Inghams Group Ltd. · ASX:ING
Inghams — Investor Day (October 2019)
64 slides from Inghams's investor day presentation, Oct 22, 2019
Slide 1: Investor Day 22 October 2019
For personal use only INVESTOR DAY 22 OCTOBER 2019
Slide 2: Important Notice and Disclaimer
For personal use only IMPORTANT NOTICE AND DISCLAIMER 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: Welcome and Introduction
For personal use only PETER BUSH INDEPENDENT CHAIRMAN WELCOME AND INTRODUCTION 2
Slide 4: Agenda
For personal use only AGENDA 10:00 am Registration 10:30 am Welcome and introduction Peter Bush, Independent Chairman 10:35 am My perspective Jim Leighton, Chief Executive Officer − The building blocks of Ingham's − Why I joined Ingham's 10:45 am The roadmap to unlock our future Jim Leighton, Chief
Slide 5: Today's Speakers
For personal use only TODAY’S SPEAKERS Jim Leighton Jonathan Gray Tim Singleton CEO and CEO New Zealand Chief Operations Officer Managing Director Anne-Marie Mooney Alan Parnham Art Lankford Feed Business Director General Manager General Manager Farming Primary Processing John Alldis Chris Croese Se
Slide 6: Combined experience from the world's largest poultry and consumer companies
COMBINED EXPERIENCE FROM THE WORLD’S For personal use only LARGEST POULTRY AND CONSUMER COMPANIES GLOBAL POULTRY COMPANIES 5
Slide 7: We are unlocking our potential
For personal use only WE ARE UNLOCKING OUR POTENTIAL • Attractive sector • Strong foundations • Clear strategy • Material efficiency and capacity upside • Right team to deliver 6
Slide 8: My Perspective
For personal use only JIM LEIGHTON CHIEF EXECUTIVE OFFICER MY PERSPECTIVE 7
Slide 9: A rich history
For personal use only A RICH HISTORY GROWTH 100 YEAR HISTORY RELATIONSHIPS • Stringent biosecurity import • Successive owners have built • Long-term, trusted restrictions a strong and valuable relationships (grocery, business QSR, food service) • Most efficient low-cost protein • Diversified network
Slide 10: Sustained demand growth for poultry
For personal use only SUSTAINED DEMAND GROWTH FOR POULTRY PER CAPITA CONSUMPTION OF MEAT TYPES (KG PER PERSON P.A.) 80kg 70kg 60kg 50kg Chicken meat – kg 40kg 30kg Pig meat – kg Beef and veal – kg 20kg 10kg Lamb and mutton – kg 0kg Source: ABARES. 9
Slide 11: Our national network is a great asset
For personal use only OUR NATIONAL NETWORK IS A GREAT ASSET • Manage biosecurity risk • Mitigate feed price volatility • Production clusters ensure local supply • Network provides ability to optimise supply nationally Facilities/farms Quarantine Primary processing Farms Further processing Hatcheries
Slide 12: Long-term customer relationships
For personal use only LONG-TERM CUSTOMER RELATIONSHIPS Consistency Certainty of demand of supply 11
Slide 13: A great opportunity
For personal use only A GREAT OPPORTUNITY A GREAT BUSINESS IN A CHANGING MARKET ALIGNED TO MY PASSION • Market structure and position • The protein market is • International experience changing as consumer and building corporate cultures • Strong asset base customer expectations evolve and fully int
Slide 14: My initial priorities
Opportunities For personal use only WITH My CHALLENGES initial I AM FAMILIAR priorities have been… WITH OUR SUCCESS IN GROWING OUR FOCUS WAS TO BE A OUR STRUCTURE AND VOLUMES HAS SUPPLIER NOT A STRATEGIC LEADERSHIP NEEDED A STRETCHED OPERATIONS PARTNER IN GROWTH REFRESH 13
Slide 15: The Roadmap to Unlock Our Future
For personal use only JIM LEIGHTON CHIEF EXECUTIVE OFFICER THE ROADMAP TO UNLOCK OUR FUTURE 14
Slide 16: The process
For personal use only THE PROCESS DEFINE OUR ESTABLISH OUR SET OUR RESET OUR BUILD PURPOSE PRINCIPLES STRATEGY STRUCTURE OUR TEAM • “Nourish Our World” • Open • Optimise the core • Horizontal vs • Deep operational vertical expertise • Honest • Innovate to grow • Balanced • International • Collaborat
Slide 17: Our purpose
For personal use only OUR PURPOSE Gives us meaning in the present and inspiration for creating future value • Physical: Nourishing people with protein and good nutrition • Emotional: Creating meaningful experiences • Community: Nurturing communities our business is part of • Environment: Limiting th
Slide 18: Our strategic framework
For personal use only OUR STRATEGIC FRAMEWORK OUR OBJECTIVE To deliver more consistent, predictable and reliable returns STRATEGIC OPTIMISE INNOVATE REINVEST PILLARS THE CORE TO GROW IN THE NEW STRATEGIC ENABLERS Consumer Cost Culture 17
Slide 19: Our pillars
For personal use only OUR PILLARS OPTIMISE THE CORE INNOVATE TO GROW INVEST IN THE NEW • Deliver asset efficiency with • Manage our core new • Be flexible, disciplined and minimal capital spend product development (NPD) well capitalised to take and portfolio mix to maximise advantage of growth • Imp
Slide 20: Our enablers
For personal use only OUR ENABLERS CONSUMER Innovation and profitable growth • Become a consumer-centric organisation • Work with customers in new ways – align with and support their growth • Invest in new value-added products and channels COST CULTURE Efficiency and focus CONSUMER Engagement and ca
Slide 21: Culture
For personal use only CULTURE • Our people have a great deal of passion for the company and are proud to be an Ingham's team member • Opportunities to improve our organisational performance, through focusing on developing the culture and our approach to leadership • Accompanied by capability develop
Slide 22: To deliver more consistent, predictable and reliable returns
TO DELIVER MORE CONSISTENT, PREDICTABLE For personal use only AND RELIABLE RETURNS Invest in the new ILLUSTRATIVE Innovate to grow Margin growth funds investment and returns Baseline revenue growth $ Margin Optimise the core expansion Optimise cost base (drive operational excellence) Time 21
Slide 23: How we win
For personal use only HOW WE WIN RIGHT LEADERSHIP We have assembled a team of leaders who have deep RIGHT STRATEGY experience and know what Fit for growth, to deliver more great looks like consistent, predictable and reliable returns RIGHT ASSETS Well invested assets and significant capacity upside
Slide 24: Unlocking Our Potential: Marketing
For personal use only SEB BRANDT CHIEF MARKETING OFFICER UNLOCKING OUR POTENTIAL MARKETING 23
Slide 25: Marketing focus areas
For personal use only MARKETING FOCUS AREAS Objective: Drive growth agenda through consumer-led brand building and innovation INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more consistent, predictable and reliable returns 01 Consumer segmentation driving innovation OPTIMISE
Slide 26: Case study – needs-based segmentation model
For personal use only CASE STUDY – NEEDS-BASED SEGMENTATION MODEL NEED STATE KEY DRIVERS OF PURCHASE AND CONSUMPTION HEAT & EAT I need something easy and quick to make. But it needs to be quality and premium and close to something I could make. WEEKEND I cook for pride – I’m looking for social curre
Slide 27: Case study – rebuilding our innovation model
For personal use only CASE STUDY – REBUILDING OUR INNOVATION MODEL • Informed by consumer needs and segmentation INTERNAL CATEGORY WORKSHOPS • Category workshops identified unmet needs and GATE 1 CATEGORY WORKSHOPS WITH areas for improvement MID LIFE CHECK- THE CUSTOMER LEARNINGS AND RESULTS • Built
Slide 28: Case study – differentiated innovation
For personal use only CASE STUDY – DIFFERENTIATED INNOVATION AMERICAN BITES FREE RANGE BONELESS WYNGZ SALT & VINEGAR TENDERS • Purchasers in the recent campaign • Unique, first to category premium • Built out Foodservice product range • Capitalising on flavor trends had never purchased Ingham’s raw
Slide 29: Unlocking Our Potential: Sales
For personal use only CHRIS CROESE CHIEF CUSTOMER OFFICER UNLOCKING OUR POTENTIAL SALES 28
Slide 30: Sustained demand growth for poultry
For personal use only SUSTAINED DEMAND GROWTH FOR POULTRY PER CAPITA CONSUMPTION OF MEAT TYPES (KG PER PERSON P.A.) 80kg 70kg 60kg 50kg Chicken meat – kg 40kg 30kg Pig meat – kg Beef and veal – kg 20kg 10kg Lamb and mutton – kg 0kg Source: ABARES. 29
Slide 31: Sales focus areas
For personal use only SALES FOCUS AREAS Objective: To work with customers to unlock incremental value through best-in-class innovation and account management INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more consistent, predictable and reliable returns 01 Stronger collabor
Slide 32: Case study – from transactional supplier to strategic partner
CASE STUDY – FROM TRANSACTIONAL For personal use only SUPPLIER TO STRATEGIC PARTNER • Identified opportunities to increase collaboration EXAMPLE FROM TO with key customers across the business • To address this opportunity, we <20% of ING 100% of ING − Clearly defined bilateral expectations Leveragin
Slide 33: Unlocking Our Potential: Feed
For personal use only ANNE-MARIE MOONEY FEED BUSINESS DIRECTOR UNLOCKING OUR POTENTIAL FEED 32
Slide 34: Feed focus areas
For personal use only FEED FOCUS AREAS Objective: Deliver high quality nutrition to allow our farmers to grow and deliver healthy and consistent birds to our plants at the lowest possible cost INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more consistent, predictable and re
Slide 35: Our national network mitigates risk to delivered cost
OUR NATIONAL NETWORK MITIGATES For personal use only RISK TO DELIVERED COST AND CREATES A COMPETITIVE ADVANTAGE TOTAL (‘m MT) QLD (‘m MT) % 5 year average 23.2 5 year average 1.0 4% ’18/19E. 17.0 ’18/19E. 0.4 2% ’19/20F – Oct 19 17.5 ’19/20F – Oct 19 0.4 2% WA (‘m MT) % NSW (‘m MT) % 5 year average
Slide 36: Case study – Innovation Farm
For personal use only CASE STUDY – INNOVATION FARM • New state-of-the-art research farm in Queensland commissioned in October 2019, to deliver R&D for feed and farming initiatives in a controlled environment • Key network asset to deliver on our goal to be the leader in consumer protein innovation a
Slide 37: Q&A
For personal use only Q&A 36
Slide 38: Break
For personal use only BREAK 37
Slide 39: Unlocking Our Potential: Supply Chain and Network Overview
For personal use only TIM SINGLETON CHIEF OPERATIONS OFFICER UNLOCKING OUR POTENTIAL SUPPLY CHAIN AND NETWORK OVERVIEW 38
Slide 40: Our fully integrated operating model
For personal use only OUR FULLY INTEGRATED OPERATING MODEL • Value is created across a highly complex and inter-related supply chain • Cost, capability and complexity creates barriers • Balance and operational excellence are key to margin capture FEED MILLING FURTHER PROCESSING SALES AND MARKETING C
Slide 41: Unlocking value across the supply chain
For personal use only UNLOCKING VALUE ACROSS THE SUPPLY CHAIN PRIMARY FURTHER NUTRITION FARMING PROCESSING PROCESSING • Maximise genetic • Introduce new • Improve operating • Improve operating potential technology to practices to practices to • Innovate to − Reduce mortality increase yields and incr
Slide 42: Supply chain and network focus areas
For personal use only SUPPLY CHAIN AND NETWORK FOCUS AREAS Objective: Ensure planning and decision making across the network is co-ordinated to safely deliver high quality products to our customers consistently and reliably at the lowest cost INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATI
Slide 43: We must standardise operations
For personal use only WE MUST STANDARDISE OPERATIONS IMPROVE STEP CHANGE ASSET REALISE CAPACITY THE BASICS EFFICIENCY POTENTIAL • Run processes to specification • Standardise and right size • Identify current bottlenecks staffing • Maintain our assets • Define solutions to increase • Implement best
Slide 44: Unlocking Our Potential: Farming
For personal use only ALAN PARNHAM GENERAL MANAGER FARMING UNLOCKING OUR POTENTIAL FARMING 43
Slide 45: Farming focus areas
For personal use only FARMING FOCUS AREAS Objective: Set the standard for animal welfare and deliver a consistent size and quality bird to our processing plants at the lowest cost INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more consistent, predictable and reliable return
Slide 46: Case study – Hatchcare
For personal use only CASE STUDY – HATCHCARE Improved living conditions for more animal-friendly production Feed and water for stronger and healthier day-old chicks MicroClimer technology for superior and uniform chick quality Bio-security for healthy chick production Energy efficiency for
Slide 47: Unlocking Our Potential: Primary Processing
For personal use only ART LANKFORD GENERAL MANAGER PRIMARY PROCESSING UNLOCKING OUR POTENTIAL PRIMARY PROCESSING 46
Slide 48: Primary processing focus areas
For personal use only PRIMARY PROCESSING FOCUS AREAS Objective: Maximise throughput and yield to deliver our products at the lowest unit cost, whilst maintaining the highest standards of employee and food safety and quality INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more
Slide 49: Case study – unlocking latent capacity
For personal use only CASE STUDY – UNLOCKING LATENT CAPACITY • Internal review identified spin chillers as the major bottleneck impacting Capital spend (2 plants) plant throughput at Somerville (VIC) and Osborne Park (WA) primary processing facilities ~$14m • New spin chillers will double capacity a
Slide 50: Case study – delivering yield upside
For personal use only CASE STUDY – DELIVERING YIELD UPSIDE • Internal review identified rapid breast deboners Incremental yield +1.0% performing significantly below global standards Incremental breast meat harvested per week 40 tpw • Minor capital required to unlock incremental +1.0% breast yield Re
Slide 51: Unlocking Our Potential: Further Processing
For personal use only JOHN ALLDIS GENERAL MANAGER FURTHER PROCESSING UNLOCKING OUR POTENTIAL FURTHER PROCESSING 50
Slide 52: Case study – Turkey turnaround
For personal use only CASE STUDY – TURKEY TURNAROUND A horizontal view of the business can unlock incremental value TURKEY ACTUAL MARGIN ($) Siloed ways of working coupled with short term planning was resulting in sub-optimal decision making +90% John Alldis introduced a “Back to Basics” program to
Slide 53: Further processing focus areas
For personal use only FURTHER PROCESSING FOCUS AREAS Objective: Maximise throughput and yield to deliver our products at the lowest unit cost, whilst maintaining the highest standards of employee and food safety and quality INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more
Slide 54: Case study – unlocking capacity and efficiency potential
CASE STUDY – UNLOCKING CAPACITY For personal use only AND EFFICIENCY POTENTIAL INITIAL STEPS TAKEN TO MANAGE SIGNIFICANT EP AVERAGE WEEKLY PRODUCTION VOLUME PRODUCTION GROWTH AT EDINBURGH PARKS (EP) +60% 1. Simplify production scheduling − Reduce changeovers − Longer runs 2. Debottleneck process to
Slide 55: Unlocking Our Potential: New Zealand
For personal use only JONATHAN GRAY CEO NEW ZEALAND UNLOCKING OUR POTENTIAL NEW ZEALAND 54
Slide 56: New Zealand focus areas
For personal use only NEW ZEALAND FOCUS AREAS INGHAM'S STRATEGIC FRAMEWORK SHORT TERM PRIORITY INITIATIVES To deliver more consistent, predictable and reliable returns 01 Complete rebuild of broiler farm infrastructure OPTIMISE INNOVATE REINVEST Continued improvement in operational THE CORE TO GROW
Slide 57: Broiler Farm Infrastructure
For personal use only BROILER FARM INFRASTRUCTURE 56
Slide 58: Operational efficiency and performance
For personal use only OPERATIONAL EFFICIENCY AND PERFORMANCE • Productivity improvements being realised, however further opportunities remain • Detailed review of primary plant layout, flow and capacity underway to unlock efficiency improvements • Primary Plant automation with breast deboner • Intro
Slide 59: Case study – brand architecture
For personal use only CASE STUDY – BRAND ARCHITECTURE Best Better Good 58
Slide 60: Summary
For personal use only JIM LEIGHTON CHIEF EXECUTIVE OFFICER & MANAGING DIRECTOR SUMMARY 59
Slide 61: Outlook
For personal use only OUTLOOK • Trading to plan through Q1 FY2020 • EBITDA run rate expected to be lower in the 1H than the 2H of FY2020 reflecting impact of feed prices and Further Processing (as previously discussed) • Adoption of AASB16 will have no economic impact to the group • Initial recognit
Slide 62: We are unlocking our potential
For personal use only WE ARE UNLOCKING OUR POTENTIAL • Attractive sector • Strong foundations • Clear strategy • Material efficiency and capacity upside • Right team to deliver 61
Slide 63: Q&A
For personal use only Q&A 62
Slide 64: For personal use only
For personal use only