WH Group Limited 2014 Interim Results Presentation. August 2014

Transcription

1 WH Group Limited 2014 Interim Results Presentation August 2014

2 Disclaimer This presentation and the accompanying slides (the Presentation ) have been prepared by WH Group Limited ("WH Group " or the "Company") solely for information purposes. This Presentation does not constitute or form part of and should not be construed as, an offer or invitation to acquire, purchase or subscribe for any securities of the Company nor is it calculated to invite any such offer or invitation nor shall it constitute any offer or sale of such securities in any jurisdiction. No part of this Presentation shall form the basis of or be relied upon in connection with any investment decision, contract or commitment whatsoever. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, on the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. The Company reserves the right to amend or update all or any part of this Presentation at any time, but the Company shall not be under any obligation to provide the recipient of this Presentation with any such amended or updated information or correct any inaccuracies herein unless otherwise required by the Rules Governing The Listing Of Securities On The Stock Exchange Of Hong Kong Limited or any applicable law. This Presentation may not be all-inclusive and may not contain all of the information that you may consider material. Neither the Company nor any of its affiliates or representatives make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein or any other written or oral communication transmitted or made available to any recipient. The Company and its affiliates and representatives expressly disclaim any and all responsibility or liability based, in whole or in part, on any of the information contained herein, errors herein or omissions here from. In all cases, interested parties should conduct their own investigations and analyses of the Company, its businesses, assets, financial conditions and prospects, and of the information set forth in this Presentation. This Presentation contains statements that reflect the Company's intentions, beliefs or expectations about the future or future events (the "forward- looking statements"). These forward looking statements are based on a number of assumptions about the Company's operations, its future development plans, market (financial and otherwise) conditions, growth prospects and certain plans and objects of the management of the company, and are subject to significant risks, uncertainties and other factors beyond the Company's control, and accordingly, actual results may differ materially from these forward-looking statements. You should not take any forward-looking statements contained in this Presentation regarding past trends or activities as a representation that such trends or activities will continue in the future. The Company expressly disclaims any obligation to update these forward-looking statements. 1

3 1 Highlights 2 Review of Operational and Financial Performance 3 Outlook 2

4 Section 1 Highlights

5 Key Highlights Consolidated turnover reached US$10.54 billion; turnover from China operations reached US$3.402 billion with YoY growth of 3.2%; contribution by Smithfield amounted to US$7.138 billion Operating profit excluding biological fair value adjustments reached US$815 million; China operations realized US$405 million with YoY growth of 23.1% and 1.9 percentage points uplift in margin; contribution by Smithfield amounted to US$410 million Net profit attributable to shareholders of the Group excluding biological fair value adjustments amounted to US$366 million, with basic earnings per share of US$3.42 cents Continuously making progress in realizing synergies 4

6 Results Overview Turnover 1 Operating Profit 2 3 Net Profit 2 4 US$ MM US$ MM % US$ MM 12,000 1, ,540 10, % , % , ,000 3,298 3,298 3, , H2013 1H H2013 1H H2013 Total China Operating Profit Margin Notes: 1. Net external sales 2. Excluding biological fair value adjustments 3. Operating profit margin = operating profit / consolidated revenue 4. Net profit attributable to shareholders of the Group 5

7 Turnover and Operating Profit Breakdown Turnover 1 by Segment Operating Profit 2 by Segment % % Hog Production 2.3% Others & Corporate 0.8% % 20.2% (11.7%) 100.0% 60 Fresh Pork 43.9% Packaged Meat 53.0% Packaged Meat Fresh Pork Hog Production Others & Corporate Total Note: 1. External sales 2. Excluding biological fair value adjustments 6

8 Significant Growth in China Increased sales of packaged meat and fresh pork China Packaged Meat Turnover 1 and Operating Margin US$ MM % 3, % 18.0 China Fresh Pork Turnover 1 and Operating Margin 2 US$ MM % 3, % 5.0 Pricing expertise: profit margin improved by effectively managing both raw material costs and fresh pork selling prices 2, % 1,895 1, , % 4.0 Continued improvement in packaged meat product portfolio with a shift to mid- and high-end products with higher unit selling prices and greater profitability 1, ,500 1,280 1, Increased sales from more profitable retail channels including specialty stores and supermarkets/hypermarkets Favorable market conditions; reserves made to mitigate risk of raw material cost increase in the future 0 1H H H2013 Operating Profit Margin Notes: 1. Net external sales 2. Segment operating profit margin = reportable segment operating profit / segment revenue 7

9 Significant Growth in (Cont d) U.S. and Europe Overall profitability of Smithfield grew substantially to a record high level Concurrent rise in hog price and decline in raw material costs beneficial to hog production segment Successful price pass-through to relieve pressure of high raw material costs on margins Strengthened performance management driven by managerial synergies as well as integration of corporate culture Consumer demand for animal protein products remained stable over the first half despite significant increase in prices Substantial increase in export volume International business also experiencing strong growth US$ MM U.S. Operating Profit by Segment Packaged Meat Fresh Hog Pork Production Others & Corporate Total Turnover (1) 3,277 2, ,358 Operating Profit (64) 364 Operating Margin (2) (%) US$ MM Europe Operating Profit by Segment Packaged Meat Fresh Pork Hog Production Others & Corporate Total Turnover (1) Operating Profit Operating Margin (2) (%) Notes: 1. Net external sales 2. Segment operating profit margin = reportable segment operating profit / segment revenue

10 Continuous Progress in Synergies Realization Export fresh pork from Smithfield to China Introduce high-end western products to Chinese consumers to meet growing demand for premium food Exchange industry know-how and best practices Enhance information sharing and capitalize on global sourcing power Leverage existing customer relationships to expand into new markets 9

11 Smithfield Fresh Pork Kiosks in China Smithfield Fresh Pork Kiosks 10

12 New Packaged Meats Products (Illustrative) 11

13 Section 2 Review of Operational and Financial Performance

14 Sales Volume and Average Selling Price Packaged Meat 1 MM Metric Tons 3.0 Average Selling Price US$/Kg 1H2013 China U.S. & Europe 5.17 Fresh Pork 1 MM Metric Tons 3.0 Average Selling Price US$/Kg 1H2013 China U.S. & Europe China 1H2013 U.S. and Europe 0.0 1H2013 Note: 1. External sales 13

15 Capital Expenditure and Production Capacity Capital Expenditure China business invested US$150 million in, primarily for the expansion of packaged meat and fresh pork production capacity U.S. business invested US$86 million in, primarily for equipment upgrading and hog farm renovation Packaged Meat (MM Metric Tons) China Production Facilities Footprint Packaged Meat Production Facilities Slaughtering Facilities Fresh Pork (MM Heads) Annual Capacity Utilization Rate Annual Capacity Utilization Rate China % US % Others % China % US % Others % 14

16 Liquidity Inventory Turnover Days 1 Trade and Bills Receivables Days 2 Trade and Bills Payables Days 3 Days 50.0 Days 30.0 Days PF PF PF Notes: 1. inventory turnover days based on average inventory balance; 2013 PF based on ending balance 2. trade and bills receivables days based on average inventory balance; 2013 PF based on ending balance 3. trade and bills payables days based on average inventory balance; 2013 PF based on ending balance 15

17 IPO Helps Improve Debt Structure and Save Finance Costs Total Debt 1 /Total Equity US$ Total MM Borrowings 1 Breakdown as of PF Total Borrowings 2 Breakdown Assuming Debt Repayment % % 218.8% Due over 5 Years US$1,416 MM Due within 1 Year US$834 MM 11.1% 18.8% Due within 1-2 Years US$588 MM 7.8% Due over 5 Years US$1,416 MM Due within 1 Year US$584 MM 11.6% 28.1% Due within 1-2 Years US$588 MM 11.7% 150 Due within 2-5 Years US$4,706 MM 62.4% Due within 2-5 Years US$2,456 MM 48.7% 2013 PF Finance Costs Assuming Debt Repayment % 88.2% US$ MM (92) (2) (3) % PF Finance 2 PF IPO Costs Notes: 1. Includes long term borrowings, short term borrowings and bank overdrafts 2. Assuming repayment of US$2.5 billion of 3-year syndicate loan tranche based on IPO net proceeds of US$2.272 billion and cash on hand 3. Interest rate calculated based on one-month forward LIBOR rate as of August 15, 2014, plus 350 basis points Annual Finance Costs Savings Assuming Debt Repayment 2013 PF Finance Costs (Assuming Debt Repayment) 16

18 Section 3 Outlook

19 Outlook China: Strengthen optimization of product portfolio and expand sales through innovation in products and marketing initiatives U.S.: Continue to focus on maximizing existing business through increased consumer marketing programs and product innovation to further enhance leadership position in consumer packaged meats market Synergies: Maximize synergies within a vertically integrated global platform by adopting flexible import/export strategies, introducing high-end western packaged meat products into China, sharing managerial and technological know-how, global procurement and leveraging existing customer relationships 18