Inghams Group Ltd. · ASX:ING
Inghams — H1 2022 Earnings Presentation
27 slides from Inghams's earnings presentation, Feb 18, 2022
Slide 1: Inghams Group Limited 2022 Interim Results Presentation
Inghams Group Limited 2022 INTERIM RESULTS PRESENTATION 18 FEBRUARY 2022
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND 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), and is current at the date of this presentation, unless otherwise noted. It is information given in summ
Slide 3: Presentation of Financial Information
PRESENTATION OF FINANCIAL INFORMATION FINANCIAL INFORMATION IS PROVIDED ON A POST AASB 16 BASIS UNLESS OTHERWISE STATED On 5 November 2020 Ingham’s announced that it will report its underlying results inclusive of the new leases standard AASB 16. The underlying results in this document include the i
Slide 4: Group Performance Highlights
Group Performance Highlights ANDREW REEVES CEO & MANAGING DIRECTOR
Slide 5: Group Highlights
GROUP HIGHLIGHTS SOLID RESULTS WHILST MANAGING COVID-19 CHALLENGES § Results reflect the effective management of extended lockdowns and operational disruptions caused by COVID-19 § Headline financial results in-line with/ahead of prior corresponding period outcomes § Good progress on strategic initi
Slide 6: 1H22 Financial Summary
1H22 FINANCIAL SUMMARY STRONG VOLUME GROWTH OFFSET BY CHANNEL MIX SHIFT DUE TO EXTENDED LOCKDOWNS § Key financial metrics broadly in-line or above PCP despite 1H 22 1H 21 Variance % challenging operating conditions - Extended COVID-19 lockdowns in New South Wales, Group Core Poultry Volume (kt) 237.
Slide 7: Managing COVID-19 Challenges
MANAGING COVID-19 CHALLENGES EXTENSIVE OPERATIONAL AND MARKET DISRUPTION DUE TO PROLONGED LOCKDOWNS AND WORKFORCE IMPACTS § The first half was characterised by market and operational disruption due to extended COVID-19 lockdowns and isolation requirements § 1H result underpinned by Ingham’s consider
Slide 8: Observations Across Our Channels
OBSERVATIONS ACROSS OUR CHANNELS CORE POULTRY VOLUMES INCREASED 5.6% AND AVERAGE SELLING PRICE DECLINED 2.7% QSR FOOD EXPORT RETAIL SERVICE WHOLESALE • 1H sales in Australia saw • Volume levels similar to prior • Marginal Australian volume • Significant gains have been • Australian volume grew stron
Slide 9: Financial Results
Financial Results GARY MALLETT CHIEF FINANCIAL OFFICER
Slide 10: Profit & Loss
PROFIT & LOSS SOLID 1H RESULTS WITH STRONG VOLUME GROWTH OFFSET BY REVENUE MIX AND LOWER NET SELLING PRICE $M 1H 22 1H 21 Variance % Core Poultry volumes (kt) 237.1 224.6 12.5 5.6 § Volume: Growth in core poultry volume of +5.6% Total Poultry volumes (kt) 289.0 279.4 9.6 3.4 − Australian volume grow
Slide 11: Balance Sheet
BALANCE SHEET BALANCE SHEET WELL POSITIONED TO MANAGE COVID-19 DISRUPTION $M Dec-21 Jun-21 Variance Inventories/Biologicals1 374.3 328.5 45.8 § Inventories: Increased $45.8M due to an increase in the value of feed materials on hand with higher volumes of grain Receivables1 268.8 224.7 44.1 procured
Slide 12: Cashflow
CASHFLOW CONSISTENT CASH GENERATION AND CAPITAL MANAGEMENT INITIATIVES $M 1H 22 1H 21 Variance § Cash conversion ratio of 83.5%, reflective of 1H seasonal Statutory EBITDA 220.4 215.6 4.8 working capital cycle Non-cash items 3.1 0.8 2.3 EBITDA excluding non-cash items 223.5 216.4 7.1 § Capital Inves
Slide 13: Capital Management Outcomes
CAPITAL MANAGEMENT OUTCOMES CAPEX PROJECT DELAYS DUE TO COVID-19 IMPACTS; STRONG BALANCE SHEET POSITION Cashflow from Cashflow from strategic Cashflow from Cashflow from operations of $186.6M, an increase of 2.6% on 1HFY21. Cash conversion ratio of 83.5% in line with prior operations activities inte
Slide 14: External Feed Market Observations
EXTERNAL FEED MARKET OBSERVATIONS FEED COSTS HAVE INCREASED DUE TO VOLATILITY IN INTERNATIONAL MARKETS § Delivered feed cost contains cereal grains, protein meals, vitamins and minerals. Feed cost also includes transport and milling cost § Grain imported into New Zealand operations is purchased from
Slide 15: Segment Performance
Segment Performance ANDREW REEVES CEO & MANAGING DIRECTOR
Slide 16: Australia
AUSTRALIA BENEFITS OF STRONG VOLUME GROWTH OFFSET BY IMPACT OF UNCERTAIN Q2 MARKET CONDITIONS § Revenue: Core poultry revenue growth of +2.2% due to weak $M 1H 22 1H 21 Variance % pricing principally across the Wholesale channel, reflecting excess supply, while feed revenue declined -2.0% as custome
Slide 17: New Zealand
NEW ZEALAND MIX, PRICE INCREASES AND OPERATIONAL IMPROVEMENTS OFFSET IMPACT OF LOCKDOWNS ON VOLUME GROWTH § Core poultry volumes were flat on the prior period (pcp) reflecting $M 1H 22 1H 21 Variance % the fact that NZ went back into lockdowns, including a period at Alert Level 4 (AL4) Core Poultry
Slide 18: ESG
ESG ANDREW REEVES CEO & MANAGING DIRECTOR
Slide 19: Leadership in ESG
LEADERSHIP IN ESG NEW ZEALAND'S ONLY INDEPENDENTLY CERTIFIED PRODUCER OF NET CARBON-ZERO CHICKEN 19
Slide 20: Preparing for the Recovery
PREPARING FOR THE RECOVERY PRODUCTION CAN RECOVER QUICKLY AS OPERATING ENVIRONMENT IMPROVES § As operating conditions improve, in particular staffing and transport, the business is capable of recovering and adapting relatively quickly to meet customer and consumer demand, and with it, profitability
Slide 21: Summary
SUMMARY TIMING OF RECOVERY UNCERTAIN AS EFFECTS FROM PANDEMIC-RELATED DISRUPTION CONTINUE § Financial results in the first half were solid and reflected the effective management of prolonged COVID-19 lockdowns and restrictions in Australia and New Zealand § More significant impact expected in 2H due
Slide 22: Appendix
Appendix
Slide 23: AASB 16 Lease Impact
AASB 16 LEASE IMPACT Balance Sheet $M 1H 22 AU NZ 1H 21 Land & Buildings 849.4 737.9 111.5 803.1 Balance Sheet: Growers 494.7 414.2 80.5 556.5 § Land and Buildings: Ingham’s has a large leased property Equipment 3.3 2.0 1.3 9.2 portfolio. Average term remaining on the portfolio is 12.7 years Right-o
Slide 24: Profit & Loss Reconciliation
PROFIT & LOSS RECONCILIATION Excluded 1H 22 Underlying 1H 21 Underlying 1H 22 1H 22 AASB 16 Profit & Loss $M from (Pre AASB 16) (Pre AASB 16) Statutory Underlying Leases underlying (Reported) (Reported) Core Poultry volume (kt) 237.1 237.1 237.1 224.6 By-Products volume (kt) 51.9 51.9 51.9 54.8 Tota
Slide 25: EBITDA & NPAT Reconciliation
EBITDA & NPAT RECONCILIATION $M 1H 22 1H 21 Var % Significant Items excluded from underlying results: Statutory EBITDA 220.4 215.6 4.8 2.2 § (Profit)/Loss on sale of assets: relates to loss on sale of (Profit) / Loss on sale of assets 0.1 0.1 - Bungonia property in NSW and residential land in SA Res
Slide 26: Segment Reconciliation
SEGMENT RECONCILIATION Group Group Australia Australia NZ NZ $M 1H 22 1H 21 Var 1H 22 1H 21 Var 1H 22 1H 21 Var Statutory EBITDA 220.4 215.6 4.8 183.1 182.8 0.3 37.3 32.8 4.5 (Profit) / Loss on sale of assets 0.1 0.0 0.1 0.1 0.0 0.1 0.0 0.0 0.0 Impairment of assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.
Slide 27: Definitions
DEFINITIONS CERTAIN NON-IFRS INFORMATION IS REFERRED TO IN THIS PRESENTATION AND ARE DEFINED BELOW § EBITDA: Earnings before Interest, Tax, Depreciation and Amortisation § EBIT: Earnings before Interest and Tax § Gross Profit: Revenue less cost of sales § Underlying Gross Profit pre AASB 16: Underly