2 days ago
Strong annual performance for Premier Group despite consumer spending pressures
Premier Group, with brands Blue Ribbon, Snowflake, Dove, among others, produced strong results the year ended March 31, 2025 despite consumer spend still being under pressure.
Premier Group, a leading consumer packaged goods company with brands Blue Ribbon, Snowflake, Dove, among others, produced strong results the year ended March 31, 2025 despite consumer spend still being under pressure.
At a macro level, despite the successful transition to a Government of National Unity and inflation moderating to below the middle of the target range, high interest rates, volatile soft commodity prices and low economic growth continue to besiege the consumer.
Despite this, shareholders got a final gross dividend of 271 cents per share up, up 23% from the prior year. The market welcomed the results, with Premier's share on Tuesday afternoon rising 2.95% to R137.39 on the JSE.
Revenue increased by 7.0% to R19.9 billion, supported by revenue growth in both the Millbake and the Groceries and International divisions of 5.7% and 13.3%, respectively.
Earnings per share increased by 31.0% to 936 cents and headline earnings per share increased by 26.8% to 943 cents, when compared to last year.
"Through meticulous margin management and efficiencies, as well as a commitment to producing quality products at the lowest cost, moderate revenue growth has been leveraged into meaningful improvement in operational earnings," it said.
Ebitda increased by 14.7% to R2.4 billion. Millbake Ebitda grew by 14.7%, while the Groceries and International Ebitda grew by 9.2%. The Group's Ebitda margin improved by 80 basis points to 11.8% compared to the prior year level of 11.0%.
Operating profit increased by 16.9% to R1.9bn. The operating profit margin improved by 80 basis points to 9.6% when compared to last year.
Net finance costs decreased by 16.7% to R306 million, the result of debt repayments made on borrowings and the reduction of interest rates post the refinancing of the syndicated debt facilities during the year. Cash generated from operations was in line with the prior year, at R2.4bn, enabled by growth in Ebitda and supported by disciplined working capital management.
Looking at various divisions, Premier said the Millbake division achieved a "stellar set of results", displaying resilience despite a challenging economic environment. Revenue increased by 5.7% to R16.4 billion and Ebitda increased by 14.7% to R2.3bn.
A good performance was achieved in the Groceries and International division. The division's revenue increased by 13.3% to R3.5bn and Ebitda increased by 9.2% to R233 million.
The Home and Personal Care (HPC) category had "a pleasing year". The additional capacity installed in tampon manufacturing and packaging has enabled improved service levels, contributing to volume gains in the local business. The HPC supply chain strategy, focused on becoming the best cost manufacturer to drive market share and brand equity, is gaining traction, Premier said.
Meanwhile, Sugar Confectionery's performance experienced some disruptions during the year which impacted service levels. "The new private label contracts and product launches continue to gain momentum and the new liquorice line, commissioned in December 2024, will add exciting new product ranges to the confectionery offering. The first phase of site consolidations has been completed, which is anticipated to enhance efficiencies between the two sugar confectionery sites," it said.
Looking ahead, Premier said moderate revenue growth is anticipated for the most part of 2026 driven by substantial declines in maize input prices and subdued global wheat prices. Maize prices are expected to soften by mid-2025, Premier said will enable it to pass through cost savings to burdened consumers.
It also warned that local food inflation will be impacted in 2025 by Eskom tariff hikes and failing water infrastructure mitigation.
Meanwhile, the two-year capital project to refurbish the Aeroton bakery to the standards of Premier's coastalsites and the mega-bakery in Tshwane is expected to further enhance efficiencies and step change bread quality in the inland region. The Aeroton bakery will replace the capacity of three small-scale, older generation bakeries in the region. Investments in the HPC factory, scheduled for commissioning during the first half of 2026, are expected to further improve efficiencies and economies of scale.
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