RCL Foods Limited · JSE:RCL

RCL Foods — H1 2006 Earnings Presentation

24 slides from RCL Foods's earnings presentation, November 2006

  1. Slide 1: Interim Results 6 months ended 30 September 2006

    Interim Results 66 months months ended ended 30 30 September September 2006 2006

  2. Slide 2: Market perspective

    Interim results 6 months ended Market perspective 30 Sep 2006 ƒ Economy grew by 4% - Weaker Rand - Increasing inflation and interest rates - Higher local yellow maize prices - Food inflation impacted by higher maize and fuel costs - Import volumes continue to increase ƒ AI SA status - Local industry

  3. Slide 3: Market perspective: poultry market by channel

    Interim results 6 months ended Market perspective 30 Sep 2006 ƒ Poultry consumption has been Imports growing strongly since the early R1,7bn 1990s, driven by: Continued Chicken high growth - Greater health awareness shops R0,8bn Retail R3,8bn Relatively new, Continued high - Convenience high growth

  4. Slide 4: Market perspective: poultry imports

    Interim results 6 months ended Market perspective 30 Sep 2006 ƒ Imports increased Total poultry imports (‘000 tons) substantially over past 225 few years 69 198 ƒ Chicken products still 60 focused mainly on small range of products (dark meat and offal) 156 154 47 24 ƒ Extension of anti-dumping 44 du

  5. Slide 5: Market perspective: maize prices

    Interim results 6 months ended Market perspective 30 Sep 2006 SAFEX yellow maize spot prices R / ton Year ended Year ended 6m ended March 2005 March 2006 Sep 2006 1,300 1,200 1,100 1,000 900 800 700 600 500 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 Industry dynamics Rainbow action

  6. Slide 6: Highlights

    Interim results 6 months ended Highlights 30 Sep 2006 Revenue (Rm) + 13,7% Operating profit (Rm) + 20,0% 2177,8 2177,8 256,9 1978,3 256,9 1821,6 1915,2 214,2 118,8 85,4 2003 2004 2005 2006 2003 2004 2005 2006 Headline earnings (Rm) + 13,7% Interim dividend per share (cents) + 17,6% 172,4 172,4 20,0

  7. Slide 7: Financial review

    Interim results 6 months ended Financial review 30 Sep 2006 30 Sep 30 Sep % 2005 2006 change Revenue Rm 1 915,2 2 177,8 + 13,7 Headline EBITDA Rm 265,5 314,3 + 18,4 Operating profit Rm 214,2 256,9 + 20,0 Effective tax rate % 30,3 36,1 + 5,8 Attributable earnings Rm 149,2 171,0 + 14,6 Headline earnin

  8. Slide 8: Financial review: revenue

    Interim results 6 months ended Financial review 30 Sep 2006 Revenue (Rm) + 13,7% 2177,8 1978,3 1915,2 450,4 450,4 1821,6 392,3 External sales (Cobb, Epol, Vector) + 21,7% 370,2 376,6 ƒ Higher Epol external volumes 1727,4 1727,4 1586,0 ƒ Vector new principal growth 1545,1 1445,0 Chicken sales + 11,8%

  9. Slide 9: Financial review: EBITDA and profit after tax

    Interim results 6 months ended Financial review 30 Sep 2006 Headline EBITDA + 18,4% Profit after tax (Rm) + 14,6% 14,4% Effective tax rate 12,2% % 36,1% 35,2% 35,1% Headline EBITDA Margin 30,3% 6,5% % 6,3% 314,3 314,3 171,0 171,0 265,5 149,2 Headline Profit EBITDA after tax Rm Rm 90,5 142,4 114,8 67

  10. Slide 10: Financial review: capex and cash generation

    Interim results 6 months ended Financial review 30 Sep 2006 Capex spend - 29,6% Cash generated by ops (Rm) - 16,5% 56,0 Depreciation & 48,9 Amortisation 252,2 Rm 35,5 210,7 210,7 30,1 141,1 128,7 Capex 99,3 83,4 99,3 Spend Rm 65,9 41,1 2003 2004 2005 2006 ƒ Strong cash generation, however R94,3m 200

  11. Slide 11: Financial review: interim dividend per share

    Interim results 6 months ended Financial review 30 Sep 2006 Interim dividend per share + 17,6% 57,0 40,0 ƒ Dividend policy review for year end will take into account: - Performance - Cash flow - Future prospects of the 30,5 business Total 29,0 Final 21,0 21,0 20,0 20,0 17,0 9,5 Interim 8,0 2003 2004

  12. Slide 12: Impact of IAS39

    Interim results 6 months ended Impact of IAS39 30 Sep 2006 13,4 ƒ Reporting the financial effects of only certain procurement instruments in terms of IAS39 introduces volatility to statutory results ƒ 2006 negative R34,1m impact (2005 positive R25,8m) 11,3 11,9 ƒ Underlying (Pre IAS39) profitability

  13. Slide 13: Strategy update

    Interim results 6 months ended Strategy update 30 Sep 2006 1 Maximised Key Performance Indicators in Agriculture Improved processing yields 33 Fixed the basics Enhanced animal husbandry practices and bio-security Managed costs out of the business 33 Yielded improved earnings but the business was sti

  14. Slide 14: Strategy update: five key initiatives

    Interim results 6 months ended Strategy update 30 Sep 2006 3 Redefined our broader business strategy within a framework of 5 key Developing an Creating Managing Investing Creating a initiatives intimate mutually complexity, continually in winning understanding beneficial leveraging inspirational com

  15. Slide 15: Strategy update: chicken sales by channel

    Interim results 6 months ended Strategy update 30 Sep 2006 Chicken sales by channel ƒ Strong growth in Foodservice and Retail Retail channels Foodservice + 14% ƒ Foodservice channel growth areas + 32% 2006 - Quick Service Restaurants (QSRs) Revenue + 13,7% - New business ƒ Retail channel focus areas

  16. Slide 16: Rainbow FoodSolutions

    Interim results 6 months ended Strategy update 30 Sep 2006 Rainbow FoodSolutions ƒ Significant growth from strategic partners in Quick Service Restaurants (QSRs) ƒ Significant growth also through: - New products eg Ready2Go ex Further Processed plant - Expanded customer base via RTM strategy Interim

  17. Slide 17: Strategy update: consumer basket by LSM

    Interim results 6 months ended Strategy update 30 Sep 2006 ƒ Research reinforces that chicken is an important item for every LSM group ƒ Opportunity for Rainbow to offer value added convenience Consumer basket: Top 5 categories by LSM (Source AC Nielsens) LSM LSM LSM LSM 1-4 5+6 7+8 9 + 10 1 Maize C

  18. Slide 18: Further Processed

    Interim results 6 months ended Strategy update 30 Sep 2006 Further Processed ƒ In the first 8 months since launch, new products performing well with excellent acceptance by trade and consumers ƒ Fully Cooked category - well accepted by the trade and consumers ƒ Frozen Crumbed category - capacity to

  19. Slide 19: Individually Quick Frozen (IQF)

    Interim results 6 months ended Strategy update 30 Sep 2006 Individually Quick Frozen (IQF) ƒ IQF category constitutes 62% (2005 57%) of total chicken market (AC Nielsens 12mm JJ06) ƒ IQF grew at 18% volume and 24% value (AC Nielsens 12mm JJ06) and primarily responsible for driving market growth ƒ Ch

  20. Slide 20: IQF Innovation - Flavoured Mixed Portions

    Interim results 6 months ended Strategy update 30 Sep 2006 IQF Innovation - Flavoured Mixed Portions ƒ Opportunity to extend the range into further value added IQF offerings ƒ Consumer insight: Consumers enjoy great tasting aromatic chicken at home ƒ Consumer need: Consumers always add spices to fla

  21. Slide 21: IQF Innovation - Premium Curry Pack

    Interim results 6 months ended Strategy update 30 Sep 2006 IQF Innovation - Premium Curry Pack ƒ IQF with sachet of Mild & Spicy Rajah Curry Powder included ƒ Consumer insight: Chicken curry is a firm favourite ƒ The perfect mix ƒ Co-branding with Unilever Interim Results 6 months ended 30 September

  22. Slide 22: Support

    Interim results 6 months ended Strategy update 30 Sep 2006 Support • TV advertising • In-store Point-of-sale • In-store demonstrations • Fridge dividers • Tactical taste stations • Sampling Interim Results 6 months ended 30 September 2006

  23. Slide 23: Investment update

    Interim results 6 months ended Strategy update 30 Sep 2006 Investment update ƒ Supply Chain review underway - focus of spend in Agriculture and Feedmilling operations ƒ Recent upgrade of Vector distribution facilities - Bellville (Peninsula) - Integration of Multi-Temperature Contract Distribution (

  24. Slide 24: Prospects

    Interim results 6 months ended Prospects 30 Sep 2006 ƒ Consumer spending expected to remain positive, with demand for chicken specifically as an affordable protein source also expected to remain strong. ƒ Maize prices likely to remain at current higher levels and, together with the weaker Rand, it i

RCL Foods Limited (Rainbow Chicken) — H1 2006 Earnings Presentation on 6ix