Slide 1: Half Year 2021 Results Presentation
INGHAMS GROUP LIMITED Half Year 2021 Results Presentation 19 FEBRUARY 2021
Slide 2: Important notice and disclaimer
Important notice and disclaimer 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 gi
Slide 3: Presentation of underlying financial information
Presentation of underlying financial information Underlying results are post AASB 16 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. As such the underlying results in this document include the impa
Slide 4: Group Performance Highlights
GROUP PERFORMANCE HIGHLIGHTS Jim Leighton Managing Director & CEO 4
Slide 5: Group Highlights
GROUP HIGHLIGHTS Strong 1H FY21 results driven by resilience in demand & strategic initiatives delivering operational momentum Solid growth in § Group core poultry volume growth of 4.0% on pcp and 5.6% on 2H FY20 § Strengthened demand across most channels and the return of overall trading volumes po
Slide 6: 1H FY21 Financial Highlights
1H FY21 FINANCIAL HIGHLIGHTS Improved financial performance driven by increased sales volume HY21 Variance to HY20 % Variance § Increase in core poultry volume reflecting solid demand across retail, QSR, wholesale and food service Group Core Poultry Volume 224.6kt 8.7 4.0 channels, slightly offset b
Slide 7: Observations Across Our Channels
OBSERVATIONS ACROSS OUR CHANNELS Strengthened customer demand across most channels as COVID-19 restrictions eased RETAIL QSR FOOD WHOLESALE EXPORT SERVICE Volatility during the Strong recovery supported Channel recovering as Improved volume driven by Australia constrained by period due to COVID-19 b
Slide 8: COVID-19 Impacts During the Half Year
COVID-19 IMPACTS DURING THE HALF YEAR First quarter more significantly impacted by COVID-19 restrictions than second quarter. Successfully implemented lessons learned from first wave to meet customer demand and ensure continuity of supply to customers § Leading Government engagement to proactively G
Slide 9: Strategy Update
STRATEGY UPDATE Jim Leighton Managing Director & CEO 9
Slide 10: Our Strategic Framework
OUR STRATEGIC FRAMEWORK Continued focus on five-year strategic plan while managing ongoing COVID-19 challenges OUR OBJECTIVE To deliver more consistent, predictable and reliable returns § Deliver asset efficiency with modest capital spend OPTIMISE § Implement a continuous improvement culture THE COR
Slide 11: 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 12: Financial Results
FINANCIAL RESULTS Gary Mallett Chief Financial Officer 12
Slide 13: Profit & Loss – Statutory
PROFIT & LOSS – STATUTORY Strong half year result despite navigating the continuing challenges of COVID-19 & high grain costs $M 1H FY21 1H FY20 Var % Revenue 1,363.0 1,303.5 59.5 4.6 Gross Profit 356.8 337.8 19.0 5.6 EBITDA 215.6 205.3 10.3 5.0 Depreciation & Amortisation (132.4) (131.0) (1.4) 1.1
Slide 14: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION Items excluded from underlying results in the half $M 1H FY21 1H FY20 Var % § AASB 16 leases impact: Included in EBITDA ($117.9M) is Statutory EBITDA 215.6 205.3 10.3 5.0 cost of sales ($105.3M), distribution ($10.0M) and sales & (Profit) / Loss on sale of assets 0.7 adm
Slide 15: Profit & Loss – Underlying
PROFIT & LOSS – UNDERLYING Growth in NPAT as a result of volume growth and continued improvements in operational efficiencies $M 1H FY21 1H FY20 Var % Underlying results are presented post AASB 16 Core Poultry volumes (kt) 224.6 215.9 8.7 4.0 Volume & Revenue Growth Total Poultry volumes (kt) 279.4
Slide 16: Balance Sheet
BALANCE SHEET Robust balance sheet maintained with leverage declining to 1.7x and inventory reduced $M Dec-20 Jun-20 Variance § Inventories: Decreased $29.2M in 1H due to a reduction in Inventories/Biologicals 308.5 337.7 (29.2) poultry inventory of $42.3M, offset by higher feed inventory of Receiva
Slide 17: Cash Flow
CASH FLOW Operating cash generation and prudent approach to capex driving improved cash conversion $M Dec-20 Dec-19 Variance Statutory EBITDA 215.6 205.3 10.3 § Cash conversion: The cash conversion has been impacted by Non-cash items 0.8 0.8 (0.0) seasonal working capital increase of $37.5M. Invento
Slide 18: Capital Management
CAPITAL MANAGEMENT Gary Mallett Chief Financial Officer 18
Slide 19: Capital Management Metrics
CAPITAL MANAGEMENT METRICS Leverage of 1.7x down from 1.8 at June 2020 Leverage $M Dec-20 Jun-20 Dec-19 § Net debt increased $12.8M in the half due to the normal seasonal trade receivables Leverage working capital cycle Net Debt – Bank Facility 327.5 314.7 323.4 § Maturing debt facilities have been
Slide 20: Capital Management Framework
CAPITAL MANAGEMENT FRAMEWORK A disciplined approach to capital management § Our core objective is to deliver consistent, predictable and reliable returns § Our capital management framework aims to meet our capital needs and maximise total shareholder returns, while enabling Ingham’s to take advantag
Slide 21: Capital Management Framework
CAPITAL MANAGEMENT FRAMEWORK Cashflow from Cashflow from strategic Cashflow from interest and operations activities tax Strong cash generation Key outcomes in 1H FY21 § Cashflow from operations pre AASB 163 of Sustaining capital1 $58.9M in 1H FY21 delivering a cash conversion Annual spend range of a
Slide 22: Capital Management History
CAPITAL MANAGEMENT HISTORY Significant cash generation with a history of solid returns to shareholders and continued investment in our business $444M returned to shareholders since IPO Cash flow from operations – pre AASB 16 250.0 500 280 980 450 880 Cash flow from operations ($M) Return to Sharehol
Slide 23: Segment Performance
SEGMENT PERFORMANCE Jim Leighton Managing Director & CEO Jonathan Gray CEO New Zealand 23
Slide 24: Australia
AUSTRALIA Market showing resilience with improving trading performance from strong volume growth Highlights: $M 1H FY21 1H FY20 Var % § Revenue growth of 5.2% despite ongoing COVID-19 Core Poultry volumes (kt) 190.9 183.6 7.3 4.0 environment. Total poultry revenue growth of 6.5% on 5.0% increase in
Slide 25: New Zealand
NEW ZEALAND Solid poultry sales volume and revenue growth, earnings impacted by reduced processing volume Highlights: $M 1H FY21 1H FY20 Var % § Total poultry revenue growth of 3.2% on 3.6% increase in Core Poultry volumes (kt) 33.7 32.3 1.4 4.3 volume Total Poultry volumes (kt) 40.1 38.7 1.4 3.6 §
Slide 26: Feed Market Update
FEED MARKET UPDATE Anne-Marie Mooney Chief Agribusiness Officer 26
Slide 27: External Feed Market Observations
EXTERNAL FEED MARKET OBSERVATIONS New crop wheat now fully harvested with initial easing in wheat pricing before stabilising in early 2021, while soymeal prices have increased - Delivered feed cost contains cereal grains, protein meals, vitamins and minerals. Feed cost also includes transport and mi
Slide 28: Feed Cost Outcomes in 1H FY21
FEED COST OUTCOMES IN 1H FY21 The end of a 3-year drought resulted in a deep low in domestic stock positions which combined with strong export demand, drove higher pricing to secure supply § Lowest ending stock position in five years and close to a near run out position on wheat and grain stocks on
Slide 29: Feed Cost Expectation in 2H FY21
FEED COST EXPECTATION IN 2H FY21 New crop harvested with wheat prices easing and expected to fully flow through by Q4 FY21, slightly offset by higher soymeal pricing § New crop harvest commenced in November, and is now largely complete § Delivered prices reflect easing wheat prices however holding f
Slide 30: Outlook
OUTLOOK Jim Leighton Managing Director & CEO 30
Slide 31: Outlook
OUTLOOK Strategic initiatives delivering operational momentum to support future growth § Solid progress in the delivery of our first strategic pillar of ‘optimise the core’, enabling our future growth strategy § The net impact of lower feed prices is expected to be modest during the second half, giv
Slide 32: Appendix
| APPENDIX ee) Cy - — 32
Slide 33: Segment Reconciliation
SEGMENT RECONCILIATION Items excluded from underlying results in the half Group Group Australia Australia NZ NZ $M 1H FY21 1H FY20 Var 1H FY21 1H FY20 Var 1H FY21 1H FY20 Var Statutory EBITDA 215.6 205.3 10.3 182.8 174.4 8.4 32.8 30.9 1.9 (Profit) / Loss on sale of assets 0.7 0.0 0.7 0.0 0.0 Impairm
Slide 34: Profit & Loss Reconciliation – 1H FY21
PROFIT & LOSS RECONCILIATION – 1H FY21 1H FY20 1H FY21 1H FY21 Excluded from 1H FY21 AASB16 Underlying Profit & Loss $M Underlying Var Var % Statutory underlying Underlying Leases Pre AASB16 Pre AASB16 Revised (1) Core Poultry volume (kt) 224.6 224.6 224.6 215.9 8.7 4.0 By-Products volume (kt) 54.8
Slide 35: AASB16 Lease Impact
AASB16 LEASE IMPACT $M Balance Sheet Dec-20 AU NZ Jun-20 Dec-19 § Land and Buildings: Ingham’s has a large leased property portfolio. Working Capital & Right-of-use Assets $803.1M. Average term remaining on the 4.1 Provisions (1) portfolio is 12.5 years Land & Buildings 803.1 722.0 81.1 814.6 843.7
Slide 36: Profit & Loss Reconciliation – 1H FY20
PROFIT & LOSS RECONCILIATION – 1H FY20 1H FY20 1H FY20 1H FY20 Excluded from 1H FY20 AASB16 Underlying Less: reclass Underlying Profit & Loss $M (1) Statutory underlying Underlying Leases Pre AASB16 Pre AASB16 Reported Revised Core Poultry volume (kt) 215.9 215.9 215.9 215.9 By-Products volume (kt)
Slide 37: Working Capital & Provisions
WORKING CAPITAL & PROVISIONS $M Dec-20 Jun-20 Var Dec-19 Var Processed Poultry 103.9 146.2 (42.3) 88.1 15.8 Feed 56.4 47.3 9.1 33.3 23.1 Other 41.8 38.3 3.5 39.0 2.8 Obsolescence Provision (11.1) (14.8) 3.7 (6.0) (5.1) Inventory 191.0 217.0 (26.0) 154.4 36.6 Biological Assets 117.5 120.7 (3.2) 122.2
Slide 38: International Wheat Market Impacts
INTERNATIONAL WHEAT MARKET IMPACTS Current market vs 10 year historical averages § Despite a near record domestic wheat harvest, strong demand internationally for Australian ASX Wheat is relatively cheaper when compared with 100% CME or Russian wheat in $A wheat is holding prices higher than anticip
Slide 39: Definitions
DEFINITIONS Certain non-IFRS information is referred to in this presentation. Defined below is what is included in each non-IFRS measure used throughout this presentation § EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation § EBIT: Earnings before Interest and Tax § Gross Profit: R
Slide 40: Investor Enquiries
INVESTOR ENQUIRIES Carrie Barrack Senior Advisor – Cato & Clive e | carrie@catoandclive.com m | 0422 464 028