Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 2019 Earnings Presentation
24 slides from Australian Agricultural's earnings presentation, Nov 20, 2018
Slide 1: H1 19 Interim Results
H1 19 INTERIM RESULTS 20 NOVEMBER 2018 1
Slide 2: Important Information
Important Information Summary information only This presentation contains general information about the Australian Agricultural Company Limited and its consolidated entities (“AACo”) and its activities current as at the date of this presentation. It is provided in summary and does not purport to be
Slide 3: Contents
Highlights 04 Contents Financial Performance 11 Sustainability 18 Operating Environment 20 3
Slide 4: Highlights
Highlights
Slide 5: Westholme Australia
WESTHOLME |) AUSTRALIA
Slide 6: Highlights
Highlights AACo continues to present a unique value proposition, our unrivaled ability to produce the highest quality beef at scale ^^ Tough business decisions taken to create a simpler ^^ Transition to premium branded beef business and more efficient AACo have proven to be sound progressing • Livin
Slide 7: Financial Highlights
Financial Highlights ^^ Revenue up 11.1% to $219.2m vs $197.2m pcp: ^^ Significant head room in debt covenants • Underlying* Meat revenue up 2.3% ^^ Gearing ratio at 26.8% within targeted range ^^ Operating Profit up to $24.8m vs $6.8m pcp ^^ Operating cash inflow of $29.6m vs ($47.5m) ^^ Statutory
Slide 8: Wagyu Brands
Wagyu Brands 7.1 93.9 5.8 79.3 77.9 5.0 15.58 13.59 13.16 H1FY17 H1FY18 H1FY19 H1FY17 H1FY18 H1FY19 H1FY17 H1FY18 H1FY19 Volumes Sold Sales ($m) Price / Kg ($) (Kg m) H1FY17 5.8 H1FY17 79.3 H1FY17 13.59 H1FY18 5.0 H1FY18 77.9 H1FY18 15.58 H1FY19 7.1 H1FY19 93.9 H1FY19 13.16 8
Slide 9: International Market Premium Brands
International Market Growth Singapore 34% * Premium Brands Volume continue to command premium pricing in target markets Taiwan Pricing held constant on pcp despite macro headwinds 12% ** Volume Dubai Launch October 2018 * Compared to pcp ** Compared to H2 FY18 given market launch occurred in H1 FY18
Slide 10: Operating Profit
Operating Profit $29.6M 18.0m H1 2018 H1 2019 $24.8M ($47.5M) $6.8M 77.1m Net Operating Cash Flow H1 2018 H1 2019 Improvement 10
Slide 11: Financial Performance
Financial Performance
Slide 12: H1 2019 Results
H1 2019 Results $’000 H1 2019 H1 2018 Change ^^ Operating Profit $24.8m vs $6.8m pcp Meat sales 146,426 169,898 (23,472) • Excluding Livingstone, Operating profit $34.6m vs Cattle sales 72,771 27,331 45,440 $11.3m pcp Total sales revenue 219,197 197,229 21,968 ^^ Underlying Meat Sales + 2.3% pcp Ope
Slide 13: Operating Expenses
Operating Expenses $M H1 2019 H1 2018 Change ^^ Well below average rainfall for all of AACo’s southern properties, with the drought impacting the Southern Barkly, Central and Freight 12.0 8.0 4.0 Southern Queensland being the hardest hit Station Opex 104.3 79.9 24.4 ^^ Seasonal conditions contributi
Slide 14: Cost of Production
Cost of Production 50 $3.00 40.9 41.5 37.8 $2.66 40 26.9 $2.52 29.6 $2.50 30 $2.21 $2.09 $2.13 20 $2.00 10 0 $1.50 H1FY17 H2FY17 H1FY18 H2FY18 H1FY19 Cost of production ($/kg LW) Kilograms produced (m KG LW) Key points: ^^ Seasonal conditions resulted in an increase in feedlot usage and rising grain
Slide 15: Cash Flow
Cash Flow Key points: $M H1 2019 H1 2018 Change ^^ Significant improvement in operating cash flow stemming Operating profit 24.8 6.8 18.0 from increased cattle sales and decreased purchases due to Livingstone and 1824 decisions. Cattle sales brought Inventory movement 3.4 (33.4) 36.8 forward due to
Slide 16: Balance Sheet
Balance Sheet Key points: $M 30 Sep 18 31 Mar 18 Change Property, Plant & Equipment 759.2 753.8 5.4 ^^ Strong balance sheet with $902.4m in net tangible assets Livestock 514.7 628.3 (113.6) ^^ Net reduction in Livestock due to: • U nfavourable statutory market revaluations impact of Interest-bearing
Slide 17: Westholme Australia
WESTHOLME AUSTRALIA
Slide 18: Sustainability
Sustainability
Slide 19: Sustainability
Sustainability Protecting our future ^^ AACo is committed to sustainable Beef ^^ Improved Energy Efficiency – diesel to solar production striving for best practice through bore upgrade programme continuous improvement across all its operations ^^ Environment – supporting R&D to minimise greenhouse g
Slide 20: Operating Environment
Operating Environment 20
Slide 21: Increased Beef Supply Impact Markets
Worst Drought Increased beef supply in 103 Years - ABC News impact markets Global beef production US exports increased has increased in key markets Year-on-year % change in US exports Year-on-year % change in US exports 64.0 11.0 60% 49% 48% 63.0 50% 10.5 40% 40% 62.0 40% Million MT (CWE) Million MT
Slide 22: Current Operating Environment
Current Operating Environment External factors affecting the business today include: ^^ Continuation of dry conditions in NSW and Southern Queensland with poor summer crops expected despite some rainfall in the past few weeks. ^^ No short term relief expected from highly elevated feed input prices f
Slide 23: Westholme Australia
WESTHOLME \\ = QUEENSLAND = AUSTRALIA
Slide 24: Thank You
Thank You 24
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