Quantum Foods Holdings Ltd · JSE:QFH
Quantum Foods — FY2018 Earnings Presentation
33 slides from Quantum Foods's earnings presentation, September 2018
Slide 1: Results presentation for the year ended 30 September 2018
Results presentation for the year ended 30 September 2018
Slide 2: Agenda
AGENDA Business Financial Operational Outlook and Overview: Overview: Overview: management focus: H Lourens A Muller H Lourens H Lourens Adel vd Merwe Results presentation 2018 2
Slide 3: Business Overview: H Lourens
BUSINESS OVERVIEW: H LOURENS Results presentation 2018 3
Slide 4: Business Overview
BUSINESS OVERVIEW › Lower raw material input costs Operating Revenue profit › Stable exchange rate 2% 178% › Tailwinds due to lower egg supply › South African economy remains muted Cash › Good recovery in industry dynamics in rest of HEPS generated Africa 234% R448m Total Total dividend dividend 201
Slide 5: Financial Overview: A Muller
FINANCIAL OVERVIEW: A MULLER Results presentation 2018 5
Slide 6: Statement of Income
STATEMENT OF INCOME 2018 2017 % For the year ended 30 September 2018 Rm Rm change Revenue 4 121.9 4 051.9 2 Operating profit* 473.3 170.1 178 Income from associates 0.7 1.1 Net finance income 23.8 6.4 Profit before tax 497.8 177.6 Tax (135.6) (50.0) Profit for the period 362.2 127.6 * Operating prof
Slide 7: Dividends and Share Repurchases
DIVIDENDS AND SHARE REPURCHASES › For 2018 • Dividend at a HEPS cover of 4 times 41 cents • Special dividend due to 2018 cash generation 49 cents • Interim dividend paid (20 cents) • Final dividend 70 cents › 11 784 941 shares repurchased in 2018 at average R4.45 per share › Total amount of R244.1 m
Slide 8: Revenue Analysis
REVENUE ANALYSIS Total R4 122 million (2017: R4 052 million) ANIMAL FEEDS EGGS FARMING AFRICA 2017: R1 485m | 37% 2017: R1 052m | 26% 2017: R1 311m | 32% 2017: R204m | 5% Results presentation 2018 8
Slide 9: Segment Results
SEGMENT RESULTS 2018 2017 Adjusted operating profit Rm Rm Eggs 286.7 46.5 Farming 98.5 47.3 Animal Feeds 69.4 77.8 Other African countries 31.0 (9.7) Head Office costs (13.2) (12.4) 472.4 149.5 Results presentation 2018 9
Slide 10: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 2018 2017 At year end Rm Rm Non-current assets 1 091.9 1 076.8 Net working capital 574.6 590.4 Non-current liabilities (228.3) (230.8) Cash 422.5 261.5 Total net assets 1 860.6 1 697.9 Borrowings (6.2) (6.3) Equity 1 854.4 1 691.6 Results presentation 2018 10
Slide 11: Statement of Cash Flow
STATEMENT OF CASH FLOW 2018 2017 For the year ended 30 September 2018 Rm Rm Cash operating profit 547.8 200.4 Working capital inflow 12.9 115.2 Change in exchange rate (7.9) 0.7 Cash effect of hedging activities 8.9 3.4 Tax paid (138.0) (61.3) Net finance income 24.4 6.9 Cash generated by operations
Slide 12: Capital Expenditure
CAPITAL EXPENDITURE 2018 Future R’m R’m Maintenance capex – SA 27.9 44.9 – Africa 13.1 15.2 Farms: capacity and efficiency 18.4 1.2 Energy efficiency 5.4 3.1 Hartbeespoort broiler hatchery expansion 6.6 1.2 Zambia feed mill 9.5 0.9 Uganda layer farm expansion 17.3 0.4 Layer hatchery expansion 6.0 6.
Slide 13: Sensitivities: Eggs
SENSITIVITIES: EGGS Effect of movement in: Rand value EBIT/annum Selling prices Eggs (R/doz) 1% 17c R13m Raw material costs Maize R/ton R100 R6m Soya bean meal R/ton R100 R2m Assumption: Egg volume of 6.4 million dozen per month Results presentation 2018 13
Slide 14: Operational Overview: H Lourens / Adel vd Merwe
OPERATIONAL OVERVIEW: H LOURENS / ADEL VD MERWE Results presentation 2018 14
Slide 15: Nulaid Eggs
NULAID EGGS › Realisation increased by 24% • AI outbreak • Improved product mix EGGS Less Liquid Egg Increased sales of Higher Value Eggs › Volumes declined by 7% Good utilisation of supply dynamics supported by excellent operational performance Results presentation 2018 15
Slide 16: Nulaid Eggs
NULAID EGGS Results presentation 2018 16
Slide 17: Nulaid Eggs: Realisation Movement Index
NULAID EGGS Realisation Movement 150.00 140.00 Flock AI replacement Effect 130.00 Normal 120.00 cycle Index 110.00 100.00 90.00 80.00 Month Results presentation 2018 17
Slide 18: Nulaid Eggs: Management and Cost Control
NULAID EGGS › Strengthened management team › Successful cost control • Nominal Increase of 3.5% • Additional AI Costs • Per unit increase higher due to lower volumes › Operational efficiency improvements • Returns • Stock Variances • Equipment Efficiency Results presentation 2018 18
Slide 19: Nulaid Eggs: Distribution and Sales
NULAID EGGS › Progress with 3rd party distribution model • Nominal decrease of 0.5% • Per unit increase higher › Successful execution of direct farm sales strategy › Successful execution of retail customer service • Nulaid awarded best Egg Brand for sixth consecutive year • Nulaid won the 2018 Shopr
Slide 20: Nulaid Eggs Expectations
NULAID EGGS EXPECTATIONS › Expected Higher Feed Costs › Increased National Egg Supply › Increased Nulaid volume due to placements › Continued equipment efficiency improvements › Continued investment in Green projects Results presentation 2018 20
Slide 21: Nova Feeds
NOVA FEEDS › Continued external volume growth › Margin declined due to competitive dynamics › Excellent feed performance across all species ANIMAL FEED › Cost push well managed › AI effect • Loss of internal volumes and contribution • Additional bio-security costs › Approved investments for • Future
Slide 22: Farming Operations: Layer Farming
FARMING OPERATIONS LAYER FARMING › Satisfactory breeder performance › Commercial farm performance continue to improve › AI effect FARMING • Increased day old pullet sales • Decline in point of lay sales • Sharp increase in unit cost of production › Successful mitigation of flock decline due to AI •
Slide 23: Farming Operations: Broiler Farming
FARMING OPERATIONS BROILER FARMING › Day old chick volumes now exceed that of old model › Increased hatchery capacity projects completed FARMING › Day old chick volumes increased by 6% › Decline of 1.2% in live bird weight sold › Record performance on commercial broiler level Genetic impact › Broile
Slide 24: Other Africa Segment
OTHER AFRICA SEGMENT ZAMBIA › Disease challenges on breeder farm › Very good commercial layer farm performance › Prices and volumes increased in all sales categories › New feed mill commissioned AFRICA UGANDA › Excellent maize crop › Very good commercial layer performance Good economic recovery in a
Slide 25: Outlook and Management Focus: H Lourens
OUTLOOK AND MANAGEMENT FOCUS: H LOURENS Results presentation 2018 25
Slide 26: Prospects 2019
PROSPECTS 2019 Quantum Foods Expectations response • Significant drop in egg prices • Judicious customer and channel management • Increase in raw material costs • Continued focus on efficiencies through all • Increased competition in feed sector our segments • Opportunities in day old chick market •
Slide 27: Results presentation 2018 27
Results presentation 2018 27
Slide 28: Appendix
APPENDIX Results presentation 2018 28
Slide 29: SAFEX Yellow Maize Rand per Ton
SAFEX YELLOW MAIZE RAND PER TON 4 500 4 000 3 016 3 500 2 924 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 Results presentation 2018 29
Slide 30: CBOT USD Soya Beans
CBOT USD SOYA BEANS 430 410 390 370 309 300 316 309 350 330 310 299 290 270 250 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Results presentation 2018 30
Slide 31: Rand vs US$
RAND VS US$ 18 14.14 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 Results presentation 2018 31
Slide 32: Layer Productivity Index
LAYER PRODUCTIVITY INDEX 135 130 125 120 115 110 105 100 95 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Results presentation 2018 32
Slide 33: Broiler Productivity Index
BROILER PRODUCTIVITY INDEX 125 120 115 110 105 100 95 90 85 2010 2011 2012 2013 2014 2015 2016 2017 2018 Results presentation 2018 33
Quantum Foods Holdings — FY2018 Earnings Presentation on 6ix