Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — Investor Presentation (March 2018)
28 slides from Ricegrowers Ltd. Class B's investor presentation, Mar 15, 2018
Slide 1: Rice Industry Field Day: Global Market and Strategy Update
Rice Industry Field Day Global Market and Strategy Update Rob Gordon - Chief Executive Officer Thursday 15 March 2018
Slide 2: Global Outlook / Pure, Premium & Sustainable
Global Outlook • Global Market • California Developments • Global Stockpiles • Foreign Exchange • Rice Remains Attractive Pure, Premium & Sustainable • Resilience Proved • Five-Year Strategy • Vietnam Developments • Profit Businesses Success • Attracting Customers & Facilitating Growers • Summary 2
Slide 3: Pricing Indicators
Pricing Indicators World Rice Prices Foreign Exchange Milling Yields Crop Size Branded Markets Smooth Pricing 3
Slide 4: Medium Grain Prices: Tender Markets
Medium Grain Prices: Tender Markets US$/tonne (FOB Origin Port) Japan Minimum Access Pricing (10 Years) 1,300 Period since last Field Day 1,200 1,100 1,000 900 800 700 600 500 400 Source: Creed Report 4
Slide 5: Medium Grain Prices: Tender Markets
Medium Grain Prices: Tender Markets US$/tonne Japan Minimum Access Pricing (Since Sept 2015) Award Price - FOB California Port Period Since 2017 Rice Field Day 970 920 $880 870 $870 $835 $850 820 $820 $810 $830 $805 $820 $775 $752 770 $755 $780 $735 $770 $775 $749 $735 $740 720 $755 $745 $685 670 $7
Slide 6: California Annual Plantings
California Annual Plantings '000 acres California Rice Acres Planted 595 600 585 561 567 550 562 550 558 541 533 534 528 526 519 500 509 500 473 450 445 440 429 400 Source: SunRice 6
Slide 7: California: Conditions for our major competitor
California: Conditions for our major competitor • Following drought, gap emerged between the C16 crop and lower than expected plantings: late harvest in C17 caused short supply - Millers chased volume by dropping price in most markets in C16 Californian exports forecast to be 24% lower than last y
Slide 8: California: Unfavourable Water Conditions Developing
California: Unfavourable Water Conditions Developing Water storage continues to show above average due to the 2016/17 record water year YTD 2017/18 water accumulation 65% of normal Accumulation potential diminishing for balance of the water year - Snow water content is at 30% of average - Next
Slide 9: Global Stockpiles still High
Global Stockpiles still High Million tonnes Rice Stockpiles: China / Thailand / Egypt + 'Rest of World' China Thailand Egpyt Rest of the World 140 120 100 80 60 40 20 0 Source: USDA 9
Slide 10: Large Stockpiles being Unwound in China & Egypt
Large Stockpiles being Unwound in China & Egypt As a result of high floor prices for domestic farmers, China has a stockpile of 94 million tonnes, which accounts for 67% of overall global stockpiles China is now unwinding this stockpile, especially into lower returning markets, especially in Asi
Slide 11: Foreign Exchange Movements – A$/US$
Foreign Exchange Movements – A$/US$ 0.85 A$/US$ (since January 2015) Stronger A$/US$ exchange rate is unfavourable for international rice sales Period since 2017 Field Day 0.80 Average Hedging for FY18: US$0.75 SunRice was hedged at average of US$0.75 for FY18 0.75 SunRice’s rice price sensiti
Slide 12: Is the A$ Set to Depreciate?
Is the A$ Set to Depreciate? US 10 YEAR YIELD 10 YEAR RATE SPREAD - AUS v US AUD/USD 2.5 1.10 10 YEAR BOND SPREAD AUvUS AUD/USD 1.05 2.0 1.00 0.95 1.5 0.90 0.85 1.0 0.80 0.75 0.5 0.70 0.65 0.0 0.60 Source: Bloomberg 12
Slide 13: Iron Ore Pricing versus AUD/USD
Iron Ore Pricing versus AUD/USD Iron Ore Price Iron Ore Price - AUD v USD AUD/USD 180 1.10 Iron Ore Mid Price: US$/tonne (LHS) 1.05 160 AUD/USD 1.00 140 0.95 120 0.90 100 0.85 80 0.80 60 0.75 40 0.70 20 0.65 0 0.60 Source: Bloomberg 13
Slide 14: Crop Size and Milling Yield
Crop Size and Milling Yield Crop Size and Average MG Milling Yield '000 tonnes Milling Yield (%) Crop Size ('000 tonnes) - LHS Milling Yield 1,200 60 59.3% 58.5% Forecast 57.4% 57.2% 58.0% 1,000 55 54.9% 800 55.4% Forecast 600 600 50 48.3% 400 45 200 800 963 1,161 829 802 690 244 0 40 Source: SunRic
Slide 15: Pricing Indicators: On Balance Positive
Pricing Indicators: On Balance Positive World Rice Prices Foreign Exchange Milling Yields Crop Size Branded Markets & Sale of Premium Varieties Ensure Stronger Pricing 15
Slide 16: SunRice Provides Reliable Paddy Price Indicators
SunRice Provides Reliable Paddy Price Indicators SunRice has developed a consistent track record of A$/tonne (Reiziq) Riverina Paddy Price providing growers with 460 reliable price range $415 indicators and guidance 420 $404 $395 Regular adjustments to 380 price range guidance are C17 Range comm
Slide 17: Rice Remains an Attractive Prospect for C19
Rice Remains an Attractive Prospect for C19 SunRice has demonstrated the insulating power that our brands and international trading activities provide against - Price cycles - Increasing competition in lower returning markets - Exchange rate volatility in certain markets For previous crops SunRi
Slide 18: Pure, Premium & Sustainable
Pure, Premium & Sustainable • Resilience Proved • Five-Year Strategy • Vietnam Developments • Profit Businesses Success • Attracting Customers & Facilitating Growers • Summary 18
Slide 19: Resilience Proved: Focus returns to Expansion
Resilience Proved: Focus returns to Expansion Over the past five years, SunRice’s strategy to expand the business has succeeded in: - Improving financial performance, with turnover now well exceeding A$1 billion; - Building a resilient business to weather cyclical downturns; - Increasing grower re
Slide 20: Five-year Strategy: Pure, Premium & Sustainable
Five-year Strategy: Pure, Premium & Sustainable Our five-year strategy identifies where these growth opportunities exist and outlines what we need to do to maximise the benefits Three overarching themes to the refreshed strategy: 1. The provenance of Australian rice Riverina growers to focus on
Slide 21: World is changing in our favour: food trends
Fortunately, being an Australian-owned branded rice player today is exciting given that the world is changing in our favour Food trends that affect SunRice Developing countries that are rice eating nations are ramping up the Rice eating wealth curve, in Many rice-eating nations are search for premiu
Slide 22: Emphasis on sushi and Low GI rices to resonate with Asian consumers
Our greater emphasis on sushi and Low GI rices will likely resonate with the Asian consumer – we will further emphasise these varietals in the Riverina going forward Global Sushi demand Overweight populations in Asia Indexed: Japan size indexed to 100 100 100 Japanese cuisine restaurants outside Jap
Slide 23: Expansion of Short Grain would Benefit Growers
Expansion of Short Grain would Benefit Growers Indexed – a comparison of paddy returns Medium Grain to High-returning markets = Indexed at 100 Riverina should be positioned as 219 the premium Medium Grain source for premium Medium Grain markets Riverina well positioned to grow high-returning var
Slide 24: The 2017 Strategy: repositioning Riverina supply as premium
The 2017 Strategy aims to reposition the higher-cost Riverina supply as our premium supply source intended for premium end-markets. →This means growing higher-returning varietals, investing in equipment that ensures a premium finish, and increase efficiency We aim to ensure that the Riverina grower
Slide 25: Vietnam: servicing high volume yet low value markets
Vietnam: Ensuring SunRice is able to service our high volume yet low value markets from a lower cost supply source 600,000 paddy tonnes of exports per annum: SunRice is one of Vietnam’s larger rice exporters (5% of total exports and ~50% of Japonica exports) SunRice has ensured that the mills we
Slide 26: Profits Businesses Critical to Ongoing Success
Profits Businesses Critical to Ongoing Success Includes International $ Million Rice Business, Rice SunRice NPAT Food, Riviana and 55 52.0 CopRice 49.2 50 C17 Guidance Diverse mix of profit 45.0 45 businesses - Riviana 40 36.0 - SunFoods 35 - Trukai 33.5 34.2 Increasing globally 30 traded volu
Slide 27: Attracting Customers & Facilitating Growers
Attracting Customers & Facilitating Growers Customer Engagement Initiation of ‘paddy to plate’ tours to the Riverina for present and potential customers in key markets to educate on our premium offering and traceability through our vertically integrated supply chain - 10 touring parties visited in
Slide 28: Summary: International Focus, Local Benefits
Summary: International Focus, Local Benefits Meeting the ever increasing demand of our global customers, who are willing to pay for a sustainable supply of premium Riverina rice, and matching consumer trends with relevant products. We will concentrate Riverina supply on higher value varieties to s
Ricegrowers Limited (SunRice) — Investor Presentation (March 2018) on 6ix