Inghams Group Limited FY2018 Results Presentation 22 AUGUST 2018 - PowerPoint PPT Presentation

Inghams Group Limited FY2018 Results Presentation 22 AUGUST 2018

Important notice and disclaimer Disclaimer The material in this presentation is general background information about the activities of Inghams Group Limited (Ingham’s) and its subsidiaries (Ingham’s Group), current at the date of this presentation, unless otherwise noted. It is information given in summary form and does not purport to be complete. It should be read in conjunction with the Ingham’s Group other periodic and continuous disclosure announcements lodged with the Australian Stock Exchange, which are available at www.asx.com.au. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. This presentation includes non-IFRS information including EBITDA, Underlying and Pro-forma, which Ingham’s considers useful for users of this presentation to reflect the underlying performance of the business. Definitions are included in the Appendix defining the non-IFRS information used. Non-IFRS measures have not been subject to audit. This presentation may contain certain “forward-looking statements” and comments about future events, including Ingham’s expectations about the performance of its businesses. Such forward–looking statements may include forecast financial information about Ingham’s, statements about industry and market trends, statements about future regulatory developments and the progress of current developments and statements about Ingham’s strategies and the likely outcomes of those strategies. Forward-looking statements can be identified by the use of forward-looking terminology, including, without limitation, the terms “believes”, “estimates”, “anticipates” “expects”, “predicts”, “outlook”, “guidance”, “plans”, “intends”, “should”, “could”, “may”, “will”, “would” and other similar expressions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Such forward-looking statements are not guarantees of future performance and are provided as a general guide only, should not be relied on as an indication or guarantee of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Ingham’s. Actual results, performance or achievements could be significantly different from those expressed in or implied by any forward-looking statements. There can be no assurance that actual outcomes will not differ materially from forward-looking statements. Nothing contained in this presentation is, or should be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Ingham’s. Ingham’s does not undertake any obligation to update or review any forward-looking statements or any other information contained in this presentation. This presentation does not constitute, or form part of, an offer to sell or the solicitation of an offer to subscribe for or buy any securities and nor is it intended to be used for the purpose of or in connection with offers or invitations to sell or subscribe for or buy or otherwise deal in securities. PAGE // 1

Broiler Farm South Australia 01 Group highlights

Group highlights Delivering on our strategy – growing volumes and earnings with strong cash flow  Chicken remains the competitive protein with 3.2% growth across ANZ in core Chicken & Turkey volumes  Strategy implementation continues to deliver improved returns despite a challenging New Zealand market  Rising energy, feed and insurance costs continue to be offset by strategic initiatives or price increases Highlights  Price increases in the range 5% to 8% plus passed through in AUS across all channels in recent months  Strong operating cash flow generation supported by working capital management and strategic asset sales  Leverage ratio reduced to 0.7x  Project Accelerate continues to deliver in line with expectations, with further benefits to be delivered – benefits flowing through in improved yields, reduced unit costs and improved utilisation of assets – initiatives on track in network rationalisation, automation, labour efficiency, procurement and others – FP network optimisation announced in June 2018  Progress made on identifying further opportunities in processing, farming and feed Strategy progress – focus on profitability and capacity rationalisation in third party feed sales  Capital investment in capacity and efficiency continues as planned – new South Australian feed mill expected to be in commercial production in Q1 FY19 – investment in new NZ Breeder facilities expected to be completed by end of H1 FY19 – further investment planned in WA with a new Feedmill and a Hatchery to be operational in FY21 PAGE // 3

Financial highlights – FY18 vs FY17 Core Gross Cash Net debt EPS Final Underlying Underlying EBITDA EBITDA NPAT NPAT Poultry Profit Conv Ratio Dividend Volume 397.7kt $476.9m $208.9m $212.0m $112.5m $114.6m 122.9% $145.4m 30.8 cps 11.6 cps ↑ 3.2% ↑ 4.4% ↑ 7.1% ↑ 8.7% ↑ 10.3% ↑ 12.4% ↑13.6% ↓ 154.2m ↑ 12.4%  Core chicken and turkey volume grew at 3.2% (total poultry volume including Ingredients grew at 2.0%)  Underlying EBITDA growth of 7.1% to $208.9m (excluding profit on sale and restructuring)  Profit on sale of assets of $19.4m, in part offset by restructuring initiatives of $16.3m, net impact $3.1m  Underlying NPAT growth of 10.3% to $112.5m  NPAT growth of 12.4% to $114.6m Financial performance  Net Debt of $145.4m (leverage ratio 0.7x)  Earnings Per Share (EPS) growth of 12.4% to 30.8 cps  Final dividend of 11.6 cents per share (Total dividend for FY18 21.1cps – 70% of NPAT)  Cash on hand of $273.7m up 83.7% on prior year balance of $149.0m  Planned Capital Return of $125m, 33.0 cps* Note: FY17 pro forma based on 52 weeks. A reconciliation between FY17 pro forma and statutory results is included in the Appendix PAGE // 4 * Subject to ATO approval

Segment Information – Australia Summary: Australia $ millions (AUD) Jun-18 Jun-17 Variance %  Poultry volume growth excluding ingredients of 2.8%  Improved margin reflecting realisation of efficiency and Australia automation initiatives and benefits of premiumisation Poultry volumes (kt) 428.5 421.8 6.7 1.6  Price increases offsetting higher feed and utility costs Feed volumes (kt) 367.4 442.0 (74.6) (16.9) Revenue 2003.9 2,022.6 (18.7) (0.9) Retail EBITDA 175.2 158.8 16.4 10.3  Growth in premium product ranges partially offset by a EBITDA % 8.7% 7.9% 0.8% moderation in demand for BBQ birds following the market price increases in 2H (approx. 12% retail price increase) QSR & Food Service  New business and demand for fresh product driving volume increases  Further Processed segment remains competitive Wholesale & Export  Wholesale volume increases reflect further contractual coverage in this channel and additional opportunities resulting from market rationalisation Third Party Feed sales  Reduction in third party feed volume reflects cycling of third party customer loss in Q2 FY17, reduced demand and subsequent closure of Red Lea Chickens in NSW, and a focus on profitability in this segment PAGE // 5 Note: Total Poultry volumes includes core chicken and turkey products in addition to ingredients Note: FY17 pro forma based on 52 weeks. A reconciliation between FY17 pro forma and statutory results is included in the Appendix

Segment Information – New Zealand Summary: New Zealand $ millions (AUD) Jun-18 Jun-17 Variance %  Poultry volume growth driven by QSR and Retail New Zealand  Challenging market conditions deteriorated further in the Poultry volumes (kt) 76.8 73.5 3.3 4.5 2H due to competitor volumes produced for export but Feed volumes (kt) 137.3 123.2 14.1 11.4 being cleared through domestic channels Revenue 370.0 361.3 8.7 2.4  FY trading performance reflects increased price EBITDA 36.8 36.2 0.6 1.7 competition due to oversupply in the domestic market EBITDA % 9.9% 10.0% -0.1%  Successful focus on higher value channels and products, leveraging the strong brand position of Waitoa  Continue to focus on operational efficiencies driving improved performance  Disciplined working capital performance Third Party Feed sales  Recovery in dairy feed volumes as dairy demand has improved on the back of strengthening milk prices  Third party chicken feed sales in line with expectations PAGE // 6 Note: All financial numbers are in AUD Note: FY17 pro forma based on 52 weeks. A reconciliation between FY17 pro forma and statutory results is included in the Appendix

Further Processing Plant Edinburgh Parks, South Australia 02 Financial results