62: Impact of change in Coty business model
INFORMATION SLIDES Impact of change in Coty business model H1 F20 H1 F20 Reported Old basis Rm Rm Revenue 687,8 568,8 Operating profit 93,5 88,5 Operating profit margin % 13,6 15,6 Coty agreement renewed for 3 years Full revenue and cost of sales on Coty product in Indigo income statement Incr
Slide 63: Spitz and Kurt Geiger profit history
INFORMATION SLIDES Spitz and Kurt Geiger profit history 400 350 300 250 R million 200 150 100 50 0 H1 F11 H1 F12 H1 F13 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 80% 60% Margin % 40% 20% 0% H1 F11 H1 F12 H1 F13 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 Operating profit % Gross profit %
Slide 64: Trading space and trading density: Spitz
INFORMATION SLIDES Trading space and trading density Spitz H1 F20 H1 F19 Number of stores 75 76 Turnover (Rm) 789,6 837,7 Average m2 19 551 19 572 Trading Density (R /m2) 40 387 42 801 Closing m2 19 645 19 745 Like-for-like metrics* H1 F20 H1 F19 Number of stores 73 73 Turnover (Rm) 774,9 819,0 Aver
Slide 65: Trading space and trading density: Kurt Geiger
INFORMATION SLIDES Trading space and trading density Kurt Geiger H1 F20 H1 F19 Number of stores 34 33 Turnover (Rm) 122,1 117,0 Average m2 4 230 4 194 Trading Density (R /m2) 28 854 27 910 Closing m2 4 289 4 194 Like-for-like metrics* H1 F20 H1 F19 Number of stores 32 32 Turnover (Rm) 123,8 119,4 Av
Slide 66: Trading space and trading density: Green Cross
INFORMATION SLIDES Trading space and trading density Green Cross H1 F20 H1 F19 Number of stores # 41 44 Turnover (Rm) 90,5 114,6 Average m2 4 901 5 431 Trading Density (R /m2) 18 473 21 108 Closing m2 4 896 5 410 Like-for-like metrics* H1 F20 H1 F19 Number of stores # 40 40 Turnover (Rm) 89,5 107,5
Slide 67: Closing number of stores and trading space
INFORMATION SLIDES Closing number of stores and trading space at the end of each period Spitz Kurt Geiger Green Cross Period End # of stores Closing m² # of stores Closing m² # of stores Closing m² December 2009 56 15,220 3 346 June 2010 56 15,012 3 346 December 2010 57 15,124 7 1,047 June 2011 57 1
Slide 68: Growing Great Brands
GROWING GREAT BRANDS