JSE-listed fast-moving consumer goods and personal care products company Premier Group has reported that its interim results for the six months ended September 30 demonstrate the continuance of a successful business model and strategy.

The company notes that sustained capital investment across its diverse asset base, focused on manufacturing excellence, the development of its people and ensuring a highly efficient logistics and distribution channel, continued to deliver tangible growth.

As anticipated, Premier says, moderate revenue growth was realised against deflation in global grain prices, including maize and rice.

Revenue growth was effectively converted into a notable uplift in operational earnings through further improvements in efficiencies, consistent daily service delivery and the companywide pursuit of excellence, says Premier.

The group's revenue increased by 6.4% year-on-year to R10.3-billion.

The Millbake division, which contributed 83% of revenue, was the main driver of growth with an increase in revenue of 6%. The Groceries and International division also grew its revenue by 8.1%.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 13.6% to R1.3-billion.

Premier says growth in Millbake’s Ebitda of 12.4% was a key contributor to the group's performance, augmented by robust growth in the Groceries and International Ebitda of 13.8%.

The group's Ebitda margin improved by 80 basis points to 12.7%.

Operating profit increased by 17% to R1.1-billion and the operating profit margin improved by 100 basis points to 10.7%.

The company says net finance costs decreased by 28.7% to R119-million, a benefit of reduced debt levels. The group's share of net profit in equity-accounted investments was R16-million.

Earnings per share (EPS) increased by 27.4% to 557.9c and headline earnings per share (HEPS) increased by 27.9% to 559.5c.

Cash generated from operations increased by 34.7% to R1.3-billion, driven by the growth in the group's Ebitda and improved working capital management, with an outflow of R70-million compared to R240-million in the prior period.

The group's net debt – including lease liabilities but excluding the trade financing facility – on September 30 was R1.8-billion, representing a group leverage ratio of 0.7 times on the last 12 months Ebitda of R2.5-billion.

MILLBAKE

Premier says the Millbake division once again delivered an excellent set of results while continuing to navigate adverse economic conditions.

As anticipated, revenue growth was a moderate 6% year-on-year at R8.6-billion.

The company notes that Ebitda, boosted by ongoing operational efficiency improvements, increased by 12.4% to R1.3-billion and simultaneously improved the Ebitda margin by 80 basis points to 14.7%.

Premier says Millbake's revenue growth is attributable to price or mix growth of 2% and volume growth of 4%, showcasing the growing strength of the brands.

Further, after much anticipation, the company says the commissioning of Phase 1 of the Aeroton megabakery project is on track for mid-November; and Phase 2 for February 2026.

It explains that this significant undertaking is expected to meaningfully enhance efficiencies and economies of scale and to fundamentally improve the quality of the bread Premier offers to its consumers in the inland region.

In addition, the company says the speed and performance of the new lines will alleviate substantial capacity pressure in the region.

OTHER DIVISIONS

Premier says the Groceries and International division delivered a good performance for the six months ended September 30.

The division's revenue increased by 8.1% to R1.8-billion and its Ebitda by 13.8% to R119-million. The Ebitda margin improved to 6.8% from 6.4%.

Additionally, the company says the Home and Personal Care division posted a good performance.

The primary focus areas for the period included bedding down several strategic projects and the streamlining of the pads and liners operations through investment in capacity and capability.

The company says the newly installed tampon manufacturing and packing machinery has supplemented its current capacity, delivering good efficiencies and, coupled with the new liner machinery commissioned in September, has enhanced local manufacturing for exports.

Moreover, Premier says the Sugar Confectionery division delivered a solid set of results.

The company says it has seen an uptick in volumes attributable to new business and improved service levels post the challenges experienced in the prior year.

“We are excited by the progress that we've achieved in onboarding the additional branded products for the prestigious Woolworths range. The liquorice line is up and running and well placed to bring further innovation and efficiencies,” the company says.

Notwithstanding significant macroeconomic headwinds in Mozambique, Premier says the CIM business division in that country experienced an improvement in trading conditions during the period, producing pleasing results.

The company says the diverse product and brand portfolio that CIM offers remains defensive, with a particularly strong performance in bread, rice and porridge.

While foreign currency supplies in the country remain low, Premier says its management team continued to actively engage with commercial banks to manage Premier's foreign exchange exposure.

INTERIM CASH DIVIDEND DECLARATION

Premier has declared a one-off interim dividend of 159c a share out of the company's reserves, in respect of both the ordinary shares of no-par value and the unlisted A and A1 ordinary shares of no-par value, for the period ended September 30.

The company explains that the interim dividend is as a result of the proposed RFG transaction and, in line with Premier's dividend payout policy of 30% of diluted HEPS, any final dividend for the year ending March 31, 2026, will be reduced by the one-off interim dividend of 159c a share.

On October 16, Premier announced its firm intention to acquire RFG Holdings. The transaction will be effected by means of a share swap that will result in RFG shareholders owning about 22.5% of the enlarged Premier Group.

GENERAL SHARE BUYBACK PROGRAMME

Premier also intends to begin a general share buyback programme in terms of the general authority granted to it by shareholders at the AGM held on September 3.

The rationale for the share buyback is to ensure that the group's capital structure remains efficiently structured, before any effects of implementation of the RFG transaction, and is primarily a response to the strong free cash flow generation of the group over the prior financial periods.

Premier notes that it intends to buy back shares at up to R154 a share, being the reference price of the RFG transaction.

OUTLOOK

Looking ahead, Premier says management will focus on maintaining the momentum achieved in the first half of the year, continuing to build scale in its operations and realising maximum throughput with high levels of operational efficiency.

After three years of patiently waiting for the completion of the new Aeroton bakery, the company says its benefits will start to flow through in the second half of the year.

Together with the numerous other capital programmes across the business, Premier says the efficiency and scale of its substantial infrastructure investments are expected to yield benefits progressively over the coming years.

The company says it will also continue its strategic focus on human capital development, providing the leadership and execution capability required to leverage its facilities, bring them to life and unlock long-term growth.

“We look forward to the approval and implementation of the RFG transaction before the end of this financial year.”

Premier says RFG's portfolio of branded and private label food products will broaden the company’s food basket and open up further opportunities to enhance efficiencies through business integration over the coming years.

The company says working closely with municipalities, particularly in smaller towns, to support operational continuity, as well as building constructive relationships and open dialogue with key individuals in government, remains vital to the success of its business.

Further to that, Premier says its social impact continues to be focal to its purpose, adding that the company will strive to execute on the meaningful projects and programmes that it has put in place countrywide to uplift people who need it most.

“We remain committed to quality, execution and capability building, with a clear plan in place to deliver against our growth ambitions for the full 2026 financial year. We remain confident in our ability to maintain our growth path.”