Simonds Farsons Cisk plc - Interim Results
On 25 September 2024, Simonds Farsons Cisk plc published its interim financial results for the six-month period ended 31 July 2024.
Revenues increased by 7% to a new record (at interim stage) of €69.8 million (H1 2023/24: €65.2million). Farsons registered growth in both beverage and food business units, with the beverage segment sales increasing by 6.6% to €54.7 million and food business sales growing by 8.2% to €18.1 million.
Operating expenses increased by 5.6% to €59.6 million. Consequently, operating profit (EBIT) surged by 15.8% to €10.1 million (H1 2023/24: €8.75 million), which translates into an improved EBIT margin of 14.5% compared to 13.4% in the same period last year. The improvement in EBIT profit margins was noted across both business segments, with the beverage business EBIT margin increasing to 15.8% from 14.4% in the previous comparable period and that of the food business increasing to 10.8% from 10.6%. The company explained that these results reflect the impact of diverse market dynamics, including shifting demographics in the local market, increasing inbound tourism, and a rising number of suppliers in the relatively limited Maltese market. Farsons highlighted that the highly competitive environment for importers has exerted pressure on margins within the Group’s importation subsidiaries. Despite this, the strong resilience in the manufacturing and franchised restaurant segments, offset the margin contraction in the importation sector.
The financial performance was also boosted by a 13.6% reduction in net finance costs to €0.58 million.
The pre-tax profit for the period amounted to €9.55 million, which is 18.2% higher than the €8.08 million figure reported for the same period last year. Overall, Farsons reported a net profit of €8.83 million, which translates into an annualised return on average equity of 11.9%.
The condensed Statement of Financial Position as at 31 July 2024, when compared to the corresponding figures as at 31 January 2024, shows that total assets increased by 2.9% (or €6.1 million) to €218 million. Meanwhile, total liabilities climbed by 2.0% (or €1.3 million) to €64.9 million. Total equity expanded by 3.3% (or €4.9 million) to €153.5 million.
Dividend
The Board of Directors noted that in light of the Group’s robust performance, it resolved to distribute a net interim dividend of €0.06 per share which is 20% higher than the interim dividend paid out last year. The interim dividend distribution translates into a payout ratio of 24.5% (H1 2023/24: 23.9%). The dividend is payable on Wednesday 16 October 2024 to all shareholders as of the close of trading on Monday 30 September 2024.
Investments
In the Interim Directors’ Report, the Board highlighted a number of ongoing investments that are aimed at fostering future growth and delivering satisfactory long-term returns to shareholders, with particular emphasis on digital transformation, environmental sustainability, and energy efficiency.
Enhancements to the logistics facilities within the Mriehel production site are being pursued, including additional investments in photovoltaic panels, the establishment of a carbon dioxide recovery plant, and the transformation of the returnable packages facility into a fully automated logistics centre.
Concurrently, the construction of a new logistics centre for the food business has started at Handaq and is scheduled for completion and full operation by the first half of 2026. The Board noted that this investment complements the ongoing strategic assessment led by the Board of Directors and executive management to explore opportunities for further growth within the foods business. This comprehensive evaluation seeks to identify the optimal corporate structure to enhance operational efficiencies and shareholder value. This strategic review is approaching completion, and detailed proposals will be presented to shareholders in due course.
Outlook
Looking ahead to the second half of the year, the Directors anticipate a moderation in performance due to seasonal fluctuations that historically impacted the business, therefore, the inherent variability in demand during the latter part of the year may result in financial performance that, while still positive, may not match the rate of growth seen in the first six months.
The Board also referred to the increasing complexity of evolving EU regulations for the food and beverage sectors. These present significant challenges, adding considerable additional compliance and other related costs.
The Directors explained that the competitive landscape continues to intensify, with market conditions becoming increasingly aggressive. Nonetheless, this heightened competition presents both challenges and opportunities. The Board and management remain determined and fully focused on strategic investments and operational improvements on a long-term basis to ensure that the Group remains a leader in the fast-moving consumer goods sector and continues to deliver superior value.