Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — FY2019 Earnings Presentation
31 slides from Australian Agricultural's earnings presentation, May 22, 2019
Slide 1: FY 2019 Results
ere) THE ART OF AUSTRALIAN BEEF FY 2019 RESULTS | 22 MAY 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 becomplete. You acknowled
Slide 3: Agenda
Year in Review 05 Financial Performance 14 Sustainability 20 Progress Against Strategy 23 Operating Environment 27 3
Slide 4: Wylarah
WV WYLARAH
Slide 5: Year in Review
Year in Review
Slide 6: AACo remains resilient despite significant seasonal events impacting FY2019
AACo remains resilient despite significant seasonal events impacting FY 2019 AACo continues to present a unique value proposition: our unrivaled ability to produce the highest quality beef at scale ➢ Premium branded beef strategy roll-out progressing ➢ Business simplification and proactive operation
Slide 7: Underlying Operating Profit and EBITDA loss
➢ Underlying* Operating Profit (excluding Gulf flood event) ➢ Statutory EBITDA loss of ($182.7m) vs ($35.3m) pcp: $23.7m vs ($13.5m) (+$37.2m fav vs pcp) despite • ($204.9m) unfavourable livestock movement significant impact of seasonal conditions in FY19 (additional $60.4m vs pcp) ➢ Key drivers beh
Slide 8: Extreme seasonal conditions have impacted FY2019 by $107m
Extreme seasonal conditions have impacted FY 2019 by ($107m) Gulf Flood Overview Seasonal Conditions ➢ Estimated impact on livestock and infrastructure consistent ➢ Drought conditions have contributed an additional $60.4m of with market announcement made on 11 March 2019 costs in FY19 vs pcp • $45.6
Slide 9: Gulf flood preparation and management
Flood Preparation ➢ Longstanding experience in managing operations is reflected in our annual flood mitigation preparation, which includes: • Moving stock into the least flood-prone paddocks • Stockpiling fuel and fodder storage • Providing additional supplement and feed ➢ Construction of flood refu
Slide 10: Volumes Sold
187.3 14.0 14.45 14.10 13.35 176.9 12.5 175.9 12.2 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 Volumes Sold (Kg m) Sales ($m) Price / Kg ($) FY17 12.5 FY17 175.9 FY17 14.10 FY18 12.2 FY18 176.9 FY18 14.45 FY19 14.0 FY19 187.3 FY19 13.35 10
Slide 11: Continue to command premium pricing in target markets
Continue to command premium pricing in target markets Wagyu sales value growth Pricing has increased on majority of cuts (over 60%) FY19 vs pcp across Westholme and Wylarah brands Asia & 68% Middle East 26% of total sales ➢ Overall Westholme and Wylarah value growth up 6% vs pcp Australia 10% 14% ➢
Slide 12: Wylarah at At.Mosphere / Westholme launch in Dubai
Wylarah at At.Mosphere in February 2019 ➢ Pinnacle of opulent fine dining in Dubai ➢ World’s tallest restaurant at Burj Khalifa ➢ Menu & brand exposure Westholme launch in Dubai October 2018 ➢ Successful launch of Westholme ➢ Significant brand exposure gained with Westholme Instagram followers growi
Slide 13: Westholme
13 Sad ne WESTHOLME = QUEENSLAND ~ AUSTRALIA
Slide 14: Financial Performance
Financial erformance
Slide 15: FY2019 vs FY2018
$M FY 2019 FY 2018 Change ➢ Underlying* Operating Profit (excluding Gulf flood) $23.7m vs ($13.5m) pcp Meat sales 246.3 332.7 (86.4) ➢ Underlying* Operating Profit (excluding Gulf flood and Livingstone) $39.6m Cattle sales 117.8 47.0 70.8 vs $9.8m pcp Total sales revenue 364.1 379.7 (15.6) ➢ Despite
Slide 16: Cost of Production increase
3.50 ➢ $0.91/kg Cost of Production increase on pcp excluding attrition* 3.00 $2.88 ➢ Increase largely attributable to the adverse impact of seasonal operations driving up transportation, $2.50 2.50 $0.88 supplementation, contractor and fuel costs combined with increases in feed commodity pricing $1.
Slide 17: Operating Cash Flow
$M FY 2019 FY 2018 Change ➢ Significant improvement in Operating Cash Flow stemming from: Receipts from customers 378.3 376.0 2.3 • Payments reduced due to lower cattle purchases, offset by increased operating and Payments to suppliers, employees and others (352.7) (395.6) 42.9 corporate expenses In
Slide 18: Property portfolio and gearing
$M FY 2019 FY 2018 Change ➢ Pastoral property portfolio value up 5.8% to $738.5m Property, Plant & Equipment 795.3 753.8 41.5 supported by infrastructure upgrades and market valuation increases Livestock 423.3 628.4 (204.9) ➢ Net reduction in Livestock value of ($204.9m) - refer to Interest-bearing
Slide 19: Westholme
VW WESTHOLME = QUFENSLAND — AUSTRALIA 19
Slide 20: Sustainability
Sustainability
Slide 21: Protecting our future
Protecting our future AACo is committed to being a leader in sustainable beef production. This means consistently striving for best practice and continuous improvement in the management of the environment and animals under our stewardship, minimising any adverse impact from our operations, and contr
Slide 22: 22
22
Slide 23: Progress Against Strategy
Progress Against Strategy
Slide 24: AACo's Strategy On a Page
We craft the magic of Australia into remarkable dining experiences. Integrated Supply Strategic . g Chain Pillars Priorities Do it for the diner AACo’s Strategy On a Page & Marketing riation for with our produc growth Embed a customer- centric mindset Drive brand promises through high impact & effic
Slide 25: Focus remains on accelerating AACo strategic priorities
Focus remains on accelerating AACo strategic priorities ➢ Progressing branded beef strategy roll-out despite extreme seasonal conditions ➢ CCO appointed ➢ Establishment of the US commercial office ➢ Advanced progress on future launches in larger scale markets ➢ Further developed nation leading Wagyu
Slide 26: Focus remains on accelerating AACo strategic priorities
Focus remains on accelerating AACo strategic priorities ➢ Continued investment in skills and technologies that help identify, assess and monitor genetic feed conversion and animal health data ➢ Advancing information systems to drive strategic decision making ➢ Investing strategically in and building
Slide 27: Operating Environment
Overating Environment
Slide 28: Ongoing extreme seasonal conditions in Queensland and the Northern Territory
➢ Ongoing extreme seasonal conditions in Queensland and the Northern Territory have significantly increased station operating expenses, particularly feeding and transport costs ➢ Failure of 18/19 winter and 19/20 summer crops in the majority of northern grain growing regions alongside dry conditions
Slide 29: Demand for Australian beef is strong
“Drought and flooding heavily impacting slaughter and herd levels…. result in the largest drop in the national herd in decades… Expected to take a number of years before the national herd is back to its longer-term average” Source: MLA April 2019 Cattle Industry Projections 400 Demand for Australian
Slide 30: Global beef exports and market trends
➢ In many mature markets, growing consumer interest and awareness of “Global exports in 2019 are forecast to increase by provenance, sustainability, animal welfare, food safety and traceability 3% as shipments from Brazil, Argentina, India and provide messaging opportunities for Australian beef bran
Slide 31: Thank You
Thank You AUSTRALIAN BEEF
Australian Agricultural Company — FY2019 Earnings Presentation on 6ix