results presentationquantumfoods.co.za/downloads/2020/results-presentation-for-the-six... ·...
TRANSCRIPT
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Results Presentation
for the six months ended 31 March 2020
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Agenda
Business overviewH Lourens
Financial overviewA Muller
Operational overviewH Lourens
OutlookH Lourens
Appendix
2Quantum Foods Results Presentation for the six months ended 31 March 2020
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Business overview
H Lourens
3Quantum Foods Results Presentation for the six months ended 31 March 2020
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• Revenue 16%
• Operating profit 25%
• HEPS 24%
• Cash generated R62m
• Interim dividend per share 2020 6 cents
• Interim dividend per share 2019 8 cents
HEPS decreased due to continued downturn of egg industry
Business overview
4Quantum Foods Results Presentation for the six months ended 31 March 2020
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Business overview
1. Higher raw material prices
• SAFEX yellow maize 5.4%
• Landed soybean meal prices 10.3%
• Bran prices 17.2%
• Hominy chop prices 9.7%
• ZAR weakened by 6.2%
2. Lower egg prices
• SA layer stock Sept 2019 28.1m
March 2020 29.4m
3. Outbreak of COVID-19 at end of March 2020
5Quantum Foods Results Presentation for the six months ended 31 March 2020
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Financial overview
A Muller
6Quantum Foods Results Presentation for the six months ended 31 March 2020
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Statement of income
For the six months ended 31 March2020
Rm2019
Rm%
change
Revenue 2 439.1 2 103.3 16
Operating profit* 91.4 120.6 (24)
Income from associates 1.2 0.5
Net finance (cost)/income (0.8) 10.1
Profit before tax 91.8 131.2
Tax (25.2) (36.1)
Profit for the period 66.6 95.1
* Operating profit includes capital items 0.1 (0.5)
Adjusted operating profit 91.3 121.2 (25)
Adjusted operating margin 3.7% 5.8%
EPS − cents 34.5 45.2 (24)
HEPS − cents 34.5 45.4 (24)
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Revenue analysis
Total R2 439 million (2019: R2 103 million)
2019: R785m | 37%
ANIMAL FEEDS
R1 085m
EGGS
R578m
FARMING
R647m
AFRICA
R129m
2019: R537m | 26% 2019: R671m | 32% 2019: R110m | 5%
8
44% 24% 27% 5%
Quantum Foods Results Presentation for the six months ended 31 March 2020
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Segment results
Adjusted operating profit for the six months ended 31 March2020
Rm2019
Rm
Eggs (19.5) 27.3
Farming 67.8 52.0
Animal feeds 48.1 40.3
Other African counties 0.6 6.7
Head office costs (5.7) (5.0)
91.3 121.2
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IFRS 16 – Leases impact
Impact of day 1 adoption 1 October 2019IFRS 16 impact
Rm
Assets – increase 62.0
Liabilities – increase 71.9
Equity – decrease 9.9
10Quantum Foods Results Presentation for the six months ended 31 March 2020
For the six months ended 31 March 2020 IFRS 16 impact
Operating profit – increase – Rm 4.5
Earnings per share – increase – cents 0.2
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Statement of financial position
31 Mar 2020Rm
30 Sep 2019Rm
Non-current assets 1 259.2 1 181.5
Net working capital 758.9 693.2
Non-current liabilities (260.7) (250.8)
Cash 174.3 219.6
Total net assets 1 931.7 1 843.5
Borrowings – IFRS 16 (74.2) (6.1)
Equity 1 857.5 1 837.4
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Statement of cash flow
For the six months ended 31 March2020
Rm2019
Rm
Cash operating profit 144.5 165.5
Working capital outflow (73.1) (84.4)
Change in exchange rate 0.1 1.1
Cash effect of hedging activities 13.5 (10.3)
Tax paid (11.2) (20.0)
Net finance income (1.1) 10.1
Principal lease payments (10.7) (0.0)
Cash generated by operations 62.1 62.1
Dividends paid (48.2) (147.1)
Treasury shares acquired by subsidiary (4.3) (2.3)
Capital expenditure (55.2) (90.9)
Proceeds from sale of assets 0.2 0.9
Net cash decrease (45.3) (177.4)
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Capital expenditure
YTD Mar 2020Rm
Future cash flowRm
RSA
Expansion/efficiency 11.4 28.9
– Feed mills 4.3 18.4
– Layer hatchery 0.4 0.1
– Farms 0.6 2.3
– Packing stations 5.4 2.1
– Energy 0.7 6.0
Replacement/compliance 24.1 38.8
Africa
Expansion/efficiency 16.7 14.8
– Uganda layer farm and breeders 16.7 14.8
Replacement 3.0 3.2
55.2 85.8
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Operational overview
H Lourens
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Nova Feeds
• Volumes increased by 18%
• Load shedding had a negative financial
impact
• Margins improved by 2%
• Costs per unit well managed and remained
under control
• Product performance remains at a very
high level
Expansion successful
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• Breeder performance stable – above Lohmann standards
• Production of day-old pullets and point-of-lay hens increased
• Day-old pullet sales decreased but point-of-lay sales increased
• Commercial rearing performance above target
• Commercial layer performance now at acceptable levels
• Cost increases in breeder business above inflation but in commercial layer business cost per dozen decreased
• Decline in layer livestock demand from February 2020
Layer farming
Productivity improvement continues
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• Breeder performance slowly improving
• Hatchability not yet at an acceptable level
• Broiler performance at very high levels
• Overhead cost decreases in both day-old chicks and live broilers
• Production of day-old chicks increased by 4.1%
Broiler farming
Pleasing financial performance
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• Egg volumes increased by 16.3%
• Egg price decreased by 7.4%
• Operational efficiencies remained at high levels
• R/dozen overhead costs declined
• Margin pressure exacerbated by feed cost increase
• Initial indications that demand for eggs is improving
Nulaid Eggs
Supply and demand not in balance
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• Difficult industry conditions in all three countries
• Raw material prices increased, creating subdued demand for products
• Record maize prices in Zambia coupled with decline in productivity levels
• Breeder farm in Uganda ready for placement at end of March
• Mozambique business performed well in current conditions
• Positive contribution to bottom line from all three countries
Other Africa segment
Industry conditions remain difficult
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Outlook
Quantum Foods Results Presentation for the six months ended 31 March 2020
H Lourens
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Outlook 2020
Challenges
• COVID-19 makes any forward view dangerous
BUT
Quantum Foods’ response
• Raw material prices expected to increase due to exchange rate
• Egg price direction too uncertain to call
• Feed and broiler livestock volumes should stabilise
• Demand for layer livestock should decrease
• Zambian business should start improving
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22Quantum Foods Results Presentation for the six months ended 31 March 2020
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Appendix
23Quantum Foods Results Presentation for the six months ended 31 March 2020
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SAFEX yellow maize Rand per ton
24Quantum Foods Results Presentation for the six months ended 31 March 2020
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20
2 6342 707
2 460
3 351
2 099
2 367
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CBOT US$ soybean meal
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250
270
290
310
330
350
370
390
410
430
Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20
342
332
312316
306300
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Rand:US$ exchange rate
26Quantum Foods Results Presentation for the six months ended 31 March 2020
Sep 14 Mar 15 Sep 15 Mar 16 Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20
14.34
15.03
12.01
14.77
13.37
13.07
18.5
16.5
14.5
12.5
10.5
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Flockreplacement
90.00
100.00
110.00
120.00
130.00
140.00
Egg realisation movement
27Quantum Foods Results Presentation for the six months ended 31 March 2020
Normal cycle
AI effect
Sep 16 Mar 17 Sep 17 Mar 18 Sep 18 Mar 19 Sep 19 Mar 20
Ind
ex