annual results presentation for the 12 months ended 30 September 2016 2016
AGENDA Business Overview [# 03] Industry Trends [# 20] Financial Overview [# 28] Industry Matters [# 39] Outlook [# 41] Additional Information [# 44] 2
business overview 2016
THE PERIOD IN PERSPECTIVE The period under review reflects a significant decrease in profitability over the prior year, on the back of higher feed prices and the inability to recover input costs Revenue 6% 50% Operating profit Financ Fina ncial ial Ind Indica icator tors 52% Earnings per share 52% Headline earnings per share 4
THE PERIOD IN PERSPECTIVE Increased poultry sales volumes despite production cutbacks Record high poultry imports ≈ 43% of local production Drop in poultry selling prices due to supply and demand imbalance Severe drought as a result of the strongest El Niño on record Rand depreciation impacting the cost of raw material imports Increase in the live bird cost due to record high feed prices Operating expenses increase year-on-year below inflation 5
THE PERIOD IN PERSPECTIVE PBIT reconciliation (R million) 1,300 1,100 900 709 700 1,101 500 207 50 300 549 100 -100 -300 -500 PBIT F2015 Internal Feed Broiler Selling Other PBIT F2016 Cost Price 6
poultry division 2016
POULTRY DIVISION - OVERVIEW Revenue - R million Operating profit - R million 10,000 700 9,000 661 9,129 600 8,740 8,000 500 7,000 6,000 400 5,000 300 4,000 3,000 200 2,000 100 1,000 59 - - F2015 F2016 F2015 F2016 Revenue up 4.5% Operating profit down 91.1% • • Broiler volumes up 4.2% Net margin 0.7% F2015: 7.6% • • Broiler selling prices down 0.6% Feed costs up 17.4% 8
POULTRY DIVISION - OVERVIEW Broiler sales volumes increased due to sales out of higher opening stock levels despite planned broiler production cutbacks during the period Broiler selling prices decreased marginally on the back of an imbalance in supply and demand leading to heightened promotional activity Continued high level of poultry imports - avg. past twelve months ≈ 8,2 million bpw (43%) with an increase in bone-in-portions from the EU Broiler feed prices increased significantly (17.4%) for the period adversely impacting the live bird production cost Improved broiler production efficiencies – feed conversion efficiency and weight for age 9
POULTRY DIVISION - SALES Product Mix 21% 21% F2016 3% 4% F2015 478 027 Tons 458 881 Tons 53% 53% Volume increase ≈ 4.2% 8% 8% 12% 11% 3% 3% 10 10
BROILER PRODUCTION PERFORMANCE 150% 140% 130% 120% 110% 100% 90% 80% Key indicators base-lined to 100% in 2010 70% F2010 F2011 F2012 F2013 F2014 F2015 F2016 Mortality Feed conversion (FCR) Efficiency factor (PEF) 11 11
BROILER PRODUCTION PERFORMANCE 104% 102% 100% 98% 96% Key indicators base-lined to 100% in 2010 94% F2010 F2011 F2012 F2013 F2014 F2015 F2016 Slaughter age Live weight Processing yield 12 12
feed division 2016
FEED DIVISION - OVERVIEW Revenue - R million Operating profit - R million 8,000 500 485 7,000 7,190 400 423 6,000 6,236 5,000 300 4,000 200 3,000 2,000 100 1,000 - - F2015 F2016 F2015 F2016 Revenue up 15.3% Operating profit up 14.7% • • Sales volumes down 2.3% Net margin 6.8% F2015: 6.8% • • Standerton – good contribution Average selling prices up 18.1% 14 14
FEED DIVISION - OVERVIEW Feed volumes decreased due to poultry production cutbacks and credit risk management in the external market SAFEX Yellow Maize – F2016 avg. R3 354 per ton (F2015: R2 367) up R987 per ton year-on-year Increased raw material costs - successfully recovered in the selling price of animal feed Rand per ton expense increases well below inflation Opportunity to optimise feed volumes amongst the three feed mills in the central region has benefited production costs Standerton feed mill contributed significantly to the division’s results with production now at 73% of rated capacity 15 15
FEED DIVISION - SALES Meadow Feeds - Sales Mix 13% 14% F2016 20% F2015 20% 1 396 301 Tons 605 066 Tons 1 429 772 Tons Volume decrease ≈ 2.3% 60% 60% 6% 7% 16 16
other africa division 2016
OTHER AFRICA DIVISION - OVERVIEW Revenue - R million Operating profit - R million 600 18 16 17 500 515 14 494 12 400 10 300 8 6 200 5 4 100 2 - - F2015 F2016 F2015 F2016 Revenue up 4.4% Operating profit down 70% • • Sales volumes down 5% Net margin 1% F2015: 3.4% • • Average selling prices up 9.9% Power outages • Exchange rate impact 18 18
OTHER AFRICA DIVISION - OVERVIEW Zambia Profitability at Tiger Animal Feeds improved for the period although negatively impacted by high diesel costs due to power outages Tiger Chicks – sales realisations under sever pressure impacted by an oversupply in the market and depressed demand Mozambique Profitability at Meadow Mozambique severely impacted by currency exchange movements Mozpintos sales volumes decreased due to weak demand under hyper- inflationary environment Swaziland Acceptable performance from National Chicks Swaziland 19 19
industry trends 2016
SAFEX YELLOW MAIZE PRICE 21 21 Source: CJA Strategic Risk Brokers
SAFEX YELLOW MAIZE vs. CBOT IN RAND TERMS 22 22 Source: CJA Strategic Risk Brokers
SAFEX SOYA BEANS PRICE 23 23 Source: CJA Strategic Risk Brokers
Source: SAPA 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 5,000 - Tons Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Total poultry imports Oct-10 Dec-10 Feb-11 Apr-11 POULTRY IMPORTS PER MONTH Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 6 per. Mov. Avg. (Total poultry imports) Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 24 24
Source: SAPA 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 18.50 19.00 19.50 Rand per kilogram Oct-10 12.33 12.83 Dec-10 13.51 13.34 Feb-11 13.42 13.20 Apr-11 13.38 13.46 Jun-11 13.18 12.79 Aug-11 12.86 13.56 Oct-11 13.91 14.90 Dec-11 15.53 INDUSTRY BROILER SELLING PRICES Broiler selling price 14.51 Feb-12 13.66 13.21 Apr-12 13.42 13.15 Jun-12 12.67 12.51 Aug-12 13.40 15.03 Oct-12 15.79 15.55 Dec-12 14.82 13.85 Feb-13 14.08 15.53 Apr-13 15.35 15.24 Jun-13 15.07 15.42 Aug-13 15.44 16.01 Oct-13 16.27 16.26 Dec-13 17.05 16.15 Feb-14 16.60 16.88 Apr-14 16.97 17.13 Jun-14 17.23 Six month average 15.94 Aug-14 16.96 16.74 Oct-14 17.44 18.48 Dec-14 18.68 17.69 Feb-15 17.93 18.32 Apr-15 18.65 19.18 Jun-15 18.82 18.23 Aug-15 18.00 17.88 Oct-15 18.28 19.26 Dec-15 19.15 18.02 Feb-16 18.33 18.05 Apr-16 18.27 18.90 Jun-16 18.57 17.93 Aug-16 18.47 18.29 25 25
BROILER PRICE vs. FOOD PRICE INFLATION 170 170 165 165 160 160 155 155 150 150 145 145 Index (October 2009 = 100) 140 140 135 135 130 130 125 125 120 120 115 115 110 110 105 105 100 100 95 95 90 90 85 85 80 80 75 75 70 70 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Broiler selling price index SA food price index Poly. (Broiler selling price index) Poly. (SA food price index) 26 26 Source: SAPA & CJA Strategic Risk Brokers
Source: SAPA & Own Data -30% -20% -10% 10% 20% 30% 40% 0% Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 CHANGE IN BROILER PRICE vs. FEED PRICE % 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 Aug-13 Oct-13 % Change in broiler selling price Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 27 27
financial overview 2016
ABRIDGED STATEMENT OF COMPREHENSIVE INCOME 2016 2015 Year ended 30 September % change R million R million Revenue 11 954 11 266 6% 50% Operating profit 549 1 101 Operating profit margin 4.6% 9.8% Net finance costs (22) (10) Share of profit in associates (1) 3 Profit before tax 526 1 094 52% Tax (154) (314) 52% Profit for the period 372 780 52% Headline earnings 373 780 EPS – Cents 964 2 013 52% 52% HEPS – Cents 965 2 016 29 29
GROUP ANNUAL REVENUE (R billion) 16.000 14.000 12.0 11.3 12.000 9.6 10.000 7.2 6.2 8.5 8.2 7.4 8.000 7.2 7.0 6.9 5.5 6.3 4.9 4.3 6.000 5.2 3.5 4.0 3.6 4.8 5.1 3.5 4.1 3.9 9.1 8.7 3.7 2.7 4.000 2.5 7.0 2.8 6.0 5.8 2.7 2.7 5.3 5.1 5.0 4.6 2.7 4.4 2.000 2.0 3.6 3.3 2.3 2.2 1.7 1.3 0.000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Poultry Feed Other Africa External revenue 30 30
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