Results presentation. for the six months ended 31 March 2017

Transcription

1 Results presentation for the six months ended 31 March 2017

2 AGENDA Business Overview: H Lourens Financial Overview: A Muller Operational Overview: H Lourens Outlook and management focus: H Lourens 2

3 BUSINESS OVERVIEW The raw material cycle has peaked Quantum Foods showed resilience through the cycle Conservative business model succeeded in RSA Rest of Africa business struggled Revenue Operating Profit HEPS Cash generated 13% 5% 16% R89m 3

4 RAND VS US$ Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 4

5 SAFEX YELLOW MAIZE RAND PER TON >R2 500/ton 20 months Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 5

6 FINANCIAL OVERVIEW

7 STATEMENT OF INCOME Six months ended 31 March 2017 Rm 2016 Rm % change Revenue Operating profit* Income from associates 0.4 (0.3) Net finance income Profit before tax Tax (13.1) (20.7) Profit for the period * Operating profit includes capital items Adjusted operating profit Adjusted operating margin 1.9% 2.2% EPS - cents HEPS - cents

8 REVENUE ANALYSIS Total R2 041 million (2016: R1 808 million) R763m 37% R498m 25% R675m 33% R105m 5% Animal feeds Eggs Farming Africa 2016: R631m 35% 2016: R483m 27% 2016: R622m 34% 2016: R72m 4% 8

9 SEGMENT RESULTS Adjusted operating profit for the six months ended 31 March 2017 Rm 2016 Rm Eggs (22.0) (20.9) Farming Animal Feeds Other African countries Head Office costs (9.4) 3.0 (7.6) (4.3) Total

10 STATEMENT OF FINANCIAL POSITION 31 Mar 2017 Rm 30 Sep 2016 Rm Non-current assets Net working capital Non-current liabilities (238.5) (236.1) Cash Total net assets Borrowings (6.4) (6.4) Equity

11 STATEMENT OF CASH FLOW Six months ended 31 March 2017 Rm 2016 Rm Cash operating profit Working capital inflow/(outflow) 50.1 (116.1) Change in exchange rates (0.1) 10.0 Cash effect from hedging activities (14.4) (1.7) Tax paid (16.2) (14.5) Net finance income Cash generated by/(utilised in) operations 89.2 (62.0) Shares repurchased (5.9) - Dividends paid (13.8) (23.3) Capital expenditure (26.9) (45.9) Business combinations - (50.2) Proceeds from sale of assets Net cash increase/(decrease) 49.5 (38.8) 11

12 CAPITAL EXPENDITURE Rm Approved 2017 YTD March 2017 Future cash flow Maintenance capex - SA Maintenance capex - Other African countries Olifantskop feed mill expansion Hartbeespoort broiler hatchery expansion Efficiency upgrade packstation Total

13 SENSITIVITIES Effect of movement in: Impact Movement Rand value EBIT/annum Selling prices Eggs dozens R/doz Eggs 1% 14c R10m Raw material costs Maize R/ton Eggs R100 R6m Soya bean meal R/ton Eggs R100 R1m Conversion costs Layer farm FCR kg/doz Eggs 1% 6c/doz R4m Assumptions: Feeds and farming business adjust selling prices with raw material cost changes 13

14 OPERATIONAL REVIEW: FEEDS

15 NOVA FEEDS Pleasing performance in volatile conditions Astute price/volume management especially towards end of maize season Segments of customer base under severe pressure - credit management key External volumes increased by 3.5% (excl Olifantskop) Operating margin per ton flat Continuous improvement in operational efficiencies 15

16 OPERATIONAL REVIEW: FARMING

17 FARMING OPERATIONS Solid performance in difficult conditions BROILER FARMING Growth in birds per week sold Market requirement for a smaller bird Margins consistent with major contracts Breeder results best in class Broiler South results remain excellent Broiler North results continue to improve Broiler asset utilisation close to full capacity Converting layer hatchery into broiler hatchery in Western Cape Volumes (kg) live birds sold 5.6% 17

18 FARMING OPERATIONS Slow improvement LAYER FARMING Margin in livestock business under pressure Breeder results exceed international standards Significant decline in day old pullet sales Increase in point of lay hen sales North and South breeder operations being consolidated to increase utilisation Commercial layer results slowly improved Opdiefontein layer farm being re-populated Closing two smaller layer farms in Gauteng/North West 18

19 OPERATIONAL REVIEW: EGGS

20 EGG BUSINESS Operational indicators improved New business model in Gauteng show early signs of success Grader replacement at Sova Packstation successful Consolidation of Safe Eggs and Sova pack station in process Terminated a contract farm supply agreement in Western Cape Improved product mix Costs well controlled Solid base established for further improvement Price 5.9% Volumes (1.8%) 20

21 OPERATIONAL REVIEW: REST OF AFRICA

22 REST OF AFRICA Margin pressure throughout value chain ZAMBIA Weak consumer demand due to macro economic factors High raw material costs due to regional drought Day old broiler over supply challenge Mega Eggs expansion of 35% now complete Egg and feed depot distribution model implemented Business remained profitable during challenging period 22

23 REST OF AFRICA UGANDA Drought persists pushing raw material prices upwards Unable to recover high raw material costs Avian Influenza outbreak had negative impact on sales prices due to border closures Farm and hatchery performance not up to expectations Two new key appointments made 23

24 REST OF AFRICA MOZAMBIQUE Mozambique economy under severe strain Experienced high mortalities (30%) due to extreme weather conditions Farm performance not on standard Re-aligned sales focus towards formal retail Expect lower raw material prices for H2 The next 18 months will be challenging 24

25 OUTLOOK AND MANAGEMENT FOCUS

26 OUTLOOK FOR 2 nd HALF OF 2017 The ZAR/USD remain crucial for raw material costs Further decline in per capita income in RSA anticipated Expect benefit of lower feed costs Egg business Layer livestock Zambia, Uganda and Mozambique Broiler & Feed business to remain stable Expect operational improvement from Rest of Africa 26

27 MANAGEMENT FOCUS AREAS Continuous improvement in layer farming operation Continuous re-positioning of egg business Execute price enhancement strategies in Zambia and Uganda Complete Olifantskop capacity increase Maintain margins in feed and broiler business Share buy back programme to continue 27