Astral Foods Limited · JSE:ARL
Astral Foods — H1 2021 Earnings Presentation
59 slides from Astral Foods's earnings presentation, March 2021
Slide 1: Interim Results Presentation
Interim Results Presentation for the 6 months ended 31 March 2021 2021
Slide 2: Agenda
Business Overview AGENDA Business Overview Slide 3 – Chris Schutte Operational Overview Slide 8 – Michael Schmitz, Frans van Heerden, Gary Arnold Industry Matters Slide 30 – Gary Arnold Financial Overview Slide 33 – Daan Ferreira Prospects Slide 44 – Chris Schutte Additional Information
Slide 3: Business Overview
Chris Schutte Chief Executive Officer BUSINESS OVERVIEW
Slide 4: Salient Points
Business Overview SALIENT POINTS Feed input costs increased over the period on record high maize and soya prices, driven by the rally in global coarse grain markets Poultry selling prices increased for the period under review, but not sufficient to recoup higher feed prices High levels of poul
Slide 5: Key Financial Indicators
Business Overview KEY FINANCIAL INDICATORS Revenue @ R7.5 billion 6.7% Profit before interest and tax @ R345 million 36.8% Profit for the period @ R229 million 38.1% Headline earnings per share @ 597 cents 37.3% Interim dividend for the period @ 300 cps 5
Slide 6: Divisional Overview
Business Overview DIVISIONAL OVERVIEW Feed Poultry Raw material costs up sharply Feeding cost increased Internal feed requirements increased Bird performance improvement External sales volumes down Broiler sales realisations up Expenses well controlled Broiler sales volumes increased
Slide 7: PBIT Movement – 1H2021 vs. 1H2020
Business Overview PBIT MOVEMENT – 1H2021 vs. 1H2020 (R million) 600 500 400 305 90 160 300 9 546 25 200 345 100 R201 million 0 Raw material conversion Other Broiler sales Broiler selling PBIT 1H2020 PBIT 1H2021 efficiency volumes Feed cost price 7
Slide 8: Feed Division
Business Overview Michael Schmitz MD: Feed FEED DIVISION
Slide 9: Feed Division
Operational Overview FEED DIVISION Revenue - R million Operating profit - R million 4000 250 265 3 964 243 3 509 200 3000 150 2000 100 1000 50 0 0 1H2020 1H2021 1H2020 1H2021 Revenue up 12.9% Operating profit up 9.0% Raw material costs up Net margin 6.7% (1H20: 6.9%) Average selling prices up
Slide 10: Feed Division
Operational Overview FEED DIVISION SAFEX yellow maize price increased for the period under review avg. R3 397 per ton (1H20: R2 703) up R694 per ton y-o-y Soya meal price increased for the period under review avg. R8 738 per ton (1H20: R6 019) up R2 719 per ton y-o-y Internal feed sales volume
Slide 11: Feed Division – Sales Mix
Operational Overview FEED DIVISION – SALES MIX 1H2020 1H2021 14% 12% 23% 647 328 Tons 23% 666 817 Tons 57% Volume decrease ≈ 2.9% 60% 5% 6% ◼ Poultry Integrated ◼ Poultry External ◼ Dairy ◼ Other 11
Slide 12: Raw Materials
Gary Arnold MD: Agriculture RAW MATERIALS
Slide 13: RSA – Total Maize Supply & Demand
Raw Materials RSA – TOTAL MAIZE SUPPLY & DEMAND Marketing year (May to April) 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21E 2021/22F '000 tons Actual Actual Actual Actual Actual Estimate Forecast Carry In (1 May) 2 074 2 471 1 093 3 689 2 662 1 000 1 731 Crop Estimate 9 955 7 779 16 820 12 510 11
Slide 14: RSA – Total Maize Supply & Demand
Raw Materials RSA – TOTAL MAIZE SUPPLY & DEMAND ‘000 Tons 4 000 30% 28,31% 3 500 25% 21,75% 20,19% 3 000 18,28% 20% 2 500 2 000 12,44% 15% 9,87% 1 500 7,66% 10% 1 000 5% 500 2 471 1 093 3 689 2 662 1 000 1 731 2 710 0 0% 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21E 2021/22F Carry out Maize stock
Slide 15: SAFEX Yellow Maize Price
Raw Materials SAFEX YELLOW MAIZE PRICE Source: CJA Strategic Risk Brokers 15
Slide 16: SAFEX YM Price vs. CBOT in Rand Terms
Raw Materials SAFEX YM PRICE vs. CBOT IN RAND TERMS Source: CJA Strategic Risk Brokers 16
Slide 17: Durban Soya Meal Price
Raw Materials DURBAN SOYA MEAL PRICE Source: CJA Strategic Risk Brokers 17
Slide 18: Poultry Division Commercial
Frans van Heerden MD: Commercial POULTRY DIVISION COMMERCIAL
Slide 19: Poultry Division - Consolidated
Operational Overview POULTRY DIVISION - CONSOLIDATED Revenue - R million Operating profit - R million 300 6000 6 115 287 250 5000 5 644 200 4000 150 3000 2000 100 1000 50 61 0 0 1H2020 1H2021 1H2020 1H2021 Revenue up 8.3% Operating profit down 78.6% Broiler sales volumes up 3.5% Net margin 1.0%
Slide 20: Poultry Division - Commercial
Operational Overview POULTRY DIVISION - COMMERCIAL Profits decreased for the period under review on the back of extraordinarily high feed prices which could not be recovered in the broiler selling prices QSR sales have recovered to 90% of pre COVID-19 levels for the period under review, and thes
Slide 21: Poultry Division – Sales Mix
Operational Overview POULTRY DIVISION – SALES MIX 1H2020 1H2021 22% 22% 222 437 Tons 50% 230 209 Tons 51% 8% 7% Volume increase ≈ 3.5% 12% 13% 5% 5% 2% 3% ◼ IQF Mixed Portions ◼ IQF Single Portions ◼ Frozen ◼ Fresh ◼ Value Added ◼ Tertiary 21
Slide 22: Broiler Selling Price
Operational Overview BROILER SELLING PRICE 140% 135% 130% 125% 120% Lockdown impact 115% 110% 105% 100% Lower brine effect 95% Dec-19 Dec-16 Dec-17 Dec-18 Dec-20 Jun-17 Jun-18 Jun-19 Jun-20 Oct-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Aug-17 Aug-18 Aug-19 Aug-20 Oct-17 Oct-18 Oct-19 Oct-20 Apr-17 Apr-1
Slide 23: Broiler Selling Price vs. Feed Price %
Operational Overview BROILER SELLING PRICE vs. FEED PRICE 40% 30% 20% 10% 0% Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Feb-17 Jun-17 Feb-18 Jun-18 Feb-19 Jun-19 Feb-20 Jun-20 Feb-21 Aug-17 Aug-18 Aug-19 Aug-20 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20 -10% -20% -30% % Change in broiler
Slide 24: Poultry Division Agriculture
Gary Arnold MD: Agriculture POULTRY DIVISION AGRICULTURE
Slide 25: Poultry Division - Agriculture
Operational Overview POULTRY DIVISION - AGRICULTURE Parent stock sales were higher for the period under review, as demand for the Ross broiler genetics continued to increase market share for the breed Feed input costs increased adversely affecting the live bird production cost, however feeding p
Slide 26: Broiler Production Performance
Operational Overview BROILER PRODUCTION PERFORMANCE 106% 104% 102% 100% 98% 96% Key indicators base-lined to 100% in F2016 94% F2016 F2017 F2018 F2019 F2020 1H2021 Slaughter age Live weight Average daily gain 26
Slide 27: Broiler Production Performance
Operational Overview BROILER PRODUCTION PERFORMANCE 120% 115% 110% 105% 100% 95% 90% 85% Key indicators base-lined to 100% in F2016 80% F2016 F2017 F2018 F2019 F2020 1H2021 Mortality Feed consumption Performance efficiency factor 27
Slide 28: Other Africa
Gary Arnold MD: Agriculture OTHER AFRICA
Slide 29: Other Africa Division
Operational Overview OTHER AFRICA DIVISION Revenue - R million Operating profit - R million 250 20 239 238 19 200 15 16 150 10 100 5 50 0 0 1H2020 1H2021 1H2020 1H2021 Revenue down 0.3% Operating profit up 19.9% Raw material costs up Net margin 7.9% (1H20: 6.6%) Average selling prices down Z
Slide 30: Industry Matters
Gary Arnold MD: Agriculture INDUSTRY MATTERS
Slide 31: Poultry Imports
Industry Matters POULTRY IMPORTS Tons 70000 65000 60000 55000 50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 Jun-18 Feb-17 Jun-17 Feb-18 Feb-19 Jun-19 Feb-20 Jun-20 Feb-21 Dec-16 Aug-17 Dec-17 Aug-18 Dec-18 Aug-19 Dec-19 Aug-20 Dec-20 Oct-16 Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Ap
Slide 32: Industry Overview
Industry Matters INDUSTRY OVERVIEW Based on industry statistics broiler slaughter numbers are approximately 20.6 million birds per week Imports for the period averaged 39 705 tons per month (≈ 7.5% down on 1H20 @ 42 907 tons), equalling approximately 26% of total consumption Highly Pathogenic
Slide 33: Financial Overview
Daan Ferreira Chief Financial Officer FINANCIAL OVERVIEW
Slide 34: Income Statement
Financial Overview INCOME STATEMENT 2021 2020 Six months ended 31 March R million R million % change Revenue 7 544 7 069 7% Operating profit 345 546 37% Operating profit margin 4.6% 7.7% Net finance (cost) / income (25) (27) Profit before tax 319 519 38% Tax (90) (148) Profit for the period 229 371
Slide 35: Group Six Month Revenue & Profit
Financial Overview GROUP SIX MONTH REVENUE & PROFIT (R million) 7 544 7 069 7 035 6 775 6 710 6 556 6 600 6 379 6 131 5 823 5 795 1036 906 866 546 503 429 379 345 292 212 120 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 External revenue Operating profit Operating profit margin % 35
Slide 36: Feed Six Monthly Revenue
Financial Overview FEED SIX MONTHLY REVENUE (R billion) 3 964 3 729 3 461 3 448 3 509 3 470 3 405 3 303 3 271 3 096 3 102 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 Revenue Change in volumes Change in feed price 36
Slide 37: Poultry Six Monthly Revenue
Financial Overview POULTRY SIX MONTHLY REVENUE (R billion) 6 115 5 472 5 644 5 699 5 394 5 415 5 405 5 124 4 693 4 436 4 456 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 Revenue Change in poultry selling price Change in volumes 37
Slide 38: Group Six Monthly Operating Profit
Financial Overview GROUP SIX MONTHLY OPERATING PROFIT (R million) 1 044 191 898 875 266 207 546 503 429 243 239 379 233 345 292 120 250 212 616 265 252 265 184 194 22 836 617 258 113 287 8 61 -135 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 Poultry Feed Other Africa Change in feed price C
Slide 39: Balance Sheet
Financial Overview BALANCE SHEET March 2021 September 2020 R million R million % change Non-current assets (excl. ROU assets) 3 267 3 259 Non-current assets – ROU assets 451 537 16% Net working capital 1 210 1 132 7% Current assets (excl. cash) 3 351 2 961 Current liabilities (excl. borrowings & lea
Slide 40: Capital Expenditure
Financial Overview CAPITAL EXPENDITURE 2021 2020 Six months ended 31 March R million R million Depreciation and amortisation 213 197 Property, plant & equipment 106 91 Right of use assets 107 106 Total capex spend 121 311 Festive expansion (including advance payments) 8 249 Other capex 113 62 Outsta
Slide 41: Working Capital
Financial Overview WORKING CAPITAL March 2021 September 2020 Variance R million R million R million Current assets 3 351 2 961 390 Biological assets 863 851 12 Inventory - Poultry 604 497 107 - Feed 415 317 98 - Other Africa 35 47 (12) Trade receivables 1 262 1 138 124 Advance capex payments 14 23 (
Slide 42: Statement of Cash Flows
Financial Overview STATEMENT OF CASH FLOWS 2021 2020 For the six months ended 31 March R million R million Cash operating profit 481 715 Working capital movement (16) (116) 465 599 Tax paid (51) (71) Finance income / Dividend received 10 17 Capital expenditure (121) (311) 303 234 Finance expense (3)
Slide 43: In Summary
Financial Overview IN SUMMARY Profit after tax at R230 million down 38% on prior period (R371 million) Net cash outflow of R154 million in a challenging period Capital expenditure of R121 million for the period (1H20: R311 million) Interim dividend 300 cps for the period at 2x cover Surplu
Slide 44: Prospects
Chris Schutte Chief Executive Officer PROSPECTS
Slide 45: Outlook
Prospects OUTLOOK Unprecedented unemployment rate following the hard lockdown, and the resultant financial impact on businesses and discretionary disposable income Very high local maize prices not seen since 2016, notwithstanding the expected good maize crop for 2021 estimated at 16.6 million to
Slide 46: Thank You
é7Astral THANK YOU
Slide 47: Additional Information
é7Astral Fed tive FRESH CHICKEN ADDITIONAL INFORMATION
Slide 48: World Corn Ending Stocks
Additional Information WORLD CORN ENDING STOCKS Million Tons 375 30% 27,8% 27,7% 350 26,2% 325 25,0% 22,8% 25% 300 22,8% 20,6% 20,2% 275 19,8% 250 20% 225 200 15% 175 150 125 10% 100 75 5% 50 25 214 279 311 326 343 303 297 277 272 0 0% 2014 2015 2016 2017 2018 2019 2020 2021E 2022F End Stock Maize s
Slide 49: El Niño Southern Oscillation
Additional Information EL NIÑO SOUTHERN OSCILLATION Source: International Research Institute for Climate and Society (IRI) – Columbia University 49
Slide 50: Vegetative Health Index
Additional Information VEGETATIVE HEALTH INDEX Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI) 50
Slide 51: Broiler Feed
Additional Information BROILER FEED Inclusion & Cost Contribution 0,5 0,4 0,4 0,3 0,4 0,3 0,4 100% 3,0 3,3 2,9 6,0 3,3 5,4 3,3 3,2 5,3 3,6 3,8 3,7 4,5 3,7 7,4 8,7 9,8 90% 7,6 7,7 7,0 9,4 9,2 14,6 16,6 16,6 14,8 14,4 18,2 0,7 0,7 5,2 80% 0,5 0,6 13,2 0,7 23,4 0,7 5,4 4,1 5,8 19,8 0,7 21,2 5,6 20,3 5,
Slide 52: Broiler Price vs. Food Price Inflation
Additional Information BROILER PRICE vs. FOOD PRICE INFLATION 120% 120% 115% 115% 110% 110% 105% 105% 100% 100% 95% 95% 90% 90% Jul-17 Jul-18 Jul-19 Jul-20 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Nov-17 Nov-18 Nov-19 Nov-20 Jan-17 May-17 Jan-18 May-18 Jan-19 May-19 Jan-20 May-
Slide 53: RSA Protein Price Comparison
Additional Information RSA PROTEIN PRICE COMPARISON cents / kg 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 Dec-18 Dec-15 Dec-16 Dec-17 Dec-19 Dec-20 Jun-18 Jun-16 Jun-17 Jun-19 Jun-20 Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Apr-16 Aug-16 Apr-17 Aug-17 Apr-18 Aug-18 Apr-19 Aug-19 Apr-20 Aug-
Slide 54: RSA Market Share
Additional Information RSA MARKET SHARE 21% 26% 4% 5% 9% 19% 7% 9% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Local broiler production ≈ 20.6 million birds per week Source: Own Estimates 54
Slide 55: RSA Market Share (Including Imports)
Additional Information RSA MARKET SHARE (INCLUDING IMPORTS) 19% 26% 14% 16% 7% 3% 4% 5% 6% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports Avg. poultry imports ≈ 7.1 million birds per week (6 months ending March 2021) Source: SAPA & Own Estimates 55
Slide 56: Total Poultry Imports
Additional Information TOTAL POULTRY IMPORTS Tons 600 000 500 000 400 000 300 000 200 000 100 000 F2018 F2019 F2020 F2021 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep F2018 46 348 92 223 140 823 188 065 228 295 281 102 327 753 374 838 412 638 461 454 523 205 579 661 F2019 45 061 89 632 127 371
Slide 57: Total Imports – Country of Origin
Additional Information TOTAL IMPORTS – COUNTRY OF ORIGIN 2020 2021 March YTD Other 2,0% Other 3,2% US 17,3% US 16,4% Argentina Argentina 4,5% 6,1% Brazil EU 6,7% 55,6% Brazil 69,5% EU 18,7% 485 543 tons 114 831 tons Source: SAPA 57
Slide 58: Total Imports – Country of Origin
Additional Information TOTAL IMPORTS – COUNTRY OF ORIGIN Country (tons) 2019 2020 2021 YTD Brazil 268 869 270 100 79 940 United States 89 598 79 492 19 816 Poland 50 419 4 321 - Argentina 37 939 29 530 5 160 Ireland 31 221 35 128 852 Denmark 23 325 16 562 50 Spain 18 824 28 000 6 673 Thailand 8 728
Slide 59: Contact Details
Business Overview CONTACT DETAILS Chris Schutte Chief Executive Officer Tel : +27 (0) 12 667 5468 Fax : +27 (0) 86 504 2002 email: Chris.Schutte@astralfoods.com www.astralfoods.com Daan Ferreira Chief Financial Officer Tel : +27 (0) 12 667 5468 Fax : +27 (0) 86 504 1602 email: Daan.Ferreira@astralfo