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Interim Results Presentation for the 6 months ended 31 March 2020 - PowerPoint PPT Presentation

Interim Results Presentation for the 6 months ended 31 March 2020 AGENDA Business Overview Slide 3 Chris Schutte Operational Overview Slide 8 Andy Crocker, Gary Arnold Industry Matters Slide 26 Gary Arnold Financial


  1. Interim Results Presentation for the 6 months ended 31 March 2020

  2. AGENDA  Business Overview Slide 3 – Chris Schutte  Operational Overview Slide 8 – Andy Crocker, Gary Arnold  Industry Matters Slide 26 – Gary Arnold  Financial Overview Slide 29 – Daan Ferreira  Outlook Slide 40 – Chris Schutte  Additional Information Slide 44 5/17/2020 2 2

  3. Chris Schutte Chief Executive Officer BUSINESS OVERVIEW 5/17/2020

  4. 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 over the period on higher maize prices, following poor yields and a smaller crop for 2019  Poultry production efficiencies on farm were maintained in line with performance forecasts  Poultry selling prices increased for the period under review, leading to a partial recovery of higher input costs  Extraordinary costs linked to load shedding, the legislated national minimum wage and the on-going Standerton water supply contingency  COVID-19 costs late March; on-going impact into 2H2020 under the nationwide lockdown complying with health and safety requirements  Good start to the 2020 maize planting season with production prospects for the crop exceeding 15 million tons (2019: 11.3 mmt) 4 5/17/2020

  5. 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 KEY FINANCIAL INDICATORS  Revenue 4.3%  Profit before interest and tax @ R546 million 8.5%  Profit for the period @ R371 million  Headline earnings per share @ 951 cps  No interim dividend declared 5

  6. 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 up  Broiler sales volumes down  Expenses well controlled  Broiler sales realisations up  Improved Rand per ton margin  Extraordinary cost impacts Other Africa  Higher profits from the Mozambique operations 6

  7. Busine Busi ness ss Ope peration onal al Financ Financial al Indust In stry y Matters Outl Ou tlook Overvi view Overvi view Overvi view THE PERIOD IN PERSPECTIVE (R million) 700 17 650 109 600 241 550 500 77 450 20 15 400 546 503 350 R43 million 300 250 PBIT H1 F2019 Raw material cost Feed conversion Broiler sales Broiler selling Extraordinary Other PBIT H1 F2020 volumes efficiency prices costs 7

  8. Andy Crocker Managing Director: Commercial 5/17/2020

  9. 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 FEED DIVISION Revenue - R million Operating profit - R million 4 000 250 243 239 3 509 200 3 303 3 000 150 2 000 100 1 000 50 - - 1H2019 1H2020 1H2019 1H2020   Revenue up 6.2% Operating profit up 1.7% • • Raw material costs up Net margin 6.9% 1H2019: 7.2% • • Average selling prices up 6.8% Expenses well controlled • • Sales volumes down 0.5% Rand per ton margin up 9 5/17/2020

  10. Busi Busine 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  SAFEX yellow maize prices increased for the period under review 1H2020 avg. R2 703 per ton (1H2019: R2 579) up R124 per ton y-o-y  Internal feed sales volumes decreased marginally by 1.2% due to improved broiler feed conversion rates  External feed sales volumes increased by 0.5% predominantly in the dairy market despite the higher feed prices  Expenses were well controlled 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 5/17/2020

  11. 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 FEED DIVISION – SALES MIX 15% 14% 1H2019 1H2020 22% 21% 697 569 Tons 694 083 Tons Volume decrease ≈ 0.5% 59% 59% 5% 5% 11 5/17/2020

  12. 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 SAFEX YELLOW MAIZE PRICE 12 5/17/2020 Source: CJA Strategic Risk Brokers

  13. 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 SAFEX YELLOW MAIZE PRICE vs. CBOT IN RAND TERMS 13 5/17/2020 Source: CJA Strategic Risk Brokers

  14. 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 DURBAN SOYA MEAL PRICE 14 5/17/2020 Source: CJA Strategic Risk Brokers

  15. Commercial 5/17/2020

  16. Busi Busine ness ss Ope peration onal al Financ Financial 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 6 000 300 287 5 644 5 472 5 000 250 258 200 4 000 150 3 000 100 2 000 50 1 000 - - 1H2019 1H2020 1H2019 1H2020   Total revenue up 3.1% Operating profit up 11.5% • • Broiler sales volumes down 2.5% Broiler feed price up 6.0% • • Broiler sales realisations up 5.5% Net margin 5.1% 1H2019: 4.7% • Breeder revenue up R44 million 16 5/17/2020

  17. 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 POULTRY DIVISION - COMMERCIAL  Profits increased for the period under review  Broiler selling prices increased with less promotional activity relative to the comparable period  Broiler slaughter numbers at an average of 5.2 million birds per week were marginally up by 2.3% year-on-year  Broiler sales volumes down due to a change in the point of recognition of a sale with the new third party distribution agreement, which is based on a consignment stock model  Overhead expenses increased over the comparable period with the legislated national minimum wage (not included in 1Q2019), exacerbated by the impact of load shedding nationally and on-going water supply costs in Standerton 17 5/17/2020

  18. 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% 22% 1H2020 1H2019 50% 51% 8% 222 437 Tons 8% 228 172 Tons Volume decrease ≈ 2.5% 13% 13% 5% 4% 2% 2% 18 5/17/2020

  19. Busine Busi ness ss Ope peration onal al Financial Financ al Indust In stry y Matters Outl Ou 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 Oct-19 Dec-19 Feb-20 -10% -20% -30% % Change in broiler feed price % Change in broiler selling price 19 5/17/2020 Source: Own Data

  20. Gary Arnold Managing Director: Agriculture Agriculture 5/17/2020

  21. 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 POULTRY DIVISION - AGRICULTURE  Parent stock sales were higher for the period under review as demand for the Ross genetics increased  Parent breeder productions were good , with an improvement in the number of chicks per hen housed  Demand for hatching eggs decreased as export markets came under pressure  Feed input costs increased due to higher raw material costs adversely affecting the live bird production cost  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 5/17/2020

  22. Busi Busine 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 1H2020 Slaughter age Live weight Average daily gain 22 5/17/2020

  23. 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 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 1H2020 Mortality Feed consumption Performance efficiency factor 23 5/17/2020

  24. 5/17/2020

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