interim results presentation - astral foods...interim results presentation for the six months ended...
TRANSCRIPT
1
Interim Results Presentation for the six months ended 31 March 2014
2
AGENDA
Business Overview
Poultry Industry Trends
Financial Overview
Industry Matters
Prospects
Q & A
3
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
4
THE PERIOD IN PERSPECTIVE
The past six months to end March 2014 reflects an improved performance compared to one of the worst trading periods experienced by the poultry industry in the prior year
Financial Indicators
Revenue
Operating profit
Headline earnings
Interim dividend of 200 cps
11%
260%
308%
5
THE PERIOD IN PERSPECTIVE
Key factors that impacted the business:
• Continued high total poultry imports, increasingly from Europe (October 2013
to March 2014 ≈ 5.1 million birds per week which equals approximately 26% of
local production – refer slides 31 and 32)
• Record high local maize prices in February, March and April 2014 not in line
with CBOT corn prices (refer slide 52)
• Record high local soya bean prices for February, March and April 2014 (refer
slide 27)
• The Rand remained weak against the US Dollar negating any benefits of lower
CBOT corn prices during 1H2014
6
THE PERIOD IN PERSPECTIVE
A solid performance from the Feed division and an improved performance from the
Poultry division have contributed positively to the Group’s earnings
The Group’s integrated best cost business model proved its value with the
business remaining profitable versus an industry that has in general struggled over
the same period
Further contraction in the poultry industry has been experienced with the
closure of small-sized producers followed by consolidation of distressed assets
Astral’s balance sheet remains healthy with a net debt to equity ratio of 12.5%
(30 September 2013: 15.5%)
7
Poultry Division
8
2 952 3 317
-
1 000
2 000
3 000
1H2013 1H2014
(Revenue - R million)
Revenue up 12%
Broiler volumes up 6.2%
Broiler realisations up 5.9%
(117)
45
(120)
(70)
(20)
30
1H2013 1H2014
(Operating profit - R million)
Operating profit up
Profit margin 1.4%
Feed costs down 3.2%
POULTRY DIVISION - OVERVIEW
9
Average broiler feed prices decreased by R150 per ton (down 3.2% vs 1H2013)
Broiler sales volumes increased on the comparable period by 6.2%
Broiler selling prices increased on the comparable period by 5.9%
High total poultry imports during the period ≈ 5.1 million birds per week
Improved broiler production performances (refer slides 11 and 12)
Improvement in product mix with our exposure to IQF decreasing by 2% (slide 10)
No industrial / strike related action impacting the division
POULTRY DIVISION - OVERVIEW
10
Product Mix
55%
2% 10%
8%
3%
22%
IQF Mixed Portions IQF Single Portions FreshValue Added Frozen Tertiary
POULTRY DIVISION – SALES
202 386 tons
11
70%
75%
80%
85%
90%
95%
100%
105%
110%
115%
120%
F2009 F2010 F2011 F2012 F2013 1H2014
Mortality Feed conversion (FCR) Efficiency factor (PEF)
BROILER PRODUCTION PERFORMANCES
Key indicators base-lined to 100% in 2009
12
94%
96%
98%
100%
102%
104%
106%
F2009 F2010 F2011 F2012 F2013 1H2014
Slaughter age Live weight Processing yield
(35.4 days)
(34.1 days)
BROILER PRODUCTION PERFORMANCES
Key indicators base-lined to 100% in 2009
13
Projected lower feed costs into 2H2014 (versus 1H2014)
Continued realignment of poultry production capacity to reduce costs
Reduced heating / energy costs at County Fair with LPG replacement project
Bedding down of major capital expenditure and acquisitions (KZN & WC)
Provisional anti-dumping duties against EU expected in June / July 2014
County Fair / Tydstroom agreement will enhance Astral’s Western Cape footprint
POULTRY DIVISION - PROSPECTS
14
Feed Division
15
(Operating profit - R million)
Operating profit unchanged
Profit margin at 6.2%
Good Rand / ton margin
(Revenue - R million)
Revenue up 6%
Volumes up 4.1%
Avg. realisations up 2.3%
2 397 2 550
-
1 000
2 000
3 000
1H2013 1H2014
156 157
-
50
100
150
200
1H2013 1H2014
FEED DIVISION - OVERVIEW
16
FEED DIVISION - OVERVIEW
Higher in-house feed volumes (up 7%) due to higher broiler placements
External feed volumes increased by 1%
Positive improvement in sales mix with higher Dairy and Pig feed sales
Maintained good Rand per ton margin despite a competitive landscape
Maintained cost increases in line with inflation
Closure of non-performing Welkom feed mill
17
Meadow Feeds - Sales Mix
23%
50%
10%
17%
Dairy Poultry Integrated Poultry External Other
FEED DIVISION – SALES
605 066 tons
18
FEED DIVISION - PROSPECTS
Increased acreage and good rainfall should lead to crop in excess of 13 mil tons
Lower local price for current maize harvest will benefit feed prices
International maize balance sheet remains healthy
Continued focus to implement new cost saving technologies
Focus on Rand per ton margins to continue
New Standerton feed mill margin contribution in Q4 of F2014
19
NEW STANDERTON FEED MILL
20
Delays in the commissioning of the feed mill have been experienced due to rain
(8 weeks) experienced over the project duration
Recent unforeseen late equipment deliveries have impacted the commissioning
Commissioning process scheduled for June 2014
Forecast total project costs are in line with approved budget of R200 million
Broiler feed volumes of 15 208 tons per month will fully accrue in Q4 of F2014
Official opening ceremony set for 17 July 2014
NEW STANDERTON FEED MILL
21
Other Africa Division
22
(Operating profit - R million)
Operating profit down 44%
Zambian performance down
Moz operations performed well
20
11
-
10
20
1H2013 1H2014
(Revenue - R million)
Revenue up 22%
Feed volumes unchanged
Hatchery volumes up 18%
203
248
-
100
200
300
1H2013 1H2014
OTHER AFRICA DIVISION - OVERVIEW
23
OTHER AFRICA DIVISION - OVERVIEW
Zambia
Feed sales from Tiger Animal Feeds decreased 8% for the period due to increased market competition
Profitability at Tiger Animal Feeds impacted negatively by unfavourable raw material positions and stock mismanagement
The double up of the Tiger Chicks broiler breeder and hatchery operation has been successfully concluded and producing up to 200 000 DOC in March 2014
Mozambique
Feed sales increased by 43% and profitability by 70% following improved market penetration
The first Indian River broiler breeders were placed in January 2014 at Mozpintos, with the hatchery increasing capacity from 65 000 to 152 000 DOC per week by July 2014
24
OTHER AFRICA DIVISION - PROSPECTS
Zambia
Current harvest maize and soya prices are lower with Tiger Animal Feeds well positioned to take advantage of these
Increased sales of day old chicks from the double up of the hatchery and broiler breeder operation
The continued expansion of feed and day old chick outlets will improve product availability and competitive feed prices direct to farm
Mozambique
The production of hatching eggs in Mozambique at a lower cost than imported hatching eggs will improve profitability
Expanding into further feed and day old chick outlets will further improve market penetration and sales of both DOC and feed
25
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
26 Source: CJA Strategic Risk Brokers
F2010 F2013 F2011 F2012
SAFEX YELLOW MAIZE PRICE
F2014
27 Source: CJA Strategic Risk Brokers
F2010 F2011 F2014 F2012 F2013
SAFEX SOYA BEANS PRICE
28 Industry trends and statistics | Source: SAPA
Rand per kilogram
INDUSTRY BROILER SELLING PRICES 15
.44 15
.81 16
.28
13.9
5 13
.78
14.0
6 14.6
0 14
.04
13.4
1 13.8
1 13
.09
13.1
2 13
.22
13.4
7 13
.41
12.7
0 11
.96
11.9
5 11
.75 12
.22
11.7
5 11
.76 12
.29
11.8
3 12.3
3 12.8
3 13
.51
13.3
4 13
.42
13.2
0 13
.38
13.4
6 13
.18
12.7
9 12
.86
13.5
6 13.9
1 14
.90
15.5
3 14
.51
13.6
6 13
.21
13.4
2 13
.15
12.6
7 12
.51
13.4
0 15
.03
15.7
9 15
.55
14.8
2 13
.85
14.0
8 15
.53
15.3
5 15
.24
15.0
7 15.4
2 15
.44 16
.01
16.2
7 16
.26
17.0
5 16
.15 16
.56 16.8
7
11.00
11.50
12.00
12.50
13.00
13.50
14.00
14.50
15.00
15.50
16.00
16.50
17.00
17.50
Oct
-08
Dec
-08
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10A
pr-1
0Ju
n-10
Aug
-10
Oct
-10
Dec
-10
Feb-
11A
pr-1
1Ju
n-11
Aug
-11
Oct
-11
Dec
-11
Feb-
12A
pr-1
2Ju
n-12
Aug
-12
Oct
-12
Dec
-12
Feb-
13A
pr-1
3Ju
n-13
Aug
-13
Oct
-13
Dec
-13
Feb-
14
Broiler selling price Six month average
29
Source: SAPA & CJA Strategic Risk Brokers
BROILER PRICE VS. FOOD PRICE INFLATION
65707580859095100105110115120125130135140145
65707580859095
100105110115120125130135140145
Oct
-08
Dec
-08
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10A
pr-1
0Ju
n-10
Aug
-10
Oct
-10
Dec
-10
Feb-
11A
pr-1
1Ju
n-11
Aug
-11
Oct
-11
Dec
-11
Feb-
12A
pr-1
2Ju
n-12
Aug
-12
Oct
-12
Dec
-12
Feb-
13A
pr-1
3Ju
n-13
Aug
-13
Oct
-13
Dec
-13
Feb-
14
Broiler selling price index SA food price index
30
Source: SAPA & Own Data
CHANGE IN BROILER SELLING PRICE VS. FEED PRICE
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
Oct
-08
Dec
-08
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10A
pr-1
0Ju
n-10
Aug
-10
Oct
-10
Dec
-10
Feb-
11A
pr-1
1Ju
n-11
Aug
-11
Oct
-11
Dec
-11
Feb-
12A
pr-1
2Ju
n-12
Aug
-12
Oct
-12
Dec
-12
Feb-
13A
pr-1
3Ju
n-13
Aug
-13
Oct
-13
Dec
-13
Feb-
14
% Change in feed price % Change in broiler selling price
31
Tons
Source: SAPA
TOTAL POULTRY IMPORTS PER MONTH
-
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
Oct
-08
Dec
-08
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10A
pr-1
0Ju
n-10
Aug
-10
Oct
-10
Dec
-10
Feb-
11A
pr-1
1Ju
n-11
Aug
-11
Oct
-11
Dec
-11
Feb-
12A
pr-1
2Ju
n-12
Aug
-12
Oct
-12
Dec
-12
Feb-
13A
pr-1
3Ju
n-13
Aug
-13
Oct
-13
Dec
-13
Feb-
14
Total poultry imports 6 per. Mov. Avg. (Total poultry imports)
32
F2013 47 492 41 153 28 617 27 714 27 301 34 421 36 475 39 190 33 194 27 896 27 962 37 518
F2014 28 334 38 588 32 403 25 144 23 898 33 942
% Var -40.3 -6.2 13.2 -9.3 -12.5 -1.4
bpw* 4,7 6,4 5,4 4,2 4,0 5,6
Industry trends and statistics |
Tons
Source: SAPA
TOTAL POULTRY IMPORTS (CHICKEN, TURKEY, MDM)
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug SepF2011 24 684 48 108 76 511 103 474 127 429 156 795 182 871 215 684 250 081 286 051 320 321 349 364F2012 33 348 67 819 100 540 135 614 170 194 204 560 244 296 278 914 305 472 326 520 353 296 387 173F2013 47 942 89 095 117 712 145 426 172 727 207 148 243 623 282 813 316 007 343 903 371 703 409 286F2014 28 334 66 922 99 325 124 469 148 367 182 309
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
450 000
F2011 F2012 F2013 F2014
*bpw ≈ million birds per week
33
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
34
ABRIDGED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 31 March 2014
R million 2013
R million % change
Revenue 4 700 4 219
Operating profit 213 59
Operating profit margin 4.5% 1.4%
Profit on sale of interest in associate - 47
Profit before interest and tax 213 106
Net finance costs (12) (12)
Share of profit of associates 2 5
Profit before tax 203 99
Tax (58) (25)
Profit for the period 145 74
(Profit for the period : previously reported) - 107
EPS – Cents (restated) 376 192
(EPS – Cents: previously reported) - 278
HEPS – Cents 386 94
11%
260%
101%
105%
95%
96%
35%
308%
35%
35
GROUP SIX MONTHLY REVENUE
(R billion)
1.999 2.383 2.441 2.138
2.741 2.408 2.581 2.449 2.606 2.652 2.878 2.956 2.952 3.049 3.317
1.629 1.901 2.194
2.944
2.238 1.750
1.847 1.730 1.708 1.770 2.175 2.152 2.397 2.519
2.551 2.900
3.429 3.800
4.384 4.500 4.334
3.591 3.415 3.552 3.675
4.039 4.122 4.219 4.290
4.700
0.000
1.000
2.000
3.000
4.000
5.000
6.000
7.000
1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14
Poultry Feed Services & Ventures Other Africa Net Revenue
36
POULTRY – SIX MONTHLY REVENUE
(R million)
2741 2408
2581 2449 2606 2652
2878 2956 2952 3049 3317
0.00000
0.20000
0.40000
0.60000
0.80000
1.00000
1.20000
1.40000
1000
1500
2000
2500
3000
3500
4000
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14
Revenue Change in realisations (SAPA) Change in volumes
37
FEED – SIX MONTHLY REVENUE
(R million)
2238
1750 1847
1730 1708 1770
2175 2152
2397 2519 2551
0.00000
0.20000
0.40000
0.60000
0.80000
1.00000
1.20000
1.40000
1.60000
1000
1200
1400
1600
1800
2000
2200
2400
2600
2800
3000
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14
Revenue Change in volumes Change in feed price
38
GROUP SIX MONTHLY OPERATING PROFIT
(R million)
137 145 134 128 229 124 140
-3 -117 8 45
126 135 151
130
133
149 154
135 156
175 157
279 302 304 281
375
299 324
153
59
208 213
-0.1
0.1
0.3
0.5
0.7
0.9
1.1
1.3
-120
-20
80
180
280
380
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14
Poultry Feed Services & Ventures
Other Africa Change in feed price Change in realisations (SAPA)
39
ABRIDGED STATEMENT OF FINANCIAL POSITION
Mar 2014 R million
Sep 2013 R million
% change
Non-current assets 2 060 1 983 (Sep 2013 restated: previously R2 016 million)
Net working capital 427 486
Current assets (excl. cash) 1 996 1845
Current liabilities (excl. borrowings) (1 569) (1 359)
Non-current liabilities (excl. borrowings) (520) (511)
Net assets 1 967 1 958
Net debt 218 263
Structured debt 234 185
Cash and cash equivalents (16) 78
Equity 1 749 1 695
(Sep 2013 restated: previously R1 725 million)
Total 1 967 1 958
4%
12%
8%
15%
2%
0.5%
17%
0.5%
3%
40
CASH FLOW
For the six months ended 31 March 2014
R million 2013
R million
Cash operating profit 287 122
Working capital requirement 58 (89)
345 33
Tax paid (52) (15)
Net interest paid (19) (15)
Capital expenditure (150) (104)
Finance received - loans 49 85
Other cash flow items 5 -
Cash flow before financing activities 178 (16)
Dividends paid (85) (128)
Movement in cash equivalents 93 (144)
Disposals (PPE and investments) 1 67
Opening balance (78) (77)
Closing balance 16 (154)
41
CAPITAL EXPENDITURE
Six months ended 31 March 2014
R million 2013
R million
Depreciation 69 60
Replacement capex 74 36
Expansion capex - other 41 14
- new feed mill 41 58
Total capex spent 156 108
Commitments - other 148
- County Fair expansion 81
- new feed mill 31
Total spent and committed 416
42
IN SUMMARY
Improvement in Poultry division performance continued
Cash flow for the period positive
Net debt to equity ratio of 12,5% (30 September 2013: 15,5%)
Substantial reinvestment in business for future benefit (R1,2 billion over past three years including commitments)
Interim dividend of 200 cents per share declared
43
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
44
INDUSTRY MATTERS
Market contraction continued with the closure of further small sized poultry producers
Liquidation sales of distressed assets has resulted in consolidation
Astral supports the requirement for regulatory control around brining, however the 15% brining level should be debated
Provisional EU anti-dumping measures are expected in June / July 2014
Approval has been granted by DAFF for the importation of maize from Argentina as an alternative source during local shortages
45
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
46
PROSPECTS
The slowing level of growth in the economy and higher unemployment levels will continue to depress consumer spending. This, coupled with other factors like industrial action in the mining sector, will continue to impact profit margins in the industry. There will be a good maize crop in South Africa with an expected softening in grain prices in the coming six months off the highs of the past reporting period. This will benefit feed prices and broiler production costs. If the SAPA application to ITAC for anti-dumping duties against the EU is successful, this will go some way to improving the imbalance in the supply and demand of chicken.
47
48
Business Overview Poultry Industry Trends Financial Overview Industry Matters Prospects Q & A
49
Additional Information
50 Source: CJA Strategic Risk Brokers
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14E 2014/15FActual Actual Actual Actual Actual Estimate Forecast
Carry In (1 May) 1 049 1 581 2 131 2 336 991 1 414 496Crop Estimate 12 700 12 050 12 815 10 360 12 121 11 811 13 545Sagis Delivery 11 929 11 697 12 092 10 394 11 972 11 353 12 988Minus early deliveries 0 0 0 0 0 -842 -530Imports 27 27 0 421 11 80 0Total Supply 13 005 13 305 14 224 13 151 12 973 12 005 12 953
Domestic Usage Food 4 524 4 471 4 513 4 512 4 499 4 615 4 700Domestic Usage Feed 4 020 4 101 4 271 4 362 4 378 4 550 4 600Gristing, withdrawn & released 562 755 866 693 674 672 664Total Domestic Usage 9 106 9 327 9 650 9 567 9 551 9 837 9 964
Exports & Sundries 2 318 1 847 2 238 2 590 2 008 2 203 1 886Plus early deliveries 0 0 0 0 0 530 580Carry Out (30 Apr) 1 581 2 131 2 336 994 1 414 496 1 683No of days usage 63 83 88 38 54 18 62STU 17.37% 22.85% 24.20% 10.38% 14.81% 5.04% 16.89%
Marketing year (May to April) '000 tons
SOUTH AFRICA - TOTAL MAIZE SUPPLY & DEMAND
51 Source: CJA Strategic Risk Brokers
RSA MAIZE CARRY OUT AND STOCK TO USE RATIO
17.37%
22.85% 24.20%
10.38%
14.81%
5.04%
16.89%
0%
5%
10%
15%
20%
25%
0
500
1 000
1 500
2 000
2 500
2008/09 2009/10 2010/11 2011/12 2012/13 2013/14E 2014/15F
Carry out Maize stock to use ratio
‘000 tons
52 Source: CJA Strategic Risk Brokers
SAFEX YELLOW MAIZE VS. CBOT CORN IN RAND TERMS
F2010 F2011 F2014 F2012 F2013
53
Million birds per week / Rand per kg kg
Source: SAPA
LOCAL BROILER PRODUCTION, IMPORTS & PER CAPITA CONSUMPTION
20
24
28
32
36
40
10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0
26.0
28.0
Oct
-08
Dec
-08
Feb
-09
Ap
r-0
9
Jun
-09
Au
g-0
9
Oct
-09
Dec
-09
Feb
-10
Ap
r-1
0
Jun
-10
Au
g-1
0
Oct
-10
Dec
-10
Feb
-11
Ap
r-1
1
Jun
-11
Au
g-1
1
Oct
-11
Dec
-11
Feb
-12
Ap
r-1
2
Jun
-12
Au
g-1
2
Oct
-12
Dec
-12
Feb
-13
Ap
r-1
3
Jun
-13
Au
g-1
3
Oct
-13
Dec
-13
Feb
-14
RSA Broilers slaughtered / week Poultry imports (birds/week)Broiler selling price Per capita consumption (kg)
54
48%
7% 17%
10%
6%
12%
Brazil Argentina Netherlands
UK Germany Other
46%
7% 16%
10%
10%
12%
2014 YTD (March)
TOTAL POULTRY IMPORTS – COUNTRY SPLIT
2013
Source: SAPA
55
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Industry trends and statistics |
Sheep
Beef
Pork
Chicken
Chicken Pork Beef Sheep
Feed Conversion Rate 1.7 2.2 5.5 5.0
Per Capita Consumption 36.4 kg 4.6 kg 17.2 kg 3.2 kg
Source: SAPA & FNB
PRODUCER PRICE COMPARISON – RSA PROTEIN Cents per kg
56
DRAFT BRINING LEGISLATION
Draft Brining Regulations – impact on consumer if we do nothing
Unit Size 2 kg
70:30
R40.00 / 2 kg
185g / piece
10.8 pieces
Live Mass 1.784 kg
Age 34.1 days
Unit Size 2 kg
85:15
R47.24 / 2 kg
153g / piece
13.1 pieces
Live Mass 1.784 kg
Age 34.1 days
57
Tel: +27 (0) 12 667 5468 Fax: +27 (0) 86 504 2002
Astral Foods Corporate Office
92 Koranna Avenue, Doringkloof Centurion, 0157,
Gauteng, South Africa
Chris Schutte Chief Executive Officer
Tel : +27 (0) 12 667 5468 Fax : +27 (0) 86 504 2002 Email: [email protected]
Website: www.astralfoods.com
Daan Ferreira Group Financial Director
Tel : +27 (0) 12 667 5468 Fax : +27 (0) 86 504 1602 Email: [email protected]
Astral Foods Limited
CONTACTS