Headline earnings per share in South African fast-moving consumer goods (FMCG) manufacturer Premier have risen 17.4% to 744 cents for the full-year period to end March, uplifted by a 26.4% firming in operating profits to R1.6 billion.
Revenues for the period strengthened by 3.6% to R18.6bn on the back of a 54.8% rise in cash generated from operations to R2.4bn.
This comes as Premier benefited from robust stabilisation in the aftermath of soft commodity impacted inflation in the prior period.
Earnings before interest, tax, depreciation and amortisation (EBITDA) in the company for the full year soared 18.6% to R2.1bn, “driven by strong performances in both the Millbake, groceries and international” divisions, the company said.
Wayne McCurrie, wealth and investments analyst with FNB, said: “Premier good results all round. Very good cash generated. Market rewards share up 5%.”
This was after the share price in Premier traded 6.57% higher at R64.10 by mid-morning on the JSE yesterday.
Premier CEO Kobus Gertenbach yesterday said that the company had “maintained an unrelenting focus on optimising operational efficiencies, margin management and upskilling our people” against the backdrop of poor performance in national and municipal infrastructure.
“The deteriorating municipal infrastructure, port congestion and the overhang of political uncertainty, in the lead-up to the May elections, have imposed challenges on the operating landscape,” Gertenbach said.
To the company’s advantage, the debilitating effect of load shedding “somewhat diminished in the second half of the year”, although “high interest rates and unemployment levels are still impacting buying power” of consumers.
During the period under review, Premier entered the rice category, teaming up with Goldkeys International to distribute the Golden Delight range of rice products in South Africa.
“The anticipated benefits of the partnership, including leveraging Premier’s customer relationships and distribution network to provide sales, merchandising and distribution services to Goldkeys, are coming to fruition,” the company said.
Additionally, Premier also launched the Sunblest pasta range into select channels in the South African market following the completion of the company’s pasta-manufacturing plant rebuild in Mozambique.
Premier has also concluded the acquisition of a 35% stake in a UK-based specialist skincare treatment range, with an exclusive sales and distribution agreement for existing Lil-lets UK markets.
Net finance costs for Premier during the full-year period strengthened by 26.9% to R367 million as a result of a higher weighted average interest rate in the current year of 9.65% compared to 7.51% in the prior year.
This had partially been offset, though, by interest savings from voluntary debt repayments of R150m, R100m and R456m in June 2023, September 2023 and December 2023 respectively.
Premier closed the period under review with net debt, including lease liabilities but excluding the trade financing facility, of R1.8bn.
“The accrued withholding tax on preference dividends of R43m, which was reversed to profit during the prior year, also contributed to the increase in net finance costs,” the company said.
“In addition, there was a decrease in the foreign exchange gains on cash and intergroup loans of a funding nature of R57m as a result of the conversion of the intergroup loan into equity on 30 March 2023.”
The Millbake division raised revenues by 3.7% to R15.5bn while EBITDA increased by 20.6% to R2bn. Premier, under Millbake, has positioned to service low-income consumers with its broad product offering in the staples basket despite the burdens of high unemployment and elevated interest rates.
However, Premier’s business CIM division in Mozambique continued to “face headwinds with both revenue and EBITDA down” for the year under review.
The company attributed this to several macro-economic constraints existing in Mozambique against the backdrop of “historically high food inflation and widespread poverty” which is impacting household consumption” in the country.
BUSINESS REPORT