Sanford Limited · NZX:SAN
Sanford — FY2023 Earnings Presentation
38 slides from Sanford's earnings presentation, November 2023
Slide 1: FY23 Results Briefing
FY23 RESULTS BRIEFING For the 12 months ended 30 September 2023 .1 FY23 Results Presentation
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: Agenda Today
AGENDA TODAY 1. Market and highlights 2. FY23 results 3. Business unit performance 4. Outlook 5. Questions 3 FY23 Results Presentation
Slide 4: FY23 Market Conditions
FY23 MARKET CONDITIONS • Strong pricing and customer demand across • Water space closures, weather events and tight most business units. labour supply adversely impacting operations, particularly in the Mussel business. Labour • Inflationary cost pressures across the business – constraints easing in
Slide 5: FY23 Results Snapshot
FY23 RESULTS SNAPSHOT Catch/Harvest Volume Sales Volume Revenue Adjusted EBIT1 112.5k GWT 92.0k GWT $553.4M $49.4M +2.8% - 12.1% +4.0% +22.9% EBIT GW kg Adjusted EBITDA1 NPAT2 EPS Final Dividend 54₵ $81.5M $10.0M 10.7 CPS 6.0CPS + 16₵ /kg + 19.4% - 82.1% -49₵ -4.0₵ 1. See Appendix for Adjusted EBIT
Slide 6: Group Financial Summary
GROUP FINANCIAL SUMMARY • Revenue increase of 4.0% to $553.4m; highest result for 5 years reflecting good demand and strong in-market prices. • Adjusted EBIT of $49.4m, a 22.9% increase on FY22. • Catch/harvest volume at 112.5k GWT, up 2.8% on FY22. • Sales volume down 12.1% due to reduced squid cat
Slide 7: Continuation of Earnings Improvement in FY23
CONTINUATION OF EARNINGS IMPROVEMENT IN FY23 7 FY23 Results Presentation
Slide 8: Our Vision and Strategy
OUR VISION NEW ZEALAND’S SEAFOOD LEADER FOR QUALITY, VALUE AND REPUTATION PURPOSE PROVIDING EXCEPTIONAL NUTRITIOUS FOOD FROM HEALTHY OCEANS CULTURE ACHIEVING TOGETHER VALUES CARE - PASSION - INTEGRITY sults Presentation Ss) OUR STRATEGY SANFORD ~ RECOVER, REBUILD AND OUTPERFORM COMMERCIAL FOCUS y, U
Slide 9: FY23 Key Events and Highlights
FY23 KEY EVENTS AND HIGHLIGHTS • Wildcatch delivering consistent earnings – • Implemented the company wide Sancore ERP material decrease in squid catch. system change programme. • Outperformance in Salmon business. • Focus on integrity capital expenditure; construction of new scampi vessel underway
Slide 10: Environmental, Social, Governance (ESG) FY23 Highlights
ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) FY23 HIGHLIGHTS1 Climate • 8.7% reduction in absolute Greenhouse Gas emissions relative to base year (2020)2. • Climate scenario analysis complete, voluntary climate related disclosure issued3. • NZ seafood sector climate adaptation strategy implementation pro
Slide 11: 2. Financial Results
2. FINANCIAL RESULTS 11 FY23 Results Presentation
Slide 12: Improved Profitability Driven by Salmon & Mussels
IMPROVED PROFITABILITY DRIVEN BY SALMON & MUSSELS Key drivers of Adjusted EBIT change vs FY22 NZD $M 12 FY23 Results Presentation
Slide 13: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Gearing1 Net Debt Net Debt / Adjusted EBITDA 22.9% $196.2M +34.8% 2.4x Sept 22 2.1x Sep 22 18.9% Total Equity Return on Average Total Equity $685M +3.0% 1.5% Sept 22 8.6% Operating Cashflow Free Cashflow2 Operating Cashflow Debt Facility Headroom3 -$23.0m 50 45 $41.1m $47
Slide 14: Net Debt
NET DEBT • Net debt increased by $51m to $196m. • Increased capital spend (including progress Net Debt payments on the new scampi vessel). 250 • Investment in the Sancore technology 200 196 programme and Bioactives centre. 184 179 • Interest rates increasing. 145 150 • Continued dividend payments in
Slide 15: Seafood Inventory
SEAFOOD INVENTORY Inventory 80 75 • Seafood inventory has increased by $19m 70 67 from last year. 59 60 • Increased inventories in wildcatch (orange 50 48 roughy and hoki), will be sold through in 40 H1 2024. $m 35 30 • Mussel inventory has also increased in all 20 three categories (meat, powder and
Slide 16: Capital Expenditure
CAPITAL EXPENDITURE FY22 FY23 • Total FY23 capital spend $64m. Integrity & H&S $31.3m $51.1m • Sancore capitalised spend of Vessel surveys $13.8m Vessel surveys $7.6m Vessel Capex $3.3m Vessel Capex $10.6m $1.7m. Processing equipment $3.3m Processing equipment $4.8m Mussels $4.7m Mussels $5.5m • 80%
Slide 17: 3. Business Performance
3. BUSINESS PERFORMANCE 17 FY23 Results Presentation
Slide 18: Strengthen Wildcatch
STRENGTHEN WILDCATCH .18 FY23 Results Presentation
Slide 19: Wildcatch FY23
WILDCATCH FY23 Performance impacted by low squid catch, partly mitigated by strong pricing on other key species. 19 FY23 Results Presentation
Slide 20: Wildcatch FY23
WILDCATCH FY23 Pricing mix improving across key species. 20 FY23 Results Presentation
Slide 21: Wildcatch Year in Review
WILDCATCH YEAR IN REVIEW • Strong offshore prices and demand for wildcatch, particularly scampi, hoki and squid. • Sales volumes reduced due to lower squid catch (down 58% year on year) which affected the entire industry. The lack of squid resulted in shift to alternative, less profitable species. •
Slide 22: Wildcatch: Outlook
WILDCATCH: OUTLOOK • Demand and prices expected to be maintained, with continued pressure on operational costs. Some relief from FY23 peak fuel prices and freight costs. • Continue integrity capital investment programme to update fleet and infrastructure. • Focus on improving operational efficiency.
Slide 23: Inshore Update (Wildcatch)
INSHORE UPDATE (WILDCATCH) • Announced sale of Annual Catch Entitlement for much of the North Island inshore species to Moana New Zealand through a new long-term agreement. Commerce Commission clearance received and transaction settled on 31 October 2023. • Assets being transferred and processing no
Slide 24: Grow Salmon
GROW SALMON .24 FY23 Results Presentation
Slide 25: Salmon FY23
SALMON FY23 Strong pricing and ongoing growth in Big Glory Bay driving improved revenue and profit contribution. 25 FY23 Results Presentation
Slide 26: Salmon FY23
SALMON FY23 Pricing uplift driven by favourable mix/BGB growth. Inventory levels well managed. 26 FY23 Results Presentation
Slide 27: Salmon Year in Review
SALMON YEAR IN REVIEW • Outperformed FY23 expectations, with profit growth ahead of schedule. • Strong pricing continues and demand is high for premium product. Big Glory Bay branded product is 51% of our volume. • Challenging summer conditions offset by new farm and oxygenation equipment - mortalit
Slide 28: Salmon: Outlook
SALMON: OUTLOOK • Strong pricing and demand expected to continue, although pricing growth likely to moderate in 2024. • Continued volume focus and managing through El Nino summer conditions. • Focus on sustaining margins and cost management, through lean and efficient ‘smart farming’. • New feed bar
Slide 29: Grow Mussels
GROW MUSSELS .29 FY23 Results Presentation
Slide 30: Mussels FY23
MUSSELS FY23 Profit improved supported by strong pricing. Volumes impacted by operational constraints. 30 FY23 Results Presentation
Slide 31: Mussels FY23
MUSSELS FY23 Pricing continues on strong growth trajectory. Inventory levels remain normalised. 31 FY23 Results Presentation
Slide 32: Mussels Year in Review
MUSSELS YEAR IN REVIEW • Strong demand and pricing for half shell mussels. • Labour shortages impacted ability to leverage the strong demand. Now resolved with processing teams close to being fully resourced. • Challenging year in the Coromandel for NIML (50% JV in North Island Mussel Ltd) with extr
Slide 33: Mussels: Outlook
MUSSELS: OUTLOOK • Strong demand and pricing for half shell mussels expected to continue in 2024. • Labour shortages largely resolved and expecting a full compliment of staff in 2024. • Change in weather patterns (El Nino) expected to assist mussel performance, although low seeding, particularly in
Slide 34: 4. Outlook
4. OUTLOOK 34 FY23 Results Presentation
Slide 35: FY24 Outlook
FY24 OUTLOOK • Wildcatch improvement following the arrangement with Moana for the inshore business. • Squid catch expected to remain below historical averages. • Salmon expected to perform well and maintain current profitability. • Mussel improvement planned – low volume year in the North Island and
Slide 36: 5. Questions?
SS SANFORD 5. QUESTIONS?
Slide 37: Kia Ora
SS SANFORD KIA ORA
Slide 38: FY23 Financial Results - GAAP to Non-GAAP
FY23 FINANCIAL RESULTS - GAAP TO NON-GAAP GAAP to Non-GAAP Reconciliation Non-GAAP Profit measures 30-Sep-23 30-Sep-22 Sanford’s standard profit measure prepared under New Zealand GAAP is net profit. Sanford have used non-GAAP measures when discussing financial performance in this $000 $000 document