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Super Group Ltd’s Latest Earnings: Signs of Improvement Seen?

Super Group Ltd (SGX: S10) reported its fiscal first-quarter earnings yesterday evening. The reporting period was for 1 January 2016 to 31 March 2016.

Super Group is a food and beverage (F&B) company with operations primarily in Asia. It has two business segments, namely, Branded Consumer (BC), and Food Ingredients (FI). Under the former, Super Group creates instant beverages such as coffee and tea; for the latter, the company manufacturers ingredients that go into the production of other beverages.

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

Financial highlights

The following’s a rundown on some of the latest financial figures for Super Group:

  1. Revenue for the reporting quarter was $119.4 million, down 2% compared to the same quarter a year before.
  2. Profit attributable to shareholders was down 15% year-on-year to $11.5 million.
  3. Consequently, earnings per share (EPS) also suffered a 15% decline, falling from 1.22 cents in the first-quarter of 2015 to 1.04 cents.
  4. On a brighter note, cash flow from operations came in at $25.5 million with capital expenditure clocking in around $4.8 million. This puts the F&B outfit in positive free cash flow territory to the tune of $20.7 million. It’s a huge jump from a year ago when free cash flow was a negative S$3.5 million (S$5.6 million in cash flow from operations and S$9.1 million in capex).
  5. As of 31 March 2016, Super Group had $143.3 million in cash and equivalents and borrowings of $28 million. This is an improvement from the previous sequential quarter when the company had $124 million in cash and equivalents and borrowings of about $27.6 million.

In summary, Super Group ended the quarter with lower sales and profits. But, there could be a hint that things are improving.

On a constant currency basis, Super Group’s sales actually inched up by 0.3%. The company’s free cash flow also improved significantly from better working capital control and the balance sheet had strengthened over the previous quarter too.

Operational highlights

For the reporting quarter, the BC segment saw sales decrease by 2% year-on-year to $83 million. The segment’s revenue fell in part due to weaker regional currencies in Thailand and Malaysia. On a constant currency basis, BC segment sales were actually up by 2%.

On the FI segment side, sales slipped by 3% to $36.5 million in the first-quarter of 2016. Lower revenue from China and the Philippines were the culprits. This is also an improvement from the 20% fall in FI segment sales in the previous quarter.

David Teo, Chairman and Managing Director of Super Group, added the following commentary in the earnings release for the outlook ahead:

“Despite a competitive and challenging business environment, we continue to forge ahead with our strategies of brand building, developing innovative products and differentiating ourselves from the competition. Whilst currency volatilities were beyond our control, we are encouraged that the Group’s fundamentals remain strong and we are well-positioned to power our growth in existing and new markets.”

At its closing price yesterday of $0.915, Super Group traded at around 22.5 times trailing earnings with a dividend yield of 2.4%.

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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