Premier Foods Plc · LSE:PFD
Premier Foods — FY2022/23 Earnings Presentation
42 slides from Premier Foods's earnings presentation, May 18, 2023
Slide 1: Preliminary Results for 52 Weeks Ended 1 April 2023
PRELIMINARY RESULTS FOR 52 WEEKS ENDED 1 APRIL 2023 18 MAY 2023
Slide 2: Alex Whitehouse, CEO
ALEX WHITEHOUSE Frnciching life
Slide 3: Another strong year – and we achieved £1bn sales
Another strong year – and we achieved £1bn sales Revenue Grocery market share Trading profit1 Trading profit margin1 £1,006m £158m 15.7% +64bps +11.8% +11.5% In line with prior year Adjusted PBT1 Net debt/EBITDA Dividend Pensions £137m 1.5x +20% 50% to £125m NPV of contributions vs +13.0% 0.2x lower
Slide 4: With strategic progress across the board
With strategic progress across the board 1 2 3 4 5 Infrastructure Inorganic Grow the UK core Category expansion International investment opportunities 1 +33% +10%1,2 +5.3% 3yr average UK Branded Investing in Revenue increased International The Spice Tailor revenue growth automation & efficiency 33%
Slide 5: Duncan Leggett, CFO
DUNCAN LEGGETT CFO Fenciching life
Slide 6: Group headlines – strong revenue and profit growth with margins maintained
Group headlines – strong revenue and profit growth with margins maintained £m FY22/23 Change vs PY Comments Branded revenue 844 9.1% Broad based growth, accelerated in H2 Non-branded revenue 162 28.3% Combination of new contracts and price increases on existing contracts Total revenue 1,006 11.8% Gr
Slide 7: Grocery performance driving profit growth
Grocery performance driving profit growth £m FY22/23 Change vs PY Comments Grocery Branded revenue 635 13.4% All major brands in growth; Batchelors and Nissin a particularly good year Non-branded revenue 112 27.3% Pricing benefits on existing contracts and recovery in out of home Total revenue 747 1
Slide 8: Leverage target of 1.5x met, and after The Spice Tailor acquisition
Leverage target of 1.5x met, and after The Spice Tailor acquisition Net debt /EBITDA 1.7x 1.3x 1.5x £m 350 300 285 182 44 274 250 7 230 13 45 200 20 2 20 150 20 100 50 0 Net debt EBITDA Working Capex Interest Tax Pensions Dividends Restructuring Net debt pre M&A Net debt FY21/22 capital / Other & ot
Slide 9: A reminder of our financial strength
A reminder of our financial strength Leverage Substantially fixed interest cost Commodities & forex Instrument Bond RCF Quantum £330m £175m 1.5x Coupon/margin 3.5% 2.5% + SONIA In line with target Tenor October 2026 May 2025 +1 £€$ ▪ Strong underlying cash ▪ Broad based spend on commodities generati
Slide 10: Pensions merger now delivering deficit contribution reductions
Pensions merger now delivering deficit contribution reductions 1 NPV of deficit contributions reduced to 2 Cash costs reduced by c.£6m 3 Now targeting full resolution Headlines £125m (net of RHM surplus) per annum from FY23/24 Actuarial Triennial Valuation progression (£m) NPV of deficit contributio
Slide 11: Knighton site closure
Knighton site closure 1 Knighton overview 2 Rationale 3 Impact ▪ Group branded mix +260bps increases by c.260bps to 86.5%1 ▪ Absolute and % margin accretive ▪ Manufactures powdered beverages and similar products ▪ Group strategy focused on delivering ▪ Approximately 300 colleagues affected branded g
Slide 12: Guidance
Guidance FY23/24 guidance £m • Working capital investment reflects Working capital Outflow higher value of stock holding Depreciation (including software amortisation) c.£25m • Low single digit £m cash tax payable Amortisation of brands and intangibles c.£20m from FY23/24 due to tax legislation chan
Slide 13: 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 14: Alex Whitehouse, CEO
THe SPICE a TAILOR distinctive intense fiery goan curry classic butter chicken nutty & aromatic delicate korma curry
Slide 15: 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 solid and growing UK Invest in operational Build sustainable Utilise brand building Leverage proven busine
Slide 16: Continued good progress in each pillar of our Enriching Life Plan
Continued good progress in each pillar of our Enriching Life Plan PRODUCT PLANET PEOPLE • Sales of plant based products increased 34% • New corporate charity partnership with • New Plantastic product launches include • Our GHG emissions targets have now been FareShare Millionaire Flapjacks, Protein
Slide 17: Our branded growth model is at the core of what we do
1 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
Slide 18: Our branded growth model at work
1 Our branded growth model at work Insight driven new products Brand investment Health & Nutrition Convenience Indulgence 1 TV & digital support for major brands 2 Digital & TV for cross brand ‘Best Restaurant in Town’ ▪ A major focus of innovation ▪ Convenient, affordable and tasty ▪ Indulgent opti
Slide 19: Instore execution and partnerships driving growth
1 Instore execution and partnerships driving growth Ambrosia and Angel Delight: Minions instore activity tie-up Batchelors: DC Warner Brothers pack promotions 19
Slide 20: Consistent delivery of branded revenue growth in the UK
1 Consistent delivery of branded revenue growth in the UK UK Branded Revenue progression UK Branded Revenue 3yr CAGR1 £m Pandemic ▪ Consistent branded elevated 800 volumes revenue progression over 5.3% last 4 years driven 700 by success of growth model ▪ Now exceeded the 600 FY20/21 peak, which was
Slide 21: Macro environment and a well-placed portfolio
1 Macro environment and a well-placed portfolio External environment Well-positioned /resilient Comfortable Managing Struggling Cross-brand investment Inflationary Changes in consumer Elevated in home Strong and Affordable highlighting great backdrop spending patterns eating occasions resilient bran
Slide 22: Investing in our infrastructure to drive growth and efficiency
2 Investing in our infrastructure to drive growth and efficiency Capex fuels branded growth Investment examples Stoke Carlton Cash Capital generation investment Branded Gross growth margin accretion Brand investment ▪ Triple head depositor on ▪ Auto case packer at end of ▪ Mr Kipling French Fancies
Slide 23: Sales from new categories up 33%, driven by Ambrosia Porridge
3 Sales from new categories sales up 33%, driven by Ambrosia Porridge Four key tests in market Ambrosia Porridge Market share progress 6.0% 5.0% 4.0% 3.0% Ready to eat, superior Targets growing quality & convenience ‘on the go’ market 2.0% 1.0% 4.5/5.0 “Delicious porridge, 0.0% perfect on the go. De
Slide 24: International sales increased 10%
4 International sales increased 10%1 Now rolling out Mr Kipling in USA following successful trial Australia Ireland International sales FY23 vs FY20 ▪ Delivered record market share of cake during ▪ Broad based growth FY22/23 63 ▪ Now market leader in ▪ Sales of Soba Indian cooking sauces noodles mor
Slide 25: Mr Kipling delivered record market share in Australia
4 Mr Kipling delivered record market share in Australia Australia Mr Kipling Branded growth model at work Market share progression 10.2% 8.6% 8.8% Value market share 6.8% 4.1% ▪ Lemon Bakewell Tarts received very strong consumer response in 3.1% first year 2.5% ▪ Impactful instore execution driving
Slide 26: Driving growth of The Spice Tailor post acquisition
5 Driving growth of The Spice Tailor post acquisition Why is The Spice Tailor a great fit? Accelerating revenue growth1 Increasing SKU distribution 25% 1 Branded business 20% 2 High growth profile 2018-2021 2023 3 Strong innovation potential Leveraging cross-brand instore activity New product innova
Slide 27: Exciting plans for FY23/24
Exciting plans for FY23/24 1 UK branded core 2 Infrastructure investment 3 New categories 4 International ▪ Expanding distribution of ▪ Increasing Mr Kipling Ambrosia Porridge to further distribution in US following retailers test in Target ▪ Adding new flavours to existing ▪ TV advertising and prod
Slide 28: We look forward to further strategic progress this year
We look forward to further strategic progress this year 1 ― We enter the year with positive momentum 2 ― We’ve made a good start to Quarter 1 Outlook 3 ― We have strong plans in place to deliver on each of our strategic pillars 4 ― The first cash benefits of pensions merger are now being realised 5
Slide 29: Q&A
Q&A
Slide 30: Appendix
DELICIOUSL) DELICIOUSLY GOOD
Slide 31: 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
Slide 32: Definitions
Definitions ▪ The period ‘FY22/23’ refers to the 52 weeks ended 1 April 2023, unless where otherwise stated. The period ‘FY21/22’ refers to the 52 weeks ended 2 April 2022, unless otherwise stated. ▪ Trading profit is defined as Profit/(loss) before tax before net finance costs, amortisation of bran
Slide 33: Why invest in Premier Foods?
Why invest in Premier Foods? 1 Portfolio of category leading brands 2 Proven branded growth model 3 Strong margin profile • Market leaders in • Sector leading the UK in our five • Strong track record margins main categories of delivering comparable with • 91% of UK branded revenue 5.3% large-cap pee
Slide 34: UK Grocery market
UK Grocery market 17% 37% Chilled 45% Ambient Frozen & Fresh 55% 63% 83% Branded Non-branded Branded Non-branded Branded Non-branded Market size £38bn £53bn £8bn Premier Foods Flavourings & Ambient Ambient QMS Cooking Sauces categories Seasonings Desserts Cake Market size £435m £478m £1,068m £314m £
Slide 35: 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 20% 20% FY22/23 commentary • FY22/23 No
Slide 36: Full year sales
Full year sales Including The Spice Tailor Excluding The Spice Tailor £m FY22/23 Change vs 1 year ago FY22/23 Change vs 1 year ago Grocery Branded revenue 635 13.4% 625 11.6% Non-branded revenue 112 27.3% 112 27.3% Total revenue 747 15.3% 737 13.8% Sweet Treats Branded revenue 209 (2.4%) 209 (2.4%)
Slide 37: Quarter 4 sales
Quarter 4 sales Including The Spice Tailor Excluding The Spice Tailor £m FY22/23 Change vs 1 year ago FY22/23 Change vs 1 year ago Grocery Branded revenue 176 22.7% 172 19.2% Non-branded revenue 31 37.6% 31 37.6% Total revenue 207 24.7% 203 21.7% Sweet Treats Branded revenue 54 (1.8%) 54 (1.8%) Non-
Slide 38: FY22/23 Revenue excluding Knighton
FY22/23 Revenue excluding Knighton £m Q1 Q2 Q3 Q4 FY Group sales 197.0 222.9 318.0 268.5 1,006.4 (including The Spice Tailor) Knighton (6.2) (7.2) (9.8) (7.6) (30.8) Group sales 190.8 215.7 308.2 260.9 975.6 (including The Spice Tailor, excluding Knighton) ▪ In FY23/24, the Group will report underly
Slide 39: Trading profit and Adjusted eps growth
Trading profit and Adjusted eps growth £m FY22/23 FY21/22 Trading profit – old definition 162 148 Software amortisation (5) (7) Trading profit – new definition 158 141 Net regular interest (20) (20) Adjusted PBT 137 121 Tax (26) (23) Adjusted earnings 111 98 Weighted average shares in issue (million
Slide 40: Interest and taxation
Interest and taxation £m FY22/23 FY21/22 Change Senior secured notes interest 12 13 1 Interest Bank debt interest 6 5 (1) 18 18 - Amortisation of debt issuance costs 2 2 - Net regular interest 20 20 - ▪ Tax charge of £21m, due to operating activities charge and impact on tax rate changes ▪ Notional
Slide 41: Combined Pensions Schemes – combined surplus of £766m
Combined Pensions Schemes – combined surplus of £766m 1 April 2023 2 April 2022 IAS19 Accounting valuation (£m) Premier Premier RHM Combined RHM Combined Foods Foods Assets 3,240 553 3,793 4,274 826 5,100 Liabilities (2,292) (735) (3,027) (3,135) (1,020) (4,155) Surplus/(Deficit) 948 (183) 766 1,139
Slide 42: Summarised Balance sheet
Summarised Balance sheet £m 1 April 2023 2 April 2022 Property, plant & equipment 186 191 Intangibles / Goodwill 975 940 Deferred tax asset 22 23 Retirement benefit assets 960 1,149 Non-current Assets 2,143 2,303 Working Capital - Stock 94 78 - Debtors 103 97 - Creditors (255) (254) Total Working Ca