Results lts Presenta entation tion for the six months ended 31 - PowerPoint PPT Presentation

Results lts Presenta entation tion for the six months ended 31 March 2020

Agen enda da Business overview H Lourens Financial overview A Muller Operational overview H Lourens Outlook H Lourens Appendix Quantum Foods Results Presentation for the six months ended 31 March 2020 2

Busin siness ess over ervie view H Lourens Quantum Foods Results Presentation for the six months ended 31 March 2020 3

Bus usine iness ss overvie view HEPS S de decreased sed du due to contin ntinued ued do downt wnturn rn of egg g industry dustry • Revenue 16% • Operating profit 25% • HEPS 24% • Cash generated R62m • Interim dividend per share 2020 6 cents • Interim dividend per share 2019 8 cents Quantum Foods Results Presentation for the six months ended 31 March 2020 4

Bus usine iness ss overvie view w 1 . Higher raw material prices SAFEX yellow maize 5.4% • Landed soybean meal prices 10.3% • Bran prices 17.2% • Hominy chop prices 9.7% • ZAR weakened by 6.2% • 2 . Lower egg prices SA layer stock Sept 2019 28.1m • March 2020 29.4m 3 . Outbreak of COVID-19 at end of March 2020 Quantum Foods Results Presentation for the six months ended 31 March 2020 5

Fin inanci ancial al over ervie view A Muller Quantum Foods Results Presentation for the six months ended 31 March 2020 6

Sta tateme tement nt of of in income ome 2020 2019 % For the six months ended 31 March Rm Rm change Revenue 2 439.1 2 103.3 16 Operating profit* 91.4 120.6 (24) Income from associates 1.2 0.5 Net finance (cost)/income (0.8) 10.1 Profit before tax 91.8 131.2 Tax (25.2) (36.1) Profit for the period 66.6 95.1 * Operating profit includes capital items 0.1 (0.5) Adjusted operating profit 91.3 121.2 (25) Adjusted operating margin 3.7% 5.8% − cents EPS 34.5 45.2 (24) − cents HEPS 34.5 45.4 (24) Quantum Foods Results Presentation for the six months ended 31 March 2020 7

Reven enue ue ana naly lysis sis Total R2 439 million (2019: R2 103 million) ANIMAL FEEDS EGGS FARMING AFRICA R1 085m R578m R647m R129m 44% 27% 5% 24% 2019 : R785m | 37% 2019 : R537m | 26% 2019 : R671m | 32% 2019 : R110m | 5% Quantum Foods Results Presentation for the six months ended 31 March 2020 8

Segme gment nt results sults 2020 2019 Adjusted operating profit for the six months ended 31 March Rm Rm Eggs (19.5) 27.3 Farming 67.8 52.0 Animal feeds 48.1 40.3 Other African counties 0.6 6.7 Head office costs (5.7) (5.0) 91.3 121.2 Quantum Foods Results Presentation for the six months ended 31 March 2020 9

IF IFRS 16 – Le Leases es im impac act IFRS 16 impact Impact of day 1 adoption 1 October 2019 Rm Assets – increase 62.0 Liabilities – increase 71.9 Equity – decrease 9.9 For the six months ended 31 March 2020 IFRS 16 impact Operating profit – increase – Rm 4.5 Earnings per share – increase – cents 0.2 Quantum Foods Results Presentation for the six months ended 31 March 2020 10

Sta tateme tement nt of of fina inancia ncial l pos osition ition 31 Mar 2020 30 Sep 2019 Rm Rm Non-current assets 1 259.2 1 181.5 Net working capital 758.9 693.2 Non-current liabilities (260.7) (250.8) Cash 174.3 219.6 Total net assets 1 931.7 1 843.5 Borrowings – IFRS 16 (74.2) (6.1) Equity 1 857.5 1 837.4 Quantum Foods Results Presentation for the six months ended 31 March 2020 11

Sta tateme tement nt of of cash sh flow low 2020 2019 For the six months ended 31 March Rm Rm Cash operating profit 144.5 165.5 Working capital outflow (73.1) (84.4) Change in exchange rate 0.1 1.1 Cash effect of hedging activities 13.5 (10.3) Tax paid (11.2) (20.0) Net finance income (1.1) 10.1 Principal lease payments (10.7) (0.0) Cash generated by operations 62.1 62.1 Dividends paid (48.2) (147.1) Treasury shares acquired by subsidiary (4.3) (2.3) Capital expenditure (55.2) (90.9) Proceeds from sale of assets 0.2 0.9 Net cash decrease (45.3) (177.4) Quantum Foods Results Presentation for the six months ended 31 March 2020 12

Capita pital l exp xpenditur enditure YTD Mar 2020 Future cash flow Rm Rm RSA Expansion/efficiency 11.4 28.9 – Feed mills 4.3 18.4 – Layer hatchery 0.4 0.1 – Farms 0.6 2.3 – Packing stations 5.4 2.1 – Energy 0.7 6.0 Replacement/compliance 24.1 38.8 Africa Expansion/efficiency 16.7 14.8 – Uganda layer farm and breeders 16.7 14.8 Replacement 3.0 3.2 55.2 85.8 Quantum Foods Results Presentation for the six months ended 31 March 2020 13

Oper peration tional al over ervie view H Lourens Quantum Foods Results Presentation for the six months ended 31 March 2020 14

Nova a Feeds eeds Expansi Ex ansion on su success cessful ful • Volumes increased by 18% • Load shedding had a negative financial impact • Margins improved by 2% • Costs per unit well managed and remained under control • Product performance remains at a very high level Quantum Foods Results Presentation for the six months ended 31 March 2020 15

Layer er far arming ming Producti oductivity vity impr provem ement ent conti ntinues es • Breeder performance stable – above Lohmann standards • Production of day-old pullets and point-of-lay hens increased • Day-old pullet sales decreased but point-of-lay sales increased • Commercial rearing performance above target • Commercial layer performance now at acceptable levels • Cost increases in breeder business above inflation but in commercial layer business cost per dozen decreased • Decline in layer livestock demand from February 2020 Quantum Foods Results Presentation for the six months ended 31 March 2020 16

Broiler oiler far arming ming Pl Pleasi asing ng financial ancial perf rforma ormance nce • Breeder performance slowly improving • Hatchability not yet at an acceptable level • Broiler performance at very high levels • Overhead cost decreases in both day-old chicks and live broilers • Production of day-old chicks increased by 4.1% Quantum Foods Results Presentation for the six months ended 31 March 2020 17

Nulaid ulaid Eg Eggs gs Supply pply and d de demand d not t in ba balanc ance • Egg volumes increased by 16.3% • Egg price decreased by 7.4% • Operational efficiencies remained at high levels • R/dozen overhead costs declined • Margin pressure exacerbated by feed cost increase • Initial indications that demand for eggs is improving Quantum Foods Results Presentation for the six months ended 31 March 2020 18

Ot Othe her r Afri rica ca segme gment nt Indu dust stry ry cond nditi itions s remain n di difficul cult • Difficult industry conditions in all three countries • Raw material prices increased, creating subdued demand for products • Record maize prices in Zambia coupled with decline in productivity levels • Breeder farm in Uganda ready for placement at end of March • Mozambique business performed well in current conditions • Positive contribution to bottom line from all three countries Quantum Foods Results Presentation for the six months ended 31 March 2020 19

Outl tlook ook H Lourens Quantum Foods Results Presentation for the six months ended 31 March 2020

Out utlook look 2020 Challenges Quantum Foods’ response • COVID-19 makes any • Raw material prices expected to forward view increase due to exchange rate dangerous • Egg price direction too uncertain to call BUT • Feed and broiler livestock volumes should stabilise • Demand for layer livestock should decrease • Zambian business should start improving Quantum Foods Results Presentation for the six months ended 31 March 2020 21

Quantum Foods Results Presentation for the six months ended 31 March 2020 22

App ppendix endix Quantum Foods Results Presentation for the six months ended 31 March 2020 23

SAFE FEX X yell llow ow ma maiz ize e Rand nd per r to ton 4 500 4 000 3 500 3 351 3 000 2 707 2 634 2 500 2 460 2 367 2 099 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 Mar 20 Quantum Foods Results Presentation for the six months ended 31 March 2020 24

CBOT T US$ so soyb ybea ean n me meal 430 410 390 370 350 342 332 330 316 312 310 306 300 290 270 250 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Quantum Foods Results Presentation for the six months ended 31 March 2020 25

Rand nd:US$ :US$ exchang hange e rate te 18.5 16.5 14.77 15.03 14.5 14.34 13.37 13.07 12.5 12.01 10.5 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Quantum Foods Results Presentation for the six months ended 31 March 2020 26

Egg g realisa lisation tion mo movement ment 140.00 130.00 AI effect Flock replacement 120.00 Index Normal cycle 110.00 100.00 90.00 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Quantum Foods Results Presentation for the six months ended 31 March 2020 27