Farm Pride Foods Limited · ASX:FRM
Farm Pride Foods — Shareholder Meeting (February 2021)
31 slides from Farm Pride Foods's shareholder meeting presentation, Feb 22, 2021
Slide 1: Farm Pride Foods Ltd 2020 AGM CEO Presentation
Farm Pride Foods Ltd 2020 AGM CEO Presentation “RESILIENCE” 22nd February, 2020 Presented By: Daryl BIRD, CEO, Farm Pride Foods Ltd
Slide 2: Disclaimer
Disclaimer This presentation dated 22nd February 2020 provides additional comment on the Annual Report for the 12 months ended 30 June 2020 of Farm Pride Foods Ltd Limited (The ’Company’) and accompanying information released to the market. As such, it should be read in conjunction with the explanat
Slide 3: Agenda
Agenda • Industry overview Industry Market trends Observations • The evolving business of Farm Pride • Farm Pride Foods Ltd FY20 Results • The 3 year journey so far and matters subsequent • Value adding and innovation • Moving forward 3 Farm Pride | CEO Presentation AGM 2020
Slide 4: Industry overview
Industry overview
Slide 5: Industry overview: key industry metrics
Industry overview Key industry metrics Share of category by egg type Market segmentation Annual Annual Growth Growth 2020–2025 2015–2020 1.0% 2.8% Source: IBIS World Egg Farming in Australia Report May 2020 Source: IBIS World Egg Farming in Australia Report May 2020 5 Farm Pride | CEO Presentation A
Slide 6: Industry overview: concentration of egg market
Industry overview Concentration of egg market Market player concentration Major players - share • The east coast states represent over 85% of egg sales in step with population • Market share of the total business is highly concentrated across 5-6 suppliers • FRM share has dropped approx. 3% given AI
Slide 7: Industry overview: volatility and capital intensity
Industry overview Volatility of egg market Capital intensity • The egg market is volatile • Supply fluctuations, feed prices, animal disease, shifts in demand and legislative changes all influence revenue volatility. • The egg industry is highly capital intensive with investment increasing over the
Slide 8: Industry overview: purchasing costs rising, profit declining
Industry overview Purchasing costs rising Profit declining • Rising costs driven by feed (drought), consumables (new laying systems e.g. CF and FR) and compliance • Some cost reprieve in 2020 with declining wheat and feed prices • Profits in general decline and future earnings will be further exacer
Slide 9: Industry overview: key market trends
Industry overview Key market trends (now and mid term 2 - 4 years) • Per capita egg consumption growing and should continue to grow, cheap source of protein • Key margin determiners remain Historical supply fluctuations – typically over and under supply (demand pretty constant apart from COVID imp
Slide 10: Industry overview: key market trends continued
Industry overview Key market trends cont’ (now and mid term 2 - 4 years) • Innovation in shell egg is minimal and unlikely to change. Limited opportunity to value add. • Retailers will continue to grow ‘own label’ range at expense of brands • Consolidation of supply base will continue particularly s
Slide 11: Industry overview: observations
Industry overview Observations • The industry can be summed up as VUCA Volatile Uncertain Complex Ambiguous • Industry earnings in FY21 will be down • Continuing ‘over’ and then ‘under’ supply conditions impact margins • Wheat while lower than previous years still relatively high for most suppliers
Slide 12: Industry overview: observations continued
Industry overview Observations cont’ Earnings • Box market supply to remain congested for next 2-3 years • Retail will be even more competitive next 12 months as retailers sure up future supply to meet 2025 • Industrial and foodservice customers will start to join the free range party • Incidence of
Slide 13: The evolving business of Farm Pride
The evolving business of Farm Pride
Slide 14: Farm Pride farming today (pre AI) and tomorrow (post AI)
Farm Pride farming today (pre AI) and tomorrow (post AI) Current farm structure Pre AI Future farm structure post AI and asset sale FY22 • Tomorrow we manage 10 farms in our national network Key movements • With vertically integrated and dedicated rearing capability at • Today we manage 11 farms in
Slide 15: Farm Pride value added (ingredients) today and tomorrow
Farm Pride value added (ingredients) today and tomorrow Ingredients and value added business Tomorrow Today (2025) Export • Unique capability in egg industry Industrial customers • Key margin driver Growth target Export • Key driver of innovation (production and New markets New value adding of key r
Slide 16: Farm Pride Foods Ltd FY20 Results
Farm Pride Foods Ltd FY20 Results
Slide 17: Farm Pride Foods Ltd – Headline Results FY20
Farm Pride Foods Ltd – Headline Results FY20 Revenue • Realigned shell eggs supply focus from box to retail - solid retail customer growth achieved +7% YOY $90.37M • Ingredient sales impacted by COVID Q4, with large sales declines in Foodservice channel – (7% decline YOY) 4.25% YOY growth EBITDA(Und
Slide 18: FY20 Headline results
FY20 Headline results Other developments and attainment • Development of management talent and capability Commercial Supply chain and procurement – additional resources and enhanced systems to better anticipate and manage supply • Margin & contribution fluctuations and drive cost out initiatives
Slide 19: Farm Pride Foods Ltd – Headline Results FY20
Farm Pride Foods Ltd – Headline Results FY20 ($’000) 2018 2019 2020 • Revenue UP Revenue 86,116 86,641 90,327 • Earnings EBITDA UP Earnings before Interest & Tax (EBIT) 858 (5,324) (3,099) Earnings before interest, tax, 5,386 1,092 2,672 • Net profit loss after tax DOWN depreciation and amortization
Slide 20: The 3 year journey so far and matters subsequent
The 3 year journey so far and matters subsequent
Slide 21: 3 Year, 3 phase plan initiated – Managing For Value
3 Year, 3 phase plan initiated – “Managing For Value” Strategy & initiatives – 3 distinct phases originally 2019 – 2021+ Sustainability • Approach business in 3 phases – target extended Reinvent 24 months to allow reset Farm Pride 3R’s Long Term post AI 24 months Plan distance travelled Earnings det
Slide 22: The journey so far…
The journey so far… Solid signs of recovery and as per plan, then detour for COVID and subsequent event AI • COVID impact on foodservice sales back end Q3 and into Q4 • Ingredient Sales decline of 30% almost immediate impacting group revenue by approx. 7% • Despite this business continues to perform
Slide 23: Value adding and innovation
Value adding and innovation
Slide 24: Value adding and innovation
Value adding and innovation • Achieving a strong innovation footing for the business in the next few years remains a key imperative • Converting our egg raw materials from our farms and other sources, using our internal capability and capacity provides Farm Pride the best chance of generating better
Slide 25: Value adding and innovation cont’
Value adding and innovation cont’ • Our new farm business intelligence management system (Power BI) is a good example of the sophistication we are now applying to managing our flocks for higher performance • Power BI is an automated tool which provides live time data from each farm and shed in one c
Slide 26: Value adding a key to higher earnings…
Value adding a key to higher earnings… 31.8% 25.1% 23.3% 14.4% 6.6% 6.9% 7.0% 4.6% 3.0% 0.6% Maggie Beer Farm Pride Sunny Queen Ridley Bega Cheese Inghams Huon Select Harvest Tassal Group A2 Milk Holdings Foods Corporation Revenue (A$m) $44.5 $90.2 $413.0 $967.9 $1,493.2 $2,555.3 $339.9 $247.9 $552.
Slide 27: Moving forward
Moving forward
Slide 28: An evolving roadmap to success in distinct phases
An evolving roadmap to success in 3 distinct phases OUTCOMES Review “Strong & Business & Market ENABLERS Sustainable identified Operating Platform Farms Strategic Systems Key metrics Priority REINVENT (FY21-FY22) Established…” Plans enhanced Ingredients established Focus Performance Driven Culture P
Slide 29: Moving forward next 12 months (FY21-FY22)
Moving forward next 12 months (FY21-FY22) • Key focus areas (continuing to realign and reinvent) • Reset and realign farm scale and operational response post AI • Continue to engage retail customers and seek growth opportunities around cage free transition • Continuing management review of initiativ
Slide 30: Our 3 year mission started well, but mother nature dealt us two blows
Our 3 year mission started well, but mother nature dealt us two significant blows – we had buttressed the business against such risk and we have now reset. We will recover, but the journey may take a little longer. We are a resilient business, and we are taking all steps necessary to return to a gro
Slide 31: Finish Questions?
Finish Questions?
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