Avi Limited Class Y · JSE:AVI

Avi Limited Class Y — FY2013 Earnings Presentation

71 slides from Avi Limited Class Y's earnings presentation, 2013

  1. Slide 1: AVI Limited Presentation to shareholders & analysts

    AVI Limited Presentation to shareholders & analysts for the year ended 30 June 2013

  2. Slide 2: Agenda

    AGENDA  Key features and results history  Group financial results  Performance and prospects  Questions and answers

  3. Slide 3: Key Features

    KEY FEATURES  Revenue from continuing operations up 11% to R9,22 billion  Operating profit from continuing operations up 11% to R1,53 billion  Headline earnings per share from continuing operations up 7% to 341 cents  Solid group performance notwithstanding pressure on Entyce Beverages and I&J 

  4. Slide 4: Results History: Operating profit history

    RESULTS HISTORY Operating profit history - continuing operations (excluding Real Juice, Denny and Alpesca) 1,600 1,529 1,400 1,386 410 1,200 308 1,121 1,000 236 156 167 915 892 806 101 179 166 800 151 133 718 95 Rm 133 91 105 600 509 147 73 388 238 74 329 435 115 60 160 262 - 47 51 117 233 400 193 8

  5. Slide 5: Results History: Historical cash generation

    RESULTS HISTORY Historical cash generation - continuing operations 1,400 1,200 1,097 1,043 1,005 1,000 530 800 780 502 Rm 619 595 600 480 436 460 454 356 400 363 284 227 237 92 567 541 200 410 264 256 325 196 209 224 - F05 F06 F07 F08 F09 F10 F11 F12 F13 Total Capex Free Cash Flow  High conversion

  6. Slide 6: Results History: Dividend yield

    RESULTS HISTORY Dividend yield Historical dividend yield (based on closing share price) 14.0% 12.0% 12.0% 10.0% 7.7% 7.4% 8.0% 6.4% 6.2% 6.0% 5.2% 4.5% 3.8% 4.1% 4.4% 3.7% 4.0% 4.0% 2.8% 2.0% 0.0% F05 F06 F07 F08 F09 F10 F11 F12 F13 Normal dividend yield Total dividend yield  Total dividend yield i

  7. Slide 7: Group financial results

    Group financial results

  8. Slide 8: Income statement - continuing operations

    GROUP FINANCIAL RESULTS Income statement - continuing operations F13 F12 Rm Rm % Revenue 9 218,3 8 287,1 11,2 Gross profit 4 107,8 3 762,8 9,2 Gross profit margin % 44,6 45,4 (1,8) Operating profit 1 526,2 1 372,5 11,2 Operating profit margin % 16,6 16,6 0,0 Net financing cost (52,7) (14,3) (268,5)

  9. Slide 9: Continuing operations revenue 11,2% up

    GROUP FINANCIAL RESULTS Continuing operations – revenue 11,2% up Movement in group revenue 9 200 9 000 8 800 8 600 Rm 8 400 8 200 8 000 8,287 84 253 64 122 327 76 9,218 F12 Entyce Snackworks Personal Spitz Green Cross I&J F13 Care  Entyce: price increases & volume growth in tea and creamer offset b

  10. Slide 10: Continuing operations gross profit 9,2% up

    GROUP FINANCIAL RESULTS Continuing operations – gross profit 9,2% up Movement in group gross profit 4 200 4 100 4 000 Rm 3 900 3 800 3 700 3,763 20 107 32 50 167 (35) 4,108 F12 Entyce Snackworks Personal Spitz Green Cross I&J F13 Care  Entyce: growth in tea and creamer offset by decrease in coffee

  11. Slide 11: Gross profit margin history

    GROUP FINANCIAL RESULTS Continuing operations – gross profit margin history 70% 60% 46% 46% 45% 45% 50% 45% 45% 44% 44% 43% 43% 42% 41% 41% 41% 40% 40% 30% 20% H1 H2 Full year F09 F10 F11 F12 F13  Gross profit margin in grocery brands remains healthy despite slight decline  Input cost pressure in

  12. Slide 12: Continuing operations operating profit 11,2% up

    GROUP FINANCIAL RESULTS Continuing operations – operating profit 11,2% up Movement in group operating profit 1 600 1 500 Rm 1 400 1 300 1,373 (18) 59 11 22 80 (13) 12 1,526 F12 Entyce Snackworks Personal Spitz Green Cross I&J Other F13 Care  Entyce: Lower coffee volumes and tea margin pressure offs

  13. Slide 13: Group financial results: cash and debt

    GROUP FINANCIAL RESULTS Continuing operations F13 F12 Rm Rm % Cash generated by operations 1 556,5 1 452,6 7,2 Working capital to revenue % 19,1 18,1 5,5 Capital expenditure 566,9 541,1 4,8 Depreciation and amortisation 259,0 220,7 17,4 Net debt/(cash) 681,1 (175,0) Net debt / capital employed % 15

  14. Slide 14: Cash flows

    GROUP FINANCIAL RESULTS Cash flows 2 000 Cash generation 1 800 1 600 1 400 1 200 Rm 1 000 800 600 400 200 - 1,751 (25) (407) (567) 876 (53) (380) (1,195) Cash from Working Taxation Capital Increase in net Net interest Green Cross Dividends paid operations capital and expenditure debt paid acquisitio

  15. Slide 15: Return on capital employed

    GROUP FINANCIAL RESULTS Return on capital employed 4,500.0 35.0 4,000.0 30.0 3,500.0 25.0 3,000.0 2,500.0 20.0 % Rm 2,000.0 15.0 1,500.0 10.0 1,000.0 5.0 500.0 - - F09 F10 F11 F12 F13 Net operating profit after tax Average capital employed ROCE (%)  ROCE improved with margin expansion, effective ca

  16. Slide 16: Capital expenditure & depreciation history

    GROUP FINANCIAL RESULTS Capital expenditure & depreciation history 600 567 500 541 400 410 300 337 258 256 200 217 182 186 191 100 - F09 F10 F11 F12 F13 Capital expenditure Depreciation charge  Capital expenditure of R567 million with on-going investment in replacement, capacity and efficiency proj

  17. Slide 17: Capital projects spend summary

    GROUP FINANCIAL RESULTS Capital projects spend summary Rm Tea packing line replacement and upgrades 46 Coffee roaster replacement 26 Westmead Topper line upgrade 41 Westmead Red Label line upgrade 8 I&J Marel processing line at Woodstock factory 42 Indigo aerosol line case packing and palletisation

  18. Slide 18: Historical dividends and earnings

    RESULTS HISTORY Dividend yield Historical dividends and earnings 400 350 Cents per share 300 250 200 150 100 50 0 F05 F06 F07 F08 F09 F10 F11 F12 F13 Normal dividend declared Headline earnings per share  Annual dividend cover ratio reduced from 2,0 in F11 to 1,25 in F13  More even return of capita

  19. Slide 19: Dividends

    GROUP FINANCIAL RESULTS Dividends F13 F12 % Interim dividend - cps 90 83 8,4 Final dividend - cps 170 120 41,7 Normal dividend - cps 260 203 28,1 Normal dividend yield - %* 4,4 4,1 Special dividend – cps 180 ─ Total dividend – cps 440 203 116,7 Total dividend yield - %* 7,4 4,1 Cover ratio – normal

  20. Slide 20: Business unit performance and prospects

    Business unit performance and prospects

  21. Slide 21: Entyce Beverages: Performance and prospects

    -ENTYCE BEVERAGES mY Performance and prospects ee ST A UV | GROWING GREAT BRANDS

  22. Slide 22: Entyce Income statement - continuing operations

    Income statement - continuing operations F13 F12 % Rm Rm Revenue 2 414,9 2 330,7 3,6 Operating profit 397,8 415,4 (4,2) Operating profit margin % 16,5 17,8 (7,3)  Continued strong performance from Tea  Leading market position and strong margins / returns maintained  Some margin pressure from hig

  23. Slide 23: Entyce Income statement - coffee

    Income statement - continuing operations F13 F12 % Rm Rm Revenue 2 414,9 2 330,7 3,6 Operating profit 397,8 415,4 (4,2) Operating profit margin % 16,5 17,8 (7,3)  Coffee pressure from lower consumer demand and increased competition  Maintained healthy profit margins despite category pressure  Fr

  24. Slide 24: Sales volume and selling prices

    Sales volume and selling prices

  25. Slide 25: Market Share

    Market Share Brand market shares F12 vs. F13 60.0% 51.8% 49.3% 50.0% 40.0% 34.7% 35.6% 35.5% 33.9% 30.0% 22.0% 23.4% 20.0% 10.0% 0.0% Five Roses Freshpak Frisco Ellis Brown F12 F13

  26. Slide 26: Input costs

    Input costs Impact of key materials consumed (Ave. F12 vs. F13) 60 48 50 40 30 Rm 20 8 10 3 2 0 -10 -10 -20 Arabica Robusta / Palm oil Glucose Tea chicory  Weaker Rand impacted on all imported / parity priced inputs  Improvements in coffee USD prices  Steep rooibos and black tea cost increases 

  27. Slide 27: Prospects for F14

    Prospects for F14  Brand resilience in constrained environment  Raw material pressure from weaker Rand  Rooibos and creamer packaging in new formats  Support improved Frisco market share - granules  Export growth through AVI International  Improving factory performance  Cost management

  28. Slide 28: Snackworks: Performance and prospects

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  29. Slide 29: Income statement

    Income statement F13 F12 % Rm Rm Revenue 2 681,6 2 428,7 10,4 Operating profit 387,9 328,5 18,1 Operating profit margin % 14,5 13,5 7,4  Excellent Biscuits performance  Effective pricing / promotion to drive volumes  Factory performance – efficiency, quality and throughput  Improving Snacks mar

  30. Slide 30: Sales volume and selling prices

    Sales volume and selling prices %Δ Comments F13 vs. F12 Biscuits revenue growth 11,8 Volume growth 10,1 Effective pricing / promotional activity and category growth Ave. selling prices 1,5 Limited raw material pressure in this period; volume leverage Snacks revenue growth 6,5 Volume growth 0,3 Margi

  31. Slide 31: Market Share

    Market Share Brand market shares F12 vs. F13 50.0% 43.5% 44.4% 45.0% 40.0% 35.0% 30.0% 25.0% 19.2% 21.4% 21.1% 18.4% 20.0% 15.0% 10.0% 5.0% 0.0% Bakers (Sweet) Bakers (Savoury) Willards F12 F13

  32. Slide 32: Input costs

    Input costs Impact of key raw materials consumed (Ave. F12 vs. F13) 15 11 10 8 7 5 0 Rm -5 -10 -15 -17 -20 Butter Palm oil Sugar Flour  Benefit from raw material and currency positions secured in F12  Weaker Rand impacted on all imported / parity priced inputs  Improved factory efficiency and thr

  33. Slide 33: Prospects for F14

    Prospects for F14  Sustain biscuit volume momentum  Manage volume / price elasticity  Utilise unsold capacity  Master brand support – sweet and savoury portfolios  Export growth through AVI International  Raw material cost pressures – weaker Rand and butter prices  Ongoing focus on manufactur

  34. Slide 34: I&J: Performance and prospects

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  35. Slide 35: I&J Income statement

    Income statement F13 F12 % Rm Rm Revenue 1 591,9 1 515,4 5,0 Operating profit 165,8 178,6 (7,2) Operating profit margin % 10,4 11,8 (11,9)  Stronger second half with improved fishing and weaker Rand  Lower sales volumes due to:  Lower non-hake sales – by-catch and convenience products  Increase

  36. Slide 36: Movement in I&J operating profit

    Income statement Movement in I&J operating profit 200 150 R million 100 50 - 179 (26) (29) (11) (35) 64 24 166 F12 Volume Fuel price Catch rate Operations Exchange Pension F13 rate fund surplus  Operations variance mainly at Woodstock wet fish processing facility:  Lower throughput in H1  Project

  37. Slide 37: Sales volume and selling prices

    Sales volume and selling prices %Δ F13 vs. F12 I&J Domestic revenue growth 3,8 Volume (3,9) Lower catch volumes (including by-catch) and aggressive retail price competition Ave. selling prices 8,1 Increases in response to higher costs I&J Export revenue growth 3,0 Volume (10,0) Lower catch volumes a

  38. Slide 38: Fishing performance

    Fishing performance I&J catch rates (hake tons per sea day) 14.0 12.0 Hake tons per sea day 10.0 8.0 6.0 4.0 2.0 0.0 2007 2008 2009 2010 2011 2012 2013 I&J catch rate  Catch rates still healthy but lower than last few year  Impacted by weather conditions  Improved in second half  Management focu

  39. Slide 39: Prospects for F14

    Prospects for F14  Increasing benefit from weaker Rand  Export markets still under pressure – price and volume  Benefit of higher quota possibly constrained by lower catch rates  Continued high fuel costs  Ongoing incremental development of export market opportunities  Realisation of savings f

  40. Slide 40: Personal Care: Performance and prospects

    PERSONAL CARE Performance and prospects

  41. Slide 41: Personal Care Income statement

    PERSONAL CARE Income statement F13 F12 % Rm Rm Revenue 982,1 918,1 7,0 Operating profit 167,1 155,7 7,3 Operating margin % 17,0 17,0 0,0  Category under price and volume pressure  Sound Yardley cosmetics performance  Pressure on body spray volumes after prolonged period of growth  Focused marke

  42. Slide 42: Personal Care Sales volume and selling prices

    PERSONAL CARE Sales volume and selling prices %Δ Comments F13 vs. F12 Personal Care revenue 7,0 growth Volume growth (1,0) Lower body sprays offset by increased make-up and fragrance Ave. selling price 8,1 Price increases and mix

  43. Slide 43: Personal Care Prospects for F14

    PERSONAL CARE Prospects for F14  Increased launch activity in F14  Focus on body spray volumes – price / volume balance  Traction on medium term growth opportunities – product and channel  Effective marketing spend  Export growth through AVI International  Capital project evaluation – ongoing

  44. Slide 44: Footwear & Apparel: Performance and prospects

    FOOTWEAR & APPAREL Performance and prospects

  45. Slide 45: Spitz and Kurt Geiger Income statement

    Income statement Spitz and Kurt Geiger F13 F12 % Rm Rm Revenue 1 170,4 1 044,2 12,1 Operating profit 326,2 304,6 7,1 Operating margin% 27,9 29,2 (4,5)  Strong volume growth in core brands  Footwear volume growth of 6,6% - Carvela, Kurt Geiger, Lacoste  Clothing revenue up 41,0% - Kurt Geiger, Ca

  46. Slide 46: Sales volume and selling prices

    Sales volume and selling prices %Δ Comments F13 vs. F12 Spitz & KG Footwear 9,7 revenue growth Volume growth 6,6 Core Carvela and Lacoste ranges performing well; Kurt Geiger store roll-out Ave. selling price 2,9 Price increase on core Carvela ranges in H2 F13 and mix change KG Clothing revenue 41,0

  47. Slide 47: Spitz & Kurt Geiger operating profit and trading density

    Spitz & Kurt Geiger Operating profit 400.0 35.0% 350.0 30.0% 300.0 25.0% 250.0 20.0% 200.0 15.0% 150.0 100.0 10.0% 50.0 5.0% 0.0 0.0% F05 F06 F07 F08 F09 F10 F11 F12 F13 Operating profit Operating profit % Trading density 28,000 60,000 24,000 50,000 20,202 20,000 17,946 15,749 16,186 40,000 15,465 1

  48. Slide 48: Trading space and trading density

    Trading space and trading density Spitz F13 F12 F11 Number of stores 64 61 57 Turnover (Rm) 1,044 959 876 Average m2 16,357 15,107 15,233 Trading Density (R /m2) 63,820 63,460 57,480 Closing m2 16,586 15,662 14,991 Kurt Geiger Number of stores 30 26 15 Turnover (Rm) 127 86 25 Average m2 3,845 2,839

  49. Slide 49: Prospects for F14

    Prospects for F14  Enduring brand strength will be tested again in constrained environment  Increase in trading space – 8 Spitz stores and 10 Kurt Geiger stores  Manage price / volume balance  Leverage central fixed costs  Continue developing use of owned brands – Carvela and Kurt Geiger  Sust

  50. Slide 50: Green Cross income statement

    F13 F12 % Rm Rm Revenue 327,5 315,5 3,8 Operating profit 80,0 82,6 (3,1) Operating profit % 24,4 26,2 (6,9)  Included with effect from 1 July 2012  Earn out phase completed in February 2013  Sound performance in constrained environment  Price increases to offset weaker Rand  Limited increase i

  51. Slide 51: Trading space and trading density Green Cross

    Trading space and trading density Green Cross F13 F12 Number of stores 29 29 Turnover (Rm) 180 167 Average m2 3,225 3,167 Trading Density (R /m2) 55,795 52,786 Closing m2 3,225 3,225

  52. Slide 52: Prospects for F14

    Prospects for F14  Investment in product development and retail format  Open 6 new stores  Refurbish old stores  Consolidate and focus the wholesale business  Focus on procurement  Develop the manufacturing site – distribution and offices

  53. Slide 53: AVI International

    el I SS UV | GROWING GREAT BRANDS

  54. Slide 54: AVI International

    AVI INTERNATIONAL Entyce, Snackworks and Indigo – sales outside RSA F13 F12 % Rm Rm International Revenue 639,4 557,5 14,7 % of Grocery and Personal Care brands 10,5 9,8 International Operating Profit 128,9 117,5 9,7 % of Grocery and Personal Care brands 13,5 13,1 International Operating Margin 20,

  55. Slide 55: AVI International operating profit history

    AVI INTERNATIONAL Operating profit history 140 129 117 120 92 34 100 33 76 80 28 58 Rm 56 48 21 37 60 9 15 26 40 22 23 18 20 48 47 33 38 24 25 - F08 F09 F10 F11 F12 F13 Tea Biscuits Other  Improved capability from new structure  Good growth in Mozambique and Zambia  Established own distribution o

  56. Slide 56: Africa Strategy

    AVI INTERNATIONAL Africa Strategy  Replicate our South African category market leadership in selected countries:  Establish brand presence and depth  Target double digit sales growth  Invest in own operations for sales, marketing and distribution where appropriate  Preserve high ROCE  In count

  57. Slide 57: Growing Great Brands

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  58. Slide 58: Medium term strategy

    AVI GROUP Medium term strategy  Sustain growth and momentum of our South African brands across all categories despite constraints  Meaningfully widen the category use of selected brands  Replicate our category market leadership in selected regional markets  Build on our efficiency, productivity

  59. Slide 59: Prospects for F14

    AVI GROUP Prospects for F14  Leverage strong brand portfolio to sustain growth in challenging environment  Constrained consumer demand to persist  Competitive retail environment and cost of serving growing retail space  Margin / demand pressure from weaker Rand / commodity costs  Improved manuf

  60. Slide 60: Questions and answers

    @) : & A " ‘ : @ cneenscnoss | . ib a Questions and answers s \ V | GROWING GREAT BRANDS

  61. Slide 61: Information slides

    9 @ crcenscnoss Information slides s \ V | GROWING GREAT BRANDS

  62. Slide 62: Returns to shareholders

    RESULTS HISTORY Returns to shareholders Distributions to shareholders (Rm) 1,600.0 1,400.0 - 1,200.0 550.0 1,000.0 Rm 800.0 269.9 600.0 319.1 - 226.6 400.0 806.4 230.6 620.7 - - 200.0 201.8 373.0 229.4 238.6 262.8 301.1 116.0 166.0 - F05 F06 F07 F08 F09 F10 F11 F12 F13 Normal dividend declared Speci

  63. Slide 63: Business unit financial results

    BUSINESS UNIT FINANCIAL RESULTS Continuing operations Segmental Segmental Operating Revenue Operating Profit Margin F13 F12 Δ F13 F12 Δ F13 F12 Rm Rm % Rm Rm % % % Food & Beverage Brands 6 688,4 6 274,8 6,6 951,5 922,5 3,1 14,2 14,7 Entyce 2 414,9 2 330,7 3,6 397,8 415,4 (4,2) 16,5 17,8 Snackworks 2

  64. Slide 64: Footwear & Apparel financial results

    FOOTWEAR & APPAREL FINANCIAL RESULTS Income statement Segmental Segmental Operating Revenue Operating Profit Margin F13 F12 Δ F13 F12 Δ F13 F12 Rm Rm % Rm Rm % % % Footwear & Apparel 1 536,1 1 087,1 41,3 409,8 307,9 33,1 26,7 28,3 Spitz and KG 1 170,4 1 044,2 12,1 326,4 304,6 7,2 27,9 29,2 Green Cro

  65. Slide 65: Consumer Demand

    INFORMATION SLIDE Consumer Demand Sales volume %Δ Comments growth F13 vs. F12 Tea 2,0 Strong rooibos growth Coffee (10,6) Pressure on affordable SKU’s with rising price points Creamer 2,8 Good category growth offset by increased competition Biscuits 10,1 Effective pricing/promotional activity and ca

  66. Slide 66: Selling prices

    INFORMATION SLIDE Selling prices Ave. realised %Δ Comments selling Selling Prices prices F13 vs. F12 Tea 9,0 Increases in response to raw material increases Coffee 7,2 Lagged impact of higher raw material prices Creamer 4,7 Limited price increase in constrained environment Biscuits 1,5 Limited raw

  67. Slide 67: Raw material / commodity costs

    INFORMATION SLIDE Raw material / commodity costs Impact of key raw materials and commodities consumed (Ave. F12 vs. F13) 50 48 40 33 30 Rm 20 10 11 10 8 8 2 0 -10 -10 -20 -17 Butter Arabica Robusta / Glucose Sugar Palm oil Flour Fuel Tea chicory  Total increase of R93m for commodities shown  Inclu

  68. Slide 68: Key Market Shares

    INFORMATION SLIDE Key Market Shares Market shares F12 vs. F13 60.0% 51.8% 49.3% 47.7% 44.4% 50.0% 43.5% 42.9% 38.1% 37.5% 35.5% 35.6% 34.7% 33.9% 40.0% 30.0% 23.4% 22.0% 21.4% 21.1% 19.2% 18.4% 20.0% 10.0% 0.0% Five Roses Freshpak Frisco Ellis Brown Bakers Bakers Willards I&J Body sprays (Sweet) (Sa

  69. Slide 69: Marketing expenditure

    INFORMATION SLIDE Marketing expenditure Brand support - % of NSV 18.6% 20.0% 16.5% 18.0% 16.0% 14.0% 10.4% 12.0% 10.4% 8.8% 8.7% 7.8% 7.8% 10.0% 7.3% 6.8% 8.0% 5.2% 5.1% 4.7% 4.4% 6.0% 3.1% 2.5% 4.0% 2.0% 0.0% Tea Coffee Creamer Biscuits Snacks I&J retail Personal Footwear care F12 F13  Includes ad

  70. Slide 70: I&J Quota - seafood products

    INFORMATION SLIDE I&J Quota– seafood products CY09 CY10 CY11 CY12 CY13 Hake Quota (tons) South African Total Allowable Catch (TAC) 118 578 119 861 131 847 144 742 156 088 % change in quota (9,1) 1,1 10,0 9,8 7,8 I&J 33 199 33 550 36 906 40 515 43 689 % 28,0 28,0 28,0 28,0 28,0

  71. Slide 71: Discontinued operations - historical information

    INFORMATION SLIDE Discontinued operations – historical information July – Sept F12 2012 Rm Rm Real Juice Revenue 33,6 146,2 Operating profit 0,6 8,1 Capital items* 41,1 0,1 * Includes profit on disposal of Real Juice of R40,9 million F13 F12 Rm Rm Denny Capital items** ─ 27,3 ** Excludes attributabl

AVI — FY2013 Earnings Presentation on 6ix