Sanford Limited · NZX:SAN
Sanford — FY2019 Earnings Presentation
24 slides from Sanford's earnings presentation, November 2019
Slide 1: Annual Result for the Year Ended 30 Sept 2019
ANNUAL RESULT FOR THE YEAR ENDED 30 SEPT 2019 SALT IN ‘OUR VEIN
Slide 2: Disclaimer
DISCLAIMER This presentation contains not only a review of operations, but also some forward looking statements about Sanford Limited and the environment in which the company operates. Because these statements are forward looking, Sanford Limited’s actual results could differ materially. Media relea
Slide 3: Sanford's 2019 integrated report is available
Sanford’s 2019 integrated report is available at https://www.sanford.co.nz/investors/reports-1/company- reports/ The report outlines Sanford's Business Excellence Framework – this enables each part of the business to map out its role in helping to deliver on our goals We strive to inform in a
Slide 4: Shifting the Focus onto Consumers
Shifting the Focus onto Consumers 2014 Creating value: commodity fish -> seafood -> beyond food 2019
Slide 5: Evolving our Business Model to Create Value
Evolving our Business Model TO CREATE VALUE INVESTING INTO DEVELOPING OUR VALUE CHAIN …………………………………………………………………………………………………………………………………… BMT S&OP Innovation People and Safety and Technology Operations Communication Sustainability Business Customer Marketing Consumer Strategies Processes Culture W
Slide 6: The Sanford Journey – Tackling Challenges
The Sanford Journey – Tackling Challenges People Infrastructure Consumer Preferences Climate Change & Public Perception New York Times, 4 March 2019
Slide 7: FY19: A challenging start, but value strategy enabled a satisfactory recovery
FY19 : A challenging start, but value strategy enabled a satisfactory recovery CATCH/HARVEST VOLUME REVENUE (Like for like¹) ADJUSTED EBIT² EBIT GW kg 113k GWT $558M $64.8M 56c* -4% +8% Flat +2c/kg ADJUSTED EBITDA² NPAT EPS ANNUAL DIVIDEND $85.7M $41.7M** 45C 23CPS 2% -1% Flat Stable ¹Like for like
Slide 8: FY19: Balance Sheet strengthening further
FY19 : Balance Sheet strengthening further NET DEBT DEBT / EBITDA GEARING* $130.7M 1.52x 23.6% -14% FY18 1.81x TOTAL EQUITY RETURN ON AVERAGE down from 26.6% TOTAL EQUITY $588M 7.13 % +1% Down from 7.3% Operating Cash Flow $m 80 $48.7m 60 40 20 -33% 0 FY 17 FY 18 FY19 8 * Debt/Equity
Slide 9: Value strategy driving adjusted EBIT improvement
Value strategy driving adjusted EBIT improvement Key Drivers of ADJUSTED EBIT change NZD m 80 One-off -4m Climate -4m Fair Value -3m Strategy in Action +11m 5 70 6 2 60 5 3 5 4 2 2 50 8 40 30 64.7 64.8 20 10 FY18 FY Adj San Granit Mussel Algal Salmon Algal FY18 one-off Biological Salmon Mussel Hoki
Slide 10: Wild Catch 2019
Wild Catch 2019 Wild catch sales volumes -9% Profit contribution vs LY down 3% 100 Wins 80 GWT (000’s) 60 • Upgraded sonar technology lifted catch of squid 40 • Implementation of PSH technology delivered improved 20 quality 0 FY 17 FY 18 FY 19 • Improved quality and change in production focus on Dee
Slide 11: Wild Catch Strategic Priorities
Wild Catch Strategic Priorities • Moving hoki products further up the value chain, through • Improved crew training and retention • Improved cold chain controls on vessels • PSH technology • Optimising product specifications • Upgrading inshore vessels and improving fresh fish quality using Precisio
Slide 12: King Salmon 2019
King Salmon 2019 Salmon sales volumes +16% 4,000 Profit contribution vs LY up 62% (like for like) 3,000 Wins GWT 2,000 • Sales penetration into the premium branded segment - both in NZ and the USA 1,000 • Optimised S&OP process leading to margin growth - through closer customer engagement and meetin
Slide 13: King Salmon Strategic Priorities
King Salmon Strategic Priorities • Big Glory Bay brand activation and expansion in domestic and export markets Focus on NZ, USA and Australia premium food service customers • Continued infrastructure investment to improve fish performance and quality • Volume growth investment, made possible throu
Slide 14: Greenshell Mussels 2019
Greenshell Mussels 2019 Greenshell mussel sales volumes +3% Profit contribution vs LY up 69% 40 35 Wins 30 • Strong half-shell mussel pricing GWT (000’s) 25 • Channel development has created strong demand at 20 15 increased returns 10 • Product sales mix change driving margin 5 0 • Havelock processi
Slide 15: Greenshell Mussels Strategic Priorities
Greenshell Mussels Strategic Priorities • Explore expansion of Sea to Me in USA and China • Progress selective spat breeding at SPATNZ - focus on excellent line retention from strategic spat deployments • Development of Golden Bay water space for growth and geographical risk mitigation • Build of ne
Slide 16: Sanford Marine Extracts Facility - Blenheim
Sanford Marine Extracts Facility - Blenheim Moving ‘beyond food’ through innovation • $20m+ investment • Planned opening in December 2020 16
Slide 17: Achieving Together in FY19
Achieving Together in FY19 • Elevated people engagement • Overall 72% • Safety 85% • Expanded organisational capability through training • Ongoing investment in wages • Improved communications – Toolbox Toolkit, Officers’ Conference • Development of centres of excellence in South Island • Sale of pe
Slide 18: FY19 and FY20-22 Capital Investments
FY19 Capital Investments FY20-22 Capital Investments • Capital expenditure of $38.3m, +55% vs LY • Priority areas: • Supporting the brand - more fresh fish through the Auckland Fish Market • Marine Extracts facility and equipment • ‘Beyond food’ strategy – 2 new dryers for Enzaq • Scampi vessel repl
Slide 19: Why Sanford?
Why Sanford? • Our strategy addresses major risks (changes in climate and consumer preferences) • Our strong values attract great skills • We aim to create value for all stakeholders. We focus on the following areas in 2020: Wild Catch Mussels Salmon • Channel / customer focus • Product diversificat
Slide 20: Thank you! Questions?
Ps Thank you! Questions? * 20
Slide 21: Sanford Strategy
Integrated thinking and delivery across our businesses Business Excellence Framework Sanford Strategy Sustainability as the Foundation PURPOSE AMBITION VISION We share the natural To be the Best Seafood goodness of our oceans with $1 EBIT GW kg by Company in the World uncompromising care 2023 ORGANI
Slide 22: FY19 Financial Results - GAAP to Non GAAP reconciliation
FY19 Financial Results - GAAP to Non GAAP reconciliation 2019 2018 $m $m Revenue 545.1 515.0 Gross Profit 107.4 113.9 Reported net profit (GAAP) 41.7 42.3 Add back (deduct) Net interest and tax expenses 25.5 25.8 Net (gain) on sale of investments, property, plant and equipment and intangibles (4.6)
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION Non-GAAP Profit measures Sanford's standard profit measure prepared under New Zealand GAAP is net profit. Sanford has used non-GAAP measures when discussing financial performance in this document. The Directors and management believe that these measures provide useful
Slide 24: USD FX Hedging Pattern for the Year
USD FX HEDGING PATTERN FOR THE YEAR USD Exchange Rate 2018 Year compared to 2019 Year 0.7400 0.7200 0.7000 0.6800 0.6600 0.6400 2017/2018 Spot Rates Actual Achieved 2017/2018 Av Effective Rate 2017/2018 2018/2019 Spot Rates Actual Achieved 2018/2019 Av Effective Rate 2018/2019 0.6200 Week 24