Slide 1: Tiger Brands Group Results presentation
Tiger Brands Group Results presentation 20 November 2020
Slide 2: Index
Index Executive summary Financial and operational review Strategic update and outlook Picture to be confirmed 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 20 November 2020. 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 2020 Executive summary Noel Doyle | CEO We nourish and nurture more lives every day
Slide 5: Progress on key H2 deliverables
Progress on key H2 deliverables Execution gains momentum facilitated by focus and speed Structural realignment Conclude VAMP disposal Plan for Deciduous Fruit Rationalisation of tail-end brands in Personal Care • Clear accountability • Concluded with all jobs • Sale process initiated • Sale agreemen
Slide 6: Disappointing full year result while H2 performance shows signs of stabilisation despite Covid-19
Disappointing full year result while H2 performance shows signs of stabilisation despite Covid-19 An already challenging operating environment exacerbated by Covid-19 challenges Challenging environment Segmental headwinds Positive response to Covid-19 pandemic • Value orientated consumer focused • M
Slide 7: Financial and operational review
AUDITED GROUP RESULTS for the year ended 30 September 2020 Financial and operational review Deepa Sita | CFO We nourish and nurture more lives every day
Slide 8: A disappointing full year result with continued margin compression
A disappointing full year result with continued margin compression Poor first half result offset in part, by an improved underlying performance in the second half Group revenue up 4% to R29.8 billion Group operating income+** down 18% to R2.6bn FY20 29 796 FY20 2 602 FY19 28 579 FY19 3 170 Pricing u
Slide 9: Deleverage at operating income level despite tight operating cost control
Deleverage at operating income level despite tight operating cost control Prior year EPS boosted by capital profit from the unbundling of investment in Oceana Rm FY20 FY19 % change Gross profit 8 959 9 104 (2%) Gross margin % 30.1% 31,9% (2%) Operating income before impairments and abnormal items 2
Slide 10: Abnormal items adversely impacted profitability
Abnormal items adversely impacted profitability Fair value gain on unbundling of investment in Oceana & sale of residual shares distorts FY19 Rm FY20 FY19 Restructuring & related costs (68) (32) Dispute resolution – Nigeria (67) - Obsolete assets scrapped (8) - Loss on sale of intangible asset (1) -
Slide 11: Impairments recognised in Export businesses, UAC and Personal Care
Impairments recognised in Export businesses, UAC and Personal Care Reflective of challenging outlook exacerbated by Covid-19 led economic headwinds Rm FY20 FY19 Personal Care (36) - Davita (powdered soft drinks & seasoning) (250) (212) Impairment of intangible assets (286) (212) Impairment of proper
Slide 12: Income from associates supported by Carozzi and NFL
Income from associates supported by Carozzi and a reasonable trading performance from NFL Tough macro aggravated by Covid-19 headwinds in Nigeria impact UAC’s result Rm -5% YoY 400 R371m R352m 350 57 73 300 9 23 250 30 200 150 286 245 100 50 0 FY20 FY19 Empresas Carozzi Oceana Group UAC National Foo
Slide 13: Covid-19 lockdown measures led to a mixed segmental result
Covid-19 lockdown measures led to a mixed segmental result Grains & Groceries supported by at-home consumption while demand in high-margin segments suppressed • Good second half performance in some segments Rm • Grains particularly impacted by adverse cost dynamics in Rice, despite 20% inflation 13
Slide 14: Revenue recovery in H2 supported by improved demand & operational performance
Revenue recovery in H2 supported by improved demand & operational performance Price inflation reflects constrained environment H1 revenue drivers (Rm) H2 revenue drivers (Rm) FY revenue drivers (Rm) 15,1 15,2 14,6 28,6 29,8 13,5 H1 FY19 Price Volume H1 FY20 H2 FY19 Price Volume Forex H2 FY20 FY19 Pr
Slide 15: Profitability impacted across most of the portfolio
Profitability impacted across most of the portfolio Cost push ahead of inflation in domestic businesses plus Export challenges result in reduced profits Rm ( 118 ) ( 88 ) 15 ( 142 ) ( 58 ) 28 ( 39 ) ( 10 ) ( 40 ) ( 71 ) (45) 3 170 2 602 FY 19 Milling Other Snacks Beverages Out of Personal Baby Decid
Slide 16: Headwinds as a result of Covid-19 impacting margin and operating profit
Headwinds as a result of Covid-19 impacting margin and operating profit Covid-19 related costs shaved 100bps off the operating margin 35 16% o Approximately R450m of direct and indirect Covid-19 related costs incurred during the year 30 14% o Relating to additional operating regulations, staff safet
Slide 17: Grains
Grains Price increases insufficient to offset raw material cost increases, but select categories had promising H2 recovery o Reasonable recovery in H2 5% 14% 202bps • Baking stabilised; Sorghum challenged by Covid-19 • Adverse competition dynamics persist in Maize R13.9bn R1.2bn 8.9% • Cost re
Slide 18: Groceries
Groceries Groceries profitability improved on increased volumes and rigid cost control o Volume growth driven by spreads and canned vegetables 9% 9% - • Jam & peanut butter volumes benefiting significantly from at-home consumption R5.6bn R354m 6.4% o Profitability benefited from favourable produ
Slide 19: Snacks & Treats
Snacks & Treats Demand adversely impacted across all segments during the various lockdown stages o Lower volumes across sugar and chocolate 5% 46% 594bps o Profitability impacted by closure of facilities during the initial stages of the lockdown R2.1bn R171m 8% • Additional Covid-19 related cos
Slide 20: Beverages
Beverages Covid-19 restriction in H2 offsets reasonable H1 growth o Impacted by Covid-19 restrictions in H2 1% 20% 387bps o Operating income adversely affected by unfavourable product mix • Energade lockdown-linked decline significant R1.6bn R238m 15.3% • Concentrates demand improved, but marg
Slide 21: Home, Personal & Baby Care (HPCB)
Home, Personal & Baby Care (HPCB) HPCB performance underpinned by sustained strong performance in Home Care o Volume uplift in Home Care driven by increased demand and 5% 7% 231bps effective in-store execution o EBIT affected by trading restrictions in the early stages R2.8bn R510m 18.1% of th
Slide 22: Exports and International
Exports and International Improved second half performance driven by Chococam & Exports o Exports impacted by trademark dispute in Nigeria 4% 51% 347bps • Subsequently resolved providing positive momentum o Rebound in Mozambique as new distributor model gains traction R3.4bn R103m 3.1% Revenue
Slide 23: Solid working capital management in tough trading conditions
Solid working capital management in tough trading conditions 4 days Rbn FY20 3,5 32 o Strong collections across the portfolio FY19 3,7 Debtor days 4 days FY20 2,3 o Impacted by demand levels in some 30 categories and factory closures FY19 2,6 Creditor days 11 days FY20 5,3 o Lower raw material
Slide 24: Full year dividend resumed plus special dividend
Full year dividend resumed plus special dividend Supported by strong balance sheet and cash generation Rm FY20 FY19 cps FY20 FY19 Cash generated by operations 2 953 3 492 Interim dividend - 321 Capital expenditure (937) (1 104) Final dividend 537 434 Proceeds on disposal of VAMP* 100 - Special divid
Slide 25: Disbursement ~R1 billion focused on replacement
Disbursement ~R1 billion focused on replacement Capex spend on replacement up 10% Capex (Rm) Capital expenditure (R’m) 1 104 937 Replacement 280 504 278 600 659 Compliance 192 2019 2020 Efficiency optimisation 187 Replacement Expansion Capacity enhancement 158 Category spend (Rm) 62 Major maintenanc
Slide 26: Key focus areas
Key focus areas Immediate priorities to ensure sustainable improvements Systematic and Continued Adoption of Continuous Improved capex continuous cost working capital alternative solutions assessment of approval and management optimisation to actively manage category fit execution process forex expo
Slide 27: Strategic update and outlook
AUDITED GROUP RESULTS for the year ended 30 September 2020 Strategic update and outlook Noel Doyle | CEO We nourish and nurture more lives every day
Slide 28: The challenging environment & our new normal
The challenging environment & our new normal Headwinds are well-known & economic downturn likely to persist Change in consumer spending habits Competition Costs & efficiencies • Value for money spending continues • Increased competition as everyone fights • No room for inefficiency for a bigger piec
Slide 29: Tiger Brands is at a critical inflection point
Tiger Brands is at a critical inflection point Stakeholders are skeptical of our ability to effect the long-awaited turnaround Ensuring a much-improved performance in FY21 is non-negotiable Invest in • Restore investor confidence • IT • Secure the time needed for our turnaround strategies to gain tr
Slide 30: Balancing short-term impact with long-term growth
Balancing short-term impact with long-term growth Dual pronged approach Stabilise performance Platform for growth Operational initiatives to improve current portfolio Setting us up for the future • Respond to the consumer • Organic growth • Enhance the supply chain - Clear categorisation of growth v
Slide 31: Immediate focus is to drive an improved performance of the current portfolio
Immediate focus is to drive an improved performance of the current portfolio Focused on the consumer and supply chain Respond to the consumer Enhance the supply chain • Build clear benefits of current brands • Targeting saving of ~R500 million in FY21 • Innovation and renovation • Deliberate capital
Slide 32: Respond to the consumer
Respond to the consumer Early signs of execution with plans gaining traction • Reformulated and relaunched Baby Toiletries under Purity • Expanded Purity into toddler snacking Respond to • Build clear benefits of current brands the consumer • Modernised Ingram’s and expanded range • Innovation and r
Slide 33: Enhance the supply chain
Enhance the supply chain Clear prioritisation & targets with improved tracking & monitoring • Clear prioritisation of plants Enhance the • Targeting saving of ~R500 million in FY21 supply chain • Frequent tracking and monitoring • Deliberate capital expenditure • Harnessing digital platforms for bet
Slide 34: Growth beyond turnaround
Growth beyond turnaround As we stabilise the core, focus will shift to growth Growth pipeline ORGANIC INORGANIC Focus on profitability Distort to Grow Prioritise supply chain & Prioritise marketing investment, Exit / Review M&A JV VC Licensing procurement efforts to improve R&D resource & Exco focus
Slide 35: Immediate priority is to address commercial pressures
Immediate priority is to address commercial pressures Supported by strategic commitments to ESG Health & nutrition Enhanced livelihoods Environmental stewardship • Key commercial driver • Supports our supply chain initiatives • Supports plant efficiency • Updated nutritional standards against • Supp
Slide 36: Drivers of an improved performance in FY21
Drivers of an improved performance in FY21 Clear signs of momentum evident Groundwork complete The year ahead – Our centennial year • Signs of recovery in Rice, Pasta, Maize • Business and functions organised and staffed to compete • Cost focused projects in Groceries, S&T and Beverages • Focused te
Slide 37: Appendix
AUDITED GROUP RESULTS for the year ended 30 September 2020 Appendix We nourish and nurture more lives every day
Slide 38: Value share losses experienced across most of Grains, except in bread
Value share losses experienced across most of Grains, except in bread 45% 42,3% 41,6% 40% 34,5% 34,0% 33,4% 34,2% 35% 30,5% 30% 28,8% 27,4% 27,5% 24,4% 25% 22,6% 20% 15% 12,4% 10,8% 10% 5% 0% Grains Maize Flour Cereals Rice Dry Pasta Bread 12MM LY 12MM TY Source: Nielsen 12mm value share as at Septe
Slide 39: Aggressive pricing pressure from competitors has resulted in share losses
Aggressive pricing pressure from competitors has resulted in share losses except for peanut butter 70% 61,6% 62,7% 61,5% 59,5% 60% 50% 40,5% 38,5% 40% 35,5% 35,5% 30% 20% 10% 0% Beans Tomato Sauce Peanut Butter Mayo/Salad Cream 12MM LY 12MM TY Source: Nielsen 12mm value share as at September 2020 39
Slide 40: Liquid concentrates continue to gain momentum and drive beverage growth
Liquid concentrates continue to gain momentum and drive beverage growth Benefitting from core offering & innovations 50% 45% 43,0% 40% 38,1% 36,3% 36,2% 34,5% 34,3% 35% 30% 25% 20% 18,6% 17,1% 15% 10% 5% 0% Beverages Liquid Concentrates Sport Drinks Ready To Drink 12MM LY 12MM TY Source: Nielsen 12m
Slide 41: Market shares maintained across all baby categories
Market shares maintained across all baby categories 70% 65,6% 65,8% 60% 56,3% 57,0% 50% 40% 30% 20% 10% 5,4% 4,9% 0% Home Care (Pest) Personal Care Baby Nutrition 12MM LY 12MM TY Source: Nielsen 12mm value share as at September 2020 | Baby nutrition includes homogenised segment & cereals 41
Slide 42: Additional information
Additional information Rm FY20 FY19 Working capital per rand of turnover 21.1 21.4 Net working capital days 85.7 96.0 Stock days 83.7 94.8 Debtor days 31.9 35.6 Creditor days (29.9) (34.4) Effective tax rate 31.0% 29.5% 42
Slide 43: Contribution to revenue and operating income
Contribution to revenue and operating income Revenue Operating income before IFRS 2 33% 33% 42% 38% 19% 18% 19% 13% 13% 17% 10%11% 9% 11% 13% 7% 8% 9% 10%10% 9% 5% 6% 7% 6% 6% 4% 3% 4% 3% 2% 2% 2020 2019 2020 2019 Milling and Baking Other Grains Groceries Snacks & Treats Beverages Out of Home Home,