Astral Foods Limited · JSE:ARL
Astral Foods — FY2014 Earnings Presentation
57 slides from Astral Foods's earnings presentation, September 2014
Slide 1: Annual Results Presentation
Annual Results Presentation for the year ended 30 September 2014
Slide 2: Agenda
AGENDA Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q&A 2 2
Slide 3: Business Overview
BUSINESS OVERVIEW 3
Slide 4: The Period in Perspective: Financial Indicators
THE PERIOD IN PERSPECTIVE The period under review reflects an improved performance compared to one of the worst trading periods during the past decade experienced by the poultry industry Revenue 13% Operating profit 88% Financial Indicators Earnings per share 62% Headline earnings per shar
Slide 5: The Period in Perspective
THE PERIOD IN PERSPECTIVE Continued high total poultry imports, increasingly from Europe (June 2014 ≈ 7 million bpw with local production at 19 million bpw – refer slides 30 and 31) Record high local maize prices in February, March and April 2014 not in line with CBOT corn prices (refer slide 53
Slide 6: The Period in Perspective
THE PERIOD IN PERSPECTIVE A solid performance from the Feed division and an improved performance from the Poultry division have contributed positively to the Group’s earnings The Group’s integrated best cost business model proved its value with the business remaining more profitable versus an in
Slide 7: Poultry Division
POULTRY DIVISION 7
Slide 8: Poultry Division - Overview
POULTRY DIVISION - OVERVIEW Revenue - R million Operating profit - R million 8 000 130 7 000 6 967 6 000 80 104 6 001 5 000 30 4 000 3 000 (20) 2 000 (70) 1 000 (112) - (120) F2013 F2014 F2013 F2014 Revenue up 16% Operating profit up 193% • Broiler volumes up 7% • Net margin 1.5% F2013: (1.9%) •
Slide 9: Poultry Division - Overview
POULTRY DIVISION - OVERVIEW Average broiler feed prices increased year-on-year by 2.3% Broiler selling prices increased year-on-year by 7.9% Product mix improvement with IQF reducing by 1% and fresh and value added increasing by 1% and 2% respectively Broiler sales volumes increased year-on-
Slide 10: Poultry Division – Sales
POULTRY DIVISION – SALES Product Mix F2013 F2014 22% 22% 4% 3% 378 821 Tons 406 819Tons 56% 55% 7% 9% 9% 10% 3% 3% 10 10
Slide 11: Broiler Production Performances
BROILER PRODUCTION PERFORMANCES 120% 115% 110% 105% 100% 95% 90% 85% 80% 75% Key indicators base-lined to 100% in 2009 70% F2009 F2010 F2011 F2012 F2013 F2014 Mortality Feed conversion (FCR) Efficiency factor (PEF) 11 11
Slide 12: Broiler Production Performances
BROILER PRODUCTION PERFORMANCES 106% 105% (37.0 days) 104% 103% 102% 101% 100% 99% (34.3 days) 98% 97% 96% Key indicators base-lined to 100% in 2008 Key indicators base-lined to 100% in 2009 95% F2009 F2010 F2011 F2012 F2013 F2014 Slaughter age Live weight Processing yield 12 12
Slide 13: Poultry Division - Prospects
POULTRY DIVISION - PROSPECTS Projected lower feed costs in at least the first half of the new reporting period Broiler production efficiency improvement expected to continue Volume growth to approximately 5 million birds per week from October 2014 Improved product mix from the “Tydstroom” vo
Slide 14: Feed Division
FEED DIVISION 14
Slide 15: Feed Division - Overview
FEED DIVISION - OVERVIEW Revenue - R million Operating profit - R million 6 000 400 5 506 350 5 000 354 4 916 300 329 4 000 250 3 000 200 150 2 000 100 1 000 50 - - F2013 F2014 F2013 F2014 Revenue up 12% Operating profit up 7% • Sales volumes up 5% • Net margin 6.4% F2013: 6.7% • Avg. realisatio
Slide 16: Feed Division - Overview
FEED DIVISION - OVERVIEW Feed volumes increased by 4.5% due to higher inter-group volumes (up 12.9%) Rand per ton margin increased on prior year despite a competitive landscape Inflationary costs were successfully recovered from the market On-going management of credit risk Commissioning o
Slide 17: Feed Division – Sales
FEED DIVISION – SALES Meadow Feeds - Sales Mix F2013 F2014 18% 16% 1 217 774 Tons 49% 1 272 298 Tons 22% 53% 22% 11% 9% 17 17
Slide 18: Feed Division - Prospects
FEED DIVISION - PROSPECTS Recently harvested maize crop of 14,3 million tons – highest on record Softening of grain prices will benefit feed prices and livestock production costs External feed sales drive with due regard to credit risks Continued focus to invest in new cost saving technologi
Slide 19: Other Africa Division
OTHER AFRICA DIVISION 19
Slide 20: Other Africa Division - Overview
OTHER AFRICA DIVISION - OVERVIEW Revenue - R million Operating profit - R million 50 500 45 499 45 40 400 442 35 35 30 300 25 20 200 15 100 10 5 - - F2013 F2014 F2013 F2014 Revenue up 13% Operating profit down 23% • Volumes up 4% • Net margin 7% F2013: 10.2% • Avg. realisations up 8% • Tiger Ani
Slide 21: Other Africa Division - Overview
OTHER AFRICA DIVISION - OVERVIEW Zambia Profitability at Tiger Animal Feeds impacted negatively by unfavourable raw material positions and the management thereof in 1H2014 Recovery in earnings in 2H2014 at Tiger Animal Feeds in line with expectations Tiger Chicks sales volumes increased by 79%
Slide 22: Other Africa Division Profit Segmentation
OTHER AFRICA DIVISION PROFIT SEGMENTATION F2013 Country PBIT Contribution F2014 Country PBIT Contribution 14% 23% R45 million R35 million 47% 22% 64% 30% 22 22
Slide 23: Other Africa Division - Prospects
OTHER AFRICA DIVISION - PROSPECTS Zambia Maize and soya prices are at lower levels with Tiger Animal Feeds well positioned to take advantage of these The continued expansion of feed and day old chick outlets will improve product availability and competitive feed prices direct to farm Mozambique
Slide 24: Industry Trends
INDUSTRY TRENDS 24
Slide 25: SAFEX Yellow Maize Price
SAFEX YELLOW MAIZE PRICE F2010 F2011 F2012 F2013 F2014 Source: CJA Strategic Risk Brokers 25 25
Slide 26: SAFEX Soya Beans Price
SAFEX SOYA BEANS PRICE F2010 F2011 F2012 F2013 F2014 26 Source: CJA Strategic Risk Brokers 26
Slide 27: Industry Broiler Selling Prices
11.00 11.50 12.00 12.50 13.00 13.50 14.00 14.50 15.00 15.50 16.00 16.50 17.00 17.50 18.00 Oct-09 13.22 Source: SAPA 13.47 Dec-09 13.41 12.70 Feb-10 11.96 Rand per kilogram 11.95 Apr-10 11.75 12.22 Jun-10 11.75 11.76 Aug-10 12.29 11.83 Oct-10 12.33 12.83 Dec-10 13.51 13.34 Feb-11 13.42 13.20 Apr-11 1
Slide 28: Broiler Price vs Food Price Inflation
Index (Oct 2009 = 100) 105 110 115 120 125 130 135 100 85 90 95 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Source: SAPA & CJA Strategic Risk Brokers Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Poultry selling price index Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 BROILER PRICE VS FO
Slide 29: Change in Broiler Selling Price vs Feed Price
10% 20% 30% 40% 0% -30% -20% -10% Oct-09 Dec-09 Feb-10 Apr-10 Source: SAPA & Own Data Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 % Change in feed price Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 CHANGE IN BROILER SELLING PRICE VS FEED PRICE Aug-13 Oct-1
Slide 30: Poultry Imports per Month
Tons - 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 Source: SAPA Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Total poultry imports Aug-11 Oct-11 Dec-11 Feb-12 POULTRY IMPORTS PER MONTH Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Au
Slide 31: Total Poultry Imports (Chicken, Turkey, MDM)
TOTAL POULTRY IMPORTS (CHICKEN, TURKEY, MDM) Tons 450 000 400 000 350 000 300 000 250 000 200 000 150 000 100 000 F2011 F2012 F2013 F2014 50 000 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep F2011 24 684 48 108 76 511 103 474 127 429 156 795 182 871 215 684 250 081 286 051 320 321 349 364 F2012
Slide 32: Financial Overview
if E = iit i tar/a fj Se ) ill FINANCIAL OVERVIEW
Slide 33: Abridged Statement of Comprehensive Income
ABRIDGED STATEMENT OF COMPREHENSIVE INCOME 2014 2013 Year ended 30 September % change R million R million Revenue 9 602 8 509 13% Operating profit 493 262 88% Operating profit margin 5.1% 3.1% Profit on sale of business unit - 46 Profit before interest and tax 493 308 60% Net finance costs (25) (27)
Slide 34: Group Annual Revenue
GROUP ANNUAL REVENUE 14.000 (R billion) 12.000 10.000 9.602 8.508 8.160 8.000 7.407 7.227 6.852 7.006 5.506 6.329 4.327 4.916 6.000 5.184 3.988 3.478 4.838 3.577 3.530 5.138 3.947 4.053 4.000 3.692 2.670 2.516 2.793 6.967 5.834 6.001 2.681 2.703 5.149 5.258 4.579 5.030 2.000 2.689 4.382 1.983 3.345
Slide 35: Poultry – Annual Revenue
POULTRY – ANNUAL REVENUE 4000 1.4 (R million) 1.2 3500 1.0 3000 0.8 2500 3650 0.6 3317 2000 2956 2952 3049 2878 0.4 2581 2606 2652 2449 1500 0.2 1000 0.0 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 Revenue Change in realisations (SAPA) Change in volumes 35 35
Slide 36: Feed – Annual Revenue
FEED – ANNUAL REVENUE 3000 1.6 2800 (R million) 1.4 2600 1.2 2400 1.0 2200 2000 0.8 2956 1800 2519 2550 0.6 2397 1600 2175 2152 0.4 1847 1400 1730 1708 1770 0.2 1200 1000 0.0 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 Revenue Change in volumes Change in feed price 36 36
Slide 37: Group Annual Operating Profit
GROUP ANNUAL OPERATING PROFIT 16.0% 880 14.8% 809 (R million) 14.0% 12.3% 12.8% 674 680 766 12.0% 581 585 597 9.6% 272 493 333 548 9.3% 477 10.0% 480 35 8.3% 8.4% 38 214 7.3% 282 8.0% 6.6% 45 389 261 280 5.9% 328 281 5.8% 151 6.7% 6.0% 203 5.1% 153 262 385 220 289 79 130 3.1% 354 4.0% 80 124 90 174
Slide 38: Group Annual Operating Profit
GROUP ANNUAL OPERATING PROFIT 375 1.5 380 133 324 304 299 1.3 20 281 280 280 151 154 24 1.1 149 130 213 197 203 229 11 0.9 25 180 153 157 20 173 18 156 0.7 134 140 135 128 124 80 59 0.5 59 45 5 0.3 -20 (R million) 0.1 -117 -120 -0.1 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 Poultry Feed Serv
Slide 39: Abridged Statement of Financial Position
ABRIDGED STATEMENT OF FINANCIAL POSITION 2014 2013 At 30 September % change R million R million Non-current assets 2 242 1 983 13% Net working capital 452 523 13% Current assets (excl. cash) 2 003 1 845 9% Current liabilities (excl. borrowings) (1 551) (1 322) 17% Non-current liabilities (excl. borr
Slide 40: Abridged Statement of Cash Flow
ABRIDGED STATEMENT OF CASH FLOW 2014 2013 For the year ended 30 September R million R million Cash operating profit 671 388 Working capital movement 33 (151) 704 237 Tax paid (100) (67) Net interest paid (37) (34) Capital expenditure (395) (235) 172 (99) Dividends paid (163) (129) Net increase in lo
Slide 41: Capital Expenditure
CAPITAL EXPENDITURE 2014 2013 Year ended 30 September R million R million Depreciation 135 123 Replacement capex 129 73 Expansion capex 275 168 Total capex 404 241 Commitments 56 Total spent and committed 460 41 41
Slide 42: Key Financial Ratios
KEY FINANCIAL RATIOS 70 30 65 60 25 55 49 50 48 51 46 45 48 20 39 39 16.5 40 37 33 36 14.5 34 13.9 15 31 31 31 30 29 30 11.4 14.8 25 26 26 10.0 12.3 12.8 11.0 21 9.3 9.9 23 20 10 9.3 8.9 7.5 19 20 9.6 7.3 9.3 7.4 13 8.3 8.4 6.5 8.0 7.8 5.8 12 5.1 6.1 4.5 5 10 5.5 5.9 5.5 4.7 4.4 4.3 4.7 4.8 3.1 4.1
Slide 43: Key Financial Indicators
KEY FINANCIAL INDICATORS 60 50 49.95 44.16 40 41.36 41.65 37.43 29 35.38 33.47 34.24 30 26 23.83 22 28.28 22 21 21 23 19 18 20 17 20 15 16 14 17.36 11 9 10 15 14.34 14 10 12 12 10.79 8.53 9 3 9 7 0 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 NAV
Slide 44: Headline Earnings per Share & Dividend per Share
HEADLINE EARNINGS PER SHARE & DIVIDEND PER SHARE 1600 (Cents per share) 1400 1381 1200 1286 1148 1000 958 960 800 890 864 840 810 787 760 700 700 700 600 631 656 585 400 487 434 440 380 326 200 272 230 222 168 90 108 0 F2001 F2002 F2003 F2004 F2005 F2006 F2007 F2008 F2009 F2010 F2011 F2012 F2013 F20
Slide 45: Industry Matters
INDUSTRY MATTERS 45
Slide 46: Industry Matters
INDUSTRY MATTERS ITAC accepted an application from SAPA for alleged dumping of poultry products from the EU after the industry showed evidence of financial harm Provisional anti-dumping duties were implemented against Germany, Netherlands and the United Kingdom on 4 July 2014, but expire on 2 Ja
Slide 47: Prospects
PROSPECTS
Slide 48: Prospects
PROSPECTS The slowing level of growth in the economy and higher unemployment levels will continue to depress consumer spending. It is of paramount importance that the EU anti-dumping measures are sanctioned on a more permanent basis by the Minister of Trade and Industry in order to stem the tide of
Slide 49: Astral's strategy statement
— \ASTRAL “Astral’s strategy is to be the best cost integrated poultry producer in selected African countries”
Slide 50: Additional Information
ADDITIONAL INFORMATION 50 50
Slide 51: South Africa - Total Maize Supply & Demand
SOUTH AFRICA - TOTAL MAIZE SUPPLY & DEMAND Marketing year (May to April) 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15E 2015/16F '000 tons Actual Actual Actual Actual Actual Estimate Forecast Carry In (1 May) 1 581 2 131 2 336 991 1 414 590 2 386 Crop Estimate 12 050 12 815 10 360 12 121 11 811 14
Slide 52: RSA Maize Carry Out and Stock to Use Ratio
RSA MAIZE CARRY OUT AND STOCK TO USE RATIO ‘000 tons 2 500 25% 22.85% 24.20% 2 000 18.62% 20% 18.13% 14.81% 1 500 15% 10.38% 1 000 10% 6.82% 500 5% 0 0% 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15E 2015/16F Carry out Maize stock to use ratio Source: CJA Strategic Risk Brokers 52 52
Slide 53: SAFEX Yellow Maize vs CBOT Corn in Rand Terms
SAFEX YELLOW MAIZE VS CBOT CORN IN RAND TERMS F2010 F2011 F2012 F2013 F2014 Source: CJA Strategic Risk Brokers 53 53
Slide 54: Local Broiler Production, Imports & Per Capita Consumption
LOCAL BROILER PRODUCTION, IMPORTS & PER CAPITA CONSUMPTION Million birds per week / Rand per kg kg 28.0 26.0 40 24.0 36 22.0 20.0 32 18.0 28 16.0 14.0 24 12.0 10.0 20 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Jun-11 Jun-12 Jun-13 Jun-14 Feb-10 Apr-10 Jun-10 Feb-11 Feb-12 Feb-13 Feb-14 Aug-10 Apr-11 Aug-11
Slide 55: Brazil & Europe Product Cost Benchmark
BRAZIL & EUROPE PRODUCT COST BENCHMARK Ex BRAZIL - November 2014 FROZEN LEG QUARTERS BULK PACKED CIF DBN US$ per ton TON 1 350.00 1 350.00 1 350.00 SA COST R/$ exchange rate R$ 10.00 10.50 11.00 Rand per ton TON 13 500.00 14 175.00 14 850.00 20 750.00 Rand per kg KG 13.50 14.18 14.85 20.75 Duty per
Slide 56: Producer Price Comparison – SA Protein
PRODUCER PRICE COMPARISON – SA PROTEIN Cents per kg 6000 Sheep 5500 5000 4500 4000 Beef 3500 3000 2500 Pork 2000 1500 Chicken 1000 Chicken Pork Beef Sheep Feed Conversion Rate 1.7 2.2 5.5 5.0 Per Capita Consumption 36.4 kg 4.6kg 17.2kg 3.2kg Source: SAPA & FNB 56 56
Slide 57: Contacts
CONTACTS Tel: +27 (0) 12 667 5468 Chris Schutte Fax: +27 (0) 86 504 2002 Chief Executive Officer Astral Foods Corporate Tel : +27 (0) 12 667 5468 Office Fax : +27 (0) 86 504 2002 92 Koranna Avenue, Email: [email protected] Doringkloof, Centurion, 0157, Gauteng, South Africa Daan Ferreira Group Fin