New Annual Results Presentation - Astral Foods · 2020. 2. 4. · Revenue Profit before interest and tax Earnings per share @ 3 691 cps Headline earnings per share @ 3 712 cps Total

Annual Results Presentation

for the 12 months ended 30 September 2018

2

“

”

AGENDA

Business Overview Page 3 / Slide 3

Operational Overview Page 5 / Slide 8

Industry Trends Page 12 / Slide 21

Financial Overview Page 16 / Slide 29

Outlook Page 22 / Slide 42

Additional Information Page 24 / Slide 46

BUSINESS OVERVIEW

HIGHLIGHTS

Business

Overview

Operational

Overview Industry Trends

Financial

Overview Outlook

4

A majority of the key drivers of profitability were in Astral’s favour

– “stars were aligned”

Feed input costs reduced notably due to lower maize prices on

the back of a bumper maize crop for 2017

Supply and demand balance during the year gave pricing

support

Further improvements in on-farm poultry production efficiencies

were achieved

No further incidents of bird flu and related costs were

experienced during the period under review

Contribution to profitability from an improved performance across

all business units

Revenue

Profit before interest and tax

Earnings per share @ 3 691 cps

Headline earnings per share @ 3 712 cps

Total dividend for the year @ 2 050 cps

94%

88%

79%

5%

KEY FINANCIAL INDICATORS

Business

Overview

Operational


Financial

Overview Outlook

5

94%

6

DIVISIONAL HIGHLIGHTS

Business

Overview

Operational


Financial

Overview Outlook

Poultry

Feeding cost decreased

Bird performance improvement

Sales volumes flat

Sales realisations up

No impact from HPAI (bird flu)

Feed

Maize prices notably down

General market improvement

Higher internal feed required

External sales volumes up

Rand per ton margin up

Other Africa

Higher profits – improved performance from Mozambique and Swaziland

6

465

116 18

519

93

1 087

1 942

356

-

500

1 000

1 500

2 000

2 500P

BIT

F20

17

Raw

mate

rial

co

st

Feed

co

nve

rsio

ne

ffic

ien

cy

Bro

ile

r s

ale

sv

olu

me

s

Bro

ile

r s

ellin

gp

ric

e

Bir

d f

lu c

os

t2017 Oth

er

PB

IT F

20

18

THE YEAR IN PERSPECTIVE

Business

Overview

Operational


Financial

Overview Outlook

7

(R million)

R855 million

“

”

8

9

POULTRY DIVISION

Business

Overview

Operational


Financial

Overview Outlook

Operating profit - R million

Operating profit up 127.7%

• Feed price down 4.0%

• Selling price contribution

• Net margin 13.7% F2017: 6.4%

Revenue - R million

Revenue up 6.9%

• Broiler sales volumes up 0.2%

• Broiler sales realisations up 7.1%

9 916 10 604

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

11 000

F2017 F2018

638

1 453

-

100

200

300

400

500

600

700

800

900

1 000

1 100

1 200

1 300

1 400

1 500

F2017 F2018

10

POULTRY DIVISION

Business

Overview

Operational


Financial

Overview Outlook

Results for the year ended September 2018 are a significant improvement

on the comparable period

Feed input costs reduced due to lower maize prices on the back of a record

maize crop for 2017 and an above average crop for 2018

Supply and demand balance gave pricing support in the first half of the

reporting period, whilst the second half reflected a weaker market and softer

selling prices

Imports during the period were higher than the comparable period,

averaging 48 305 tons (≈ 8,6 million birds per week)

Further improvements in on-farm poultry production efficiencies,

benefitting broiler live cost through an improved feed conversion efficiency

No further incidents of bird flu and related costs were experienced during

the period

11

POULTRY DIVISION – PRODUCT MIX

Business

Overview

Operational


Financial

Overview Outlook

49%

3%

4% 14%

7%

23%

F2018

437 506 Tons Volume increase ≈ 0,2%

49%

4%

4%

14%

7%

22%

F2017

436 695 Tons

12

BROILER PRODUCTION PERFORMANCE

Business

Overview

Operational


Financial

Overview Outlook

92%

94%

96%

98%

100%

102%

104%

106%

108%

F2013 F2014 F2015 F2016 F2017 F2018

Slaughter age Live weight Average daily gain

Key indicators base-lined to 100% in F2013


Business

Overview

Operational


Financial

Overview Outlook

65%

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

125%

130%

F2013 F2014 F2015 F2016 F2017 F2018

Mortality rate Feed conversion rate Efficiency factor (PEF)


13


Business

Overview

Operational


Financial

Overview Outlook

85%

90%

95%

100%

105%

110%

115%

120%

125%

F2013 F2014 F2015 F2016 F2017 F2018

Broiler feed price index Feed conversion index Feeding cost index


14

“

”

15

FEED DIVISION

Business

Overview

Operational


Financial

Overview Outlook



• Net margin 7.4% F2017: 5.9%

• Improved trading conditions

Revenue - R million

Revenue down 5.8%

• Raw material costs down

• Average selling prices down 11.2%

• Sales volumes up 6.1%

6 583 6 198

-

1 000

2 000

3 000

4 000

5 000

6 000

7 000

F2017 F2018

391

457

-

100

200

300

400

500

F2017 F2018

16

FEED DIVISION

Business

Overview

Operational


Financial

Overview Outlook

SAFEX yellow maize prices decreased notably for the period under review

F2018 avg. R2 098 per ton (F2017: R2 464) down R366 per ton year-on-year

Internal feed sales increased by 6.0% due to an increase in broiler

production numbers in F2018

External feed sales increased by 6.1% as all livestock sectors benefitted

from lower feed costs

Expense increases were contained to 4.7% year-on-year across all seven

feed mills

The average net margin increased (on a Rand per ton basis) for the period

under review

17

FEED DIVISION – SALES MIX

Business

Overview

Operational


Financial

Overview Outlook

60%

6%

21%

13%

60%

6%

22%

12%

F2017

1 329 771 Tons

F2018

1 410 283 Tons Volume increase ≈ 6.1%

18

“

”

19

OTHER AFRICA DIVISION (Zambia, Mozambique & Swaziland)

Business

Overview

Operational


Financial

Overview Outlook

20



• Net margin 7.8% F2017: 6.3%

• Mozambique & Swaziland

improved performance

Revenue - R million

Revenue down 3.7%

• Raw material costs down

• Sales volumes up 4.0%

• Average selling prices down 7.4%

427 411

-

50

100

150

200

250

300

350

400

450

F2017 F2018

27

32

-

5

10

15

20

25

30

35

F2017 F2018

INDUSTRY TRENDS

SAFEX YELLOW MAIZE PRICE

Business

Overview

Operational


Financial

Overview Outlook

22

Source: CJA Strategic Risk Brokers

SAFEX YELLOW MAIZE PRICE vs. CBOT IN RAND TERMS

23

Business

Overview

Operational


Financial

Overview Outlook


DURBAN SOYA MEAL PRICE

24

Business

Overview

Operational


Financial

Overview Outlook


POULTRY IMPORTS PER MONTH

25

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

50 000

55 000

60 000

65 000

70 000

Oct-

13

Dec-1

3

Fe

b-1

4

Ap

r-14

Ju

n-1

4

Au

g-1

4

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

Ju

n-1

7

Au

g-1

7

Oct-

17

Dec-1

7

Fe

b-1

8

Ap

r-18

Ju

n-1

8

Au

g-1

8

Total poultry imports 6 per. Mov. Avg. (Total poultry imports)

Tons

Business

Overview

Operational


Financial

Overview Outlook

Source: SAPA

BROILER SELLING PRICES

26

Business

Overview

Operational


Financial

Overview Outlook

Source: Own Data

80%

90%

100%

110%

120%

130%

140%

150%

160%

Oct-

12

Dec-1

2

Fe

b-1

3

Ap

r-13

Ju

n-1

3

Au

g-1

3

Oct-

13

Dec-1

3

Fe

b-1

4

Ap

r-14

Ju

n-1

4

Au

g-1

4

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

Ju

n-1

7

Au

g-1

7

Oct-

17

De

c-1

7

Fe

b-1

8

Ap

r-18

Ju

n-1

8

Au

g-1

8

Broiler selling price index Six month average

BROILER PRICE vs. FOOD PRICE INFLATION

27

Business

Overview

Operational


Financial

Overview Outlook

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

80%

90%

100%

110%

120%

130%

140%

150%

160%

170%

Oct-

12

Dec-1

2

Fe

b-1

3

Ap

r-13

Ju

n-1

3

Au

g-1

3

Oct-

13

Dec-1

3

Fe

b-1

4

Ap

r-14

Ju

n-1

4

Au

g-1

4

Oct-

14

Dec-1

4

Fe

b-1

5

Ap

r-15

Ju

n-1

5

Au

g-1

5

Oct-

15

Dec-1

5

Fe

b-1

6

Ap

r-16

Ju

n-1

6

Au

g-1

6

Oct-

16

Dec-1

6

Fe

b-1

7

Ap

r-17

Ju

n-1

7

Au

g-1

7

Oct-

17

Dec-1

7

Fe

b-1

8

Ap

r-18

Ju

n-1

8

Au

g-1

8

Broiler selling price index SA food price index

Source: Own Data

-30%

-20%

-10%

0%

10%

20%

30%

40%

Oc

t-1

2

De

c-1

2

Feb

-13

Ap

r-1

3

Ju

n-1

3

Au

g-1

3

Oc

t-1

3

De

c-1

3

Feb

-14

Ap

r-1

4

Ju

n-1

4

Au

g-1

4

Oc

t-1

4

De

c-1

4

Feb

-15

Ap

r-1

5

Ju

n-1

5

Au

g-1

5

Oc

t-1

5

De

c-1

5

Feb

-16

Ap

r-1

6

Ju

n-1

6

Au

g-1

6

Oc

t-1

6

De

c-1

6

Feb

-17

Ap

r-1

7

Ju

n-1

7

Au

g-1

7

Oc

t-1

7

De

c-1

7

Feb

-18

Ap

r-1

8

Ju

n-1

8

Au

g-1

8

% Change in broiler feed price % Change in poultry selling price

CHANGE IN POULTRY SELLING PRICE vs. FEED PRICE

28

Business

Overview

Operational


Financial

Overview Outlook

Source: Own Data

FINANCIAL OVERVIEW

INCOME STATEMENT

30

Business

Overview

Operational


Financial

Overview Outlook

Year ended 30 September

2018

R million

2017

R million

Restated

2017

R million

Revenue 12 979 12 417 12 351

Operating profit 1 942 1 056 1 048

Operating profit margin 15.0% 8.5% 8.5%

Profit on sale of investment - 31 31

Profit before interest and tax 1 942 1 087 1 079

PBIT margin 15.0% 8.7% 8.7%

Net finance income / (cost) 52 (15) (15)

Profit before tax 1 994 1 072 1 064

Tax (560) (311) (309)

Profit for the period 1 434 761 755

Headline earnings 1 439 741 735

EPS – Cents 3 691 1 963 1 948

HEPS – Cents 3 712 1 914 1 899

5%

84%

86%

89%

88%

94%

% change

79%

1,3 1,7 2,2 2,3 3,3 3,6

4,4 4,6 5,1 5,0 5,3 5,8 6,0 7,0

8,7 9,1 9,9

10,6

2,0 2,7

2,7 2,7

2,5 2,7 3,5 5,1

4,0 3,6 3,5 4,3 4,9

5,5

6,2 7,2

6,6 6,2

2,8

3,7 3,9 4,1

4,8 5,2

6,3 6,9

7,4 7,0 7,2

8,2 8,5

9,6

11,3 12,0

12,4 13,0

0,000

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Poultry Feed Other Africa External revenue

GROUP ANNUAL REVENUE

31

Business

Overview

Operational


Financial

Overview Outlook

(R billion)

124 90 174 238 383 494 476 163 282 262 353 137

-112

104 661 59

638 1453

79 130 153

151

214

272 333

385

261 281

282

289

329

354

423

485

391

457

203 220

328 389

597

766 809

548 581 585

674

477

262

493

1101

549

1086

1942

7,3%

5,9%

8,3%

9,6%

12,3%

14,8%

12,8%

6,7% 6,6%

8,4%

9,3%

5,8%

3,1%

5,1%

9,8%

4,6%

8,7%

15,0%

0

0,02

0,04

0,06

0,08

0,1

0,12

0,14

0,16

-120

380

880

1380

1880

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Poultry Feed Other Africa Profit on Sale of Investment

GROUP ANNUAL OPERATING PROFIT

32

(R million)

Business

Overview

Operational


Financial

Overview Outlook

140

-3 -117 5

45 59 351 310 194

-135 22

616 836 617

154

135 156 173 157 197

186 237

233

252 184

207

191

266

324

153 59

203 213 280

550 551

429

120 212

875

1044

898

1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18

Poultry Feed Other Africa Change in feed price Change in broiler selling price

GROUP SIX MONTHLY OPERATING PROFIT

33

Business

Overview

Operational


Financial

Overview Outlook

(R million)

September 2018

R million

September 2017

R million

Restated

% change

Non-current assets 2 409 2 228

Net working capital 1 189 869

Current assets (excl. cash) 2 943 2 468

Current liabilities (excl. borrowings) (1 754) (1 599)

Non-current liabilities (excl. borrowings) (650) (610)

Net assets 2 948 2 487

Net (surplus cash) (789) (552)

Equity 3 737 3 039

Total 2 948 2 487

BALANCE SHEET

34

Business

Overview

Operational


Financial

Overview Outlook

37%

19%

10%

7%

19%

19%

23%

8%

42%

CAPITAL EXPENDITURE

35

Business

Overview

Operational


Financial

Overview Outlook

Twelve months ended 30 September 2018

R million

2017

R million

Depreciation 152 149

Total capex spend 356 150

Commitments 1 401 148

Total spend and committed 1 757 298

CAPITAL EXPENDITURE F2018

36

Business

Overview

Operational


Financial

Overview Outlook

2018

R million

Processing plant equipment 113

Breeder farm refurbishment 22

Water augmentation project Western Cape 16

HPAI mitigation project 42

Listeria mitigation project 17

Sub-Total 210

Other: normal on-going capex 146

Total capex spend F2018 356

CAPITAL EXPENDITURE COMMITMENTS

37

Business

Overview

Operational


Financial

Overview Outlook

R million

Total commitments 1 401

Major projects: 1 271

Festive expansion (Phase 1 & 2 – 800 000 bpw) 875

Mountain Valley expansion (200 000 bpw) 203

Meadow Feeds Standerton silo complex 53

New feed mill Zambia 140

WORKING CAPITAL

38

Business

Overview

Operational


Financial

Overview Outlook

For the twelve months ended 30 September 2018

R million

2017

R million

Variance

R million

Current assets 2 943 2 468 475

Biological assets 770 658 112

Inventory - Poultry 532 258 274

- Feed 255 185 70

- Other Africa 50 50 -

Trade receivables 1 204 1114 90

Receivables – investment sold 16 56 (40)

Other receivables 116 147 (31)

Current liabilities (1 754) (1 599) (155)

Trade payables (1 324) (1 151) (173)

Other payables (430) (448) (18)

Net working capital 1 190 869 321

STATEMENT OF CASH FLOWS

39

Business

Overview

Operational


Financial

Overview Outlook

For the twelve months ended 30 September 2018

R million

2017

R million

Cash operating profit 2 156 1 436

Working capital movement (425) (71)

1 731 1 365

Tax paid (516) (310)

Net interest received / (paid) 58 (11)

Capital expenditure (358) (180)

915 864

Dividends paid (729) (108)

Government grant received - 29

Other cash flow items 45 7

Loans (repaid) - (35)

Movement in cash equivalents 231 757

Effect of exchange rate changes 6 -

Opening balance 552 (205)

Closing balance 789 552

272 326 487

631

958

1286 1381

840 890 960 1148

787

434

864

2016

965

1914

3712

90 108 168 230 380 585 700 700 700 760 810 656 222 440 1150 490 1055 2050

F2

00

1

F2

00

2

F2

00

3

F2

00

4

F2

00

5

F2

00

6

F2

00

7

F2

00

8

F2

00

9

F2

01

0

F2

01

1

F2

01

2

F2

01

3

F2

01

4

F2

01

5

F2

01

6

F2

01

7

F2

01

8

Headline earnings per share Dividend per share

HEADLINE EARNINGS & DIVIDEND PER SHARE

40

Business

Overview

Operational


Financial

Overview Outlook

(cents per share)

Record profits in F2018 with profit margin at 15.0% (F2017: 8.7%)

Cash flow generated from operations R1 731 million in F2018

Net surplus cash at year-end of R789 million

Final dividend of 1 050 cps within the Group’s liquidity capability

Full year dividend of 2 050 cps at 1.8 times cover (up 94%)

IN SUMMARY

41

Business

Overview

Operational


Financial

Overview Outlook

OUTLOOK

Raw material prices are on an upward trend and will impact Astral‟s

largest input cost, namely feed making up 67% of broiler live cost

The impact of international trade wars and geopolitics on key input

costs, including coarse grains and fuel

The negative impact of high fuel prices on consumer disposable

income and continued pressure on poultry selling prices

The impact of the new minimum wage will increase production costs

however could lead to higher levels of consumer discretionary spend

High levels of poultry imports from Brazil and the USA, expected to

continue

The on-going risk of bird flu, however prevention strategies to manage

this threat are in place, albeit at additional associated costs

Policy uncertainty around land expropriation without compensation

and the impact on property rights and capital investment

43

Business

Overview

Operational


Financial

Overview Outlook

POTENTIAL NEGATIVE INFLUENCES

Improved political situation in South Africa and the region

Indications of a more “business friendly” environment in South Africa,

with key government departments engaging with the poultry industry

The European Partnership Agreement (EPA) safeguard duty finally

imposed on poultry imports into South Africa from the EU

Progressive genetic improvement of the Ross broiler breed will

continue to support the group‟s best cost strategy

Sufficient international and local coarse grain stocks

Expansion in Astral‟s poultry processing capacity (up 20%) over the

next three years (capex of R1.1 billion) supports the President‟s

investment drive and stimulus plan announced during the year

44

Business

Overview

Operational


Financial

Overview Outlook

POTENTIAL POSITIVE INFLUENCES

“

”

45

ADDITIONAL INFORMATION

WHAT WE SAID IN MAY 2018

47

General business confidence improved as well as the prospect

for foreign direct investment following the election of a new

President for the country

A bumper maize crop in 2017 and the country set to harvest an

above average maize crop in 2018 will stand us in good stead

over the next period from a feed input cost point of view

Further unlocking the inherent genetic potential of the Ross

broiler breed through optimised broiler nutrition therefore

cementing Astral‟s best cost strategy

Higher level of competitiveness as producers have expanded

broiler production numbers, and the pork industry has been

forced to sell product at lower prices following the listeria

outbreak

Continued high levels of poultry imports especially from the

United States of America and Brazil, equivalent to over 40% of

local poultry production

HPAI remains a threat and major concern for the poultry

industry with the upcoming winter season

?

KEY FINANCIAL RATIOS

48

37 36

48 48

51

65

55

31 31

30

34

23

12

20

41

19

36

61

31 33

39 39

46

49

45

25 26 26

29

21

13

19

36

28

42

8,9

7,5

10,0

11,4

13,9

16,5

14,5

9,3 9,9

11,0

7,4 6,5

11,1

9,9

16,1

7,3 8,3

9,6

12,3

14,8

12,8

8,0 7,8 8,4

9,3

5,8 5,1

9,8

4,6

8,7

15,0

5,5 5,5 6,1

4,7 4,1 4,4 4,3 4,7 4,8

3,6 3,7 4,0 3,8 3,9 4,2 4,1 4,1 4,1

-

5,0

10,0

15,0

20,0

25,0

30,0

0

10

20

30

40

50

60

70S

ep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Sep

-16

Sep

-17

Sep

-18

RONA ROE EBITDA margin PBIT margin Asset turn

KEY FINANCIAL INDICATORS

49

8,53 10,79

14,34 17,36

23,83

28,28

33,47 34,24 35,38 37,43

41,36 41,65 44,16

49,95

61,05 61,07

78,15

96,06

23 20

21

29

17

9

19

12

15

11 10

16

21 18

24

34

24

34

26

22 21

12

14

14

9

3

7

15

9

2

10 0 0

0

10

20

30

40

50

60

70

80

90

100S

ep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

Sep

-15

Sep

-16

Sep

-17

Sep

-18

NAV share Working capital days Net Debt / Equity

12,30%

14,81%

19,82%

25,00%

27,80%

28,73%

27,61%

23,85%

19,86%

10%

15%

20%

25%

30%

0

25

50

75

100

125

150

175

200

225

250

275

300

325

350

375

2012 2013 2014 2015 2016 2017 2018 2019E 2020F

End Stock Maize stock to use ratio

WORLD CORN ENDING STOCKS

50

Million Tons


SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND

51

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19E 2019/20F

Actual Actual Actual Actual Estimate Estimate Forecast

Carry In (1 May) 1 414 589 2 074 2 471 1 093 3 689 2 326

Crop Estimate 11 811 14 250 9 955 7 779 16 744 12 931 12 347

Retentions 433 163 309 837 932 890

Sagis Delivery 11 072 13 817 9 794 7 469 15 907 11 999 11 457

Minus early deliveries 0 0 0 450 0 0 0

Imports 80 65 1 964 2 237 0 0 0

Total Supply 12 566 14 471 13 831 11 727 17 000 15 688 13 783

Domestic Usage Food 4 583 4 840 4 698 4 808 4 872 5 145 5 063

Domestic Usage Feed 4 715 5 041 5 520 5 004 5 399 5 308 5 435

Gristing, withdrawn & released 480 376 293 278 358 281 314

Total Domestic Usage 9 777 10 257 10 512 10 090 10 630 10 734 10 812

Exports & Sundries 2 122 2 153 848 993 2 925 2 628 1 814

Plus early deliveries 0 0 0 450 0 0 0

Carry Out (30 Apr) 590 2 062 2 471 1 093 3 446 2 326 1 156

No of days usage 25 73 86 40 118 79 39

STU 4,96% 16,62% 21,75% 9,87% 25,42% 17,41% 9,16%

Marketing year (May to April)

'000 tons


1414 590 2062 2471 1093 3689 2326 1156

12,23%

4,96%

16,62%

21,75%

9,87%

28,31%

17,41%

9,16%

0%

5%

10%

15%

20%

25%

30%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19E 2019/20F

Carry out Maize stock to use ratio

SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND

52

„000 Tons


EL NIÑO SOUTHERN OSCILLATION - FORECAST

53 Source: International Research Institute for Climate and Society (IRI) – Columbia University

SOUTHERN AFRICA - VEGETATIVE HEALTH INDEX

54

VHI of previous year VHI of current year

Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI)

BROILER FEED – INGREDIENT INCLUSION & COST CONTRIBUTION

55

65,0 45,7 63,3 43,6 61,4 39,6 61,1 38,0 55,6 29,8 54,3 26,7

11,4

14,9

15,6

20,3

16,8

22,3

14,0

18,6

14,0

17,9

13,2

17,9

9,1

8,6

6,4

5,6

6,9

5,4

6,2

4,0

6,1

3,3

5,7

4,1

6,4

14,9

6,7

14,0

7,3

17,2

7,8

18,8

8,6

21,5

9,1

21,3

0,2

0,9

0,4

1,2

0,5

1,7 0,4

1,5 0,5

1,7

0,7

2,3

7,5

10,3

7,3

10,3

6,6

9,1 9,9

13,8

14,6

19,8

16,6

22,2

0,3

4,7

0,3 5,0

0,4 4,7

0,5

5,4

0,5

6,0

0,4

5,4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1H16Incl.

1H16Contr.

2H16Incl.

2H16Contr.

1H17Incl.

1H17Contr.

2H17Incl.

2H17Contr.

1H18Incl.

1H18Contr.

2H18Incl.

2H18Contr.

Maize Soybean MealSunflower Meal OtherFish Meal F/Fat and Extr SoyVitamins, Minerals and Medication.

Source: Own Data

BRAZIL, EU & USA PRODUCT COST BENCHMARK

56

Ex BRAZIL – December 2018

FROZEN LEG QUARTERS BULK PACKED

CIF DBN US$ per ton TON 1 050.00 1 050.00 1 050.00 SA COST

R/$ exchange rate R$ 14.20 14.40 14.60

Rand per ton TON 14 910.00 15 120.00 15 330.00 21 100.00

Rand per kg KG 14.91 15.12 15.33 21.10

Duty per kg KG 37% 37% 37% -

Clearance costs KG 0.65 0.65 0.65 -

COST INTO STORAGE KG 21.08 21.36 21.65 21.10

Storage KG 0.50 0.50 0.50 -

Distribution KG 0.80 0.80 0.80 0.92

Marketing, Administration, Finance KG 0.80 0.80 0.80 0.96

TOTAL COST KG 23.18 23.46 23.75 22.98

EUROPE – December 2018


CIF DBN € per ton TON SA COST

€ exchange rate R$

Rand per ton TON 21 100.00

Rand per kg KG 21.10

Duty per kg KG -

Clearance costs KG -

COST INTO STORAGE KG 21.10

Storage KG -

Distribution KG 0.92

Marketing, Administration, Finance KG 0.96

TOTAL COST KG 22.98

Source: Own Estimates

BRAZIL, EU & USA PRODUCT COST BENCHMARK

57

EUROPE Ex Belgium, Ireland, Spain, Poland with Safeguard Duty @ 35,3% – December 2018


CIF DBN € per ton TON 900.00 900.00 900.00 SA COST

R/€ exchange rate R$ 16.20 16.40 16.60

Rand per ton TON 14 580.00 14 760.00 14 940.00 21 100.00

Rand per kg KG 14.58 14.76 14.94 21.10

Duty per kg KG 35.3% 35.3% 35.3% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 22.48 22.72 22.96 22.98

Ex USA – December 2018


CIF DBN US$ per ton TON 650.00 650.00 650.00 SA COST

R/$ exchange rate R$ 14.20 14.40 14.60

Rand per ton TON 9 230.00 9 360.00 9 490.00 21 100.00

Rand per kg KG 9.23 9.36 9.49 21.10

Duty per kg KG 37.00% 37.00% 37.00% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 15.40 15.57 15.75 22.98


LOCAL BROILER PRODUCTION & MARKET SHARE

58

Local broiler production ≈ 19.1 million birds per week

27%

19%

8% 7%

8%

4%

4%

23%

Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other


LOCAL BROILER PRODUCTION & MARKET SHARE

59

Avg. poultry imports ≈ 8.6 million birds per week

(12 months ending September 2018)

18%

13%

6%

5%

6% 3%

2%

16%

31%

Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports

Source: SAPA & Own Estimates

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

F2015 42 363 81 170 108 674 137 660 168 965 209 337 247 672 285 532 327 180 375 717 417 427 460 255

F2016 37 789 83 258 126 866 165 602 200 461 258 134 306 385 360 899 414 947 460 098 502 138 551 209

F2017 50 324 101 279 135 812 173 187 212 399 278 057 319 933 367 106 409 557 453 981 499 952 551 867

F2018 46 348 92 223 140 823 188 065 228 295 281 102 327 753 374 838 412 638 461 454 523 205 579 661

0

100 000

200 000

300 000

400 000

500 000

600 000

F2015 F2016 F2017 F2018

TOTAL POULTRY IMPORTS (CHICKEN, MDM, TURKEY)

60

F2017 50 324 50 955 34 533 37 375 39 212 65 658 41 876 47 173 42 451 44 424 45 971 51 915

F2018 46 348 45 875 48 600 47 242 40 230 52 807 46 651 47 085 37 800 48 816 61 751 56 456

% Var -7,9 -10,0 40,7 26,4 2,6 -19,6 11,4 -0,2 -11,0 9,9 34,3 8,7

bpw* 8,2 8,1 8,6 8,4 7,1 9,4 8,3 8,4 6,7 8,7 11,0 10,0

*bpw ≈ million birds per week

Tons

Source: SAPA

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

61

Brazil 60,6%

EU 14,0%

Argentina 5,9%

US 15,6%

Other 3,9%

Country of origin for poultry imports - 2017

Brazil 62,1%

EU 11,0%

Argentina 6,5%

US 16,8%

Other 3,6%

Country of origin for poultry imports - September 2018 YTD

551 867 tons 579 661 tons

Source: SAPA

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

62 Source: SAPA

Country Imports (tonnes) 2015 2016 2017 2018 YTD

Brazil 241 180 233 787 337 476 272 451 Netherlands 61 995 110 344 112 170 United Kingdom 15 985 45 647 1 366 206 Spain 27 090 39 620 11 138 258 United States 331 26 573 87 059 73 837 Belgium 35 613 24 256 23 451 23 Argentina 27 718 18 713 32 816 28 328 Ireland 13 336 15 556 24 746 21 437 Hungary 10 547 13 174 0 0 Denmark 9 508 9 779 16 884 22 388 Canada 131 8 884 14 431 5 342 Germany 554 6 073 134 168 Poland - 4 773 72 3 292 Thailand 7 616 2 078 4 019 6 254 Chile 408 360 1 770 3 427 Australia 264 254 984 268 France 24 895 105 4 3 Uruguay 182 0 25 359 Switzerland 72 0 0 73 Swaziland 35 0 24 258

SOUTH AFRICAN PROTEIN PRICE COMPARISON

63 Source: SAPA, FNB, Red Meat Industry Forum

Chicken Pork Beef Mutton

Feed Conversion Rate 1.5 2.2 5.5 5.0

Per Capita Consumption 38,9 kg 4,6 kg 17,8 kg 3.2 kg

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Jan

-13

Ma

r-13

Ma

y-1

3

Ju

l-13

Sep

-13

No

v-1

3

Jan

-14

Ma

r-14

Ma

y-1

4

Ju

l-14

Sep

-14

No

v-1

4

Jan

-15

Ma

r-15

Ma

y-1

5

Ju

l-15

Sep

-15

No

v-1

5

Jan

-16

Ma

r-16

Ma

y-1

6

Ju

l-16

Sep

-16

No

v-1

6

Jan

-17

Ma

r-17

Ma

y-1

7

Ju

l-17

Sep

-17

No

v-1

7

Jan

-18

Ma

r-18

Ma

y-1

8

Ju

l-18

Sep

-18

cents / kg

INDUSTRY MATTERS

POULTRY IMPORTS

65

The EPA (SADC-EU Economic Partnership Agreement) safeguard for poultry

imports from the EU was published on 28 September 2018

Under the provision the safeguard duty on EU frozen bone-in portions will be as

follows:

35.3% from 28 September 2018 up to and including 11 March 2019

30% from 12 March 2019 up to and including 11 March 2020



This duty levels the playing field somewhat with imports from Brazil and the US

that are subject to the 37% import duty currently in place for those exporting countries

(plus an anti-dumping duty on the US - for which the AGOA 65 000 ton annual quota is

exempt)

Imports from the EU over the past 18 months have been substantially lower than

historical levels, from a time where record EU imports were received in November

2016. This is due to the prevalence of highly pathogenic bird flu in many EU countries

affecting EU trade with South Africa

Import volumes previously supplied by the EU have simply been switched to Brazil,

which is currently the largest exporter of poultry products to South Africa

HIGHLY PATHOGENIC AVIAN INFLUENZA (HPAI)

66

HPAI remains a global challenge, however, world-wide cases of HPAI in

2018 were much lower when compared to 2017

In South Africa, 193 cases of HPAI H5N8 have officially been reported

across 8 provinces (Mpumalanga, Limpopo, Gauteng, KwaZulu Natal, Free

State, North West, Eastern Cape and Western Cape) over a 14 month

period from the 21st of June 2017 to the end of September 2018

The number of HPAI H5N8 outbreaks in South Africa has been reported as

33 in commercial chickens (broiler breeders, commercial layers and

commercial ducks), 47 on ostrich farms, 80 in wild bird (finches, sparrows,

yellow-billed ducks, penguins, terns, white-faced duck, gannets and black

swans), 23 cases in birds kept for hobby (and zoos) purposes and 10 in

backyard chickens

No reported outbreaks of HPAI were experienced by the local poultry

industry since May 2018

LISTERIOSIS

67

On 5 December 2017 the Minister of Health announced a Listeriosis

outbreak in South Africa. This was ultimately declared the worlds worst

Listeriosis outbreak on record with the death toll exceeding 200 people.

Through SAPA the poultry industry engaged with the DOH, NICD, DAFF

and DOA throughout the process, to counter the misrepresentation of the

poultry industry as the primary cause for concern, and to ensure pragmatic

reaction to the crisis. Production was suspended at one poultry abattoir near

Hartebeespoort, but this was not linked to the outbreak strain.

The outbreak strain (ST6) was identified in a processed meat facility in

Polokwane, as announced on 4 March 2018. One of South Africa’s largest

poultry producers was also implicated at the time because the outbreak

strain was detected on polony casings, however this could not be traced to

their manufacturing facilities.

Both businesses experienced severe disruptions to the relevant supply

chains, which also had a delayed secondary impact on both pork and

poultry supply.

Astral was not implicated with the outbreak at any stage. Review of the

company’s food safety management system, the internationally benchmarked FSSC

22 000 accreditation, proved that the Astral’s management of the risk of food borne

pathogens is both world class, and robust in execution. This review included three

independent evaluations of Astral’s Listeria readiness.

Astral did take additional precautionary steps during this period, which have been

adopted as the “new normal” going forward. These included:

increased testing and analysis for Listeria

revised cleaning and sanitation protocols

revitalization of the company’s hygiene campaigns,

improvements in processing based on HACCP methodologies

Renewed and on going staff training.

LISTERIOSIS

68

SOUTH AFRICAN POULTRY ASSOCIATION (SAPA)

69

SAPA has over the past year undergone a restructuring exercise

reflecting a better organised association more reflective of the industry

Both the broiler and layer organisations in this structure will be

independently headed up by newly appointed General Managers

spearheading specific interests in both areas of the industry

Both organisations are managed by appointed boards consisting of

member representatives, the General Manager and a nominated Chairman

SAPA is governed by an appointed board comprising members of both

organisations and led by an appointed Chairperson

Membership of both organisations has improved markedly following the

restructure, with the broiler membership representing approximately 73% of

the local weekly broiler production numbers

A statutory levy has been approved for the table egg industry, and together

with the improved membership of both organisations SAPA is in a better

position to lead important matters of industry interest

Chris Schutte

Chief Executive Officer

Tel : +27 (0) 12 667 5468

Fax : +27 (0) 86 504 2002

email: [email protected]

www.astralfoods.com

Daan Ferreira

Chief Financial Officer

Tel : +27 (0) 12 667 5468

Fax : +27 (0) 86 504 1602

email: [email protected]

Documents

New Annual Results Presentation - Astral Foods · 2020. 2. 4. · Revenue Profit before interest and tax Earnings per share @ 3 691 cps Headline earnings per share @ 3 712 cps Total