Inghams Group Ltd. · ASX:ING
Inghams — FY2020 Earnings Presentation
35 slides from Inghams's earnings presentation, Aug 21, 2020
Slide 1: ASX Release: Full Year 2020 Financial Results Presentation
ASX Release 21 August 2020 ASX Market Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000 Inghams Group Limited (ASX: ING, Ingham’s) Full Year 2020 Financial Results Presentation Attached is information authorised for release to the market by the Board of Inghams Gro
Slide 2: Full Year 2020 Financial Results Presentation
INGHAMS GROUP LIMITED FULL YEAR 2020 FINANCIAL RESULTS PRESENTATION JIM LEIGHTON – CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR GARY MALLETT – CHIEF FINANCIAL OFFICER JONATHAN GRAY – CHIEF EXECUTIVE OFFICER, NEW ZEALAND 21 AUGUST 2020 0
Slide 3: 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 4: Five Year Strategy – Building Resilience
FIVE YEAR STRATEGY – BUILDING RESILIENCE 2 2
Slide 5: Group Performance Highlights
GROUP PERFORMANCE HIGHLIGHTS 3
Slide 6: Group Highlights
GROUP HIGHLIGHTS A resilient result despite interrupted momentum from COVID-19 challenges A resilient result consistent with our May Business Update reflecting uncertain trading conditions and challenges in our supply chain and operations Following a difficult Q1, positive operating momentum del
Slide 7: FY20 Financial Highlights
FY20 FINANCIAL HIGHLIGHTS Improving business performance through 1H impacted by COVID-19 in 2H FY20 Variance To PCP Var % Group core poultry volume increased year on year, but 2H below 1H due to Q4 COVID-19 impact Group Core Poultry Volume 428.7kt 13.8 3.3 Year on year decline in Underlying EBIT
Slide 8: Impacts of COVID-19
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Slide 9: Managing Supply Chain, Operations and Customers
MANAGING SUPPLY CHAIN, OPERATIONS AND CUSTOMERS Proactive management of pandemic related challenges to our business Swiftly introduced additional COVID-19 safe measures to ensure safety, welfare and attendance to minimise operational disruption People safety Collaboration with Governments, union
Slide 10: Managing Supply Chain, Operations and Customers
MANAGING SUPPLY CHAIN, OPERATIONS AND CUSTOMERS Flexibility key to managing cost and productivity challenges FEED PRIMARY FURTHER FARMING PROCESSING PROCESSING Increased risk to security Long lead times to adjust Increased complexity, cost Managing significant of domestic wheat supply field inventor
Slide 11: Managing Supply Chain, Operations and Customers
MANAGING SUPPLY CHAIN, OPERATIONS AND CUSTOMERS Significant demand volatility across all channels QSR FOOD EXPORT RETAIL WHOLESALE SERVICE Retail channel remained Demand reduced as in Significant volume decline Volumes negatively Some closure of well open but initial volume store dining restrictions
Slide 12: Managing Supply Chain, Operations and Customers
MANAGING SUPPLY CHAIN, OPERATIONS AND CUSTOMERS Improving financial performance interrupted by COVID-19 in Q4 1H performance negatively impacted by significant cost increases and supply constraints in further processing network. Volumes and operating performance improved in Q2 as positive momentum
Slide 13: Financial Results
FINANCIAL RESULTS 11
Slide 14: Profit & Loss – Statutory
PROFIT & LOSS – STATUTORY The transition to AASB16 had a major impact on the Statutory Results Statutory Statutory Impact of $ millions FY20 FY19 Var % AASB 16 Revenue 2,555.3 2,489.8 65.5 2.6 - EBITDA 387.8 242.2 145.6 60.1 229.6 Depreciation & Amortisation (263.4) (46.8) (216.6) (462.8) (208.5) EB
Slide 15: Profit & Loss – Underlying Pre AASB16
PROFIT & LOSS – UNDERLYING PRE AASB16 $ millions FY20 FY19 (1) Var % Core Poultry volumes (kt) 428.7 414.9 13.8 3.3 Core poultry volume increase of 3.3% on FY19 despite volatile Total Poultry volumes (kt) 532.6 517.5 15.1 2.9 trading conditions in 2H. Moderation of 2H growth to 2.6% vs 1H of 4.1%.
Slide 16: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION (Profit)/Loss on sale of assets $ millions FY20 FY19 Var % Statutory EBITDA 387.8 242.2 145.6 60.1 FY20 relates to the disposal of some small surplus properties across Australia. FY19 profit relates to the sale of Mitavite, Cardiff Impact AASB16 (229.6) - and Mile End
Slide 17: Balance Sheet
BALANCE SHEET Impact of $ millions Jun-20 Jun-19 Variance AASB16 AASB16 Leases Inventories/Biologicals* 352.5 296.4 56.1 Land and Building: Ingham’s has a large leased property Receivables* 205.2 216.9 (11.7) portfolio. Right-of-use assets ~ $814.5M. Average term Payables (406.4) (371.3) (35.1) Wo
Slide 18: Cash Flow
CASH FLOW $ millions Jun-20 Jun-19 Variance AASB 16 Cash Conversion Ratio Statutory EBITDA 387.8 242.2 145.6 229.6 Cash conversion pre AASB16 of 97.1% reflects strong cash Non-cash items 6.8 (45.6) 52.4 collection despite inventory build that negatively impacted EBITDA excluding non-cash items 394
Slide 19: Capital Management
CAPITAL MANAGEMENT Leverage / Net Debt $ millions Jun-20 Jun-19 Dec-19 Net Debt increased $50.9M and Leverage increased to 1.8x due Total Assets pre AASB16 1,143.0 1,081.6 1,073.6 to investment in the new hatcheries $39.6M and a $9.3M increase in working capital driven by increase in inventory Net
Slide 20: Segment Performance
TheFREE RANGER Free Kange WHOLE CHICKEN m VICTORIA GHAMS
Slide 21: Australia
AUSTRALIA 2H volume shift to retail did not fully offset other channels, negative impact to revenue and margin $ millions FY20 FY19(1) Var % Highlights Core Poultry volumes (kt) 366.4 351.3 15.1 4.3 Core poultry volume increased year on year, 1H growth of 4.7% Total Poultry volumes (kt) 457.0 440.
Slide 22: New Zealand
NEW ZEALAND Level 4 restrictions caused material volume loss and margin impact $ millions FY20 FY19 Var % Highlights Core Poultry volumes (kt) 62.3 63.6 (1.3) (2.0) Solid progress recorded through Q3, before the introduction Total Poultry volumes (kt) 75.6 76.7 (1.1) (1.4) of the 5 week national l
Slide 23: Feed Market Update
INGHAM’S Nourish Our World
Slide 24: Feed Market Update
FEED MARKET UPDATE Tight wheat supply led to sustained higher prices during 2H FY20 for old crop volumes Wheat price (as observed by Ingham’s) $A per tonne 450 400 350 300 250 200 150 100 50 0 Major wheat growing regions CY17 CY17 CY17 CY17 CY18 CY18 CY18 CY18 CY19 CY19 CY19 CY19 CY20 CY20 Q1 Q2 Q3
Slide 25: Outlook
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Slide 26: Outlook
OUTLOOK Poultry continues to show resilience as a preferred protein, with consistency of supply and attractive pricing Conditions remain uncertain as government restrictions continue to impact consumption of poultry products in Australia and New Zealand Market supply may be impacted by COVID-1
Slide 27: Five Year Strategy – Building Resilience
FIVE YEAR STRATEGY – BUILDING RESILIENCE 25 25
Slide 28: Appendices
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Slide 29: FY20 Underlying Pre AASB16 Performance
FY20 UNDERLYING PRE AASB16 PERFORMANCE Restructuring Underlying Statutory / Impairments AASB16 Pre AASB16 Underlying $ millions FY20 LOSA / POSA Leases FY20(1) FY19(2) Var % Core Poultry volumes (kt) 428.7 428.7 414.9 13.8 3.3 Total Poultry volumes (kt) 532.6 532.6 517.5 15.1 2.9 Feed volumes (kt) 4
Slide 30: Underlying Results Pre AASB16 – Half on Half
UNDERLYING RESULTS PRE AASB16 – HALF ON HALF Underlying Results (1) 1H FY20 2H FY20 FY20 1H FY19(1) 2H FY19 (1) FY19 (1) 1H 2H FY Core Poultry volume (kt) 215.9 212.8 428.7 207.5 207.4 414.9 4.0% 2.6% 3.3% By-Products volume (kt) 50.7 53.2 103.9 52.4 50.2 102.6 -3.2% 6.0% 1.3% Total Poultry volume (
Slide 31: Items Excluded from Underlying Results
ITEMS EXCLUDED FROM UNDERLYING RESULTS $ millions FY20 FY19 Var % Excluded from Underlying 251.1 (33.6) 284.7 (847.3) Restructuring costs within EBITDA EBITDA pre AASB16 Restructuring 1.6 18.3 (16.7) (91.3) Redundancy costs relate to management and structural Redundancy 1.4 4.4 changes Farming exi
Slide 32: AASB16 Lease Balance Sheet Impact
AASB16 LEASE BALANCE SHEET IMPACT $ millions Jun-20 AU NZ Ave. Term (years) Total AU NZ Land & Building 814.5 741.3 73.3 Land & Building 12.4 13.0 8.0 Growers 601.7 500.5 101.2 Growers 4.1 4.0 4.6 Equipment 13.0 10.1 2.9 Equipment & Fleet 1.5 1.5 2.1 Right-of-use Asset 1,429.2 1,251.9 177.4 Land & B
Slide 33: Mitavite Trading Results
MITAVITE TRADING RESULTS $ millions FY20 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 Trading Resu
Slide 34: 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 Gross Profit:
Slide 35: Investor Enquiries
Investor Enquiries: Craig Haskins – Investor Relations Director e | chaskins@inghams.com.au m | 0421 029 843 33