Sanford Limited · NZX:SAN
Sanford — HY21 Earnings Presentation
35 slides from Sanford's earnings presentation, March 2021
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Slide 2: Disclaimer
DISCLAIMER Important Notice This presentation contains not only a review of operations and information about Sanford Limited (the Company), but also contains some forward-looking statements about the Company and the environment in which it operates. This disclaimer applies to this presentation and a
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Slide 4: HY21 Summary
HY21 Summary Market conditions remain challenging: • Conditions and expectations consistent with our March 17th market update, driven by Covid-19 • Potential for H2 improvement: expect some typical seasonal improvement in H2 • Uncertainty: freight and international supply chain reliability (compromi
Slide 5: HY21 Results snapshot
HY21 Results snapshot A continuation of the impacts of Covid-19 Catch/Harvest Volume Sales Volume Revenue Adjusted EBIT1 51.6k GWT 54.9k GWT $233.5M $10.7M flat +6% -5% -54% EBIT GW kg Adjusted EBITDA1 NPAT EPS No Interim 19₵ $25.8M $16.2M 17CPS Dividend -27₵/kg -30% -15% -3₵ Down 5₵ ¹ See Appendix
Slide 6: Change in profitability driven by Greenshell mussels
Change in profitability driven by Greenshell mussels Key drivers of Adjusted EBIT change vs HY201 NZD m Wildcatch drivers Salmon drivers Mussels drivers Group-wide drivers -$1m -$3m -$13m +$5m 6 ¹ The driver sub-totals above differs to the profit contribution by division change in slides 14,17,20. W
Slide 7: HY21 Balance Sheet and Cash flow
HY21 Balance Sheet and Cash flow Balance Sheet remains strong, debt levels contained Net Debt Net Debt / Adjusted EBITDA Gearing1 $181.0M 3.3X 23.8% +15% vs Mar 20 -2% vs Sep 20 Mar 20 | 1.9x Sep 20 | 2.8x Mar 20 | 22.1% Total Equity Return on Average Total Equity $642M 3.1% +10% vs Mar 20 Mar 20 |
Slide 8: Geographic diversity of revenue
Geographic diversity of revenue Revenue by geographic distribution - H1 FY21 vs. H1 & H2 FY201 • Diverse footprint allows us to move 43% 44% sales around as markets change 42% • Europe impacted by Covid-19 lockdowns • Wildcatch growth in Australia • Wildcatch and salmon growth in North America 18% 1
Slide 9: Seafood inventory value stabilised, with mix changing
Seafood inventory value stabilised, with mix changing VOLUME (PWT) VALUE ($M) YOY increase +6% YOY increase +60% 14.0 $80.0 $74.8 $71.7 12.2 $70.0 $6.3 12.0 0.5 $6.4 Inventory Volume (tonnes 000’s) 10.4 $60.0 10.0 9.8 2.8 0.5 $20.2 Inventory Value ($m) 0.1 $50.0 $44.9 $30.2 8.0 2.9 4.1 $1.0 $40.0 $1
Slide 10: Global supply chain disruptions creating significant challenges
Global supply chain disruptions creating significant challenges 10
Slide 11: Managing expenditure carefully for Covid conditions
Managing expenditure carefully for Covid conditions Operating Expenses -15% vs HY201 30 27.3 24.8 25 23.3 20 $ millions 15 10 5 0 H1 FY20 H2 FY20 H1 FY21 People Insurance IT Consultancy Travel Other 1 Operating expenses adjusted for one-off restructuring and impairment costs. 11
Slide 12: People engagement score improved through Covid
People engagement score improved through Covid ‘Mullet Over’ engagement survey results Oct 19 – Mar 21 77% Mar 21 76% Oct 20 75% Jun 20 73% Feb 20 • More engaged staff are more motivated and therefore safer and more productive 72% Oct 19 • Drives higher returns • Attracts and retains talent 12
Slide 13: Update by Division
JPDATE BY DIVISION _ \
Slide 14: Wildcatch HY21
Wildcatch HY21 FRESH FROZEN Solid volumes for catch and sales. Prices are low, but stabilising Sales Volumes +20% YoY Revenue -6% YoY Profit contribution* +4% YoY 40 36.7 160 144.3 5.0 20 18.7 0.6 35.5 137.3 136.3 140 4.6 18 30.5 $4.73 16 0.5 120 4.2 $0.53 14 11.4 0.4 GWT (000’s) 11.9 100 3.8 $ mill
Slide 15: Wildcatch HY21: positives and challenges
Wildcatch HY21 FRESH FROZEN Positives Challenges • 20% increase in sales volumes (incl. clearing of hoki • Average wildcatch pricing 22% lower than HY20 inventory back to historical levels) • Squid: catch down 25%, impacting second half; • Deepwater catch volumes +2% (incl. +11% for hoki reduced pri
Slide 16: Wildcatch HY21: prices stabilising, volume and inventory normalising
Wildcatch HY21 FRESH FROZEN Prices are low, but stabilising. Volume and inventory normalising GWT AND AVERAGE PRICING TREND INVENTORY GWT (000’s) $6.00 $5.69 25 18.0 23.2 16.4 21.1 16.0 15.1 $4.74 $4.72 20.2 14.3 $5.00 18.0 20 14.0 13.0 $4.12 $4.70 FOB PRICE / GW KG 17.9 16.5 $3.84 11.9 $4.00 $3.73
Slide 17: Greenshell Mussels HY21
Greenshell Mussels HY21 MUSSELS Hardest hit this reporting period, ongoing disruption to global foodservice channel Sales volume -18% YoY Revenue -38% YoY Profit contribution* -95% YoY 25 70 65.7 3.8 16 15.1 1.2 19.1 60 54.8 3.4 14 20 $3.43 16.6 12 15.6 50 $3.30 3.0 40.7 0.8 GWT (000’s) 10 $ million
Slide 18: Greenshell Mussels HY21: positives and challenges
Greenshell Mussels HY21 MUSSELS Volume and pricing for half shell mussels significantly impacted Positives Challenges • Consistent reduction in growth time from spat to final • Mussels are foodservice reliant harvest (from 18-24 to 10-16 months) • Sales volumes fell 18% • Starting to see positive li
Slide 19: Greenshell Mussels HY21: inventories climbed
Greenshell Mussels HY21 MUSSELS Covid impact was coming off record prices and volumes. Inventories climbed GWT AND AVERAGE PRICING TREND INVENTORY GWT (000’s) $4.00 12 14.0 $3.50 $3.49 12.4 $3.37 11.7 $3.50 12.0 $3.07 $3.10 $3.07 10 9.1 9.1 10.0 FOB PRICE / GW KG $3.00 8.0 8.2 7.7 9.1 $2.47 10.0 $2.
Slide 20: King Salmon HY21
King Salmon HY21 Strong production and sales growth in challenging times SALMON Sales volumes +26% YoY Revenue +12% YoY Profit contribution1,2 -22% YoY 35 15.0 18 12.0 3,000 31.5 $14.21 15.6 28.2 $13.77 14.0 16 2,490 30 10.0 2,500 13.0 14 25 22.6 $12.68 12.1 2,000 1,984 12.0 12 $7.87 8.0 $ millions
Slide 21: King Salmon HY21
King Salmon HY21 Long-term strategic opportunity validated, but responding to changing near-term environment SALMON Positives Challenges • Harvest volumes and processing efficiencies • Lower pricing impacting fair value of salmon stock in • Maintained focus on sustainability and licence to water ope
Slide 22: King Salmon HY21
King Salmon HY21 Long-term strategic opportunity validated, but responding to changing near-term environment SALMON GWT AND AVERAGE PRICING TREND INVENTORY GWT $16.00 3,000 1,000 $14.32 $14.07 $14.14 898 $13.78 $13.74 $13.48 $14.00 $12.86 900 $12.51 2,500 800 $12.00 703 702 FOB PRICE / GW KG 700 2,0
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Slide 24: FY21 Focus recap
FY21 Focus recap • Covid-19 tactical response plan: 1. Focus on fundamentals 2. Build agility to respond to change 3. Spend aligned to integrity projects 4. Reduce costs and protect EBIT 5. Safe and high-performance culture • Maintain the momentum that allows us to return to growth • Leverage the co
Slide 25: H2 Focus
H2 21 Focus Wildcatch Greenshell Mussels King Salmon • Focus on profitable inventory • Traditional markets reopening • Big Glory Bay in-market activation reduction plan • Marine extracts consent process • RAS (Recirculation Aquaculture • San Granit back in service in June • Harvest vessel asset reju
Slide 26: Marine extracts
Marine extracts • Marine Extracts facility 2022, consent process the priority • Interim collagen facilities up and running Concept Marine Extracts Plant Hoki Collagen Powder 26 Collagen Manufacturing Equipment Note: Marine extracts included in Mussel division
Slide 27: King Salmon retail in Asia, US and NZ
King Salmon retail in Asia, US and NZ Products that allow us to respond to not only changing channels, but also high value consumer trends Ole Supermarket, China Yokes Fresh Market, Idaho, US Ryan’s Grocery, Singapore New World North Island, New Zealand 27
Slide 28: Capital expenditure
Capital expenditure • We maintain our previously signalled expected level of spend in FY21 of ~$45-55m • Spend aligned to business performance for next 18 months, with integrity capex prioritised • We maintain an eye on the future and will respond accordingly • Scampi project remains on hold for now
Slide 29: Looking ahead …
Looking ahead … Near term – “Adaptable and robust”: • Adaptability to rapidly changing market conditions will help business recover from Covid-19 impacts • However, as demand returns, supply chain congestion a challenge • Strong balance sheet with sufficient covenant headroom Medium term – “Ready fo
Slide 30: Early impressions: Peter Reidie
Early impressions: Peter Reidie Strengths: • Scale, diversity, growth potential of all four business areas: wildcatch, mussel, salmon, innovation • Heritage, legacy, tenure and knowledge of our fishing. We have been doing it for over 150 years • Engagement, positivity, skills and capability of our p
Slide 31: Strategic direction
Strategic direction • The essence of our long-term strategy is unchanged. We are focused on creating sustainable long-term value for all our stakeholders. • The challenges of the pandemic have offered insights, which we will factor into our long-term strategy. We will share this strategic refinement
Slide 32: Questions?
= = QUESTIONS? ‘
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Slide 34: Appendix: USD FX hedging pattern for the year
APPENDIX : USD FX HEDGING PATTERN FOR THE YEAR 34
Slide 35: Appendix: HY21 Financial Results - GAAP to Non GAAP reconciliation
APPENDIX : HY21 Financial Results - GAAP to Non GAAP reconciliation H1 FY21 H1 FY20 FY20 $m $m $m Non-GAAP Profit measures Unaudited Unaudited Audited Sanford's standard profit measure prepared under New Zealand GAAP is net Revenue 233.5 245.5 468.8 profit. Sanford has used non-GAAP measures when di