interim results presentation - astralfoods.com · interim results presentation for the 6 months...
TRANSCRIPT
Interim Results Presentation
for the 6 months ended 31 March 2019
2
“
”
AGENDA
Business Overview Page 3 / Slide 3
Operational Overview Page 5 / Slide 8
Financial Overview Page 12 / Slide 21
Industry Trends Page 17 / Slide 32
Outlook Page 21 / Slide 40
Additional Information Page 23 / Slide 44
BUSINESS OVERVIEW
SALIENT POINTS
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
4
Feed input costs increased markedly on higher maize prices due
to unfavourable weather conditions in the planting season, which will
negatively impact crop yields for 2019
Poultry selling prices decreased for the period under review
leading to an under recovery on higher input costs
Poultry production efficiencies were maintained in line with
projections
Extraordinary cost increases in the newly legislated national
minimum wage, costs associated with load shedding, and the strike
cost in KZN negatively impacted profits
Fresh product processing capacity expansion, with the project
underway at the Festive plant located in Olifantsfontein and on track
for commissioning in April 2020
Revenue
Profit before interest and tax
Earnings per share @ 948 cps
Headline earnings per share @ 949 cps
Interim dividend of 475 cps
52%
52%
51%
3%
KEY FINANCIAL INDICATORS
5
53%
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
6
DIVISIONAL SALIENT POINTS
Poultry
Feeding cost increased
Bird performance maintained
Broiler sales volumes down
Broiler sales realisations down
Extraordinary cost impacts
Feed
Raw material costs up
Lower internal feed required
External sales volumes down
Expenses well controlled
Improved Rand per ton margin
Other Africa
Lower profits – depressed performances from Mozambique and Zambia
6
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
1 036
503
113
176
145
114
0
200
400
600
800
1 000
1 200P
BIT
1H
20
18
Ra
w m
ate
rial
co
st
Fe
ed
co
nve
rsio
ne
ffic
ien
cy
Bro
iler
sale
sv
olu
mes
Bro
iler
sell
ing
pri
ce
s
Extr
ao
rdin
ary
exp
en
ses
Oth
er
PB
IT 1
H20
19
THE PERIOD IN PERSPECTIVE
7
R533 million
(R million)
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
17 2
“
”
8
FEED DIVISION
Operating profit - R million
Operating profit up 24.6%
• Net margin 7.2% 1H2018: 6.2%
• Expenses well controlled
• Rand per ton margins up
Revenue - R million
Revenue up 6.7%
• Raw material costs up
• Average selling prices up 7.6%
• Sales volumes down 0.9%
3 097 3 303
-
1 000
2 000
3 000
4 000
1H2018 1H2019
191
239
-
50
100
150
200
250
1H2018 1H2019
9
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
FEED DIVISION
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
SAFEX yellow maize prices increased markedly for the period under
review 1H2019 avg. R2 579 per ton (1H2018: R1 981) up R598 per ton y-o-y
Internal feed sales decreased marginally by 0.6% due to improved broiler
feed conversion rates
External feed sales decreased by 1.3% as livestock sectors came under
pressure from higher feed costs and producers moved for lower feed prices
Expense increases well controlled across the division for the period under
review
The average net margin increased (on a Rand per ton basis) for the period
under review
10
FEED DIVISION – SALES MIX
59%
7%
21%
13%
59%
5%
21%
15%
1H2018
703 827 Tons
1H2019
697 569 Tons Volume decrease ≈ 0.9%
11
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
“
”
12
13
POULTRY DIVISION
Operating profit - R million
Operating profit down 68.9%
• Broiler feed price up 9.2%
• Net margin 4.7% 1H2018: 15.4%
Revenue - R million
Total revenue up 1.0%
• Broiler sales volumes down 1.1%
• Broiler sales realisations down 3.4%
• Breeder revenue up R100 million
5 415 5 472
-
1 000
2 000
3 000
4 000
5 000
6 000
1H2018 1H2019
828
258
-
100
200
300
400
500
600
700
800
900
1H2018 1H2019
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
14
POULTRY DIVISION - COMMERCIAL
Profits for the six months ended March 2019 reflect a significant decline on
the comparable period
Broiler live cost increased due to rising feed costs resulting in a higher base
cost of production
Broiler selling prices decreased on subdued consumer demand and
deeper promotional activity in the market, leading to an under recovery of
higher input costs
Broiler sales volumes down despite sales realisations decreasing on the
comparable period
Overhead expenses increased with the newly legislated minimum wage,
exacerbated by the impact of load shedding nationally, and water supply
interruptions in Standerton
Imports during the period were lower than the comparable period,
averaging 41 771 tons per month (1H2018: 46 850 tons)
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
15
POULTRY DIVISION – PRODUCT MIX
51%
2%
3%
14%
7%
23%
1H2018
230 710 Tons
51%
2% 4%
13%
8%
22%
1H2019
228 172 Tons Volume decrease ≈ 1.1%
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
16
POULTRY DIVISION - AGRICULTURE
Breeder revenue increased on higher demand for parent stock and an
increase in broiler day-old chick sales
Feed input costs increased due to higher raw material costs adversely
affecting the live bird production cost
Strike action in KZN at National Chicks and Mountain Valley impacted
profitability during the period under review
Further improvements in on-farm poultry production efficiencies,
benefitting broiler live cost through an improved feed conversion rate
Higher broiler hatching egg production as a result of Astral’s bird flu
contingency planning
In South Africa 203 cases of highly pathogenic bird flu have officially
been reported across 9 provinces, from the 21st of June 2017 to the 28th of
February 2019
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
17
BROILER PRODUCTION PERFORMANCE
94%
96%
98%
100%
102%
104%
106%
108%
F2014 F2015 F2016 F2017 F2018 1H2019
Slaughter age Live weight Average daily gain
Key indicators base-lined to 100% in F2014
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
BROILER PRODUCTION PERFORMANCE
18
60%
65%
70%
75%
80%
85%
90%
95%
100%
105%
110%
115%
120%
125%
130%
F2014 F2015 F2016 F2017 F2018 1H2019
Mortality Feed consumption Performance efficiency factor
Key indicators base-lined to 100% in F2014
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
“
”
19
OTHER AFRICA DIVISION (Zambia, Mozambique & Swaziland)
20
Operating profit - R million
Operating profit down 59.9%
• Net margin 3.0% 1H2018: 9.1%
• Mozambique provision for
non-recovery of import VAT
Revenue - R million
Revenue up 20.9%
• Sales volumes up 11.7%
• Average selling prices up 8.2%
185
223
-
50
100
150
200
250
1H2018 1H2019
17
7
-
5
10
15
20
1H2018 1H2019
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
FINANCIAL OVERVIEW
INCOME STATEMENT
22
Six months ended 31 March
2019
R million
2018
R million
Restated
Revenue 6 775 6 600
Operating profit 503 1 036
Operating profit margin 7.4% 15.7%
Net finance income 18 22
Profit before tax 521 1 058
Tax (151) (297)
Profit for the period 370 761
Headline earnings 368 759
EPS – Cents 948 1 958
HEPS – Cents 949 1 959
3%
51%
51%
52%
52%
52%
% change
51%
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
4 700 4 902
5 755 5 511
5 823
6 131
5 795
6 556 6 600 6 379
6 775
213 280
550 551
429
120
212
866
1 036
906
503
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19
External revenue Operating profit Operating profit margin %
15.7%
3.7%
13.2%
GROUP SIX MONTHLY REVENUE AND PROFITABILITY
23
(R million)
14.2%
7.4%
2.0%
7.4%
10.0% 9.6%
5.7%
4.5%
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
2 550
2 956 2 961
3 275 3 461
3 729 3 448 3 405
3 096 3 102 3 303
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19
Revenue Change in volumes Change in feed price
FEED SIX MONTHLY REVENUE
24
(R million)
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
3 317 3 650
4 503 4 237
4 436 4 693
4 456
5 394 5 415 5 188
5 472
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19
Revenue Change in broiler selling price Change in volumes
POULTRY SIX MONTHLY REVENUE
25
(R million)
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
45 59
351 310 194
-135 22
608
828
625
258 157 197
186 237
233
252 184
207
191
266
239 213 280
550 551
429
120 212
867
1 036
906
503
-0,1
0,1
0,3
0,5
0,7
0,9
1,1
1,3
1,5
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19
Poultry Feed Other Africa Change in feed price Change in broiler selling price
GROUP SIX MONTHLY OPERATING PROFIT
26
(R million)
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
March 2019
R million
September 2018
R million
% change
Non-current assets 2 507 2 409
Net working capital 1 419 1 189
Current assets (excl. cash) 3 053 2 943
Current liabilities (excl. borrowings) (1 634) (1 754)
Non-current liabilities (excl. borrowings) (656) (650)
Net assets 3 270 2 948
Net (surplus cash) (431) (789)
Equity 3 701 3 737
Total 3 270 2 948
BALANCE SHEET
27
19%
4%
7%
1%
11%
11%
1%
4%
45%
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
CAPITAL EXPENDITURE
28
Six months ended 31 March 2019
R million
2018
R million
Depreciation 88 78
Total capex spend 345 136
Festive expansion 223
Standerton silo complex 30
Other capex 92
Outstanding commitments 753 144
Festive expansion 651
Standerton silo complex 22
Other capex 80
Total spend and committed 1 098 280
Board approved (on hold) 344
Mountain Valley expansion 203
Zambian feed mill 141
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
WORKING CAPITAL
29
March 2019
R million
September 2018
R million
Variance
R million
Current assets 2 863 2 912 (49)
Biological assets 779 770 9
Inventory - Poultry 415 532 (117)
- Feed 285 255 30
- Other Africa 36 50 (14)
Trade receivables 1 214 1 204 10
Other receivables 134 101 33
Current liabilities (1 634) (1 754) 120
1 229 1 158 71
Capital expenditure advance payments 190 31 159
Net working capital 1 419 1 189 230
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
STATEMENT OF CASH FLOWS
30
For the six months ended 31 March 2019
R million
2018
R million
Cash operating profit 407 1 094*
Working capital movement 100 (42)*
507 1 052
Tax paid (131) (259)
Net interest received 21 25
Capital expenditure (345) (136)
52 682
Dividends paid (409) (339)
Other cash flow items (1) 2
Proceeds on investment sold – prior year - (4)
Movement in cash equivalents (358) 385
Effect of exchange rate changes - (4)
Opening balance 789 553
Closing balance 431 934
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
*Restated
Decline in poultry profitability - profit margin at 4.7% (1H2018: 15.4%)
Feed profitability in line with expectations
Capital expenditure on expansion projects – R253 million paid
Net surplus cash at 31 March 2019 of R431 million
Interim dividend of 475 cps at 2 times cover
IN SUMMARY
31
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
INDUSTRY TRENDS
SAFEX YELLOW MAIZE PRICE
33
Source: CJA Strategic Risk Brokers
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
SAFEX YELLOW MAIZE PRICE vs. CBOT IN RAND TERMS
34
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
Source: CJA Strategic Risk Brokers
DURBAN SOYA MEAL PRICE
35
Source: CJA Strategic Risk Brokers
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
POULTRY IMPORTS PER MONTH
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
55000
60000
65000
70000
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
Oc
t-1
8
De
c-1
8
Feb
-19
36
Tons
Source: SAPA
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
BROILER SELLING PRICE
37
Source: Own Data
80%
85%
90%
95%
100%
105%
110%
115%
120%
125%
130%
135%
140%
145%
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
Oct-
18
Dec-1
8
Fe
b-1
9
Broiler selling price index Six month average
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
BROILER PRICE vs. FOOD PRICE INFLATION
38
Source: Own Data
90%
100%
110%
120%
130%
140%
150%
90%
100%
110%
120%
130%
140%
150%
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
Oct-
18
Dec-1
8
Fe
b-1
9
Broiler selling price index SA food price index
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
-30%
-20%
-10%
0%
10%
20%
30%
40%
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
Oc
t-1
8
De
c-1
8
Feb
-19
% Change in broiler feed price % Change in broiler selling price
CHANGE IN BROILER SELLING PRICE vs. FEED PRICE
39
Source: Own Data
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
OUTLOOK
Raw material price increases will negatively impact Astral’s largest
input cost, namely feed which makes up 66% of broiler live cost
Traditionally slower trading conditions for the second half of Astral’s
financial year, exacerbated by continued high levels of unemployment
The negative impact of high fuel prices on consumer disposable
income, leading to continued pressure on poultry selling prices
Higher local poultry production levels together with imports from
Brazil and the USA, will negatively impact the supply and demand
balance in the short term
The newly legislated minimum wage will continue to impact poultry
production costs
Municipal infrastructure deterioration in Standerton, leading to water
supply interruptions at a cost to the business
41
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
POTENTIAL NEGATIVE INFLUENCES
Sufficient international coarse grain stocks with good prevailing
planting conditions in the US and South America
Maize imports into the Western Cape at a discount to local Safex
prices, will contribute positively to feed input costs in that region
Local maize stocks together with maize imports will meet demand,
despite early season SA maize crop concerns
Recent late rainfall received in the maize growing areas of the country,
will benefit soil moisture conditions for the new planting season
Supply and distribution of the Ross poultry genetics in South Africa,
has been secured for a further ten year period with the conclusion of a
renewed supply agreement with Aviagen
42
POTENTIAL POSITIVE INFLUENCES
Business
Overview
Operational
Overview
Financial
Overview Industry Trends Outlook
“
”
43
ADDITIONAL INFORMATION
12,30%
14,81%
19,82%
25,00%
27,80%
26,22%
27,83%
23,76%
21,17%
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
45
Million Tons
Source: CJA Strategic Risk Brokers
SOUTH AFRICA – TOTAL MAIZE SUPPLY & DEMAND
46
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 2 940
Crop Estimate 11 811 14 250 9 955 7 779 16 820 12 510 10 655
Retentions 433 163 309 1 191 495 481
Sagis Delivery 11 072 13 817 9 794 7 469 15 629 12 015 10 174
Minus early deliveries 0 0 0 450 0 0 0
Imports 80 65 1 964 2 237 0 206 700
Total Supply 12 566 14 471 13 831 11 727 16 722 15 911 13 814
Domestic Usage Food 4 583 4 840 4 698 4 808 4 993 5 146 5 220
Domestic Usage Feed 4 715 5 041 5 520 5 004 5 276 5 355 5 100
Gristing, withdrawn & released 480 376 293 278 313 249 540
Total Domestic Usage 9 777 10 257 10 512 10 090 10 583 10 750 10 860
Exports & Sundries 2 122 2 153 848 993 2 451 2 221 1 002
Plus early deliveries 0 0 0 450 0 0 0
Carry Out (30 Apr) 590 2 062 2 471 1 093 3 689 2 940 1 952
No of days usage 25 73 86 40 127 100 66
STU 4,96% 16,62% 21,75% 9,87% 28.31% 22.67% 16.46%
Marketing year (May to April)
'000 tons
Source: CJA Strategic Risk Brokers
1 414 590 2 062 2 471 1 093 3 689 2 940 1 952
12,23%
4,96%
16,62%
21,75%
9,87%
28,31%
22,67%
16,46%
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
47
‘000 Tons
Source: CJA Strategic Risk Brokers
EL NIÑO SOUTHERN OSCILLATION - FORECAST
48 Source: International Research Institute for Climate and Society (IRI) – Columbia University
SOUTHERN AFRICA - VEGETATIVE HEALTH INDEX
49
VHI of previous year VHI of current year
Source: NOAA - National Environmental Satellite, Data, and Information Service (VHI)
BROILER FEED – INGREDIENT INCLUSION & COST CONTRIBUTION
50
Source: Own Data
65,0
45,7
63,3
43,6
61,4
39,6
61,1
38,0
55,6
29,8
54,3
26,7
53,4
28,6
11,4
14,9
15,6
20,3
16,8
22,3
14,0
18,6
14,0
17,9
13,2
17,9
13,8
18,4
9,1
8,6
6,4
5,6
6,9
5,4
6,2
4,0
6,1
3,3
5,7
4,1
4,9
4,2
6,4
14,9
6,7
14,0
7,3
17,2
7,8
18,8
8,6
21,5
9,1
21,3
8,6
20,1
0,2
0,9
0,4
1,2
0,5
1,7 0,4
1,5 0,5
1,7
0,7
2,3
0,7
2,2
7,5
10,3
7,3
10,3
6,6
9,1
9,9
13,8
14,6
19,8
16,6
22,2
18,2
23,4
0,3
4,7
0,3 5,0
0,4
4,7
0,5
5,4
0,5
6,0
0,4
5,4
0,4 3,0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1H16Incl.
1H16Contr.
2H16Incl.
2H16Contr.
1H17Incl.
1H17Contr.
2H17Incl.
2H17Contr.
1H18Incl.
1H18Contr.
2H18Incl.
2H18Contr.
1H19Incl.
1H19Contr.
Maize Soybean MealSunflower Meal OtherFish Meal F/Fat and Extr SoyVitamins, Minerals and Medication.
BRAZIL, EU & USA PRODUCT COST BENCHMARK
51
Ex BRAZIL – May 2019
FROZEN LEG QUARTERS BULK PACKED
CIF DBN US$ per ton TON 1 200.00 1 200.00 1 200.00 SA COST
R/$ exchange rate R$ 14.30 14.60 14.90
Rand per ton TON 17 160.00 17 520.00 17 880.00 23 480.00
Rand per kg KG 17.16 17.52 17.88 23.48
Duty per kg KG 37% 37% 37% -
Clearance costs KG 0.65 0.65 0.65 -
COST INTO STORAGE KG 24.16 24.65 25.15 23.48
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 26.26 26.75 27.25 25.36
EUROPE – May 2019
FROZEN LEG QUARTERS BULK PACKED
CIF DBN € per ton TON SA COST
€ exchange rate R$
Rand per ton TON 23 480.00
Rand per kg KG 23.48
Duty per kg KG -
Clearance costs KG -
COST INTO STORAGE KG 23.48
Storage KG -
Distribution KG 0.92
Marketing, Administration, Finance KG 0.96
TOTAL COST KG 25.36
Source: Own Estimates
BRAZIL, EU & USA PRODUCT COST BENCHMARK
52
EUROPE Ex Ireland, Spain, Poland and Denmark with Safeguard Duty @ 30 % – May 2019
FROZEN LEG QUARTERS BULK PACKED
CIF DBN € per ton TON 1 100.00 1 100.00 1 100.00 SA COST
R/€ exchange rate R$ 16.00 16.20 16.50
Rand per ton TON 17 600.00 17 820.00 18 150.00 23 480.00
Rand per kg KG 17.60 17.82 18.15 23.48
Duty per kg KG 30% 30% 30% -
Clearance costs KG 0.65 0.65 0.65 -
COST INTO STORAGE KG 23.53 23.82 24.25 23.48
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 25.63 25.92 26.35 25.36
Ex USA – May 2019
FROZEN LEG QUARTERS BULK PACKED
CIF DBN US$ per ton TON 1000.00 1000.00 1000.00 SA COST
R/$ exchange rate R$ 14.30 14.60 14.90
Rand per ton TON 14 300.00 14 600.00 14 900.00 23 480.00
Rand per kg KG 14.30 14.60 14.90 23.48
Duty per kg KG 37.00% 37.00% 37.00% -
Clearance costs KG 0.65 0.65 0.65 -
COST INTO STORAGE KG 20.24 20.65 21.06 23.48
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 22.34 22.75 23.16 25.36
Source: Own Estimates
LOCAL BROILER PRODUCTION & MARKET SHARE
53
Local broiler production ≈ 19.4 million birds per week
26%
20%
8% 7%
8%
5%
4%
22%
Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other
Source: Own Estimates
LOCAL BROILER PRODUCTION & MARKET SHARE
54
Avg. poultry imports ≈ 7.4 million birds per week
(6 months ending March 2019)
18%
13%
6%
5%
6% 3%
2%
16%
31%
Astral RCL Country Bird Daybreak Sovereign Grainfields Chubby Chick Other Imports
Source: SAPA & Own Estimates
TOTAL POULTRY IMPORTS (CHICKEN, MDM, TURKEY)
55
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
F2019 45 061 44 571 37 739 35 174 42 094 45 987
% Var -2,8 -2,8 -22,3 -25,6 4,6 -12,9
bpw* 8,0 7,9 6,7 6,2 7,5 8,2
*bpw ≈ million birds per week
Tons
Source: SAPA
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
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
F2019 45 061 89 632 127 371 162 545 204 639 250 626
0
100 000
200 000
300 000
400 000
500 000
600 000
F2016 F2017 F2018 F2019
TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN
56
Brazil 61,5%
EU 12,6%
Argentina 5,9%
US 16,1%
Other 3,9%
Country of origin for poultry imports - 2018
Brazil 52,1%
EU 23,0%
Argentina 2,7%
US 18,0%
Other 4,2%
Country of origin for poultry imports - March 2019 YTD
566 210 tons 123 275 tons
Source: SAPA
TOTAL POULTRY IMPORTS – COUNTRY OF ORIGIN
57 Source: SAPA
Country Imports (tons)
2017 2018 2019 YTD
Brazil 337 476 348 155 64 212
United States 87 059 91 374 22 153
Argentina 32 816 33 278 3 363
Ireland 24 746 26 328 7 052
Denmark 16 884 25 672 5 794
Poland 72 13 463 11 993
Thailand 4 019 9 011 2 867
Canada 14 431 7 305 1 576
Spain 11 138 4 932 3 298
Chile 1 770 4 362 614
Australia 984 553 114
Swaziland 24 482 23
Uruguay 50 359 -
Netherlands 112 323 48
United Kingdom 1 366 231 76
Germany 134 222 37
Belgium 23 451 23 27
Other 344 137 28
Grand Total 556 877 566 210 123 275
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
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
No
v-1
8
Jan
-19
Ma
r-19
SOUTH AFRICAN PROTEIN PRICE COMPARISON
58 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 39,5 kg 5,1 kg 17,0 kg 3,0 kg
cents / kg
INDUSTRY MATTERS
POULTRY IMPORTS
60
The EPA (SADC-EU Economic Partnership Agreement) safeguard for poultry bone-
in imports from the EU is in force
Under the provision the safeguard duty on EU frozen bone-in portions will be as
follows (to which the EU have declared a dispute):
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
25% from 12 March 2020 up to and including 11 March 2021
15% from 12 March 2021 up to and including 11 March 2022
This duty levels the playing field somewhat, with imports from Brazil and the US
subject to a 37% import duty (current) for these 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 couple of years 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 a
number of EU countries affecting EU trade with South Africa
Import volumes previously supplied by the EU have switched to Brazil, which is
currently the largest exporter of poultry products to South Africa
POULTRY IMPORTS
61
Tariff Investigation (Frozen Chicken)
SAPA has made application made for an increase in the rate of custom duties for
bone-in portions and boneless cuts from 37% and 12% respectively to the
maximum bound rate of 82%
ITAC has already found unfair trade within WTO rules and only the percentages
are up for review
The ITAC investigation was expected to be completed by the end of March
2019 with the Minister of Trade and Industry making his decision 2 to 4 weeks
thereafter
However, this has been delayed by an urgent application from AMIE and
Merlog Foods where they are claiming:
Access to certain confidential information from SAPA and the Participating
Producers ("Confidentiality Claim"); and
A right to receive a preliminary decision from ITAC for comment prior to making a
recommendation to the Minister of Trade and Industry ("Constitutional Claim")
Anti-Dumping Application against Brazil
Webber Wentzel provided an opinion that there is sufficient evidence to prove
dumping of bone-in portions into South Africa
It is necessary to update the 2017 injury information provided for the frozen
chicken tariff investigation / application to include 2018
It is has been recommended that ITAC be engaged informally to obtain its view on
whether there is sufficient information to initiate an application
WAGENINGEN UNIVERSITY RESEARCH
62
South Africa remains an efficient chicken producer in the global
context, and has consistently produced chicken cheaper than European
Union countries
This is according to the latest research from the Bureau for Food and
Agricultural Policy
Data for major chicken producing countries is analysed every two
years by Wageningen University and Research in the Netherlands,
which has been ranked as one of the world’s top agricultural universities
Additional research to include the comparable South African data has been
undertaken by the Bureau for Food and Agricultural Policy (BFAP), an
independent research institute in Pretoria
The report, based on data from 2017 was released during April 2019 by
the BFAP
South African producers remain competitive and were shown to produce
a kilogram of chicken meat at a lower cost relative to the European
producers included in the sample, but at a higher cost than the leading
exporters such as the US and Brazil (with the difference mainly being
attributable to feed costs)
WAGENINGEN UNIVERSITY RESEARCH
63
TECHNICAL EFFICIENCY
WAGENINGEN UNIVERSITY RESEARCH
64
ECONOMIC EFFICIENCY: TOTAL PRODUCTION COSTS
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]