Interim results presentation for the six months ended 31 March - - PowerPoint PPT Presentation

for the six months ended 31 March 2018

Interim results presentation

2 INTERIM RESULTS PRESENTATION 2018

AGENDA

Business Overview:

H Lourens

Financial Overview:

A Muller

Operational Overview:

H Lourens

Outlook:

H Lourens

3 INTERIM RESULTS PRESENTATION 2018

› ZAR strengthened by 6% › Large global maize stocks › Soybean meal US$ prices slightly higher › Steep egg price increases › Much smaller national layer flock › Bio-security cost increases

BUSINESS OVERVIEW

Revenue Operating profit Flat 534% HEPS Cash generated 563% R208m Interim dividend 2018 Interim dividend 2017 20c Nil

Lower raw material input costs Avian Influenza impact

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4 INTERIM RESULTS PRESENTATION 2018

RAND VS US$

10 12 14 16 18 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 11.83 11.28 12.13 13.84 14.76 13.71 13.42 13.55

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5 INTERIM RESULTS PRESENTATION 2018

SAFEX YELLOW MAIZE RAND PER TON

1 500 2 000 2 500 3 000 3 500 4 000 4 500 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 3 121 3 016 2 924 2 436 2 044 1 953 1 770 1 961

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6 INTERIM RESULTS PRESENTATION 2018

25.04 24.55 24.34 24.85 24.80 23.17 22.55

20 21 22 23 24 25 26 2012 2013 2014 2015 2016 2017 YTD March

Pre AI

AVERAGE LAYERS PER CALENDAR YEAR (MILLIONS)

Source: SAPA

24.20

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FINANCIAL OVERVIEW 2018

8 INTERIM RESULTS PRESENTATION 2018

STATEMENT OF INCOME

For the six months ended 31 March 2018 Rm 2017 Rm % change Revenue 2 035.4 2 040.9 Operating profit* 244.2 42.3 477 Income from associates 0.5 0.4 Net finance income 10.0 2.5 Profit before tax 254.7 45.2 Tax (71.5) (13.1) Profit for the period 183.2 32.1 * Operating profit includes capital items (0.2) 3.7 Adjusted operating profit 244.4 38.6 534 Adjusted operating margin 12.0% 1.9% EPS – cents 82.4 13.9 494 HEPS – cents 82.5 12.4 563

9 INTERIM RESULTS PRESENTATION 2018

Total R2 035 million (2017: R2 041 million)

REVENUE ANALYSIS

ANIMAL FEED 2017: R763m 37% EGGS 2017: R498m

25%

FARMING 2017: R675m 33% AFRICA 2017: R105m 5% R732m

36%

R607m

30%

R587m

29%

R110m

5%

10 INTERIM RESULTS PRESENTATION 2018

SEGMENT RESULTS

Adjusted operating profit for the six months ended 31 March 2018 Rm 2017 Rm Eggs 156.1 (22.0) Farming 43.7 37.2 Animal Feeds 39.0 40.4 Other African countries 10.8 (9.4) Head Office costs (5.2) (7.6) 244.4 38.6

11 INTERIM RESULTS PRESENTATION 2018

STATEMENT OF FINANCIAL POSITION

31 Mar 2018 Rm 30 Sep 2017 Rm Non-current assets 1 045.9 1 076.8 Net working capital 585.1 590.4 Non-current liabilities (228.5) (230.8) Cash 359.1 261.5 Total net assets 1 761.6 1 697.9 Borrowings (6.3) (6.3) Equity 1 755.3 1 691.6

12 INTERIM RESULTS PRESENTATION 2018

STATEMENT OF CASH FLOW

For the six months ended 31 March 2018 Rm 2017 Rm Cash operating profit 279.3 67.3 Working capital (outflow) / inflow (20.4) 50.1 Change in exchange rate (6.2) (0.1) Cash effect of hedging activities (3.8) (14.4) Tax paid (51.1) (16.2) Net finance income 10.0 2.5 Cash generated by operations 207.8 89.2 Shares repurchased (2.7) (5.9) Dividends paid (75.5) (13.8) Capital expenditure (32.4) (26.9) Proceeds from sale of assets 0.5 7.0 Net cash increase 97.6 49.5

13 INTERIM RESULTS PRESENTATION 2018

CAPITAL EXPENDITURE

R’m Approved 2018 YTD March 2018 Future cash flow Maintenance capex – SA 38.7 12.4 25.6 – Africa 14.9 7.7 7.1 Layer farms: capacity & efficiency 13.0 3.9 9.1 Broiler farms: capacity & efficiency 2.2 2.2

• Energy efficiency

5.5 1.0 4.4 Hartbeespoort broiler hatchery expansion 7.8 4.8 3.0 Layer farms: biosecurity upgrade 3.8 0.5 3.3 Zambia feed mill 10.4

• 10.4

96.2 32.4 62.9

14 INTERIM RESULTS PRESENTATION 2018

SENSITIVITIES

Effect of movement in: Impact Movement Rand value EBIT/annum Selling prices Eggs dozens R/doz Eggs 1% 17c R12m Raw material costs Maize R/ton Eggs R100 R6m Soya bean meal R/ton Eggs R100 R1m Assumptions: Feeds and farming business adjust selling prices with raw material cost changes : Egg volume of 6 million dozen per month

ANIMAL FEED EGGS AFRICA

FARMING

OPERATIONAL REVIEW

ANIMAL FEED EGGS AFRICA

FARMING

16 INTERIM RESULTS PRESENTATION 2018

› External volumes increased by 13% › Margins remained stable › Cost management & efficiencies improvement › AI effect

• Loss of internal volumes
• Additional costs incurred

NOVA FEEDS

ANIMAL FEED VOLUMES

13%

Margins stable

17 INTERIM RESULTS PRESENTATION 2018

FARMING

BROILER FARMING › Decline in parent performance › Excellent commercial broiler performance improved further › Hartbeespoort hatchery expansion on track › Broiler product * volumes increased by 6.7% › Cost base well managed * Broiler product = All day old chicks transferred and sold

FARMING OPERATIONS

BROILER PRODUCTS SOLD*

6.7%

Margins stable

18 INTERIM RESULTS PRESENTATION 2018

LAYER FARMING › AI volume effect mitigated by

• Additional capacity creation
• Dormant assets utilized
• Extending age of layers

› Higher overhead cost due to AI › Breeder performance remains above standard › Commercial rearing performance on standard › Commercial layer performance continues to improve

FARMING OPERATIONS

FARMING

19 INTERIM RESULTS PRESENTATION 2018

› Volume decline countered by price increase › Additional bio-security and logistics cost (AI) › Nominal overhead cost increase below inflation › Geographical spread mitigated AI crisis › Western Cape supplied from Gauteng › Western Cape customers short of stock only one week › All operational efficiencies improved and on target

EGG BUSINESS

EGGS VOLUMES

7%

PRICE

31%

20 INTERIM RESULTS PRESENTATION 2018

GENERAL › Economies improved in all jurisdictions › Raw material cost declined › Overall improvement in profitability

AFRICA

• perating

environment

AFRICA

UGANDA › Excellent financial performance › Breeder and commercial egg efficiencies on target › Leadership team well settled › Further investment approved ZAMBIA › Profitability above target › Mega Eggs business performed very well › Breeder farm under pressure due to disease challenge › New investment in a feed factory MOZAMBIQUE › Financial performance much improved › Mozambique egg and raw material prices trend similar to RSA › Productivity improving but still below standard › Volume increase expected for next period

21 INTERIM RESULTS PRESENTATION 2018

QUANTUM FOODS RESPONSE

› Increase in raw material prices › Slow decrease in egg prices › Increase in broiler product volumes › Increased volume and margin pressure in feeds › Continued good financial performance out of Africa

OUTLOOK