Super Group Ltd’s Latest Earnings: A Mixed Cuppa Results

Super Group Ltd (SGX: S10) reported its fiscal second-quarter earnings yesterday evening. The reporting period was for 1 April 2015 to 30 June 2015.

Super Group is an instant food and beverage (F&B) brand-owner with operations primarily in Asia. It has two business segments, namely, branded consumer (BC) sales and food ingredient (FI) sales.

You can read more about Super Group in here or catch its first-quarter earnings here.

Financial highlights

The following’s a quick rundown on Super Group’s latest financial figures:

  1. Revenue for the reporting quarter was $125.5 million, down 5% compared to the same quarter a year ago.
  2. Profit attributable to shareholders came in worse, plunging 29% year-on-year to $11.1 million.
  3. Consequently, Super Group’s earnings per share (EPS) saw a 30.4% decline from 1.35 cents in the second-quarter of 2014 to 0.94 cents in the reporting quarter.
  4. On a positive note, cash flow from operations for the reporting quarter came in at $18.9 million with capital expenditures clocking in at less than $1 million. This puts the F&B outfit back into positive free cash flow territory with close to $18 million in free cash flow. This is a big improvement compared to a year ago when Super Group had $17.3 million in cash flow from operations, $13.5 million in capital expenditures, and thus just $3.8 million in free cash flow.
  5. As of 30 June 2015, Super Group had $103.4 million in cash and equivalents and borrowings of about $33.3 million, giving rise to a net cash position of $70.1 million. The F&B outfit’s balance sheet had strengthened compared to a year ago when it had $58 million in net cash.

In summary, Super Group’s revenue had declined again; this comes after the company had recorded a small 2% decline in the previous quarter.

But, there are still some positives to takeaway with free cash flow being decidedly positive for the reporting quarter with Super Group’s level of capital expenditures coming down significantly. Furthermore, the firm’s balance sheet remains solid.

Super Group’s board of directors had declared an interim dividend of $0.01 per share for the reporting quarter which was unchanged from the year before.

When we piece everything together, it looks like it was a mixed quarter for the F&B outfit.

Operational highlights

For the second-quarter of 2015, the BC segment saw revenue decrease by 4% year-on-year to $80 million. There were lower sales in the segment’s coffee product and other product sub-segments. From a geographical standpoint, BC sales in Philippines was weaker due to the streamlining of its product portfolio. This was offset by stronger performance in Thailand and Myanmar.

On the FI segment, revenue dipped by 5% to $45.5 million over the same period. The segment’s non-dairy creamer product had particularly weak sales, falling more than 18% year-on-year. From a geographical standpoint, both Philippines and China had weaker FI sales.

David Teo, Chairman and Managing Director of Super Group, had the following commentary in the earnings release for Super Group’s performance thus far and the outlook ahead:

“We are glad that despite economic headwinds, weakened domestic currencies in core markets and subdued business environments in the first half of the year, our BC business remained relatively resilient. We registered higher BC sales in our key markets of Thailand, Myanmar and China. We continued to see negative impact from the weaknesses of domestic currencies in Asia on our revenue and weakened consumer spending within the Asian markets.

We believe that our strategy of branding, product innovations and diversification will continue to spur us ahead of the competition and support the Group’s long-term growth objectives.”

Investors might want to note that Super Group is also expecting to endure competitive market conditions over the next 12 months.

Foolish take away

At its closing price yesterday of $0.95, Super Group traded at around 17.7 times its trailing earnings with a dividend yield of 3.2%.

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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 Chin Hui Leong owns shares in Super Group