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 Founded Goodvalley in 1994 Goodvalley since 2016 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. Interim Report Q2 2018 1 FULL-YEAR 2017 CONFERENCE CALL
Group highlights GOODVALLEY DELIVERS STRONG OPERATIONAL PERFORMANCE DESPITE CHALLENGING MARKET CONDITIONS FINANCIALS HIGH AND IMPROVED EFFICIENCY IN GREAT SHAPE FOR THE FUTURE DKK 374m 31.4 pigs per sow Branded products Revenue declined 11 % to DKK 374 million Improve d from 30.9 in Q2 2017 In Q2 2018 Goodvalley prepared the driven by lower pig prices and reduced launch of premium branded products capacity 22.2% 2.74 kilo RWA Adjusted EBITDA of DKK 83 million, Stable and low feed conversion ratio of Goodvalley continues to expand the yielding an Adjusted EBITDA margin of 2.74 kilo feed per kilo pork capacity for RWA production 22.2% 7.1 meat to feed ratio Stable renovations 2018 Goodvalley continues stable renovations The meat to feed ratio declined Outlook for 2018 maintained following to increase capacity and efficiency adjustment on 10 August from 7.8 in Q2 2017 Interim Report Q2 2018 2 FULL-YEAR 2017 CONFERENCE CALL
Market developments POLAND UKRAINE RUSSIA Lower capacity and pig prices Higher pig prices Lower pig prices • • • Finalizing launch of branded Continued stable upgrades to lift Improved operational performance • • • premium products volume and efficiency Cross-border knowledge sharing • REVENUE REVENUE REVENUE 62% 25% 13% of total of total of total -17% 3% -3% growth growth growth 2014-2018 PIG PRICES DKK/KG (CARCASS WEIGHT ) Goodvalley (Poland) Goodvalley (Ukraine) Goodvalley (Russia) EU average 1 25 20 15 10 5 0 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 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 Interim Report Q2 2018 3 FULL-YEAR 2017 CONFERENCE CALL
Pig segment PIGS SOLD PER SOW PER YEAR, HEADS Slaughter pig volumes declined due to reduced capacity Ended production at two leased finisher farms in Poland 35 • 32.2 31.4 30.9 30.7 30.8 30.5 30 Stable renovations • 25 RWA capacity expansion • 20 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Lower revenue alleviated by increased efficiency PIGS SOLD, THOUSAND TONNES (LIVE WEIGHT) Adjusted EBITDA of around 26% despite lower revenue • 40 Increased number of pigs sold per sow to 31.4 • 30.1 29.8 29.3 28.4 28.0 27.7 30 20 10 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 DKK million Q2 2018 Q2 2017 2017 PIG PRICE, DKK/KG AND MEAT TO FEED RATIO External revenue 165 205 701 Internal revenue 98 102 434 15 12.84 12.71 11.31 11.26 10.84 10.68 263 307 1,135 REVENUE 10 58 157 368 EBITDA 5 7.86 7.81 7.35 7.13 7.13 7.00 68 112 374 ADJUSTED EBITDA 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 25.9% 36.5% 33.0% ADJUSTED EBITDA MARGIN Interim Report Q2 2018 4 FULL-YEAR 2017 CONFERENCE CALL
Food segment SALE OF PORK, THOUSAND TONNES Increased volume in tonnes sold • Revenue decreased mainly due to lower pork price 15 12.9 13.0 13.0 12.7 12.5 11.9 • Improved product mix with more processed products 10 5 0 Earnings driven by volume growth Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 • EBITDA increased to DKK 2 million from DKK -1 million in Q2 2017 SALES SPLIT, % MAP 19% 56% Processed 25% Deboned DKK million Q2 2018 Q2 2017 2017 REVENUE 192 202 767 2 (1) (9) EBITDA 0.9% (0.3%) (1.2%) EBITDA MARGIN Interim Report Q2 2018 5 FULL-YEAR 2017 CONFERENCE CALL
Arable and Energy segments 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 PRODUCED ELECTRICITY, GWH • Revenue increased to DKK 19 million 20 16.4 16.5 16.0 15.8 15.3 14.9 15 10 5 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 DKK million Q2 2018 Q2 2017 2017 DKK million Q2 2018 Q2 2017 2017 External revenue 2 - 54 External revenue 13 13 61 Internal revenue 7 - 121 Internal revenue 5 4 24 9 - 175 19 17 85 REVENUE REVENUE EBITDA 11 13 39 EBITDA 3 3 17 n.a. n.a. 22.3% 15.0% 16.3% 20.0% EBITDA MARGIN EBITDA MARGIN Interim Report Q2 2018 6 FULL-YEAR 2017 CONFERENCE CALL
Group financials REVENUE, DKK MILLION Lower revenue due to pig prices and reduced capacity • Revenue came to DKK 374 million 600 446 421 388 365 374 • Strong and improved operational performance 351 400 200 0 Earnings impacted by market conditions Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q2 2018 Adjusted EBITDA came to DKK 83 million • EBITDA MARGIN, % Adjusted profit was DKK 37 million • 80 60 41.9% 40 Cash flow development 22.2% 27.1% 27.6% 24.7% 20 11.3% • Operating cash flows amounted to DKK 44 million 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 DKK million Q2 2018 Q2 2017 2017 OPERATING CASH FLOW, DKK MILLION 374 421 1,620 REVENUE 73 176 426 EBITDA 150 104 Herd price adjustment 10 (45) 5 100 73 55 45 44 43 83 132 431 ADJUSTED EBITDA 50 22.2% 31.2% 26.6% ADJUSTED EBITDA MARGIN 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 19.6% 41.9% 26.3% EBITDA margin Interim Report Q2 2018 7 FULL-YEAR 2017 CONFERENCE CALL
Outlook 2018 FINANCIAL OUTLOOK Goodvalley maintains recently revised outlook DKK million 2018 outlook Previous 2017 actuals 2018 outlook • Revenue of DKK 1,400-1,550 million Revenue 1,400-1,550 1,500-1,700 1,620 • Adjusted EBITDA of DKK 280-325 million Adjusted EBITDA 280-325 340-425 431 Performance expected to be impacted by Reported EBITDA 2017 - - 426 • Drought and related effects • Upgrade of stables • Expanded RWA capacity • Marketing investments related to branded products 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. Interim Report Q2 2018 8 FULL-YEAR 2017 CONFERENCE CALL
Strategy EXPANDING CAPACITY TO STRENGTHEN VERTICAL INTEGRATION VALUE CHAIN BY GEOGRAPHY Slaughtering, Meat Feed Crop growing Pig production cutting and processing and production deboning marketing Bioenergy production Poland Fully integrated production Ukraine Partly integrated production Russia Partly integrated production MULTIPLE LEVERS TO DRIVE GROWTH AND ENHANCED PROFITABILITY Capacity expansion Strengthen consumer focus Optimisation New geographies Increase pig production Finalized launch of branded Expansion into selected • • • Sustainability based on Danish • products to the Polish market new markets know how Feed, land base and green energy • Improving facilities • Margin expansion and reduced Acquisitions or greenfield • • Expansion of land bank in Ukraine • Obtained Global GAP certification • exposure to bulk market with obtained farming rights Clear selection criteria • Capitalising on sustainability and • environmental protection Interim Report Q2 2018 9 FULL-YEAR 2017 CONFERENCE CALL
Questions 10
Contact information TOM AXELGAARD HANS HENRIK PEDERSEN CEO CFO FINANCIAL CALENDAR 2018 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 11 FULL-YEAR 2017 CONFERENCE CALL
Appendix 12
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