Super Group Ltd (SGX: S10) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their quarterly earnings presentations (the link for Super Group is here). There may be new information investors can pick out from these webcasts. Last week, Super Group released its earnings for the quarter and year ended 31 December 2015. I had spent some time watching the webcast for that particular earnings briefing and noted five useful things investors can learn from it. But before I share them, here’s a quick background on Super Group for some context later. The company manufactures and…
There may be new information investors can pick out from these webcasts. Last week, Super Group released its earnings for the quarter and year ended 31 December 2015. I had spent some time watching the webcast for that particular earnings briefing and noted five useful things investors can learn from it.
But before I share them, here’s a quick background on Super Group for some context later. The company manufactures and distributes instant food and beverage products, predominantly coffee. It has two business segments, namely, branded consumer (BC) and food ingredients (FI). You can read more about Super Group in here.
With that, here are the notes I have from the webcast:
- Summing up the quarter, Chief Financial Controller Koh Chun Yuan highlighted four key points:
- The financial year 2015 was a challenging year, with the weak Asian economy dampening consumer consumption. The pain was particularly acute in the company’s food ingredients business in China and Indonesia.
- The stronger U.S. dollar also made the ingredients, which are sold in the U.S. dollar, more costly to Super Group’s food ingredients customers in Myanmar, Indonesia, and Eastern Europe. Furthermore, the depreciation of the Malaysian ringgit and the implementation of a goods and services tax in the country had also held back Super Group’s Malaysian sales.
- Koh was happy to note that Super Group’s operating profit had increased by 3% despite lower revenue recorded for the fourth-quarter of 2015. For context, fourth-quarter sales was down 8% year-on-year. He said that this reflects the group’s strong income generating capability.
- Despite the drop in the company’s dividend payout, Koh mused that Super Group has paid out over 50% of its net profit as dividends since 2010. Super Group is planning to pay out 2.2 cents per share in dividends for 2015, a decline from the dividend of 3.1 cents per share in 2014.
- Super Group’s management team remains committed to the company’s strategy of product innovation and geographical diversification. Koh said the launch of the new ESSENSO microground coffee and Owl Kopitiam Roast products were met with encouraging results. The company expects to launch new innovative branded consumer products in the future and expand its distribution channels for its food ingredients segment.
- Speaking of cost, Super Group improved its fourth-quarter gross margin to 39% on the back of lower material costs and a higher mix of branded consumer sales. Selling and distribution expenses was 13% of revenue. The effective tax rate for the fourth-quarter rose to 25%, up from 10% in the same quarter in 2014. The expiry of an overseas tax incentive had contributed to the higher tax.
- The BC segment had contributed 68% of Super Group’s total revenue for the fourth-quarter with the FI segment contributing the rest. This compares with the 63% contribution to total revenue that the BC segment had in the fourth-quarter of 2014.
- From a geographical standpoint, BC segment sales were particularly weak in Eastern Europe, in part due to weaker currencies against the U.S. dollar. This was offset by strong sales in China from successful product roll-outs.
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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.