Transcript 7 Smalltalk Conference 2015

March 2015
BUSINESS COMPOSITION
2
Rm turnover 2014
%
Animal Feed
1 241
34,8
Layers
1 087
30,5
Broilers
1 081
30,4
152
4,3
3 561
100
Africa
Quantum Foods
NOVA FEEDS
3
Pretoria
34%
Malmesbury
52%
42% sales to external market
CAGR for external sales
volumes for period 2010-2014
is 6.7%
Leading supplier of diary feed
in Western Cape
Ability to “pass though” raw
material price changes
Superior technical input with
custom mixes are key
success factors
George
14%
NULAID EGGS
4
Integrated business from grand parent level to pack stations
BREEDING
COMMERCIAL
SALES
GP
Rearing
Pack Station
Parents
Transfer
Laying
Ungraded
Liquid Egg
Hatchery
Day old pullet sales
Transfer
Point of lay sales
Quantum Foods sell the equivalent of over 1
billion eggs per annum
90% of eggs sold are produced by own farms
One of only three suppliers of pullets
Geographical spread of farms
Nulaid brand commands a premium
BROILER BUSINESS
BREEDING
5
COMMERCIAL
GP
Parents
Sales to
Others
Transfer
Rearing
Hatchery
Own
Abattoir
Significant re-engineering to stop losses
•
Exit Eastern Cape market
•
Closure of two abattoirs
•
Live bird supply agreement in Western Cape
Western Cape business essentially a livestock farming business
Gauteng business remain fully integrated
560 000 broilers per week Western Cape
250 000 broilers per week Gauteng
Retail
&
Wholesale
AFRICA OUTSIDE SOUTH AFRICA
6
UGANDA
• Broiler and layer breeding
• Feed mixing plant
ZAMBIA
• Broiler and layer breeding
• Commercial egg farm in Copperbelt
• Feed mixing plant
Significant contributor to profits during
2013 and 2014
SUCCESS FACTORS
7
Economic factors
1
Commodity prices
• Maize
(refer to slide 11)
• Soybean meal
2
3
ZAR/US$
• Exchange rate
(refer to slide 12)
• Egg cycle of supply and demand
(refer to slide 13)
Egg prices
• Feed prices
4
Broiler meat prices
• Trade regime
• Domestic supply and demand
• Feed prices
OPERATIONAL FACTORS
1
Feed Conversion Ratio ( FCR ) both layers and broilers
2
Eggs per hen housed
3
Lowest cost of production throughout value chains
4
Disease status of national flocks
8
9
FINANCIAL DRIVERS AND SENSITIVITIES 2015
Current Level
Impact per annum
Operating profit
Rm
Maize price of R100/ton
R2500
11
Soybean meal price of R100/ton
R5800
3
Egg selling price of 10c per doz
R10.29
 .
8
Broiler meat selling price of 10c per kg
R18.49
 .
2
FCR change in broilers (one gram)
1.65 kg

FCR change in layers (one gram)
1.65 kg
2,3
290 eggs
2
Change in
One additional egg per hen housed
 SAPA November 2014 report
 SAPA November 2014 report
 Breed targets
2,8
STRATEGY
10
1
2
3
Reducing cyclicality
Improve margins
Grow selected markets
1. Western Cape de-risking of boiler
business
2. Review Hartebees abattoir
3. Improve Customer and Product mix
in Egg business
4. Increase Africa geographic
footprint
1. Improvement of farm operations
• Broiler FCR close to optimum
• Layer FCR and eggs per hen
housed can improve by at least
2.5%
2. Cost efficiency in pack stations
3. Consolidated supply chain efforts
4. Utilize import opportunities for
maize
5. Pack station project KZN
1. Organic growth in feed business
2. Acquisitive growth in feed business
3. “Off balance sheet” growth in egg
business
4. Growth in current Africa operations
5. Grow the layer livestock business
ECONOMIC FACTORS: MAIZE
11
3500
R2,377
R2,380
3000
R2,069
R2,264
2500
R1,672
R/ton
2000
+5.03%
R1,278
+42.34
1500
-12.98%
-4.87%
+30.80%
1000
-15.70%
500
0
2010
2011
2012
Yellow Maize (Safex)
2013
2014
2010 - 2014 Reporting period: Oct - Sep
2015 Reporting period: Oct - Febr
2015
ECONOMIC FACTORS: EXCHANGE RATE
12
12
R11.3085
11.5
R10.6037
11
+6.65%
10.5
R9.2888
10
+14.16%
9.5
Rand
9
R8.0729
8.5
8
R7.4865
+15.06%
R6.9697
7.5
7
6.5
+15.83%
-17.39%
-6.90%
6
5.5
2010
2011
2012
ZAR vs US$
2013
2014
2015
13
Source: SAPA
Thank you