Premier Foods plc · LSE:PFD
Premier Foods — FY2021/22 Earnings Presentation
46 slides from Premier Foods's earnings presentation, May 18, 2022
Slide 1: Preliminary Results for 52 Weeks Ended 2 April 2022
PRELIMINARY RESULTS FOR 52 WEEKS ENDED 2 APRIL 2022 18 MAY 2022
Slide 2: Alex Whitehouse, CEO
ALEX WHITEHOUSE CEO
Slide 3: Trading profit and Adjusted PBT ahead of previously raised guidance
Trading profit and Adjusted PBT ahead of previously raised guidance FY revenue Market share1 Trading profit Adjusted PBT Net debt2 +6.3% Performance Total compared to 2 +41bps +11.9% +37.6% 33.7% years ago +9.7% lower Branded (3.6%) Performance Total +11.4% 14.3% compared to 1 +25bps Flat lower year
Slide 4: Strong progress against our strategic priorities
Strong progress against our strategic priorities +8.7% +25%1 1 2 3 4 5 UK Branded International Infrastructure revenue growth vs Category expansion revenue vs 2 years M&A Investment 2 years ago ago Pensions Deficit reduction + c.£60m reduction in NPV of pension payments 1 – At constant currency rate
Slide 5: Track record of sustained delivery over the last 5 years
Track record of sustained delivery over the last 5 years Trading profit (£m)1 Adjusted PBT (£m)1 128 148 148 115 133 129 93 88 123 79 117 74 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 FY16/17 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 Net debt (£m)2 Net debt/EBITDA2 523 496 3.93 470 3.56 3.23 408
Slide 6: Duncan Leggett, CFO
DUNCAN LEGGETT CFO
Slide 7: Group headline results – Trading profit 11.9% ahead vs 2 years ago
Group headline results – Trading profit 11.9% ahead vs 2 years ago Change vs 1 year Change vs 2 years £m FY21/22 ago ago ▪ Branded revenue +9.7% ahead of 2YA through benefits of Branded growth Branded revenue 774 (3.4%) 9.7% model and (3.4%) lower compared to prior year due to elevated volumes Non-b
Slide 8: Grocery – Branded revenue and DC well ahead of 2 years ago
Grocery – Branded revenue and DC well ahead of 2 years ago Change vs 1 year Change vs 2 years £m FY21/22 ago ago Branded revenue 560 (6.9%) +8.8% Non-branded revenue 88 (4.5%) (9.6%) Total revenue 648 (6.6%) +5.9% Divisional contribution 160 (7.1%) +8.1% Divisional contribution % 24.7% (0.1ppts) +0.
Slide 9: Sweet Treats strong margins through Branded growth and cost efficiencies
Sweet Treats strong margins through Branded growth and cost efficiencies Change vs 1 year Change vs 2 years £m FY21/22 ago ago Branded revenue 214 +7.0% +12.1% Non-branded revenue 39 (5.0%) (13.0%) Total revenue 253 +5.0% +7.3% Divisional contribution 33 +49.6% +41.0% Divisional contribution % 13.2%
Slide 10: Double digit adjusted eps growth for 2nd consecutive year
Double digit adjusted eps growth for 2nd consecutive year £m FY21/22 vs FY20/21 vs FY19/20 Trading profit 148 0.0% 11.9% Net regular interest (20) 40.0% 49.5% Adjusted PBT 128 11.4% 37.6% Notional tax @ 19% (24) (11.4%) (37.6%) Adjusted earnings 104 11.4% 37.6% Weighted average shares in issue (mill
Slide 11: Dividend up 20% and net debt £48m lower
Dividend up 20% and net debt £48m lower Operating profit pre Hovis disposal up £10m Compared to 2 years ago Compared to prior year £131m 9.3p £131m £131m 9.3p £285m +20% +£36m +69.1% (£22m) +£11m (25.7%) £48m lower Operating Operating Operating Dividend Basic eps profit pre- Basic eps Net debt profi
Slide 12: Net debt reduced by nearly £50m and leverage of 1.7x EBITDA
Net debt reduced by nearly £50m and leverage of 1.7x EBITDA Net debt 2.0x 1.7x /EBITDA ▪ Capex includes new high-speed lines at £m 400 Lifton & Ashford sites 350 333 168 ▪ Interest c. half levels of two years ago 300 11 285 following successful 11 13 21 refinancing 250 23 41 ▪ Working capital 200 ou
Slide 13: Significant reduction in PF pension deficit in less than 12 months post-merger
Significant reduction in PF pension deficit in less than 12 months post-merger Premier Foods Schemes Actuarial deficit progression (£m) Pensions NPV (£m) 551 552 538 300 - 320 c.20% 240-260 427 2013 2016 2019 2021 Previous Revised ▪ Benefits of merger being realised including revised investment stra
Slide 14: Earnings enhancing refinancing completed this year
Earnings enhancing refinancing completed this year First RCF extension completed May 2022 Bond pricing Substantial interest cost reduction Capital structure £m £m 39 350 330 300 33 6.25% 3.50% 250 200 175 150 20 100 50 Retired Fixed New Fixed 0 rate Notes rate Notes FY19/20 FY20/21 FY21/22 2022 2023
Slide 15: Capital allocation to evolve over medium-term
Capital allocation to evolve over medium-term Context A cash generative business with leading sector margins, progressive marketing investment and lower interest costs Today Medium-term 1 1 • Current contributions expected to reduce over time as • Investment programmes focused on cost Pensions RHM s
Slide 16: Guidance
Guidance FY22/23 guidance £m Working capital Small outflow • Low to mid single digit £m cash tax payable from FY23/24 due to tax legislation changes on brought Depreciation c.£20m forward losses Capital expenditure £30-35m • Tax rate rises to 25% from FY23/24 Interest – cash £16-18m • Dividend payme
Slide 17: Alex Whitehouse, CEO
Shar voods STIR FRY SAUCE J Sharwoods
Slide 18: 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 19: Our new ESG strategy, 'Enriching Life Plan'
Our new ESG strategy, ‘Enriching Life Plan’ Major, new, ambitious targets we introduced this year Pillar PRODUCT PLANET PEOPLE GREAT TASTING NUTRITIOUS AND CONTRIBUTING TO A HEALTHIER NOURISHING THE LIVES OF OUR SUSTAINABLE FOOD PLANET COLLEAGUES AND COMMUNITIES Our ambitions • Healthier Nutrition •
Slide 20: Progress in all three ESG pillars
Progress in all three ESG pillars PRODUCT PLANET PEOPLE • Promoted to BBFAW Tier Board now aligns with Hampton 1 for 1st time this year Alexander report recommendations • Only 3 other food following new NED appointments companies in top tier and also adheres to Parker review Tier 1 across 150 compan
Slide 21: 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 categories • Launch new products linked to key consumer trends • High household penetration • Major focus on health & nutrition 3 Sustained marketing inve
Slide 22: Demonstrating the success of the Branded Growth Model
1 Demonstrating the success of the Branded Growth Model UK Branded revenue progression Branded Revenue 2yr CAGR 4.2% 4 yr CAGR £m Pandemic elevated 800 volumes ▪ Consistent branded revenue 5.9% 750 progression over 4.7% 700 last 4 years driven by success of 3.6% 650 growth model ▪ Peak in FY20/21 60
Slide 23: Growing faster than our markets and delivering distribution gains
1 Growing faster than our markets and delivering distribution gains Market share1 vs 2 years ago Weighted average distribution points YoY2 68bps ▪ Market share gains 65bps reflecting strength of 58bps branded growth model 52bps 197 ▪ Nissin Soba key 41bps contributor to Grocery gains while Sweet Tre
Slide 24: Navigating macro and industry-wide challenges
1 Navigating macro and industry-wide challenges ▪ Inflation seen so far covered by cost savings and price increases already implemented Input ▪ Continue to actively monitor commodity market movements cost ▪ Looking ahead, we expect to see further inflation inflation ▪ We will address using a combina
Slide 25: Product innovation & investment delivering branded revenue growth
1 Product innovation & investment delivering branded revenue growth Insight driven new products Brand investment Six major brands on TV + digital activations Sweet Treats Grocery ▪ Mr Kipling 30% less sugar Viennese Whirls and Signature premium range contributors to growth ▪ Cadbury Crunchie & Fudge
Slide 26: An exceptional year for Nissin – revenue up +44%
1 An exceptional year for Nissin – revenue up +44% Turnover profile (£m) Authentic pot snack market Strong repeat purchase rates 60% 19 50% 48% 41% 13 40% 29% 30% 8 20% 16% 20% 4 3 10% 0% 2017 2018 2019 2020 2021 FY17/18 FY18/19 FY19/20 FY20/21 FY21/22 Nissin Competitor 1 Competitor 2 Competitor 3 ▪
Slide 27: Investing in our infrastructure to drive growth and efficiency
2 Investing in our infrastructure to drive growth and efficiency Capital investment fuels branded growth Investment examples Ashford – Batchelors and Sharwood’s Cash Capital ▪ New manufacturing line generation investment to produce pot snacks ranges ▪ Previously outsourced, now manufactured at Ashfo
Slide 28: Great progress expanding into new categories
3 Great progress expanding into new categories Product ranges now in market Recently launched Herbs & Spices and Rubs & Marinades Biscuits Ice-cream Breakfast ▪ Strategy to leverage ▪ Already exceeded £1m revenue ▪ Ready to eat one portion Mr Kipling brand ▪ Utilises iconic flavour variants for each
Slide 29: International – revenue up 25% vs 2 years ago
4 International – revenue up 25%1 vs 2 years ago Revenue overview Region performance Revenue vs 2 years ago ▪ Strong application of branded growth 11.7% model; sales up 27%1 ▪ Performance reflects brand investment, NPD and instore execution ▪ All brands in growth vs two years ago, shipping delays ha
Slide 30: International – Mr Kipling expansion into key target markets
4 International – Mr Kipling expansion into key target markets Ireland Australia Canada USA Europe Trial Market Market Market complete, 200 Trial 2022/23 No.1 No.1 wider store trial begun and positioning leader leader Trial distribution instore underway Continue to NPD and Start Extend Assess deploy
Slide 31: Strong/exciting innovation and investment planned for FY22/23
Strong/exciting innovation and investment planned for FY22/23 Brand investment New product development TV and digital activation Sweet Treats Grocery New advert for FY22/23 ▪ Aligned to ambition of doubling sales of healthier products ▪ First full range of non-HFSS products in cake category ▪ Can be
Slide 32: A strong FY21/22 behind us
A strong FY21/22 behind us…. +11.9% +8.7% Trading profit c.£60m +37.6% reduction Adjusted PBT FY19/20 FY20/21 FY21/22 UK Branded Profit delivery & TP Industry challenges Interest costs nearly revenue growth margin progress Pensions NPV navigated well halved in 2 years vs 2 years ago vs 2 years ago 3
Slide 33: With this momentum, we're well placed for further progress this year
With this momentum, we’re well placed for further progress this year 1 ― Strong pipeline of new product development to be launched this year 2 ― Further brand investment behind major six brands including digital activation 3 ― Expansion into new categories to accelerate growth Outlook 4 ― Internatio
Slide 34: mn ANGEL SLICES
mn 6 ANGEL SLICES =
Slide 35: Appendix
APPENDIX
Slide 36: 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 37: Definitions
Definitions ▪ The period ‘FY21/22’ refers to the 52 weeks ended 2 April 2022, unless where otherwise stated. The period ‘FY20/21’ refers to the 52 weeks ended 3 April 2021, unless otherwise stated. The period ‘FY19/20’ refers to the 52 weeks ended 28 March 2020. ▪ The period ‘Q4’ refers to the thirt
Slide 38: Strong brand equity
Strong brand equity Categories Brands Position Share Penetration Flavourings & Seasonings 1 44% 67% Quick Meals, Snacks & Soups 1 34% 43% Ambient Desserts 1 37% 54% Cooking Sauces & Accompaniments 1 15% 52% Ambient Cakes 1 24% 64% Sources: Category position & market share: IRI 52 w/e 26 March 2022;
Slide 39: UK Grocery market
UK Grocery market 18% 34% Chilled 47% Ambient Frozen & Fresh 53% 66% 82% Branded Non-branded Branded Non-branded Branded Non-branded Market size £36bn £50bn £7bn Flavourings & Ambient Ambient QMS Cooking Sauces Seasonings Desserts Cake Market size £402m £397m £926m £291m £1,066m PF share 44% 34% 15%
Slide 40: 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% 24% FY21/22 commentary • FY21/22 No
Slide 41: Our latest better for you ranges
Our latest better for you ranges Product ranges in market ▪ Cooking sauces better for you ranges up over 100% vs 2YA ▪ Homepride pasta bake cooking sauces combine healthier and great value for families ▪ Expansion of Meat-free Bisto & Oxo ranges ▪ Mr Kipling Viennese Whirls delivered a strong first
Slide 42: Quarter 4 sales
Quarter 4 sales Quarter 4 £m FY21/22 Change vs 1 year ago Change vs 2 years ago Grocery Branded revenue 143.8 (5.4%) 1.0% Non-branded revenue 22.3 9.0% (7.7%) Total revenue 166.1 (3.7%) (0.2%) Sweet Treats Branded revenue 55.4 9.2% 17.7% Non-branded revenue 4.3 13.1% (7.6%) Total revenue 59.7 9.5% 1
Slide 43: Operating profit
Operating profit £m FY21/22 (52 weeks) FY20/21 (53 weeks) Change Trading profit 148 151 (3) Amortisation of intangible assets (27) (31) 4 Foreign exchange fair value movements 5 (2) 7 Reversal of impairment loss of Loan receivable - 16 (16) Profit on disposal of investment in associate - 17 (17) Net
Slide 44: Interest and taxation
Interest and taxation £m FY21/22 FY20/21 FY19/20 Senior secured notes interest 13 26 31 Interest Bank debt interest 5 4 5 18 30 36 Amortisation of debt issuance costs 2 3 3 Net regular interest 20 33 39 ▪ Tax charge of £25m in FY21/22, due to operating activities charge and impact on tax rate change
Slide 45: Combined Pensions Schemes – combined surplus of nearly £950m
Combined Pensions Schemes – combined surplus of nearly £950m 2 April 2022 3 April 2021 IAS19 Accounting valuation (£m) Premier Premier RHM Combined RHM Combined Foods Foods Assets 4,274 826 5,100 4,459 793 5,252 Liabilities (3,135) (1,020) (4,155) (3,537) (1,175) (4,712) Surplus/(Deficit) 1,139 (194
Slide 46: Summarised Balance sheet
Summarised Balance sheet £m 2 April 2022 3 April 2021 Property, plant & equipment 191 192 Intangibles / Goodwill 940 963 Deferred tax asset 23 29 Retirement benefit assets 1,149 935 Non-current Assets 2,303 2,119 Working Capital - Stock 78 69 - Debtors 97 83 - Creditors (254) (250) Total Working Cap