Inghams Group Ltd. · ASX:ING
Inghams — Investor Day (November 2023)
65 slides from Inghams's investor day presentation, Nov 15, 2023
Slide 1: Investor Day 15 November 2023
INVESTOR DAY 15 NOVEMBER 2023 Broiler farm, New Zealand
Slide 2: Disclaimer
DISCLAIMER Important notice The material in this presentation is general background information about the activities of Inghams Group Limited and its related entities, current at the date of this presentation, unless otherwise stated. The content is information given in summary form and does not pur
Slide 3: Welcome
WELCOME Helen Nash Chair Inghams Group Broiler farm, Queensland
Slide 4: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY On behalf of Ingham’s, I would like to respectfully acknowledge the traditional owners both past and present, as custodians of this land we are meeting on today. Artist: Kelly Taylor www.ktaboriginalfineart.store Inghams Group Limited Investor Day | 15 November 2023 4
Slide 5: Agenda
AGENDA 1 GROUP Our business and strategy 2 GROUP Financial performance and capital management 3 AUSTRALIA Market trends and growth opportunities 4 AUSTRALIA Strengthening our integrated network and operational excellence 5 NEW ZEALAND Strategy update and pathway to growth Inghams Group Limited Inves
Slide 6: Our Business & Strategy
OUR BUSINESS & STRATEGY GROUP Andrew Reeves Chief Executive Officer & Managing Director Packenham Hatchery, Victoria
Slide 7: Ingham's at a Glance
INGHAM’S AT A GLANCE FOUNDED IN 1918, INGHAM’S ARE ANZ’S LARGEST PRODUCER OF POULTRY 8,000+ 440+ 320+ 1.2+ EMPLOYEES MILLION KILOS MILLION MILLION TONNES DIRECTLY EMPLOYED OF CHICKEN SOLD EGGS OF GRAIN PROCURED EACH YEAR PRODUCED EACH YEAR EACH YEAR 230+ 100% 4.8+ 90+ CONTRACT RSCPA & SPCA MILLION S
Slide 8: About Ingham's
ABOUT INGHAM’S OUR VISION OUR PURPOSE Innovators in ‘Further National fully integrated Deep technical expertise Leading the way ‘doing good’ Processed’ and processing network, across the entire value chain and setting new standards in ‘Value Enhanced’ product supplying at scale to long to unlock eff
Slide 9: Compelling Investment Proposition
COMPELLING INVESTMENT PROPOSITION Ingham’s 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 prot
Slide 10: We Operate in a Growing Market
WE OPERATE IN A GROWING Meat Consumption Kg/Capita – Australia3 MARKET • Chicken consumption per capital is 44.8kg (1) in Australia CONSUMPTION and 40.2kg (1) in New Zealand STABLE GROWTH • Consistent growth in consumption versus other protein products Chicken (kg per capita) Pork (kg per capita) La
Slide 11: 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 12: 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 13: Inghams Has Grown Ahead of the Market
INGHAMS HAS GROWN AHEAD OF THE MARKET Australian Chicken Meat Volume (kt) New Zealand Broilers Processed (m) +1.9% +0.6% 1,376 1,362 125.5 1,292 120.7 120.7 1,237 1,244 119.4 118.7 119.5 1,230 1,198 115.1 FY17 FY18 FY19 FY20 FY21 FY22 FY23 CY16 CY17 CY18 CY19 CY20 CY21 CY22 Source: ABS Chicken slaug
Slide 14: Network Serves a Diversified Mix of Channels and Customers
OUR NETWORK AND INTEGRATION ALLOWS US TO SERVE A DIVERSIFIED MIX OF CHANNELS AND CUSTOMERS Retail Average Channel Mix by Volume 36% QSR 48.0% 16% Food Service / Wholesale Retail Quick Service Restaurants Wholesale, Food Service, Other, Export Inghams Group Limited Investor Day | 15 November 2023 14
Slide 15: Ingham's Strategy
INGHAM’S STRATEGY INTENT WE HAVE AMBITIOUS PLANS FOR GROWTH AND VALUE CREATION • Leveraging consumer insights to tap into what consumers value and would pay more for • Elevating customer partnerships to bring new propositions to life HOW WE WIN • Implementing distinctive capabilities that provide co
Slide 16: People Are the 'Key' to Our Success
PEOPLE ARE THE ‘KEY’ TO OUR SUCCESS SAFETY FOR CONSTRUCTIVE AND BUILDING LEADERSHIP OUR PEOPLE INCLUSIVE CULTURE AND CAPABILITY We have put safety at the We are committed to We are investing in developing forefront of everything we do creating a constructive and our people, last year over 1,50
Slide 17: We Are Leading Sustainable Agriculture
WE ARE LEADING SUSTAINABLE AGRICULTURE FLAGSHIP INITIATIVES BEYOND OUR GATE We will lead on global imperatives through partnerships and innovation; challenging the industry using our voice. Ensuring welfare for animals and Addressing climate risk and supporting Addressing the growing consumption soc
Slide 18: Performance & Capital Management
PERFORMANCE & CAPITAL MANAGEMENT GROUP Gary Mallett Chief Financial Officer Amarina Breeder farm, Northern New South Wales
Slide 19: Financial Performance
FINANCIAL PERFORMANCE EBITDA Pre AASB-16 $m 138 106 109 97 99 101 100 100 92 89 83 83 1H24 profitability has been supported by stabilisation and improvement in operational performance, robust demand for poultry and 36 wholesale market economics 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23
Slide 20: Investment and Performance
INVESTMENT AND PERFORMANCE Capital investment $m 115 97 87 Investment in the network was materially impacted 72 61 66 62 by COVID access restrictions. Since listing of $560M invested across - • Developed and own two new hatcheries $80M FY17 FY18 FY19 FY20 FY21 FY22 FY23 and breeder farm $50M • Spin
Slide 21: Capital Management Principles
CAPITAL MANAGEMENT PRINCIPLES DISCIPLINED OPTIMISE BALANCE SHEET CAPITAL ALLOCATION WORKING CAPITAL STRENGTH & FLEXIBILITY • Predictable and reliable long-term earnings • Maintain appropriate product inventory • Maintain leverage within the Group’s and cashflow growth levels to meet customer demand,
Slide 22: Capital Management Framework
CAPITAL MANAGEMENT FRAMEWORK CASH FROM CASH FOR NET INTEREST, TAX AND OPERATING ACTIVITIES INVESTING ACTIVITIES LEASE PAYMENTS Cash realisation ratio Sustaining Service obligations Sustaining capex Annual spend 75-90% of depreciation pre AASB-16 on Stay-in-business across Replacement and ESG project
Slide 23: A Disciplined Approach to Capital Management
A DISCIPLINED APPROACH TO CAPITAL MANAGEMENT STRATEGIC STAY IN BUSINESS CORE GROWTH HIGH GROWTH INVESTMENTS Replacement of end Building breeder and Automation of whole Purchase of strategic of life assets requiring FP capacity muscle cutting (DSI), properties within the replacement Unlocki
Slide 24: Net Debt and Leverage
NET DEBT AND LEVERAGE INGHAMS HAS STRONG HISTORY OF CASH GENERATION PROVIDING FLEXIBILITY FOR FUTURE INVESTMENTS Group net debt and leverage Debt maturity profile ($m) 2.0 400 1.7 1.8 2.0 1.3 1.4 300 1.2 1.5 200 0.7 1.0 345 298 264 315 267 240 263 200 100 0.5 145 0 0.0 FY17 FY18 FY19 FY20 FY21 FY22
Slide 25: Shareholder Returns
SHAREHOLDER RETURNS Dividends: Since listing $393M of dividends have been $m declared, representing an average payout ratio of 235 70% of underlying NPAT 36 This is consistent with the dividend policy which 125 targets a dividend payout ratio of 60-80% of Underlying NPAT. Dividends have been ful
Slide 26: Panel 1
PANEL 1 ANDREW REEVES MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER GARY MALLETT CHIEF FINANCIAL OFFICER Inghams Group Limited Investor Day | 15 November 2023 Broiler farm, Queensland 26
Slide 27: Market Trends & Opportunities
MARKET TRENDS & OPPORTUNITIES AUSTRALIA Seb Brandt Chief Strategy & Planning Officer Clair Stevenson Executive General Manager Retail
Slide 28: The Outlook for Growth in Chicken Is Positive
THE OUTLOOK FOR GROWTH IN CHICKEN IS POSITIVE AUSTRALIAN CONSUMER SPEND & VOLUME RETAIL TRENDS OUT-OF-HOME TRENDS • A valuable category • Poultry driving product for consumers Consumer Spend Innovation • All retailers adding +3.8% growth more space to poultry • More prominence on permanent menu • Me
Slide 29: Global Insights Highlighted Opportunities
GLOBAL INSIGHTS HIGHLIGHTED OPPORTUNITIES GLOBAL POULTRY AUSTRALIA POULTRY INGHAM’S Strong category Positive Consumption Free range Insights and Focus on growth tailwinds 44.8kg(1) fastest growth data being ‘Dinner Done’ & category commercialised ‘Raised Right’ Inspiring ANZ leading Consumers Outloo
Slide 30: Deep Understanding of Consumer Needs Underpins Value Growth
DEEP UNDERSTANDING OF CONSUMERS DESIRE NEEDS UNDERPINS VALUE GROWTH +95% CONSUMER PENETRATION VALUE | VERSATILITY | TASTE | HEALTHY DINNER DONE! FOOD IMPRESS LUNCHTIME RAISED THE GREEN (EVERYDAY) CONNECTION THE CROWD HEROES RIGHT PROTEIN During the Mid-week time Elevating Easy, tasty & Making good R
Slide 31: Improving Mix of High Value Products Will Grow Profit
IMPROVING MIX OF HIGH VALUE PRODUCTS WILL GROW PROFIT CASE STUDY: CREATING VALUE IN RETAIL CHICKEN BREAST RSPCA BARN RAISED FREE RANGE FURTHER PROCESSED VALUE ENHANCED FREE RANGE VALUE ENHANCED BREAST FILLET FREE RANGE INGHAM’S FURTHER MARINATED FREE RANGE SKIN OFF BREAST FILLET PROCESSED RETAIL RAN
Slide 32: Consumer Desire for Convenience: Dinner Done
DEEP UNDERSTANDING OF CONSUMERS DESIRE FOR CONVENIENCE CONSUMER INSIGHTS INNOVATION PLATFORMS GROWTH OPPORTUNITY Getting Dinner Done 41% of Poultry Needs – 1 solving Dinner Done angst 1 Trade up drumstick meat via de-boning is a real chore Time poor consumers Poultry best placed Cook in bag packagin
Slide 33: Consumer Desire to Make Good Choices: Raised Right
DEEP UNDERSTANDING OF CONSUMERS DESIRE TO MAKE GOOD CHOICES CONSUMER INSIGHTS NEW INNOVATION PLATFORMS GROWTH OPPORTUNITIES 65% desire to buy Provenience from 1 Strong purchase intent Free Range 1 ‘somewhere’ Expand VE & FP range 2 Category momentum 20% category growth 2 and formats Significant late
Slide 34: Inghams Will Grow the Attractiveness of the Category By…
INGHAMS WILL GROW THE ATTRACTIVENESS OF THE CATEGORY BY… PARTNERING FOR • More category shelf space equates to more ‘volume’ 1 GROWTH IN RETAIL • Product innovation equates to more ‘value’ on shelf AND QSR and permanent menus LEVERAGE INGHAMS • Respond to the consumer need for convenience CONSUMER I
Slide 35: Only Consumer-Ready Poultry Specialist at National Scale
WE ARE THE ONLY ‘CONSUMER-READY’ POULTRY SPECIALIST OPERATING AT A NATIONAL SCALE IN THE AUSTRALIAN MARKET High Production capability Inghams are distinguished from our competitors by: • The scale and reach of our ‘consumer-ready’ product range, across fresh, value-enhanced, and further-processed se
Slide 36: Set Up to Meet Objectives of Retail & QSR Customers
WE ARE SET UP TO MEET THE INCREASINGOBJECTIVES OF RETAIL & QSR CUSTOMERS INNOVATION QUALITY ANIMAL WELFARE • Deep understanding of consumer needs • Set up to meet highly specified • 100% RSPCA accredited Broilers • Best innovation and execution capability requirements of retail and QSR • Largest vet
Slide 37: Strong Relationships with Tier-1 Customers
STRONG RELATIONSHIPS WITH TIER-1 CUSTOMERS, ALIGNED AROUND GROWTH OPPORTUNITIES 62-YEAR RELATIONSHIP 55-YEAR RELATIONSHIP 44-YEAR RELATIONSHIP • Supported Q1 • McCrispy • Hot and crispy FY23 launch of 1H24 National boneless poultry range Launch reviews and • 2H22 National Permanent partnered on Laun
Slide 38: Panel Session 2
PANEL SESSION 2 SEB BRANDT CHIEF STRATEGY & PLANNING OFFICER CLAIR STEVENSON EXECUTIVE GENERAL MANAGER RETAIL Inghams Group Limited Investor Day | 15 November 2023 Broiler farm, Queensland 38
Slide 39: Strengthening Our Integrated Network and Operational Excellence
STRENGTHENING OUR INTEGRATED NETWORK AND OPERATIONAL EXCELLENCE AUSTRALIA Anne Marie Mooney Chief Operations Officer Distribution centre, South Australia
Slide 40: Network Size and Breadth Are Our Advantage
NETWORK SIZE AND BREADTH ARE OUR ADVANTAGE PRIMARY PROCESSING NETWORK FURTHER PROCESSING NETWORK Ingham’s* Cordina Ingham’s* Baiada Nerang Baiada Turosi Gourmet Turosi Hazeldene’s Mt Baker Cordina Golden Cockeral Nichols • Operate primary processing facilities in every state • Largest and most exten
Slide 41: Network and Expertise Creates a Unique Service Proposition
OUR NETWORK AND EXPERTISE CREATES A UNIQUE SERVICE PROPOSITION NATIONAL NETWORK TECHNICAL EXPERTISE MANUFACTURING ESG CAPABILITY • We operate in every state • We have a team of deep • Assets base designed • We are improving safety of Australia subject matter experts to service a higher value year on
Slide 42: Global Insights to Adopt and Leverage
GLOBAL INSIGHTS TO ADOPT AND LEVERAGE GLOBAL POULTRY INGHAM’S Fixed weight Tight labour Significant Primary Processing Automation We are leaders technology market driver for investments in to be designed is critical to in animal welfare, in operation automation automation for inline speed efficiency
Slide 43: Network Investment Plan Unlocks Capacity and Automation
Broiler farm, South Australia OUR NETWORK INVESTMENT PLAN UNLOCKS CAPACITY, ACCELERATES AUTOMATION AND MEETS CONSUMER NEEDS STAY IN BUSINESS CORE GROWTH HIGH GROWTH • Replacement of end-of-life • Investments to create • Automation of primary assets requiring replacement, network capacity to support
Slide 44: Insight Driven Investment Targeted to Consumer Needs
INSIGHT DRIVEN INVESTMENT TARGETED TO MEETING CONSUMER NEEDS AND CUSTOMER WANTS THAT WILL GROW PORTFOLIO RETURNS CASE STUDY: INVESTING IN VALUE-ENHANCED “VE” VALUE ENHANCED A STRATEGIC FOCUS FOR UNLOCKING EFFICIENCIES GROWTH AND A KEY INGHAM’S STRENGTH IN VALUE ENHANCED PRODUCTION • Widest range of
Slide 45: Automation Investments Unlock Capability and Capacity
AUTOMATION INVESTMENTS WILL UNLOCK CAPABILITY AND CAPACITY, WHILE DELIVERING STRONG RETURNS CASE STUDY: INVESTING IN AUTOMATION LEG DEBONERS WHOLE MUSCLE DSI ROBO BATCHING IMPLEMENTATION FY24 FY24/FY25 FY25/FY26/FY27 BENEFITS REALISED FROM 1H25 2H25 1H26 CAPITAL INVESTMENT $17.0m $30.3m $18.0m OPEX
Slide 46: Disciplined Performance Management Across the Value Chain
WE ARE DISCIPLINED IN MANAGING PERFORMANCE WITH A FOCUS ON CONTINUOUS IMPROVEMENT ACROSS THE VALUE CHAIN Cost Base Australian Value Chain1 Feed & Farming Primary Processing Further Processing Warehousing & Distribution Sales, General & Admin Feed & Farming Primary & Further Processing Levers Measure
Slide 47: Continuous Improvement Delivered Over $40M in FY23
CONTINUOUS IMPROVEMENT DELIVERED OVER $40M IN FY23 ACROSS 300+ SEPARATE INITIATIVES CASE STUDY: TWO CONTINUOUS IMPROVEMENT EXAMPLES IN FOCUS UNLOCKING BENEFITS EFFICENCY • Diverter arm installed to deliver • Process: Automation product directly to packing area, of manual shop floor removing the need
Slide 48: Strategy Update & Pathway to Growth
STRATEGY UPDATE & PATHWAY TO GROWTH NEW ZEALAND Ed Alexander Chief Executive New Zealand Broiler farm, New Zealand
Slide 49: New Zealand Strategic Summary
NEW ZEALAND STRATEGIC SUMMARY WE WILL… • Be known as New Zealand’s first choice for poultry through Brilliant Partnerships, focused Operational Excellence and System- OUR INTENT Level Innovation • Capture today’s potential by applying the ethos of the more we understand how we create value, the more
Slide 50: Emerged Stronger from the Downturn
BUT HAVE EMERGED STRONGER FROM THE DOWNTURN WE RESPONDED TO THE CHALLENGES OF FY23… IMPROVED RETURNS AND A MORE RESILIENT BUSINESS FUTURE PROOF Bromley Park Automation to reduce THE NETWORK Acquisition labour reliance MANAGE THE Continuous Transitioned off Improved FUNDAMENTALS Improvement CO2 Opera
Slide 51: Landscape Scan Highlights Market Differences Versus Australia
A LANDSCAPE SCAN HIGHLIGHTS KEY MARKET DIFFERENCES VERSUS AUSTRALIA & OPPORTUNITIES GLOBAL POULTRY NEW ZEALAND POULTRY INGHAM’S Focus on Adding value Poultry challenged Cost of living Cost #1 Free providence and through adjacent as the cheapest pressures, retail Leadership Range Brand – transparency
Slide 52: Significant Progress on Our Strategy
WE HAVE MADE SIGNIFICANT PROGRESS ON OUR STRATEGY EXTEND OUR STRENGTHS NETWORK RESILIENCE AND GROWTH DIFFERENTIATE AT SCALE WAITOA CARBON ZERO BROMLEY PARK ACQUISITION FIRST MOVER 100% SPCA Inghams Group Limited Investor Day | 15 November 2023 52
Slide 53: First NZ Producer with 100% SPCA Certification
FIRST NEW ZEALAND PRODUCER TO HAVE 100% SPCA CERTIFICATION ACROSS BARN RAISED AND FREE RANGE CASE STUDY: INVESTING IN HIGHER ANIMAL WELFARE FOR COMPETITIVE ADVANTAGE KEY CHANGES / REQUIREMENTS HOW IT CREATES ADVANTAGE STOCKING DENSITY DRY LITTER PERCHING ONSITE AUDITS 4 Co-design the requirement <34
Slide 54: Automation Investments Will Deliver Strong Returns
AUTOMATION INVESTMENTS WILL DELIVER STRONG RETURNS CASE STUDY: INVESTING IN AUTOMATION CONVENIENCE FOOD CUT UP LEG DEBONERS HYGIENE AUTOMATION IMPLEMENTATION FY25 FY26 FY25/FY26/FY27 BENEFITS REALISED FROM 1H26 1H27 1H26 CAPITAL INVESTMENT $1.8m $5.5m $0.5m OPEX REDUCTION $0.8m $1.3m $0.3m ROIC1 28%
Slide 55: How We Will Win
HOW WE WILL WIN 1 2 3 OUR THREE LEVERS Operational Excellence Sustainability and Welfare Brand and Innovation Means optimizing the Means shaping the NZ market Means using Brand and performance of today’s on our terms and with the Innovation to create a business through: future in mind: “moat of diff
Slide 56: Panel Session 3
PANEL SESSION 3 ANNE MARIE MOONEY CHIEF OPERATIONS OFFICER ED ALEXANDER CHIEF EXECUTIVE NEW ZEALAND Inghams Group Limited Investor Day | 15 November 2023 Broiler farm, Queensland 56
Slide 57: Closing Remarks
CLOSING REMARKS GROUP Andrew Reeves Chief Executive Officer & Managing Director Broiler farm, Queensland
Slide 58: Compelling Investment Proposition
COMPELLING INVESTMENT PROPOSITION Ingham’s 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 prot
Slide 59: Thank You
Slide 60: Appendix
APPENDIX
Slide 61: Definitions
DEFINTIONS 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 liabilities ROIC: Return on Invested Capital pre AASB 16. of AASB 16; average calculated over two financial year end periods. Total Poul
Slide 62: AASB-16 Profile
AASB-16 PROFILE Right of Use Assets $b Lease Liability $m Grower Grower L&B/Other L&B/Other 602 516 462 501 487 476 431 445 378 363 311 244 294 177 110 226 158 90 828 859 858 833 801 972 945 928 923 916 908 901 894 887 770 738 706 675 FY20A FY21A FY22A FY23A FY24 FY25 FY26 FY27 FY28 FY20A FY21A FY22
Slide 63: Feed Costs Is Our Largest and Most Complex Cost
FEED COSTS IS OUR LARGEST AND MOST COMPLEX COST The market price observed takes on average 6 months to be realised in the profit and loss and we are continually reviewing and optimising the diet and nutrition package to deliver the best economic outcome Time to cycle through entire supply chain is =
Slide 64: We Maximise Value Through Planning & Balancing the Bird
WE MAXIMISE VALUE THROUGH PLANNING & ‘BALANCING THE BIRD’ 1 We are skilled in planning the long- and short-term integrated supply 2 We have a mix of customers and products that enables us to balance the distribution of bird weights 3 We sell all parts of the bird across the supply chain ENABLING US
Slide 65: Diversified Customer & Product Mix Enables Balancing the Bird
OUR DIVERSIFIED CUSTOMER & PRODUCT MIX ENABLES US TO ‘BALANCE THE BIRD’ WHILE CREATING GROWTH OPPORTUNITIES DEFINITION ‘BIG BIRD’ ‘SMALL BIRD’ PRIMARY BREAST THIGH WINGS DRUMSTICK OTHER PORTIONS WHOLE BIRD CUTS POINT OF CONSUMPTION IN-HOME OUT-OF-HOME PRODUCTS RETAIL WHOLESALE QSR FOOD SERVICE EXPOR