Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — H1 FY2020 Earnings Presentation
29 slides from Australian Agricultural's earnings presentation, Nov 20, 2019
Slide 1: The Art of Australian Beef: H1FY20 Interim Results Presentation
co THE ART OF AUSTRALIAN BEEF HI1FY20 Interim Results Presentation 20 November 2019
Slide 2: Summary information only
Summary information only This presentation contains general information about the Australian Agricultural Company Limited and its consolidated entities (“AACo”) and its activities current as at the date of this presentation. It is provided in summary and does not purport to be complete. You acknowle
Slide 3: Key Highlights
Key Highlights 04 Strategic Progress 05 Portfolio Highlights 07 Brand Highlights 09 Regional Performance 11 Financial Performance 16 Operating Environment 21 Gulf Flood Update 23 Assets and Provenance 24 Value Proposition 25 3
Slide 4: Solid progress made on roll-out of Premium Branded beef strategy
Solid progress made on roll-out of Premium Branded beef strategy • Positive Operating Profit and Cash Flow despite ongoing national drought conditions. • Strongest half year of Wagyu meat sales to date: +9.5% vs pcp; Price/Mix/Exchange per Kg +5.9% vs pcp. • 7 Westholme launches: Global Westholme sa
Slide 5: Strategic Progress
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Slide 6: AACo's journey: From stewards of Australia's finest cattle to custodians of premium beef brands
AACo’s journey: From stewards of Australia’s finest cattle to custodians of the world’s most coveted premium beef brands A winning portfolio Margin through Growth in Distributor partnerships A simpler, A high of premium global allocation and priority regions and customer more efficient performance b
Slide 7: Scaling priority premium Global Brands while maintaining Regional Wagyu Brands
We are scaling our priority premium Global Brands, while maintaining traction with our Regional Wagyu Brands 7
Slide 8: AACo brand portfolio overview
• The pinnacle of excellence in • Premium Wagyu brand • Darling Downs Wagyu is a • Master Kobe is produced beef. aimed at fine dining and strong performer in primary from full-blood, pure-bred premium butcher channel. markets of Korea, Australia Wagyu cattle, with a marble • Provides a halo for othe
Slide 9: Brand Highlights
ry ag WESTHOLME AUSTRALIA Brand Highlights
Slide 10: H1FY20 Progress
H1FY20 Progress • 7 key launches. • Global Meat Sales volume: +61% vs pcp. • Global Meat Sales value: +106% vs pcp. • 2 x Gold Medals - World Steak Challenge 2019. World’s 50 Best Los Angeles Florida UK Hong Kong Restaurants Launched Launched Launched & Macau Launched June 2019 July 2019 August 2019
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Slide 12: Asia: Revenue Growth
Revenue Growth • Approximately + 8% vs pcp. • Approximately 68% of overall Wagyu meat sales. Commercial Highlights • Asia focused commercial team based in Singapore. • Extended distribution partnership in Singapore. • Targeted Taiwan activations –Westholme Asian BBQ festive period promotion. • Doubl
Slide 13: Europe/Middle East: Revenue Growth
Revenue Growth • Approximately + 26% vs pcp. • Approximately 13% of overall Wagyu meat sales. Commercial Highlights • EU distribution partnership restructured to support Westholme strategy. • EU region sales manager embedded - focusing on 5 strategic countries - UK, France, Germany, Italy and Spain.
Slide 14: North America: Revenue Growth
Revenue Growth • Approximately + 7% vs pcp. • Approximately 7% of overall Wagyu meat sales. Commercial Highlights • US based commercial team building in-country resourcing and distribution network. • California distribution partnership agreement executed. • Distributor partnerships developed in Flor
Slide 15: Australia: Revenue Growth
Revenue Growth • Approximately (6%) vs pcp (Price/Mix 5% increase, Volume 10% decrease). • Approximately 12% of overall Wagyu meat sales. Commercial Highlights • Premium market shift proceeding to plan – growing premium brand sales and market presence. • Achieved higher pricing while reducing overal
Slide 16: Financial
Financial 16
Slide 17: Financial performance highlights
• Continued positive operating profit and cash flow delivered in the face of ongoing adverse seasonal conditions. Approximately $36m adverse impact in H1FY20 of elevated drought related costs. This represents an increase of $11.1m over pcp. – Operating profit1 $6.3m vs $24.8m pcp – Operating profit1
Slide 18: Positive Operating Profit despite approximately $36m of elevated drought related costs
Positive Operating2 Profit despite approximately $36m of elevated drought related costs H1FY H1FY $m Var $ • Operating profit2 $6.3m vs $24.8m pcp. 20201 2019 • Operating profit2 (excluding Livingstone) $9.4m vs $34.6m pcp. Meat sales 105.8 146.4 (40.6) • 9.5% growth in underlying Wagyu meat sales v
Slide 19: Balance sheet remains strong with $1.3b in total assets
$m 30 Sep 2019 31 Mar 2019 Pre AASB Post AASB • Balance sheet remains strong with $1.3b in total assets held. 161 Adj 161 Adj PPE&E 802.7 802.7 795.3 • Net livestock reduction vs pcp reflects strategic destocking in the context of adverse seasonal conditions. This is partly offset by Right of use as
Slide 20: Cash flow
H1FY H1FY $m Var $ 2020 2019 • AACo has delivered positive operating cash flows in 3 out Receipts from Customers 193.5 233.1 (39.6) of the last 4 financial halves despite significant drought related impacts. Payments to Suppliers and Employees (175.1) (196.7) 21.6 Net financing costs (7.4) (6.8) (0.
Slide 21: Operating
Operating 21
Slide 22: Demand for Australian beef is strong with a lower pool of cattle
Demand for Australian Beef is strong with a lower Ongoing adverse seasonal conditions remain a challenge. pool of cattle to source from. “Winter and early spring offered no reprieve from widespread dry Total Australian Beef Exports conditions for the majority of Australian cattle producers, who cont
Slide 23: Significant progress made rebuilding flood affected Gulf properties
Significant progress made rebuilding our flood effected Gulf properties • Full assessment of the impact on infrastructure across approximately 800,000 hectares of affected properties has been completed. • Gulf rebuild is applying the key lessons of the Gulf Flood event. Enhanced infrastructure devel
Slide 24: Generations of farming heritage and stewardship
We combine generations of farming heritage with stewardship over some of the world’s finest cattle country and the most advanced, innovative technologies available to deliver premium grade beef to the world’s most discerning consumers. Our history brings together that knowledge and experience. 2424
Slide 25: AACo presents a unique value proposition
AACo presents a unique value proposition: Scale - The scale of our herd and properties allows us to adapt and evolve, to meet the needs of customers around the world. Heritage - AACo Beef is a product of Australian history dating back to 1824. We are Australia’s oldest continuously operating company
Slide 26: Appendices
CO THE ART OF AUSTRALIAN BEEF Appendices
Slide 27: Financial results excluding AASB 16
H1FY H1FY $m Var $ 20201 2019 Meat sales 105.8 115.2 (9.4) Cattle Sales 77.0 72.8 4.2 Total Sales 182.8 188.0 (5.2) Operating Expenditure (140.7) (134.0) (6.7) Cattle Purchases (9.3) (1.8) (7.5) Operating Gross Profit 32.8 52.2 (19.4) Change in Herd at Cost of Production (CoP) (0.2) (3.1) 2.9 Meat I
Slide 28: Impact of AASB 16 on key metrics
Pre Post $m Adjust AASB161 AASB161 Profit & Loss Operating Profit 5.9 0.4 6.3 Net Loss before tax (18.9) (0.2) (19.1) Balance Sheet Total Assets 1,278.9 33.5 1,312.4 Total Liabilities (451.4) (33.6) (485.0) Cash Flow Net Operating Cash Flow 8.1 2.9 11.0 Net Financing Cash Flow 5.0 (2.9) 2.1 Total Ca
Slide 29: Thank you
CO THE ART OF AUSTRALIAN BEEF Thank you
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