Sanford Limited · NZX:SAN
Sanford — FY2020 Earnings Presentation
31 slides from Sanford's earnings presentation, November 2020
Slide 1: Annual Result for the Year Ended 30 Sept 2020
Ss) SANFORD ANNUAL RESULT¢& FOR THE YEAR ENDED 30 SEPT 2020
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
Slide 3: FY20 Results Summary
FY20 RESULTS SUMMARY 3
Slide 4: FY20 Summary
FY20 Summary Covid-19 had a major impact on this year’s performance • Result reflects impact of global lockdowns • Demand dropped significantly in both third and fourth quarter – Covid-19 seriously impacted global foodservice • Near to medium-term tactical adjustments required to navigate the challe
Slide 5: FY20: Results snapshot
FY20: Results snapshot Toothfish and impacts of Covid-19 pandemic drove a disappointing result CATCH/HARVEST VOLUME SALES VOLUME REVENUE ADJUSTED EBIT1 113k GWT 106k GWT $469M $38.3M Like-for-Like2 -9% Like-for-Like2 -14% Like-for-Like2 -41 % Like-for-Like2 -1% +7% Flat -11 % - 34 % EBIT GW kg ADJUS
Slide 6: Covid-19 Response
Covid-19 Response Our response promoted a more flexible culture to navigate the new environment People Customers Financial • Health & Safety remained • Rapid shift from eating out to in- • Robust balance sheet – gearing of paramount home dining for seafood industry 30.6% at 30 September • Response t
Slide 7: EBIT performance heavily impacted by fall in foodservice demand
EBIT performance heavily impacted by fall in foodservice demand Key drivers of Adjusted EBIT change NZD m Divested Operational Timing Strategy in Action Covid-19 -$6m -$8m -$4m +$6m -$14m 7 *Excludes the impact of NZ IFRS 16 leases
Slide 8: FY20 Balance sheet
FY20 Balance sheet Balance Sheet remains strong but debt has increased GEARING* NET DEBT NET DEBT / ADJUSTED EBITDA $184.3M 2.8x 30.6% +41% FY19 1.52x up from 23.7% TOTAL EQUITY RETURN ON AVERAGE TOTAL EQUITY $612M 3.7 % +4% Down from 7.1% OPERATING CASHFLOW LIQUIDITY RATIO Operating Cashflow $m $18
Slide 9: Seafood inventory build in FY20
Seafood inventory build in FY20 VOLUME VALUE YOY increase +44% YOY increase +99% 14.0 $80.0 75 12 12.0 $70.0 Inventory Volume (tonnes 000’s) $60.0 10.0 Inventory Value ($m) 8 $50.0 8.0 $40.0 38 6.0 $30.0 4.0 $20.0 2.0 $10.0 0.0 $0.0 FY19 FY20 FY19 FY20 Wildcatch* Greenshell mussels King salmon Wildc
Slide 10: Update by Business
UPDATE BY BUSINESS 10
Slide 11: Wild Catch FY20
Wild Catch FY20 Covid 19 caused a dramatic downturn for wild catch sold in foodservice globally FRESH FROZEN Sales Volumes -3% Revenue -21% Profit contribution* -45% 80 400 60 551 1.20 3551 5.80 681 66 350 $5.21 5.40 60 300 282 $0.79 5.00 40 0.80 GWT (000’s) 250 $ millions $ millions 40 200 4.60 $4.
Slide 12: Wild Catch FY20
Wild Catch FY20 FRESH FROZEN Demand for both commodity and high value products fell, reducing sales margin Positives Challenges • 10% higher deepwater catch (reduced vessel • Lower Toothfish catch and soft pricing downtime: vessel upgrades, improved crew • Reduced pricing, smaller squid size and low
Slide 13: Greenshell Mussels FY20
Greenshell Mussels FY20 Half-shell volumes have heavy reliance on banqueting and buffet dining – more heavily impacted by Covid-19 than standard foodservice MUSSELS Sales volume +5% Revenue +12% Profit contribution* +30% 40 140 4.00 25 1.20 23 35 34 36 121 120 108 20 30 3.60 18 100 $3.35 $0.65 0.80
Slide 14: Greenshell Mussels FY20
Greenshell Mussels FY20 Pricing strong for first three quarters, but weakened in Q4 MUSSELS Positives Challenges • Strong price, country and customer mix change • Higher inventories in H2 as demand dropped driving margin • Due to reliance on foodservice, the switch to • Mussel powder pet market cont
Slide 15: King Salmon FY20
King Salmon FY20 Covid-19 reversed the first half momentum Needed to accelerate our retail programme placing pressure on margins SALMON Sales volumes +3% Revenue +4% Profit contribution1,2 -9% 4,000 3,625 60 14.6 25 6.40 3,522 49 51 3,500 50 14.4 20 20 18 6.00 3,000 40 14.2 $5.60 $ millions $ millio
Slide 16: King Salmon FY20
King Salmon FY20 Long-term strategic opportunity validated, but responding to changing near-term environment SALMON Positives Challenges • Strong interest and sales in North America from the Big • Launch of Big Glory Bay into China was delayed by Glory Bay brand pre Covid-19 disruption pandemic and
Slide 17: Diversity of geography somewhat mitigates Covid-19 implications
Diversity of geography somewhat mitigates Covid-19 implications • Diverse footprint allows us Geographic distribution of revenue - FY20 vs. FY19 to move sales around as $300 markets change • Flat sales to Europe despite $250 $239 Covid-19 lockdowns, driven by diversification of Mussels $206 1 $200 a
Slide 18: High levels of commitment and increasing engagement of our people
High levels of commitment and increasing engagement of our people will support our recovery 76% Oct ‘20 75% Jun ’20 73% Feb ’20 72% Oct ‘19 ‘Mullet Over’ engagement survey results Oct ‘19 – Oct ‘20 18
Slide 19: Looking Forward: FY21 Focus
LOOKING FORWARD: FY21 FOCUS 19
Slide 20: Entering the "Revive" stage
Entering the “Revive” stage RESPOND REVIVE THRIVE 20
Slide 21: FY21 Focus
FY21 Focus • 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, and when the time is r
Slide 22: FY21 Focus – by business
FY21 Focus – by business Wildcatch Greenshell Mussels King Salmon • Sell down inventory levels to ensure • New market and channel • Use Big Glory Bay brand to diversify cashflow whist protecting premium development to sell down inventory channels and maximise value channels • Complete the build of t
Slide 23: Capital expenditure
Capital expenditure • To retain financial flexibility during the pandemic, FY20 capital expenditure was reduced to $48m (compared to ~$80m outlook pre-Covid-19): $35m integrity (surveys, processing equipment etc) $13m growth • Similar level expected in FY21 of ~$45-55m • Spend aligned to business pe
Slide 24: Innovation pipeline
Innovation pipeline Products that allow us to respond to not only changing channels, but also high value consumer trends • Marine Extracts facility delayed third quarter 2021 24
Slide 25: Wrap-up and Q+A
WRAP-UP AND Q+A 25
Slide 26: Thank you! Questions?
Thank you! Questions?
Slide 27: Appendices
APPENDICES 27
Slide 28: Sanford's FY20 integrated report and Business Excellence Framework
Sanford’s FY20 integrated report is available at https://www.sanford.co.nz/investors/reports-1/company- reports/ The report outlines Sanford's Business Excellence Framework – this enables each part of the business to map out its role in helping to deliver on our goals We strive to inform in a
Slide 29: Sanford's product portfolio – FY20
Sanford’s product portfolio – FY20 HARVEST VOLUME DEEPWATER VOLUME King salmon 4% Factory Greenshell mussels vessels 33% Wildcatch - 96% deepwater 55% Scampi 1% Wildcatch - Toothfish inshore 3% 8% SALES REVENUE DEEPWATER REVENUE King salmon Greenshell 11% mussels Factory 27% Scampi vessels 11% 84% W
Slide 30: USD FX Hedging Pattern for the Year
USD FX HEDGING PATTERN FOR THE YEAR 30
Slide 31: FY20 Financial Results - GAAP to Non GAAP reconciliation
FY20 Financial Results - GAAP to Non GAAP reconciliation 2020 2019 Non-GAAP Profit measures $m $m Sanford's standard profit measure prepared under New Zealand GAAP is net profit. Sanford has used non-GAAP measures when discussing financial Revenue 468.8 545.1 performance in this document. The Direct