Quantum Foods Holdings Ltd · JSE:QFH
Quantum Foods — FY2019 Earnings Presentation
30 slides from Quantum Foods's earnings presentation, September 2019
Slide 1: Results Presentation for the year ended 30 September 2019
Results Presentation for the year ended 30 September 2019
Slide 2: Agenda
Agenda 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
Slide 3: Business overview
Business a overview H Lourens Quantum Foods Results Presentation for the year ended 30 September 2019 3
Slide 4: Salient features
Salient features 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 •
Slide 5: Business overview
Business overview HEPS decreased due to downturn of egg industry • 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 201
Slide 6: Financial overview
Financial a overview A Muller Quantum Foods Results Presentation for the year ended 30 September 2019 6
Slide 7: Statement of income
Statement of income 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
Slide 8: Dividends
Dividends 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
Slide 9: Share repurchases
Share repurchases • 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
Slide 10: Revenue analysis
Revenue analysis Total R4 418 million (2018: R4 122 million) ANIMAL FEED EGGS FARMING AFRICA 1 759 1 095 1 325 239 40% 25% 30% 5% 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
Slide 11: Segment results
Segment results 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
Slide 12: Statement of financial position
Statement of financial position 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 fo
Slide 13: Statement of cash flow
Statement of cash flow 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
Slide 14: Capital expenditure
Capital expenditure 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 bree
Slide 15: Sensitivities: Eggs
Sensitivities: Eggs 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
Slide 16: Operational overview
Operational a overview H Lourens Quantum Foods Results Presentation for the year ended 30 September 2019 16
Slide 17: Nova Feeds
Nova Feeds Solid performance • 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
Slide 18: Broiler farming
Broiler farming Strong performance • 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 throug
Slide 19: Layer farming
Layer farming Continued improvement • 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 decrease
Slide 20: Nulaid Eggs
Nulaid Eggs Excellent operational performance • 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
Slide 21: Africa business
Africa business Tough trading conditions • 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 hat
Slide 22: Outlook 2020
Outlook 2020 Mh
Slide 23: Outlook 2020
Outlook 2020 Expectations Quantum Foods’ response • Challenging macro business • Ensure egg sales in optimal environment channels and geographies • Stable raw material costs • Leverage investments in feeds and hatcheries • Weaker egg prices • Improve efficiencies • Tough first six months in througho
Slide 24: Quantum Foods Results Presentation for the year ended 30 September 2019
Quantum Foods Results Presentation for the year ended 30 September 2019 24
Slide 25: Appendix
a Appendix Quantum Foods Results Presentation for the year ended 30 September 2019 25
Slide 26: Safex yellow maize Rand per ton
Safex yellow maize Rand per ton 4 500 4 000 3 016 3 500 2 924 2 700 3 000 2 352 1 770 1 953 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
Slide 27: CBOT USD soya beans
CBOT USD soya beans 430 410 390 370 309 300 316 309 350 296 330 310 299 290 270 250 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
Slide 28: Rand:US dollar exchange rate
Rand:US dollar exchange rate 18 14.14 15.13 16 13.71 13.84 13.55 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
Slide 29: Layer productivity index
Layer productivity index 140 135 130 125 120 115 110 105 100 95 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Quantum Foods Results Presentation for the year ended 30 September 2019 29
Slide 30: Broiler productivity index
Broiler productivity index 125 120 115 110 105 100 95 90 85 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Quantum Foods Results Presentation for the year ended 30 September 2019 30
Quantum Foods Holdings — FY2019 Earnings Presentation on 6ix