INTERIM REPORT Q2 2018 Conference call 21 August 2018 1 Agenda - - PowerPoint PPT Presentation

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INTERIM REPORT Q2 2018 Conference call 21 August 2018 1 Agenda - - PowerPoint PPT Presentation

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INTERIM REPORT Q2 2018 Conference call 21 August 2018 1 Agenda SPEAKERS WELCOME TO GOODVALLEY GROUP HIGHLIGHTS MARKETS SEGMENTS GROUP FINANCIALS OUTLOOK 2018 STRATEGY Q&A SESSION TOM AXELGAARD HANS HENRIK PEDERSEN CEO CFO

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INTERIM REPORT Q2 2018

Conference call – 21 August 2018

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FULL-YEAR 2017 CONFERENCE CALL

Agenda

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DISCLAIMER This presentation contains forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond Goodvalley A/S’ control, may cause actual developments and results to differ materially from the expectations contained in the presentation.

WELCOME TO GOODVALLEY GROUP HIGHLIGHTS MARKETS SEGMENTS GROUP FINANCIALS OUTLOOK 2018 STRATEGY Q&A SESSION

SPEAKERS

TOM AXELGAARD CEO

Founded Goodvalley in 1994

HANS HENRIK PEDERSEN CFO

Goodvalley since 2016

Interim Report Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Group highlights

GOODVALLEY DELIVERS STRONG OPERATIONAL PERFORMANCE DESPITE CHALLENGING MARKET CONDITIONS

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FINANCIALS HIGH AND IMPROVED EFFICIENCY IN GREAT SHAPE FOR THE FUTURE

DKK 374m

Revenue declined 11 % to DKK 374 million driven by lower pig prices and reduced capacity

22.2%

Adjusted EBITDA of DKK 83 million, yielding an Adjusted EBITDA margin of 22.2%

31.4 pigs per sow

Improved from 30.9 in Q2 2017

2.74 kilo

Stable and low feed conversion ratio of 2.74 kilo feed per kilo pork

7.1 meat to feed ratio

The meat to feed ratio declined from 7.8 in Q2 2017

Branded products

In Q2 2018 Goodvalley prepared the launch of premium branded products

RWA

Goodvalley continues to expand the capacity for RWA production

2018

Outlook for 2018 maintained following adjustment on 10 August

Stable renovations

Goodvalley continues stable renovations to increase capacity and efficiency

Interim Report Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Market developments

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1 EU average based on EU (weighted average) market prices for pig carcass grade E in the E.U. (European Commission)

Source: Company information and World Bank (Global Economy Prospects, January 2018). Real growth based on constant 2010 U.S. dollar GDP weights

2014-2018 PIG PRICES DKK/KG (CARCASS WEIGHT )

Goodvalley (Ukraine) Goodvalley (Poland) Goodvalley (Russia)

POLAND

  • Lower capacity and pig prices
  • Finalizing launch of branded

premium products

REVENUE UKRAINE

  • Higher pig prices
  • Continued stable upgrades to lift

volume and efficiency

REVENUE RUSSIA

  • Lower pig prices
  • Improved operational performance
  • Cross-border knowledge sharing

REVENUE

62%

  • f total
  • 17%

growth

25%

  • f total

3%

growth

13%

  • f total
  • 3%

growth

EU average1

5 10 15 20 25 Q1 2014 Q4 2015 Q2 2014 Q3 2014 Q1 2018 Q3 2016 Q4 2014 Q3 2015 Q1 2015 Q2 2015 Q1 2016 Q2 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

Interim Report Q2 2018

Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Pig segment

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Slaughter pig volumes declined due to reduced capacity

  • Ended production at two leased finisher farms in Poland
  • Stable renovations
  • RWA capacity expansion

Lower revenue alleviated by increased efficiency

  • Adjusted EBITDA of around 26% despite lower revenue
  • Increased number of pigs sold per sow to 31.4

DKK million Q2 2018 Q2 2017 2017 External revenue 165 205 701 Internal revenue 98 102 434 REVENUE 263 307 1,135 EBITDA 58 157 368 ADJUSTED EBITDA 68 112 374 ADJUSTED EBITDA MARGIN 25.9% 36.5% 33.0% PIGS SOLD PER SOW PER YEAR, HEADS PIGS SOLD, THOUSAND TONNES (LIVE WEIGHT) PIG PRICE, DKK/KG AND MEAT TO FEED RATIO

30.5 30.9 30.7 30.8 32.2 31.4 20 25 30 35 Q1 2017 Q2 2017 Q3 2017 Q1 2018 Q4 2017 30.1 29.3 28.4 29.8 28.0 10 20 30 40 Q4 2017 Q3 2017 Q1 2017 Q2 2017 Q1 2018 10.84 12.84 12.71 11.26 10.68 7.00 7.81 7.86 7.35 7.13 5 10 15 Q1 2017 Q2 2017 Q3 2017 Q1 2018 Q4 2017

Interim Report Q2 2018

Q2 2018 27.7 Q2 2018 11.31 7.13 Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Food segment

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Increased volume in tonnes sold

  • Revenue decreased mainly due to lower pork price
  • Improved product mix with more processed products

Earnings driven by volume growth

  • EBITDA increased to DKK 2 million from DKK -1 million in Q2 2017

DKK million Q2 2018 Q2 2017 2017 REVENUE 192 202 767 EBITDA 2 (1) (9) EBITDA MARGIN 0.9% (0.3%) (1.2%) SALE OF PORK, THOUSAND TONNES SALES SPLIT, %

12.7 11.9 12.5 12.9 13.0 5 10 15 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 56% 25% 19% Processed Deboned MAP

Interim Report Q2 2018

Q2 2018 13.0

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FULL-YEAR 2017 CONFERENCE CALL

Arable and Energy segments

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Arable revenue increased, while earnings declined

  • Revenue was DKK 9 million
  • EBITDA declined slightly to DKK 11 million due to drought
  • Obtained farming rights in Ukraine of 6,500 hectares

Stable production in Energy

  • Revenue increased to DKK 19 million

DKK million Q2 2018 Q2 2017 2017 External revenue 2

  • 54

Internal revenue 7

  • 121

REVENUE 9

  • 175

EBITDA 11 13 39 EBITDA MARGIN n.a. n.a. 22.3% PRODUCED ELECTRICITY, GWH

16.4 15.8 15.3 16.0 16.5 5 10 15 20 Q4 2017 Q2 2017 Q1 2017 Q3 2017 Q1 2018

DKK million Q2 2018 Q2 2017 2017 External revenue 13 13 61 Internal revenue 5 4 24 REVENUE 19 17 85 EBITDA 3 3 17 EBITDA MARGIN 15.0% 16.3% 20.0%

Interim Report Q2 2018

Q2 2018 14.9

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FULL-YEAR 2017 CONFERENCE CALL

Group financials

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Lower revenue due to pig prices and reduced capacity

  • Revenue came to DKK 374 million
  • Strong and improved operational performance

Earnings impacted by market conditions

  • Adjusted EBITDA came to DKK 83 million
  • Adjusted profit was DKK 37 million

Cash flow development

  • Operating cash flows amounted to DKK 44 million

DKK million Q2 2018 Q2 2017 2017 REVENUE 374 421 1,620 EBITDA 73 176 426 Herd price adjustment 10 (45) 5 ADJUSTED EBITDA 83 132 431 ADJUSTED EBITDA MARGIN 22.2% 31.2% 26.6% EBITDA margin 19.6% 41.9% 26.3% REVENUE, DKK MILLION EBITDA MARGIN, % OPERATING CASH FLOW, DKK MILLION

365 421 446 388 351 200 400 600 Q1 2017 Q1 2018 Q3 2017 Q2 2017 Q4 2017 27.1% 41.9% 24.7% 11.3% 27.6% 20 40 60 80 Q4 2017 Q1 2017 Q3 2017 Q2 2017 Q1 2018 55 73 104 45 43 50 100 150 Q1 2018 Q2 2017 Q1 2017 Q4 2017 Q3 2017

Interim Report Q2 2018

Q2 2018 374 Q2 2018 22.2% Q2 2018 44

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FULL-YEAR 2017 CONFERENCE CALL

Outlook 2018

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DKK million 2018 outlook Previous 2018 outlook 2017 actuals Revenue 1,400-1,550 1,500-1,700 1,620 Adjusted EBITDA 280-325 340-425 431

Reported EBITDA 2017

  • 426

FINANCIAL OUTLOOK COMMENTS AND ASSUMPTIONS

The earnings outlook is presented at fixed herd price in terms of Adjusted EBITDA to reduce fluctuations in guidance and provide optimum conditions for assessing Goodvalley’s operational efficiency and performance specifically and in isolation from changes in market prices for live pigs, potentially entailing material fair value adjustments of the Group’s biological assets on the balance sheet date. The outlook for 2018 is based on an average market pig price of DKK 11.1 per kilo and fixed exchange rates as well as the prevailing economic situation in Goodvalley’s markets. The outlook represents our current expectations for the development in the Group’s revenue and Adjusted EBITDA, and Goodvalley’s reported EBITDA may thus deviate significantly from this outlook.

Goodvalley maintains recently revised outlook

  • Revenue of DKK 1,400-1,550 million
  • Adjusted EBITDA of DKK 280-325 million

Performance expected to be impacted by

  • Drought and related effects
  • Upgrade of stables
  • Expanded RWA capacity
  • Marketing investments related to branded products

Interim Report Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Ukraine Russia Poland

Strategy

EXPANDING CAPACITY TO STRENGTHEN VERTICAL INTEGRATION

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VALUE CHAIN BY GEOGRAPHY Crop growing Feed production Pig production Slaughtering, cutting and deboning Meat processing and marketing Fully integrated production Partly integrated production Partly integrated production MULTIPLE LEVERS TO DRIVE GROWTH AND ENHANCED PROFITABILITY

Bioenergy production

Optimisation

  • Sustainability based on Danish

know how

  • Improving facilities
  • Obtained Global GAP certification

Capacity expansion

  • Increase pig production
  • Feed, land base and green energy
  • Expansion of land bank in Ukraine

with obtained farming rights

Strengthen consumer focus

  • Finalized launch of branded

products to the Polish market

  • Margin expansion and reduced

exposure to bulk market

  • Capitalising on sustainability and

environmental protection

New geographies

  • Expansion into selected

new markets

  • Acquisitions or greenfield
  • Clear selection criteria

Interim Report Q2 2018

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Questions

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FULL-YEAR 2017 CONFERENCE CALL

Contact information

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FINANCIAL CALENDAR 2018

TOM AXELGAARD CEO HANS HENRIK PEDERSEN CFO

27 November Q3 interim report GOODVALLEY A/S

Vesterbrogade 4A DK-1620 Copenhagen Tel.: +45 76 52 20 01 Mail: investor@goodvalley.com Web: www.goodvalley.com Interim Report Q1 2018

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Appendix

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FULL-YEAR 2017 CONFERENCE CALL

Key figures and financial ratios

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Note: Years 2013-2016 have been restated in accordance with new accounting principles

DKK million Q2 2018 Q2 2017 2017 Income statement Revenue 374 421 1,620 Total income 446 536 1,653 Gross profit 103 196 511 EBITDA 73 176 426 Adjusted EBITDA 83 132 431 EBIT 42 146 304 Financial items, net (8) (53) (135) Profit/(loss) for the period 34 93 169 Adjusted profit 37 92 245 Cash flow Operating activity 44 73 274 Investing activity (85) (29) (143) Free cash flow (41) 44 131 Financing activity (15) (120) 28 Balance sheet Non current assets 1,864 1,942 1,833 Net working capital 598 582 532 Invested capital 2,462 2,524 2,365 Total assets 2,819 2,940 2,751 Equity 1,318 1,388 1,265 Net interest-bearing debt 1,142 1,178 1,100 DKK million Q2 2018 Q2 2017 2017 Key financials Gross margin 27.6% 46.6% 31.5% EBITDA margin 19.6% 41.9% 26.3% Adjusted EBITDA margin 22.2% 31.2% 26.6% EBIT margin 11.3% 34.6% 18.8% Free cash flow / revenue (11.0)% 10.4% 8.1% Cash conversion 53.1% 55.5% 43.1% Capex plant and equipment (68) (30) 152 NIBD/Adjusted EBITDA LTM 3.1x 3.2x 2.6x Equity ratio 46.8% 47.2% 46.0% ROIC 8.9% 11.0% 12.9% FTE 2,301 2,327 2,232 Share ratios Earnings per share, DKK 1 2 3

Interim Report Q2 2018

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FULL-YEAR 2017 CONFERENCE CALL

Goodvalley Bond Obligor Group1

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1Bond Obligor Group consists of: Goodvalley A/S, Finansax ApS, Goodvalley Agro SA, Goodvalley Sp. Z o.o. Goodvalley Ukraine LLC

DKK million Q2 2018 2017 Goodvalley Bond Obligor Group Revenue 331 1,460 Total Income 395 1,495 EBITDA 50 375 Adjusted EBITDA 63 374 Net interest-bearing debt 1,144 1,081 Adjusted EBITDA LTM 312 374 NIBD/Adjusted EBITDA LTM 3.7 2.9

Interim Report Q2 2018