Sanford Limited · NZX:SAN
Sanford — Investor Presentation (May 2010)
38 slides from Sanford's investor presentation, May 2010
Slide 1: Investor Presentation May 2010
Eric Barratt Managing Director Investor Presentation | May 2010
Slide 2: Forward looking statements disclaimer
This presentation contains not only a review of operations, but also some forward looking statements about Sanford Limited and the environment in which the company operates. Because these statements are forward looking, Sanford Limited’s actual results could differ materially. Media releases, manage
Slide 3: Agenda
1. Interim result 2010 2. Sanford overview 3. Attractive sector themes 4. Favourable long term pricing outlook 5. Aquaculture in New Zealand 6. Resource to customer model Investor Presentation | May 2010 3
Slide 4: Interim result 2010
Investor Presentation | May 2010
Slide 5: Six months to 31 March 2010 results
NZ$’000 6 months to 6 months to 12 months to 31 Mar 2010 31 Mar 2009 30 Sep 2009 Sales revenue 185,878 228,441 433,091 EBITDA 10,296 43,620 68,366 Depreciation, amortisation & impairment (6,832) (8,000) (14,892) Net interest (2,599) (4,213) (6,788) Net currency gains/(losses) 7,046 6,470 8,387 Net g
Slide 6: Interim revenue down 18.6% with revenue bridge
2010 interim revenue of $186m down Revenue bridge from 1H09 to 1H10 18.6% from $228m in 2009 $240 (4) Millions 1.7% decrease due to lower volumes $220 (17) $200 Skipjack Tuna and Hoki volumes well (22) $180 down $160 Mussels, Southern Blue Whiting, $140 Hake, Squid and Scampi volumes up $120 228 7.3
Slide 7: Hoki and Orange Roughy price indices
Hoki Fillet prices declined over the Prices for Orange Roughy period continued to firm during the Hoki Block prices remained stable period but sales slowed during the Prices for Half Shell Mussels period, causing an inventory build declined progressively up (since cleared) Hoki Fillet & Hoki Block O
Slide 8: Ling, Smooth Dory and Skipjack Tuna prices
Markets in Southern Europe and Skipjack Tuna prices increased the UK continued to be difficult over the period but remain well and Ling prices have been slow to below pre-GFC levels recover Smooth Dory Fillet prices were stable over the period Ling & Smooth Dory Fillets Skipjack Tuna 1.70 2.30 Index
Slide 9: New Zealand Seafood segment results
The New Zealand Seafood segment produced reasonable results from inshore and deepwater fishing, but poor results from aquaculture Aquaculture profitability impacted by: Lower mussel prices due to price competition between NZ producers Pacific Oysters faced competition in Australia Some positives fro
Slide 10: Expense reduction, inventory and debt facilities
$10m reduction in expenses achieved Reduced impact on fuel price increases from conversion of larger deepwater fleet to light fuel oil Other operating costs contained within expectations Inventory of $57m at end of period up from $50m at end of September During the period inventories of some species
Slide 11: Indications of reasonable recovery in second half
There are indications of a reasonable recovery in the six months to 30 September Hoki Block and Salmon volumes have increased since the end of March Markets for Hoki, Ling, Orange Roughy, Toothfish and Mackerel caught or harvested in the coming months are likely to continue to improve Markets in Nor
Slide 12: Sanford overview
Investor Presentation | May 2010 12
Slide 13: Sanford Limited overview and five year financials
Sanford Limited is a large and long established fishing company devoted entirely to the harvesting, farming, processing, storage and marketing of quality seafoods and aquaculture products, with a focus on the clear waters of New Zealand Inshore and deepwater fishing – quota and non-quota Aquaculture
Slide 14: Business segments structure
New Zealand Seafood Australian Other Deepwater Inshore Aquaculture Seafood NZ quota NZ quota Mussel, Pacific Australian Skipjack tuna deepwater inshore fishing Oyster & seafood in South Pacific fishing Onshore Salmon auction market China Toothfish processing farming Australian Processing of Charter
Slide 15: Species split and processing plants
Approximate % species split (2009) Our plants Deepwater Kaeo – Oyster processing 10% 17% Aquaculture Auckland – Coromandel – Mussel Farm 6% Inshore Fish processing Tauranga – Fish & Mussel 12% 16% Australia processing 12% Hoki 14% 13% Pelagic Orange Roughy/Oreo Dory Other Havelock – Mussel processin
Slide 16: Sells to over 200 customers in 60 countries
Sanford sells to over 200 customers in 60 countries around the globe We export to the world’s biggest fish importers Sanford export markets (2009) Top 10 importers of fish (2006)1 South Korea Europe UK 5% 6% Denmark 16% 23% Germany Japan 1% Americas 5% 6% 23% 11% China Asia 7% 22% Australian USA 13%
Slide 17: Attractive sector themes
Investor Presentation | May 2010 17
Slide 18: Key sector themes driving growth
Key sector themes driving growth: Food security Increasing consumption in emerging and developing nations Health and nutrition Sustainability Investor Presentation | May 2010 18
Slide 19: World population growth and food security
Driven by three distinct factors World population to continue growing 1. Increasing global population 10 2. Increasing GDP per capita of 9 World Population (Billions) 8 developing regions driving increased 7 protein consumption per capita 6 3. Constraints on food production 5 4 Particularly Asia and
Slide 20: Per capita fish consumption
Expanding middle class in emerging countries Rising incomes and diversification of diets in developing countries Continued consumption growth expected from industrialised countries, but at slower pace Historical global growth1 Per capita fish consumption by economic status & region1 35 Per capita fi
Slide 21: Global protein consumption and fish protein content
Global consumption of protein is “If we replaced the protein we got from increasing fish with land based agriculture, we’d need Population growth, rising incomes, extra grazing land equal to the entire increasing urbanisation world’s rainforest 22 times over, says eminent fisheries scientist Profess
Slide 22: Health and nutrition preferences
Consumer preferences increasingly influenced by health and nutrition The vitamins, minerals, & Omega-3 fatty acids found in seafood have significant benefits Studies show that seafood has benefits for: brain, heart, joints, lungs, muscles, digestion and skin1 The Heart Foundation recommends those at
Slide 23: Sustainability and MSC certification
Sustainability increasingly of concern Major retailers committed to MSC for customers and governments The Marine Stewardship Council’s Sainsbury’s (“MSC”) fishery certification program (UK) Carrefour Walmart recognises and rewards sustainable (France) (US, UK) fishing Certified fisheries Sanford ope
Slide 24: Favourable long term pricing outlook
Investor Presentation | May 2010 24
Slide 25: Historical pricing for key Sanford products
Historical Pricing for Key Sanford Products 250 225 US Dollar Pricing Indexed to 100 at 3 Prices driven higher by: 200 Increased demand: health, diet, fashion food Reduced supply: fisheries management systems December 2001 175 150 125 100 75 Hoki Orange Roughy Hoki Fillet Block 50 Dec-01 Dec-02 Dec-
Slide 26: Future supply-demand imbalance should support prices
Likely future supply-demand imbalance should support prices World capture fisheries production is flat/declining Only 20% of the world’s marine fishery resources are moderately or under exploited and maximum wild capture potential has probably been reached1 Growth in aquaculture is required to meet
Slide 27: Sanford's wild catch is sustainable
Sanford’s wild catch is sustainable, MSC status of Sanford Quota1 ensuring future ability to maintain supply 12% With a largely fixed wild catch quota, 10% earnings growth from wild catch lies in 1% capturing anticipated long term price gains 77% Sanford see opportunities for price growth in: MSC Ce
Slide 28: Aquaculture in New Zealand
Investor Presentation | May 2010 28
Slide 29: Aquaculture growth to meet fish consumption
Per capita supply from aquaculture grew at an average annual growth rate of 6.9% from 1970 to 20061 In recent years, major increases in fish consumption have originated from aquaculture supply1 Continued need for aquaculture growth to meet increasing fish consumption Sustainability constrains abilit
Slide 30: NZ aquaculture production statistics
Aquaculture makes up approximately 20% of NZ’s total fisheries production (by value) and 15% of NZ’s total seafood exports (by value) About 66% of New Zealand’s aquaculture production is exported New Zealand Aquaculture production statistics Total NZ production (tonnes Sanford production Sanford Sha
Slide 31: Market position of NZ producers
Market Position of NZ Producers Major aquaculture areas1 Greenshell™ Northland Coromandel King Salmon Pacific Oysters Pacific Oyster: 47% Pacific Oyster: 21% mussels Greenshell™ Auckland mussels: 22% #1 NZ King Salmon Pacific Marine Farms Pacific Oyster: 26% Greenshell™ mussels: 3% #2 Pacifica Seafo
Slide 32: Aquaculture NZ and Ten-Point Plan
“Aquaculture NZ” formed in 2006 Ten-Point Plan Strategy to achieve $1 billion of 1. Establish a new national sector organisation sales by 2025 2. Strengthen the partnership with government Drive for development of new, high 3. Strengthen other stakeholder partnerships value species and value-add 4.
Slide 33: Government support and Aquaculture Reform Bill
Government fully supports Aquaculture NZ’s goal of $1b revenue by 2025 Aquaculture Reform Bill anticipated mid-2010 comprising package of initiatives to: Reduce costs, delays and uncertainty of the regulatory process Promote investment in aquaculture Balance aquaculture with other marine interests R
Slide 34: Forecast Sanford mussel volumes
Greenshell™ mussels are the main Forecast Sanford Mussel Volumes focus of Sanford’s aquaculture 35 strategy 30 Expect to grow mussel production 5,000 MT Sealord acquisition Production ('000 MT) 25 substantially over the next 5 years 20 Acquisition from Sealord of mussel 15 operations in the Marlboro
Slide 35: Salmon and mussel demand, prices and margins
Salmon demand driven by: Mussel Prices at Lows1 Chilean disease – short term, King 175 US Dollar Pricing Indexed to Salmon unaffected 100 at 3 December 2001 150 125 Desirable for health benefits 100 Mussel demand driven by: 75 50 Cheapest seafood 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 36: Resource to customer model
Investor Presentation | May 2010 36
Slide 37: Integrated food supply chains capture more margin
Integrated food supply chains enable Sanford to capture more margin, and also provide customers with traceability of origin Consumption in industrialised markets increasingly driven by quality assurances such as traceability, processing controls and packaging requirements Focus has been on moving se
Slide 38: Sanford offers investors exposure to
Sanford offers investors exposure to: A large and long established sustainable New Zealand fishing company The global food security macro theme The favourable long term pricing outlook for seafood Aquaculture in New Zealand An integrated supply chain through to the customer Investor Presentation | M