Wrap Text
Unaudited interim results for the six months ended 30
September 2023
PREMIER GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2007/016008/06)
JSE share code: PMR
ISIN: ZAE000320321
(Premier, the "Group" or the "Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2023
FINANCIAL OVERVIEW
- Revenue increased by 7.1% to R9.4 billion
- Earnings before finance income and finance costs (including foreign exchange
gains), tax, depreciation and amortisation ("EBITDA") increased by 23.9% to R1.0 billion
- Earnings per share ("EPS") increased by 0.3% to 326 cents per share
- Headline earnings per share ("HEPS") increased by 0.8% to 331 cents per share
- Normalised HEPS(1) increased by 25.4% to 331 cents per share
(1) The prior period normalised headline earnings per share were reduced for foreign exchange gains on
cash and loans of a funding nature and the once off reversal of the accrued withholding tax on preference
dividends when the redeemable preference shares were converted to ordinary shares.
COMMENTARY ON PERFORMANCE
The results for Premier for the six months ending 30 September 2023 are pleasing,
showcasing Premier's agility and resilience in the face of ongoing economic
challenges. The trading environment has been characterised by currency and soft
commodity volatility, extensive infrastructural constraints and high interest rates.
The consumer remains under significant stress which has been compounded by the low
growth economy but the reduced loadshedding regime has been a welcome relief.
Inflation is anticipated to flatten as soft commodity prices continue to decline and
stabilise. In line with this, price relief in wheat and maize has been passed through
to the consumer, providing some respite from the inflationary impact on staple foods
experienced in the recent past.
The Group's revenue increased by 7.1% to R9.4 billion, driven by increases in revenue
in both the Millbake and the Groceries and International categories of 8.1% and 2.0%
respectively. The impact of loadshedding on the business is not considered to have
had a material effect, with additional costs incurred across the business for the
period of approximately R17 million.
EBITDA increased by 23.9% to R1.0 billion mainly driven by the growth in Millbake
EBITDA of 27.3%. The Groceries and International EBITDA declined by 4.0% mainly as
a result of macro-economic conditions experienced by the Group's business in
Mozambique. The Group's EBITDA margin improved by 150 basis points, when compared to
the same period last year, to 10.9% in the current period.
Operating profit increased by 33.3% to R805 million. The operating profit margin
improved by 170 basis points, when compared to the same period last year, to 8.6%.
EPS increased by 0.3% to 326 cents and HEPS increased by 0.8% to 331 cents when
compared to the same period last year. Normalised HEPS increased by 25.4% to 331
cents.
Normalised HEPS in the prior period was adjusted for foreign exchange gains on cash
and loans of a funding nature of R36 million (net of tax) and by the reversal of
accrued withholding tax on preference dividends of R43 million to profit on the
conversion of the redeemable preference shares to ordinary shares, both of which
were once off in nature. The improvement in normalised HEPS is underpinned by the
growth in the Group's operating profit.
Cash generated from operations increased by 33.6% to R831 million, underpinned by
the growth in the Group's EBITDA and supported by well managed working capital.
Voluntary debt repayments of R357 million were made during the period, consisting of
voluntary capital repayments on borrowings of R250 million and R107 million repayment
on the bank overdraft.
DIVIDENDS
The board of directors resolved not to declare an interim dividend.
MILLBAKE
The Millbake division delivered robust results underpinning the Group's performance
for the six months ending 30 September 2023. Revenue increased by 8.1% to R7.9
billion and EBITDA increased by 27.3% to R970 million. The EBITDA margin of 12.3%
improved by 180 basis points over the same period last year. The increase in
Millbake's revenue is attributable to price/mix growth of 8% with flat volume growth.
Revenue growth for the period has been softer due to softer commodity prices in wheat
and maize and the associated price relief being passed through to consumers. Further
price relief is expected to be muted by the rising fuel prices, high interest rates
and the weakened Rand.
Investment in manufacturing site upgrades and facility optimisation to maintain best-
in-class efficiencies remains integral to drive growth and create opportunities for
expansion. The new mega-bakery in Pretoria has been in operation for a full 12 months
and is on track to deliver its business case, the Aeroton bakery is closed for a
rebuild and good progress has been made with the Mthatha bakery which is scheduled
for completion by the end of the financial year.
GROCERIES AND INTERNATIONAL
The Groceries and International division delivered a sound performance for the six
months ending 30 September 2023. The division's revenue increased by 2.0% to R1.5
billion, however EBITDA decreased by 4.0% to R107 million. The EBITDA margin
contracted by 40 basis points over the same period last year to 7.2%.
Ongoing focus on site manufacturing optimisation and functionality remains critical
in achieving cost efficiencies in Sugar Confectionery and HPC. Efficiencies and
increased capacity of tampon manufacturing installed at the Durban HPC facility will
enable the onshoring of supply to the UK market. The acquisition of a 35% stake in
a UK based niche skin care treatment range, under the brand Science of Skin("SOS"),
is a step towards leveraging the Group HPC infrastructure to expand participation
within the broader Personal Care category. Selected Lil-lets products have also been
launched on Amazon in the United States.
CIM, the Group's business division in Mozambique, remains under pressure as macro-
economic factors and double-digit food inflation continue to weigh heavily on
households. Political instability, climate change and widespread poverty are key
issues facing the consumer. GDP growth is however projected to rise considerably
over the next few years driven by growth in mining, agriculture and Liquefied Natural
Gas ("LNG") exports. The CIM business is poised to capitalise on the economic recovery
through established efficiencies in manufacturing capability and an extensive product
range.
OUTLOOK
Premier has produced a pleasing set of maiden interim results as a listed company
and is well positioned for further growth in the next six months, continuing to
deliver on its investment case and remains committed to its purpose. Revenue growth
is likely to moderate compared with the prior year which was impacted by significant
inflation in soft commodity prices. Low single digit revenue growth is projected for
the second half of the year, however margins are expected to remain in line with
those achieved for the first half of the year. Due to the reduced debt levels,
following the debt paydown, some benefit is anticipated, despite higher interest
rates. The team will continue to focus on the bakery capex projects scheduled for
the remainder of the year and remain alert for value adding acquisition opportunities.
Innovation and product renovation to grow market share, maintain and expand product
margins and brand equity are a strategic focus. In addition, emphasis remains on
entrenching and delivering on our sustainability vision, supporting our people and
communities in need, and evolving our business to limit our impact on the environment.
Any forward-looking information contained in this announcement has not been reviewed
or reported on by the Group's auditors.
ABOUT THIS ANNOUNCEMENT
The contents of this short-form announcement are the responsibility of the directors
of the Company and have not been reviewed or audited by the Group's auditor.
Shareholders are advised that this short-form announcement represents a summary of
the information contained in the full announcement and does not contain full or
complete details as published on the Stock Exchange News Service and on Premier's
website, https://www.premierfmcg.com/investors/results-reports on 13 November 2023.
Any investment decisions by investors and/or shareholders should be based on
consideration of the full announcement as a whole which is available for viewing at
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/PMRE/13112023.pdf
or on the Group's website set out above.
Non-Executive Directors
I van Heerden (Chairman), JER Matthews, PRN Hayward-Butt (Alternate Director to JER
Matthews)
Independent Non-Executive Directors
FN Khanyile (Lead Independent), H Ramsumer, CJ Roodt and W Sihlobo
Executive Directors
JJ Gertenbach (Chief Executive Officer), F Grobbelaar (Chief Financial Officer)
Company Secretary: M Stoltz
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
13 November 2023
Date: 13-11-2023 08:00:00
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