Interim results presentation for the six months ended 31 March - PowerPoint PPT Presentation

Interim results presentation for the six months ended 31 March 2018

AGENDA Business Financial Operational Outlook: Overview: Overview: Overview: H Lourens H Lourens A Muller H Lourens INTERIM RESULTS PRESENTATION 2018 2

BUSINESS OVERVIEW › ZAR strengthened by 6% Operating Revenue profit › Large global maize stocks Lower raw Flat 534% material input › Soybean meal US$ prices slightly higher costs Cash HEPS generated 563% R208m › Steep egg price increases Avian Influenza › Much smaller national layer flock impact › Bio-security cost increases Interim Interim dividend dividend 2018 2017 20c Nil ◄ INTERIM RESULTS PRESENTATION 2018 3

RAND VS US$ 18 14.76 16 13.71 13.55 13.84 13.42 14 12.13 11.83 11.28 12 10 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 ◄ INTERIM RESULTS PRESENTATION 2018 4

SAFEX YELLOW MAIZE RAND PER TON 4 500 3 121 4 000 3 016 3 500 2 044 2 924 3 000 2 436 1 770 1 953 1 961 2 500 2 000 1 500 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 ◄ INTERIM RESULTS PRESENTATION 2018 5

AVERAGE LAYERS PER CALENDAR YEAR (MILLIONS) 26 25 25.04 24.85 24.80 Pre AI 24.55 24 24.34 24.20 23 23.17 22.55 22 21 20 2012 2013 2014 2015 2016 2017 YTD March Source: SAPA ◄ INTERIM RESULTS PRESENTATION 2018 6

FINANCIAL OVERVIEW 2018

STATEMENT OF INCOME 2018 2017 % For the six months ended 31 March Rm Rm change Revenue 2 035.4 2 040.9 0 Operating profit* 244.2 42.3 477 Income from associates 0.5 0.4 Net finance income 10.0 2.5 Profit before tax 254.7 45.2 Tax (71.5) (13.1) Profit for the period 183.2 32.1 * Operating profit includes capital items (0.2) 3.7 Adjusted operating profit 244.4 38.6 534 Adjusted operating margin 12.0% 1.9% EPS – cents 82.4 13.9 494 HEPS – cents 82.5 12.4 563 INTERIM RESULTS PRESENTATION 2018 8

REVENUE ANALYSIS Total R2 035 million (2017: R2 041 million) R732m R607m R587m R110m 36% 30% 29% 5% ANIMAL FEED EGGS FARMING AFRICA 2017 : R763m 2017 : R498m 2017 : R675m 2017 : R105m 37 % 25% 33 % 5 % INTERIM RESULTS PRESENTATION 2018 9

SEGMENT RESULTS 2018 2017 Adjusted operating profit for the six months ended 31 March Rm Rm Eggs 156.1 (22.0) Farming 43.7 37.2 Animal Feeds 39.0 40.4 Other African countries 10.8 (9.4) Head Office costs (5.2) (7.6) 244.4 38.6 INTERIM RESULTS PRESENTATION 2018 10

STATEMENT OF FINANCIAL POSITION 31 Mar 2018 30 Sep 2017 Rm Rm Non-current assets 1 045.9 1 076.8 Net working capital 585.1 590.4 Non-current liabilities (228.5) (230.8) Cash 359.1 261.5 Total net assets 1 761.6 1 697.9 Borrowings (6.3) (6.3) Equity 1 755.3 1 691.6 INTERIM RESULTS PRESENTATION 2018 11

STATEMENT OF CASH FLOW 2018 2017 For the six months ended 31 March Rm Rm Cash operating profit 279.3 67.3 Working capital (outflow) / inflow (20.4) 50.1 Change in exchange rate (6.2) (0.1) Cash effect of hedging activities (3.8) (14.4) Tax paid (51.1) (16.2) Net finance income 10.0 2.5 Cash generated by operations 207.8 89.2 Shares repurchased (2.7) (5.9) Dividends paid (75.5) (13.8) Capital expenditure (32.4) (26.9) Proceeds from sale of assets 0.5 7.0 Net cash increase 97.6 49.5 INTERIM RESULTS PRESENTATION 2018 12

CAPITAL EXPENDITURE Approved YTD March Future R’m 2018 2018 cash flow Maintenance capex – SA 38.7 12.4 25.6 – Africa 14.9 7.7 7.1 Layer farms: capacity & efficiency 13.0 3.9 9.1 Broiler farms: capacity & efficiency 2.2 2.2 - Energy efficiency 5.5 1.0 4.4 Hartbeespoort broiler hatchery expansion 7.8 4.8 3.0 Layer farms: biosecurity upgrade 3.8 0.5 3.3 Zambia feed mill 10.4 - 10.4 96.2 32.4 62.9 INTERIM RESULTS PRESENTATION 2018 13

SENSITIVITIES Effect of movement in: Impact Movement Rand value EBIT/annum Selling prices Eggs dozens R/doz Eggs 1% 17c R12m Raw material costs Maize R/ton Eggs R100 R6m Soya bean meal R/ton Eggs R100 R1m Assumptions: Feeds and farming business adjust selling prices with raw material cost changes : Egg volume of 6 million dozen per month INTERIM RESULTS PRESENTATION 2018 14

OPERATIONAL REVIEW ANIMAL ANIMAL FARMING FARMING EGGS EGGS AFRICA AFRICA FEED FEED

NOVA FEEDS › External volumes increased by 13% › Margins remained stable › Cost management & efficiencies improvement ANIMAL FEED › AI effect • Loss of internal volumes • Additional costs incurred VOLUMES 13% Margins stable INTERIM RESULTS PRESENTATION 2018 16

FARMING OPERATIONS BROILER FARMING › Decline in parent performance › Excellent commercial broiler performance improved further FARMING › Hartbeespoort hatchery expansion on track › Broiler product * volumes increased by 6.7% BROILER PRODUCTS › Cost base well managed SOLD* 6.7% * Broiler product = All day old chicks transferred and sold Margins stable INTERIM RESULTS PRESENTATION 2018 17

FARMING OPERATIONS LAYER FARMING › AI volume effect mitigated by • Additional capacity creation • Dormant assets utilized FARMING • Extending age of layers › Higher overhead cost due to AI › Breeder performance remains above standard › Commercial rearing performance on standard › Commercial layer performance continues to improve INTERIM RESULTS PRESENTATION 2018 18

EGG BUSINESS › Volume decline countered by price increase EGGS › Additional bio-security and logistics cost (AI) › Nominal overhead cost increase below inflation PRICE › Geographical spread mitigated AI crisis 31% › Western Cape supplied from Gauteng › Western Cape customers short of stock only one week › All operational efficiencies improved and on target VOLUMES 7% INTERIM RESULTS PRESENTATION 2018 19

AFRICA GENERAL UGANDA › Economies improved in all › Excellent financial performance jurisdictions › Breeder and commercial egg › Raw material cost declined efficiencies on target › Overall improvement in profitability › Leadership team well settled AFRICA › Further investment approved ZAMBIA MOZAMBIQUE › Profitability above target › Financial performance much improved › Mega Eggs business performed › Mozambique egg and raw material prices very well trend similar to RSA operating › Breeder farm under pressure due › Productivity improving but still below environment to disease challenge standard › New investment in a feed factory › Volume increase expected for next period INTERIM RESULTS PRESENTATION 2018 20

OUTLOOK › Increase in raw material prices › Slow decrease in egg prices QUANTUM FOODS RESPONSE › Increase in broiler product volumes › Increased volume and margin pressure in feeds › Continued good financial performance out of Africa INTERIM RESULTS PRESENTATION 2018 21