Avi Limited Class Y · JSE:AVI
Avi Limited Class Y — H1 FY2024 Earnings Presentation
66 slides from Avi Limited Class Y's earnings presentation, March 2024
Slide 1: AVI Limited presentation to shareholders & analysts
AVI Limited presentation to shareholders & analysts for the six months ended 31 December 2023
Slide 2: Agenda
AGENDA Key features and results history Group financial results Performance Prospects Questions and answers
Slide 3: Key Features
KEY FEATURES Satisfactory performance in a tough trading environment ❑ Constrained consumer demand ❑ Production sites impacted by unreliable municipal infrastructure ❑ SA port inefficiencies disrupted supply chains ❑ Load-shedding direct costs of R21,1 million Group revenue increased by 7,1% G
Slide 4: Key Features
KEY FEATURES Group operating profit increased by 17,1% Headline earnings per share up 17,4% to 374,3 cents Interim dividend of 202 cents per share, up 17,4% Capital expenditure of R242,0 million to upgrade facilities and improve efficiencies Return on capital employed of 30,8% for the 12 m
Slide 5: Results History: Operating profit history
RESULTS HISTORY Operating profit history 2 000 1 800 1 804 1 541 1 600 1 530 1 515 322 1 408 1 456 1 457 1 420 1 400 1 302 342 265 311 114 287 247 209 32 1 152 310 1 200 94 100 102 306 140 110 1 021 128 72 R million 169 126 160 1 000 309 140 921 179 153 124 854 296 167 790 800 303 103 160 585 674 23
Slide 6: Results History: Return on capital employed
RESULTS HISTORY Return on capital employed 8 000 35% 7 000 30% 6 000 5 000 25% R million 4 000 20% 3 000 2 000 15% 1 000 0 10% F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 F23 F24* Net operating profit after tax Average capital employed ROCE (%) * F24 represents a rolling 12 month period to 31 December 2
Slide 7: Results History: Cash conversion
RESULTS HISTORY Cash conversion 4 500 120% 4 000 100% 3 500 3 000 80% R million 2 500 60% 2 000 1 500 40% 1 000 20% 500 0 0% F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 F23 F24* EBITDA Cash generated by operations Cash to EBITDA (%) * F24 represents a rolling 12 month period to 31 December 2023 Sustai
Slide 8: Results History: Dividend yield
RESULTS HISTORY Dividend yield (Year end) 14% 12,0% 12% 10,1% 10% 7,7% 8% 7,4% 7,0% 7,1% 6,4% 6,5% 6,3% 6,2% 5,8% 6,1% 6% 5,2% 4,9% 3,8% 4,5% 4,1% 4,5% 4,3% 4,5% 4,4% 4,1% 3,7% 4,0% 4,0% 4% 2,8% 2% 0% F05 F06 F07 F08 F09 F10 F11 F12 F13 F14 F15 F16 F17 F18 F19 F20 F21 F22 F23 Normal dividend yield T
Slide 9: Results History: Returns to shareholders
RESULTS HISTORY Returns to shareholders 2 500 2 364 2 253 2 000 926 823 1 704 1 606 1 531 1 500 1 360 639 1 322 1 368 1 354 R million 1 197 550 953 1 000 870 789 1 606 270 621 1 430 1 368 1 354 1 438 1 531 675 … 319 1 322 1 197 500 227 1 065 953 318 231 301 810 229 263 … 621 675 202 166 373 229 239
Slide 10: Group Financial Results
Group Financial Results GROWING GREAT ANDS
Slide 11: Group Financial Results: Income statement
GROUP FINANCIAL RESULTS Income statement H1 F24 H1 F23 Rm Rm %∆ Revenue 8 378,1 7 822,9 7,1 Cost of sales (4 903,4) (4 711,0) 4,1 Gross profit 3 474,7 3 111,9 11,7 Gross profit margin % 41,5 39,8 4,3 Selling and administrative expenses (1 670,9) (1 571,2) 6,3 Operating profit 1 803,8 1 540,7 17,1 Op
Slide 12: Business unit financial results
GROUP FINANCIAL RESULTS Business unit financial results Segmental Segmental Operating Revenue Operating Profit Margin H1 F24 H1 F23 Δ H1 F24 H1 F23 Δ H1 F24 H1 F23 Rm Rm % Rm Rm % % % Food & Beverage brands 6 674,7 6 127,4 8,9 1 373,3 1 133,6 21,1 20,6 18,5 Entyce Beverages 2 420,2 2 086,6 16,0 551,
Slide 13: Movement in group revenue
GROUP FINANCIAL RESULTS Movement in group revenue 9 000 8 500 8 000 R million 7 500 7 000 6 500 6 000 7 823 827 (272)* 8 378 H1 F23 Price Volume H1 F24 * Includes impact of loss of Coty business in Personal Care Price increases to recover significant input cost inflation I&J sales benefitted fro
Slide 14: Gross profit margin
GROUP FINANCIAL RESULTS Gross profit margin 60% 50% Gross Profit % 41,5% 41,5% 39,6% 39,6% 39,8% 40% 30% 20% H1 F20 H1 F21 H1 F22 H1 F23 H1 F24 Increase in gross profit margins despite difficult environment and lower I&J profit Margins well protected by selling price increases, fastidious cost c
Slide 15: Operating profit 17,1% up
GROUP FINANCIAL RESULTS Operating profit 17,1% up 1 850 1 800 1 750 R million 1 700 1 650 1 600 1 550 1 500 1 541 75 205 (40) 12 11 1 804 H1 Entyce Snackworks I&J Personal Footwear & H1 F23 Care Apparel F24 Entyce: Tea recovery off weak base supported by strong creamer result and sustained improve
Slide 16: Cash flow, gearing and return on capital
GROUP FINANCIAL RESULTS Cash flow, gearing and return on capital H1 F24 H1 F23 Rm Rm % Cash generated by operations 1 851,7 1 058,3 75,0 Working capital to revenue % * 24,7 27,6 (10,5) Capital expenditure (242,0) (245,5) (1,4) Net debt 1 808,9 2 447,2 (26,1) Net debt / capital employed % 25,2 33,4
Slide 17: Performance and prospects
Performance and prospects Performance
Slide 18: Entyce: Income statement (Tea)
Income statement H1 F24 H1 F23 % Rm Rm Revenue 2 420,2 2 086,6 16,0 Operating profit 551,9 476,9 15,7 Operating profit margin % 22,8 22,9 (0,4) Tea profit growth supported by higher volumes, good cost control and selling price increases ❑ Price increases across black tea and rooibos to ameliorate
Slide 19: Entyce: Income statement (Coffee)
Income statement H1 F24 H1 F23 % Income statement Rm Rm Revenue 2 420,2 2 086,6 16,0 Operating profit 551,9 476,9 15,7 Operating profit margin % 22,8 22,9 (0,4) Coffee profit decline ❑ Revenue growth in premium, mixed instant and affordable brewed categories ❑ Significant selling price increases
Slide 20: Entyce: Income statement (Creamer)
Income statement H1 F24 H1 F23 % Income statement Rm Rm Revenue 2 420,2 2 086,6 16,0 Operating profit 551,9 476,9 15,7 Operating profit margin % 22,8 22,9 (0,4) Pleasing creamer profit growth ❑ Top line grew supported by higher sales volumes and selling price increases ❑ Margin improvement despi
Slide 21: Sales volume and selling prices
Sales volume and selling prices %Δ H1 F24 vs Comments H1 F23 Tea revenue growth 17,5 Volume 13,0 Growth in both black tea and rooibos volumes off weaker base which included aggressive competitor promotions Ave. selling price 4,0 Prices increases in August 2023 on both black tea and rooibos Coffee re
Slide 22: Market shares – 12 months value
Market shares – 12 months value 70,0% 60,0% 57,4% 55,0% 48,9% 50,0% 41,2% 40,0% 29,2% 29,8% 30,0% 18,6% 20,0% 15,7%16,4% 15,7% 10,0% 0,0% Five Roses Freshpak Frisco Ellis Brown Trinco H1 F23 H1 F24 Short-term market shares reflect targeted price/volume balance in volatile market Market share ref
Slide 23: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (H1 F24 vs H1 F23): 30 24 25 20 16 15 14 10 11 10 5 R million 5 0 (5) (10) (15) (15) (20) Palm oil Casein Rooibos Arabica Glucose Robusta / chicory Black tea Impact net of hedging
Slide 24: Snackworks Performance
Snackworks That’s Good Times! AD) Willer’ Mir, _ Performance fy JUMPIN JAC GOURMET POPCORN > \ oe ad rt »4 a ~ —_ e. — » f J +s : “<« \ be
Slide 25: Snackworks: Income statement (Biscuits)
Income statement H1 F24 H1 F23 % Income statement Rm Rm Revenue 3 101,1 2 824,9 9,8 Operating profit 789,6 584,5 35,1 Operating profit margin % 25,5 20,7 23,2 Growth in biscuit profit due to improved mix and good cost control ❑ Higher realised prices from increases taken last year ❑ Sales volume
Slide 26: Snackworks: Income statement (Snacks)
Income statement H1 F24 H1 F23 % Rm Rm Revenue 3 101,1 2 824,9 9,8 Operating profit 789,6 584,5 35,1 Operating profit margin % 25,5 20,7 23,2 Sound improvement in snacks’ profit ❑ Volume growth in maize extruded snacks’ brands ❑ Potato chip volumes supported by flavour extensions but constrained
Slide 27: Sales volume and selling prices
Sales volume and selling prices %Δ H1 F24 vs Comments H1 F23 Biscuits revenue growth 10,1 Volume (2,9) Increased pricing and constrained consumers partly offset by strong festive season Ave. selling prices 13,4 Price increases to recover cost pressures Snacks revenue growth 8,7 Volume 1,1 Volume gro
Slide 28: Market shares – 12 months value
Market shares – 12 months value 45,0% 39,3% 40,0% 38,0% 35,0% 30,0% 25,0% 20,0% 16,9% 16,2% 14,2% 13,7% 15,0% 10,0% 5,0% 0,0% Bakers (Sweet) Bakers (Savoury) Willards H1 F23 H1 F24 Balanced price / volume Market share reflects formal retail only Sound demand in wholesale channels
Slide 29: Raw material costs
Raw material costs Cost impact of raw materials and commodities consumed in the period (H1 F24 vs H1 F23): 15 13 10 6 5 3 1 R million 0 (5) (7) (10) (15) (15) (20) Palm oil Flour Maize Butter Potatoes Sugar Impact net of currency and commodity hedging
Slide 30: I&J Performance
J Performance
Slide 31: I&J Income statement
Income statement H1 F24 H1 F23 % Rm Rm Revenue 1 153,4 1 215,9 (5,1) Operating profit 31,8 72,2 (56,0) Operating profit margin % 2,8 5,9 (52,5) Difficult semester with lower fishing profits, despite weaker Rand ❑ Loss of export sales due to inefficiencies at Cape Town’s port ❑ Unexpectedly low ca
Slide 32: I&J Income statement: Abalone
Income statement H1 F24 H1 F23 % Rm Rm Revenue 1 153,4 1 215,9 (5,1) Operating profit 31,8 72,2 (56,0) Operating profit margin % 2,8 5,9 (52,5) Abalone profit decline ❑ Higher selling prices and weaker Rand offset by lower demand for live and dried abalone ❑ Core Asian markets challenged by weake
Slide 33: I&J Operating profit
Operating profit 200 180 160 140 R million 120 100 80 60 40 20 - 72 54 43 13 (63) (15) (8) (64) 32 H1 Currency Fuel VAP Catch rate Non-cash Re- Other H1 F23 Insurance BBBEE structuring F24 recognition charge costs Reduction in fuel prices supported by usage savings initiatives Recognition of ins
Slide 34: I&J Profit history
Profit history 250 200 175 159 160 22 149 150 5 35 128 50 R million 100 153 74 154 153 14 114 110 50 30 60 10 20 0 (25) H1 F18 H1 F19 H1 F20 H1 F21 H1 F22 H1 F23 H1 F24 (50) Fishing Abalone * F18 - F20 restated to exclude Simplot Fishing performance materially impacted by lower catch rates Abalo
Slide 35: Fishing performance
Fishing performance 12,0 9,6 9,8 10,0 9,3 9,3 9,1 8,9 8,9 8,5 8,3 8,2 Hake tons per sea day 8,0 7,2 6,0 4,0 2,0 0,0 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 H1 F21 H1 F22 H1 F23 H1 F24 I&J catch rate Decline across wet and freezer vessels with lowest catch rates in the last 20 years
Slide 36: Sales volume and selling prices (Hake)
Sales volume and selling prices (Hake) %Δ Comments H1 F24 vs H1 F23 I&J Domestic revenue decline* (5,2) Volume (10,2) Competitor activity, constrained demand, lower catch rates and service level constraints with production catch-up following fire last year Ave. selling prices 5,6 Price increases tak
Slide 37: Indigo Brands Performance
PO ee —~ irr my oN INdigo brands E E i E E E E EEE EEE EEE EEE EEE EEE YARDLEY LENTHERIC exclamation LONDON = LONDON + PARIS
Slide 38: Personal Care Income statement
Income statement H1 F24 H1 F23 % Rm Rm Revenue 539,3 610,5 (11,7) Operating profit 114,4 102,2 11,9 Operating profit margin % 21,2 16,7 26,9 Indigo profit growth despite loss of Coty contract ❑ Price increases to recover input cost pressures ❑ Revenue growth across aerosol, fragrance and roll-on
Slide 39: Sales volume and selling prices
Sales volume and selling prices %Δ Comments H1 F24 vs H1 F23 Personal Care revenue growth* 5,7 Volume (13,3) Volume decline due to constrained demand, aggressive competitor pricing and rationalisation of non- critical lines Ave. selling price 19,0 Price increases in response to cost pressure and imp
Slide 40: Market shares – 12 months value
Market shares – 12 months value 45,0% 42,0% 40,3% 40,0% 35,0% 33,4% 32,5% 30,0% 25,0% 20,0% Body sprays - Female * Body sprays - Male * H1 F23 H1 F24 * Excludes Coty Balanced price/volume in competitive environment Good performance from Lentheric in female and male portfolios
Slide 41: Footwear and Apparel Performance
FOOTWEAR AND APPAREL Performance
Slide 42: Footwear and Apparel Income statement
FOOTWEAR AND APPAREL Income statement H1 F24 H1 F23 % Rm Rm Revenue 1 164,1 1 085,0 7,3 Operating profit 322,3 311,2 3,6 Operating profit margin % 27,7 28,7 (3,5) Operating profit growth from higher selling prices and strong December performance ❑ Price increases to combat impact of weaker Rand a
Slide 43: Footwear and Apparel: Sales volume and selling prices
FOOTWEAR AND APPAREL Sales volume and selling prices %Δ H1 F24 vs Comments H1 F23 Spitz and Kurt Geiger Footwear revenue 10,4 growth Volume 0,6 Good demand for Carvela and Lacoste brands supported by availability and replenishment Ave. selling price 9,7 Price increases to ameliorate input cost press
Slide 44: International Performance
AN | International Performance DENTHERTC 8 sadars oer
Slide 45: AVI International: Operating profit history
AVI INTERNATIONAL Operating profit history 160 148 144 135 139 140 117 120 109 100 92 94 93 R million 82 80 73 77 70 60 40 20 - H1 F12 H1 F13 H1 F14 H1 F15 H1 F16 H1 F17 H1 F18 H1 F19 H1 F20 H1 F21 H1 F22 H1 F23 H1 F24 Profit growth from main subsidiary markets partly offset by declines in distrib
Slide 46: Entyce, Snackworks and Indigo – Non RSA sales
AVI INTERNATIONAL Entyce, Snackworks and Indigo – Non RSA sales H1 F24 H1 F23 % Rm Rm International Revenue 632,8 656,4 (3,6) % of Grocery and Personal Care brands 10,4 11,9 (12,6) International Operating Profit 148,3 144,2 2,8 % of Grocery and Personal Care brands 10,2 12,4 (17,8) % % Internationa
Slide 47: H2 Prospects
H2 Prospects GROWING GREAT ANDS
Slide 48: Prospects for H2
AVI GROUP Prospects for H2 Protect Entyce and Snackworks margins in a tough environment ❑ Careful price/volume management in market that is expected to remain constrained and competitive ❑ New product launches to support brands and profitability ❑ Raw material prices and exchange rates secured sup
Slide 49: Prospects for H2
AVI GROUP Prospects for H2 Protect Entyce and Snackworks margins in a tough environment ❑ Continued project activity to upgrade facilities and improve efficiencies ❑ Input cost pressures remain with selling price increases expected in some categories ❑ Ongoing focus on cost savings, structures and
Slide 50: Prospects for H2
AVI GROUP Prospects for H2 I&J prospects materially dependent on fishing performance, fuel prices and exchange rates ❑ Savings from restructuring of Woodstock facility and closure of cold storage in H1 will support profitability ❑ Exchange rates hedged at better rates than achieved in H1 ❑ Benefit
Slide 51: Prospects for H2
AVI GROUP Prospects for H2 Footwear and Apparel ❑ Continued selling price inflation to ameliorate the impact of a weaker Rand ❑ Exchange rates secured support profitability ❑ Focus on improving apparel performance ❑ Continued development of owned brands ❑ Ongoing focus on cost control and improvin
Slide 52: Prospects for H2: Capital investment projects
AVI GROUP Prospects for H2 Capital investment projects to upgrade facilities and improve efficiencies H2 F24 F24 Total Planned Planned Rm Rm Back-up water storage, boreholes and treatment 18 23 Creamer capacity increase 9 50 Biscuit line upgrades and improvements 27 52 Snacks fryer essential repla
Slide 53: Investor proposition
AVI GROUP Investor proposition Ongoing review and simplification of business model to accommodate a challenging macro environment Focus on scalable and relevant innovation for constrained consumers Group initiatives – margin management, procurement, cost savings and production efficiencies M
Slide 54: Questions
Questions GROWING GREAT BRANDS
Slide 55: Revenue 7,1% up
INFORMATION SLIDES Revenue 7,1% up 8 600 8 400 8 200 R million 8 000 7 800 7 600 7 400 7 823 334 276 (63) (71) 79 8 378 H1 Entyce Snackworks I&J Personal Footwear & H1 F23 Care Apparel F24 Entyce: Growth in Ciro, tea and creamer partly offset by declines in coffee Snackworks: Growth in biscuits
Slide 56: Gross profit 11,7% up
INFORMATION SLIDES Gross profit 11,7% up 3 600 3 500 3 400 R million 3 300 3 200 3 100 3 000 2 900 3 112 112 228 (29) 12 40 3 475 H1 Entyce Snackworks I&J Personal Footwear & H1 F23 Care Apparel F24 Entyce: Revenue growth partly offset by margin pressure with higher commodity input costs not fully
Slide 57: Impact of non-renewal of Coty distributor agreement
INFORMATION SLIDES Impact of non-renewal of Coty distributor agreement Personal Care F23 H1 F23 H1 Coty F23 H1 excluding Reported contribution Coty Operating performance Rm Rm Rm Revenue 610,5 101,1 509,4 Operating profit 102,2 21,8 80,4 Operating profit margin 16,7 21,6 15,8 F23 H1 Rm Working capit
Slide 58: Marketing expenditure
INFORMATION SLIDES Marketing expenditure 16,0% 14,4% 14,2% 14,0% 12,0% 10,0% 8,1% 7,8% 8,0% 7,0% 6,6% 6,4% 6,1% 5,9% 5,4% 5,6% 6,0% 5,4% 4,3% 4,4% 4,0% 1,9% 1,6% 2,0% 0,0% * Excludes Coty H1 F23 H1 F24 Total expenditure for H1 F24 of R433,9 million compared to R416,3 million in H1 F23 ❑ Increase i
Slide 59: Key capital projects spend summary
INFORMATION SLIDES Key capital projects spend summary H1 F24 Rm Creamer capacity increase 41 Biscuit line upgrades and improvements 25 Snacks’ fryer essential replacement 28 Distribution centre facility upgrades 13 I&J processing plant and storage facility upgrades 15 I&J vessel dry-docks and upgrad
Slide 60: Capital expenditure and depreciation
INFORMATION SLIDES Capital expenditure and depreciation (excluding depreciation on right-of-use assets) 1 000 F16 F17 F18 F19 F20 F21 F22 F23 F24 120,00 900 882 100,00 800 700 322 80,00 600 546 R million 500 473 60,00 482 472 420 416 400 262 394 388 408 377 411 388 388 390 347 183 316 40,00 236 230
Slide 61: Cash flows
INFORMATION SLIDES Cash flows 2 500 2 000 1 500 R million 1 000 500 - 2 054 27 (191) (420) (242) (14) (73) (106) (1 035) Cash from Increase in Working Taxation Capital Intangible Lease Net interest Ordinary operations net debt capital and expenditure expenditure liabilities paid paid dividend paid o
Slide 62: Foreign exchange hedges
INFORMATION SLIDES Foreign exchange hedges February 2024 to July 2024 to January 2025 to June 2024 December 2024 June 2025 % Cover % Cover % Cover USD imports 67% 11% 0% 50% 4% 0% EUR imports USD exports 70% 44% 5% 76% 32% 2% EUR exports Consistent hedging philosophy provides stability to manage g
Slide 63: I&J period end fair value adjustments
INFORMATION SLIDES I&J period end fair value adjustments H1 F24 H1 F23 Actual Actual Rm Rm Rm Fuel hedge unrealised (gain) / loss (10,3) 5,1 (15,4) Opening mark-to-market liability (12,8) (0,2) Closing mark-to-market liability (2,5) (5,3) Abalone – (increase) / decrease in unrealised profit in (5,
Slide 64: I&J fishing quota
INFORMATION SLIDES I&J fishing quota CY18 CY19 CY20 CY21 CY22 CY23 CY24 Quota (tons) South African Total Allowable Catch 133 120 146 430 146 430 139 119 132 163 138 772 145 145 (TAC) % change in TAC (5,0) 10,0 - (5,0) (5,0) 5,0 4,6 I&J 36 013 39 517 39 517 37 543 34 143 35 850 37 365 % 27,1 27,0 27,
Slide 65: Trading space and trading density
INFORMATION SLIDES Trading space and trading density Footwear and apparel H1 F24 H1 F23 Number of stores 115 116 Turnover (Rm) 1 164,1 1 085,0 Average m2 23 703 24 543 Trading Density (R/m2) 49 112 44 208 Closing m2 23 734 24 411 Like-for-like metrics* H1 F24 H1 F23 Number of stores 112 112 Turnover
Slide 66: Trading density – Footwear and apparel stores
INFORMATION SLIDES Trading density – Footwear and apparel stores 50 000 35 000 45 000 30 000 40 000 35 000 25 000 30 000 20 000 R/m2 m2 25 000 15 000 20 000 15 000 10 000 10 000 5 000 5 000 0 0 H1 F17 H1 F18 H1 F19 H1 F20 H1 F21 H1 F22 H1 F23 H1 F24 Trading density (R/m2) Average trading space (m2)