Interim results FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 AGENDA - - PowerPoint PPT Presentation

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Interim results FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 AGENDA - - PowerPoint PPT Presentation

Oct 02, 2022 177 likes •478 views

Interim results FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 AGENDA INTRODUCTION & HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL REVIEW Jim Brisby, Commercial Director OPERATING & STRATEGIC

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SLIDE 1

Interim results

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
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SLIDE 2 19 75 2 Interim Results – 6 months ended 30 September 2017 INTRODUCTION & HIGHLIGHTS Adam Couch, CEO FINANCIAL REVIEW Mark Bottomley, Finance Director COMMERCIAL REVIEW Jim Brisby, Commercial Director OPERATING & STRATEGIC REVIEW Adam Couch, CEO Q&A

AGENDA

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SLIDE 3 19 75 3 Interim Results – 6 months ended 30 September 2017

HIGHLIGHTS

TOTAL SALES VOLUME GROWTH RECORD PIG NUMBERS PROCESSED TOTAL EXPORT SALES GROWTH INVESTMENT IN ASSET BASE FOR FUTURE GROWTH +15% 1.5M +30% £29M REVENUE (£M) +23.0% 2017 2016 714.6 580.8 ADJUSTED EARNINGS PER SHARE (P)1 +20.1% 2017 2016 70.0 58.3 FREE CASH FLOW (£M) +3.4% 2017 2016 39.5 38.2 ADJUSTED PROFIT BEFORE TAX (£M)1 +17.2% 2017 2016 44.4 37.9 INTERIM DIVIDEND PER SHARE (P) +15.3% 2017 2016 15.1 13.1 NET DEBT (£M) +£13.8M 16.7 2017 2.9 2016 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2017 and 2016
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SLIDE 4 19 75 4 Interim Results – 6 months ended 30 September 2017 DIVIDEND PER SHARE (pence) ADJUSTED PROFIT BEFORE TAX 1 (£M) £64m 1.4 1.7 2.2 2.3 3.0 3.1 4.0 5.0 7.1 9.3 11.7 17.5 19.8 21.2 21.6 31.1 32.733.0 43.8 0.9 47.3 45.6 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 £116m £157m £313m £740m 49.1 52.2 57.8 64.4 '17 £1,245m £1,005m 75.5 34.7 REVENUE 27 YEARS OF UNBROKEN DIVIDEND GROWTH 1. Excludes IAS41 movements on biological assets and acquisition related amortisation in 2017 and 2016.

TRADING RECORD

1990 – 2017 34.0 37.5 3.3 3.8 4.0 4.1 4.3 4.6 5.1 5.8 6.8 7.5 8.3 10.8 12.0 13.2 14.5 16.5 18.1 19.9 21.7 25.0 27.5 28.5 30.0 2.8 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 32.0 '14 '15 '16 '17 44.1
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SLIDE 5 19 75 5 Interim Results – 6 months ended 30 September 2017

HIGHLIGHTS

  • Total revenue ahead by 23%
  • Record H1 capital expenditure of £29m to add capacity,
extend capability and drive effjciencies
  • Board approval for class-leading £54m primary poultry
facility with further £13m associated investment to upscale existing milling and hatchery facilities
  • New £28m Continental Foods facility progressing to plan
  • Strong growth in poultry category following new product
launches and retail listings
  • Interim dividend up 15.3% to 15.1p per share
Compound annual growth rates to 31 March 2017 REVENUE +9.3% ADJUSTED EARNINGS PER SHARE +9.2% ADJUSTED PROFIT BEFORE TAX +8.7% DIVIDEND PER SHARE +9.3% 10 YEAR RECORD
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SLIDE 6 19 75 6 Interim Results – 6 months ended 30 September 2017 1. Like-for-like revenue excludes the contribution from Crown Chicken prior to 8 April and from Ballymena in the current period
  • 2. Excludes IAS 41 movement on biological assets in both periods
  • 3. Excludes acquisition related amortisation in both periods

FINANCIAL SUMMARY

£M 2017 2016 % CHANGE Revenue 714.6 580.8 23.0% Like-for-like revenue 1 685.1 580.8 18.0% Adjusted gross margin 2 12.9% 13.4% 45bps Adjusted operating profjt 2, 3 44.6 38.2 16.8% Adjusted operating margin 2, 3 6.2% 6.6% 34bps Adjusted profjt before tax 2, 3 44.4 37.9 17.2% Adjusted earnings per share 2, 3 70.0p 58.3p 20.1% Dividend per share 15.1p 13.1p 15.3%
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SLIDE 7 19 75 7 Interim Results – 6 months ended 30 September 2017 £M 2017 2016 Cash generated from operations 46.6 45.2 Tax paid (7.0) (6.8) Net cash from operating activities 39.6 38.4 Net capital expenditure (29.3) (24.3) Acquisitions (4.0) (39.3) Disposals – 14.5 Interest paid (0.1) (0.2) Share issues 0.1 0.1 Dividend paid (11.9) (9.5) Net cash outfmow (5.6) (20.3) Net debt (16.7) (2.9) NET CAPEX (£M) 2017 2016 Fresh pork 5.7 6.1 Convenience 17.4 13.2 Gourmet products 4.2 3.3 Poultry 2.0 1.5 Other – 0.2 Net capex 29.3 24.3 NET DEBT BRIDGE (£M) A d j u s t e d E B I T D A 100 120 80 60 40 20
  • 20
W
  • r
k i n g c a p i t a l T a x a t i
  • n
A c q u i s i t i
  • n
s / d i s p
  • s
a l s N e t c a p e x D i v i d e n d s O t h e r S e p t 2 1 7 S e p t 2 1 6 (2.9) 26.8 19.7 15.0 51.5 2.4 (16.7) 17.0 113.8

CASH FLOW

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SLIDE 8 19 75 8 Interim Results – 6 months ended 30 September 2017 £M 2017 2016 Property, plant & equipment 229.1 204.4 Intangible assets 157.3 147.6 Biological assets 21.2 18.3 Working capital 83.0 53.4 Net debt (16.7) (2.9) Tax, grants, provisions, pensions (26.0) (27.8) Net assets 447.9 393.0 KEY METRICS 2017 2016 ROCE 1 18.7% 18.9% Gearing 3.7% 0.7% Interest cover 200x 126x Net debt/adjusted EBITDA 0.15x 0.03x Acquired goodwill 10.2 Acquired customer relationships 1.7 Acquisition related amortisation (2.2) Net movement 9.7 Acquisitions 5.9 Inventories 8.9 Receivables 18.8 Payables (4.0) Net movement 29.6 1. Adjusted operating profit divided by sum of average net assets, net debt, pension liabilities & deferred tax.

BALANCE SHEET

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SLIDE 9 19 75 9 Interim Results – 6 months ended 30 September 2017

STRONG PERFORMANCE ACROSS ALL METRICS

FY15 FY17 FY16 H1 FY18 10% 12% 11% 13% 14% ADJUSTED OPERATING MARGIN ADJUSTED GROSS MARGIN ROCE ADJUSTED EBITDA (£M) FY15 FY17 FY16 H1 FY18 5.0% 6.0% 5.5% 6.5% 7.0% FY15 FY17 FY16 H1 FY18 16% 17% 18% 19% 12.4 5.8 17.0 13.4 6.4 18.2 12.8 12.9 6.1 6.2 19.0 18.7 H1 FY18 60 40 20 80 100 120 FY15 FY16 FY17 H1 H2 42.2 34.8 45.7 40.2 61.5 51.4 52.3
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SLIDE 10 19 75 10 Interim Results – 6 months ended 30 September 2017 FREE CASH FLOW NET CAPEX ACQUISITION / (DISPOSAL) DIVIDEND PAID CASH INFLOW / (OUTFLOW)* H1 2018 39.5 29.3 4.0 11.9 (5.7) FY 2017 72.4 46.5 40.5 14.6 (29.2) 2016 83.4 33.5 – 14.6 35.3 2015 52.7 20.4 17.7 15.3 (0.7) 2014 59.1 27.4 14.4 12.7 4.6 2013 49.0 30.5 5.8 11.4 1.3 2012 43.4 19.9 (14.5) 11.8 26.2 2011 50.0 33.9 – 10.5 5.6 449.5 241.4 67.9 102.8 37.4 * Excludes the proceeds from the issue of share options.

CASH GENERATION AND BANKING FACILITY

BANKING FACILITY £160m revolving credit facility with four major UK banks Includes committed
  • verdraft of £20m
Option to access further £40m on same terms To November 2022 with opportunity to extend for a further year Unsecured 4.8 2015 16.7 2017 2016 2.9 CASH GENERATION 2011–2018 (£M) H1 NET DEBT PROFILE
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SLIDE 11 19 75 11 Interim Results – 6 months ended 30 September 2017 CRANSWICK PERFORMANCE Core category growth Poultry development Out of home & wholesale growth TRENDS Retail recovery Health and convenience Out of home OUTLOOK Strategic partnerships Poultry strategy Innovation

COMMERCIAL UPDATE

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SLIDE 12 19 75 12 Interim Results – 6 months ended 30 September 2017 5 10 15 20 25 30 SYMBOLS & INDEPENDENTS MARKS & SPENCER LIDL ALDI ICELAND OTHER MULTIPLES THE CO-OPERATIVE WAITROSE MORRISONS ASDA SAINSBURY’S TESCO GROWTH % GROCERY MARKET SHARE RETAILER PERFORMANCE – TOTAL TILL ROLL 3.0 1.9 1.6 1.4 17.3 2.1
  • 1.5
15.7 4.2 3.0 4.9 1.9 % SHARE NOVEMBER 2017 % SHARE NOVEMBER 2016 JAN 15 APR 15 JUL 15 OCT 15 JAN 16 APR 16 JUL 16 OCT 16 JAN 17 APR 17 JUL 17 SALES VALUE SALES VOLUME 6 4 2
  • 2
GROWTH, LAST 3 MONTHS ON SAME 3 MONTHS A YEAR AGO (%)

RETAILER TRENDS

Overall grocery market growth @ 3.6% Top 4 retailers returned to growth Discounter growth continues Impact of infmation evident Corporate activity SOURCE: Kantar, 12 w/e 5 November 2017 SOURCE: Kantar, September 2017
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SLIDE 13 19 75 13 Interim Results – 6 months ended 30 September 2017

CHANGING TASTES

Premium tiers ahead of total categories Provenance key for consumers Allows retailers to difgerentiate PREMIUM CATEGORY GROWTH (%) Consumers seeking quick and easy solutions Average meal preparation time under 30 minutes Demand for high quality, modern meal solutions Increasingly important for consumers Pressure on food industry to address challenges An opportunity for the category Premium growth Convenience Health Total Premium BACON RASHERS SAUSAGE GAMMON COOKED MEAT PASTRY 10 20 FOR MIDWEEK MEALS… n “ I use a combination of ready prepared and fresh ingredients” n “ I cook from scratch” n “ I have ready meals, take-aways
  • r eat out” 45+35+23
44% 34% 22% VERY/FAIRLY CONCERNED ABOUT MY/FAMILY HEALTH PROPORTION OF MEALS CHOSEN FOR HEALTH REASONS SOURCE: Kantar, 52 w/e 8 October 2017 / IGD ShopperVista 2017

70% 38%

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SLIDE 14 19 75 14 Interim Results – 6 months ended 30 September 2017

OUT OF HOME

Growth continues in out of home eating Average consumer visits
  • utlets 5x per week
Increased choice and proliferation
  • f outlets continues
£1.5bn growth via ‘food to go’ channels And ‘dining out’ occasion drives £1bn increase SOURCE: Kantar, October 2017 38% 21% 12% 29% n Main Meal n Quick Meal n Snack n Drinks BREAKDOWN OF SPEND £49bn +4% CHANNEL GROWTH Quick Service Restaurant +£698m (+7%) Cofgee Shop +£501m (+9%) Pubs & Bars +£439m (+7%) Full Service Restaurant +£366m (+6%) Multiple Retailers (inc. Café & Forecourt) +£114m (+2%) Bakery & Sandwich +£20m (0%) High Street +£16m (+2%) Hotels
  • £25m (-2%)
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SLIDE 15 19 75 15 Interim Results – 6 months ended 30 September 2017

CRANSWICK PERFORMANCE

CORE CATEGORIES +23% POULTRY GROWTH +27% FOODSERVICE & WHOLESALE +37% Fresh pork growth Gourmet categories +28% New meal solutions driving convenience division Increasing share of business Innovative, fast growth customers Long term supply agreements Internal supply increased to 20% New customers for fresh chicken Retail cooked poultry launched

72+24+6

GROWTH 19% GROWTH 30% GROWTH 37% 71% 23% 6% n Retail Share n Food Service & Wholesale Share n Export Share
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SLIDE 16 19 75 16 Interim Results – 6 months ended 30 September 2017 *SOURCE: Kantar Worldpanel, 52 w/e 8 October 2017

COMMERCIAL DATA

NOTES: (i) Like-for-like Fresh Pork sales exclude the contribution from Ballymena. Including Ballymena, total Fresh Pork sales growth was +26.3%. Fresh Pork retail sales +5.4%, volume -9.2% (ii) Convenience comprises Cooked Meats and Continental Foods (iii) Gourmet Products comprises Sausage, Bacon and Pastry (iv) Poultry comprises Fresh and Cooked Poultry. Like-for-like Poultry sales exclude the contribution from Crown Chicken prior to 8 April. Including Crown Chicken prior to 8 April, total Poultry sales growth was +26.6% CRANSWICK SALES H1 2017-18 MARKET* ANNUAL SALES 2016-17 CATEGORY CHANGE CHANGE VALUE VOLUME VALUE VOLUME Fresh Pork (i) +12.8% +0.6% +1.3%
  • 1.3%
Convenience (ii) +17.2% +9.7% +0.9% +0.5% Gourmet Products (iii) +27.7% +24.0% +1.9% +1.3% Poultry (iv) +21.3% +16.5% +3.0% +5.6% Super premium +9.0%
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SLIDE 17 19 75 17 Interim Results – 6 months ended 30 September 2017 Long-term agreements Aligned supply chains Dedicated facilities and teams Relevant products Packaging and process Agricultural R&D Signifjcant growth plans New investment Added value opportunities

POSITIVE OUTLOOK

STRATEGIC PARTNERSHIPS POULTRY STRATEGY INNOVATION
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SLIDE 18 19 75 18 Interim Results – 6 months ended 30 September 2017 GUIDING PRINCIPLES STRATEGIC PILLARS CONSOLIDATION DRIVING THE CORE DIVERSIFICATION EXPANDING OUR OFFER INTERNATIONAL DEVELOPING NEW OPPORTUNITIES HIGH QUALITY PRODUCTS SALES GROWTH SUSTAINABILITY QUALITY PEOPLE VALUE INNOVATION OPERATING EXCELLENCE

STRATEGY & BUSINESS MODEL

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SLIDE 19 19 75 19 Interim Results – 6 months ended 30 September 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Market share gains Long-term relationships Building additional capacity Ballymena investment Investment in UK pig herd Waste reduction and energy effjciency initiatives Record capital expenditure to enhance capability New £28m facility for Continental Foods Stronger throughput drives
  • perating effjciencies
Focus on premium Business wins based
  • n quality
Strong innovation pipeline DRIVING THE CORE BUSINESS

CONSOLIDATION

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SLIDE 20 19 75 20 Interim Results – 6 months ended 30 September 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong growth category New retail business Approval for new £54m poultry facility Integrated supply chain Low food miles adding to product quality Strong environmental and welfare credentials Drive effjciency through farm to fork model Optimise value of whole birds and portions Stronger throughput drives
  • perating effjciencies
Focus on premium tier From fresh to cooked added value Retail and
  • ut-of-home ranges
SIGNIFICANT GROWTH POTENTIAL THROUGH POULTRY STRATEGY

DIVERSIFICATION

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SLIDE 21 19 75 21 Interim Results – 6 months ended 30 September 2017
  • Approval for £54m investment in new, state-of-the-art,
poultry facility
  • 18,000 square metre processing factory to be built
  • n 40 acre site in Eye, Sufgolk
  • Approval for £13m expansion of existing milling, hatchery
and rearing operations
  • Double processing capacity with further room for expansion
  • Vertically integrated supply chain and additional capacity
to provide opportunities with retail customers
  • In-line chilling of all production will improve quality and
consistency of product
  • Fresh and added value poultry markets growing strongly
  • Incorporates highest animal welfare standards
INVESTING IN POULTRY

DIVERSIFICATION

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SLIDE 22 19 75 22 Interim Results – 6 months ended 30 September 2017 Weekly tonnage from 4.5k to 7k 100% self suffjcient for poultry feed Continue to develop feed for pigs and game Double capacity at hatchery All chicks to be managed through internal supply chain Proposed development at Kenninghall Increase from 26 farms to 45 farms Allocate dedicated farms and sheds to key retailers Retro-fjt all sheds with natural light to further improve welfare position MILLING HATCHERY FARMS POULTRY SUPPLY CHAIN

DIVERSIFICATION

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SLIDE 23 19 75 23 Interim Results – 6 months ended 30 September 2017 SALES GROWTH HIGH QUALITY PRODUCTS OPERATING EXCELLENCE SUSTAINABILITY Strong export sales growth Weaker sterling makes exports more competitive Developing direct relationships Higher welfare a key difgerentiator Emerging markets Develop international
  • perations
Effjcient production
  • f 5th quarter
Multiple accreditations Shanghai offjce Reputation of British
  • utdoor bred pork
Pre packed, higher welfare products for China Prime cuts to Europe, Japan & Australia EXPANDING OUR FOOTPRINT

INTERNATIONAL

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SLIDE 24 19 75 24 Interim Results – 6 months ended 30 September 2017

RECORD CAPITAL INVESTMENT TO ADD CAPACITY, DRIVE EFFICIENCY AND ENHANCE CAPABILITY

CROWN CHICKEN SUFFOLK CONTINENTAL FOODS MANCHESTER FRESH PORK HULL AND BALLYMENA AGRICULTURE NORFOLK New processing site £54m Expansion of hatchery and mill £13m Pig herd expansion £4m Site upgrades £9m New site £28m
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SLIDE 25 19 75 25 Interim Results – 6 months ended 30 September 2017 FRESH POULTRY FRESH BEEF FRESH PORK FRESH LAMB FRESH BACON & GAMMON FRESH SAUSAGE SLICED COOKED MEATS £7.86 0.00 2.00 October 2017 October 2016 4.00 6.00 8.00 10.00 £4.66 £4.53 £8.38 FRESH CHICKEN FRESH PORK FRESH BEEF FRESH LAMB £7.81 £8.12 SOURCE: Kantar Worldpanel, 52 week data to October 2017 UK EU SPAIN DENMARK GERMANY POLAND FRANCE NETHERLANDS 20 40 60 80 100 120 140 SOURCE: AHDB, 52 week data to 8 October 2017 EXPENDITURE SHARE PIG PRICE – UK & EU p/kg 52 WEEK PIG REF PRICE p/kg

PIG PRICES & MARKET

UK RETAIL AVERAGE PRICE (£/kg) 2017 2016 2015 2014 2013 120 150 170 130 160 180 110 140 100 90 80 EU SPP DAPP 160 £4.15 £4.28

26+24+8+6+13+6+21

25% 23% 8% 6% 12% 6% 20%
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SLIDE 26 19 75 26 Interim Results – 6 months ended 30 September 2017 Strong revenue & earnings growth Strong balance sheet & cash generation Strong growth in poultry sales Board approval for £67m investment in poultry facilities New £28m facility for Continental Foods Record H1 capital expenditure
  • f £29m in core asset base
Pork & chicken competitively priced Gaining market share Growth strategy
  • n track

Strong Performance Ongoing Investment Positive Outlook

SUMMARY – STRONG H1 PERFORMANCE

SALES GROWTH OPERATING EXCELLENCE HIGH QUALITY PRODUCTS SUSTAINABILITY
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SLIDE 27 19 75 27 Interim Results – 6 months ended 30 September 2017 Certain statements in this presentation are forward looking
  • statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause actual results or events to difger materially from those expressed or implied by those statements. Forward-looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements.

DISCLAIMER

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SLIDE 28 19 75 28 Interim Results – 6 months ended 30 September 2017

APPENDIX 1

ADJUSTED & REPORTED EARNINGS £M 2017 2016 Adjusted operating profjt 44.6 38.2 Net IAS 41 movement 1.2 3.6 Acquisition related amortisation (1.1) (1.0) Operating profjt 44.7 40.8 Profjt before tax 44.5 40.5 Profjt after tax 35.6 31.3
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SLIDE 29 19 75 29 Interim Results – 6 months ended 30 September 2017

APPENDIX 2

TAX & EARNINGS PER SHARE TAX % 2017 2016 Headline tax rate 19.0 20.0 Disallowed expenses 0.9 1.2 Other 0.2 1.5 Efgective rate (continuing operations) 20.1 22.7 Discontinued operations – (2.3) Efgective rate (inc. discontinued operations) 20.1 20.4 EARNINGS PER SHARE PENCE 2017 2016 On adjusted profjt for the period 70.0 58.3 Acquisition related amortisation (2.2) (2.0) Net IAS 41 movement 2.4 7.1 Tax impact – (0.9) On reported profjt for the period 70.2 62.5