Inghams Group Ltd. · ASX:ING
Inghams — 1H24 Earnings Presentation
34 slides from Inghams's earnings presentation, Feb 16, 2024
Slide 1: 2024 Interim Results Presentation
2024 INTERIM RESULTS PRESENTATION 16 FEBRUARY 2024 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: 1H24 Highlights & Overview
1H24 HIGHLIGHTS & OVERVIEW Andrew Reeves Chief Executive Officer & Managing Director
Slide 4: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY We respectfully acknowledge the traditional owners both past and present, as custodians of this land we are meeting on today. FY24 Interim Results Presentation | 16 February 2024 Artist: Kelly Taylor www.ktaboriginalfineart.store 4
Slide 5: 1H24 Financial Highlights
1H24 FINANCIAL HIGHLIGHTS Strong 1H24 results driven by solid operating performance, growth in margin and volume REVENUE CORE POULTRY VOLUME $1,642.2M 240.8KT +8.7% v 1H23 +2.2% v 1H23 NET PROFIT AFTER TAX EBITDA STATUTORY UNDERLYING STATUTORY UNDERLYING PRE‐AASB 16 PRE‐AASB 16 $63.4M $69.3M $253.7M
Slide 6: Executive Summary
EXECUTIVE SUMMARY Strong 1H24 results driven by solid operating performance, growth in margin and volume • NPAT of $63.4M, up 268.6%; HY results in‐line with the trading update provided in October 2023 • Underlying EBITDA (pre AASB 16) margin increased to 8.4% • Core poultry volume growth of 2.2%, w
Slide 7: Core Poultry Net Selling Prices (NSP) Recovering Cost
CORE POULTRY NET SELLING PRICES (NSP) RECOVERING COST Group NSP increased 8.5% versus 1H23 to $6.28 ‐ Reflects increases applied in FY23 and early FY24 (+2.3% on 2H23), in response to significant increase in costs, including feed, other commodity and key input costs ‐ Australia core poultry NSP +8
Slide 8: Observations Across Our Channels
OBSERVATIONS Group core poultry volume increased +2.2% on 1H23, and +5.7% on 2H23 ACROSS OUR Australian volume increased 1.0% (+2.0kt) on New Zealand volume grew 9.5% (+3.1kt) as CHANNELS 1H23, with strong Retail growth of 9.3% significantly offset by volume reduction in production capacity retu
Slide 9: Financial Results
FINANCIAL RESULTS Gary Mallett Chief Financial Officer HatchCare Hatchery
Slide 10: Profit & Loss
PROFIT & LOSS Core Poultry volumes: increased 2.2% vs 1H23, with Australia +1.0% and +9.5% in $M 1H24 1H23 Variance % New Zealand Core Poultry volumes (kt) 240.8 235.7 5.1 2.2 External Feed volume: declined due to the closure of Wanneroo feedmill in Apr‐ 23 Total Poultry volumes (kt) 295.8 290.5
Slide 11: Balance Sheet
BALANCE SHEET $M Dec‐23 Jun‐23 Variance Inventories/Biologicals: Increased $31.0M due largely to an increase in Inventories/Biologicals1 419.2 388.2 31.0 Processed Poultry inventories due to restocking to support improved Receivables1 288.4 270.2 18.2 customer service level performance, a softenin
Slide 12: Cash Flow
CASH FLOW $M 1H24 1H23 Variance Cash conversion ratio: improved to 89.1% due to strong cash collection, EBITDA 253.7 197.0 56.7 notwithstanding an increase in inventory Non‐cash items (2.5) (10.4) 7.9 Non‐cash items: comprised mainly of the share‐based payment charges EBITDA excluding non‐cash i
Slide 13: Capital Management Outcomes
CAPITAL MANAGEMENT OUTCOMES Fully franked interim dividend of 12.0 cps delivers attractive income to shareholders reflecting strong profit growth CASHFLOW FOR INVESTING NET INTEREST, TAX AND CASHFLOW FROM OPERATIONS ACTIVITIES LEASE PAYMENTS Cash realisation ratio Sustaining Service obligations CASH
Slide 14: Feed Market Observations
FEED MARKET OBSERVATIONS ABARES expect grain and oilseed costs to remain elevated in 2023–24 due to strong global demand LONG TERM WHEAT & SOYMEAL EXTERNAL MARKET PRICING1 ($A PER METRIC TONNE) Delivered internal feed cost contains cereal $800 1 grains, protein meals, vitamins and minerals $700 Whea
Slide 15: Segment Performance
SEGMENT PERFORMANCE Andrew Reeves Chief Executive Officer & Managing Director Broiler farm, Queensland
Slide 16: Australia
AUSTRALIA Core Poultry volume increased 1.0%, with strong Retail $M 1H24 1H23 Variance % channel growth of 9.3% substantially offset by a decline in QSR and other out‐of‐home channel volumes as consumers Core Poultry volumes (kt) 204.8 202.8 2.0 1.0 responded to cost of living pressures Total Poul
Slide 17: New Zealand
NEW ZEALAND $M 1H24 1H23 Variance % Core Poultry volume increased 9.5% on 1H23, reflecting improved production with a return to normal operating Core Poultry volumes (kt) 36.0 32.9 3.1 9.5 cadence, with the PCP impacted by labour and CO2 Total Poultry volumes (kt) 43.1 39.6 3.5 8.8 shortages Feed
Slide 18: Business Update & Summary
BUSINESS UPDATE & SUMMARY Andrew Reeves Chief Executive Officer & Managing Director
Slide 19: WA Distribution Centre Operational
WA DISTRIBUTION CENTRE OPERATIONAL New Hazelmere, WA distribution centre commenced operations January 2024, completing the Group’s three‐facility DC investment program The new purpose‐built facility, which has ~2‐times the capacity of the previous facility, provides significant operational effic
Slide 20: Automation Investments Commencing Production
AUTOMATION INVESTMENTS COMMENCING PRODUCTION Implementing higher levels of automation is a key element of our network analysis and planning Benefits include cost savings, higher yield and throughput outcomes, improved product quality, and will also support increased production of value‐ add prod
Slide 21: Completed Two Strategic Acquisitions to Strengthen Our Network
COMPLETED TWO STRATEGIC ACQUISITIONS TO STRENGTHEN OUR NETWORK Bolivar (SA) Primary Processing facility Acquired the land and buildings associated with the Group’s Bolivar Primary Processing plant (previously leased) in Burton, South Australia, for $75.6 million (plus acquisition costs) ‒ The acqu
Slide 22: Outlook
OUTLOOK Market conditions for consumers over 2H24 expected to remain challenging, underpinning the shift already experienced toward in‐home dining (Retail) from out‐of‐home (QSR and Food Service) channels ‒ Combined effect of tax relief for consumers and modest slowing in the overall rate of infla
Slide 23: Compelling Investment Proposition
COMPELLING INVESTMENT PROPOSITION Inghams 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 prote
Slide 24: Thank You
Slide 25: Appendix
APPENDIX
Slide 26: AASB 16 Lease Impact
AASB 16 LEASE IMPACT Balance Sheet $M 1H24 AU NZ 1H23 Balance Sheet: Land & Buildings 778.6 645.9 132.7 832.2 Land and Buildings: Ingham’s has a large leased property Growers 410.8 277.9 132.9 409.1 portfolio. Average term remaining on the portfolio is 11.9 years Equipment 17.1 14.6 2.5 21.0 Con
Slide 27: AASB-16 Profile
AASB‐16 PROFILE Right of Use Assets $b Lease Liability $m Grower Grower L&B/Other L&B/Other 501 487 602 516 476 445 462 446 293 270 213 191 151 133 972 945 928 923 828 859 858 830 849 792 757 694 736 635 FY20A FY21A FY22A FY23A FY24 FY25 FY26 FY27 FY28 FY20A FY21A FY22A FY23A FY24 FY25 FY26 FY27 FY2
Slide 28: Profit & Loss Reconciliation
PROFIT & LOSS RECONCILIATION Excluded 1H24 Underlying 1H23 Underlying 1H24 AASB 16 Profit & Loss $M 1H24 from (Pre AASB 16) (Pre AASB 16) Underlying Leases underlying (Reported) (Reported) Core Poultry volume (kt) 240.8 240.8 240.8 235.7 By‐Products volume (kt) 55.0 55.0 55.0 54.8 Total Poultry volu
Slide 29: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION $M 1H24 1H23 Var % $M 1H24 1H23 Var % EBITDA 253.7 197.0 56.7 28.8 NPAT 63.4 17.2 46.2 268.6 Business transformation 0.0 16.2 (16.2) (100.0) Business transformation 0.0 11.5 (11.5) (100.0) Acquisitions/disposal or assignment Acquisitions/disposal or assignment (2.1) (3.0
Slide 30: Segment Reconciliation
SEGMENT RECONCILIATION Group Group Australia Australia NZ NZ $M 1H24 1H23 Var 1H24 1H23 Var 1H24 1H23 Var EBITDA 253.7 197.0 56.7 205.4 168.8 36.6 48.3 28.2 20.1 Business transformation 0.0 16.2 (16.2) 0.0 16.2 (16.2) 0.0 0.0 0.0 Acquisitions/disposal or assignment of (2.1) (3.0) 0.9 (2.1) (3.0) 0.9
Slide 31: 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 32: 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 33: We Operate in a Growing Market
WE OPERATE IN A GROWING Meat Consumption Kg/Capita – Australia3 MARKET • Chicken consumption per capita is 44.8kg (1) in Australia and CONSUMPTION 40.2kg(1) in New Zealand STABLE GROWTH • Consistent growth in consumption versus other protein products Chicken (kg per capita) Pork (kg per capita) Lamb
Slide 34: Definitions
DEFINITIONS 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 ROIC: Return on Invested Capital pre AASB 16. liabilities of AASB 16; average calculated over two financial year end periods. Total Pou