Sanford Limited · NZX:SAN
Sanford — H1 2019 Earnings Presentation
22 slides from Sanford's earnings presentation, May 2019
Slide 1: For the six months ended 31 March 2019
_FOR THE SIX MONTHS ENDED fH, Foe?
Slide 2: Disclaimer
DISCLAIMER This presentation contains not only a review of operations, but also some forward looking statements about Sanford Limited and the environment in which the company operates. Because these statements are forward looking, Sanford Limited’s actual results could differ materially. Media relea
Slide 3: The safety, health and wellbeing of our people is the top priority
The safety, health and wellbeing of our people is the top priority • Sad loss of Steffan Stewart in a tragic • Extensive work previously undertaken to align accident on board the San Granit San Granit with regulatory and internal safety on 14 November 2018 requirements • Following this accident, a f
Slide 4: Climate change remains our top enterprise risk
Climate change remains our top enterprise risk • Warmer waters impacting by way of algal blooms, bio-fouling, adverse weather conditions • Continuing to mitigate effects of climate change through geographic spread, diversity and innovation
Slide 5: Challenging conditions mark the first half of FY19
Challenging conditions mark the first half of FY19, partly mitigated by strategy of focusing on value CATCH/HARVEST VOLUME SALES VOLUME REVENUE (Like for like***) ADJUSTED EBIT 55k GWT 39k PWT $272M $32.6M -13% -12% Flat -8% EBIT GW kg NPAT GROSS PROFIT % (Like for like***) INTERIM DIVIDEND 57c* $22
Slide 6: Value strategy driving adjusted EBIT improvement
Value strategy driving adjusted EBIT improvement Key Drivers of Half Year ADJUSTED EBIT change NZD m One-off -4m Timing -4m Fair Value +2m Strategy in Action +3m 6
Slide 7: Balancing growth and innovation with operational rejuvenation
Balancing growth and innovation with operational rejuvenation 2014 Creating value: commodity fish -> seafood -> beyond food 2019
Slide 8: Wild Catch
Wild Catch FRESH FROZEN Wild catch sales volumes -14% H1 performance down vs prior half year 50 40 GWT (000’s) Headwinds 30 20 • San Granit outage ($4.1m negative EBIT impact) 10 • Capacity constraints in our inshore fleet and unplanned 0 vessel outages reduced catch H1 17 H1 18 H1 19 • Toothfish pr
Slide 9: Wild Catch strategic priorities and outlook
Wild Catch FRESH FROZEN Strategic Priorities • Catching beautiful fresh fish using precision seafood harvesting (PSH) net technology • Moving hoki products further up the value chain, through • Improved crew training and retention • Improved cold chain controls on the vessels • Use of PSH technology
Slide 10: Greenshell Mussels
Greenshell Mussels MUSSELS H1 outperformed prior half year Greenshell mussel sales volumes -2% 20 Wins • Strong halfshell mussel pricing 15 GWT (000’s) • Product sales mix change driving margin 10 • Channel development has created strong demand at 5 increased returns • Full 6 months of 2 operational
Slide 11: Greenshell Mussels strategic priorities and outlook
Greenshell Mussels MUSSELS Strategic Priorities • Explore expansion of Sea to Me in USA and China • Selective spat breeding at SPATNZ - progressing well with excellent line retention from strategic spat deployments to new spat farms chosen for colder water and different fouling regime • Development
Slide 12: King Salmon
King Salmon SALMON Salmon sales volumes +13% 2,000 H1 outperformed prior half year 1,500 Wins GWT 1,000 • Greater volume available over Q1 due to improving focus on biomass management 500 • Margin growth resulting from investment in optimising - the S&OP process H1 17 H1 18 H1 19 • Increased pricing
Slide 13: Salmon strategic priorities and outlook
Salmon SALMON Strategic Priorities • Big Glory Bay brand activation and expansion in domestic and export markets NZ premium food service customers increased to 29 (+22 v Mar 18) Importers and distributors appointed in USA and Australia (building blocks for expansion in H2) • Continued infrastruc
Slide 14: Strategic priorities
Strategic priorities • Drive to leverage cross functional teams to ensure effective planning and review of business results ORGANISATIONAL • Hugely important system and data capability upgrade (Sancore) - further advanced with investment in a CAPABIILTY dedicated expert team • Focus on training to l
Slide 15: Strategic priorities
Strategic priorities • Continue to drive awareness and foot traffic to the Auckland Fish Market INNOVATION BRANDING • Integrate Fresh Catch E-commerce platform into Sanford & Sons fishmongers • Develop Nutraceutical NPD pipeline using a variety of marine based sources • Relationship building with iw
Slide 16: Sanford Strategy
Integrated thinking and delivery across our businesses Business Excellence Framework Sanford Strategy Sustainability as the Foundation PURPOSE AMBITION VISION We share the natural To be the Best Seafood goodness of our oceans with $1 EBIT GW kg by Company in the World uncompromising care 2023 ORGANI
Slide 17: Appendices
APPENDICES 17
Slide 18: Improving Gearing and Balance Sheet vs 2018 half year
Improving Gearing and Balance Sheet vs 2018 half year GEARING DEBT $168.8M DEBT / EBITDA* 28.4% -9% 2.06x FY18 2.11x TOTAL EQUITY * Rolling basis down from 31.7% $594M +1% Operating Cash Flow $10.4m Movement largely driven by timing of customer -55% receipts 18
Slide 19: YTD Capital Investments
YTD Capital Investments • Capital expenditure of $20.3m in H1 is more than double last year’s spend. • Focus has been on: • Supporting the brand and drive to sell more fresh fish through the Auckland Fish Market • ‘Beyond food’ strategy – 2 new dryers for Enzaq to expand mussel powder sales • Vessel
Slide 20: HY19 Financial Results - GAAP to Non GAAP reconciliation
HY19 Financial Results - GAAP to Non GAAP reconciliation Unaudited Six months ended 31 March ($m) 2019 2018 Revenue 265.0 272.8 Gross Profit 54.2 60.8 Reported Net profit (GAAP) 22.9 27.3 Add back (deduct): Net interest and tax expenses 13.2 15.2 Net gain on sale of investments, property, plant and
Slide 21: GAAP to Non-GAAP reconciliation
GAAP TO NON-GAAP RECONCILIATION Non-GAAP Profit measures Sanford's standard profit measure prepared under New Zealand GAAP is net profit. Sanford has used non-GAAP measures when discussing financial performance in this document. The Directors and management believe that these measures provide useful
Slide 22: USD FX hedging pattern for the year
USD FX HEDGING PATTERN FOR THE YEAR USD Exchange Rate Rolling 12 months comparison 2017/2018 Spot Rates Actual Achieved 2017/2018 Av Effective Rate 2017/2018 2018/2019 Spot Rates Actual Achieved 2018/2019 Av Effective Rate 2018/2019 0.7700 0.7500 0.7300 0.7100 0.6900 0.6700 0.6500 0.6300 Week 22