Inghams Group Ltd. · ASX:ING
Inghams — FY2021 Earnings Presentation
35 slides from Inghams's earnings presentation, Aug 20, 2021
Slide 1: 2021 Annual Results Presentation
INGHAMS GROUP LIMITED 2021 Annual Results Presentation 20 AUGUST 2021
Slide 2: Important notice and disclaimer
Important notice and disclaimer The material in this presentation is general background information about the activities of Inghams Group Limited (Ingham’s) and its subsidiaries (Ingham’s Group), and is current at the date of this presentation, unless otherwise noted. It is information given in summ
Slide 3: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION Financial information is provided on a post AASB 16 basis unless otherwise stated On 5 November 2020 Ingham’s announced that it will report its underlying results inclusive of the new leases standard AASB 16. The underlying results in this document include the i
Slide 4: Group Performance Highlights
GROUP PERFORMANCE HIGHLIGHTS Andrew Reeves CEO & Managing Director 4
Slide 5: Group Highlights
GROUP HIGHLIGHTS Strong results, delivering on Optimising the Core strategy § Statutory EBITDA of $443.9M up 14.5%, Statutory NPAT of $83.3M § Underlying EBITDA of $448.7M up 9.6%, Underlying NPAT $86.7M Strong financial results § Underlying EBITDA pre AASB 16 of $209.6M up 16.6%, Underlying NPAT pr
Slide 6: FY21 Financial Highlights
FY21 FINANCIAL HIGHLIGHTS Growth in key earnings metrics backed by a strong balance sheet FY21 FY20 Variance % § Growth in core poultry volume of +4.2% reflects Group Core Poultry Volume (kt) 446.9 428.7 18.2 4.2 the resilience of poultry Statutory EBITDA ($M) 443.9 387.8 56.1 14.5 - Overall trading
Slide 7: Observations Across Our Channels
OBSERVATIONS ACROSS OUR CHANNELS QSR FOOD EXPORT RETAIL SERVICE WHOLESALE • Performing well despite • Good performance post • Volume growth improved • Volume grew strongly in • Australian export volumes COVID-19 effects COVID-19 lockdowns in 2H with the easing of the second half versus were lower ve
Slide 8: Progress on Our Strategy
PROGRESS ON OUR STRATEGY Key focus on embedding strong foundations to support future growth opportunities STRATEGIC PILLARS ACHIEVEMENTS IN DELIVERY OF STRATEGY § Continuous improvement culture delivering improved effectiveness and capacity to lower costs, enhance yield, deliver a better product mix
Slide 9: Financial Results
FINANCIAL RESULTS Gary Mallett Chief Financial Officer 9
Slide 10: Profit & Loss
PROFIT & LOSS Improved financial results achieved in a challenging operating environment $M FY21 FY20 Variance % § Volume: Core poultry volume +4.2% despite reduction in external feed volumes, challenging market conditions Core Poultry volumes (kt) 446.9 428.7 18.2 4.2 including intermittent lockdow
Slide 11: Balance Sheet
BALANCE SHEET Strong balance sheet provides a platform for future growth § Inventories: Reduced $24.0M due to selling down of excess frozen $M Jun-21 Jun-20 Variance processed poultry inventory built up in FY20 due to COVID-19, Inventories/Biologicals* 328.5 352.5 (24.0) offset by increased value of
Slide 12: Cash Flow
CASH FLOW Improved cash conversion through operating cash generation and prudent capital management § Cash conversion: Higher cash conversion, with a 340 $M Jun-21 Jun-20 Variance Statutory EBITDA 443.9 387.8 56.1 basis point improvement from solid trading and working Non-cash items (3.3) 6.8 (10.1)
Slide 13: Capital Management Outcomes
CAPITAL MANAGEMENT OUTCOMES Cashflow from operations less lease payments of $207.2M. Cashflow from Cashflow from strategic Cashflow from interest and Cash conversion ratio of 102.2% due to working capital operations activities tax management and improved trading results Strong cash generation Expend
Slide 14: External Feed Market Observations
EXTERNAL FEED MARKET OBSERVATIONS Wheat pricing holding firm in 2H FY21 while soymeal prices have eased slightly but remain above historical levels - Delivered feed cost contains cereal grains, protein meals, vitamins and minerals. Feed cost also includes transport and milling cost - Grain imported
Slide 15: Segment Performance
SEGMENT PERFORMANCE Andrew Reeves CEO & Managing Director 15
Slide 16: Australia
AUSTRALIA Growth in revenue combined with operational efficiencies drive performance $M FY21 FY20 Var % Highlights: Core Poultry volumes (kt) 380.7 366.4 14.3 3.9 § Revenue growth of 4.8% delivered against a backdrop of intermittent COVID-19 lockdowns and a challenging trading environment Total Poul
Slide 17: New Zealand
NEW ZEALAND NZ growth supported by strong volumes and efficiencies in a challenged market $M FY21 FY20 Var % Highlights: Core Poultry volumes (kt) 66.2 62.3 3.9 6.3 § Core poultry volumes grew 6.3%, driven by a recovering wholesale and foodservice channel, continued strength in QSR and lapping the T
Slide 18: Strategy in Action
STRATEGY IN ACTION Andrew Reeves CEO & Managing Director 18
Slide 19: Pakenham Hatchery, Victoria
PAKENHAM HATCHERY, VICTORIA First of its kind in Australia/New Zealand § The hatchery takes eggs from our Breeder farms, hatches the chicks, and sends them out to broiler farms § Automated technology system called ‘HatchCare’ that provides a more spacious environment, and immediate access to light,
Slide 20: Auckland Plant
AUCKLAND PLANT Investing in the plant to improve capability, capacity and efficiency § Investing NZ $17 million in the Auckland processing facility − Project to complete in 1H FY22 § Increased overall network capacity to meet forecast growth in demand. Provides improved processing capability § Stron
Slide 21: Optimising the Core
OPTIMISING THE CORE Installed new Spin Chiller at Osborne Park Lyndhurst Distribution Centre § Spin Chiller at Osborne Park, Western Australia, § Investing in the network to ensure ongoing business installed in 2H efficiency into the future § Spend of around $8 million § The current distribution cen
Slide 22: Sustainability
SUSTAINABILITY Andrew Reeves CEO & Managing Director 22
Slide 23: Sustainability
SUSTAINABILITY Core to our strategy and underpins our future initiatives § This year we set our 2030 Planet targets including our commitment to set Science Based Targets (SBT) § Our 2030 Planet targets include a commitment to set Science Based Targets for Scope 1 and Scope 2 GHG emissions based on t
Slide 24: Sustainability
SUSTAINABILITY Key focus areas across our operations showing good progress § Despite the disruptions caused by COVID-19, we made good progress in FY21 § Our measures of GHG emissions, water usage and landfill waste generation have all improved year on year 4.4% reduction in absolute GHG emissions ag
Slide 25: Strategic Evolution & Summary
STRATEGIC EVOLUTION & SUMMARY Andrew Reeves CEO & Managing Director 25
Slide 26: Evolving Our Strategy
EVOLVING OUR STRATEGY Elevating our focus on brand, product and customer § Undertaking a review of the strategic priorities - Identify opportunities to leverage and evolve current activities - Optimise the Core delivering significant benefits with a meaningful pipeline of projects that will benefit
Slide 27: Summary
SUMMARY § Solid financial results achieved in FY21 and strong balance sheet position § Seamless CEO transition - Comprehensive review of Ingham’s operations over the past five months - Review of strategic priorities to be undertaken in 1H FY22 § Ingham’s and Woolworths have agreed in principle to an
Slide 28: Appendix
INGHAM’S ® Nourish Our World
Slide 29: AASB 16 Lease Impact
AASB 16 LEASE IMPACT AASB 16 impact reduced with NPAT benefiting by $9.2M Balance Sheet $M FY21 AU NZ FY20 Land & Buildings 852.0 738.8 113.2 814.6 § Land and Buildings: Ingham’s has a large leased property Growers 515.6 426.0 89.6 601.6 portfolio. Right-of-use assets increased due to lease extensio
Slide 30: Profit & Loss Reconciliation
PROFIT & LOSS RECONCILIATION Excluded FY21 Underlying FY20 Underlying FY21 FY21 AASB 16 Profit & Loss $M from (Pre AASB 16) (Pre AASB 16) Statutory Underlying Leases underlying (Reported) (Reported) Core Poultry volume (kt) 446.9 446.9 446.9 428.7 By-Products volume (kt) 109.2 109.2 109.2 103.9 Tota
Slide 31: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION $M FY21 FY20 Var % § (Profit)/Loss on sale of assets: relates to the loss on sale of Statutory EBITDA 443.9 387.8 56.2 14.5 Hamilton mill and sale of surplus farms in the prior year (Profit) / Loss on sale of assets 0.5 (0.4) 0.9 (225.0) § Impairments of assets: in the p
Slide 32: Segment Reconciliation
SEGMENT RECONCILIATION Group Group Australia Australia NZ NZ $M FY21 FY20 Var FY21 FY20 Var FY21 FY20 Var Statutory EBITDA 443.9 387.8 56.1 371.8 327.8 44.0 72.1 60.0 12.1 (Profit) / Loss on sale of assets 0.5 (0.4) 0.9 0.0 (0.4) 0.4 0.5 0.0 0.5 Impairment of assets 0.0 20.3 (20.3) 0.0 20.3 (20.3) 0
Slide 33: Return on Invested Capital (ROIC)
RETURN ON INVESTED CAPITAL (ROIC) Achieved a ROIC of 22.4% for FY21 § Achieved a ROIC of 22.4% for the year, up from 18.4% in pcp $M FY21 FY20 § Measure introduced as part of our capital management framework Return On Invested Capital (ROIC) § ROIC defined as: Underlying NPAT pre AASB 16 101.2 78.8
Slide 34: FY20 AASB 16 Impact
FY20 AASB 16 IMPACT FY20 FY20 Profit & Loss Less: AASB 16 impact FY20 Less: FY20 Underlying Underlying $M Reclass(1) $M Reported Reclass(1) Revised (Reported) (Revised) Revenue 2,555.3 2,555.3 Revenue - - Cost of sales (1,912.8) 21.0 (1,891.8) Cost of sales (224.1) 21.0 (203.1) Gross profit 642.5 21
Slide 35: Definitions
DEFINITIONS Certain non-IFRS information is referred to in this presentation and are defined below § EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation § EBIT: Earnings before Interest and Tax § Gross Profit: Revenue less cost of sales § Underlying Gross Profit pre AASB 16: Underly