Astral Foods Limited · JSE:ARL
Astral Foods — FY2022 Earnings Presentation
61 slides from Astral Foods's earnings presentation, November 2022
Slide 1: Annual Results Presentation
Annual Results Presentation for the year ended 30 September 2022 2022
Slide 2: Agenda
AGENDA ▪ Business Overview Slide 3 – Chris Schutte ▪ Operational Overview Slide 11 – Gary Arnold ▪ Industry Matters Slide 30 – Gary Arnold ▪ Financial Overview Slide 33 – Dries Ferreira ▪ Outlook Slide 44 – Chris Schutte ▪ Additional Information Slide 47 2
Slide 3: Business Overview
BUSINESS OVERVIEW Chris Schutte Chief Executive Officer
Slide 4: Salient Points
Business Overview SALIENT POINTS ▪ Feed input costs increased sharply over the period on record high maize and soya prices, driven by global fundamentals in the coarse grain markets ▪ Broiler production efficiencies improved year-on-year, notwithstanding a negative impact due to load shedding in the
Slide 5: Salient Points
Business Overview SALIENT POINTS ▪ Record level of unemployment in South Africa with weak economic growth, rising cost of living and a strained consumer environment ▪ Disposal of Astral’s interest in National Chicks Swaziland and the sale of the Mozambique feed and poultry assets, completed ▪ Poultr
Slide 6: Key Financial Indicators
Business Overview KEY FINANCIAL INDICATORS ▪ Revenue @ R19,3 billion 22% ▪ Profit before interest and tax @ R1 440 million 103% ▪ Profit for the period @ R1 071 million 126% ▪ Headline earnings per share @ 2 762 cents 125% ▪ Total dividend for the year @ 1 380 cps 97% 6
Slide 7: Divisional Overview
Business Overview DIVISIONAL OVERVIEW Feed Poultry ▪ Raw material costs up sharply ▪ Broiler performance improvement ▪ Internal feed requirements increased ▪ Broiler sales volumes increased ▪ External sales volumes increased ▪ Broiler sales realisations up ▪ Expenses up in line with inflation ▪ Cost
Slide 8: Broiler Selling Price vs. Feed Price
-5% -15% -10% 10% 20% 25% 30% 15% 0% 5% Oct-17 Source: Own Data Dec-17 Feb-18 Business Overview Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 % Change in broiler feed price Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 BROILER SELLING PRICE vs. FEED PRICE Apr-21 Jun
Slide 9: Broiler Net Margin vs. Feed Price
Business Overview BROILER NET MARGIN vs. FEED PRICE 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 Broiler net margin % Change in broiler feed price (index) Source: Own Data 9
Slide 10: PBIT Movement F2022 vs. F2021
1 000 1 200 1 400 1 600 1 800 2 000 0 200 400 600 800 PBIT F2021 711 Business Overview (R million) Broiler raw 614 material cost Feed conversion 14 efficiency Broiler feed 75 change Broiler sales 221 volumes Broiler selling prices 1 482 PBIT MOVEMENT F2022 vs. F2021 Water and load 116 shedding costs
Slide 11: Raw Materials
RAW MATERIALS Gary Arnold Group Chief Operating Officer
Slide 12: RSA Total Maize Supply & Demand
Operational Overview RSA TOTAL MAIZE SUPPLY & DEMAND Marketing year (May to April) 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23E 2023/24F '000 tons Actual Actual Actual Actual Actual Estimate Forecast Carry In (1 May) 1 093 3 689 2 662 1 000 2 115 2 124 1 821 Crop Estimate 16 820 12 510 11 275 15
Slide 13: SAFEX Yellow Maize Price
Operational Overview SAFEX YELLOW MAIZE PRICE Source: CJA Strategic Risk Brokers 13
Slide 14: Durban Soya Meal Price
Operational Overview DURBAN SOYA MEAL PRICE Source: CJA Strategic Risk Brokers 14
Slide 15: Broiler Feed Cost Breakdown
Operational Overview BROILER FEED COST BREAKDOWN Inclusion (%) Cost Contribution (%) 36 17 59 13 23 17 Maize Soya meal Extruded soya Sunflower meal Fish meal Soya oil Other Vitamins & Minerals 15
Slide 16: Feed Division
FEED DIVISION Gary Arnold Group Chief Operating Officer
Slide 17: Feed Division
Operational Overview FEED DIVISION Revenue - R million Operating profit - R million 600 10000 599 550 9000 10 017 500 530 8000 450 8 302 7000 400 6000 350 5000 300 250 4000 200 3000 150 2000 100 1000 50 0 0 F2021 F2022 F2021 F2022 Revenue up 20.7% Operating profit up 13.0% ▪ Raw material costs up ▪
Slide 18: Feed Division
Operational Overview FEED DIVISION ▪ SAFEX yellow maize price increased for the period under review F2022 avg. R4 111 per ton (F2021: R3 371) up R740 per ton ▪ DBN soya meal price increased for the period under review F2022 avg. R9 629 per ton (F2021: R8 216) up R1 413 per ton ▪ Internal feed sales
Slide 19: Feed Division
Operational Overview FEED DIVISION F2021 F2022 33% 37% 1 330 991 tons 1 418 396 tons Volume Increase ≈ 6.6% 58% 61% 6% 5% ◼Poultry Integrated ◼ Poultry External ◼ Other 19
Slide 20: Poultry Division Commercial
POULTRY DIVISION COMMERCIAL Gary Arnold Group Chief Operating Officer
Slide 21: Poultry Division - Consolidated
Operational Overview POULTRY DIVISION - CONSOLIDATED Revenue - R million Operating profit - R million 16000 750 15 838 700 763 14000 650 12000 13 077 600 550 10000 500 450 8000 400 350 6000 300 250 4000 200 150 2000 100 147 50 0 0 F2021 F2022 F2021 F2022 Revenue up 21.1% Operating profit up 420% ▪ B
Slide 22: Poultry Division - Commercial
Operational Overview POULTRY DIVISION - COMMERCIAL ▪ Broiler sales volumes increased on higher bird numbers, with additional volumes slaughtered under the new Festive processing capacity ▪ Improved economies of scale linked to an increase in broiler slaughter numbers contributed positively to profit
Slide 23: Poultry Division - Commercial
Operational Overview POULTRY DIVISION - COMMERCIAL F2021 F2022 22% 22% 6% 476 750 tons 51% 7% 519 380 tons 50% Volume increase ≈ 8.9% 12% 12% 5% 4% 4% 5% IQF Mixed Portions IQF Single Portions Frozen Fresh Value Added Tertiary 23
Slide 24: Poultry Division Agriculture
POULTRY DIVISION AGRICULTURE Gary Arnold Group Chief Operating Officer
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 on the back of escalating raw material costs, adversely affecting th
Slide 26: Broiler Performance
Operational Overview BROILER PERFORMANCE 110% 108% 106% 104% 102% 100% 98% 96% 94% 92% F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F2022 Slaughter age Live weight Average daily gain *Key indicators base-lined to 100% in F2012 26
Slide 27: Broiler Performance
Operational Overview BROILER PERFORMANCE 135% 130% 125% 120% 115% 110% 105% 100% 95% 90% 85% 80% 75% 70% 65% F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 F2022 Mortality Feed consumption Performance efficiency factor *Key indicators base-lined to 100% in F2012 27
Slide 28: Other Africa
OTHER AFRICA Gary Arnold Group Chief Operating Officer
Slide 29: Other Africa
Operational Overview OTHER AFRICA Revenue - R million Operating profit - R million 500 65 450 60 65 471 55 400 50 350 45 300 40 35 250 289 30 35 200 25 150 20 15 100 10 50 5 0 0 F2021 F2022 F2021 F2022 Revenue up 62.6% Operating profit up 87.4% ▪ Selling prices up ▪ Net margin 13.8% (F2021: 12.0%) ▪
Slide 30: Industry Matters
INDUSTRY MATTERS Gary Arnold Group Chief Operating Officer
Slide 31: Poultry Imports
Industry Matters POULTRY IMPORTS tons 65 000 60 000 55 000 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Feb-18 Aug-18 Feb-19 Aug-19 Oct-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Aug-22 Apr-18 Apr-19 Apr-20 Ap
Slide 32: Industry Overview
Industry Matters INDUSTRY OVERVIEW ▪ Based on industry statistics broiler slaughter numbers are approximately 21.3 million birds per week ▪ Imports for the period averaged 33 318 tons per month (≈ 5.9 million bpw) being approximately 22% of local consumption (F2021: 37 610 tons per month) ▪ Highly P
Slide 33: Financial Overview
FINANCIAL OVERVIEW Dries Ferreira CFO Designate
Slide 34: Income Statement
Financial Overview INCOME STATEMENT 2022 2021 % change Year ended 30 September R million R million Revenue 19 334 15 866 22% Operating profit 1 440 711 103% Op– incl. gain on disposal of interest in subsidiaries 29 - Op– incl. impairment of goodwill (16) - Operating profit margin 7.4% 4.5% Net finan
Slide 35: Group Annual Revenue
Financial Overview GROUP ANNUAL REVENUE (R billion) 19,3 15,9 10,0 13,5 13,9 13,0 8,3 12,0 12,4 11,3 7,0 6,2 6,6 9,6 6,6 8,5 6,2 7,2 8,2 7,4 7,0 7,2 6,9 5,5 15,8 6,3 4,3 4,9 13,1 4,8 5,2 4,0 3,6 3,5 4,1 3,5 5,1 10,6 10,9 11,3 3,7 3,9 9,9 2,5 2,7 8,7 9,1 2,8 2,7 2,7 7,0 2,7 5,1 5,3 5,8 6,0 2,0 4,4 4,
Slide 36: Group Annual Operating Profit
Financial Overview GROUP ANNUAL OPERATING PROFIT 14,8% 1 942 (R million) 15,0% 12,8% 12,3% 457 1 440 9,6% 9,8% 9,3% 8,7% 1 101 1 086 8,3% 8,4% 6,5% 599 7,3% 6,7% 882 5,9% 7,4% 813 4,5% 5,9% 766 809 6,6% 423 674 5,8% 4,6% 391 711 597 5,1% 1 453 581 585 549 272 333 548 489 477 493 508 389 214 282 3,1%
Slide 37: Group Six Monthly Operating Profit
Financial Overview GROUP SIX MONTHLY OPERATING PROFIT 1044 (R million) 191 898 875 266 207 785 272 655 550 551 538 327 503 186 237 243 429 239 379 374 233 337 324 280 250 275 265 203 213 120 212 265 154 265 59 197 252 153 157 184 173 135 156 140 45 59 351 310 194 22 616 836 617 258 113 287 8 61 86 4
Slide 38: Balance Sheet
Financial Overview BALANCE SHEET September 2022 September 2021 R million R million % change Non-current assets (excl. ROU assets) 3 260 3 235 1% Non-current assets – ROU assets 289 340 Net working capital 1 751 1 454 20% Current assets (excl. cash) 4 167 3 520 18% Current liabilities (excl. borrowin
Slide 39: Capital Expenditure
Financial Overview CAPITAL EXPENDITURE F2022 F2021 Year ended 30 September R million R million Depreciation and amortisation 307 425 Property, plant & equipment 211 217 Right of use assets 96 208 Total capex spend 258 260 Outstanding commitments 737 240 Ross – GGP farm purchase and build 245 Ross –
Slide 40: Working Capital
Financial Overview WORKING CAPITAL September 2022 September 2021 Variance R million R million R million Current assets 4 167 3 520 646 Biological assets 1 246 976 270 Inventory - Poultry 694 537 157 - Feed 415 328 86 - Other Africa 70 56 14 Trade receivables 1 524 1 438 86 Other receivables 218 185
Slide 41: Statement of Cash Flows
Financial Overview STATEMENT OF CASH FLOWS 2022 2021 For the twelve months ended 30 September R million R million Cash operating profit 1 906 1 156 Working capital movement (414) (344) 1 492 812 Tax paid (294) (136) Net interest received 25 6 Capital expenditure paid (281) (260) Lease payments (122)
Slide 42: HEPS & Dividend Per Share
Financial Overview HEPS & DIVIDEND PER SHARE 3712 2762 2016 1914 1674 1381 1441 1286 1228 1148 958 960 965 840 890 864 787 631 487 434 272 326 90 108 168 230 380 585 700 700 700 760 810 656 222 440 1150 490 1055 2050 900 775 700 1380 F2013 F2001 F2002 F2003 F2004 F2005 F2006 F2007 F2008 F2009 F2010
Slide 43: In Summary
Financial Overview IN SUMMARY ▪ Revenue at R19,3 billion up 21.9% (prior year at R15,9 billion) ▪ Profit before tax at R1 440 million up 103% on higher volumes and improved margin ▪ Capital expenditure of R258 million at a normalised level, with strategic capex spend of R588 million over next 18 mon
Slide 44: Outlook
OUTLOOK Chris Schutte Chief Executive Officer
Slide 45: Prospects
Outlook PROSPECTS ▪ Consistently high unemployment levels and a soaring cost of living, have led to pressure on consumer spending with lower disposable income levels ▪ Record high raw material costs, notwithstanding the good South African maize crops for the past three years, and which is expected t
Slide 46: Thank You
THANK YOU “It was the best of times…..and the worst of times” Confirmed March 2022
Slide 47: Additional Information
Financial Overview ADDITIONAL INFORMATION
Slide 48: Key Financial Ratios
Additional Information KEY FINANCIAL RATIOS 70 30,0 65 60 61 25,0 55 50 48 51 49 48 20,0 46 45 42 40 39 41 37 36 36 15,0 39 34 31 31 15,0 30 33 14,8 29 29 30 36 31 28 12,3 12,8 24 24 9,8 25 26 26 23 21 10,0 9,6 20 20 21 19 17 7,4 19 15 5,9 8,3 8,4 9,3 13 8,7 14 7,3 8,0 7,8 16 4,6 11 6,5 10 5,5 5,5 6
Slide 49: Key Financial Indicators
Additional Information KEY FINANCIAL INDICATORS 140 124,65 120 107,60 106,08 100 96,06 97,45 78,00 80 61,05 61,07 60 49,95 41,36 41,65 44,16 37,43 40 33,47 34,24 35,38 34 34 26 29 28,28 30 22 27 27 27 23 23,83 24 24 20 21 19 21 17,36 17 16 18 20 14,34 15 12 12 11 8,53 10,79 9 10 9 10 21 14 7 15 14 3
Slide 50: World Corn Ending Stocks
Additional Information WORLD CORN ENDING STOCKS 375 30% 27,80% 27,70% 350 26,20% 325 25,00% 22,80% 21,20% 25% 23,10% 22,20% 21,90% 300 20,50% 275 19,80% 250 20% 225 200 15% 175 150 125 10% 100 75 5% 50 25 0 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2024F End Stock Maize stock to use rati
Slide 51: El Niño Oscillation
Additional Information EL NIÑO OSCILLATION Source: International Research Institute for Climate and Society (IRI) – Columbia University 51
Slide 52: Vegetative Health Index
Additional Information VEGETATIVE HEALTH INDEX Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI) 52
Slide 53: Broiler Feed Ingredient Contribution
Additional Information BROILER FEED INGREDIENT CONTRIBUTION 0,3 0,4 0,3 0,4 0,3 0,3 0,4 100% 3,8 3,3 2,2 1,8 3,0 1,7 2,9 3,2 5,3 3,6 3,7 4,5 3,7 3,1 7,3 6,0 6,4 7,0 8,7 9,4 9,2 9,8 11,5 90% 14,8 14,4 16,2 17,3 16,6 0,7 0,6 5,2 4,7 16,1 0,7 80% 0,6 0,7 13,2 0,8 0,7 4,1 3,8 4,6 22,7 23,0 21,2 5,6 20,3
Slide 54: Broiler Price vs. Food Price Inflation
Additional Information BROILER PRICE vs. FOOD PRICE INFLATION 140 140 135 135 130 130 125 125 120 120 115 115 110 110 105 105 100 100 95 95 90 90 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Dec-17 Dec-18 Dec-19 Jun-20 Dec-20 Dec-21 Jun-18 Aug-18 Jun-19 Jun-21 Jun-22 Feb-18 Feb-19 Feb-20 Feb-21 Feb-22 Aug-19
Slide 55: RSA Protein Price Comparison
Additional Information RSA PROTEIN PRICE COMPARISON Cents per kilogram 13000 11000 9000 7000 5000 3000 1000 Dec-19 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Dec-17 Dec-18 Dec-20 Dec-21 Jun-18 Jun-19 Jun-20 Jun-22 Feb-18 Feb-19 Feb-20 Feb-21 Jun-21 Aug-21 Feb-22 Aug-18 Aug-19 Aug-20 Aug-22 Apr-18 Apr-19 Apr
Slide 56: RSA Poultry Market Share
Additional Information RSA POULTRY MARKET SHARE 21% 28% 4% 5% 8% 18% 7% 9% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Local broiler production ≈ 21,3 million birds per week (July 2022) Source: SAPA & Own Estimates 56
Slide 57: RSA Poultry Market Share
Additional Information RSA POULTRY MARKET SHARE 22% 22% 14% 16% 7% 3% 4% 7% 5% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports Avg. poultry imports ≈ 5.9 million birds per week (12 months ended September 2022) Source: SAPA & Own Estimates 57
Slide 58: Total Poultry Imports
Additional Information TOTAL POULTRY IMPORTS tons 600 000 500 000 400 000 300 000 200 000 100 000 F2020 F2021 F2022 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep F2020 40 409 86 676 128 331 170 449 216 314 257 443 296 901 338 461 371 969 405 599 442 892 490 501 F2021 44 514 85 247 123 398 153 29
Slide 59: Total Poultry Imports
Additional Information TOTAL POULTRY IMPORTS COUNTRY OF ORIGIN ▪ 2021 ▪ 2022 September YTD Other 2,4% Other 3,5% US 13,6% US 15,6% Argentina Argentina 8,9% 5,5% EU 8,8% EU 0,5% Brazil Brazil 66,6% 74,6% 432 307 tons 295 434 tons Source: SAPA 59
Slide 60: Total Poultry Imports
Additional Information TOTAL POULTRY IMPORTS COUNTRY OF ORIGIN Country (tons) 2020 2021 2022 Sep YTD Brazil 270 100 287 880 220 467 United States 79 492 67 308 40 292 Poland 4 321 - - Argentina 29 530 23 715 26 151 Ireland 35 128 852 1 Denmark 16 562 100 - Spain 28 000 37 077 2 061 Thailand 4 035 4
Slide 61: Contact Details
Financial Overview CONTACT DETAILS Chris Schutte Chief Executive Officer Tel : +27 (0) 12 667 5468 email: ces@astralfoods.com Dries Ferreira CFO Designate Tel : +27 (0) 12 667 5468 email: dries.ferreira@astralfoods.com www.astralfoods.com