Annual Results Presentation for the 12 months ended 30 September - PowerPoint PPT Presentation

Annual Results Presentation for the 12 months ended 30 September 2019

AGENDA  Business Overview Page 3 / Slide 3  Operational Overview Page 5 / Slide 8  Industry Matters Page 14 / Slide 26  Financial Overview Page 16 / Slide 29  Outlook Page 22 / Slide 41  Additional Information Page 24 / Slide 45 2 2

BUSINESS OVERVIEW Chris Schutte

Busi Busine ness ss Ope peration onal al Financial Financ al In Indust stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view SALIENT POINTS  Feed input costs increased markedly on higher maize prices, due to a smaller maize crop following poor crop yields for 2019  Poultry production efficiencies were maintained in line with projections  Poultry selling prices decreased for the period under review, leading to an under recovery on higher input costs  Extraordinary cost increases associated with; load shedding, violent industrial action in KwaZulu-Natal, and the newly legislated national minimum wage  Water supply interruptions to Astral’s processing plant in Standerton resulted in a significant cost, impacting profitability for the period under review 4

Busine Busi ness ss Ope peration onal al Financ Financial al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view KEY FINANCIAL INDICATORS  Revenue 4%  Profit before interest and tax 55% 55%  Earnings per share @ 1 659 cps  Headline earnings per share @ 1 674 cps 55% 56%  Total dividend for the year @ 900 cps 5

Busine Busi ness ss Ope peration onal al Financ Financial al In Indust stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view DIVISIONAL OVERVIEW Feed Poultry  Raw material costs up  Feeding cost increased  Less internal feed required  Bird performance improvement  External sales volumes down  Broiler sales volumes up  Expenses well controlled  Broiler sales realisations down  Improved Rand per ton margin  Extraordinary cost impacts Other Africa  Lower profits – weaker performances from Mozambique and Zambia 6

Busi Busine ness ss Ope peration onal al Financ Financial al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view THE YEAR IN PERSPECTIVE (R million) 2 500 2 000 569 203 258 1 500 26 223 349 1 000 1 942 500 882 R1 060 million 0 PBIT F2018 Raw material conversion Broiler sales Broiler selling Extraordinary Other PBIT F2019 efficiency volumes expenses Feed prices cost 7

Andy Crocker

Busine Busi ness ss Ope peration onal al Financ Financial al In Indust stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view FEED DIVISION Revenue - R million Operating profit - R million 7 000 500 489 450 6 574 457 6 000 6 198 400 5 000 350 300 4 000 250 3 000 200 150 2 000 100 1 000 50 - - F2018 F2019 F2018 F2019   Revenue up 6.1% Operating profit up 7.2% • • Raw material costs up Net margin 7.4% F2018: 7.4% • • Average selling prices up 9.7% Expenses well controlled • • Sales volumes down 3.3% Rand per ton margin up 9

Busine Busi ness ss Ope peration onal al Financ Financial al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view FEED DIVISION  SAFEX yellow maize prices increased markedly for the period under review F2019 avg. R2 638 per ton (F2018: R2 098) up R540 per ton y-o-y  Internal feed sales decreased by 3.0% due to improved broiler feed conversion rates, coupled with broiler production cutbacks  External feed sales decreased by 3.7% as livestock sectors came under pressure from higher feed costs and producers moved for lower feed prices  Expenses were well contained to an increase of 5.9% across the division for the period under review  The average net margin increased (on a Rand per ton basis) for the period under review 10

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view FEED DIVISION – SALES MIX 12% 14% F2018 22% F2019 21% 1 410 283 Tons 1 364 233 Tons Volume decrease ≈ 3.3% 60% 60% 6% 5% 11

Busi Busine ness ss Ope peration onal al Financial Financ al In Indust stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view SAFEX YELLOW MAIZE PRICE 12 Source: CJA Strategic Risk Brokers

Busi Busine ness ss Ope peration onal al Financial Financ al In Indust stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view DURBAN SOYA MEAL PRICE 13 Source: CJA Strategic Risk Brokers

Commercial

Busi Busine ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view POULTRY DIVISION - CONSOLIDATED Revenue - R million Operating profit - R million 11 000 1 500 10 877 1 400 1 453 10 000 10 604 1 300 9 000 1 200 1 100 8 000 1 000 7 000 900 6 000 800 700 5 000 600 4 000 500 3 000 400 300 371 2 000 200 1 000 100 - - F2018 F2019 F2018 F2019   Total revenue up 2.6% Operating profit down 74.5% • • Broiler sales volumes up 2.6% Broiler feed price up 7.7% • • Broiler sales realisations down 2.0% Net margin 3.4% F2018: 13.7% • Breeder revenue up R237 million 15

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view POULTRY DIVISION - COMMERCIAL  Profits for the period under review declined significantly on the comparable year  Broiler selling prices decreased on subdued consumer demand and deeper promotional activity in the market, leading to an under recovery of higher input costs  Broiler slaughter numbers at an average of 5 million birds per week were marginally down by 0.8% year-on-year  Broiler sales volumes up with sales realisations decreasing on the comparable period  Inflationary expense increases were exacerbated by the impact of load shedding nationally, water supply interruptions in Standerton and the newly legislated minimum wage 16

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view POULTRY DIVISION – PRODUCT MIX 22% 23% F2018 F2019 49% 7% 51% 437 506 Tons 448 944 Tons 7% Volume increase ≈ 2.6% 12% 14% 4% 5% 3% 3% 17

Busine Busi ness ss Ope peration onal al Financ Financial al In Indust stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view BROILER SELLING PRICE 150% Lower brine effect 140% 130% Bird flu impact 120% 110% 100% 90% 80% Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Broiler selling price index Six month average 18 Source: Own Data

Busine Busi ness ss Ope peration onal al Financial Financ al In Indust stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view CHANGE IN BROILER SELLING PRICE vs. FEED PRICE 40% 30% 20% 10% 0% Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 -10% -20% -30% % Change in broiler feed price % Change in broiler selling price 19 Source: Own Data

Gary Arnold Agriculture

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view POULTRY DIVISION - AGRICULTURE  Sales increased on higher demand for parent stock, hatching eggs and broiler day-old chicks  Feed input costs increased due to higher raw material costs adversely affecting the live bird production cost  Strike action in KwaZulu-Natal at National Chicks and Mountain Valley impacted profitability during the period under review  Parent breeder productions were good , with an improvement in the number of chicks per hen housed  Further improvements in on-farm broiler production efficiencies , assisted broiler live cost through an improved feed conversion rate  Highly pathogenic bird flu still prevalent in wild birds and ostriches, however no confirmed cases in commercial poultry since May 2018 21

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view BROILER PRODUCTION PERFORMANCE 108% 106% 104% 102% 100% 98% 96% Key indicators base-lined to 100% in F2015 94% F2015 F2016 F2017 F2018 F2019 Slaughter age Live weight Average daily gain 22

Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Ou Outl tlook Overvi view Overvi view Overvi view BROILER PRODUCTION PERFORMANCE 125% 120% 115% 110% 105% 100% 95% 90% 85% Key indicators base-lined to 100% in F2015 80% F2015 F2016 F2017 F2018 F2019 Mortality Feed consumption Performance efficiency factor 23