Results lts Presenta entation tion for the year ended 30 - PowerPoint PPT Presentation

Results lts Presenta entation tion for the year ended 30 September 2019

Agen enda da Business overview H Lourens Financial overview A Muller Operational overview H Lourens Outlook and management focus H Lourens Quantum Foods Results Presentation for the year ended 30 September 2019 2

Bu Business siness over ervie view a H Lourens Quantum Foods Results Presentation for the year ended 30 September 2019 3

Salient ient featur tures es 1 . Unfavourable economic environment Slow economic growth • Declining discretionary consumer spend • ZAR continues to weaken • Infrastructure challenges at Eskom • 2 . Quantum Foods: Overview Good volume growth in most categories • Expected margin squeeze in egg business occurred • Most operational efficiencies improved • Quantum Foods Results Presentation for the year ended 30 September 2019 4

Bus usiness ness overvie view HEPS S decreased sed due to down wnturn turn of egg industry dustry • Revenue R4.4bn • Operating profit R245m • HEPS 92.3 cents • Total dividend per share 33 cents • Cash generated by operations R178m • Repurchased 18.6m shares 8.8% Quantum Foods Results Presentation for the year ended 30 September 2019 5

Fin inancial ancial over ervie view a A Muller Quantum Foods Results Presentation for the year ended 30 September 2019 6

Sta tateme tement nt of of inc ncome ome 2019 2018 % For the year ended 30 September Rm Rm change Revenue 4 417.7 4 121.9 7 Operating profit* 245.2 473.3 (48) Income from associates 0.2 0.7 Net finance income 11.1 23.8 Profit before tax 256.6 497.8 Tax (67.4) (135.6) Profit for the period 189.2 362.2 * Operating profit includes capital items 0.6 0.9 Adjusted operating profit 244.6 472.4 (48) Adjusted operating margin 5.5% 11.5% − cents EPS 92.6 164.3 (44) − cents HEPS 92.3 163.9 (44) Quantum Foods Results Presentation for the year ended 30 September 2019 7

Divide idends nds For 2019 • Dividend at a HEPS cover of 4 times 23 cents • Special dividend due to 2019 cash position 10 cents • Interim dividend paid (8 cents) • Final dividend 25 cents Quantum Foods Results Presentation for the year ended 30 September 2019 8

Sha hare e repur purchase hases • 10 505 000 shares repurchased and cancelled in 2019 at an average of R3.35 per share • 8 083 426 shares purchased by subsidiary in 2019 at an average of R3.39 per share 2017 2018 2019 Dividends plus share repurchases as % of HE 93% 68% 75% • R142 million returned to shareholders for 2019 • Board intends to continue with repurchase of shares Quantum Foods Results Presentation for the year ended 30 September 2019 9

Reven enue ue ana nalysi sis Total R4 418 million (2018: R4 122 million) ANIMAL FEED EGGS FARMING AFRICA 1 759 1 095 1 325 239 40% 30% 5% 25% 2018 : R1 460 | 36% 2018 : R1 206 | 29% 2018 : R1 233 | 30% 2018 : R222 | 5% Quantum Foods Results Presentation for the year ended 30 September 2019 10

Segme gment nt results ults 2019 2018 Adjusted operating profit Rm Rm Eggs 38.3 286.7 Farming 112.1 98.5 Animal feeds 89.1 69.4 Other African counties 14.2 31.0 Head office costs (9.1) (13.2) Profit for the year 244.6 472.4 Quantum Foods Results Presentation for the year ended 30 September 2019 11

Sta tateme tement nt of of financ nancial ial pos osition ition 2019 2018 At year-end Rm Rm Non-current assets 1 181.5 1 091.9 Net working capital 693.2 574.6 Non-current liabilities (250.8) (228.3) Cash 219.6 422.5 Total net assets 1 843.5 1 860.6 Borrowings (6.1) (6.2) Equity 1 837.4 1 854.4 Quantum Foods Results Presentation for the year ended 30 September 2019 12

Sta tateme tement nt of of cash h flow ow 2019 2018 For the year ended 30 September Rm Rm Cash operating profit 329.8 547.8 Working capital (outflow) / inflow (109.2) 12.9 Changes in exchange rates 1.3 (7.9) Cash effect of hedging activities (6.7) 8.9 Tax paid (51.2) (138.0) Net finance income 14.4 24.4 Cash generated by operations 178.4 448.0 Shares repurchased (35.2) (52.4) Dividends paid (162.6) (119.7) Treasury shares acquired by subsidiary (27.4) (2.5) − Advance of loan (6.7) Capital expenditure (152.6) (116.0) Proceeds from sale of assets 3.3 3.8 Net cash (decrease) / increase (202.9) 161.0 Quantum Foods Results Presentation for the year ended 30 September 2019 13

Capita pital l expenditur enditure 2019 Future Rm Rm RSA Expansion/efficiency 61.0 2.6 – Feed mills 30.3 2.0 – Layer hatchery 5.6 0.6 − – Farms 8.3 − – Packing stations 13.7 − – Energy 3.1 Replacement/compliance 34.4 63.1 Africa Expansion/efficiency 47.7 29.7 − – Zambia layer farm 13.8 – Uganda layer farm and breeders 33.9 29.7 Replacement 9.5 5.2 152.6 100.6 Quantum Foods Results Presentation for the year ended 30 September 2019 14

Sensiti nsitivities vities: : Eggs gs Effect of movement in: Rand value EBIT/annum Selling prices Eggs (R/doz) 1% 15c R12m Raw material costs Maize R/ton R100 R7m Soya bean meal R/ton R100 R2m Assumption: Egg volume of 7.0 million dozen per month Quantum Foods Results Presentation for the year ended 30 September 2019 15

a Oper perational ional over ervie view H Lourens Quantum Foods Results Presentation for the year ended 30 September 2019 16

Nova a Feeds eeds Solid id performan ormance ce • Relentless focus on raw material procurement had a positive effect • Positive volume growth: CAGR of 3.8% since 2015 • Margins decreased due to product mix changes and price lead competition • Cost increases per unit remained under control • Both Paterson and Pretoria projects completed on time, within budget • Projects increased capacity by 16% Quantum Foods Results Presentation for the year ended 30 September 2019 17

Broiler oiler far arming ming Stron ong g perf rforman ormance ce • Improved financial performance • Breeder efficiency declined − expect little improvement in medium term • Broiler efficiency remained excellent • Production of day-old chicks increased by 7.2% • Change in supply contract to Sovereign Foods • Costs per unit throughout business under control • New broiler executive to start 1 January 2020 Quantum Foods Results Presentation for the year ended 30 September 2019 18

Layer er far arming ming Cont ntinued ued improvem emen ent • Improved financial result • Layer breeders continues to perform above breed standard • Production of day-old pullets increased by 12.7% • Point-of-lay sales volumes increased by 5.3% • Much improved productivity at commercial layer farms • Cost per unit decreased throughout value chain Quantum Foods Results Presentation for the year ended 30 September 2019 19

Nulaid ulaid Eg Eggs gs Excelle lent nt operati tiona onal l perform orman ance ce • All operational efficiencies improved • Volumes increased by 5.5% • Prices declined by 14.3% • Feed prices increased by 16.3% • South Africa flock estimated at c.28m layers • Capex programme for graders near completion • Nulaid remains the egg brand of choice Quantum Foods Results Presentation for the year ended 30 September 2019 20

Africa rica business usiness Tough gh trading ing cond nditions itions • Financial performance under pressure • Raw material prices increased in all three countries • Egg productivity improved • Uganda breeder farm temporarily moved to Masindi • Cost affected by devaluation of Kwacha • Zambia capital cycle completed • Uganda hatchery capacity increased • Uganda breeder farm completion by March 2020 • Zambia breeder business returned to profitability Quantum Foods Results Presentation for the year ended 30 September 2019 21

Outl tlook ook 20 2020 20 a

Out utlook ook 2020 Expectations Quantum Foods’ response • Challenging macro business • Ensure egg sales in optimal environment channels and geographies • Leverage investments in • Stable raw material costs feeds and hatcheries • Weaker egg prices • Improve efficiencies • Tough first six months in throughout layer value chain African business • Target cost-saving initiatives Quantum Foods Results Presentation for the year ended 30 September 2019 23

Quantum Foods Results Presentation for the year ended 30 September 2019 24

App ppendix endix a Quantum Foods Results Presentation for the year ended 30 September 2019 25

Safex yell llow ow ma maiz ize e Rand nd per r to ton 4 500 4 000 3 016 3 500 2 924 2 700 3 000 2 352 1 953 1 770 2 500 2 000 1 500 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Quantum Foods Results Presentation for the year ended 30 September 2019 26

CBOT T USD soya beans ans 430 410 390 370 309 316 300 309 350 296 330 310 299 290 270 250 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Quantum Foods Results Presentation for the year ended 30 September 2019 27

Rand nd:US :US dol ollar lar exchang hange e rate te 18 15.13 14.14 16 13.71 13.55 13.84 14 11.28 12 10 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Quantum Foods Results Presentation for the year ended 30 September 2019 28