Slide 1: Tiger Brands Year-End Results Presentation
TIGER BRANDS YEAR-END RESULTS PRESENTATION 19 November 2021
Slide 2: Index
Index Executive summary Financial & Strategic operational update & review outlook 2
Slide 3: Disclaimer
Disclaimer Forward-looking statement This document contains forward looking statements that, unless otherwise indicated, reflect the company’s expectations as at 19 November 2021. Actual results may differ materially from the company’s expectations if known and unknown risks or uncertainties affect
Slide 4: Executive summary
AUDITED GROUP RESULTS for the year ended 30 September 2021 We nourish and nurture more lives every day Executive summary Noel Doyle | CEO
Slide 5: Current trading environment requires a consumer-focused approach
Current trading environment requires a consumer-focused approach, optimal supply chain and relentless cost containment CHALLENGING MACRO ENVIRONMENT • Demand impacted by further Covid-19 waves and subsequent lockdowns • Renewal of SRD grant amongst low-income households did little to improve consume
Slide 6: Well-known headwinds required management focus
Well-known headwinds required management focus SPECIFIC HEADWINDS • Product recall • Civil unrest in July • Rest of Africa underperformance relative to our expectations - Compounded by factory under-recoveries due to strike action 6
Slide 7: Despite challenges, steady progress achieved against strategic priorities
Despite challenges, steady progress achieved against strategic priorities aimed at improving performance & capitalising on growth MEET THE NEEDS IGNITE BUILD A OPTIMISE OUR BE OBSESSED ABOUT OF THE CONSUMER OUR PEOPLE GROWTH PIPELINE SUPPLY CHAIN COST SAVINGS AND EFFICIENCIES • Value orientated • Em
Slide 8: Our Billion Rand Brands continue to rank highly on all metrics
Our Billion Rand Brands continue to rank highly on all metrics; making them relevant and resilient BRAND EQUITY RANK VOLUME SHARE VOLUME RANK VALUE SHARE VALUE RANK #1 25,7% #2 29,7% #1 #1 32,3% #1 33,3% #1 #3 24,1% #2 24,1% #2 #2 11,2% #2 11,9% #2 #2 38,1% #1 44,0% #1 #1 61,7% #1 65,9% #1 #1 53,9%
Slide 9: Volume share gains in the long-term supported by optimal pricing
Volume share gains in the long-term supported by optimal pricing and more effective promotional activity achieved without margin sacrifice in aggregate Total data set - volume share of basket 12MM TY vs LY 3MM TY vs LY Sep TY vs LY • Own Brands’ volume share losses are driven mainly -2,9 All Other -
Slide 10: Value share loss despite volume share gains
Value share loss despite volume share gains represents attempts to price more effectively for market conditions while efficiency gains make it possible Total data set - value share of basket 12MM TY vs LY 3MM TY vs LY Sep TY vs LY • Own Brands lose in the long term All Other -0,3 -0,6 -0,7 20,3 20,0
Slide 11: Accelerating strategic execution while some initiatives are of a long-term nature
Accelerating strategic execution while some initiatives are of a long-term nature Priority Progress 1. Meet the needs Enable digital and direct marketing eco-system of the consumer Health & Nutrition is used as a narrative and growth pillar Look for commercially viable opportunities to manufac
Slide 12: Financial and operational review
AUDITED GROUP RESULTS for the year ended 30 September 2021 We nourish and nurture more lives every day Financial and operational review Deepa Sita | CFO
Slide 13: Despite slower revenue growth in H2; momentum maintained in cost saving
Despite slower revenue growth in H2; momentum maintained in cost saving initiatives and efficiencies HIGHLIGHTS HEADWINDS • Despite significant cost push, solid naked margin • Limited volume growth management in H2 across most categories • Supply chain challenges • Procurement & MUV savings • Catego
Slide 14: Improved top-line performance driven by price inflation across the portfolio
Improved top-line performance driven by price inflation across the portfolio Pricing 7% Revenue* Volumes 2% Revenue* 5% to Gross profit 2% to Operating income** 10% at R31,0bn R8,8bn R2,2bn Total gross margin 160bps to Total operating margin110bps at Effective tax rate 190bps to 28,5%
Slide 15: Price inflation across all segments boosts revenue growth, despite slower H2
Price inflation across all segments boosts revenue growth, despite slower H2 Revenue* H2 F20 vs H2 F21 6% (4%) (1%) H1 F20 vs H1 F21 9% (1%) - 16,4 15,2 14,6 14,8 H1 FY20 H2 FY20 H1 FY21 H2 FY21 * Excluding the product recall and civil unrest 15
Slide 16: Civil unrest & product recall impact revenue, cost of sales & expenses
Civil unrest & product recall impact revenue, cost of sales & expenses Rm FY21 Total revenue 30 954 • Total impact of the product recall amounted Revenue 31 209 to R647m accounted for as follows: Impact of product recall (255) Revenue 255 Total Cost of Sales (22 144) Cost of sales 308 Cost of Sales
Slide 17: Performance impacted by costs relating to civil unrest & product recall
Performance impacted by costs relating to civil unrest & product recall Revenue (R’m) Operating Income* (R’m) Operating margin (%) HEPS (cps) 31,2 9,5% 31,0 3,0 8,3% 1 445 29,8 2,5 7,2% 1 196 1 127 2,2 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 As reported Excluding costs relating to civil unrest & pro
Slide 18: Clear accountability matrix drives consistent cost management
Clear accountability matrix drives consistent cost management in line with guidance R’m 236 183 79 2 478 2 236 (732) (8) Group operating OEE & factory Material usage Procurement Costs relating to Operational Group operating income FY20* efficiencies variance savings civil unrest and performance inco
Slide 19: Recovery across the portfolio while Milling & Baking and Exports face headwinds
Recovery across the portfolio while Milling & Baking and Exports face headwinds Grains (R’m) Consumer Brands (R’m) Home and Personal Care (R’m) Exports and international (R’m) FY21 14 590 13 920 11 080 10 668 3 588 FY20 3 367 1 951 1 840 433 399 1 369 1 236 1 131 941 96 103 Revenue Operating profit
Slide 20: Grains
5% 11% 50 bps Grains R14,6bn R1,4bn 9,4% Revenue Operating profit Operating margin Looking ahead • Adverse bread category dynamics persist • Plan to lead - Market pricing not reflective of cost push innovation and continue to build • Albany holding premium our brand purpose • Maize recovers in
Slide 21: Groceries
-% 12% 80 bps Groceries* R5,5bn R397m 7,2% Revenue Operating profit Operating margin Looking ahead • Result achieved despite • Defend leading - Increasingly competitive trading environment market positions through marketing - Low seasonal demand, particularly over Easter and innovation - Suppl
Slide 22: Snacks & Treats
7% 37% 220 bps Snacks & Treats R2,3bn R234m 10,2% Revenue Operating profit Operating margin Looking ahead • Revenue growth underpinned by 8% price increases; 1% lower • Priority site to volumes improve service • Volume performance negatively impacted by levels - Inability to meet demand albeit
Slide 23: Beverages
6% 9% 40 bps Beverages R1,7bn R261m 15,7% Revenue Operating profit Operating margin Looking ahead • Demand recovers post-lockdown for ready-to-drink segment • Identified as a high • Liquid concentrates shows continued momentum growth category - Benefitting from core offering (Oros) & innovatio
Slide 24: Baby
12% 29% 160 bps Baby R1,1bn R143m 13,0% Revenue Operating profit Operating margin Looking ahead • Delivered an overall strong recovery • Consolidation of • Volume growth driven by demand recovery across most segments Purity as master- brand - Nutrition recovers from adverse demand dynamics dur
Slide 25: Home and Personal Care (HPC)
6% 8% 50 bps Home and Personal Care (HPC) R2,0bn R433m 22,2% Revenue Operating profit Operating margin Looking ahead • Sustained strong performance in Home Care offset by volatile • Drive capex to demand in Personal Care achieve continuous • Home Care performance underpinned by a strong summer
Slide 26: Exports and International
7% 7% 40 bps Exports and International R3,6bn R96m 2,7% Revenue Operating profit Operating margin Looking ahead • Challenges in H2 create margin pressure • Optimise sales and • Revenue growth largely driven by strong performance in the first half country mix, while staying focused - Increased
Slide 27: Improved working capital dynamics and higher earnings resulted in strong cash generation
Improved working capital dynamics and higher earnings resulted in strong cash generation Cash generated from operations (R’m) Cash and cash equivalents (R’m) 34% 21% Rm FY21 FY20 Net cash (R’m) 2 162 1 780 RONA 19,3% 21,1% 3,955 2,162 Return on equity (ROE) 12,7% 9,0% Return on invested capital
Slide 28: Total capex spend in line with guidance; focus on replacement and automation
Total capex spend in line with guidance; focus on replacement and automation Capex spend by category Capex plan R1,7bn • Total Capex spend expected to be ~R1,7bn for FY22 R1,1bn R1,0bn • Emphasis remains on replacement and R937m automation • Larger projects include: - Relocation of Peanut Butter pla
Slide 29: Sector challenges impacting FY22 start
Sector challenges impacting FY22 start FOCUSED AND PRO-ACTIVE MANAGEMENT • Significant cost push • Labour unrest • Bread category remains challenging • Post Covid supply chain squeeze 29
Slide 30: Drivers for FY22 improvement
Drivers for FY22 improvement Reasonable revenue growth expectations at the core driven by • Volume growth underpinned by planned innovation launches • Exports improved products and country mix Significant improvements in factory performances (R480m) • Grains, Consumer Brands and Davita driven by low
Slide 31: Strategic update and outlook
AUDITED GROUP RESULTS for the year ended 30 September 2021 We nourish and nurture more lives every day Strategic update and outlook Noel Doyle | CEO
Slide 32: Our strategic priorities remain; progress achieved will be the platform
Our strategic priorities remain; progress achieved this year will be the platform for short-term improvement & long-term growth MEET THE NEEDS OPTIMISE OUR BE OBSESSED ABOUT BUILD A IGNITE OF THE CONSUMER SUPPLY CHAIN COST SAVINGS AND GROWTH PIPELINE OUR PEOPLE EFFICIENCIES • Continue to deliver val
Slide 33: Q&A
AUDITED GROUP RESULTS for the year ended 30 September 2021 We nourish and nurture more lives every day Q&A
Slide 34: Appendix
AUDITED GROUP RESULTS for the year ended 30 September 2021 We nourish and nurture more lives every day Appendix
Slide 35: Price inflation across all segments boost revenue growth
Price inflation across all segments boost revenue growth, despite slower revenue growth in H2 Revenue* Price inflation 7% Volume 2% R31,2m R29,8m Total Price Volume Forex Grains 5% 10% (5%) - Consumer Brands* 4% 7% (3%) - HPC 6% 3% 3% - Domestic operations 5% 8% (3%) - Exports & International 7% 2%
Slide 36: Grains value share stable; gains in Pasta and Maize
Grains value share stable; gains in Pasta and Maize offset by Flour and Rice while Bread holds its own 43,8 41,6 41,7 40,3 33,8 33,3 27,4 27,1 25,1 24,1 21,6 19,9 10,9 12,0 Grains Maize Flour Cereals Rice Dry Pasta Bread 12MM LY 12MM TY Source: IRI Tiger value share F21 September 2021 performance 36
Slide 37: Spreads and Beans show gains; Condiments impacted by price-led competition
Spreads and Beans show gains; Condiments impacted by price-led competition 65,9 63,9 61,4 60,8 40,2 40,3 38,9 38,7 32,2 32,6 Culinary Beans Tomato Sauce Peanut Butter Mayo & Salad Cream 12MM LY 12MM TY Source: IRI Tiger value share F21 September 2021 performance 37
Slide 38: Candy gains driven by Maynards; competitive behaviour in chocolate
Candy gains driven by Maynards; competitive behaviour in chocolate resulted in some share losses 42,9 43,7 31,1 29,9 21,4 21,2 12,7 12,1 Snacks & Treats Chocolate Candy Novelty & Speciality 12MM LY 12MM TY Source: IRI Tiger value share F21 September 2021 performance 38
Slide 39: Overall Beverages share growth driven by liquid concentrates
Overall Beverages share growth driven by continued momentum in liquid concentrates, with RTD juices also gaining share 53,4 51,4 46,3 47,4 45,8 44,9 17,9 16,4 Beverages Dilutables Sports Drinks RTD Juice 12MM LY 12MM TY Source: IRI Tiger value share F21 September 2021 performance 39
Slide 40: Baby reflective of improved demand & innovation
Baby reflective of improved demand & innovation; Personal Care impacted by volatile demand 60,5 61,7 59,4 59,6 9,6 8,8 Home Care (Pest) Personal Care Baby Nutrition 12MM LY 12MM TY Source: IRI Tiger value share F21 September 2021 performance 40
Slide 41: Contribution to revenue and operating income
Contribution to revenue and operating income Milling & Baking Snacks & Treats Baby Other grains Beverages Home & Personal Care (HPC) Groceries Out of Home Exports & International Revenue Operating income before IFRS 2 42% 34% 32% 33% 19% 18% 14% 15% 12% 13% 14% 11% 13% 13% 12% 9% 7% 6% 7% 6% 8% 9% 5