Astral Foods Limited · JSE:ARL

Astral Foods — FY2021 Earnings Presentation

60 slides from Astral Foods's earnings presentation, Sep 30, 2021

  1. Slide 1: Annual Results Presentation 2021

    2021 Annual Results Presentation for the year ended 30 September 2021

  2. Slide 2: Agenda

    AGENDA  Business Overview Slide 3 – Chris Schutte  Operational Overview Slide 9 – Gary Arnold, Michael Schmitz, Frans Van Heerden  Industry Matters Slide 29 – Gary Arnold  Financial Overview Slide 32 – Daan Ferreira  Outlook Slide 43 – Chris Schutte  Additional Information Slide 46 2

  3. Slide 3: Business Overview

    BUSINESS OVERVIEW Chris Schutte Chief Executive Officer

  4. Slide 4: Salient Points

    Business Overview SALIENT POINTS  Feed input costs increased over the period on high maize prices, driven by global fundamentals in the coarse grain markets  Broiler production efficiencies impacted by a management decision to change the feeding regime, to offset the higher cost of feed  Poultry

  5. Slide 5: Key Financial Indicators

    Business Overview KEY FINANCIAL INDICATORS  Revenue @ R15,9 billion 13.9% (R16,1 billion including discontinued operations)  Profit before interest and tax @ R711 million 12.5% (R731 million including discontinued operations)  Profit for the period @ R473 million 15.6%  Headline earnings per sha

  6. Slide 6: Divisional Overview

    Business Overview DIVISIONAL OVERVIEW Feed Poultry  Raw material costs up sharply  Feeding programme change  Internal feed requirements increased  Broiler performance impact  External sales volumes down  Broiler sales realisations up  Expenses well controlled  Broiler sales volumes increased

  7. Slide 7: Broiler Selling Price vs. Feed Price

    -30% -20% -10% 10% 20% 30% 40% 0% Oct-16 Source: Own Data Dec-16 Feb-17 Business Overview Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 % Change in broiler feed price Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 BROILER SELLING PRICE vs. FEED PRICE Apr-20 Jun-20 Au

  8. Slide 8: PBIT Movement F2021 vs. F2020

    Business Overview PBIT MOVEMENT F2021 vs. F2020 (R million) * 2020 & 2021 excludes discontinued operations 1 000 900 59 800 176 700 600 795 500 400 813 796 711 300 200 100 125 38 47 0 * * Extraordinary PBIT F2020 PBIT F2021 Feed conversion Other Broiler feed change Broiler sales Broiler raw material

  9. Slide 9: Raw Materials

    RAW MATERIALS Gary Arnold Group Chief Operating Officer

  10. Slide 10: RSA Total Maize Supply & Demand

    Operational Overview RSA TOTAL MAIZE SUPPLY & DEMAND Marketing year (May to April) 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22E 2022/23F '000 tons Actual Actual Actual Actual Actual Estimate Forecast Carry In (1 May) 2 471 1 093 3 689 2 662 1 000 2 115 2 221 Crop Estimate 7 779 16 820 12 510 11

  11. Slide 11: SAFEX Yellow Maize Price

    Operational Overview SAFEX YELLOW MAIZE PRICE Source: CJA Strategic Risk Brokers 11

  12. Slide 12: SAFEX YM Price vs. CBOT in Rand Terms

    Operational Overview SAFEX YM PRICE vs. CBOT IN RAND TERMS Source: CJA Strategic Risk Brokers 12

  13. Slide 13: Durban Soya Meal Price

    Operational Overview DURBAN SOYA MEAL PRICE Source: CJA Strategic Risk Brokers 13

  14. Slide 14: Feed Division

    FEED DIVISION Michael Schmitz Managing Director : Feed

  15. Slide 15: Feed Division

    Operational Overview FEED DIVISION Revenue - R million Operating profit - R million 9000 550 8000 500 530 8 302 450 508 7000 6 979 400 6000 350 5000 300 4000 250 200 3000 150 2000 100 1000 50 0 0 F2020 F2021 F2020 F2021 Revenue up 18.9% Operating profit up 4.2%  Raw material costs up  Net margin 6

  16. Slide 16: Feed Division

    Operational Overview FEED DIVISION  SAFEX yellow maize price increased for the year under review F2021 avg. R3 363 per ton (F2020: R2 747) up R616 per ton y-o-y  DBN soya meal price increased for the year under review F2021 avg. R8 216 per ton (F2019: R6 617) up R1 599 per ton y-o-y  Internal fee

  17. Slide 17: Feed Division – Sales Mix

    Operational Overview FEED DIVISION – SALES MIX F2020 F2021 14% 13% 23% 1 305 203 Tons 22% 1 330 991Tons Volume increase ≈ 2.0% 58% 60% 5% 5% ◼Poultry Integrated ◼ Poultry External ◼ Dairy ◼ Other 17

  18. Slide 18: Poultry Division – Commercial

    POULTRY DIVISION COMMERCIAL Frans Van Heerden Managing Director: Commercial

  19. Slide 19: Poultry Division - Consolidated

    Operational Overview POULTRY DIVISION - CONSOLIDATED Revenue - R million Operating profit - R million 14000 300 295 12000 13 077 250 10000 11 343 200 8000 150 6000 147 100 4000 2000 50 0 0 F2020 F2021 F2020 F2021 Revenue up 15.3% Operating profit down 50.3%  Broiler sales volumes up 6.4%  Net marg

  20. Slide 20: Poultry Division - Commercial

    Operational Overview POULTRY DIVISION - COMMERCIAL  Profits decreased for the year under review on the back of extraordinarily high feed prices and higher operating costs  Broiler sales volumes increased on higher bird numbers, with additional volumes slaughtered under the new Festive expansion ca

  21. Slide 21: Poultry Division – Sales Mix

    Operational Overview POULTRY DIVISION – SALES MIX F2020 F2021 22% 22% 7% 447 918 Tons 7% 476 750 Tons 51% 53% Volume increase ≈ 6.4% 12% 12% 4% 2% 4% 4% IQF Mixed Portions IQF Single Portions Frozen Fresh Value Added Tertiary 21

  22. Slide 22: Broiler Selling Price

    100% 105% 110% 115% 120% 125% 135% 140% 95% 130% Nov-16 Source: Own Data Jan-17 Mar-17 May-17 Operational Overview Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Broiler selling price index BROILER SELLING PRICE Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Se

  23. Slide 23: Poultry Division – Agriculture

    POULTRY DIVISION AGRICULTURE Gary Arnold Group Chief Operating Officer

  24. Slide 24: Poultry Division - Agriculture

    Operational Overview POULTRY DIVISION - AGRICULTURE  Parent stock sales were higher for the year under review, as demand for the Ross broiler genetics continued to increase market share for the breed  Feed input costs increased on the back of high raw material costs, adversely affecting the live b

  25. Slide 25: Broiler Production Performance

    Operational Overview BROILER PRODUCTION PERFORMANCE 110% 108% 105% 103% 100% 98% 95% 93% 90% F2011 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 Slaughter age Live weight Average daily gain *Key indicators base-lined to 100% in F2011 25

  26. Slide 26: Broiler Production Performance

    Operational Overview BROILER PRODUCTION PERFORMANCE 150% 140% 130% 120% 110% 100% 90% 80% F2011 F2012 F2013 F2014 F2015 F2016 F2017 F2018 F2019 F2020 F2021 Mortality Feed consumption Performance efficiency factor *Key indicators base-lined to 100% in F2011 26

  27. Slide 27: Other Africa

    OTHER AFRICA Gary Arnold Group Chief Operating Officer

  28. Slide 28: Other Africa Division

    Operational Overview OTHER AFRICA DIVISION Revenue - R million Operating profit - R million 350 50 45 * Includes discontinued operations 300 310 40 289 55* 250 35 30 35 200 25 150 20 100 15 10 35* 50 5 9 0 0 F2020* F2021* F2020* F2021* Revenue down 6.7% Operating profit up  Raw material costs up 

  29. Slide 29: Industry Matters

    INDUSTRY MATTERS Gary Arnold Group Chief Operating Officer

  30. Slide 30: Poultry Imports

    Industry Matters POULTRY IMPORTS Tons 70 000  Covid-19 lockdowns 65 000  Currency weakness 60 000  Increased freight costs  Port shutdowns 55 000  Tariff increase 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 Feb-17 Feb-18 Feb-19 Feb-20 Feb-21 Oct-16 Oct-17 Oct-18 Oct-1

  31. Slide 31: Industry Overview

    Industry Matters INDUSTRY OVERVIEW  Based on industry statistics broiler slaughter numbers are approximately 20.6 million birds per week  Imports for the period averaged 37 610 tons per month (≈ 8.0% down on F2020 @ 40 875 tons), equalling approximately 25% of total consumption  Highly Pathogenic

  32. Slide 32: Financial Overview

    FINANCIAL OVERVIEW Daan Ferreira Chief Financial Officer

  33. Slide 33: Income Statement

    Financial Overview INCOME STATEMENT 2021 2020 Year ended 30 September R million R million % change (restated) Revenue 15 866 13 932 13.9% Operating profit – continuing operations 711 813 12.5% Operating profit – (incl. discontinuing operations) (731) (838) 12.8% Xxxxxxxxxxxxxxxx Operating profit mar

  34. Slide 34: Group Annual Revenue

    Financial Overview GROUP ANNUAL REVENUE (R billion) 15,9 13,9 13,5 13,0 8,3 12,4 12,0 11,3 7,0 6,2 6,6 9,6 6,6 7,2 8,2 8,5 6,2 7,4 7,2 6,9 7,0 5,5 6,3 4,3 4,9 13,1 4,8 5,2 4,0 3,6 3,5 5,1 10,6 10,9 11,3 3,9 4,1 3,5 9,9 3,7 2,7 8,7 9,1 2,8 2,5 7,0 2,7 2,7 5,8 6,0 2,7 4,6 5,1 5,0 5,3 2,0 3,6 4,4 3,3 1

  35. Slide 35: Group Annual Operating Profit

    Financial Overview GROUP ANNUAL OPERATING PROFIT 1 942 14,8% 15,0% (R million) 12,8% 12,3% 457 9,8% 9,3% 9,6% 1 101 1 086 8,7% 8,3% 8,4% 882 7,3% 809 6,7% 813 766 6,6% 674 711 423 6,5% 5,9% 597 581 585 5,8% 391 548 549 5,9% 272 477 493 5,1% 4,5% 333 4,6% 389 214 328 282 489 261 281 262 508 203 220 1

  36. Slide 36: Group Six Monthly Operating Profit

    Financial Overview GROUP SIX MONTHLY OPERATING PROFIT 1 044 (R million) 191 898 875 266 207 550 551 538 503 186 237 243 429 239 379 374 324 233 337 280 120 250 275 265 203 213 265 154 212 153 59 197 252 265 157 184 173 135 156 140 45 59 351 310 194 616 836 617 258 113 287 61 86 -3 22 8 5 -117 -135 1

  37. Slide 37: Balance Sheet

    Financial Overview BALANCE SHEET September 2021 September 2020 R million R million % change Non-current assets (excl. ROU assets) 3 235 3 259 1% Non-current assets – ROU assets 340 537 Net working capital 1 454 1 132 28% Current assets (excl. cash) 3 520 2 961 19% Current liabilities (excl. borrowin

  38. Slide 38: Capital Expenditure

    Financial Overview CAPITAL EXPENDITURE F2021 F2020 Year ended 30 September R million R million Depreciation and amortisation 425 403 Property, plant & equipment 217 190 Right of use assets 208 213 Total capex spend 260 456 Festive expansion - 270 Other capex 260 186 Outstanding commitments 240 298 3

  39. Slide 39: Working Capital

    Financial Overview WORKING CAPITAL September 2021 September 2020 Variance R million R million R million Current assets 3 520 2 961 (559) Biological assets 976 851 125 Inventory - Poultry 537 497 40 - Feed 328 317 11 - Other Africa 56 47 9 Trade receivables 1 438 1 126 312 Other receivables 185 123 6

  40. Slide 40: Statement of Cash Flows

    Financial Overview STATEMENT OF CASH FLOWS 2021 2020 For the twelve months ended 30 September R million R million Cash operating profit 1 156 1 232 Working capital movement (344) (74) 812 1 158 Tax paid (136) (153) Net interest received 6 22 Investment in equity instruments - (155) Capital expenditu

  41. Slide 41: HEPS & Dividend per Share

    Financial Overview HEPS & DIVIDEND PER SHARE 3 712 2 016 1 914 1 674 1 381 1 441 1 286 1 228 1 148 958 890 960 965 840 787 864 631 487 434 272 326 90 108 168 230 380 585 700 700 700 760 810 656 222 440 1 150 490 1 055 2 050 900 775 700 F2005 F2016 F2001 F2002 F2003 F2004 F2006 F2007 F2008 F2009 F201

  42. Slide 42: In Summary

    Financial Overview IN SUMMARY  Revenue at R15,9 billion* up 13.9% (prior year at R13,9 million)  Profit before tax at R711 million* down 12.5% in a challenging year  Capital expenditure of R260 million at a normalised level  Cash outflow of R265 million distorted by payment of the full prior yea

  43. Slide 43: Prospects

    PROSPECTS Chris Schutte Chief Executive Officer

  44. Slide 44: Outlook

    Prospects OUTLOOK  Record high unemployment levels have been reported for South Africa, which will lead to pressure on consumer spending with lower disposable income  Volatile raw material markets on global supply and demand, notwithstanding the very good South African maize crop for 2021 which is

  45. Slide 45: Thank You

    Confirmed August 2019 THANK YOU

  46. Slide 46: Additional Information

    Financial Overview ADDITIONAL INFORMATION

  47. Slide 47: Key Financial Ratios

    Additional Information KEY FINANCIAL RATIOS 70 30 65 61 60 25 55 48 51 50 49 48 46 20 45 42 40 39 41 36 39 37 36 36 31 31 34 15 33 31 14,8 30 30 29 28 25 26 26 12,8 15,0 24 12,3 23 10 21 21 20 9,6 9,3 20 19 9,8 19 8,3 8,4 8,7 17 15 7,3 5,9 8,0 7,8 16 13 14 6,1 6,5 11 5 10 5,8 12 5,1 5,9 5,5 5,5 4,5

  48. Slide 48: Key Financial Indicators

    Additional Information KEY FINANCIAL INDICATORS 120 107,60 106,08 100 96,06 97,45 78,00 80 61,07 61,05 60 49,95 44,16 41,36 41,65 37,43 40 33,47 34,24 35,38 34 34 29 28,28 30 26 27 27 23,83 24 24 22 21 21 21 19 18 20 15 16 23 20 14,34 14 9 11 10 8,53 17 17,36 15 10,79 12 12 14 3 2 9 9 10 0 7 Sep-03

  49. Slide 49: World Corn Ending Stocks

    Additional Information WORLD CORN ENDING STOCKS Million Tons 375 30% 27,80% 27,70% 350 26,20% 25,00% 325 22,80% 23,00% 22,80% 25% 300 20,40% 19,60% 275 250 20% 19,80% 225 200 15% 175 150 125 10% 100 75 5% 50 25 214 279 311 326 343 303 301 298 284 275 0 0% 2014 2015 2016 2017 2018 2019 2020 2021 2022

  50. Slide 50: El Niño Oscillation

    Additional Information EL NIÑO OSCILLATION Source: International Research Institute for Climate and Society (IRI) – Columbia University 50

  51. Slide 51: Vegetative Health Index

    Additional Information VEGETATIVE HEALTH INDEX Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI) 51

  52. Slide 52: Broiler Feed Ingredient Contribution

    Additional Information BROILER FEED INGREDIENT CONTRIBUTION Inclusion & Cost Contribution 0,4 0,4 0,3 0,4 0,3 0,4 0,3 100% 3,0 2,2 3,1 3,3 5,4 3,3 3,2 5,3 3,6 3,8 3,7 4,5 3,7 3,3 7,4 8,7 9,8 11,5 7,3 90% 7,7 7,0 9,4 9,2 16,6 18,2 16,6 14,8 14,4 0,7 0,6 5,2 4,7 80% 0,6 0,7 13,2 16,1 0,7 0,7 5,4 4,1 3

  53. Slide 53: Broiler Price vs. Food Price Inflation

    -10% 10% 20% 30% 0% Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Additional Information Aug-16 Oct-16 Dec-16 Source: Own Data & CJA Strategic Risk Brokers Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 % Change in food price index Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19

  54. Slide 54: RSA Protein Price Comparison

    Additional Information RSA PROTEIN PRICE COMPARISON Cents per kilogram 11 000 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Apr-21 Feb-17 Oct-17 Feb-18 Feb-19 Feb-20 Feb-21 Apr-17 Aug-17 Apr-18 Aug-18 Apr-19 Aug-19

  55. Slide 55: RSA Poultry Market Share

    Additional Information RSA POULTRY MARKET SHARE 21% 27% 4% 5% 8% 19% 7% 9% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Local broiler production ≈ 20.6 million birds per week (July YTD) Source: Own Estimates 55

  56. Slide 56: RSA Poultry Market Share Including Imports

    Additional Information RSA POULTRY MARKET SHARE INCLUDING TOTAL POULTRY IMPORTS 25% 20% 14% 16% 7% 3% 5% 4% 6% Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports Avg. poultry imports ≈ 6.7 million birds per week (12 months ending September 2021) Source: SAPA & Own Esti

  57. Slide 57: Total Poultry Imports

    Additional Information TOTAL POULTRY IMPORTS Tons 600 000 500 000 400 000 300 000 200 000 100 000 F2019 F2020 F2021 0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep F2019 45 061 89 632 127 371 162 545 204 659 250 646 302 318 354 046 408 633 455 069 502 306 538 605 F2020 40 409 86 676 128 331 170 44

  58. Slide 58: Total Poultry Imports: Country of Origin

    Additional Information TOTAL POULTRY IMPORTS COUNTRY OF ORIGIN  2020  2021 September YTD Other 3,2% Other 3,2% US 16,4% US 16,0% Argentina Argentina 5,1% 6,1% Brazil 55,6% EU 8,6% Brazil 67,1% EU 18,7% 485 568 tons 327 926 tons Source: SAPA 58

  59. Slide 59: Total Poultry Imports: Country of Origin

    Additional Information TOTAL POULTRY IMPORTS COUNTRY OF ORIGIN Country (tons) 2019 2020 2021 YTD Brazil 268 869 270 100 219 955 United States 89 598 79 492 52 338 Poland 50 419 4 321 - Argentina 37 939 29 530 16 786 Ireland 31 221 35 128 852 Denmark 23 325 16 562 100 Spain 18 824 28 000 27 159 Thail

  60. Slide 60: Contact Details

    Financial Overview CONTACT DETAILS Chris Schutte Chief Executive Officer Tel : +27 (0) 12 667 5468 email: Chris.Schutte@astralfoods.com Daan Ferreira Chief Financial Officer Tel : +27 (0) 12 667 5468 email: Daan.Ferreira@astralfoods.com www.astralfoods.com

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