Interim Results Presentation - Astral Foods · Interim Results Presentation for the six months ended 31 March 2016 . 2 AGENDA Business Overview [# 03] Poultry Industry Trends [# 23]

Interim Results Presentation

for the six months ended 31 March 2016

2

AGENDA

Business Overview [# 03]

Poultry Industry Trends [# 23]

Financial Overview [# 30]

Industry & Other Matters [# 41]

Prospects [# 47]

Additional Information [# 50]

BUSINESS OVERVIEW

4

THE PERIOD IN PERSPECTIVE

Revenue

Operating profit

Earnings per share

Headline earnings per share 23%

The period under review reflects a weaker performance over the prior year, on the

back of higher feed prices and the inability to recover input costs

Financial

Indicators 22%

22%

1%

5

OUTLOOK AS AT NOVEMBER 2015

The slowing level of growth in the economy and higher unemployment levels will

continue to hamper an increase in the per capita consumption of poultry.

The strong El Niño and impact on planting conditions will negatively impact crop

yields leading to higher feed prices in the new reporting period.

Strong likelihood for the introduction of brining regulations which could result in

lower volumes for the industry, and higher selling prices for the consumer. These

regulations if promulgated at the proposed levels by DAFF, as well as the technical

format of the regulations, will likely be challenged by the industry.

The annual quota for 65 000 tons of US poultry imports, free of anti-dumping duties

negotiated around the renewal of AGOA, is likely to negatively impact local

producers as high levels of poultry imports continue unabated.

Further consolidation in the industry could follow as a result of the above as the

resilience of the poultry industry will be tested to the limit.

Astral‟s best cost integrated strategy has further strengthened on the back of

selective investments contributing to higher poultry volumes, improved efficiencies

and feeding costs into the future.

6

THE PERIOD IN PERSPECTIVE

Decrease in poultry sales volumes and stock build-up

Flat poultry selling prices due to supply and demand imbalance

Severe drought as a result of the strongest El Niño on record

Depreciation of the Rand impacting the cost of raw material imports

Increase in the live bird cost due to higher feed prices

Currency weakness severely impacts other African contribution

7

POULTRY DIVISION

8

POULTRY DIVISION - OVERVIEW

Operating profit - R million

Operating profit down 45%

• Net margin 4.4% 1H2015: 7.8%

• Feed costs up 13.9%

Revenue - R million

Revenue down 1%

• Broiler volumes down 4.4%

• Broiler selling prices up 1.5%

4,503 4,436

-

1,000

2,000

3,000

4,000

5,000

1H2015 1H2016

351

194

-

100

200

300

400

1H2015 1H2016

9

POULTRY DIVISION - OVERVIEW

Broiler sales volumes decreased leading to a build-up in poultry stock levels

and subsequent broiler production cutbacks (# 10)

Broiler selling prices increased marginally on the back of an imbalance of

supply and demand

Continued high level of poultry imports - avg. past six months ≈ 7,7 million

bpw with the first AGOA US poultry import shipments in March 2016

Average broiler feed prices increased for the period adversely impacting the

live bird production cost

Consistent broiler production efficiencies - slightly higher mortality rate (# 11)

Product mix improvement with fresh increasing and IQF reducing by 2% (# 10)

53%

4%

12%

6%

4%

21%

1H2015

239 534 Tons

10

POULTRY DIVISION - SALES

52%

3%

13%

6%

4%

22%

1H2016

228 905 Tons Volume decrease ≈ 4.4%

Product Mix

11

BROILER PRODUCTION PERFORMANCES

70%

75%

80%

85%

90%

95%

100%

105%

110%

115%

120%

F2010 F2011 F2012 F2013 F2014 F2015 1H2016

Mortality Feed conversion (FCR) Efficiency factor (PEF)

Key indicators base-lined to 100% in 2010

94%

96%

98%

100%

102%

104%

F2010 F2011 F2012 F2013 F2014 F2015 1H2016

Slaughter age Live weight Processing yield

Key indicators base-lined to 100% in 2010

12

BROILER PRODUCTION PERFORMANCES

13

POULTRY DIVISION - PROSPECTS

Continued high feed costs at least until rainfall patterns normalise

Higher poultry stock levels in general will exert pressure on selling prices

Production cutbacks to balance stock levels and lower seasonal demand

Broiler production efficiencies a key focus area to offset high feed price impact

USA export quota (AGOA) could contribute to already high poultry imports

Brining regulations may not impact volumes in second half of reporting period

14

FEED DIVISION

15

FEED DIVISION - OVERVIEW


Operating profit up 26%

• Net margin at 6.7% 1H2015: 6.3%

• Good contribution - Standerton

Revenue - R million

Revenue up 17%

• Sales volumes up 1%

• Avg. selling prices up 16%

2,961

3,461

-

1,000

2,000

3,000

1H2015 1H2016

186

233

-

50

100

150

200

250

1H2015 1H2016

16

FEED DIVISION - OVERVIEW

Feed volumes increased marginally by 1% due to higher external volumes (# 17)

Rand per ton margin improvement on prior year despite subdued market

SAFEX YM price – 1H16 avg. R3 406 per ton (1H15: R2 136)

Increased raw material costs were successfully recovered from the market

Rand per ton expense increases well managed below inflation

Standerton feed mill “attracts” volumes with production at 70% of rated capacity

17

FEED DIVISION - SALES

60%

7%

20%

13%

Meadow Feeds - Sales Mix

60%

8%

20%

12%

605 066 Tons 1H2016

712 962 Tons Volume increase ≈ 1%

1H2015

708 969 Tons

18

PROSPECTS

Current maize crop estimate of 7,1 million tons – smallest crop since 2007

El Niño impact dissipating - may benefit 2017 crop planting conditions (# 56)

High local maize prices set to continue with associated impact on feed prices

Soya prices increasing and are no longer expected to offer feed price relief

Global balance sheets for coarse grains remain exceptionally healthy

Maize import program into the coastal regions of South Africa to continue

19

OTHER AFRICA DIVISION

20

OTHER AFRICA DIVISION - OVERVIEW


Operating profit down 90%

• Net margin 0.5% 1H2015: 5.3%

• Exchange rate impacts

Revenue - R million

Revenue up 1%

• Feed volumes up 1%

• Hatchery volumes down

256 258

-

50

100

150

200

250

300

1H2015 1H2016

14

2

-

2

4

6

8

10

12

14

1H2015 1H2016

21

OTHER AFRICA DIVISION - OVERVIEW

Zambia

Profitability at Tiger Animal Feeds improved for the period although negatively

impacted by high diesel costs due to power outages

Tiger Chicks sales decreased by 9% over comparative period impacted by new

entrant / capacity and oversupply in the market

Mozambique

Profitability at Meadow Mozambique severely impacted by currency exchange

movements

Mozpintos sales volumes decreased by 10% over comparative period due to

poor market demand

Swaziland

Consistent performance from National Chicks Swaziland

22

OTHER AFRICA DIVISION - PROSPECTS

Zambia

Maize procurement positions in local currency will reduce exposure to USD

denominated raw material purchases

Uncertainty in the outlook for the Zambian Kwacha due to continued low

copper exports and approaching general elections

Mozambique

Severe economic downturn in Mozambique set to continue with poor foreign

exchange availability and continued weakness in the Meticais

Re-sizing and alignment of operations to limit potential losses and no further

investment in the short to medium term

Ethiopia

See update - slide # 51

23

INDUSTRY TRENDS

24

SAFEX YELLOW MAIZE PRICE

Source: CJA Strategic Risk Brokers

25

SAFEX SOYA BEANS PRICE


-

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

Jan

-10

Ma

r-1

0

Ma

y-1

0

Ju

l-1

0

Se

p-1

0

No

v-1

0

Jan

-11

Ma

r-1

1

Ma

y-1

1

Ju

l-1

1

Se

p-1

1

No

v-1

1

Jan

-12

Ma

r-1

2

Ma

y-1

2

Ju

l-1

2

Se

p-1

2

No

v-1

2

Jan

-13

Ma

r-1

3

Ma

y-1

3

Ju

l-1

3

Se

p-1

3

No

v-1

3

Jan

-14

Ma

r-1

4

Ma

y-1

4

Ju

l-1

4

Se

p-1

4

No

v-1

4

Jan

-15

Ma

r-1

5

Ma

y-1

5

Ju

l-1

5

Se

p-1

5

No

v-1

5

Jan

-16

Ma

r-1

6

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

26

POULTRY IMPORTS PER MONTH

Tons

EU anti-dumping duties imposed

Source: SAPA

57 673 tons

12.3

3

12.8

3

13.5

1

13.3

4

13.4

2

13.2

0

13.3

8

13.4

6

13.1

8

12.7

9

12.8

6 13.5

6

13.9

1 1

4.9

0

15.5

3

14.5

1

13.6

6

13.2

1

13.4

2

13.1

5

12.6

7

12.5

1 1

3.4

0

15.0

3 15.7

9

15.5

5

14.8

2

13.8

5

14.0

8

15.5

3

15.3

5

15.2

4

15.0

7

15.4

2

15.4

4

16.0

1

16.2

7

16.2

6 17.0

5

16.1

5

16.6

0

16.8

8

16.9

7

17.1

3

17.2

3

15.9

4 1

6.9

6

16.7

4

17.4

4 18.4

8

18.6

8

17.6

9

17.9

3

18.3

2

18.6

5

19.1

8

18.8

2

18.2

3

18.0

0

17.8

8

18.2

8 1

9.2

6

19.1

5

18.0

2

18.6

9

18.2

5

11.00

11.50

12.00

12.50

13.00

13.50

14.00

14.50

15.00

15.50

16.00

16.50

17.00

17.50

18.00

18.50

19.00

19.50

20.00

20.50

21.00

Oc

t-1

0

De

c-1

0

Feb

-11

Ap

r-11

Ju

n-1

1

Au

g-1

1

Oc

t-1

1

De

c-1

1

Feb

-12

Ap

r-1

2

Ju

n-1

2

Au

g-1

2

Oct-

12

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-14

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

Oct-

15

De

c-1

5

Feb

-16

Broiler selling price Six month average

27

INDUSTRY BROILER SELLING PRICES

Source: SAPA

Rand per kilogram

28

BROILER PRICE VS. FOOD PRICE INFLATION

Source: SAPA, CJA Strategic Risk Brokers & SBG Securities

70

75

80

85

90

95

100

105

110

115

120

125

130

135

140

145

150

155

160

70

75

80

85

90

95

100

105

110

115

120

125

130

135

140

145

150

155

160

Oc

t-0

8D

ec-0

8F

eb

-09

Ap

r-0

9J

un

-09

Au

g-0

9O

ct-

09

De

c-0

9F

eb

-10

Ap

r-1

0J

un

-10

Au

g-1

0O

ct-

10

Dec-1

0F

eb

-11

Ap

r-1

1J

un

-11

Au

g-1

1O

ct-

11

De

c-1

1F

eb

-12

Ap

r-1

2J

un

-12

Au

g-1

2O

ct-

12

De

c-1

2F

eb

-13

Ap

r-1

3J

un

-13

Au

g-1

3O

ct-

13

De

c-1

3F

eb

-14

Ap

r-1

4J

un

-14

Au

g-1

4O

ct-

14

De

c-1

4F

eb

-15

Ap

r-1

5J

un

-15

Au

g-1

5O

ct-

15

De

c-1

5F

eb

-16

Ind

ex

(O

cto

ber

20

08

= 1

00

)

Broiler selling price index SA food price index

Poly. (Broiler selling price index) Poly. (SA food price index)

Median food price across all categories up 12.1% y-o-y

vs.

Average poultry selling price increase up 2% y-o-y

29

CHANGE IN BROILER SELLING PRICE VS FEED PRICE

Source: SAPA & Own Data

-30%

-20%

-10%

0%

10%

20%

30%

40%

Oc

t-1

0

De

c-1

0

Feb

-11

Ap

r-1

1

Ju

n-1

1

Au

g-1

1

Oc

t-1

1

De

c-1

1

Feb

-12

Ap

r-1

2

Ju

n-1

2

Au

g-1

2

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

% Change in feed price % Change in broiler selling price

30

FINANCIAL OVERVIEW

31

ABRIDGED STATEMENT OF COMPREHENSIVE INCOME

Six months ended 31 March 2016

R million

2015

R million % change

Revenue 5 823 5 755

Operating profit 429 550

Operating profit margin 7.4% 9.6%

Net finance costs (4) (10)

Share of profit in associates - 2

Profit before tax 425 542

Tax (124) (154)

Profit for the period 301 388

Headline earnings 299 387

EPS – Cents 777 999

HEPS – Cents 774 1 001

1%

22%

22%

23%

23%

23%

22%

3,319 3,534

3,744 3,663 3,591 3,415

3,552 3,675

4,039 4,122 4,219 4,290

4,700 4,902

5,755

5,511

5,823

407

141

279 302 304 281

375

299 324

153

59

208 213 280

550 551

429

0

200

400

600

800

1000

1200

1400

1600

1800

2000

0

1000

2000

3000

4000

5000

6000

1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16

External Revenue Operating Profit Margin %

32

GROUP SIX MONTHLY REVENUE AND PROFITABILITY

(R million)

2,581 2,449

2,606 2,652

2,878 2,956 2,952 3,049

3,317

3,650

4,503

4,237 4,436

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16

Revenue Change in realisations (SAPA) Change in volumes

33

POULTRY – SIX MONTHLY REVENUE

(R million)

1,847 1,730 1,708

1,770

2,175 2,152

2,397 2,519 2,550

2,956 2,961

3,275

3,461

0

0

0

1

1

1

1

1

2

1000

1500

2000

2500

3000

3500

4000

4500

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16

Revenue Change in feed price Change in volumes

34

FEED – SIX MONTHLY REVENUE

(R million)

134 128 229 124 140

-3 -117

5 45 59 351 310 194

151 130

133

149 154

135 156 173 157 197

186

237

233

304 281

375 299 324

153

59

203 213

280

550 551

429

-0.1

0.1

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

-120

-20

80

180

280

380

480

580

680

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16

Poultry Feed Other Africa Change in feed price Change in realisations (SAPA)

35

GROUP SIX MONTHLY OPERATING PROFIT

(R million)

36

ABRIDGED STATEMENT OF FINANCIAL POSITION

March 2016

R million

September 2015

R million % change

Non-current assets 2 235 2 234

Net working capital 1 036 776

Current assets (excl. cash) 2 673 2 261

Current liabilities (excl. borrowings) (1 637) (1 485)

Non-current liabilities (excl. borrowings) (570) (582)

Net assets 2 701 2 428

Net debt 242 57

Loans 59 83

Cash and cash equivalents 183 (26)

Equity 2 459 2 371

Total 2 701 2 428

11%

4%

11%

33%

10%

18%

2%

37

WORKING CAPITAL

March 2016

R million

September 2015

R million

Change

R million

Current assets 2 673 2 261 412

Inventory 1 641 1 370 271

Trade receivables and other 1 032 891 141

Current liabilities (1 637) (1 485) (152)

Trade payables and other (1 637) (1 485) (152)

Net working capital 1 036 776 260

Major variances:

Increased stock levels – poultry 145

Increased stock levels – feed 110

38

ABRIDGED STATEMENT OF CASH FLOW

For the six months ended 31 March 2016

R million

2015

R million

Cash operating profit 559 629

Working capital movement (353) 80

206 709

Tax paid (100) (142)

Net interest paid (3) (11)

Capital expenditure (73) (50)

30 506

Dividends paid (222) (93)

Other cash flow items 8 1

(184) 414

Loans (repaid) / received (24) (23)

Movement in cash equivalents (208) 391

Other 1 -

Opening balance 26 32

Closing balance (183) 423

39

CAPITAL EXPENDITURE

Six months ended 31 March 2016

R million

2015

R million

Depreciation 75 73

• Replacement capex 30 41

• Expansion capex 43 9

Total capex 73 50

Commitments 154

Total spent and committed 227

40

IN SUMMARY

Poultry division down on feed price increases not recovered in the market

Feed division posted improved results on recovery of input costs

Negligible contribution from other African operations

Cash flow negative due to stock build-up in both poultry and feed divisions

Net debt to equity ratio of 9.8% (30 Sep 2015: Net debt to equity ratio of 2.4%)

Interim dividend of 390 cps (2.0 x cover), within the Group’s liquidity capability

41

INDUSTRY & OTHER MATTERS

42

BRINING REGULATIONS

Amended regulations regarding control over the sale of poultry meat were

published in the Government Gazette on 22 April 2016 (6 month implementation)

The new standards now include regulations governing the definitions of brine,

brine based mixtures and formulated solutions

Included are regulations stipulating the allowable levels of brine in whole birds and

individual portions treated with a formulated solution

The notice also sets out methods and procedures to be used to determine the

uptake of a formulated solution (brine) in poultry carcasses and portions

The maximum limit set for the uptake of brine in whole birds has been set at 10%

and for individual portions at 15%

These regulations could be legally challenged by SAPA as they are fundamentally

flawed and have no scientific basis and / or consumer consideration

43

POULTRY IMPORTS (US & EU)

A deadline was set by the US of 15 March 2016 to allow poultry imports in terms of

the AGOA renewal or face the removal of SA’s agricultural AGOA benefits

The first US poultry imports as part of the AGOA deal arrived before the deadline,

and by end March 2016 around 10 000 tons of a quota of 16 250 tons for the

quarter had landed

These imports were subject to lower phytosanitary and in particular Salmonella

standards than generally applied to poultry imports

Product seen is mostly block frozen format and of generally poor physical quality

with wholesale prices set at similar levels to locally produced IQF product (# 68)

The investigation for safeguard measures in terms of Article 16 of the TDCA

against the EU was initiated by ITAC on 19 February 2016

These measures could take the form of a safeguard duty and it is unlikely that

these measures will be enforced before October 2016

44

B-BBEE SCORECARD (CURRENT CHARTER)

32.03 32.03

45.62

51.83

55.57

62.72 60.84

69.77

30

35

40

45

50

55

60

65

70

75

2009 2010 2011 2012 2013 2014 2015 2016

Sc

ore

Level 4

45

SKILLS DEVELOPMENT

Specialised management training programme with leading SA business school

Three levels – Fundamental, Middle and Advanced Management

84 employees have completed the management training programmes

Supervisory training through Astral’s workplace improvement programme

71 employees have completed the supervisory training

Underpins policy of staff development and promotion from within

46

CONTRACT GROWER DEVELOPMENT

In line with B-BBEE (Enterprise Development) Astral promotes the development of

black contract growers and broiler farm ownership

Astral currently contracts 10 black contract growers (12 farms) supplying broilers

to the Goldi and Festive operations

A pilot project in Gauteng was concluded with Phetogo CC owned by Tumi

Mokwene

An Astral-owned farm has been leased to the individual and a contract grower

agreement concluded with Festive

If this project is successful consideration will be given to rolling out the concept on Astral

owned broiler farms

Skills transfer, mentorship and incentivising the farm employees are important aspects

for the success of this project

PROSPECTS

48

PROSPECTS

It is expected that the demand for poultry will continue to be

constrained due to limited consumer discretionary spend and weaker

seasonal poultry consumption patterns.

High maize and feed prices will continue until at least rainfall patterns

normalise, with some mid-size industry producers already showing

signs of financial distress.

Rand weakness will continue to negatively impact input costs on

imports of poultry genetics, maize and soya.

The high level of poultry imports and the potential AGOA impact of US

poultry will see local broiler production cutbacks due to an imbalance

in supply and demand.

A weakening of the El Niño weather event could favour better planting

conditions for maize in the coming season as normal rainfall is

predicted.

World raw material stocks are exceptionally healthy.

49 7 April 2016

50

ADDITIONAL INFORMATION

51

ETHIOPIA UPDATE

A business has been registered in Ethiopia and a General Manager appointed

and based in that country from early 2015

Extensive market research was completed prior to the investment motivation

being presented to the Astral board for consideration

A detailed due diligence exercise on a table egg operation was performed

with a view to acquiring the business as a going concern

Unfortunately during negotiations to conclude the transaction the Dutch

owners decided not to sell the business

Land has been identified outside Debre Zeit (approx. 60 km south east of

Addis Ababa) for allocation to Astral for a Greenfields investment

The application for this land was submitted to the relevant authorities on

11 April 2016 and is receiving attention

Once the allocation of the land is finalised Astral will proceed with the

construction of a “entry level” feed mill and hatchery

52

SAFEX YELLOW MAIZE VS CBOT CORN IN RAND TERMS


53

SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16E 2016/17F

Actual Actual Actual Actual Actual Estimate Forecast

Carry In (1 May) 2,131 2,336 991 1,414 589 2,077 2,241

Crop Estimate 12,815 10,360 12,121 11,811 14,250 9,955 7,065

Retentions 433 440 475

Sagis Delivery 12,092 10,394 11,972 11,072 13,817 9,515 6,590

Minus early deliveries 0 0 0 0 0 535 0

Imports 0 421 11 80 65 2,009 3,350

Total Supply 14,224 13,151 12,973 12,566 14,471 13,066 12,181

Domestic Usage Food 4,513 4,512 4,499 4,583 4,840 4,688 4,800

Domestic Usage Feed 4,271 4,362 4,378 4,715 5,041 5,494 5,126

Gristing, withdrawn & released 866 693 674 480 376 323 300

Total Domestic Usage 9,650 9,567 9,551 9,777 10,257 10,505 10,226

Exports & Sundries 2,238 2,590 2,008 2,122 2,153 855 804

Plus early deliveries 0 0 0 0 0 535 0

Carry Out (30 Apr) 2,336 994 1,414 590 2,062 2,241 1,152

No of days usage 88 38 54 25 73 78 41

STU 19.65% 8.17% 12.23% 4.96% 16.62% 19.73% 10.44%

Marketing year (May to April)

'000 tons


19.1% 19.7%

8.2%

12.2%

5.0%

16.6%

19.7%

10.4%

0%

5%

10%

15%

20%

25%

0

500

1,000

1,500

2,000

2,500

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16E 2016/17F

Carry out Maize stock to use ratio

54

RSA MAIZE CARRY OUT AND STOCK TO USE RATIO

„000 Tons


55

WORLD CORN ENDING STOCKS VS STU

137 129

116

140

168

189

217

16.7%

15.2%

13.1%

16.2%

17.7%

19.3%

22.3%

12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

0

25

50

75

100

125

150

175

200

225

250

201

0

201

1

201

2

201

3

201

4

201

5

201

6E

End stock STU

Million Tons


56

EL NIÑO SOUTHERN OSCILLATION (ENSO) – FORECAST

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

57

SOUTH AFRICA – VEGETATION HEALTH INDEX

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

58

BROILER FEED

INGREDIENT INCLUSION AND COST CONTRIBUTION

66.9 47.5 67.0 44.6 65.9 42.5 64.9 40.0 66.2 42.7 63.6 45.2

14.0

20.9

17.0

26.8

18.9

29.2

16.5

25.0

14.7

20.4

11.4

15.0

8.5

8.0

7.0

6.8

6.0

5.7

7.5

7.4

7.4

7.5

9.1

8.7

0.5

1.2

0.4

1.1

0.9

2.4

0.3

0.9

0.4

1.3

0.2

0.9

0.3

3.8

0.3

4.1

0.4

5.5

0.3

4.2

0.4

6.2

0.3

4.7

9.9

18.5

8.4

16.6

7.9

14.7

10.5

22.4

10.9

21.9

13.9

25.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2H13 Incl. 2H13Contr.






Maize Soybean Meal Sunflower Meal Fish Meal Vitamins, Minerals and Medication. Other

59

BRAZIL, EU & USA PRODUCT COST BENCHMARK

Ex BRAZIL – May 2016

FROZEN LEG QUARTERS BULK PACKED

CIF DBN US$ per ton TON 875.00 875.00 875.00 SA COST

R/$ exchange rate R$ 14.60 14.80 15.00

Rand per ton TON 12 775.00 12 950.00 13 125.00 24 130.00

Rand per kg KG 12.78 12.95 13.13 24.13

Duty per kg KG 37% 37% 37% -

Clearance costs KG 0.58 0.58 0.58 -

COST INTO STORAGE KG 18.08 18.32 18.56 21.75

Storage KG 0.50 0.50 0.50 -

Distribution KG 0.64 0.64 0.64 0.84

Marketing, Administration, Finance KG 0.78 0.78 0.78 1.04

TOTAL COST KG 20.00 20.24 20.48 26.01

Ex NETHERLANDS – May 2016


CIF DBN US$ per ton TON 1 270.00 1 270.00 1 270.00 SA COST

R/$ exchange rate R$ 14.60 14.80 15.00

Rand per ton TON 18 542.00 18 796.00 19 050.00 24 130.00

Rand per kg KG 18.54 18.80 19.05 24.13

Duty per kg KG 22.81% 22.81% 22.81% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 25.27 25.58 25.90 26.01

60

BRAZIL, EU & USA PRODUCT COST BENCHMARK

Ex EUROPE NON-TARIFF COUNTRIES – May 2016


CIF DBN US$ per ton TON 1 240.00 1 240.00 1 240.00 SA COST

R/$ exchange rate R$ 14.60 14.80 15.00

Rand per ton TON 18 104.00 18 352.00 18 600.00 24 130.00

Rand per kg KG 18.10 18.35 18.60 24.13

Duty per kg KG 0.00% 0.00% 0.00% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 20.60 20.85 21.10 26.01

Ex USA – May 2016


CIF DBN US$ per ton TON 900.00 900.00 900.00 SA COST

R/$ exchange rate R$ 14.60 14.80 15.00

Rand per ton TON 13 140.00 13 320.00 13 500.00 24 130.00

Rand per kg KG 13.14 13.32 13.50 24.13

Duty per kg KG 37.00% 37.00% 37.00% -



Storage KG 0.50 0.50 0.50 -



TOTAL COST KG 20.50 20.75 21.00 26.01

61

LOCAL BROILER PRODUCTION AND MARKET SHARE

Source: Own Estimates

Local broiler production ≈ 18.5 million birds per week

27%

24% 8%

7%

7%

27%

Astral RCL Country Bird Daybreak Sovereign Other

62

TOTAL POULTRY MARKET PARTICIPATION

Source: Own Estimates & SAPA (Imports)

Avg. poultry imports ≈ 7,7 million birds per week (avg. past 6 months)

19%

17%

6%

5% 5%

19%

29%

Astral RCL Country Bird Daybreak Sovereign Other Imports

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

F2013 47,942 89,095 117,712 145,426 172,727 207,148 243,623 282,790 316,047 343,913 371,741 409,158

F2014 28,250 66,647 99,050 124,194 148,092 179,811 216,947 253,490 294,102 320,603 346,582 383,710

F2015 42,363 81,170 108,674 137,660 168,965 209,337 247,672 285,532 327,180 375,537 417,247 460,075

F2016 37,789 83,258 126,866 165,602 200,461 258,134

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

F2013 F2014 F2015 F2016

63

TOTAL POULTRY IMPORTS (CHICKEN, TURKEY, MDM)

F2015 42,363 38,807 27,504 28,896 31,305 40,372 38,335 37,860 41,648 48,437 41,710 42,828

F2016 37,789 45,469 43,608 38,736 34,859 57,673

% Var -10.8 17.2 58.6 34.1 11.4 42.5

bpw* 6,7 8,1 7,7 6,9 6,2 10,3

Source: SAPA *bpw ≈ million birds per week

Tons

64

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

Source: SAPA

Brazil 50.4%

EU 41.7%

Argentina 5.8%

Other 2.1%

Country of origin for poultry imports - 2015

Brazil 45.4%

EU 40.9%

Argentina 3.4%

US 7.4%

Other 2.9%

Country of origin for poultry imports - 2016 YTD

478 267 tons 131 268 tons

65

TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN

Source: SAPA

Poultry imports according to main country of origin for 2013 to 2015 and 2016 YTD

0

5

10

15

20

25

30

35

40

5.0

10.0

15.0

20.0

25.0

30.0

Oc

t-0

9

De

c-0

9

Feb

-10

Ap

r-1

0

Ju

n-1

0

Au

g-1

0

Oc

t-1

0

De

c-1

0

Feb

-11

Ap

r-1

1

Ju

n-1

1

Au

g-1

1

Oc

t-1

1

Dec-1

1

Feb

-12

Ap

r-1

2

Ju

n-1

2

Au

g-1

2

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-14

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

RSA broilers (slaughtered / week) Poultry imports (birds / week)

Broiler selling price (Rand / kg) Per capita consumption (kg)

66

LOCAL BROILER PRODUCTION, IMPORTS & PER CAPITA CONSUMPTION

Source: SAPA & DAFF

Million birds per week / Rand per kg kilogram

1000

2000

3000

4000

5000

6000

Jan

-10

Ap

r-10

Ju

l-10

Oct-

10

Jan

-11

Ap

r-11

Ju

l-11

Oct-

11

Jan

-12

Ap

r-12

Ju

l-12

Oct-

12

Jan

-13

Ap

r-13

Ju

l-13

Oct-

13

Jan

-14

Ap

r-14

Ju

l-14

Oct-

14

Jan

-15

Ap

r-15

Ju

l-15

Oct-

15

Jan

-16

Ap

r-16

67

SOUTH AFRICAN PROTEIN PRICE COMPARISON

Source: SAPA, FNB, Red Meat Industry Forum

Chicken Pork Beef Mutton

Feed Conversion Rate 1.65 2.2 5.5 5.0

Per Capita Consumption 40.3 kg 4.8kg 18.8kg 3.6kg

Cents per kg

68

US POULTRY (“AGOA” IMPORTS)

69

COMPETITOR ACTIVITY (STOCK CLEARANCE)

70

COMPETITOR ACTIVITY (FEBRUARY / MARCH 2016)

71

COMPETITOR ACTIVITY (5 KG PRICE COMPARISON)

72

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

Group Financial Director

Tel : +27 (0) 12 667 5468

Fax : +27 (0) 86 504 1602

email: [email protected]

Documents

Interim Results Presentation - Astral Foods · Interim Results Presentation for the six months ended 31 March 2016 . 2 AGENDA Business Overview [# 03] Poultry Industry Trends [# 23]