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Super Group First Quarter Results: Strong Brew of Profit

Ser Jing - Super Group First Quarter Results, Strong Brew of Profit (pic)Instant-beverage manufacturer Super Group (SGX: S10) released its first quarter results today, posting a 25% year-on-year increase in its quarterly profit from S$17.7m to S$22.1m. Sales of the company grew as well, with quarterly revenue coming in at S$132.4m, a 9% increase from last year’s S$121.6m

The market seems pleased with the company’s earnings report as its shares were up by more than 4% at 2:30pm.

Super Group consists of two segments: the Branded Consumer segment and the Food Ingredients segment. They make up 71% and 29% of the company’s overall revenue respectively for the first quarter this year. Let’s take a closer look at how they fared.

The company sold S$93.9m worth of products under the Branded Consumer segment in the first quarter of 2013, a small 1% increase over last year’s S$92.7m. Increased sales in Thailand, Philippines and China helped to overcome declines in other parts of Southeast Asia.

Super Group sells Coffee products, Cereal, Noodles, Potato Chips and Tea-mixes under its Branded Consumer segment, with Coffee products making up the bulk of this segment’s sales.

With Branded Consumer’s revenue only eking out a small increase, it was Food Ingredients that picked up the slack for Super Group – Food Ingredients’ sales jumped by 33% for this quarter from S$28.9m last year to S$38.5m. This segment has come a long way since it clocked S$39.4m in sales for the whole year only three years ago in 2010.

The products sold under the Branded Consumer segment consist of Non-Dairy Creamers and Soluble Coffee Products. The former makes up 67% of the segment’s sales for this year’s first quarter and the latter takes up the rest.

Food Ingredients’ sales growth for the first quarter of 2013 was largely driven by “increased production capacity and robust demand from key Asian markets” such as Taiwan and China.

Turning to the company’s rebranding activities that include the unveiling of a new Super logo and corporate identity on Jan this year, the company will “continue to roll-out advertising and promotional campaigns in some key markets”. Management added that the rebranding would enable the company to stay relevant to consumers and improve its branding position.

Regarding some outlook for the rest of 2013, the company commented that they “expect market conditions to remain competitive in the next twelve months while raw material costs and currency fluctuations will impact the Group’s operating performance. Management is, however, familiar with these challenges and will take appropriate actions to mitigate their impact on the Group’s businesses”.

The company’s shares were selling for $4.77 at 2:30pm. At such prices, Super Group’s selling for 32 times its last-12-months’ earnings and sport a dividend yield of 1.5% based on last year’s full-year dividends.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.  S10