RCL Foods Limited · JSE:RCL
RCL Foods — H1 2010 Earnings Presentation
35 slides from RCL Foods's earnings presentation, 2009
Slide 1: Interim Results 6 months ended 30 September 2009
Interim Results 6 months ended 30 September 2009
Slide 2: 2009 statutory highlights
2009 statutory highlights Revenue +1,0 % Operating profit +42,3 % 3360,5 3326,7 2871,4 315,7 2177,8 256,9 248,7 174,8 2006 2007 2008 2009 2006 2007 2008 2009 Headline earnings +35,0 % Interim dividend 28,0 208,3 20,0 24,0 24,0 172,4 169,8 125,8 2006 2007 2008 2009 2006 2007 2008 2009 1
Slide 3: 2009 highlights
2009 highlights Statutory 2008 2009 Revenue Rm 3326,7 3360,5 + 1.0 Headline EBITDA Rm 247,4 320,3 + 29.5 Headline EBIT Rm 175,2 243,7 + 39.1 Effective tax rate % 33,0 32,4 - 0.6 Headline earnings Rm 125,8 169,8 + 35.0 Cash generated by operations Rm 166,6 108,7 - 34.8 Net cash Rm 380,0 343,9 - 9.5 I
Slide 4: Strategic framework
Strategic framework Vision Rainbow Chicken will be at the heart of every meal. We will achieve this by creating innovative solutions and strong brands. Key to our success is consistent, profitable, sustainable demand. Strategic Drivers Consumers Customers Supply Chain Sustainability Culture The sing
Slide 5: Strategy into action
Strategy into action Notable initiatives: • Further innovation in consumer and FoodSolutions brand • Detailed customer profitability to step change decision-making • Focus on process efficiencies and cost reduction through brilliant basics • Strategic refocus and Epol brand re-launch to respond to c
Slide 6: Market conditions
Market conditions Economy - third consecutive quarterly decline - return to growth will take longer than most other countries - nearly one million jobs lost this calendar year • Inflation and interest rates declined • Exchange rate volatility • 6% fall in consumer disposable income • Significantly
Slide 7: Yellow maize
Yellow maize SAFEX YM (nearby) R/ton 2,500 2,250 34.1 % -2.0 % Increase Decrease 2,000 1,750 -28.6% Decrease 1,500 1,250 1,000 2008 2009 2010 750 A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S 6
Slide 8: Soya
Soya CBOT Soya meal ($/ton) US $ per Ton 454 404 354 304 -1.6 Decrease 254 56.6 % 14.5% Increase Increase 204 154 104 54 2009 2010 4 A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S 7
Slide 9: Exchange rate
Exchange rate R/$ 11 10 23.9% 5.1 Increase Increase 8 0.8 % Increase 7 5 2008 2009 2010 4 A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S 8
Slide 10: Feed cost vs sales realisation growth
Feed cost vs sales realisation growth % Growth Feed Cost Sales realisation 40.0 37.9 35.7 35.0 30.0 25.0 18.9 20.0 14.9 15.0 10.0 5.4 5.0 4.3 - 2007 2008 2009 9
Slide 11: Feed cost vs headline EBIT
Feed cost vs headline EBIT Rm Feed Cost Headline EBIT pre IAS 39 1,800.0 1,600.0 1,400.0 1,200.0 1,000.0 800.0 600.0 400.0 200.0 - 2006 2007 2008 2009 10
Slide 12: Financial review
Financial review Revenue (Rm) +1.0 % 3360,5 Chicken sales + 4,7 % 3326,7 727,2 2871,4 811,0 • Volumes up 0,7% despite 654,1 3 less trading days (2.4% impact) 2633,3 2515,7 Total 2177,8 • Average price realisation growth of 2217,3 5,4% Other 450,4 Chicken 1727,4 Other sales (Cobb, Epol, Vector) - 10,
Slide 13: Financial review
Financial review HEBITDA pre IAS39 Headline earnings pre IAS39 16,0% Margin 36,1 14,3% 36,0 % Effective 10,5% 10,6% 33,0 Tax rate % 32,4 410,2 230,7 348,4 196,6 305,5 163,4 Rm 300,3 Rm 159,1 2006 2007 2008 2009 2006 2007 2008 2009 • Adverse impact of exchange rate on • Effective tax rate impacted by
Slide 14: Financial review
Financial review Dividend Dividends per share per share (cents) 68,0 68,0 68,0 Final 48,0 44,0 44,0 28,0 20,0 24,0 24,0 Interim 2007 2008 2009 2010 13
Slide 15: Financial review
Financial review Capex spend 75,2 72,3 65,2 Depreciation & Amortisation 56,0 Rm 139,6 133,3 116,4 99,3 Capex Spend Rm 2006 2007 2008 2009 2008 spend includes R23m of the R54m in respect of new 5000 pallet plant based cold storage (PBCS) facility at Hammarsdale Continued investment in upgrading f
Slide 16: Financial review
Financial review Reporting the financial effects of only certain procurement instruments in terms of IAS39 introduces volatility to statutory results 13.4 12.0 Headline EBIT 11.9 margin 10.9 (%) 7.3 344,7 6.9 313,2 Pre IAS39 292,4 6.8 5.3 Post IAS39 258,3 243,7 228,1 228,8 175,2 Headline EBIT (Rm)
Slide 17: Moving Rainbow to Sustained, Profitable Demand
Moving Rainbow to Sustained, Profitable Demand 1. Growing Food Service 2. Growing Added Value 3. Re-engineering the Core 16
Slide 18: 1. Growing Food Service
1. Growing Food Service 1. Our Rainbow FoodSolutions brand remains key to our profitability 2. Growth has slowed in the recession but remains resilient 3. Good growth is expected to return in F11 17
Slide 19: 2. Growing Added Value (a reminder)
2. Growing Added Value (a reminder) 1. Speciality chicken : “Bigger than fish 2012” 2. Mass volume frozen chicken : “Make added value 1/3 of the freezer” 3. Chilled Processed Meats: “R300m by 2010” 18
Slide 20: 2. Growing Added Value
2. Growing Added Value 1. Speciality chicken : “Bigger than fish 2012” 2006 2009 19
Slide 21: 2. Growing Added Value
2. Growing Added Value 1. Speciality chicken : “Bigger than fish 2012” Progress: 1. Rainbow brands are growing at 60% in a category growing at 1% 2. Rainbow share up from 14.6% to 20.8% 3. Bigger than speciality fish by 2012 will be a close call 2009 20
Slide 22: 2. Growing Added Value
2. Growing Added Value 2. Mass volume frozen chicken : “Make added value 1/3 of chest freezer” 2006 2009 21
Slide 23: 2. Growing Added Value
2. Growing Added Value 2. Mass volume frozen chicken : “Make added value 1/3 of chest freezer” Progress : The toughest nut to crack. Grill and Braai will be bolstered by a further major launch in 2010 2009 22
Slide 24: 2. Growing Added Value
2. Growing Added Value 3. Chilled Processed Meats : “R300m by 2010” 2006 2009 23
Slide 25: 2. Growing Added Value
2. Growing Added Value 3. Chilled Processed Meats : “R300m by 2010” Progress : 1. Turnover growth for Rainbow in this category is :- F09 R167m F10 R258m F11 ? 2. Rainbow CPM is growing at 40% in a category growing at -2% 3. Family polony at a lower price point has made a good start 2009 24
Slide 26: 3. Re-engineering the core
3. Re-engineering the core 2008 2009 25
Slide 27: Conclusion
Conclusion Summary Prospects • Feed prices only expected to decline in second six months: - Forward procurement strategy - Maize prices likely to remain at lower levels but dependent on weather and extent of planting locally - Soya prices likely to remain volatile due to lower crop expectation and t
Slide 28: Appendix
RAINBOW Appendix
Slide 29: Rainbow past
Rainbow past 2004 - 2009 2004 - 2009 1991 - 1998 1999 - 2003 Transformation to consumer 6,8 6,0 focused business Revenue 4,7 Focused on: 4,0 4,1 3,8 (Rbn) 3,7 Clarifying our strategic 3,0 2,5 framework 2,1 2,2 2,2 2,3 1,9 1,5 1,5 1,6 1,7 Restructuring the company and board 0,5 Vector acquisiti
Slide 30: Industry Perspective
Industry Perspective Estimated per capita consumption of broiler meat 30,0 30,5 Kilograms per capita 29,6 25,8 23,1 21,7 21,1 19,7 20,1 19,4 19,7 18,6 18,9 17,6 17,8 16,2 14,4 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 Continues to reflect growing trend Source: SAPA 29
Slide 31: Industry Perspective
Industry Perspective Average broiler production per week 17,8 16,8 Million broilers (Excludes imports) 14,6 13,8 12,9 11,8 11,8 11,9 11,1 11,0 10,5 9,8 9,8 9,2 8,5 8,0 7,5 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 • Significant growth over last 3 years – CAGR of 7% with recent investments i
Slide 32: Industry Perspective
Industry Perspective Average broiler production per week by producer • 16,5m broilers Million broilers per week as at March 2009 produced per week • 1,3m tons per 4,4 4,3 annum • Astral = Earlybird 3,5 Farms + County Fair • Others = approximately 44 smaller producers producing less than 200k broiler
Slide 33: Industry Perspective
Industry Perspective R / kg Beef, Pork and Poultry prices 25 24 23 22 21 Beef abattoir 20 selling prices 19 18 Pork abattoir 17 contract prices 16 15 14 13 Broiler producer price 12 11 10 9 2005 2006 2007 2008 2009 Source: SAPA Calendar Year 32
Slide 34: Industry Perspective
Industry Perspective Total poultry imports (‘000 tons) For 6 months ending 30 September • Imports have increased by 26% 289 • Chicken driving this growth with 50% increase 84 279 versus the previous year. 98 Total 225 69 206 Origin of poultry imports 198 81 35 60 Feb 2008 - Jan 2009 Mechanically 156
Slide 35: Questions
RAINBOW Questions