Premier Foods plc · LSE:PFD
Premier Foods — FY2006 Earnings Presentation
49 slides from Premier Foods's earnings presentation, Mar 6, 2007
Slide 1: Premier Foods Preliminary Results Year ended 31st December 2006
Premier Foods Preliminary Results Year ended 31st December 2006 Tuesday, 6th March 2007
Slide 2: Robert Schofield, Chief Executive
Robert Schofield Chief Executive
Slide 3: Business Highlights
Business Highlights Tough trading year Hottest year on record Exceptional level of energy and raw material cost inflation But . . . Business on track Solid trading performance Issues with Convenience Foods Other businesses performing well Drive brands delivering strong growth Cost
Slide 4: Business Highlights
Business Highlights Transforming Premier Acquisition of Campbell’s UK and Ireland business for £460m Integration on track and proceeding at pace £28m pa of cost synergies by 2009 Agreed offer for RHM plc for £1,227m £85m pa of cost synergies by 2010 Completion expected 16 March 2007
Slide 5: Financial Highlights
Financial Highlights Total sales up 21.5% to £959.4m Total Grocery sales up 23.6% to £844.8m Including pro forma Meat-free, like-for-like Grocery sales up 3.1% Including pro forma Meat-free, like-for-like branded sales up 5.6% Trading profit up 23.5% to £132.5m Including like-for-like Me
Slide 6: Paul Thomas, Finance Director
Paul Thomas Finance Director
Slide 7: Summary Income Statement
Summary Income Statement £m 2006 2005 % Sales 959.4 789.7 +21.5% Trading profit 132.5 107.3 +23.5% Amortisation (11.0) (6.3) +74.6% Exceptional items* (20.1) (6.8) Na Foreign exchange valuation adjustments (3.8) 1.1 Na Operating profit 97.6 95.3 +2.4% Interest (39.5) (43.5) (9.2%) Profit before tax
Slide 8: Pro forma Sales Analysis
Pro forma Sales Analysis Sales £m 2006 2005 Change Target Convenience Foods, Pickles & Sauces 347.2 347.1 -% Spreads, Desserts & Beverages 253.7 242.3 +4.7% Core Original Grocery 600.9 589.4 +2.0% 1.5-2.0% pre Quorn Meat-free pro forma 110.0 99.8 +10.2% Core Premier Grocery 710.9 689.2 +3.1% 2.0-2.5
Slide 9: Trading Profit Growth
Trading Profit Growth 140 17.1 2.4 132.5 130 4.7 120 1.5 Trading profit £m 6.3 107.3 5.7 110 1.0 2.7 100 90 80 2005 Convenience Spreads, Bird's Meat free Meat free Meat free 2005 Acquisition - MBM 2006 Foods, Pickles Desserts & synergies organic growth synergies pre acquisition Campbell's & Sauces B
Slide 10: Reported Trading Profit
Reported Trading Profit Trading profit £m 2006 2005 Change Comments Convenience Foods, Pickles & 28.0 33.7 (16.9%) Convenience - cost inflation and weather Sauces Meat-free 19.0 6.5 na In line with acquisition expectations Campbell’s 17.1 - na In line with acquisition expectations Convenience Foods,
Slide 11: Pro Forma Trading Profit Analysis
Pro Forma Trading Profit Analysis Trading profit £m 2006 2005 Change Comments Total reported Grocery 134.4 106.8 +25.8% Campbell’s 17.1 - na In line with acquisition expectations Total Grocery excluding 117.3 106.8 +9.8% Campbell’s Pro forma Meat free - 8.7 - Pre acquisition trading profit in 2005 E
Slide 12: Trading Profit Summary
Trading Profit Summary ‘Healthy’ performance from Meat free Great performance from Spreads, Desserts & Beverages Pickles & Sauces in line with targets Convenience Foods under-performed 74% own label (beans, bean meals, pasta, traditional British veg) Hottest year on record Energy and r
Slide 13: Margin Development
Margin Development 2005 trading profit margin – continuing operations 13.59% Grocery sales mix effect and net cost savings 0.14% MBM (0.06%) Organic margin development 13.67% Acquisitions, net of Cadbury 0.14% 2006 Trading profit margin – continuing operations 13.81% Continued margin enhancement 13
Slide 14: Exceptional Items
Exceptional Items* £m 2006 Portishead closure / Methwold chilled facility set-up costs (7.2) Campbell’s - integration costs (8.0) United Biscuits – aborted acquisition costs (4.5) Other** (3.5) Profit on property disposal 3.1 Total exceptionals charge (20.1) Total cash exceptionals (13.4) *The Group
Slide 15: Interest
Interest Interest charge £m 2006 2005 Regular net cash interest 39.6 34.4 Campbell’s bridging loan interest 1.6 - Cash interest 41.2 34.4 Regular amortisation of debt costs 1.4 1.7 Regular interest charge 42.6 36.1 Exceptional amortisation of debt issuance costs 4.0 6.3 IFRS valuation adjustment – i
Slide 16: Tax
Tax Overall tax rate of 18.9% on continuing operations Pre-exceptional tax rate in 30-31% range due to permanent disallowable items Tax rate reduced by releases of prior year provisions following settlement with HMRC Cash tax rate for 2006 of 12.7% due to: accelerated capital allowances
Slide 17: Adjusted Earnings
Adjusted Earnings £m 2006 2005 % increase Continuing operations Trading profit 132.5 107.3 +23.5% Regular interest charge (42.6) (36.1) +18.0% Adjusted PBT 89.9 71.2 +26.3% Tax at 30% (27.0) (21.4) Adjusted Profit after tax 62.9 49.8 +26.3% Tax shield on allowable amortisation 3.8 3.1 +22.6% Adjuste
Slide 18: Consolidated Free Cash Flow
Consolidated Free Cash Flow Cashflow £m 2006 2005 Operating profit 97.6 95.3 Depreciation & amortisation and other non-cash charges 38.1 17.5 Working capital movement (34.7) 3.8 Movement in net retirement benefit obligations (9.1) (5.4) Cash generated from continuing operations 91.9 111.2 Discontinu
Slide 19: Consolidated Cash Flow and Debt
Consolidated Cash Flow and Debt Cashflow £m 2006 2005 Free cash flow (12.4) 43.7 Dividends (23.5) (33.8) Acquisitions, disposals and related capital (468.9) (204.3) expenditure Net proceeds from share issue 441.6 0.6 Debt issuance costs (4.4) (5.6) Non-cash movements (1.7) (2.4) Cash outflow (69.3)
Slide 20: Pension / Post Employment Benefits
Pension / Post Employment Benefits Key IAS19 Assumptions 2006 2005 Discount rate 5.20% 5.00% Inflation rate 3.00% 2.75% Increase in salaries 4.00% 3.75% Scheme specific mortality assumptions – based on experience Gross IAS 19 deficit of £85m (2005: £84m), net deficit of £59m (2005: £59m) Closi
Slide 21: Reporting on Premier / RHM Combination
Reporting on Premier / RHM Combination Continue with Premier financial years ie calendar years We will provide the following reporting on RHM Restated RHM H1/H2 2006 results prior to the interims on Premier financial calendar Post acquisition results March onwards Pro forma results for H1
Slide 22: Robert Schofield, Chief Executive
Robert Schofield Chief Executive
Slide 23: Sales
Sales Like-for-like Grocery sales, including pro forma Meat-free up 3.1% Like-for-like Grocery up 2.0% Pro forma Meat-free up 10.2% Within this Branded sales up 5.6% Own label down 0.2% Strong branded growth 23 Premier Foods plc Full Year Results – Tuesday, 6th March 2007
Slide 24: Sales Analysis
Sales Analysis Sales £m 2006 Growth Quorn 96 +13.2% Ambrosia 68 +5.5% Branston 52 +15.9% Hartley 35 +7.1% Loyd Grossman 33 +24.8% Total Drive brands 284 +12.4% Core 88 (7.6%) Classic 50 (3.6%) Total Branded sales 422 +5.6% Own label 289 (0.2%) Total excluding Cadbury 711 3.1% Cadbury 33 (31.4%) Tota
Slide 25: Core and Classic
Core and Classic Core brands down 7.6% Canned Pasta, Bean Meals hit by food values trend Bird’s chilled custard Weather impact SunPat relaunch going well Classic brands down 3.6% H1 was down 6.5% H2 down 1.5% Sarson’s, Hayward’s relaunches doing well Relaunches of SunPat, Sarsons,
Slide 26: Market performance
Market performance Premier markets in 2006 Value grew 2% Volume declined 1% Premier’s branded share in 2006 Value grew 3% Volume grew 2% Tough market – our brands are competing well 26 Premier Foods plc Full Year Results – Tuesday, 6th March 2007
Slide 27: Own label
Own label Own label sales down 0.2% Pricing up 2.5% Volume down 2.7% Convenience sales down 3.9% Pricing up 2.3% Volume down 6.2% UK’s hottest year on record New products planned to stimulate Convenience own label 27 Premier Foods plc Full Year Results – Tuesday, 6th March 2007
Slide 28: Sales summary
Sales summary Tough year given the hot weather and exceptional cost inflation Brands performed well – driven by volume Drive brands key to success Core brands affected by consumer health trend Relaunched Classic brands bouncing back Own label needs attention in some areas Brand strategy
Slide 29: Convenience Foods, Pickles & Sauces
Convenience Foods, Pickles & Sauces Like-for-like sales flat at £347.2m Trading profit –16.9% at £28.0m 40% branded, but £173m of own label Convenience Foods sales Convenience sales under pressure, particularly own label, canned pasta, bean meals Disproportionate impact of cost and energy
Slide 30: Branston Beans & Pasta
Branston Beans & Pasta Branston beans sales 71% higher than last full year of HP Sales consolidated at 8% market share Branston NPD initiatives to continue to deliver “New News” ‘Bloomin Big Beans’ – genuine category innovation. Consumers loved the taste in research Supported Instore and
Slide 31: Pickles
Pickles Total Branston Brand penetration (including beans) up 9.1 percentage points to 54% penetration (+2.1m additional households) Branston (excluding beans) up 6.5% Branston table sauces successfully launched Core sweet pickle growth of 3% Relish re-launch in top-down squeezy in March 2
Slide 32: Sauces
Sauces Another year of exceptional growth +24.8%: brand now worth £33m New advertising campaign “Taste is everything” 312,000 new households on board Website re-designed Sampling campaign to drive trial Pour-over sauces launched in 2006 Stir-in sauces to launch in 2007 Extended soup
Slide 33: Spreads, Desserts & Beverages
Spreads, Desserts & Beverages Like-for-like sales up 4.7% to £253.7m 68% branded Trading profit up 5.6% to £70.3m, despite end of Cadbury licence Like-for-like trading profit up 12.3% after adjusting for Cadbury Strong organic sales and profit growth 33 Premier Foods plc Full Year Results –
Slide 34: Ambrosia
Ambrosia Ambrosia brand growth continued in 2006 - +5.5% sales Sales now almost £70m 750,000 new households buying Ambrosia in the last twelve months Growth driven by individual pots (+21%) + T.V support 2007 – more pot activity; more growth Flavoured custard re-launch New rice raspber
Slide 35: Hartley's
Hartley’s Brand growth continued in 2006 - +7.1% Brand now worth over £34m 660,000 new households buying Hartley’s jam in the last twelve months Over the last twelve months, 1 million new households are buying Hartley’s jelly Growth driven by continued growth of Hartley’s best jam Fourth
Slide 36: Meat-free
Meat-free Sales at £110.0m – like-for-like growth of 10.2% Trading profit at £19.0m – like-for-like growth of 25.0% Accelerating Growth of Quorn – up 13.2% Dynamic NPD program – 84 new products in 2006 New TV campaign supporting Quorn as ‘An everyday choice for everyone’ Penetration up t
Slide 37: Meat-free
Meat-free Positioning Cauldron for growth New chilled facility in Methwold, £11m invested Improved capacity and efficiency Improved Quorn margins when co-packed production brought in-house Greater operational flexibility Exciting NPD pipeline in place Brand will relaunch in 2007 Leve
Slide 38: Campbell's
Campbell’s Like-for-like 2006 sales down 2.8% at £243.3m, as previously indicated Like-for-like trading profit of £51.2m up 11.1% Significant reduction in A&P activity prior to sale Rate of decline slowed from 4.4% pre acquisition to 1.1% post acquisition Batchelors, Oxo, Fray Bentos retur
Slide 39: Batchelors and Oxo Initiatives
Batchelors and Oxo Initiatives Batchelors Cleaning up the ranges – removing artificial colours and preservatives Cup a Soup range: all artificial colours and preservatives removed, TV campaign started Super Noodles range will be cleaned up H2 New product launch – Batchelors Soupfulls A ran
Slide 40: Campbell's Integration
Campbell’s Integration Cost synergies confirmed at £28m pa by 2009 Integration - Administration Sales force integrated in November 2006 Marketing integrated December 2006 Systems integration due to be completed March 2007 Cambourne closure due April 2007 Kings Lynn back-office closure June
Slide 41: Fresh Produce
Fresh Produce Sales up 7.8% at £114.6m. Loss of £1.9m due to poor crop caused by hot summer weather Heads of terms agreed for sale to management Disposal underway 41 Premier Foods plc Full Year Results – Tuesday, 6th March 2007
Slide 42: RHM Acquisition
RHM Acquisition UK competition clearance received Irish competition clearance received Subject to disposal of Erin brand Premier shareholder approval received RHM shareholder approval received Awaiting Court sanction – completion expected 16 March We can’t wait to get started 42 Premier
Slide 43: Trading Outlook
Trading Outlook Normal trading environment - tough but stable Cost pressures remain, but good recovery to date Continued margin progression Strong NPD / marketing plans in place for 2007 Trading outlook in line with our expectations 43 Premier Foods plc Full Year Results – Tuesday, 6th March
Slide 44: Summary
Summary Grocery business delivering Acquisitions performing to plan Campbell’s integration on track RHM – ready to go! Fresh Produce – also ready to go Business has been transformed 44 Premier Foods plc Full Year Results – Tuesday, 6th March 2007
Slide 45: Premier Foods Preliminary Results Year ended 31st December 2006
Premier Foods Preliminary Results Year ended 31st December 2006 Tuesday, 6th March 2007
Slide 46: Appendices
Appendices
Slide 47: Rights issue restatements
Rights issue restatements Reported Adjusted* Earnings per share (pence) 2006 12.7 12.7 2005 15.0 11.9 Dividends per share (pence) 2005 interim 4.75 3.75 2005 final 9.5 7.5 2005 total 14.25 11.25 2006 first interim 5.00 3.95 2006 second interim 5.50 5.50 2006 final 2.55 2.55 2006 total 13.05 12.00 Av
Slide 48: Group Sales Analysis
Group Sales Analysis £m Sales Change 2006 2005 Convenience Foods, Pickles & 347.2 347.1 -% Strong Loyd and Branston growth offset by Sauces smaller brands and own label Meat-free 110.0 49.6 Na Full year contribution on top of underlying growth of % Campbell’s 101.3 - Na Convenience Foods, Pickles 55
Slide 49: Trading Profit Analysis
Trading Profit Analysis Trading profit £m 2006 2005 Change Comments Convenience Foods, Pickles & 28.0 33.7 Convenience Foods - cost inflation and weather Sauces Branston Beans launch 1.0 3.5 Branston beans now established Underlying trading profit 29.0 37.2 (22.0%) Meat-free 19.0 15.2 Strong organic