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2023 ReportPeers and competitors of Associated British Foods:
NestléReview of annual results for 53 weeks ended 18 September 2010 9 November 2010 9 November 2010 Financial Highlights • Group revenue up 10% to £10.2bn • Adjusted operating profit up 26% to £909m* • Adjusted profit before tax up 26% to £825m ** p p j • Adjusted earnings per share up 25% to 72.2p** • Dividends per share up 13% to 23.8p • Net capital investment of £699m • Net debt of £816m • Operating profit up 31% at £819m, profit before tax up 54% to £763m and basic earnings per share up 52% at 69.3p * and ** - see notes at end 2 Business Highlights (cid:131) A record year – revenue over £10bn revenue over £10bn – adjusted earnings up 25% – much improved margin and returns – EBITDA over £1.2bn (cid:131) Strong underlying trading (cid:131) Investment delivering returns – Azucarera, Zambia sugar, Primark (cid:131) Benefit of restructuring – US and UK grocery (cid:131) Recovery – UK sugar, China sugar, US vegetable oils 3 Income Statement £m 2010 2009 Change Revenue Operating costs 10,167 9,255 +10% (9,355) (8,639) Share of joint ventures and associates Profits less losses on disposal of non-current assets Operating profit Adjusted operating profit* Profits less losses on disposal of non-current assets Amortisation of non-operating intangibles Inventory fair value adjustment I t l dj t t f i 16 (9) 819 909 (9) (81) - 10 (1) 625 720 (1) (82) (12) (12) +26% 4 Income Statement £m £m Operating profit Profit/(loss) on sale/closure of businesses Net interest expense Other financial (expense)/income Profit before tax Profit before tax Tax Profit after tax Non-controlling interests Attributable to equity shareholders Adjusted profit before tax** 2010 2010 819 28 (76) (8) 763 763 (194) 569 (23) 546 825 2009 2009 625 (65) (78) 13 495 495 (112) 383 (24) 359 655 Change Change +31% +54% +54% +26% 5 Tax Underlying charge 221 26.8% 166 25.3% 2010 2010 £m 2009 2009 £m Credit on goodwill & intangible amortisation (27) Credit on disposal of businesses/non-current assets Credit on inventory fair value adjustment y j - - (25) (25) ( ) (4) Reported charge 194 25.4% 112 22.6% 6 Earnings and Dividends Per Share Adjusted earnings per share * Adj sted earnings per share * 2010 72.2p 72 2p 2009 Change 57.7p 57 7p +25% +25% Earnings per share 69.3p 45.5p +52% Dividends per share 23.8p 21.0p +13% 7 Balance Sheet £m Intangible assets (including goodwill) ` PP&E and other non-current assets Net assets classified as held for sale Working capital Biological assets - current Current tax Current tax Net debt Other financial liabilities Deferred tax Deferred tax Provisions Net pension liability Equity shareholders’ funds Non controlling interests Non-controlling interests 2010 1,925 4,388 - 826 100 (132) (132) (816) (5) (238) (238) (205) (99) 5,744 44 5,293 451 451 5,744 2009 1,913 3,905 102 970 101 (113) (113) (999) (64) (212) (212) (421) (106) 5,076 0 6 4,748 328 328 5,076 8 Cash Flow £m 2010 2009 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 Net interest and other income Pension cost less contributions Other Free cash flow Free cash flow Dividends paid (incl minorities) Quota renunciation compensation (Acquisitions)/disposals including loans to joint ventures ( )/ Net cash flow before financing 893 332 193 (57) (207) (487) (32) (155) (73) (73) (34) 33 406 406 (200) - (120) ( ) 86 710 293 46 (20) (173) (372) (24) (135) (77) (77) (40) (8) 200 200 (184) 101 (179) ( ) (62) 9 Segmental Analysis By business Grocery Sugar Agriculture Agriculture Ingredients Retail Central costs Revenue * Profit Margin ROCE 2010 2009 2010 2009 2010 2009 2010 2009 £m £m 3,406 3,188 1,941 1,475 954 954 1,067 913 913 989 2,730 2,314 - - £m 229 240 33 33 104 341 (42) 905 4 £m 191 168 34 34 88 252 (34) 699 21 720 % 6.7 % 6.0 12.4 11.4 3.5 3 5 9.8 3.7 3 7 8.9 12.5 10.9 n/a 9.0 n/a 8.9 n/a 7.9 n/a 7.8 % 19.7 14.0 18.1 18 1 16.5 23.5 n/a 17.7 n/a 17.8 % 17.9 11.8 21.3 21 3 16.0 17.8 n/a 15.2 n/a 15.4 10 Continuing businesses 10,098 8,879 Businesses disposed 69 376 10,167 9,255 909 Segmental Analysis By geography United Kingdom Europe & Africa Europe & Africa The Americas Asia Pacific £m £ £m £ 4,411 4,049 2,495 2 495 1,927 1 927 1,120 1,068 2,072 1,835 Continuing businesses 10,098 8,879 Businesses disposed 69 376 10,167 9,255 Revenue Profit* Margin 2010 2009 2010 2009 2010 2009 £m £ 480 219 219 121 85 905 4 909 £m £ 354 198 198 85 62 699 21 720 % % 10.9 8.8 8 8 10.8 4.1 9.0 n/a 8.9 % % 8.7 10.3 10 3 8.0 3.4 7.9 n/a 7.8 11 Sugar Revenue Operating profit £m £m Margin ROCE Changeg +31% +42% 2010 1,941 240 12.4% 14.0% 2009 1,475 168 11.4% 11.8% • • • step change in profitability recovery recovery – UK margin – China sugar prices • investment – Azucarera contribution Zambia capacity expansion – Zambia capacity expansion 12 Sugar Revenue £m Operating Profit £m 2010 1,941 240 2009 Change 1,475 168 +31% +42% EUEU sugar • stable market, strong euro • UK profit and margin well ahead – 1.3 million tonnes sugar – excellent factory performance – non-quota world exports • first major Azucarera contribution – 394,000 tonnes beet sugar, 145,000 tonnes cane sugar – heavy rains affected north and south campaigns Vivergo wheat bioethanol plant • full operation scheduled summer 2011 13 Sugar Revenue £m Operating Profit £m 2010 1,941 240 2009 Change 1,475 168 +31% +42% IllIllovo • profit adversely affected – lower volumes – rand strength on world exports – euro weakness on EU exports drought in South Africa • drought in South Africa • longer term development continuing • good progress with capacity expansion – Zambia, Mozambique factory complete bi bi M l t Z t f – Swaziland ready for next season 14 Sugar China Chi Revenue £m Operating Profit £m 2010 1,941 240 2009 Change 1,475 168 +31% +42% • financial results much improved – higher prices – higher prices – factory efficiencies in north – good cane sugar production • progress in agricultural development in north – local government support – improved farming techniques improved farming techniques – higher beet volumes expected sugar prices now at record levels • sugar prices now at record levels 15 Agriculture Revenue Operating profit £m £m Margin ROCE 2010 954 33 2009 Changeg 913 34 +4% -2% 3.5% 3.7% 18.1% 21.3% • another strong year • UK feed ahead • growth in Premier Nutrition and speciality feed enzymes • lower demand for pig and poultry feed in China • good result from Frontier trading activities 16 Grocery Revenue Operating profit £m £m Margin ROCE Changeg +6% +19% 2010 3,406 229 6.7% 2009 3,188 191 6.0% 19.7% 17.9% • margin improvement even after £29m charge in 2010 for rationalisation • • • restructuring i – ACH, Silver Spoon, Jordans Ryvita, AB World Foods recovery – US vegetable oils, UK bread Twinings Ovaltine strong growth 17 Grocery Revenue £m Operating Profit £m 2010 3,406 229 2009 Change 3,188 191 +6% +19% Twinings Ovaltine T i O lti i • • • consistent delivery of international growth t ac track record of marketing excellence, product innovation a et g e ce e ce, p oduct eco d o o at o Twinings progress in North America, UK • Ovaltine in developing markets UK Thailand North America 18 Grocery Revenue £m Operating Profit £m 2010 3,406 229 2009 Change 3,188 191 +6% +19% UK Grocery UK G • Allied Bakeries p – margins improved but now pressure from rising wheat costs p g g – – – Little Big Loaf success competitive market, high levels of promotion capital investment accelerating • successful relaunch of Patak’s by AB World Foods • Westmill beats decline in ethnic restaurant trade • • Jordans Ryvita improving, further progress to come Jordans R ita impro ing f rther progress to come better margin at Silver Spoon 19 Grocery Revenue £m Operating Profit £m 2010 3,406 229 2009 Change 3,188 191 +6% +19% t profit well ahead with absence of last year’s hedge loss completion of commodity product transfer to Stratas ACH/Stratas ACH/St • • • Champaign and Jacksonville closed • Mazola, Capullo margins tighter with vegetable oil cost increase Australia • strong result in bakery – – premium bread launch improvement in operations • meat business – – difficult trading with lower volumes, margin new Castlemaine factory fully open summer 2011 20 Ingredients Revenue Operating profit £m £m 2010 1,067 104 2009 Changeg 989 88 +7% +18% Margin ROCE AB Mauri 9.8% 8.9% 16.5% 16.0% • strong performance by bakery ingredients • capital investment • capital investment – Harbin expansion complete – further expansions planned ABF Ingredients • much better year • enzymes and US speciality lipids well ahead • enzymes and US speciality lipids well ahead • yeast extracts capacity expansion commissioning 21 Retail Revenue Operating profit £m £m Margin ROCE Changeg +17% +35% 2010 2,730 341 12.5% 23.5% 2009 2,314 252 10.9% 17.8% • like-for-like sales up 6% – strong in UK – weaker in Ireland – excellent performance in continental Europe • selling space increase of 10% • margin substantially ahead 22 Primark margins • improvement this year from 10.9% to 12.5% – – – volume increases continental Europe performance continental Europe performance sterling relative strength against US dollar • some erosion of this year’s margin improvement in coming financial year – cotton price increases hit spring 2011 2011 hit tt i i i – VAT increases – – further volume increases further volume increases • price leadership on the high street will be maintained i d h hi h l d ill b hi i i 23 Primark - selling space expansion UK Republic of Ireland Iberia Other Total stores sq ft ‘000 stores sq ft ‘000 stores sq ft ‘000 stores sq ft ‘000 sq ft ‘000 stores 4,380 4 380 136 136 970 970 38 38 450 450 15 15 80 80 2 2 5,880 5 880 191 191 4,720 4 720 143 143 1,010 1 010 38 38 570 570 19 19 180 180 4 4 6,480 6 480 204 204 b S t September 2009 September September 2010 +8% +8% +4% +4% +27% +27% +125% +125% +10% +10% 24 Primark merchandising 25 Primark awards Retail Week Awards 2010 • Retailer of the Year f th Y R t il • Store design of the Year for Bristol Lifetime Achievement Award for Arthur Ryan • Lifetime Achievement Award for Arthur Ryan Multi Market Retailer of the Year 26 Primark expansion • • • • capital investment accelerating at least 0.5m sq ft additional selling space in financial year significant further store openings by Christmas 2011 extensions and refits 27 Looking ahead… (cid:131) Group financial strength th G fi t i l (cid:131) A number of long-term projects completing soon (cid:131) Impact of commodity cost increases dit t i f t I 28 Group financial strength (cid:131) Cash generating ability - EBITDA over £1.2bn EBITDA £1 2b C h bilit ti (cid:131) Net debt at £816m (cid:131) Bank credit facility renewed – £1.15bn maturity July 2015 – support of 12 banks pp 29 Major long-term projects completing soon Sugar Tomato glasshouse Vivergo biofuels Expansion in Swaziland 30 Major long-term projects completing soon Grocery Castlemaine factory Retail Blackburn Store expansion across Europe Elche 31 Commodity cost increases Sugar Higher selling prices for Sugar businesses Wheat UK and Australia bread margins and pricing Vivergo margin Vivergo margin Frontier trading Animal feed margins and pricing Cotton Margin pressure for Primark 32 Summary (cid:131) A record year – revenue over £10bn revenue over £10bn – adjusted earnings up 25% – much improved margin and returns – EBITDA over £1.2bn (cid:131) Strong underlying trading (cid:131) Investment delivering returns (cid:131) Benefit of restructuring f B fi i (cid:131) Recovery (cid:131) Continuing to invest for sustainable growth 33 Review of annual results for 53 weeks ended 18 September 2010 9 November 2010 9 November 2010 34 Exchange rates Average rates used to translate the income statement $US$ euro South African rand Australian $ Rates at year end used to translate the balance sheet US$ euro South African rand Australian $ 2010 1.56 1.15 2009 1.56 1.15 11.68 14.09 1.74 2.15 2010 2009 1.56 1.20 1.67 1.14 11.17 12.39 1.67 1.93 35 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 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 and profits less losses on disposal of non-current assets before amortisation of non operating intangibles, profits less losses on disposal of non current assets, and before amortisation of non-operating intangibles, profits less losses on disposal of non-current assets, and profits less losses on the sale and closure of businesses All figures stated after amortisation of non-operating intangibles, profits less losses on disposal of non-current assets and profits less losses on the sale and closure of businesses are shown on the face of the consolidated assets and profits less losses on the sale and closure of businesses are shown on the face of the consolidated income statement. 36
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