Inghams Group Ltd. · ASX:ING
Inghams — Macquarie Australia Conference 2018
30 slides from Inghams's conference presentation, May 2, 2018
Slide 1: Inghams Group Limited – Macquarie Australia Conference
For personal use only Inghams Group Limited Macquarie Australia Conference 2 MAY 2018
Slide 2: Important notice and disclaimer
Important notice and disclaimer For personal use only 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), current at the date of this presentation, unless otherwise noted. It is
Slide 3: Company Overview
Further Processing Plant Edinburgh Parks, South Australia For personal use only 01 Company Overview
Slide 4: 100 year history
100 year history For personal use only Ingham’s is progressing through the next phase of its evolution following a long and proud history since its founding as a family business in 1918 Nov-14: Sale and leaseback of 51 properties across the network complete Jan-15 Commenced management refresh No
Slide 5: Ingham's overview
Ingham’s overview For personal use only The largest vertically integrated poultry producer across Australia and New Zealand, with a long-standing reputation for quality and service FY17 revenue: A$2,427m Poultry Stockfeed Stringent biosecurity regulations restrict imports to ANZ The Australian s
Slide 6: Attractive industry structure
Attractive industry structure For personal use only Domestic demand for chicken is met by domestic producers, with stringent biosecurity regulations restricting imports to Australia and New Zealand Import restrictions Biosecurity controls Australia New Zealand Department of NZ Customs and Governing
Slide 7: Vertically integrated operations
Vertically integrated operations For personal use only Complex supply chain supported by integrated planning and optimisation Integrated Planning and Optimisation Feedmilling Further Warehousing and distribution processing Breeder farms Quarantine GGPs1 GPs2 Primary Genetics facility Parents Hatcher
Slide 8: Large scale network, with high quality asset base
Large scale network, with high quality asset base For personal use only Ingham’s national scale and vertically integrated operations provide a number of benefits, including production flexibility, cost efficiencies and reducing operating or agricultural risks Facilities / farms1 Type Australia NZ To
Slide 9: Favourable production economics
Favourable production economics For personal use only Driven by genetic improvements, feed and nutrition and ‘industrialisation’ of the supply chain Indicative FCR1,2 Improvement drivers (kg of feed to produce 1kg liveweight) 9.2 - 13.8 Genetic Selective breeding techniques have improved the 16 im
Slide 10: Price advantage of chicken
Price advantage of chicken For personal use only The price advantage over other forms of animal protein has been a key driver of the growth in demand for chicken in Australia in recent years Meat price – Australia (2000)1 Meat price – Australia (2015)1 $20.00 $20.00 $17.77 $15.00 $15.00 $13.72 $11.7
Slide 11: Strong underlying demand for poultry
Strong underlying demand for poultry For personal use only Strong consumption growth, supported by a shift in consumer preferences towards healthier and more affordable forms of protein Total chicken consumption - Australia1 Australian animal protein consumption2 1,250 14% 1990 – 2015 CAGR: 4.1% 16%
Slide 12: Long-term customer relationships
Long-term customer relationships For personal use only Brand reputation for quality and service, supporting long term customer relationships Ingham’s is a well recognised brand Long-term customer relationships Customer Years of uninterrupted supply Ingham’s brand founded in 1918 Australia Strong
Slide 13: Group highlights
Broiler Farm South Australia For personal use only 02 Group highlights
Slide 14: Group highlights
Group highlights For personal use only Delivering on our strategy – growing volumes and earnings with strong cash flow Chicken remains the competitive protein with 3.7% growth in core Chicken & Turkey volumes – despite cycling of customer EDLP initiatives in FY17 Strategy implementation on track
Slide 15: Financial highlights – 1H FY18 vs 1H FY17
Financial highlights – 1H FY18 vs 1H FY17 For personal use only Poultry Gross EBITDA EBITDA NPAT Net debt Interim (underlying) EPS Volume Profit Dividend 255.2kt $243.1m $116.2m $108.9m $65.7m $193.3m 9.5 cps 17.7 cps ↑ 2.8% ↑ 6.1% ↑ 22.0% ↑ 14.8% ↑ 28.1% ↓ 104.4m Total Poultry volume growth of 2.
Slide 16: Strategy update
Feed mill Berrima, New South Wales For personal use only 03 Strategy update
Slide 17: Ingham's – A World Class Food Company
Ingham’s – A World Class Food Company For personal use only PAGE // 16
Slide 18: Project Accelerate
Project Accelerate For personal use only Implementation of the multi year transformation project is well underway Innovation and Differentiation Focused exports strategy Accelerate FP network utilisation Farming efficiency Feed business strategy Labour productivity Automation Procure
Slide 19: Strategy update – Accelerate
Strategy update – Accelerate For personal use only Automation delivering benefits in improved processing yields and reduced unit costs across major Primary plants – program continues with deboning initiatives planned at Te Aroha (New Zealand) and a focus on FP plants – further opportunities in pro
Slide 20: Strategy update – Feed
Strategy update – Feed For personal use only Focus on providing self sufficiency for own use, and improving mill utilisation and profitability of third party sales Construction of greenfield feed mill in Murray Bridge (SA) is on track to open in 2018 Acquired existing Wacol (QLD) mill during 2
Slide 21: Strategy update – energy cost and feed prices
Strategy update – energy cost and feed prices For personal use only Energy cost increases continue to flow through – gas prices currently ~30% higher than current contract which expires in December 2018 – electricity supply contracted to the end of FY18 with progressive procurement options for FY1
Slide 22: Feed Pricing Update
90 Feed Pricing Update 80 Nov-16 Mar-17 Jul-17 For personal use only Feed prices have continued moving higher over the last 18 months Indexed Wheat and Soymeal Prices1 Soymeal Wheat 150 140 130 120 110 100 90 80 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Commentary Over 60% of Australian poultry volumes i
Slide 23: Outlook
Breeder Farm Matamata, New Zealand For personal use only 04 Outlook
Slide 24: Outlook unchanged
Outlook unchanged For personal use only Strategy implementation remains on track Accelerate benefits are expected to continue to underpin cost reduction and profit improvement as planned Increase in energy and feed costs expected to continue and, where they are unable to be offset, flow throug
Slide 25: Appendix
For personal use only Appendix
Slide 26: Profit & Loss
Profit & Loss For personal use only Pro forma Volume & Revenue Growth $ millions 1H FY2018 1H FY2017 Variance % Continued growth in poultry volumes Poultry volumes (kt) 255.2 248.2 7.0 2.8 NZ volume run rate consistent with 2H FY17 Feed volumes (kt) 270.4 297.1 (26.7) (9.0) 1H vs 2H seasonalit
Slide 27: EBITDA reconciliation
EBITDA reconciliation For personal use only Pro forma Profit on sale $ millions 1H FY2018 1H FY2017 Variance % 1H FY18 profit on sale attributable to sale of EBITDA Wanneroo farming and feedmill site (WA) 108.9 94.8 14.1 14.9 (underlying) 1H FY17 profit on sale from Foggo Road (SA) and Cardiff (
Slide 28: Cash Flow and Balance Sheet
Cash Flow and Balance Sheet For personal use only Pro forma Cashflow $ millions 1H FY2018 1H FY2017 Variance Non-cash items relates to the profit on sale of Wanneroo EBITDA 116.2 95.2 20.9 ($14.1m) and other minor items ($1.5m), primarily LTIP Non-cash items (15.6) (0.3) (15.3) Continued improve
Slide 29: Reconciliation of 1H FY17 Statutory results to pro forma
Reconciliation of 1H FY17 Statutory results to pro forma For personal use only $ millions 1H FY2017 Statutory EBITDA 61.5 1. Removal of costs of listing on ASX in November 2016 IPO transaction costs ❶ 28.0 2. Relates to fees for services charged by TPG entities that will not be incurred post listing
Slide 30: Risks Summary (per Financial Statements)
Risks Summary (per Financial Statements) For personal use only Material business risks faced by the Group that may have a significant effect on the financial prospects of the Group include: Import restrictions: Changes to import quarantine conditions in Australia and/or New Zealand that would allo