Inghams Group Ltd. · ASX:ING
Inghams — H1 FY2020 Earnings Presentation
28 slides from Inghams's earnings presentation, Feb 21, 2020
Slide 1: Inghams Group Limited FY 2020 Half-Year Results Presentation
INGHAMS GROUP LIMITED FY 2020 HALF-YEAR RESULTS PRESENTATION Foundations established for delivering consistent profitable growth 21 FEBRUARY 2020 0
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: Group Performance
er) PERFORMANCE GROUP
Slide 4: Group Highlights
GROUP HIGHLIGHTS Business regaining momentum after a difficult first quarter Operating result in line with expectations as business cycled significant financial impact of the Further Processing (FP) Network restructure as previously announced, which impacted volumes, costs, mix and margin − Austra
Slide 5: 1H FY20 Financial Highlights
1H FY20 FINANCIAL HIGHLIGHTS Strong core poultry volume growth with financial result impacted by previously disclosed operational issues Variance 1H FY20 Var % To PCP Core Poultry 216.0 kt 8.5 4.1 Demand for core poultry remains strong in Australia with +4.7% growth and +0.6% in New Zealand as IBD
Slide 6: Strategy Update
STRATEGY UPDATE 5
Slide 7: Progress on Our Strategy
PROGRESS ON OUR STRATEGY We are well progressed with the implementation of our 5 year strategy New operational leadership team applying Continuous Improvement framework across the business to improve across processing operations Quantitative and qualitative review progressed for Overall Equipmen
Slide 8: Financial Results
FINANCIAL RESULTS 7
Slide 9: Profit & Loss - Statutory
PROFIT & LOSS - STATUTORY The transition to AASB16 had a major impact on the Statutory Results Statutory Statutory Impact of $ millions 1H FY20 1H FY19 Var % AASB 16 Revenue 1,303.5 1,257.0 46.5 3.7 - EBITDA 205.3 152.0 53.3 35.1 117.8 Depreciation & Amortisation (131.0) (23.3) (107.7) (462.2) (105.
Slide 10: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION 1H $ millions FY20 1H FY19 Var % Profit/Loss on sale of assets Statutory EBITDA 205.3 152.0 53.3 35.1 Impact AASB16 (117.8) - > 1H FY20 relates to the disposal of some small surplus farms (Profit) / Loss on sale of assets 0.7 (53.9) across Australia. 1H FY19 profit relat
Slide 11: Profit & Loss – Underlying Pre AASB16
PROFIT & LOSS – UNDERLYING PRE AASB16 $ millions 1H FY20 1H FY19 (1) Var % > Continued strong demand for poultry products across all Core Poultry volumes (kt) 216.0 207.5 8.5 4.1 channels and higher external feed sales pricing flowed Total Poultry volumes (kt) 266.6 258.9 7.7 3.0 through to revenue
Slide 12: Balance Sheet
BALANCE SHEET Impact of $ millions Dec-19 Jun-19 Variance AASB16 AASB16 Leases Inventories/Biologicals 276.6 290.9 (14.3) (1.3) > Land and Building: Ingham’s has a large leased property Receivables 264.1 205.6 58.5 (7.5) portfolio. Right of use assets ~ $0.8B. Average term Payables (387.5) (370.2) (
Slide 13: Cash Flow
CASH FLOW Impact of $ millions Dec-19 Dec-18 Variance AASB 16 Cash conversion ratio Statutory EBITDA 205.3 152.0 53.3 117.8 > Cash conversion was adversely impacted by an Non-cash items 0.8 (54.6) 55.4 unfavourable working capital movement in trade EBITDA excluding non-cash items 206.1 97.4 108.7 11
Slide 14: Capital Management
CAPITAL MANAGEMENT Leverage / Net Debt $ millions Dec-19 Jun-19 Variance > Net Debt increased $59.6M and Leverage increased to 1.7x due Total Assets pre AASB 16 1,073.6 1,081.6 (8.0) to capital spend including new hatcheries and working capital Net Debt – Bank Facility 323.4 263.8 (59.6) movements d
Slide 15: Segment Performance
SEGMENT PERFORMANCE 14
Slide 16: Segment Performance - Australia
SEGMENT PERFORMANCE - AUSTRALIA Strong demand for poultry products continued across all customers and channels, however operational challenges significantly reduced profitability Highlights $ millions 1H FY20 1H FY19(1) Var % > Favourable market demand saw total poultry volume growth of Core Poultry
Slide 17: Segment Performance – New Zealand
SEGMENT PERFORMANCE – NEW ZEALAND Underlying EBITDA has returned to strong year on year growth in a challenging market $ millions 1H FY20 1H FY19 Var % Highlights > Total poultry revenue growth of +5.2% as price increases Core Poultry volumes (kt) 32.4 32.1 0.3 0.9 across all channels were applied o
Slide 18: Feed Market Update
FEED MARKET UPDATE 17
Slide 19: Feed Market Update
FEED MARKET UPDATE Our network enables us to minimise feed costs using different execution strategies depending on the market and weather conditions Wheat price (as observed by Ingham’s) $A per tonne 450 400 350 300 250 200 150 100 50 0 CY17 CY17 CY17 CY17 CY18 CY18 CY18 CY18 CY19 CY19 CY19 CY19 CY2
Slide 20: Outlook
OUTLOOK 19
Slide 21: Outlook
OUTLOOK > Poultry remains the most competitive protein based on price and reliability of supply. > Business tracking to plan and we continue to monitor the impact of bushfires, weather and health events on our consumers and customers > The 5 year strategic growth plan is on track and embedded throug
Slide 22: Appendix
APPENDIX 21
Slide 23: 1H FY20 Underlying Performance
1H FY20 UNDERLYING PERFORMANCE Restructuring Underlying Statutory / Impairments AASB16 Pre AASB16 Underlying $ millions 1H FY20 LOSA / POSA Leases 1H FY20(1) 1H FY19(2) Var % Core Poultry volumes (kt) 216.0 216.0 207.5 8.5 4.1 Total Poultry volumes (kt) 266.6 266.6 258.9 7.7 3.0 Feed volumes (kt) 21
Slide 24: AASB16 Lease Balance Sheet Impact
AASB16 LEASE BALANCE SHEET IMPACT $ millions Dec-19 AU NZ Ave. Term (years) Total AU NZ Working Capital & Provisions 4.1 4.0 0.1 Land & Building 13.1 13.9 8.5 Land & Building 843.7 782.7 61.0 Growers 4.9 4.8 5.8 Growers 728.2 633.9 94.3 Equipment & Fleet 2.0 2.0 2.6 Equipment 13.5 12.4 1.1 Right of
Slide 25: Restructuring Costs Reconciliation
RESTRUCTURING COSTS RECONCILIATION $ millions 1H FY20 1H FY19 Var % Restructuring costs within EBITDA Restructuring 1.5 11.4 (9.9) (86.7) > Redundancy costs relate to management and structural Redundancy 1.3 1.8 (0.5) (27.8) changes Farming exits 0.2 1.4 (1.2) (85.7) > Farming exits relate to exits
Slide 26: Mitavite Trading Results
MITAVITE TRADING RESULTS $ millions 1H FY20 1H FY19 Var % Trading period & results Weeks - 15.0 > Due to the completion of sale of Mitavite to Adamantem Capital on Feed volumes (kt) - 12.7 (12.7) 100.0 12 October 2018 there are 15 weeks of trading results included in the H1 FY19 Profit & Loss Tradin
Slide 27: 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 Net Debt: Debt
Slide 28: Investor Enquiries
Investor Enquiries : Craig Haskins – Investor Relations Director e | chaskins@inghams.com.au m | 0421 029 843 27