Premier Group, which lifted headline earnings a share 32.4% to 438 cents a share in the six months to September 30, said yesterday there were “green shoots” of growth in the economy.
Premier’s interim revenue increased 3.7% to R9.7 billion, and earnings before interest, tax, depreciation, and amortisation increased by 13.5% to R1.2bn. Operating profit increased by 17.3% to R945 million.
Group directors for the group that owns brands such as Snowflake, Blue Ribbon and Iwisa Maize Meal, said yesterday that the results were “encouraging,” with moderate revenue growth despite high interest rates, soft commodity volatility, and a depressed consumer environment.
However, they said an improvement in market sentiment and green shoots of economic recovery were evident from the transition to a Government of National Unity, and from the subsequent strengthening of the rand, the decrease in fuel prices, and loosening of interest rates.
The stabilisation in global soft commodity inflation and the suspension of load shedding had also seen manufacturers return to full production, which had normalised service levels across the industry.
“Premier intends to focus on ‘Being Brilliant at the Basics,’” they said.
The acquisition of a 30% shareholding in Goldkeys International, a rice distributor in KwaZulu-Natal, concluded in June 2024, had produced a resilient performance in the face of high rice import prices.
A global rice shortage had abated after the elections in India and a better-than-expected crop, and prices had normalised.
As a result of the improved liquidity provided by major shareholder Brait’s placement of 15 million additional ordinary shares into the market in March 2024, Premier was included in the FTSE/JSE All Share Index (ALSI) in September 2024.
The ALSI, a benchmark index of the JSE, represents 99% of the market capitalisation of all eligible securities listed on the Main Board of the JSE, subject to minimum free float and liquidity criteria.
The improvement in operational earnings was driven by the focus on margin management, cost-saving initiatives, and operational efficiencies across the manufacturing and the logistics and distribution channels.
Group revenue increased by 3.7% to R9.7bn, driven by increases in both the Millbake and Groceries and International categories of 2.6% and 9.7%, respectively.
Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 13.5% to R1.2bn, mainly driven by the growth in Millbake EBITDA of 15.8%. Groceries and International EBITDA fell by 2.1%, largely as a result of macro-economic conditions in Mozambique.
The group’s EBITDA margin improved 100 basis points to 11.9%. Operating profit increased by 17.3% to R945m, and the operating profit margin improved by 110 basis points to 9.7%. Net profit increased by 33.0% to R565m.
Net finance costs fell 18.2% to R166m, primarily due to the debt repayments made on borrowings in the previous year. The group share of net profit in equity-accounted investments increased to R12m as a result of the acquisition of a 30% shareholding in Goldkeys from June 3.
Cash from operations increased by 13.5% to R944m, driven by growth in the group’s EBITDA and supported by disciplined working capital management.
The Millbake division's revenue lifted by 2.6% to R8.1bn, and EBITDA increased by 15.8% to R1.1bn. The rise in Millbake's revenue was due to price/mix growth of 1% and volume growth of 2%, which directors said was “encouraging given the constrained consumer environment.”
The Groceries and International division increased revenue by 9.7% to R1.6bn, but EBITDA decreased by 2.1% to R105m.
The Sugar Confectionery category delivered revenue driven by a favourable product and customer mix. EBITDA was slightly up through tight margin management and site optimisation.
Private label launches were introduced, with further ranges in the pipeline, as well as new pack sizes and innovations to drive growth.
The Home and Personal Care category posted good results, with increases in revenue and EBITDA. Investment in additional capacity at the Durban facility had enabled growth, and tampon manufacturing and packaging was ahead of efficiency targets. The eCommerce channel in the UK continued to gain traction.
“Going into the second half of the year, Premier will focus on sustaining the level of success we have achieved year-to-date. We intend to further capitalise on the efficiencies evidenced by the investment in our capital projects and to leverage our facilities to unleash further growth,” directors said.
BUSINESS REPORT