Inghams Group Ltd. · ASX:ING
Inghams — FY2024 Earnings Presentation
45 slides from Inghams's earnings presentation, Aug 23, 2024
Slide 1: FY24 Financial Results Presentation
FY24 FINANCIAL RESULTS PRESENTATION 23 AUGUST 2024 Broiler farm, New Zealand
Slide 2: FY24 Results Webcast
FY24 RESULTS WEBCAST This presentation accompanies the live webcast, to be hosted by Andrew Reeves (CEO & MD) and Gary Mallett (CFO), scheduled for 10.00am AEST on 23 August 2024. To register and join the webcast, please use the following link: Ø https://my.eu.lumiconnect.com/735-610-695 Meeting ID:
Slide 3: Disclaimer
DISCLAIMER Important notice The material in this presentation is general background information about the activities of Inghams Group Limited (Inghams) and its subsidiaries (Inghams Group), and is current at the date of this presentation, unless otherwise noted. The content is information given in s
Slide 4: FY24 Highlights & Overview
FY24 HIGHLIGHTS & OVERVIEW Andrew Reeves Chief Executive Officer & Managing Director
Slide 5: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY We respectfully acknowledge the traditional owners both past and present, as custodians of this land we are meeting on today. FY24 Results Presentation | 23 August 2024 Artist: Kelly Taylor www.ktaboriginalfineart.store 5
Slide 6: FY24 Financial Highlights
FY24 FINANCIAL HIGHLIGHTS ALL FINANCIAL INFORMATION IN THIS PRESENTATION IS PROVIDED ON A ‘AS-REPORTED’ (53-WEEK PERIOD) BASIS EXCEPT AS NOTED (FY23: 52-WEEK PERIOD) KEY FINANCIAL RESULTS CASHFLOW & CAPITAL SHAREHOLDERS REVENUE OPERATING CASHFLOW EARNINGS PER SHARE $3,262.0M $453.1M 27.3cps +7.2% v
Slide 7: Executive Summary
EXECUTIVE SUMMARY Strong FY24 results driven by volume and margin growth, and solid operating performance • EBITDA pre AASB 16 increased 30.8% to $240.1M; NPAT (post AASB 16) of $101.5M, up 68.0% • EBITDA margin (pre AASB 16) increased 130 basis points to 7.4%, and EBITDA/kg (pre AASB 16) increased
Slide 8: FY24 Key Performance Indicators
FY24 KEY PERFORMANCE INDICATORS Group Australia New Zealand Core Poultry volume (kt) 476.4 405.5 70.9 Change on PCP 2.8% 1.9% 8.4% Core poultry net selling price ($/kg) 6.28 6.32 6.531 Change on PCP 5.4% 5.3% 4.8% EBITDA (Underlying pre AASB 16) ($M) 240.1 193.3 46.8 Change on PCP 30.8% 20.6% 100.9%
Slide 9: Safety Update
SAFETY UPDATE TRIFR improvement of 56% over the past 5 years § Safety is at the forefront of everything we do and integral to our success § In FY24 we completed our 2022–24 Safety for Life Program and have launched our 2024-26 program § Investing in safe plant and equipment, including automation, wh
Slide 10: Core Poultry Net Selling Prices ($/kg) (NSP)
CORE POULTRY NET SELLING PRICES ($/KG) (NSP) FY24 growth reflects full year effect of earlier price increases GROUP CORE POULTRY NET SELLING PRICES § Group core poultry NSP increased to $6.28, representing growth of 5.4% on FY23 $6.50 § Reflects the full year effect of increases in FY23 and FY24 (1H
Slide 11: Observations Across Our Channels
OBSERVATIONS Group core poultry volume increased +2.8% versus FY23 ACROSS OUR § Australian volume increased 1.9% (+7.4KT) on § New Zealand volume grew 8.4% (+5.5KT) on PCP, CHANNELS FY23, with strong Retail growth of 18.0KT significantly offset by lower volumes in QSR and other out-of-home channels
Slide 12: Woolworths Supply Agreement for Australia
WOOLWORTHS SUPPLY AGREEMENT FOR AUSTRALIA § Agreed in-principle commercial terms for a new multi-year supply agreement for Australia with Woolworths § Remain Woolworths #1 poultry supply partner § The key provisions of the new agreement will be phased in over FY25, on satisfactory commercial terms §
Slide 13: Financial Results
FINANCIAL RESULTS Gary Mallett Chief Financial Officer HatchCare Hatchery
Slide 14: Profit & Loss
PROFIT & LOSS § Core Poultry volume increased 2.8% vs FY23, with Australia +1.9% and +8.4% in New Zealand § Revenue increased 7.2% due to volume growth and the effect of NSP increases $M FY241 FY242 FY23 Variance1 %1 (53 week) (52 week) implemented during FY23 and FY24 in response to significant cos
Slide 15: 1H vs 2H Underlying EBITDA Pre AASB16 Performance
1H vs 2H UNDERLYING EBITDA PRE AASB16 PERFORMANCE 1H is historically stronger than 2H • Volume reduction due to normal seasonality Highest • Wholesale pricing remained firm however average 2H pricing lower than 1H 2nd highest • SG&A 1H earnings levels, offset by strong shift to in-home dining from o
Slide 16: Balance Sheet
BALANCE SHEET § Inventories/Biologicals: Increased $23.0M largely the result of an increase $M Jun-24 Jun-23 Variance in processed poultry inventories in 1H24 due to restocking to support improved customer service level performance and a softening of demand in Inventories/Biologicals 411.2 388.2 23.
Slide 17: Cash Flow
CASH FLOW $M FY24 FY23 Variance § Cash conversion ratio: improved to 97.7% due to strong cash EBITDA 471.1 418.5 52.6 collection Non-cash items (7.8) (8.7) 0.9 § Non-cash items: comprised mainly of the share-based payment Changes in operating working capital1 (15.1) (45.2) 30.1 charges, more than of
Slide 18: Capital Expenditure & Acquisitions
CAPITAL EXPENDITURE & ACQUISITIONS Investing in network capability, capacity and resilience § Sustaining capex FY24 CAPITAL EXPENDITURE COMPOSITION Stay-in-Business capex spend of $47.7M, 83.0% of depreciation pre AASB 16 ($57.5M), includes $3.6M investment in Sorell (TAS) carbon neutral expansion S
Slide 19: Net Debt and Leverage
NET DEBT AND LEVERAGE Inghams has strong history of cash generation providing flexibility for future investments Group Net Debt and Leverage Debt maturity profile ($M) 6 0 2 .5 350 2.0x 5 0 1.7x 1.8x 2 .0 300 1.5x 250 4 0 1.3x 1.4x 1.2x 1 .5 200 3 0 150 0.7x 1 .0 2 0 100 0 .5 50 1 0 298.0 145.0 263.
Slide 20: Capital Management Outcomes
CAPITAL MANAGEMENT OUTCOMES NET INTEREST, TAX AND CASHFLOW FROM OPERATIONS CASHFLOW FOR INVESTING ACTIVITIES LEASE PAYMENTS FY24 Cash realisation Investing & dividends Service obligations outcomes SUSTAINING CAPITAL1 Annual spend of 75-90% of depreciation (pre AASB 16) on stay-in-business requiremen
Slide 21: Feed Market Observations
FEED MARKET OBSERVATIONS Pricing of key feed inputs has moderated over the last 6 months - observed wheat price -4.1% and soy price -15.5% LONG TERM WHEAT & SOYMEAL EXTERNAL MARKET PRICING1 ($A PER METRIC TONNE) Delivered internal feed cost contains cereal 800 1 grains, protein meals, vitamins and m
Slide 22: Segment Performance
SEGMENT PERFORMANCE Andrew Reeves Chief Executive Officer & Managing Director
Slide 23: Australia
AUSTRALIA $M FY24 FY241 FY23 Variance2 %2 (53 week) (52 week) Core Poultry volume (kt) 405.5 398.1 398.1 7.4 1.9 § Core Poultry volume increased 1.9%, with strong Retail channel growth substantially offset by a decline in QSR Total Poultry volume (kt) 503.3 494.1 490.5 12.8 2.6 and other out-of-home
Slide 24: New Zealand
NEW ZEALAND $M FY24 FY241 FY23 Variance2 %2 (53 week) (52 week) § Core Poultry volume increased 8.4% on PCP, driven by a Core Poultry volume (kt) 70.9 69.6 65.4 5.5 8.4 return to normal operating capacity compared to FY23 and Total Poultry volume (kt) 85.1 83.5 78.1 7.0 9.0 targeted new business dev
Slide 25: Business Update & Summary
BUSINESS UPDATE & SUMMARY Andrew Reeves Chief Executive Officer & Managing Director
Slide 26: Bostock Brothers (NZ)
BOSTOCK BROTHERS (NZ) Acquisition and integration update Overview § Established in 2014, Bostock Brothers Limited (BBL) is the only certified organic producer of poultry in New Zealand § BBL’s operations are located in Hastings, on the central east coast of the North Island, approximately four hours
Slide 27: Two Acquisitions to Strengthen Our Network
TWO ACQUISITIONS TO STRENGTHEN OUR NETWORK Bromley Park Hatcheries (BPH) (NZ) § Settled on the acquisition of BPH in October 2023 following receipt of regulatory approvals ‒ Acquired for $6.6M which comprises $4.5M for fixed assets and $2.1M for working capital ‒ Third-party lessor acquired land and
Slide 28: Unlocking Network Capacity and Enhancing Efficiency
UNLOCKING NETWORK CAPACITY AND ENHANCING EFFICIENCY WA distribution centre operational § New Hazelmere, WA distribution centre commenced operations January 2024, completing the Group’s three-facility DC investment program § The new purpose-built facility, which has ~2-times the capacity of the previ
Slide 29: Investing to Enhance Capacity, Capability and Growth
INVESTING TO ENHANCE CAPACITY, CAPABILITY AND GROWTH Lisarow further processing fully cooked upgrade § Investing $9 million to convert a production line at Lisarow to a Fully Cooked production capability, for FY25 completion - Current fully cooked capability located at Edinburgh Parks (SA) § Adds se
Slide 30: Sustainability
SUSTAINABILITY INGHAMS IS A LEADER IN ANIMAL WELFARE, SUSTAINABILITY, FOOD QUALITY AND SAFETY § Continued Safety improvements across the business, with our Total Recordable Injury Frequency Rate (TRIFR) declining by 7.0% Key FY24 outcomes § First poultry producer in New Zealand to have all its broil
Slide 31: Guidance & Outlook
GUIDANCE & OUTLOOK FY25 Guidance Core poultry volume change: -1% to -3% Based on normalised FY24 (52-week) core poultry volume Underlying EBITDA (Pre AASB16): $236 million to $250 million Representing flat to ~6% growth on normalised FY24 (52-week) result FY25 guidance takes into account several key
Slide 32: Compelling Investment Proposition
COMPELLING INVESTMENT PROPOSITION Inghams provides investors with a robust and attractive earnings profile Operates at scale in an Affordable, healthy, Decades long Grow category attractive market with versatile and widely partnerships with major attractiveness by positive outlook for favoured prote
Slide 33: Thank You
Slide 34: Appendix
INGHA ‘< i) ‘ wetter Pal Pe aremazinc i} APPENDIX
Slide 35: Appendix: AASB 16 Lease Impact
APPENDIX: AASB 16 LEASE IMPACT Balance Sheet $M FY24 AU NZ FY23 Balance Sheet: Land & Buildings 776.4 646.1 130.4 811.5 § Land and Buildings: Inghams has a large leased property portfolio. Growers 240.2 228.6 11.6 446.0 Average term remaining on the portfolio is 12.0 years Equipment 15.1 12.5 2.6 18
Slide 36: Appendix: AASB Profile
APPENDIX: AASB 16 PROFILE Right-of-use Assets $M Grower Lease Liability $M Grower L&B/Other L&B/Other FY24 reduction in Right-of-use Assets and Lease Liabilities due to 602 501 487 516 462 446 476 445 259 the conversion of 66 Growers to 240 variable performance based 972 945 928 923 879 contracts, i
Slide 37: Appendix: Profit & Loss Reconciliation
APPENDIX: PROFIT & LOSS RECONCILIATION 1H24 2H24 Excluded from FY24 AASB 16 FY24 Underlying Underlying Underlying FY 23 Underlying Profit & Loss $M FY24 underlying Underlying Leases pre AASB 16 pre AASB 16 pre AASB 16 (pre AASB 16) Core Poultry volume (kt) 476.4 476.4 476.4 240.8 235.6 463.5 By-Prod
Slide 38: Appendix: Profit & Loss 53/52-Week Reconciliation
APPENDIX: PROFIT & LOSS 53/52-WEEK RECONCILIATION FY24 FY23 Excluded from FY24 AASB 16 Profit & Loss $M FY24 1H24 2H24 FY24 Underlying Underlying Underlying Underlying Leases (Pre AASB 16) (Pre AASB 16) As reported Normalised (52 weeks) Core Poultry volume (kt) 476.4 240.8 226.9 467.7 467.7 467.7 46
Slide 39: Appendix: Segment EBITDA Reconciliation
APPENDIX: SEGMENT EBITDA RECONCILIATION Group Australia New Zealand FY24 Adjustment1 FY24 FY23 Var2 FY24 Adjustment1 FY24 FY23 Var2 FY24 Adjustment1 FY24 FY23 Var2 $M (53 week) (52 week) (53 week) (52 week) (53 week) (52 week) Core Poultry volume (kt) 476.4 (8.7) 467.7 463.5 12.9 405.5 (7.4) 398.1 3
Slide 40: Appendix: NPAT Reconciliation
APPENDIX: NPAT RECONCILIATION $M FY24 Adjustment FY24 FY23 Var1 %1 (53 week) (52 week) NPAT 101.5 (1.5) 100.0 60.4 41.1 68.0 Business transformation - - - 11.7 (11.7) (100.0) Property reassignment - - - (2.1) 2.1 (100.0) Restructuring 0.1 0.0 0.1 1.1 (1.0) (90.9) Excluded from Underlying 0.1 0.0 0.1
Slide 41: Appendix: Return on Invested Capital (Pre AASB 16) (ROIC)
APPENDIX: RETURN ON INVESTED CAPITAL (PRE AASB 16) (ROIC) ACHIEVED ROIC OF 21.3% FOR FY24 § Achieved ROIC of 21.3% for the year, versus 19.0% on PCP $M FY24 FY23 § ROIC defined as: Return On Invested Capital (ROIC) - Underlying Net Operating Profit after Tax pre AASB 16 Underlying NPAT pre AASB 16 1
Slide 42: Vertically Integrated Operating Model
VERTICALLY INTEGRATED Feedmills OPERATING MODEL Further Processing Realise efficiencies across a highly complex and large-scale value chain Deep technical experience Broiler Primary Ware- Genetics Breeders Hatcheries housing and Customers Consumers and know-how across the Farms Processing Distributi
Slide 43: Highly Diversified Network
HIGHLY Largest poultry company across Australia and New Zealand DIVERSIFIED NETWORK >30% market share in Australia and New Zealand respectively Geographically diverse network FACILITIES/FARMS Biosecurity import barrier Farms Hatcheries Ensures continuity of supply to meet our customers’ needs Feedmi
Slide 44: We Operate in a Growing Market
WE OPERATE IN A GROWING Meat Consumption Kg/Capita – Australia3 MARKET • Chicken consumption per capita is 50.2kg (2) in Australia and CONSUMPTION 40.2kg(1) in New Zealand STABLE GROWTH • Consistent growth in consumption versus other protein 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 19 1
Slide 45: Definitions
DEFINITIONS NON-IFRS INFORMATION REFERRED TO IN THIS PRESENTATION AND ARE DEFINED BELOW Average Capital Invested: Net assets plus net debt plus tax balance plus net PCP: Prior corresponding period. liabilities of AASB 16; average calculated over two financial year end periods. ROIC: Return on Invest