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Super Group Ltd’s Latest Earnings: Mixed Results for the Year

Super Group Ltd (SGX: S10) reported its fiscal fourth-quarter earnings yesterday evening. The reporting period was for 1 October 2015 to 31 December 2015.

For a brief background, Super Group is an instant food and beverage (F&B) products manufacturer with its own consumer brands and with operations primarily in Asia. It has two business segments: branded consumer (BC) sales and food ingredient (FI) sales.

You can read more about Super Group in here or catch the earnings from the previous quarter here.

Financial highlights

The following’s a quick summary of the latest financial figures from Super Group:

  1. Revenue for the reporting quarter was $141 million, down 8% compared to the same quarter a year before. For the full year, Super Group’s revenue was down by 6% to end at $509.2 million.
  2. Profit attributable to shareholders for the quarter was down even more, plunging 39% year-on-year to $15.7 million. For 2015, profit was down 31% to $47.3 million. The comparable fourth-quarter in 2014 included a one-time gain from a disposal of a property. There was also a higher effective tax rate in the fourth-quarter of 2015 (25%) compared to the fourth-quarter of 2014 (10%).
  3. Consequently, earnings per share (EPS) also saw a 39% decline from 2.32 cents in the fourth-quarter in 2014 to 1.41 cents in the reporting quarter. EPS for 2015 was 4.24 cents, 31% lower than a year ago.
  4. On a brighter note, cash flow from operations came in at $34.4 million with capital expenditure clocking in at around $5.4 million. This puts the F&B outfit in positive free cash flow territory to the tune of $29 million, up 37% from the $21.1 million in free cash flow ($25.4 million in cash flow from operations and $4.3 million in capex). For the whole of 2015, Super Group generated $52.5 million in free cash flow, more than double the $22.3 million seen in 2014 ($60.4 million in cash flow from operations and $38.2 million in capex).
  5. As of 31 December 2015, Super Group had $124 million in cash and equivalents and borrowings of about $27.6 million. This is an improvement from a year ago when it had $101.4 million in cash and equivalents and borrowings of about $20.3 million.

In summary, Super Group ended the year with a mixed cuppa brew. The company’s top-line shrank a little while its profit fell significantly. On the other hand, free cash flow had improved markedly on better working capital control and lower capital expenditure. The firm’s balance sheet also strengthened over the past year.

The board of directors had proposed a final dividend of 1.2 cents per share. Together with the interim dividend of 1 cents per share, Super Group will pay out 2.2 cents per share for 2015. This is a decline from the 3.1 cents paid out last year.

Operational highlights

Overall revenue was down 8% year-on-year for the fourth-quarter, but there were different tales when it came to the business segments.

For reporting quarter, the BC segment saw sales decrease by only 1% year-on-year to $96 million. There were lower sales in its Tea product and Other product sub-segments which was offset by higher sales in its Cereal product.  From a geographical standpoint, Myanmar and Philippines were the laggards for the BC segment. For the full year, the BC segment saw sales slip by 3% to $339.2 million.

On the FI segment, sales slipped by a hefty 20% to $45 million in the fourth-quarter. The non-soluble coffee sub-segment was hit hard, falling by over 44% year-on-year. From a geographical standpoint, the weakness came from Indonesia which suffered from a weaker rupiah and a soft economy. For the full year, the FI segment saw revenue shrink 10% to $170 million.

David Teo, the chairman and managing director of Super Group, added the following commentary in the earnings release on the company’s outlook ahead:

“Although the headwinds of economic volatility, regulatory risks and currency fluctuations dominated the headlines in FY2015, we are steadfast in our resolve to seize opportunities during such extraordinary times, and position Super for more breakthroughs in Innovation and Branding.

Looking ahead, we expect market conditions to remain volatile and competitive as we continue to keep a close watch on the macro business environment. Meanwhile, we remain focused on our three strategic growth drivers – Branding, Innovation and Diversification – which will reinforce our positioning in key markets.”

Foolish take away

At its closing price yesterday of $0.735, Super Group traded at around 17.3 times trailing earnings with a dividend yield of 3%.

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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