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INTERIM RESULTS PRESENTATIONfor the six months ended 31 March 2016
1
Agenda
Strategic Update
Financial Performance
Divisional Performance
Outlook and Imperatives
2
Strategic UpdatePhil Roux
CEO
3
Environmental Discontinuities
Cause
Political instability
Drought
Low growth
Consumer weakness
Africa instability
Effect
Rand weakness
Hyper inflation and raw
material shortages
Increased rivalry
Evolving shopper habits
Currency devaluation
Cost and margin pressure
4
Financial Highlights
For the 6 months ended 31 March 2016 for continuing operations
Revenue** 9% to R10.01 bn
Operating profit* 6% to R1 236 m
Operating margin* 12.3%
HEPS* 6% to 479 cents
Interim dividend declared 11% to 105 cents
* Adjusted for the Phase I B-BBEE income/charge and items of a capital nature ** Excluding biscuits, Pepsi & Maitland Vinegar
5
Financial Highlights
1H 2013 * 1H 2016
581 1 236Operating profit (R’m)
Gross Margin 29.3% 31.0%
Operating Margin 7.2% 12.3%
Headline earnings per share (cents) 230 479
Share price (cents) 7 157 13 904
* Excludes Quantum Foods
3 yr CAGR
29%
Excluding Phase I B-BBEE income/charge and items of a capital nature
3 yr CAGR
25%
6
Our Strategy
Cost and margin pressure
Drive above-market growth Enhance competitiveness
Shape a
winning
portfolio
Focus on
power
brands
Strategic
customer
management
Reset the
cost base
Build a high
performance
team
Sustainability — Adopt sustainability best practices in all we do
7
Strategic Pillars: Progress Update
Shapin
g a
Win
nin
g
Port
folio
Portfolio mix optimisation
Future Life – Integration and innovation
FCP – Nigeria
Bakeries – Sustained growth and leverage
Aggressive SKU rationalisation
Step change in rice performance
Robust acquisition funnel
SKU – Stock keeping unit
8
Strategic Pillars: Progress Update
Cost
s &
Eff
icie
ncie
s
Containment of manpower costs < 60% of Revenue growth
Delivered enhanced manufacturing efficiencies
Elimination of “residual costs on disposals”
COE’s increase < 10% of Revenue growth rate
COS increase > Revenue growth rate (Raw material inflation)
COE – Cash operating expenses
COS – Cost of sales
9
Corporate share1
%, 6 mm to March 2016
Safari
Spekko
White Star
Liqui-Fruit
Weet-Bix
Value
share
40.2
31.6
22.5
32.2
28.8
17.1
-2.1
Share Pts
change
1.2
7.3
0.0
-1.4
0.5
7.2
Category
Growth (%)
6.6
7.4
21.9
18.9
8.4
Sasko
6 mm October 2015 to March 2016
2015 2016
Pioneer Foods
Power Brands Market Share Performance – TEG (modern trade)
1 Measured as weighted average of
Pioneer's share in 18 categories in
which it operates. TEG only.
Including DOB’s. Source: Aztec
31.2
31.8
Brand investment maintained
10
Financial PerformanceCindy Hess
CFO
11
Salient features
Group margin maintained despite strong headwinds
Pleasing revenue growth
Significant raw material cost push constrains Essential Foods
Cash operating costs stringently managed
Exceptional performance from Groceries and International
Operating margin maintained amidst severe discontinuities
Working capital management intensifies
Positive cash flow sustained
12
Revenue analysis
Pleasing revenue growth across all segments
* Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures
SEGMENTAL REVENUE MIX
Essential Foods
R6 054m60%
GroceriesR2 508m
25%
InternationalR1 448m
15%
Six months to 31 March 2016 Rm Change
Essential Foods 6 054 +8%
Groceries 2 508 +7% *
International 1 448 +20%
Total Revenue 10 010 +9% *
13
Segmental analysis
Group maintains operating margin despite external vagaries
* Adjusted for the Phase I B-BBEE income/charge and items of a capital nature
Segmental results are reflected after the reallocation of corporate costs
Operating Profit * Operating Margin *
2016 % 2016 2015
Six months to 31 March Rm Change
Group 1 236 6% 12.3% 12.3%
Essential Foods 645 -8% 10.6% 12.4%
Groceries 343 35% 13.7% 9.6%
International 252 16% 17.4% 18.0%
Other (Group Costs) (4)
14
Income statement summary
Cost and efficiency benefits kick in
* Adjusted for the Phase I B-BBEE income/charge and items of a capital nature
** Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures
Six months to 31 March 2016 Rm Change
Revenue ** 10 010 +9%
Cost of goods sold (6 905) +8%
Gross profit 3 105 +2%
Gross margin 31.0% F15: 32.3%
Net other operating expenses * (1 869) -1%
Operating profit * 1 236 +6%
Operating margin 12.3% F15: 12.3%
15
Income statement (continued)
* Adjusted for the Phase I B-BBEE income/charge and items of a capital nature
Six months to 31 March 2016 Rm Change
Operating profit * 1 236 +6%
Investment income 27 +70%
Finance costs (75) +11%
JV equity-accounted earnings 42 +25%
Profit before tax * 1 230 +7%
Income Tax (348) +9%
Profit for the period * 882 +6%
Joint ventures perform well
16
Net operating profit reported
* Adjusted for the Phase I B-BBEE income/charge and items of a capital nature
Six months to 31 March (Rm) 2016 2015 Change
Adjusted operating profit * 1 236 1 166 6%
Add/Less 155 (249)
Phase I B-BBEE transaction 143 (203)
Items of a capital nature 12 (46)
Impairment of BEE SPV QF shares (18) (51)
Profit on disposal of subsidiary 24 -
Other 6 5
Net operating profit as reported 1 391 917 52%
17
Six months to 31 March (Rm) 2016 2015 Change
Adjusted headline earnings 887 830 +7%
Adjusted HEPS 479 cents 451 cents +6%
Group earnings
Effect of the Phase 1 B-BBEE income/(charge)
* 2015 includes discontinued operations
Add/less Phase I B-BBEE income/(charge) 143 (203)
Headline earnings 1 030 627 +64%
HEPS 556 cents 341 cents +63%
Add/less Items of a capital nature 7 (82)
Earnings* 1 037 545 +90%
EPS 560 cents 296 cents +89%
Adjusted EPS 493 cents 434 cents +14%
18
Cash flow analysis
Strong cash generation despite soft commodity inventory
Six months to 31 March (Rm) 2016 2015
Cash profit from operating activities 1 428 1 345 +6%
Change in working capital (780) (838) -7%
Inventory (571) (208)
Debtors (225) (333)
Creditors 16 (297)
Cash effect from commodity hedging 42 (11)
Cash generated by operations 690 496 39%
19
Group net working capital
Working capital relatively stable
17.1%
14.9%
17.1%
12.9%
17.1%
11.5%
15.6%
14.0%
17.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Mar 12 Sep 12 Mar 13 Sep 12 Mar 14 Sep 14 Mar 15 Sep 15 Mar 16
% of revenue
20
Cash flow analysis
Cash flow from investing activities
Six months to 31 March (Rm) 2016 2015
Net cash flow from investing activities (394) (231)
PPE additions (217) (64)
PPE replacements (132) (232)
Proceeds on disposal of PPE 45 31
Proceeds on disposal of subsidiary 74 -
Investment in joint ventures (201) (81)
Proceeds on disposal of and changes in available-for-sale
financial assets and JV loans(15) 77
Interest and dividends received 52 38
Net cash and cash equivalents at end of period 840 680
21
NET debt (Rm) and debt equity ratio (%)
Significant gearing capacity
1,589
978
1,542
166 535
-97
470
-500
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16
Rm
Excludes B-BBEE (third party) debt
25% 15% 22% 3% 8% -1% 6% Net Debt to Equity Ratio
R'm
Debt
capacity
22
Interim dividend per share
11% increase in interim dividend
46
65
95
105
0
20
40
60
80
100
2013 2014 2015 2016
cents per share
Year
3 yr
CAGR
+32%
23
Divisional Performance
Phil Roux
CEO
24
Essential Foods: Back drop
• Maize category volume contraction -5.8% *
• White maize crop shortfall estimate -1,2 m tons
• Wheat duty increases by R1 068/ton over
12 months
• Maize import regulations – limiting
• White maize raw material price increase +90%
• Wheat category contraction -1.1% *
• Indications of carbohydrate substitution
* SAGIS: 6 months – March 2016
25
Divisional Performance: Essential Foods
• Category leadership on maize retained
• Maize and wheat volumes decline
• Pasta and legumes – satisfactory performance
• Bakeries - Sustained volume growth and leverage
• Rice share gains and profitability improvements
Volumes +14%
Solid delivery amidst headwinds
Volume
-5%
Revenue
+8%
Operating Profit
-8%
Margin
10.6% (F15: 12.4%)
26
Groceries: Back drop
• Increased competitor intensity
• Value offers gain momentum
• Sizzling summer bolsters beverages
• Major raw material inflation
Soft commodities
Concentrates
Flavours
27
Divisional Performance: GroceriesMargin excellence
Volume *
5%
Revenue *
7%
Operating Profit
35%
Margin
13.7% (F15: 9.6%)
• Gross margin expansion
Exit of low margin businesses
Business volume growth and leverage
• Prudent cost management
Conversion efficiencies
Fixed overheads eliminated per plan
Logistics savings
• Smaller categories show improvement
* Volume and revenue excludes biscuits, Pepsi & Maitland Vinegar from the comparative figures
28
Performance SummaryGroceries
* Excluding biscuits, Pepsi and Maitland Vinegar from the comparative figures
Revenue
+6%*R1 208m
Operating Profit
+26%R162m
Operating
Profit Margin
13.4% (F15:10.2%)
Cereals & other groceries
Beverages
Revenue
+6% *
Operating Profit
+26%
Operating Profit Margin
13.4%(F15: 10.2%)
Revenue
+9% *
Operating Profit
+44%
Operating Profit Margin
13.9%(F15: 9.1%)
29
Divisional Performance: International
HOWEVER
MARKET CONDITIONS
• Currency devaluation impacts volume growth
• Hard currency shortages
• Pricing pressure mounts
Good performance in tough environment
Volume
8%
Revenue
+20%
Operating Profit
+16%
Margin
17.4% (F15: 18.0%)
• Excellent fruit growth and profitability
• FCP – Nigeria shows steady improvement
• Basket selling gains momentum
• Solid beverage performance
• UK factory relocation and upgrade
30
Outlook and Imperatives
Phil Roux
CEO
31
Outlook
Inflationary pressure
Uncertain legislation/
duties
Household
Pressure
Intense competition
Protracted currency
weakness?
EXTERNAL
32
Pioneer Foods remains well positioned
Strategic coherence and people excellence
Portfolio optimisation continues
Maize augmented by imports
Residual “self-help” potential
Capital projects on track
Ungeared balance sheet
THANK YOU
This document contains forward looking statements that, unless otherwise indicated, reflect the company’s expectations as at 23 May 2016. Actual results may differ materially from the company’s
expectations if known and unknown risks or uncertainties affect the business, or if estimates or assumptions prove to be inaccurate. The company cannot guarantee that any forward looking
statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward looking statements. The company disclaims any intention and assumes no obligation
to update or revise any forward looking statement even if new information becomes available as a result of future events or for any other reason, save as required to do so by legislation and/or
regulation.