Australian Agricultural Company Limited · ASX:AAC
Australian Agricultural — FY2020 Earnings Presentation
32 slides from Australian Agricultural's earnings presentation, May 20, 2020
Slide 1: FY20 Results Presentation
For personal use only FY20 Results Presentation 20 May 2020
Slide 2: Disclaimer
Summary information only This presentation contains general information about the Australian Agricultural Company Limited and its consolidated entities (“AACo”) and its activities current as at thedate of this presentation. It is provided in summary and does not purport to be complete. You acknowled
Slide 3: Agenda
For personal use only Key Highlights 04 Progress against strategy 08 Regional Performance 12 Financial Performance 18 Operating Environment 23 Appendix 29 3
Slide 4: Strong second half performance building on positive momentum
For personal use only Strong second half performance building on positive momentum from Interim H1 results • Positive Operating profit and Operating cash flow delivered despite adverse seasonal conditions experienced during FY20 • Negligible impact on FY20 consolidated and regional results from COVI
Slide 5: COVID-19 impact on AACo
For personal use only COVID-19 has had a negligible impact on AACo’s FY20 financial results. FY21 impact remains uncertain. As announced to the ASX on 20 April, 2020, AACo acted early and decisively to protect our people and the remote communities in which we operate: • Adopting social distancing ac
Slide 6: Pivot into retail sales channels
For personal use only • Food Service remains an important sales channel for AACo. The strong growth and progress achieved in FY20 in the roll-out of our branded beef strategy with premium brand Westholme will be protected as we pivot further into retail in the current environment • Retail represents
Slide 7: Beef demand and meat market trends
For personal use only The demand for beef remains strong as consumer behaviour rapidly changes: • Focus on safety, quality, provenance and nutritional benefits of beef consumption • Promotions linking in safety, health and wellness themes are generally getting good traction • Wholesalers and distrib
Slide 8: Progress against strategy
For personal use only 8
Slide 9: Progress in FY20
Progress in FY20 For personal use only Execution of Margin through Focus on Key partnerships and Streamlined A high branded beef allocation and priority regions customer relationships Business performance strategy price culture • Wagyu meat sales • Wagyu meat • Strong growth • Renegotiation & • Oper
Slide 10: Portfolio of global brands
For personal use only AACo has a strong portfolio of global brands delivering into Foodservice, Retail and Wholesale channels Distributed to the world’s top Contemporary 4-5 Distribution into Trading brand sold fine dining restaurants star restaurants leading supermarkets into wholesale and High mar
Slide 11: Westholme brand rollout
Strong progress made in FY20 in the rollout of Westholme brand across key locations • Acceleration of launches in key cities • Global Meat Sales volume: +101% vs pcp • Global Meat Sales value: +155% vs pcp For personal use only • New partnerships forged across key regions • Launched brand in USA • W
Slide 12: Regional Performance
Regional sy Performance
Slide 13: Asia
For personal use only sushi Revenue Growth • Approximately +19% vs pcp • Approximately 66% of overall Wagyu meat sales Commercial Highlights • New distribution partnerships in Hong Kong, extension in Singapore • AACo retail brands supplied to supermarket chains throughout Asia • Strong retail sector
Slide 14: Asia market snapshots
For personal use only • Largest per capita • World’s largest imported beef • Grocery retail sector is • High end market consumers of beef in Asia market highly developed and • Beef consumption has • Strong customer • Significant protein deficiency in competitive risen, driven by young adult relation
Slide 15: North America
For personal use only Revenue Growth • Approximately +34% vs pcp • Approximately 7% of overall Wagyu meat sales Commercial Highlights • US based commercial team building distribution network • Distribution partnership agreements executed in seven cities • Predominantly high-end Food Service sector •
Slide 16: Europe/Middle East
For personal use only Revenue Growth • Approximately +17% vs pcp • Approximately 12% of overall Wagyu meat sales Commercial Highlights • EU distribution partnership restructured to support Westholme strategy • EU region sales manager embedded - focusing on 5 strategic countries - UK, France, Germany
Slide 17: Australia
For personal use only Revenue Growth • Approximately +16% vs pcp • Approximately 15% of overall Wagyu meat sales Commercial Highlights • Premium market shift proceeding to plan – growing branded sales programme and market presence • Achieved higher pricing while reducing overall volumes to re-focus
Slide 18: Financial Performance
For personal use only 18
Slide 19: Financial performance highlights
• Strong second half and continued positive operating profit and cash flow again delivered in the face of adverse seasonal conditions For personal use only o Operating profit (underlying) $15.2M vs $23.7M pcp o Second half FY20 delivered an additional $9.1M operating cash flow and $8.9M operating pr
Slide 20: Operating profit summary
$m FY 2020 FY 2019 Var $ Positive Operating2 Profit despite approximately $42M of elevated drought related costs For personal use only Meat sales 229.6 246.3 (16.7) o Operating profit2 (underlying) $15.2M vs $23.7M Cattle Sales 104.5 117.8 (13.3) o PCP result reflects one-off revenues from structura
Slide 21: Balance sheet
31 March 2020 31 March 2019 • Balance sheet strengthened further with over 8% or $69.7M improvement in Net Assets position Pre AASB 16 1 Post AASB 16 1 For personal use only $m • World class pastoral properties contributed net increase of $63.6M demonstrating the Adj Adj strength and quality of thes
Slide 22: Cash flow
For personal use only • Strongest operating cash flow since FY17 and achieved positive cash flow in $m FY 2020 FY 2019 Var $ four out of the last five halves o $20.1M operating cash flow for FY20 up from $13.0M in pcp Receipts from Customers 359.2 378.3 (19.1) Payments to Suppliers and Employees (32
Slide 23: Operating Environment
For personal use only 23
Slide 24: Sustainability highlights
For personal use only Custodians of the largest intact tropical savannah in the world - Investing in rural and regional Australia with 8% Three 47 approximately 98% of energy needs indigenous community living areas on our NT provided by properties, established relationships with local renewable sour
Slide 25: Enabling projects for sustainability journey
For personal use only Enabling projects for our sustainability journey: • Actively pursuing science-based measures for reducing enteric emissions • Resetting our supply chain to reduce reliance on road transport enhancing animal welfare and reducing diesel reliance • Increasing renewables in our ene
Slide 26: COVID-19 outlook and recovery
AACo continues to monitor developments in the COVID-19 pandemic and the measures For personal use only being implemented in the economy to control and slow the outbreak. Given the dynamic nature of these circumstances and the significant increase in economic uncertainty, the related impact of COVID-
Slide 27: Cattle slaughter and export outlook
For personal use only • Cattle Slaughter to drop 14% • Rain and restocking leads to lowest slaughter numbers in 20 years • Reduced production will lead to an 18% drop in exports in 2020 but COVID-19 will also change the export landscape *Source Rabobank Research Australia and NZ, COVID-19 and Aus Ag
Slide 28: AACo's unique value proposition
AACo presents a unique value proposition: For personal use only Provenance - Our beef is grown in the Australian outback and fed on a healthy diet of natural grasses and grains. Scale - The scale of our herd and properties allows us to adapt and evolve, to meet the needs of customers around the worl
Slide 29: Appendices
For personal use only CO THE ART OF AUSTRALIAN BEEF Appendices
Slide 30: Operating profit summary (pre AASB 16)
$m FY 2020 FY 2019 Var $ 214.0 15.6 For personal use only Meat sales 229.6 Cattle Sales 104.5 117.9 (13.4) Total Sales 334.1 331.9 2.2 Operating Expenditure (241.1) (236.2) (4.9) Cattle Purchases (22.3) (24.6) 2.3 Operating Gross Profit 70.7 71.1 (0.4) Change in Herd at Cost of Production (CoP) (11.
Slide 31: Impact of AASB 16 on key metrics
For personal use only Pre Post $m Adjust AASB161 AASB161 Profit & Loss Operating Profit 9.7 5.5 15.2 Net Profit before tax 47.5 (0.4) 47.1 Balance Sheet Total Assets 1,407.3 28.2 1,435.5 Total Liabilities 550.6 (28.5) 522.1 Cash Flow Net Operating Cash Flow 14.6 5.5 20.1 Net Financing Cash Flow 18.0
Slide 32: Thank you
For personal use only CO THE ART OF AUSTRALIAN BEEF Thank you
Australian Agricultural Company — FY2020 Earnings Presentation on 6ix