interim results - rhodes food group€¦ · 5 rhodes food group – interim results 2016...

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


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


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


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


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


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


GROUP TURNOVER


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%


SEGMENTAL TURNOVER


OPERATING PROFIT

* Normalised operating profit and margin


FOREIGN CURRENCY MANAGEMENT

Rand depreciated 24% against trading basket of currencies in H1 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


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


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


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


SEGMENTAL TURNOVER


INNOVATION

Rhodes branded fruit juice range

Rhodes Squish baby food range

Jam range upgraded

Jam in cups range extended

3kg catering range launched


INNOVATION

Ongoing ready meals

innovation

Value pie range

Snacking

http://www.google.co.za/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwi89YaQteXMAhUHfRoKHVUVAMgQjRwIBw&url=http://www.woolworths.co.za/store/prod/Food/Food/Ready-Prepared-Meals/Ready-Meals/Family-Serves-4-or-More-Meals/Traditional-Beef-Lasagne-2Kg/_/A-20188320&psig=AFQjCNEsv_Ac-psDxFMdt3NuiMoCRlv2QQ&ust=146372242596609


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


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


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


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)


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


REGIONAL: FRESH FOODS


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


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


Revenue 500 345 45.1

Operating profit 71 24 194.3

Operating profit margin 14.2% 7.0%


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


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


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.


CONTACT DETAILS

Bruce Henderson CEO [email protected]

Tiaan Schoombie CFO [email protected]

Graeme Lillie IR [email protected]

www.rhodesfoodgroup.com

interim results - rhodes food group€¦ · 5 rhodes food group – interim results 2016...

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