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Premier FoodsReview of annual results for the 52 weeks ended 12 September 2009 3 November 2009 Business Highlights !! Good results in difficult economic times !! Considerable progress in development of group !! Strong cash performance and balance sheet Financial Highlights •! Group revenue up 12% to £9.3bn •! Adjusted operating profit up 8% to £720m* •! Adjusted profit before tax up 4% to £655m ** •! Adjusted earnings per share up 5% to 57.7p** •! Dividends per share up 4% to 21.0p •! Net investment in capital expenditure and acquisitions less disposals of £832m •! EBITDA more than £1bn •! Net debt of £999m •! Operating profit up 13% at £625m, profit before tax down 6% to £495m and basic earnings per share up 1% at 45.5p * and ** - see notes at end Income Statement £m 2009 2008 Change Revenue Operating costs Exceptional costs Share of jv’s and associates Profits less losses on sale of PP&E Operating profit Adjusted operating profit* Profits less losses on sale of PP&E Amortisation of non-operating intangibles Inventory fair value adjustment Exceptional items 9,255 8,235 +12% (8,639) (7,660) - 10 (1) 625 720 (1) (82) (12) - (46) 15 10 554 664 10 (74) - (46) +8% Income Statement £m Operating profit Profits less losses on sale of businesses Finance income Finance expense Other financial income Profit before tax Tax Profit after tax Minority interests Attributable to equity shareholders Adjusted profit before tax** 2009 2008 Change 625 (65) 17 (95) 13 495 (112) 383 (24) 359 655 554 +13% 5 21 (74) 21 527 -6% (136) 391 (34) 357 632 +4% Tax 2009 £m 2008 £m Underlying charge 166 25.3% 154 24.4% (Credit)/charge on disposal of businesses and PP&E Credit on goodwill & intangible amortisation Credit on inventory fair value adjustment Credit on exceptional items (25) (25) (4) - 9 (21) - (6) Reported charge 112 22.6% 136 25.8% Earnings and Dividends Per Share Adjusted earnings per share * Earnings per share Dividends per share p p p 2009 57.7 2008 Change 54.9 +5% 45.5 45.2 +1% 21.0 20.25 +4% Balance Sheet £m Intangible assets (including goodwill) PP&E and other non-current assets Net assets classified as held for sale (excl cash) Working capital Biological assets - current Current tax Net debt Other financial (liabilities)/assets Deferred tax Provisions Net pension (liability)/asset Equity shareholders’ funds Minority interests 2009 1,913 3,905 102 970 101 (113) (999) (64) (212) (421) (106) 5,076 4,748 328 5,076 2008 1,815 3,349 19 905 80 (89) (791) 29 (348) (186) 61 4,844 4,554 290 4,844 Cash Flow £m Adjusted operating profit (before joint ventures and associates) Depreciation and amortisation of operating intangibles Working capital Provisions Capital expenditure - Primark - Food Purchase of intangibles Tax Net interest and other income Pension cost less contributions Other Free cash flow Dividends paid (incl minorities) Quota renunciation compensation (Acquisitions)/disposals Net cash flow before financing 2009 710 293 117 (20) (159) (386) (24) (135) (77) (40) (79) 200 (184) 101 (179) (62) 2008 649 236 (110) (6) (152) (350) (70) (110) (55) (18) (59) (45) (177) - (165) (387) Segmental Analysis By business Revenue * Profit Margin ROCE 2009 2008 2009 2008 2009 2008 2009 2008 Grocery 3,188 2,820 Sugar & agriculture 2,579 2,134 989 824 Ingredients Retail £m £m £m £m 191 223 88 194 186 78 % 6.0 8.6 8.9 % 6.9 8.7 9.5 2,314 1,933 252 233 10.9 12.1 Inter company/central costs - - Continuing businesses 9,070 7,711 (34) 720 (28) 663 Businesses disposed 185 524 - 1 9,255 8,235 720 664 n/a 7.9 n/a 7.8 n/a 8.6 n/a 8.1 % 17.9 13.3 16.0 17.8 n/a 15.4 n/a % 18.6 14.4 18.0 18.6 n/a 16.6 n/a 15.4 16.6 Segmental Analysis By geography Revenue Profit* Margin 2009 2008 2009 2008 2009 2008 United Kingdom 4,140 3,766 £m £m £m 354 Europe & Africa 2,027 1,489 219 The Americas Asia Pacific 1,068 860 1,835 1,596 85 62 Continuing businesses 9,070 7,711 720 Businesses disposed 185 524 - £m 309 159 105 90 663 1 9,255 8,235 720 664 % 8.6 10.8 8.0 3.4 7.9 n/a 7.8 % 8.2 10.7 12.2 5.6 8.6 n/a 8.1 Sugar Revenue £m Operating Profit £m 2009 1,575 189 2008 Change 1,267 +24% 153 +24% Overview •! changes to EU sugar regime behind us •! EU position strengthened –! Azucarera Ebro acquisition –! sale of Polish sugar –! access to LDC sugars •! ambitious expansion continuing in Africa •! difficult year in China Sugar EU sugar Revenue £m Operating Profit £m 2009 1,575 189 2008 Change 1,267 +24% 153 +24% •! supply and demand broadly balanced, prices more stable •! profit increase, recent trend of decline reversed •! no further regime changes until October 2015 UK •! favourable growing conditions, high yield and extraction rates •! 1.19 million tonnes sugar •! strong euro, favourable energy cost benefit Spain •! good early progress Sugar Revenue £m Operating Profit £m 2009 1,575 189 2008 Change 1,267 +24% 153 +24% UK biofuels •! Wissington –! strong profit contribution •! Vivergo –! construction progressing well at Hull –! commissioning due autumn 2010 –! AB Agri contracted to supply wheat from Frontier and sell distillers grain co-products Sugar Revenue £m Operating Profit £m 2009 1,575 189 2008 Change 1,267 +24% 153 +24% Illovo •! excellent operating result, profit ahead –! higher local market prices –! world sugar price increase –! currency gain outside South Africa •! recent rand strength •! Zambia capacity doubled •! South Africa streamlined –! Umfolozi and Pongola mills sold –! new joint venture at Gledhow •! rand 3bn rights issue to fund expansion plans Nakambala Sugar Revenue £m Operating Profit £m 2009 1,575 189 2008 Change 1,267 +24% 153 +24% China •! a difficult year low first half sugar prices •! •! prices rallied in second half South – cane sugar •! profitable business •! new mill commissioned – now five mills North East – beet sugar •! Yi’an completed •! •! management capability built •! agricultural yield improvement focus production on seven factories Agriculture Revenue £m Operating Profit £m 2009 1,004 34 2008 Change 867 +16% 33 +3% AB Agri •! another exceptional year •! UK animal feeds - increased presence in UK blends market - Carbon Trust accredited greenhouse gas reduction model for dairy farms •! Frontier - excellent grain trading performance - increased demand for agricultural inputs •! AB Vista - enzymes development and sales growth •! China - good profit growth - new mill in Henan opened Retail Primark Revenue £m Operating Profit £m 2009 2,314 252 2008 Change 1,933 +20% 233 +8% •! •! •! •! excellent trading throughout year 7% like-for-like sales growth 12 new stores including five in Spain, one each in Netherlands, Germany and Portugal operating profit margin decline –! fixed overhead of new UK distribution centre –! gross margin decline in second half – weakness of sterling but some mitigation from better buying, lower freight cost and sales mix Bristol store Primark - selling space expansion UK stores sq ft ‘000 Republic of Ireland Spain Other Total sq ft ‘000 stores sq ft ‘000 stores sq ft ‘000 stores sq ft ‘000 stores Sep 2008 4,140 134 970 38 270 9 - Sep 2009 4,380 136 970 38 410 14 120 - 3 5,380 181 5,880 191 +6% - +52% n/a +9% Retail Revenue £m Operating Profit £m 2009 2,314 252 2008 Change 1,933 +20% 233 +8% Currently planned to open in 2009/10 •! UK - four new stores •! Spain - four new stores •! Germany - Frankfurt •! Portugal •! Belgium - Porto - Liege Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Overview •! major developments –! packaged oil joint venture in US –! integration of meat business in Australia –! Jordans and Ryvita merged –! Patak’s and Blue Dragon •! •! very good progress by Allied Bakeries and Twinings Ovaltine profit held back –! first half problem at ACH in the US –! margin reduction in UK retail sugar Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Ovaltine •! growth in developing markets: Thailand, Brazil, Nigeria Twinings •! UK premium teas slowed but Everyday performed well •! consultation on major manufacturing reorganisation announced –! new factory in Poland –! doubling capacity in China, focusing on US, Asia Pacific markets –! expansion and automation of Andover Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Allied Bakeries •! •! •! strong sales and good profit improvement Little Big Loaf launched – full sized slices, just fewer of them! first UK bread brand to win accreditation from the Carbon Trust Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Silver Spoon •! margin reduction in UK retail sugar •! •! increased demand for home baking products closure of Newark packaging plant and transfer to Bury Jordans Ryvita •! •! businesses integrated Jordans improving after slow start •! Ryvita crispbread growth Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Westmill •! •! recessionary impact on ethnic foodservice spending development of main brands World Foods •! benefits from Blue Dragon and Patak’s combination •! major relaunch of Patak’s brand Patak’s paste relaunch !! Demystifying pastes –! making them easier to understand –! and easier to use !! Making pastes better for you (50% less salt and fat) !! Explaining the value for money Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% ACH •! first half long positions in vegetable oil futures –! –! Mazola, Capullo volumes down •! second half improvement –! oil futures fully utilised –! Mazola volumes recovering, consumer prices down –! competitive market for Capullo good year for home baking and spices •! Stratas •! •! •! ACH facilities to close spring 2010 progress on integration production transferring on phased basis Grocery 2009 2008 Change Revenue £m 3,188 2,820 +13% Operating Profit £m 191 194 -2% Australia •! profit progress –! recovery of higher input prices –! strong milling performance •! consolidation of baking in New South Wales completed •! meat rationalisation –! closure of Perth factory –! expansion of Castlemaine plant under way Ingredients 2009 2008 Change Revenue £m Operating Profit £m 989 88 824 +20% 78 +13% Overview •! capacity expansion, a major feature –! enzymes in Finland complete –! yeast, yeast extracts in China to complete 2010 •! benefit of currency translation Ingredients 2009 2008 Change Revenue £m Operating Profit £m 989 88 824 +20% 78 +13% AB Mauri •! good sales growth in all regions •! South American yeast, technical ingredients in the Americas strong •! effluent treatment investment ABF Ingredients •! enzyme growth •! lower sales volumes, pressure on margins Major capital projects completed A number of major projects were completed during the year: Sugar Sugar Sugar Sugar Retail Spanish cane refinery Zambia capacity China North, Yi’an capacity China South, Jinchengjiang new mill 12 Primark stores including Bristol Grocery UK sugar packaging Ingredients Enzyme capacity Continuation of long-term capital investment Significant investment is expected in 2009/10: Expected completion* Sugar Vivergo biofuels end 2010 Sugar Africa development: Swaziland, Mali 2011/12 Retail Store expansion across Europe continuing Grocery Castlemaine factory end 2010 Grocery Twinings manufacturing 2011/12 Ingredients China yeast, yeast extracts early 2010 * calendar year Financial strength !! Landmark in cash generating ability - EBITDA over £1bn !! Net debt at £999m !! Substantial capability for investment Summary !! Good results in difficult economic times !! Considerable progress in development of group !! Strong cash performance and balance sheet Review of annual results for the 52 weeks ended 12 September 2009 3 November 2009 This presentation pack is directed only at investment professionals falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and to other persons to whom the presentation pack may lawfully be promoted. Notes * ** before amortisation of non-operating intangibles, profits less losses on the sale of PP&E, inventory fair value adjustment and exceptional items before amortisation of non-operating intangibles, profits less losses on the sale of PP&E, inventory fair value adjustment, profits less losses on the sale and closure of businesses and exceptional items All figures stated after amortisation of intangibles, profits or losses on the sale of PP&E, inventory fair value adjustment, profits less losses on the sale and closure of businesses and exceptional items are shown on the face of the consolidated income statement.
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