RCL Foods Limited · JSE:RCL
RCL Foods — FY2009 Earnings Presentation
38 slides from RCL Foods's earnings presentation, March 2009
Slide 1: Year End Results To March 2009
Year End Results To March 2009
Slide 2: 2009 highlights
2009 highlights Adjusted headline EBITDA Revenue + 14,4% pre IAS39 -22,2% 6,811 5,995 876,0 4,730 789,3 4,104 681,4 624,6 2006 2007 2008 2009 2006 2007 2008 2009 Cash generated by operations Dividends per share maintained 821,5 680,1 617,2 68,0 68,0 68,0 594,5 57,0 2006 2007 2008 2009 2006 2007 2008
Slide 3: 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. The single reason Our partners in Excellence gives us Investing The right we exist
Slide 4: Overview
Overview Strategy continues to deliver value particularly on a relative basis The value added growth focus has delivered out performance Feed division restructured and reports functionally Continue to leverage opportunities from integrated supply chain 3
Slide 5: 2009 highlights
2009 highlights Statutory 2008 2009 Revenue Rm 5 955,3 6 811,4 + 14,4% Headline EBITDA Rm 901,0 575,8 - 36,1% Headline EBIT Rm 764,6 425,2 - 44,4% Effective tax rate % 33,6 28,1 + 5,5% Headline earnings Rm 528,1 318,8 - 39,6% Cash generated by ops Rm 617,2 594,5 - 3,7% Net cash Rm 509,9 528,1 + 3,6%
Slide 6: Market conditions
Market conditions • Tumultuous period in history of capital markets • South Africa to large extent escaped direct impact • CPI peaked at 13,6% falling back to 8,5% • Prime lending rates lowered providing respite for indebted consumers • Local chicken market estimated to have grown by 10% to R17,7bn
Slide 7: Total feed cost
Total feed cost 3,000.0 +33.6% 2,500.0 +42.3% 2,000.0 1,500.0 1,000.0 500.0 - 2003 2004 2005 2006 2007 2008 2009 6
Slide 8: Yellow maize
Yellow maize R/ton SAFEX YM (nearby) 2,500 2,250 +32.2% 2,000 1,750 1,500 -1.8% 1,250 1,000 750 500 2007 250 2008 2009 0 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 O N D J F M 7
Slide 9: Soya
Soya US $ per ton CBOT Soya meal ($/ton) 450.0 400.0 +51% +15% 350.0 300.0 250.0 200.0 150.0 100.0 50.0 2007 2008 2009 0.0 A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M 8
Slide 10: Exchange rate
Exchange rate R/$ 11.00 10.00 +22.8% 9.00 8.00 +12.0% 7.00 6.00 2007 2008 2009 5.00 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 O N D J F M 9
Slide 11: Feed cost vs Sales Realisation Growth
Feed cost vs Sales Realisation Growth Feed cost Sales Realisations 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 - 07 08 09 10
Slide 12: Feed Cost vs Headline EBIT
Feed Cost vs Headline EBIT 3,000 Feed cost Adjusted headline EBIT pre IAS 39 2,500 2,000 1,500 1,000 500 - 07 08 09 11
Slide 13: Financial review
Financial review Revenue (Rm) + 14,4% 6811,4 5955,3 1443,2 Chicken sales 1376,8 • Average price realisation 4730,4 growth of 15,2% 5367,9 963,2 • Volumes 2,0% higher despite 4101,5 4578,5 Total two less trading days (0,8% 766,4 impact) Other 3767,2 Chicken 3335,1 2006 2007 2008 2009 12
Slide 14: Financial review
Financial review Adjusted HEBITDA pre IAS39 Adjusted headline earnings pre IAS39 15,2% 16,7% 14,7% Margin 33,6 % Effective 10,0% Tax rate 31,9 876,0 % 29,9 524,6 28,1 789,3 681,4 487,1 624,6 385,5 Rm Rm 355,2 2006 2007 2008 2009 2006 2007 2008 2009 • Higher feed raw material costs not • Effective ta
Slide 15: Financial review
Financial review Capex and depreciation Cash generated by ops 149,2 821,5 136,4 118,2 109,7 Dep 315,5 Rm 293,1 680,1 617,2 594,5 234,4 214,1 Rm Capex Spend Rm 2006 2007 2008 2009 2006 2007 2008 2009 • Continued investment to sustain • Inventories and receivables impacted operations and invest in str
Slide 16: Cash
Cash Rm 2009 600.0 573.0 509.9 528.1 500.0 400.0 300.0 200.0 100.0 21.6 17.8 3.0 9.5 - (100.0) Op bal Work cap Taxation Interest Capex Proceeds EBIT & Dividends Share Cl bal Depr options (200.0) (115.8) (197.8) (300.0) (293.1) (400.0) Rm 2008 965.1 900.0 700.0 590.3 509.9 500.0 300.0 100.0 31.7 6.7
Slide 17: Financial review
Financial review Dividends per share 68,0 68,0 68,0 48,0 44,0 44,0 57,0 Dividend 40,0 per share (cents) Final 20,0 24,0 24,0 17,0 Interim 2006 2007 2008 2009 Dividend maintained at 68,0 cents per share 16
Slide 18: Financial review
Financial review • Material unrealised losses in respect of feed raw Pre IAS39 Post IAS39 material procurement • Underlying margin decrease due to higher feed costs not able to be passed on in chicken pricing 14,1 14,2 Adjusted headline EBIT 13,0 13,9 margin (%) 12,6 12,4 774,0 8,1 7,9 7,2 739,6 671
Slide 19: Prospects
Prospects • Considering global economic recession and impact locally, consumer spending expected to remain under pressure • Maize prices likely to remain at lower levels and continue to trade around export parity • Soya prices likely to remain under pressure due to: – Lower anticipated crops – Threa
Slide 20: Moving Rainbow to Sustained, Profitable Demand
Moving Rainbow to Sustained, Profitable Demand Our chicken business competes in two market areas:- 1. Retail/Wholesale stores & 2. Food Service 19
Slide 21: Focusing on Retail/Wholesale: 2 brand strategy, 3 strategic thrusts
Focusing on Retail/Wholesale…. Rainbow has a 2 brand strategy, with 3 strategic thrusts & Drive mass appeal, differentiated offerings Become the brand of choice for LSM A 1. Protect and grow the 2.Champion Value Added 3. Aggressive growth Core through innovation • Fast becoming our bread •More desir
Slide 22: Focusing on Retail/Wholesale: Protect and grow the core
Focusing on Retail/Wholesale…. 1. Protect and grow the Core •More desirable •Better differentiation •Improve the margin 21
Slide 23: Focusing on Retail/Wholesale....
Focusing on Retail/Wholesale…. Drive mass appeal, differentiated offerings Become the chicken brand of choice in LSM A Retail/Wholesale 1. Protect and grow the 3. Aggressive growth 2.Champion Value Added Core • Fast becoming our bread through innovation •More desirable and butter • Lots more to come
Slide 24: Focusing on Retail/Wholesale: Champion value added
Focusing on Retail/Wholesale…. 2.Champion Value Added • Fast becoming our bread and butter •Rainbow Simply Chicken polony became South Africa’s market leading polony in January 2009!! Vienna’s are hot on its heels. •Our value added range will contribute a very significant proportion of our chicken p
Slide 25: Focusing on Retail/Wholesale....
Focusing on Retail/Wholesale…. Drive mass appeal, differentiated offerings Become the chicken brand of choice in LSM A Retail/Wholesale 1. Protect and grow the 3. Aggressive growth 2.Champion Value Added Core • Fast becoming our bread through innovation •More desirable and butter • Lots more to come
Slide 26: Focusing on Retail/Wholesale: Aggressive growth through innovation
Focusing on Retail/Wholesale…. 3. Aggressive growth through innovation • Lots more to come 25
Slide 27: Strategy delivers in turbulent times
Strategy delivers in turbulent times • Past 5 years focus on improving quality of earnings • Significant impact of feed cost growth over last 2 years • 5 year Compound Annual Growth Rate to 2009: 14,3% • Strategy sound and proven by better relative performance 14,2 12,4 12,6 739,6 7,9 671,1 8,1 Adju
Slide 28: Questions
RAINBOW Questions
Slide 29: Appendix
RAINBOW Appendix
Slide 30: Infrastructure
Infrastructure South Africa’s largest processor and marketer of chicken Windhoek Northern 7,653 employees Province 4 processing plants 5 feed mills Botswana Mpumalanga 22 distribution facilities Pretoria 190 farms / hatcheries Rustenburg Carolina North Gauteng Swaziland West KwaZulu Nami
Slide 31: Complex business chain
Complex business chain GP OPERATION AGRICULTURE PROCESSING Grandparent Grandparent farms Parent Parent farms Broiler Broiler farms chicks chicks chicks Broilers Processing Rearing Laying Hatching Rearing Laying Hatching Growing 3 plants + FP 22 wks 40 wks 3 wks 21 wks 40 wks 3 wks 35 days • World’s
Slide 32: Rainbow past
Rainbow past 1991 - 1998 1999 - 2003 1991 - 1998 Business in trouble • Revenue was growing, but so were losses. Revenue 3,7 • The business had lost its way, and required (Rbn) 3,0 recapitalisation. 2,5 2,1 2,2 2,2 2,3 1,5 1,5 1,6 1,7 1,9 1999 - 2003 0,5 Fixing the basics 91 92 93 94 95 96 97 98 99 0
Slide 33: Rainbow past
Rainbow past 2004 - 2009 2004 - 2009 1991 - 1998 1999 - 2003 Transformation to consumer 6,8 6,0 focused business Revenue 4,0 4,1 4,7 3,8 Focused on: (Rbn) 3,7 3,0 Clarifying our strategic 2,3 2,5 framework 2,1 2,2 2,2 1,9 1,5 1,5 1,6 1,7 Restructuring the company and board 0,5 Vector acquisiti
Slide 34: Industry Perspective
Industry Perspective Estimated per capita consumption of broiler meat Kilograms per capita 29,6 30,0 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 14,5 14,4 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Continues to reflect growing trend Source: SAPA
Slide 35: Industry Perspective
Industry Perspective Average broiler production per week 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 7,1 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 • Significant growth over last 3 years – CAGR of 7% with recent investments in
Slide 36: Industry Perspective
Industry Perspective Average broiler production per week by producer • 14,6m broilers Million broilers per week as at March 2009 produced per week • 1,3m tons per 4,2 annum 3,8 • Astral = Earlybird Farms + County Fair • Others = 2,6 approximately 50 smaller producers producing less than 200k broiler
Slide 37: Industry Perspective
Industry Perspective R / kg Beef, Pork and Poultry prices 24 23 22 21 20 19 18 17 16 15 Beef abattoir selling prices 14 13 12 11 10 Broiler Pork abattoir 9 producer price contract prices 8 2004 2005 2006 2007 2008 Source: SAPA Calendar Year
Slide 38: Industry Perspective
Industry Perspective Total poultry imports (‘000 tons) For 12 months ending 31 March • Imports decreased during the past year • Chicken products mainly dark meat and offal 289 Total decreased by 33% over 2008. 84 279 98 225 Mechanically Deboned 69 206 Meat 198 Origin of poultry imports 81 35 60 Feb