Tiger Brands Limited · JSE:TBS
Tiger Brands — H1 2022 Earnings Presentation
52 slides from Tiger Brands's earnings presentation, May 25, 2022
Slide 1: Tiger Brands Interim Results Presentation
TIGER BRANDS INTERIM RESULTS PRESENTATION 25 May 2022
Slide 2: Index
Index Executive Financial summary review 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 25 May 2022. Actual results may differ materially from the company’s expectations if known and unknown risks or uncertainties affect the b
Slide 4: Executive summary of performance
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Executive summary of performance Noel Doyle | CEO
Slide 5: First half performance is a tale of two quarters and two businesses
First half performance is a tale of two quarters and two businesses, Snacks & Treats and Bakeries • Revenue and EBIT significantly impacted by volume losses in Bakeries and supply challenges in Snack & Treats • Excluding these businesses, core portfolio proves resilient particularly in Q2 • Addresse
Slide 6: Momentum sustained on strategic priorities despite challenging environment
Despite challenging operational environment momentum sustained on strategic priorities aimed at improving long-term performance MEET THE NEEDS IGNITE BUILD A OPTIMISE OUR BE OBSESSED ABOUT OF THE CONSUMER OUR PEOPLE GROWTH PIPELINE SUPPLY CHAIN COST SAVINGS AND EFFICIENCIES • Over-indexing market on
Slide 7: Financial review
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Financial review Deepa Sita CFO
Slide 8: Improved Q2 performance falls short of negating poor start
Improved Q2 performance falls short of negating poor start HIGHLIGHTS HEADWINDS • Successful revenue management across segments • Global supplier and logistics constraints - Impacted both cost and availability • Productivity and efficiency initiatives embedded with logistics • Unanticipated cost pus
Slide 9: Top line performance impacted by supply disruption at S&T
Top line performance impacted by supply disruption at S&T while operating income includes insurance proceeds Pricing 3% Revenue Volumes 1% Revenue 2% to Gross profit 3% to Operating income** 5% at R16,8bn R4,9bn R1,5bn Total gross margin 140bps to Total operating margin 70bps at Effect
Slide 10: Volume declines show sequential signs of slowing
Volume declines show sequential signs of slowing as revenue management initiatives gain traction Revenue* H1 F21 vs H1 F22 3% (1%) - H2 F20 vs H2 F21 6% (4%) (1%) 16,4 16,8 14,6 14,8 H2 FY20 H1 FY21 H2 FY21 H1 FY22 * Excluding the impact of the product recall and civil unrest 10
Slide 11: Excluding Bakeries & Snacks & Treats, balance of portfolio shows growth
Excluding the adverse impact of Bakeries & Snacks & Treats, balance of portfolio shows promising signs of growth Revenue* H1 F21 vs H1 F22 3% (1%) - Excluding Bakeries and Snacks & Treats - 2% 3% 16,4 16,8 13,5 14,2 H1 FY21 (as reported) H1 FY21 (excl. H1 FY22 (as reported) H1 FY22 (excl. Bakeries &
Slide 12: Revenue management goals aligned with corporate strategy
Revenue management goals aligned with our corporate strategy to stabilise and grow CONSUMER PRICE PACK-PRICE COMMERCIAL POLICY TRADE-TERMS PROMOTIONS ARCHITECTURE • Ensuring the right price, at the • Closely linked to innovation and • Optimise commercial • Trading Terms shifted from • Focused on the
Slide 13: Gross profit impacted by higher input costs and timing of price increases
Gross profit impacted by higher input costs and timing of price increases Rm H1 FY22 H1 FY21 Total revenue 16 758 16 445 Cost of Sales (11 870) (11 414) • Insurance proceeds amounting to R161m Gross profit 4 888 5 031 included in Sundry income Gross profit % 29% 31% • Marketing investment double rev
Slide 14: Solid Consumer Brands performance muted by Grains and Exports
Solid Consumer Brands performance muted by Grains and Exports and International Grains (R’m) Consumer Brands (R’m) H1 FY21 7 464 7 351 6 391 H1 FY22 6 042 619 423 640 654 Revenue Operating profit Revenue Operating profit Home and Personal Care (R’m) Exports and international (R’m) 1 102 1 095 1 838
Slide 15: Consistent cost management discipline delivers in line with guidance
Consistent cost management discipline delivers in line with guidance while trading reflects impact of industrial action at S&T and adverse category dynamics in others R’m 161 43 55 51 38 1 579 1 493 (434) Group OEE & factory Material usage Procurement Logistics Insurance Operational Group operating
Slide 16: Net cash reflects deliberate investment in raw materials and buy-back
Net cash reflects deliberate investment in raw materials, input cost inflation & commencement of share buy-back programme R’m Major contributors to decrease in cash for the period (R’m) 2 088 223 517 (1 572) (859) (477) (22) (464) 196 (676) (1 562) Cash Working Cash Dividends Dividends Tax paid Othe
Slide 17: Capex increases by 10% to R419 million
Capex increases by 10% to R419 million focused on automation, efficiency & brand development; full year capex guidance slightly lower at R1,2 billion Capex spend by category (R’m) Capex spend by Segment Capex plan • Total Capex spend expected to be ~R1,2bn 1 200 8% for FY22 3% 16% 6% • Emphasis rema
Slide 18: Commodity price impact buffered by procurement positions
Full impact of supply disruptions on commodities buffered by procurement positions; inflationary impact goes beyond raw materials to other ingredients, packaging and distribution % change in commodity prices over 6- and 12-months 103% • Significant impact of supply disruptions on commodities 50% • F
Slide 19: Looking ahead: Fine balancing act between volumes and margins
Looking ahead: Fine balancing act between volumes and margins Current headwinds likely to However, we remain focused on persist for the rest of the year finding mitigating strategies to offset these • Input costs likely to remain elevated for longer • Revenue management strategies embedded and gaini
Slide 20: Trading update – on track for an improved H2
Trading update – on track for an improved H2 Momentum gained in Q2 sustained • April and May profitability ahead of prior year • Price increases successfully landed in most segments driving improved revenue growth • Solid volumes from Beverages, Out of Home and Exports & International • Signs of imp
Slide 21: Grains
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Grains Yokesh Maharaj Chief Growth Officer
Slide 22: Grains adversely impacted by Bakeries while Other Grains deliver profit growth
Grains adversely impacted by Bakeries while Other Grains deliver profit growth Grains (R’m) Milling & baking (R’m) Other Grains (R’m) H1 FY21 • Grains revenue reflects price 7 464 H1 FY22 inflation offset by overall volume 7 351 5 051 4 946 2 412 2 405 declines • Recovery of input cost inflation acr
Slide 23: Bread category has seen limited growth over last three years
Bread category has seen limited growth over last three years & consumption has declined by 5% across regions and consumers Annual bread unit consumption per consumer Market volume and growth 6,6 80,4 75,6 2 371 2 386 2 372 2 276 2 068 2 136 4,2 48,3 48,4 3,3 40,4 38,3 27,9 28,7 27,3 23,9 792 784 0,6
Slide 24: Milling and Baking
2% 43% 390 bps Milling and Baking R4,9bn R272m 5,5% Revenue Operating profit Operating margin Looking ahead • Adverse bread category dynamics persist • Focus on supporting innovations in wheat - Market pricing strategies not reflective of environment category - Strategy to implement price incr
Slide 25: Albany remains most loved bread brand in SA
Albany remains most loved bread brand in SA with leading brand power score HIGHLIGHTS HEADWINDS • Market share gains in white bread category • Quality advantage decreased as competitors catch up • Cost saving initiatives tracking ahead of budget • Market share declines in brown bread category, where
Slide 26: Arrest volume declines and accelerate cost efficiencies
Arrest volume declines and accelerate cost efficiencies IMMEDIATE PRIORITIES • Continued focus on quality – sustain internal systems, capabilities and routines • Focused volume recovery in General Trade – capitalise on white spaces, defend and grow in strongholds, grow share in new regions • Leverag
Slide 27: Other Grains
-% 6% 40 bps Other Grains R2,4bn R151m 6,3% Revenue Operating profit Operating margin Looking ahead • Rice benefited from significant category volume and market share • Continued focus on growth cost savings and efficiencies - Driven by 20% price deflation across the category; 16% volume growth
Slide 28: Consumer Brands
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Consumer Brands Thushen Govender Chief Growth Officer
Slide 29: Pleasing performances from most segments negated by industrial action at Snacks & Treats
Pleasing performances from most segments negated by industrial action at Snacks & Treats Groceries (R’m) Snacks & Treats (R’m) Beverages (R’m) Baby (R’m) H1 FY21 H1 FY22 544 578 3 401 1 219 1 033 3 076 1 069 948 291 136 175 175 65 222 56 56 Revenue Operating profit Revenue Operating profit Revenue O
Slide 30: Groceries
11% 31% 140 bps Groceries R3,4bn R291m 8,6% Revenue Operating profit Operating margin Looking ahead • Top-line driven by combination of price (7%) and volume (4%) • Material cost inflation on - Solid growth in mayonnaise, tomato sauce and chutney ingredients and • Category volume contraction r
Slide 31: Renewed focus on innovation aimed at consumer value propositions
Renewed focus on innovation aimed at consumer value propositions EVERYDAY AFFORDABLE FLAVOUR FLAVOUR TWISTS HEALTH AND NUTRITION Everyday versatility Affordable flavour enhancement Affordable on-table variety Daily health / Health plus Regular daily usage, indulgent Preparaton of regular daily famil
Slide 32: Snacks & Treats
12% 59% 590 bps Snacks & Treats R1,1bn R56m 5,2% Revenue Operating profit Operating margin Looking ahead • Strike action and low opening stocks impact volumes • Progress made in restoring inventory - Volume decline of 14% levels • Promotional activity managed in line with stock availability •
Slide 33: Beverages
9% -% 160 bps Beverages R1,0bn R175m 16,9% Revenue Operating profit Operating margin Looking ahead • Oros and Energade continue to remain the largest contributors • Optimisation of shift structures to reflect • Innovation and pack price architecture strategies deliver seasonal nature of • Portfo
Slide 34: Baby
6% 17% 100 bps Baby R578m R65m 11,3% Revenue Operating profit Operating margin Looking ahead • Top line performance driven predominantly by price inflation; • Continued brand particularly in nutrition segment investment • Strategic focus on toiletries delivers topline however significant cost
Slide 35: Home and Personal Care (HPC)
1% 16% 340 bps Home and Personal Care (HPC) R1,1bn R212m 19,4% Revenue Operating profit Operating margin Looking ahead • Increased market share despite overall segment impacted by lower • Price management demand to protect margin • Home Care performance negatively impacted by higher than usual
Slide 36: Exports and International
5% 25% 130 bps Exports and International R1,9bn R64m 3,3% Revenue Operating profit Operating margin Looking ahead • Top line growth driven by improved Deciduous Fruit performance • Recover volumes through in-market • Increased demand and elevated international fruit prices benefit activity and
Slide 37: Strategic update
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Strategic update Noel Doyle CEO
Slide 38: Core portfolio turnaround gaining traction
Core portfolio turnaround gaining traction and focus on strategic objectives allows for long-term sustainable performance It appears that stabilisation of the core is taking much longer than anticipated; major exogenous headwinds clouding progress Confident in refreshed strategy; starting to bear fr
Slide 39: Q&A
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Q&A
Slide 40: Appendix
UNAUDITED GROUP RESULTS for the six months ended 31 March 2022 We nourish and nurture more lives every day Appendix
Slide 41: Price inflation across all segments boosts revenue growth
Price inflation across all segments boosts revenue growth R16,4bn Price inflation 3% R16,8bn Volume (1%) Total Price Volume Forex Grains (2%) 1% (3%) - Consumer Brands 6% 4% 2% - HPC (1%) 5% (6%) - Domestic operations 2% 3% (1%) - Exports & International 5% 3% 3% (1%) Total cont. operations 2% 3% (1
Slide 42: Summary of ratios
Summary of ratios Cash generated from operations (R’m) Cash and cash equivalents (R’m) 69% 49% Rm H1 FY22 H1 FY21 Net cash (R’m) 318 1 206 1 682,3 RONA 14,5% 21,2% 1 209,4 Return on equity (ROE) 15,7% 17,5% Return on invested capital (ROIC) 13,5% 16,2% WACC rate 13,0% 12,2% Working capital per R
Slide 43: Income from associate companies
Income from associate companies Rm H1 FY22 H1 FY21 Carozzi 147,6 141,1 National Foods Holdings Ltd 34,1 19,8 UAC Foods - 16,1 Total 181,7 177,0 43
Slide 44: Segmental contribution to Revenue and Operating Income
Segmental contribution to Revenue and Operating Income* Revenue Operating Income * H1 FY21 31% H1 FY22 30% 30% 21% 20% 20% 19% 16%16% 15%14% 14% 13% 11% 12% 11% 11% 9% 9% 7% 7% 7% 6% 6% 6% 5% 5% 5% 4% 5% 3%3% 3% 3% 2% 2% Persoal Care Persoal Care Out of Home Baby Out of Home Baby Snacks & Snacks & B
Slide 45: Billion Rand Brands sustain market leadership
Billion Rand Brands sustain market leadership in a tough trading environment BRAND EQUITY RANK VOLUME SHARE VOLUME RANK VALUE SHARE VALUE RANK #1 35,5% #2 37,5% #1 #1 28,8% #1 30,2% #1 #3 22,0% #2 22,3% #2 #2 9,4% #2 10,2% #2 #2 38,6% #1 43,4% #1 #1 65,9% #1 69,0% #1 #1 56,8% #1 62,6% #1 #1 36,8% #2
Slide 46: Value growth driven by Groceries, Cereals and Beverages
Value growth driven by Groceries, Cereals and Beverages offset by Milling & Baking, Snacks & Treats and Home Care Total data set - value share of basket 12MM TY vs LY 6MM TY vs LY 3MM TY vs LY • Mix changes drive value share losses in the short- -0,6 -0,4 -0,4 All Other 20,4 19,8 20,8 20,4 term 0,3
Slide 47: Volume share gains in the long-term driven by Rice, Condiments and Beverages
Volume share gains in the long-term driven by Rice, Condiments and Beverages Total data set - volume share of basket 12MM TY vs LY 6MM TY vs LY 3MM TY vs LY • Own Brands’ volume share losses are driven mainly 14,9 -1,8 -1,2 -1,9 All Other 17,1 15,3 16,8 through Rice and Novelty 1 1,2 -0,1 -0,1 -0,2
Slide 48: Overall Groceries value share remain relatively stable
Overall Groceries value share remain relatively stable 66,2 65,8 61,0 60,9 40,3 39,9 38,3 38,6 32,5 30,9 Groceries Beans Tomato Sauce Peanut Butter Mayo & Salad Cream 12MM LY 12MM TY Source: IRI Tiger value share H1 F22 March 2022 performance 48
Slide 49: Overall declines driven by supply disruptions in Snacks & Treats
Overall declines driven by supply disruptions due to prolonged strike action and low opening stocks within Snacks & Treats 43,6 42,7 30,0 25,1 21,5 20,3 12,6 11,0 Snacks & Treats Chocolate Candy Novelty & Speciality 12MM LY 12MM TY Source: IRI Tiger value share H1 F22 March 2022 performance 49
Slide 50: Beverages share growth attributable to top brands
Beverages share growth attributable to top brands, including new innovations and pack sizes 54,5 52,6 47,0 48,1 45,6 44,0 19,6 16,5 Beverages Dilutables Sports Drinks RTD Juice 12MM LY 12MM TY Source: IRI Tiger value share F22 March 2022 performance 50
Slide 51: Volumes across segments sustained; jars supported by store activity
Volumes across segments sustained; jars supported by increased store activity 60,3 60,0 8,2 7,7 Baby Nutrition Baby Care 12MM LY 12MM TY Source: IRI Tiger value share F22 March 2022 performance 51
Slide 52: Home Care gains despite adverse category dynamics
Home Care gains despite adverse category dynamics; Personal Care impacted by lower overall category demand 60,8 59,1 8,0 7,4 Home Care (Pest) Personal Care 12MM LY 12MM TY Source: IRI Tiger value share F22 March 2022 performance 52