New Zealand King Salmon Investments Ltd. · NZX:NZK
New Zealand King Salmon Investments — H1 2018 Earnings Presentation
31 slides from New Zealand King Salmon Investments's earnings presentation, December 2018
Slide 1: 1H18 Half Year Financial Results
1 H 1 8 H A L F YEA R F I N A N CI A L R ES ULTS
Slide 2: Highlights
01 HIGHLIGHTS 1H18 HALF YEAR RESULTS 2
Slide 3: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue of $87.7m, up 38% on 1H17. Pro Forma Operating EBITDA of $19.5m*, up 169% on 1H17. GAAP NPAT of $15.7m, up 81% on 1H17. Fully imputed dividend of 2.0 cents per share declared**. To be paid 23 March 2018. Firm global demand for King Salmon continues to support strong pric
Slide 4: Operating Highlights
OPERATING HIGHLIGHTS Pleasing improvement in Health, Safety and Wellness Sales of branded products up 17% on 2H17. metrics. • Ōra King sales up 22%. • LTIFR* down to 11.4 at Dec 2017 (24.1 at Dec 2016) Average sales prices up in key markets and ahead of PFI. Harvest volumes increasing: • Weighted av
Slide 5: Sustainability
02 S U S TA I N A B I L I T Y 1H18 HALF YEAR RESULTS 5
Slide 6: Sustainable Development Goals
SUSTAINABLE DEVELOPMENT GOALS Our Sustainable development goals As a company we are committed to the implementation of sustainable aquaculture and production practices that benefit the communities we operate in. We previously selected five United Nations Sustainable Development Goals that we believe
Slide 7: Health, Safety and Wellness
HEALTH, SAFETY AND WELLNESS We are uncompromising in our commitment to Health, Safety and Wellness The health, safety and wellness of our team members is critical to the continued growth of our business. It’s well understood that good safety is good business, as a positive, safe and engaged workforc
Slide 8: Financial Overview
03 FINANCIAL OVERVIEW 1H18 HALF YEAR RESULTS 8
Slide 9: Summary Financial Information
SUMMARY FINANCIAL INFORMATION Growth in all key financial metrics Group Financial Performance Pro-Forma* GAAP Key drivers of performance include: NZ$000s 1H18 1H17 % chg. 1H18 1H17 % chg. • A 29% increase in volumes sold. Volume Sold (MT) 4,392 3,407 29% 4,392 3,407 29% • A 38% increase in revenue g
Slide 10: Understanding Our GAAP Results
UNDERSTANDING OUR GAAP RESULTS Fair Value gains and losses arising from IAS 41 Agriculture and IAS 2 Inventory As expected, our results are significantly impacted by NZ IAS 41 Agriculture and NZ IAS 2 Inventory. These standards require us to record fair value adjustments associated with ongoing chan
Slide 11: Performance Phasing
PERFORMANCE PHASING Known and expected summer mortality will impact our 2H result 1H and 2H results vary due to a number of factors. Water temperature and its resulting influence on mortality is Pelorus Sound - Water Temperatures expected to be a significant factor for FY2018F: Dec-May (℃) 21 • Wate
Slide 12: Harvest by Farm
HARVEST BY FARM Volumes from new farms driving larger harvest 1H18 harvest volume has been enhanced by solid fish growth last summer. Farm Indicative Size Water Other factors Volume Harvested (FY2018F harvest) 1H17 2H17 1H18 2H18 Ruakaka Low flow Low automation, less efficient 650 MT 10 MT 1,140 MT
Slide 13: Bridging to Full Year Forecast Profit
BRIDGING TO FULL YEAR FORECAST PROFIT Profitability in 2H18 is expected to be approximately 1H18 to full year Pro Forma Operating EBITDA ($M) $13.0m to $14.5m lower than 1H18. This is due to: • Lower sales volumes: (7.0) 4.0 ► 1H18 sales volumes benefitted from stronger than (7.5 to 9.0) 19.5 (2.5)
Slide 14: Balance Sheet
Group Financial Position BALANCE SHEET NZ$000s Dec-17 Unaudited Jun-17 Audited Dec-16 Unaudited Assets Current Assets New Zealand King Salmon is in a strong financial Cash and equivalents 15,529 10,647 10,694 Receivables 19,299 11,687 15,210 position. Inventories 18,522 16,674 19,244 Biological Asse
Slide 15: Business Update
04 BUSINESS U P D AT E 1H18 HALF YEAR RESULTS 15
Slide 16: Branding / New Products
BRANDING / NEW PRODUCTS Our premium branded product strategy underpins value growth • Demand continues to outpace supply: ► This provides us with an opportunity to rebalance supply and increase prices in lower returning markets / product categories. ► We have recently implemented, or are in the proc
Slide 17: Omega Innovations
OMEGA INNOVATIONS Improving whole of fish value by adding value to by-products The Omega Innovations adds value to remaining raw materials (RRM) through applications including pet food and treats (under our pet food range Omega Plus), and other products. The Omega Plus pet food range continues to be
Slide 18: MPI Marlborough Salmon Farm Relocation Process
MPI MARLBOROUGH SALMON FARM RELOCATION PROCESS The Ministry for Primary Industries’ proposal to relocate up to six salmon farms to deeper locations with higher water flow (‘high- flow sites’) in the Marlborough Sounds is set to advance to the next stage with February’s release of the Marlborough Sal
Slide 19: Sales by Market
SALES BY MARKET Strong performance from the Domestic and North American markets Domestic market (MT) Domestic sales are up 12% on 1H17: • We are working hard to grow the domestic category through increases in per capita consumption. 1,820 1,736 2,008 1,778 • We recorded retail sales growth of 29% by
Slide 20: Sales by Market - Export
SALES BY MARKET - EXPORT Strong performance from other export markets Sales to export markets were also up in 1H18 as a result of an increase in fish availability. Australia – volumes are rebalancing following significant price increases to improve returns from this market. Asia (ex Japan) – good gr
Slide 21: Average Sale Prices
AVERAGE SALE PRICES Strong branding delivers improved value to our business The majority of markets saw price increases over FY17 and well ahead of PFI. Price increases have been underpinned by our premium positioning and branding to the consumer, together with strong demand. Average Sales price per
Slide 22: Fish Performance
FISH PERFORMANCE • Harvest volume increased to 4,424 MT, up 30% on 1H17. • FCR improved to 1.74x from 1.76x in 1H17. FCR improvements reflect increased focus on this key biological performance metric. FCR continues to be a key focus for the aquaculture team. • Feed cost in 1H18 was down 6% on 1H17 d
Slide 23: Outlook
06 O U T LO O K 1H18 HALF YEAR RESULTS 23
Slide 24: Future Volume
FUTURE VOLUME Recent and expected future mortalities limit short term volume growth • FY2018F harvest now forecast at approximately 8,000 MT, 6% above PFI forecasts of 7,500 MT. • Recent and expected mortalities will likely mean that the FY2019F harvest is consistent with the FY2018F*. • A degree of
Slide 25: Summary and Outlook
SUMMARY AND OUTLOOK • Most key operating metrics are on track. • Strong revenue growth of $87.7m, up 38% on 1H17. • Pro Forma Operating EBITDA of $19.5m, and GAAP NPAT of $15.7m. • Strong increase in volumes sold, up by 38% on 1H17, albeit sales growth will be tempered during 2H18. • Recently implem
Slide 26: Appendices
07 APPENDICES 1H18 HALF YEAR RESULTS 26
Slide 27: 1H18 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX – 1H18 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Non-recurring or infrequent items Statutory Financial Marlborough salmon Pro Forma Historical Fair Value Pro Forma Operating 1H18 Statements relocation costs Information Adjustments Financial Information NZD 000s Revenue 87
Slide 28: 1H17 Reconciliation Between GAAP Results and Pro Forma Financials
APPENDIX – 1H17 RECONCILIATION BETWEEN GAAP RESULTS AND PRO FORMA FINANCIALS Non-recurring or infrequent items Structural GAAP Financial IPO Marlborough Interest Swap Listed Pro Forma Fair Value Pro Forma 1H17 Statements Transaction salmon Closeout costs company Historical Adjustments Operating Cost
Slide 29: Glossary of Terms
APPENDIX – GLOSSARY OF TERMS 1H18 Financial results for the first half of the 2018 financial year covering the period 1 July 2017 to 31 December 2017 2H18 Forecast second half (six month) results for the 2018 financial year covering the period 1 January 2018 to 30 June 2018 CAGR Compounding annual g
Slide 30: Disclaimer
DISCLAIMER The information in this presentation has been prepared by New Zealand King Salmon Investments Limited with due care and attention. However, neither New Zealand King Salmon Investments Limited nor any of its directors, employees, shareholders nor any other person shall have any liability w
Slide 31: 1H18 Half Year Results
New Zealand King Salmon 1H18 HALF YEAR RESULTS
New Zealand King Salmon Investments — H1 2018 Earnings Presentation on 6ix