Tiger Brands Limited · JSE:TBS
Tiger Brands — H1 2012 Earnings Presentation
65 slides from Tiger Brands's earnings presentation, March 2012
Slide 1: Tiger Brands Limited Interim Results Presentation to Investors
Group Grains Consumer Brands Exports and Interna4onal TIGER BRANDS LIMITED INTERIM RESULTS PRESENTATION TO INVESTORS for the six months ended March 2012
Slide 2: Agenda
Group Grains Consumer Brands Exports and Interna4onal Agenda Strategic Review Financial Analysis Business Performance -‐ Grains Business Performance -‐ Consumer Brands Business Performance – Interna4onal Outlook 2
Slide 3: Strategic Review
Group Grains Consumer Brands Exports and Interna4onal Strategic Review Peter Matlare Chief Execu4ve Officer
Slide 4: Strategic Review – H1
Group Grains Consumer Brands Exports and Interna4onal Strategic Review – H1 • Challenging domes4c trading environment Drive local growth • Leading brands posi4on protected Protect No 1 & 2 category posiHons • Customer engagement remains key to performance Transform go-‐to-‐market • Investment in e
Slide 5: Economic Environment 2012 – Global and Local Indicators
Group Grains Consumer Brands Exports and Interna4onal Economic Environment 2012 – Global and Local Indicators Downward revisions to IMF global growth outlook since September 2011 forecast GLOBAL GDP • 2012 growth of key trading partners to GROWTH % 2011 2012 2013 Africa downgraded IMF FORECAST Actua
Slide 6: Economic Environment 2012 – Consumer Expenditure
Group Grains Consumer Brands Exports and Interna4onal Economic Environment 2012 – Consumer Expenditure Real final consumpHon expenditure (FCE) growth sturdy in 2011, but is expected to slow during 2012 2010 2011 2012 2013 • Consump4on expenditure growth eased Total consumer expenditure 3.70% 5.00% 3.
Slide 7: Impact on Shopper Behaviour
Group Grains Consumer Brands Exports and Interna4onal Impact on Shopper Behaviour Shoppers cucng down on luxury spend and acHvely looking for specials to get the most for their money • Shoppers remain extremely price conscious • Repertoire expands to include cheaper brands and private label • Number
Slide 8: Total market showing volume declines, inflation drives value growth
Group Grains Consumer Brands Exports and Interna4onal Total market is showing volume declines, whilst inflaHon above CPI drives value growth within FMCG categories where Tiger Brands parHcipates Total market growth (volume & value) – categories in which Tiger Brands parHcipates • The muted recovery i
Slide 9: Performance Overview
Group Grains Consumer Brands Exports and Interna4onal Performance Overview Within a challenging environment • Turnover shows solid growth • Opera4ng income (before IFRS charges) demonstrates posi4ve leverage • Core brands retain leading posi4on but share is slightly eroded by cheaper brands • Strong
Slide 10: HEPS (cents) – half year ended 31 March
Group Grains Consumer Brands Exports and Interna4onal HEPS (cents) – half year ended 31 March 900 850 838 800 787 748 750 700 +12.0% +5.2% 650 600 2011 2012 2012 Underlying HEPS * Excluding effect of cash settled IFRS 2 charge 10
Slide 11: Total Interim Distribution – Cents per Share
Group Grains Consumer Brands Exports and Interna4onal Total Interim DistribuHon – Cents per Share +5.0% 11
Slide 12: Financial Analysis
Group Grains Consumer Brands Exports and Interna4onal Financial Analysis Funke Ighodaro Chief Financial Officer
Slide 13: Income Statement for the six months ended March
Group Grains Consumer Brands Exports and Interna4onal Income Statement for the six months ended March % Rm 2012 2011 Change Turnover 11,591 10,339 12.1 OperaHng Income before IFRS2 charges 1,821 1,578 15.4 IFRS 2 charges (132) (27) – Equity sefled (19) (28) – Cash sefled (113) 1 OperaHng income 1,68
Slide 14: Income Statement for the six months ended March
Group Grains Consumer Brands Exports and Interna4onal Income Statement for the six months ended March % Rm 2012 2011 Change Profit ager taxaHon before abnormal items 1,283 1,176 9.0 Abnormal items (net of tax) 13 -‐ Net profit for the year 1,296 1,176 10.1 Non Controlling Interests (14) 10 Profit ahri
Slide 15: Contribution to turnover
Group Grains Consumer Brands Exports and Interna4onal ContribuHon to turnover 15
Slide 16: Contribution to EBIT (excluding corporate)
Group Grains Consumer Brands Exports and Interna4onal ContribuHon to EBIT (excluding corporate) 16
Slide 17: Turnover by Operating Segment
Group Grains Consumer Brands Exports and Interna4onal Turnover by OperaHng Segment March March % Rm 2012 2011 Change Total 11,591 10,339 12.1 DOMESTIC OPERATIONS 9,778 9,455 3.4 Grains 4,464 4,119 8.4 -‐ Milling and Baking 3,281 2,920 12.4 -‐ Other Grains 1,183 1,199 (1.3) Consumer Brands 5,314 5,
Slide 18: Income Statement – six months ended 31 March 2012
Group Grains Consumer Brands Exports and Interna4onal Income Statement – six months ended 31 March 2012 % Rm Actual Prior year Change Turnover 11,591 10,339 12.1 Organic 10,854 10,339 5.0 Acquisi4ons 737 -‐ Gross margin 4,176 3,795 10.0 Organic 3,955 3,795 4.2 Acquisi4ons 221 -‐ PBIT before IFRS2
Slide 19: Operating Income before abnormal items
Group Grains Consumer Brands Exports and Interna4onal OperaHng Income before abnormal items % OperaHng margins OperaHng Income % before IFRS2 charge March March Rm Change 2012 2011 2012 2011 Total 1,821 1,578 15.4 15.7 15.3 DomesHc operaHons 1,570 1,563 0.4 16.1 16.5 Grains 794 824 (3.6) 17.8 20.0 -
Slide 20: Group Balance Sheet
Group Grains Consumer Brands Exports and Interna4onal Group Balance Sheet 31 March 30 September 31 March Rm 2012 2011 2011 Assets Property, plant & equipment 3,318 3,317 2,699 Goodwill and intangible assets 4,020 3,826 1,982 Investments 2,518 2,360 1,713 Inventories 3,944 3,037 3,039 Trade and other
Slide 21: Key Statistics Ratios
Group Grains Consumer Brands Exports and Interna4onal Key StaHsHcs RaHos 31 March 30 September 31 March 2012 2011 2011 Net (Debt)/Cash (Rm) (2,404) (1,671) 166 Net Debt/Equity % 22.7 16.3 N/A Working capital per R1 turnover (cents) 23.1 21.8 20.4 Net interest cover (4mes) 22.1 50.9 131.2 Opera4ng in
Slide 22: Cashflow Statement for the six months ended 31 March
Group Grains Consumer Brands Exports and Interna4onal Cashflow Statement for the six months ended 31 March Rm 2012 2011 Cash operaHng profit 2,057 1,772 Working capital requirements (781) (125) Cash generated from operaHons 1,276 1,647 Dividends received net of financing costs 17 76 Taxa4on paid (574)
Slide 23: Capital Expenditure and Commitments
Group Grains Consumer Brands Exports and Interna4onal Capital Expenditure and Commitments Rm 2012 2011 Capital expenditure 238 291 -‐ Replacement 135 207 -‐ Expansion 103 84 Capital commitments 489 700 -‐ Contracted 237 468 -‐ Approved 252 232 23
Slide 24: Grains Division
Group Grains Consumer Brands Exports and Interna4onal Grains Division Thabi Segoale Business Execu4ve
Slide 25: Salient Features
Group Grains Consumer Brands Exports and Interna4onal Salient Features Net sales : + 8.4% EBIT growth • Milling and Baking : + 3.7% • Other Grains : -‐ 21.8% OperaHng margin : 17.8% Key performance drivers Key performance inhibitors • Expanded market universe • Raw material cost-‐push • Cost conta
Slide 26: Maize & Wheat Milling
Group Grains Consumer Brands Exports and Interna4onal Maize & Wheat Milling Stable performance • Declining supply outlook impacts pricing / demand • Intensifying compe44on • Price infla4on, flour volumes drive top line growth • Strong performance by value added products • New Hennenman Mill on track f
Slide 27: Albany
Group Grains Consumer Brands Exports and Interna4onal Albany SaHsfactory performance • Bread category volume contrac4on • Albany maintains no.1 value share posi4on • Good progress in consolida4on expanded market universe • New Ul4ma™ premium health range delivers success • Capital program delivers e
Slide 28: Rice
Group Grains Consumer Brands Exports and Interna4onal Rice Subdued business performance • Price infla4on stagnates category volumes • Significant raw material origin pricing differen4al impacts performance • Premium rice segment under pressure • Pricing differen4al between Thai premium & Indian B-‐ gra
Slide 29: Breakfast Cereals
Group Grains Consumer Brands Exports and Interna4onal Breakfast Cereals Convenient/value offerings drive growth • Category volume growth slows in the short term • Stellar performance from Ace Instant • Product renova4ons & value added offerings drive growth • Leading volume market share posi4on mainta
Slide 30: Summary
Group Grains Consumer Brands Exports and Interna4onal Summary SaHsfactory performance • Challenging environment • Imports of Indian variety impacts performance • Reconfigura4on of rice business model to enhance compe44veness • Progress on strategic priori4es – Favourable product mix maintained – Furt
Slide 31: Consumer Brands
Group Grains Consumer Brands Exports and Interna4onal Consumer Brands Phil Roux Business Execu4ve
Slide 32: Performance Summary: EBIT
Group Grains Consumer Brands Exports and Interna4onal Performance Summary: EBIT Work-‐in-‐progress 2012 Half Year EBIT Margin % % Groceries +9.9 14.5 ↑ VAMP -‐31.5 6.8 ↓ Snacks & Treats +40.0 14.6 ↑ Beverages +3.2 13.7 ↑ HPCB +2.2 24.0 ↑ OOH +2.4 18.2 ↓ 32
Slide 33: Groceries
Group Grains Consumer Brands Exports and Interna4onal Groceries Current PosiHon Focus Future Outcome • Share losses in retail • RGM Precision (PVM) • Share recovery • Challenging price differen4als • Price restraint • 13 – 15% opera4ng margin • Volume declines • Enhance produc4vity • Posi4ve leverage
Slide 34: Innovation
Group Grains Consumer Brands Exports and Interna4onal InnovaHon 34
Slide 35: HPCB
Group Grains Consumer Brands Exports and Interna4onal HPCB Current PosiHon Focus Future Outcome • Fierce compe44on • Core Brand focus • Share growth • Market contrac4on in • Innova4on • 20 – 25% EBIT margin Homecare • Heightened Brand Investment • Rand margin growth • Personal Care challenged • Acqu
Slide 36: Ingram's Men Innovation
Group Grains Consumer Brands Exports and Interna4onal Ingram’s Men InnovaHon 36
Slide 37: Purity Innovation
Group Grains Consumer Brands Exports and Interna4onal Purity InnovaHon 37
Slide 38: Snacks and Treats
Group Grains Consumer Brands Exports and Interna4onal Snacks and Treats Current PosiHon Focus Future Outcome • 6,6% Volume Market • Innova4on rate • Consump4on and share contrac4on growth • Restore produc4vity edge • Imports increase • 13 – 15% Opera4ng margin • Capacity and Technology • Strike ac4o
Slide 39: Core Brands Innovation
Group Grains Consumer Brands Exports and Interna4onal Core Brands InnovaHon 39
Slide 40: Innovation
Group Grains Consumer Brands Exports and Interna4onal InnovaHon 40
Slide 41: Beverages
Group Grains Consumer Brands Exports and Interna4onal Beverages DisappoinHng performance Current PosiHon Focus Future Outcome • Pornolio weakness – Dairy • Brand pornolio strategy • Share growth – Concentrates Fruit Blends • Reinvent Supply Chain Model • 10 – 12% EBIT margin • Significant cost push •
Slide 42: Value Added Meat
Group Grains Consumer Brands Exports and Interna4onal Value Added Meat Compete to grow Current PosiHon Focus Future Outcome • Market shares stabilise • Compe44ve pricing • Share recovery • Intensified compe44on • Enhanced produc4vity • 5 – 7% Opera4ng margin • Cost push compresses margins • Expand di
Slide 43: The Way Forward
Group Grains Consumer Brands Exports and Interna4onal The Way Forward • Clear improvements, but WIP • Market / categories will remain highly compe44ve • Strong, resilient and leading brands • Management resilience required in unconven4onal 4mes • Share Recovery -‐ #1 Priority 43
Slide 44: Tiger Brands International
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal Neil Brimacombe Business Execu4ve
Slide 45: Tiger Brands International
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal Strategy conHnues to gain momentum • Very encouraging progress – Exports – Excellent performance Mali – Langeberg & Ashton Foods (L&AF) – Niger Sudan Posi4ve turnaround Ghana Nigeria – Davita – Good result and on track E
Slide 46: Tiger Brands International: Exports (including Davita and L&AF)
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: Exports (including Davita and L&AF) ConHnued good progress • Net sales R 1,134m (+79%) • EBIT R 190m Growth drivers • Excellent growth in Mozambique, Zambia and Zimbabwe • Pleasing category performance from Mayonnaise,
Slide 47: Tiger Brands International: Exports
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands TIGER BRANDS INTERNATIONAL : EIXPORTS nternaHonal: Exports ConHnued investment in core brands 47
Slide 48: Tiger Brands International: Exports
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands TIGER BRANDS INTERNATIONAL : EIXPORTS nternaHonal: Exports ConHnued investment in core brands Zambia and Zimbabwe: AcHvaHon excellence 48
Slide 49: Tiger Brands International: Davita Trading
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: Davita Trading Performance in line with investment expectaHons Growth drivers • Successful leveraging of Tiger Brands distributor base with Davita products • Strong growth in Mozambique, Tanzania and Uganda • Improved e
Slide 50: Tiger Brands International: Exports
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands TIGER BRANDS INTERNATIONAL : EIXPORTS nternaHonal: Exports InvesHng in core brands Brand AcHvaHon Excellence 50
Slide 51: L&AF
Group Grains Consumer Brands Exports and Interna4onal L&AF Tiger Brands acquires minority share • Volume Flat • Net sales + 19% • EBIT R 32m Value drivers • Price increases • Pack mix • Exchange rate/prudent cover • Cost focus • Geographic expansion Focus • Ac4vate sales contracts • 2012/2013 – Seas
Slide 52: Tiger Brands International: East Africa
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: East Africa (Haco TB & EATBI) Organic Growth Sustained • Net sales R 307m • EBIT R 36m Kenya growth drivers • Good progress in regional export countries • Innova4on and Renova4on on core HPC & Foods product sectors • Ex
Slide 53: Excellence in Brand Activation
Group Grains Consumer Brands Exports and Interna4onal Excellence in BrandExcellence Activation in Brand AcHvaHon InvesHng in our Brands Nakumah: Nairobi 53
Slide 54: Investing in Core Brands: Recent Innovation
Group Grains Consumer Brands Exports and Interna4onal InvesHng In Core Brands: Recent InnovaHon 54
Slide 55: Tiger Brands International: EATBI, Ethiopia
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: EATBI, Ethiopia Excellent progress Growth drivers • Strong volume growth – New distributors – Consumer demand • Mix, price and cost management • CI program to deliver enhanced margins • Inventory op4misa4on model Challe
Slide 56: Tiger Brands International: EATBI, Ethiopia
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: EATBI, Ethiopia Fixing and opHmising Laundry facility upgrade 56
Slide 57: Tiger Brands International: Central Africa
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: Central Africa Excellent performance • Net sales R 179m + 26% • EBIT R 17m + 44% Growth drivers • Volume growth in core categories • Posi4ve sales mix • Posi4ve procurement posi4ons in key raws • Con4nuous improvement p
Slide 58: Fixing and Optimising
Group Grains Consumer Brands Exports and Interna4onal Fixing and OpHmising InvesHng in faciliHes New lollipop line Facility upgrade – new sleeving line 58
Slide 59: Driving Brand Growth
Group Grains Consumer Brands Exports and Interna4onal Driving Brand Growth Sustained Brand Investment 59
Slide 60: Tiger Brands International: West Africa (Deli and UAC Foods)
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: West Africa (Deli and UAC Foods) A challenging environment • Net sales R 336m* • EBIT R 18m* Deli growth drivers • Improved distribu4on network & route to market • Investments to support brands • Enhanced manufacturing
Slide 61: Tiger Brands International: West Africa (Deli and UAC Foods)
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal: West Africa (Deli and UAC Foods) A challenging environment Growth drivers • Significant cost saving ini4a4ves bearing fruit • Consistent high demand for Gala Sausage Roll • Improved service levels for the Beverages busin
Slide 62: Tiger Brands International
Group Grains Consumer Brands Exports and Interna4onal Tiger Brands InternaHonal Very pleasing results • Interna4onal expansion remains key growth vector • Con4nue to bed down acquisi4ons • Emphasis on Fix, Op4mise, and Grow • Leverage new capabili4es • Acquisi4ons remain a key theme 62
Slide 63: Towards 2012
Group Grains Consumer Brands Exports and Interna4onal Towards 2012 Challenging half year ahead • Pressure on the consumer not lesng up • Food infla4on on the rise • Increased focus on cost base for compe44veness • Strengthen our strategic alliances • Con4nued acquisi4ons on the con4nent 63
Slide 64: Thank you
Group Grains Consumer Brands Exports and Interna4onal Thank you 64
Slide 65: Disclaimer
Group Grains Consumer Brands Exports and Interna4onal Disclaimer Certain statements in this presenta4on may be defined as forward looking within the meaning of the United States Securi4es legisla4on. Forward-‐looking statements involve known and unknown risks, uncertain4es and other important factor