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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 releases, management commentary and analysts presentations, including those relating to the previous results announcement, are all available on the company’s website and contain additional information about matters which could cause Sanford Limited’s performance to differ from any forward looking statements in this presentation. Please read this presentation in the wider context of material previously published by Sanford Limited. 2
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 transparent and open manner and welcome feedback from our stakeholders throughout the year 3
Shifting the Focus onto Consumers 2014 2019 Creating value: commodity fish -> seafood -> beyond food
Evolving our Business Model TO CREATE VALUE INVESTING INTO DEVELOPING OUR VALUE CHAIN …………………………………………………………………………………………………………………………………… Innovation People and Safety and Technology Operations Communication Sustainability Business Customer BMT S&OP Marketing Consumer Culture Wellbeing Development Strategies Processes Business Excellence Framework Six Outcomes driving a Sustainable Business ‹#›
The Sanford Journey – Tackling Challenges People Infrastructure Consumer Preferences Climate Change & Public Perception New York Times, 4 March 2019
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 $558 M 56 c* $64.8 M -4% +8% Flat +2c/kg ADJUSTED EBITDA² NPAT EPS ANNUAL DIVIDEND $85.7M $41.7 M ** 45 C 23 CPS Flat Stable -1% 2% ¹Like for like views revenue (and gross profit) comparable to 2018 without implementing the new revenue accounting standard (NZ IFRS 15) ² See Appendix for adjusted EBIT and adjusted EBITDA reconciliation to GAAP Reported EBIT$62.6m and NPAT $41.7m *Without factors of San Granit and algal blooms, we estimate the EBIT GW kg would have been 60c ** Including gain on sale of the pelagic business of $5.1m, prior year includes earthquake insurance settlement of $6.8m
FY19 : Balance Sheet strengthening further NET DEBT DEBT / EBITDA GEARING* $130.7 M 1.52x 23.6% -14% FY18 1.81x TOTAL EQUITY RETURN ON AVERAGE down from 26.6% TOTAL EQUITY $588 M 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
Value strategy driving adjusted EBIT improvement Key Drivers of ADJUSTED EBIT change NZD m Strategy in Action +11m One-off -4m Climate -4m Fair Value -3m 80 5 70 6 2 3 5 60 5 2 4 2 50 8 40 64.7 64.8 30 20 10 FY18 FY Adj San Granit Mussel Algal Salmon Algal FY18 one-off Biological Salmon Mussel Hoki Product Marketing & Opex FY19 FY Adj EBIT Outage Bloom Bloom Salmon Value (in margin margin Cascade * Innovation Investment EBIT Model Adj Water) (Channel) investment 9 * Net of volume impact of industry voluntary shelving of Hoki (5,000 tonnes impact)
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 Deepwater Inshore Fishing partners Pelagics fillet vessels improved hoki product cascade, contributing $5m • Pelagic quota sale Wild catch sales revenue +7% • Increased engagement with our sharefishers 400 6 300 $ millions 4 200 2 Headwinds FRESH 100 0 0 • San Granit outage ($4.1m negative EBIT impact) FY 17 FY 18 FY 19 • Capacity constraints (inshore) and vessel outages Deepwater Inshore Fishing partners FROZEN • Toothfish pricing down due to an oversupply in the Pelagics Rev $/GWkg North American market • Reduced Hoki availability 10
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 Precision Seafood Harvesting (PSH) net technology • Continue deepwater vessel improvement programme FY20 Outlook: Positive • • FRESH Expected cascade improvement for hoki over the Scampi vessels replacement following year with further investment, offsetting • Continue optimising land based processing - hoki TACC reduction automation, climate control FROZEN • Increased vessel avilablity • Market prices expected to generally remain flat 11
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 meeting FY 17 FY 18 FY 19 consumer demands • Increased return on the core business Salmon sales revenue +23% • 60 15 Greater volume available over Q4 post algal bloom 15 50 event 14 Rev $/ GWkg $ millions 40 14 30 13 13 Headwinds 20 12 10 • Salmon did not grow as expected in Q2 and Q3 due to 12 - 11 algal bloom in Big Glory Bay – partially offset by strong FY 17 FY 18 FY 19 SALMON growth in Q4 12
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 through BGB nitrogen variation. Utilisation of stage 1 nitrogen cap is expected by 2022 and full utilization by 2024 • Investment in a Recirculation Aquaculture System Hatchery for increased smolt supply and security of supply FY20 Outlook: Positive • Increased capital spend on asset rejuvenation SALMON and increased volumes • Increased mitigation of environmental impact 13
Greenshell Mussels 2019 Greenshell mussel sales volumes +3% Profit contribution vs LY up 69% 40 35 Wins 30 • GWT (000’s) Strong half-shell mussel pricing 25 • 20 Channel development has created strong demand at 15 increased returns 10 • Product sales mix change driving margin 5 0 • Havelock processing plant yields were strong, with FY 17 FY 18 FY 19 increased processing efficiency Greenshell mussel sales revenue +13% • Consents for marine farms in Golden Bay 120 4 100 Headwinds 3 $ millions Rev $/ GWkg 80 • Warmer waters – biofouling in Coromandel leading to 60 2 poorer yielding product 40 • 1 Algal bloom in Marlborough impacting supply, MUSSELS 20 mitigated partially by geographic spread of farms - - FY 17 FY 18 FY 19 14
Greenshell Mussels Strategic Priorities • Explore expansion of Sea to Me in USA and China • Progress selective spat breeding at SPAT NZ - focus on excellent line retention from strategic spat deployments • Development of Golden Bay water space for growth and geographical risk mitigation • Build of new marine extracts plant FY20 Outlook: Positive • Continued strong demand and channel diversification is keeping returns high • Marine extracts demand continues to grow with our expanding range • Expected algal blooms to be mitigated with scheduling of MUSSELS harvesting and geographical spread of farms 15
Sanford Marine Extracts Facility - Blenheim Moving ‘beyond food’ through innovation • $20m+ investment • Planned opening in December 2020 16
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 pelagic assets in Tauranga • Launched / built Big Glory Bay, Sea to Me, and Sanford and Sons at the Auckland Fish Market Our focus on people will continue as a priority in FY20 17
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