Avi Limited Class Y · JSE:AVI
Avi Limited Class Y — FY2008 Earnings Presentation
22 slides from Avi Limited Class Y's earnings presentation, 2008
Slide 1: AVI Limited presentation to analysts, year ended 30 June 2008
AVI LIMITED presentation to analysts for the YEAR ENDED 30 June 2008 AGENDA • Key features • Group financial results • Operating environment • Prospects • Q&A
Slide 2: Key Features
KEY FEATURES • Revenue from continuing operations up 14% • Operating profit from continuing operations up 14% • HEPS from continuing operations up 15% • Total dividend up 10% to 80 cents per share • R550m returned to shareholders • Decision to disinvest from Alpesca • Margin pressure from significan
Slide 3: Group Financial Results – Revenue 14% up
GROUP FINANCIAL RESULTS CONTINUING OPERATIONS 08 07 Income statement Rm Rm ∆ %∆ Revenue 6 660,6 5 851,9 13,8 Gross profit % 41,3 42,7 (3,3) Operating profit 798,7 702,3 13,7 Operating margin % 12,0 12,0 - Net financing cost (64,0) (23,2) (175,9) Share of JVs and associates 17,2 (21,4) 180,4 HEPS (cp
Slide 4: Group Financial Results – Operating Profit 14% up
GROUP FINANCIAL RESULTS CONTINUING OPERATIONS – OPERATING PROFIT 14% UP GROUP FINANCIAL RESULTS CONTINUING OPERATIONS 08 07 Rm Rm ∆ %∆ Cash generated by operations 1 022,8 864,6 18,3 Working capital to revenue % 19,7 17,3 Capital expenditure 271,6 233,8 16,2 Depreciation and amortisation 166,7 150,0
Slide 5: Group Financial Results – Continuing and Discontinued Operations
GROUP FINANCIAL RESULTS CONTINUING OPERATIONS • Gross margin pressure offset by volume leverage in tea, biscuits, creamer and personal care • Improved Simplot operating performance due to better processing and retail performance, as well as unusually high seafood trading profits • Tax rate affected
Slide 6: Operating Environment – Consumer Demand
The year in REVIEW OPERATING ENVIRONMENT CONSUMER DEMAND • Generally sound demand for food, beverage and personal care categories • I&J reduction due to timing of catches, lower own and purchased quota Sales volume growth % ∆ vs 2007 Tea 10,6 Biscuits 4,1 Snacks 4,5 Creamer 9,2 Coffee (3,5) Denny 2,
Slide 7: Operating Environment – Consumer Demand and Cost Pressures
OPERATING ENVIRONMENT CONSUMER DEMAND • Slower growth in some categories in the second semester OPERATING ENVIRONMENT COST PRESSURES • Commodity input costs • Packaging input cost increases 9% - 14% • Labour cost increases 8% - 9%
Slide 8: Operating Environment – Selling Prices and Efficiency
OPERATING ENVIRONMENT SELLING PRICES • Change in average realised selling prices: Average realised selling prices by category % ∆ vs 2007 Tea 5,0 Biscuits 17,3 Snacks 10,6 Creamer 22,9 Coffee 12,2 Denny 10,8 I&J South Africa 22,7 Personal Care 2,9 Footwear 2,1 • I&J increase includes effect of weake
Slide 9: Operating Environment – A&D Spitz and Market Share
OPERATING ENVIRONMENT A & D SPITZ • 18 new stores opened, bringing total doors to 57 • Planned reduction in trading density to improve customer service • Significant increase in people, systems and warehousing costs • Quicker margin compression with slower growth in new stores • Period of consolidat
Slide 10: Operating Environment – Marketing Expenditure
OPERATING ENVIRONMENT MARKETING EXPENDITURE • Marketing spend % of revenue for key categories * = includes advertising and promotions, co-operative expenditure with customers and marketing department costs • Total marketing expenditure for 2008 was R501m PROSPECTS
Slide 11: Prospects
PROSPECTS • Demand - YTD demand acceptable across most categories - August softer than budgeted - Christmas demand is important - Impact of future price increases on demand • Cost pressures - Some indication that commodity prices are starting to trend down - Labour cost increases will lag CPI PROSPE
Slide 12: Questions and Answers
QUESTIONS and answers THANK YOU www.avi.co.za
Slide 13: Business Unit Summaries
Business UNIT summaries OPERATIONAL performance
Slide 14: Operational Performance – Entyce
OPERATIONAL PERFORMANCE – ENTYCE FINANCIAL RESULTS 08 07 Rm Rm ∆ %∆ Revenue 1 547,5 1 339,1 15,6 Operating profit 189,1 160,6 17,7 Operating margin % 12,2 12,0 1,7 OPERATIONAL PERFORMANCE – ENTYCE FY08 KEY FEATURES • Strong tea and creamer volume growth – increased market share • Extensive promotion
Slide 15: Operational Performance – Snackworx
OPERATIONAL performance OPERATIONAL PERFORMANCE – SNACKWORX FINANCIAL RESULTS 08 07 Rm Rm ∆ %∆ Revenue 1 677,2 1 394,2 20,3 Operating profit 185,8 156,8 18,5 Operating margin % 11,1 11,2 (0,9)
Slide 16: Snackworx FY08 Key Features
OPERATIONAL PERFORMANCE – SNACKWORX FY08 KEY FEATURES • Volume growth of 4% – slower in second half • Average selling price increases 16% to address sustained high input costs for flour, butter, shortening, palm oil • Lower gross margins largely offset by increased volumes • Operating profit margin
Slide 17: Chilled & Frozen Convenience Brands – Financial Results
OPERATIONAL PERFORMANCE – CHILLED & FROZEN CONVENIENCE BRANDS FINANCIAL RESULTS – CONTINUING OPERATIONS 08 07 Rm Rm ∆ %∆ Revenue 1 775,4 1 690,8 5,0 Operating profit 194,9 139,1 40,1 Operating margin % 11,0 8,2 34,1 OPERATIONAL PERFORMANCE – CHILLED & FROZEN CONVENIENCE BRANDS FINANCIAL RESULTS – SE
Slide 18: Chilled & Frozen Convenience Brands – Key Features and Quota
OPERATIONAL PERFORMANCE – CHILLED & FROZEN CONVENIENCE BRANDS FY08 KEY FEATURES • Revenue growth from weaker Rand, higher export prices and higher domestic prices • Hake volumes reduced due to lower quota • I&J catch rates slightly higher than 2007 • Fleet capacity reduced in line with lower quota •
Slide 19: Operational Performance – Out of Home
OPERATIONAL Out of Home performance OPERATIONAL PERFORMANCE – OUT OF HOME FINANCIAL RESULTS 08 07 Rm Rm ∆ %∆ Revenue 392,7 344,9 13,9 Operating profit 42,7 53,5 (20,1) Operating margin % 10,9 15,5 (29,7)
Slide 20: Out of Home FY08 Key Features
OPERATIONAL PERFORMANCE – OUT OF HOME FY08 KEY FEATURES • Volume growth in fresh juice and hot chocolate • Core coffee volumes maintained in tougher consumer environment • Decrease in margins from lower margin products and higher raw material costs • Investment in sales and equipment servicing capab
Slide 21: Operational Performance – Fashion Brands
OPERATIONAL PERFORMANCE – FASHION BRANDS FINANCIAL RESULTS 08 07 Rm Rm ∆ %∆ Revenue 1 253,3 1 058,1 18,4 Operating profit 206,3 208,4 (1,0) Operating margin % 16,4 19,7 (16,7) OPERATIONAL PERFORMANCE – FASHION BRANDS FINANCIAL RESULTS Revenue Operating profit 08 07 08 07 Rm Rm ∆ %∆ Rm Rm ∆ %∆ Person
Slide 22: Fashion Brands FY08 Key Features
OPERATIONAL PERFORMANCE – FASHION BRANDS FY08 KEY FEATURES – PERSONAL CARE • Successful product development and launch in major brands – Yardley, Lenthéric, Coty • Strong growth in deodorant sprays • Average realised selling prices up 3% • Solid performance from fragrance and make-up categories • Op