interim results...company deemster general mills alibaba foods effective date 1 oct 2015 30 nov 2015...
TRANSCRIPT
INTERIM RESULTS for the six months ended March 2016
2 RHODES FOOD GROUP – INTERIM RESULTS 2016
PRESENTATION OUTLINE
1 REVIEW OF THE SIX MONTHS
2 FINANCIAL PERFORMANCE
3 TRADING PERFORMANCE
4 OUTLOOK
5 QUESTIONS
REVIEW OF THE SIX MONTHS
4 RHODES FOOD GROUP – INTERIM RESULTS 2016
TRADING ENVIRONMENT AND PERFORMANCE
Strong organic growth
Market share gains across key product categories
Resilience of higher income consumers beneficial in
current constrained spending environment
Drought had limited impact on volumes and costs to date
International benefited from Rand depreciation
Significant investment in sales and marketing
Acquisitions contributed turnover of R484 million
5 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTEGRATION OF ACQUISITIONS
All FY2015 acquisitions stable and performing well
FY2016 acquisitions successfully integrated
– Deemster; General Mills and Alibaba Foods
Initial margin dilution, especially FY2016 acquisitions
Acquisitions post listing enabled entry into new product
categories:
– Fruit juice
– Baby food
– Bottled salads and pickles
– Bakery products
6 RHODES FOOD GROUP – INTERIM RESULTS 2016
CAPITAL INVESTMENT
Ongoing investment in production capacity and efficiency
R104 million capex in H1 2016 (H1 2015: R90 million)
Investment programme 2016 Capex Status
Upgrading meat production facility R30m Ph 2: H2 2016
Ph 3: H1 2017
Increasing production capacity at fruit
juice facility
R45m Ph 1: Complete
Ph 2: H2 2016
Increasing production capacity at pie
facility
R12m H2 2016
FINANCIAL PERFORMANCE
8 RHODES FOOD GROUP – INTERIM RESULTS 2016
FINANCIAL PERFORMANCE
Turnover +53.5% to R2.0 billion
Gross profit margin +60 bps to 28.2%
Normalised operating margin 30 bps lower at 9.4%
Normalised profit after tax +37.6%
Diluted HEPS +87.2% to 48.1 cps
Normalised HEPS +36.9% to 50.1 cps
Normalised metrics exclude once-off listing costs of R21.8 million in FY2015
9 RHODES FOOD GROUP – INTERIM RESULTS 2016
INCOME STATEMENT
R’m March 2016 March 2015 % change
Turnover 1 988 1 295 54
Cost of goods sold (1 427) (938) 52
Gross profit 561 357 57
Gross profit margin 28.2% 27.6%
Other income 13 16 (19)
Operating costs (386) (269) 43
Operating profit 188 104 81
Net interest paid (38) (15) 153
Profit before tax 150 89 69
Tax (40) (31) 29
Profit after tax 110 58 89
Normalised HEPS
Normalised diluted HEPS
50.1
48.1
36.6
35.1
36.9
37.0
10 RHODES FOOD GROUP – INTERIM RESULTS 2016
GROUP TURNOVER
11 RHODES FOOD GROUP – INTERIM RESULTS 2016
COMPONENTS OF TURNOVER GROWTH R
'm
1 295 +6.7%
+3.0% +6.4%
1 988
800
1 000
1 200
1 400
1 600
1 800
2 000
H1 2015
revenue
Volume
growth
Price
increase
Forex
impact
Acqui-
sitions
H1 2016
revenue
+37.4%
12 RHODES FOOD GROUP – INTERIM RESULTS 2016
SEGMENTAL TURNOVER
13 RHODES FOOD GROUP – INTERIM RESULTS 2016
OPERATING PROFIT
* Normalised operating profit and margin
14 RHODES FOOD GROUP – INTERIM RESULTS 2016
FOREIGN CURRENCY MANAGEMENT
Rand depreciated 24% against trading basket of currencies in H1 2016
15 RHODES FOOD GROUP – INTERIM RESULTS 2016
WORKING CAPITAL MANAGEMENT
March 2016 March 2015
Net working capital days* 115 152
Inventory 128 154
Accounts receivable 50 59
Accounts payable (58) (61)
Acquisitions increased working capital by R26 million on acquisition
Working capital in line with seasonality cycle and increase in trading
activity
* Normalised for the effect of acquisitions
16 RHODES FOOD GROUP – INTERIM RESULTS 2016
CASH MANAGEMENT R
'm
(100)
226
(98)
(65)
119
(57)
(58)
(123)
Operating
cashflows
before
working
capital
changes
Working
capital
changes
Net interest
and tax paid
Dividends
paid
Loans
raised
Loans
repaid
Purchase
and
disposal
of PPE
Acquisitions
17 RHODES FOOD GROUP – INTERIM RESULTS 2016
IMPACT OF ACQUISITIONS
Company Deemster General Mills Alibaba Foods
Effective date 1 Oct 2015 30 Nov 2015
1 Feb 2016
Purchase price (R’m) 25 58 42
H1 turnover (R’m) 32.5 16.7 6.3
H1 EBIT (R’m) (1.3) 0.2 (0.5)
H2 2016 impact
- Turnover
- EBIT
- Interest cost
Comment Fully integrated Fully integrated Fully integrated
18 RHODES FOOD GROUP – INTERIM RESULTS 2016
FINANCIAL GUIDANCE AND TARGETS
Focus on volume growth and maintaining margins in
current inflationary environment
Continue foreign exchange hedging strategy
Capital expenditure of R150 million in H2 2016
Capacity to raise debt to fund capex
Effective tax rate to be in line with corporate tax rate
Committed to achieving medium-term targets
– Gross profit margin over 30%
– Operating margin over 10%
TRADING PERFORMANCE
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SEGMENTAL TURNOVER
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INNOVATION
Rhodes branded fruit juice range
Rhodes Squish baby food range
Jam range upgraded
Jam in cups range extended
3kg catering range launched
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INNOVATION
Ongoing ready meals
innovation
Value pie range
Snacking
23 RHODES FOOD GROUP – INTERIM RESULTS 2016
TRADING PERFORMANCE: REGIONAL
Volume growth 10%; price inflation 3%; acquisitions 44%
Sustained increase in demand for canned foods
Rhodes branded fruit juice sales performing well
Continued strong growth in pie category
Operating margin impacted by initial dilutionary impact of acquisitions and
higher sales and marketing expenses, including approx R10m once-off costs
R’m March 2016 March 2015 % change
Revenue 1 488 950 56.6
Long Life 949 503 88.7
Fresh 539 447 20.5
Operating profit 119 105 13.3
Operating profit margin 8.0% 11.1%
REGIONAL: LONG LIFE FOODS
25 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS
Growth of 87% in sales in Sub-Saharan Africa driven by
canned meat and juice products
Improved brand share in Bull Brand; final phase of
factory upgrade underway
Strengthened sales structures, with specific attention on
dedicated channel management
First TV advertising campaign for Rhodes brand
26 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS – MARKET SHARE
Market shares* (%) March
2013
March
2014
March
2015
March
2016
Position
Jams 35.5 38.0 39.6 43.5 2
Canned fruit 33.3 34.8 37.4 43.5 1
Canned vegetables 11.7 14.5 14.2 16.8 2
Canned meats 54.6 58.6 59.7 63.5 1
Long life fruit juice - - 9.2 13.2 2
Infant food meals - - 4.3 5.0 2
* Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail
channel, in retail prices)
27 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: LONG LIFE FOODS – BRAND SHARE
* Moving annual total. Retailer scanning data processed by Iri Aztec (market shares in the defined retail
channel, in retail prices)
Brand shares* (%) March
2013
March
2014
March
2015
March
2016
Position
Jams 14.2 16.7 18.5 24.1 2
Jam in glass 8.6 15.8 17.8 21.4 1
Canned fruit 20.4 22.4 25.7 25.5 2
Canned pineapple 48.5 49.0 57.9 57.7 1
Canned vegetables 12.3 15.1 15.5 14.5 2
Canned tomato 17.6 22.5 20.5 24.4 2
Tomato paste 19.6 32.8 30.9 31.5 1
Corned meat 37.1 38.7 41.8 48.2 1
28 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: FRESH FOODS
29 RHODES FOOD GROUP – INTERIM RESULTS 2016
REGIONAL: FRESH FOODS
Good volume growth
Outstanding performance in pie category
Investment in capacity and efficiencies at pie factory
General Mills and Alibaba integrated into operations
Dedicated ‘out of home’ sales channel established
Offer comprehensive range of bakery products
INTERNATIONAL SEGMENT
31 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTERNATIONAL: PERFORMANCE
Weaker currency significantly enhancing results, although partially
offset by internal hedge and FECs
Some of the benefits of the weaker Rand offset by lower foreign
prices, particularly in Russia, China and South East Asia
Segment includes international sales from Boland Pulp (acquired in
FY2015)
International managed on a 12 month cycle owing to seasonality of
orders and shipping
R’m March 2016 March 2015 % change
Revenue 500 345 45.1
Operating profit 71 24 194.3
Operating profit margin 14.2% 7.0%
32 RHODES FOOD GROUP – INTERIM RESULTS 2016
INTERNATIONAL
Core range of canned fruit performing well
Complemented by range of industrial
products ex Boland Pulp
Value added fruit cups showing good
growth
Strong, stable customer base with long-
term relationships
Traditional markets such as UK currently
performing better than Asian markets
OUTLOOK
34 RHODES FOOD GROUP – INTERIM RESULTS 2016
OUTLOOK
Organic growth through market share gains,
particularly in new categories
Ongoing focus on private label ranges for retailers
Maintain growth momentum in Sub-Saharan Africa
Drought could impact H2 production costs and volumes
Expect increased contribution from acquisitions in H2
THANK YOU
QUESTIONS
36 RHODES FOOD GROUP – INTERIM RESULTS 2016
DISCLAIMER
Rhodes Food Group Holdings Limited (“RFG” or “the company”) has acted in good faith and has
made every reasonable effort to ensure the accuracy and completeness of the information
contained in this presentation, including all information that may be defined as 'forward-looking
statements' within the meaning of United States securities legislation.
Forward-looking statements may be identified by words such as 'believe', 'anticipate', 'expect',
'plan', 'estimate', 'intend', 'project', 'target', 'predict' and 'hope'.
Forward-looking statements are not statements of fact, but statements by the management of RFG
based on its current estimates, projections, expectations, beliefs and assumptions regarding the
group's future performance.
No assurance can be given that forward-looking statements will prove to be correct and undue
reliance should not be placed on such statements.
The risks and uncertainties inherent in the forward-looking statements contained in this
presentation include, but are not limited to: changes to IFRS and the interpretations, applications
and practices subject thereto as they apply to past, present and future periods; domestic and
international business and market conditions; changes in the regulatory and legislative
environments; changes to operational, social, economic and political risks; and the effects of both
current and future litigation.
RFG does not undertake to update any forward-looking statements contained in this presentation
and does not assume responsibility for any loss or damage whatsoever and howsoever arising as
a result of the reliance by any party thereon, including, but not limited to, loss of earnings, profits,
or consequential loss or damage.
37 RHODES FOOD GROUP – INTERIM RESULTS 2016
CONTACT DETAILS
Bruce Henderson CEO [email protected]
Tiaan Schoombie CFO [email protected]
Graeme Lillie IR [email protected]
www.rhodesfoodgroup.com