Rusagro Group · RUS:RAGR
Rusagro — Ros Agro — Investor Day (March 2016)
58 slides from Rusagro's investor day presentation, Mar 29, 2016
Slide 1: Ros Agro Analyst day presentation
ROS AGRO Analyst day presentation 29 March 2016
Slide 2: Disclaimer
Disclaimer IMPORTANT: You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document by ROS AGRO PLC (the “Company”) or any person on behalf of the Company, and any question-and-answer session that follows the oral pre
Slide 3: Table of Contents
Table of Contents 1 Ros Agro at a glance 4 2 Investment highlights 7 3 Business overview 17 4 Strategy and business development 38 5 Financial overview 43 3
Slide 4: Ros Agro at a glance
Section 1 Ros Agro at a glance 4
Slide 5: Ros Agro at a glance
Ros Agro at a glance Ros Agro – a leading vertically integrated diversified agriculture holding with exposure to highly attractive market segments in Russia and CIS Business highlights Overview of Ros Agro segments3 • #3 sugar producer in Russia with 14% market share1 • 6 sugar refineries 32.9 • #2
Slide 6: Key production metrics
Progress for the last 5 years Ros Agro has demonstrated consistently strong operating performance across all of its core segments since the IPO Sugar Meat Oil & Fats Agriculture #3 #2 #1/#5 Consumer margarine / #3 Sugar producer2 Pork producer Agricultural land holder3,4 Market position1 mayonnaise
Slide 7: Investment highlights
Section 2 Investment highlights 7
Slide 8: Investment highlights
Investment highlights 1 2 3 Agri Oil & Fats business business Meat Sugar business business Strong Russian agri sector Market leadership across core Vertically integrated and diversified fundamentals categories in Russia with scale benefits 4 5 6 7 Strategically located Strong brand portfolio across
Slide 9: Strong Russian agri sector fundamentals
1 Strong Russian agri sector fundamentals Ros Agro is enjoying favorable sector fundamentals in each of the four segments where it is present Sugar Meat Large, stable market with majority sugar production coming from high-margin Strong growth potential driven by further domestic production industria
Slide 10: Strong Russian agri sector fundamentals: government regulation
1 Strong Russian agri sector fundamentals: government regulation The agri sector enjoys strong government support aimed at protecting and developing domestic producers Government support breakdown (2015) Government support of agricultural sector Food Security doctrine Ministry of Agriculture targe
Slide 11: Market leadership across core categories in Russia
2 Market leadership across core categories in Russia Ros Agro commands market leadership positions across all core categories, which have also strengthened over the last few years Sugar Meat Oil & Fats Agriculture Segment Top-3 sugar producers Top-3 pork producers Top-3 consumer margarine producers
Slide 12: Vertically integrated and diversified with scale benefits
3 Vertically integrated and diversified with scale benefits Efficient and stable The company is well-positioned to drive industry consolidation given its scalable business model cluster-oriented Tambov and Voronezh regions Yekaterinburg business model 3 sugar refineries benefiting from scale, 7
Slide 13: Strategically located state-of-the-art facilities
4 Strategically located state-of-the-art facilities High standards of production efficiency through implementation of the modern technological innovations Sugar Meat Sugar processing plants are strategically located in close proximity to the sugar beet Modern technologies in Ros Agro’s pig breed
Slide 14: Strong brand portfolio across products and price points
5 Strong brand portfolio across products and price points Ongoing development of the existing and new brands to further reach out to final customers Oil and fats brands Top-5 in Russia with 5% market share1 Top-3 in Russia with 12% market share3 Nation-wide focused brand increasing Top-1 in
Slide 15: Experienced management with a proven track record
6 Experienced management with a proven track record Experienced management team widely recognised in the industry with solid and proven track record and a highly committed controlling shareholder Founder and the controlling shareholder CEO and a shareholder Senior management Vadim Moshkovich Maxim B
Slide 16: Strong financial performance
7 Strong financial performance Strong Top-Line Growth (RUB bn) Key Highlights Growth During 2013-15 the Company achieved strong top-line growth of ca. 41% per annum with its 62% 23% sales exceeding RUB 72bn in 2015 72.4 The growth was primarily attributable to developments in the meat and oil &
Slide 17: Business overview
Section 3 Business overview 17
Slide 18: Business overview: Sugar segment
Business overview Sugar segment 18
Slide 19: Overview of the sugar market
Overview of the sugar market Russia has one of the highest levels of sugar per capita consumption globally with sugar production from sugar beet benefiting from the favorable sector regulation Highlights Total sugar consumption across countries in 2015 (mt) Russia is one of the largest sugar marke
Slide 20: Sugar segment – assets overview
Sugar segment – assets overview Razgulay’s plants to be acquired1 Chernyansky plant Krivets-Sakhar Otradinsky Sugar Plant Kshen Sugar Plant Nikiforovsky plant Capacity Capacity Capacity Capacity Capacity Sugar Beet 5,500 t/d Sugar Beet 3,500 t/d Sugar Beet 5,400 t/d Sugar Beet 4,200 t/d Sugar Beet 7
Slide 21: Sugar segment – production overview
Sugar segment – production overview Maintenance Feb Mar Apr May Jun Jul Sep Oct Nov Dec Cane sugar production1 2015 sugar production spilt Beet sugar production2 ths. tons ths. tons Conversion ratio3: Cane sugar Conversion ratio4: 24% 97.3% 98.5% 98.4% 12.3% 15.7% 15.5% 582 502 498 Beet sugar 76% 21
Slide 22: Sugar segment – sales and brands overview
Sugar segment – sales and brands overview Share in total Sales pack Product Segment Pricing policy Major customers sales, volume1 Russian State Bags (25,50kg) White sugar State reserves 5.6% Spot rate Reserves Agency Bulk White sugar Industrial Spot rate Industrial Bags (25,50kg) White sugar Industr
Slide 23: Business overview: Meat segment
Business overview Meat segment 23
Slide 24: Overview of the pork market
Overview of the pork market Strong market growth potential driven by the expected per capita pork consumption growth to the European levels, further production industrialisation and import substitution Highlights Annual per capita meat consumption 2015 (kg) Despite relatively stable pork consumpti
Slide 25: Meat segment – assets overview
Meat segment – assets overview Ros Agro’s farms are located on the Company’s land in Belgorod region, Tambov region and in Primorsky Krai, which allows the Company to utilize the farm waste in its agriculture operations where possible and facilitates implementation of biosecurity measures Belgorod r
Slide 26: Meat segment – production overview
Meat segment – production overview Compound feed production Pig population development Pork production ths. tons sows ths. tons Tambov bacon Belgorod bacon Livestock Processed pork 4 565 579 72.3 73.8 65.6 359 33.6 33.7 182 176 32.6 9 115 35 33.0 38.7 40.0 173 141 115 2013 2014 2015 2013 2014 2015 2
Slide 27: Meat segment – sales and distribution overview
Meat segment – sales and distribution overview Sales distribution geography Key meat segment customers (live weight)1 Existing production capacities Proposed production capacities Livestock supply 1,000km radius Sales volume, Share in segment ths. tons sales volume, % Bobrovsky Meat Plant 34 24% (Vo
Slide 28: Business overview: Oil & Fats segment
Business overview Oil & Fats segment 28
Slide 29: Overview of the oil and fats market
Overview of the oil and fats market Russia is the largest sunflower oil and mayonnaise markets globally Highlights Sunflower oil global market 2014 Despite the fact that Russia is the largest consumer of sunflower oil, it still lags Sunflower oil production breakdown by country Sunflower oil consu
Slide 30: Oil & Fats segment – assets overview
Oil & Fats segment – assets overview • 1.25 ths. tons per day capacity for • A leading plant in the processing industry processing of sunflower seeds Top10 regions by sunflower seeds production in Far East • Main products include unrefined sunflower • Plant produces vegetable oil, mayonnaise, oil (p
Slide 31: Oil & Fats segment – production overview
Oil & Fats segment – production overview Mayonnaise production Consumer margarine and spreads production Vegetable oil & meal production ths. tons ths. tons ths. tons Vegetable oil Meal 90.0 80.0 70.0 64.6 56.0 57.7 60.0 47.1 50.0 41.5 43.2 197 0.7 188 171 40.0 0.7 0.2 170 11 53 30.0 110 7 106 40.7
Slide 32: Oil & Fats segment – sales and distribution overview
Oil & Fats segment – sales and distribution overview Share in 2015 sales Brand Product description (volume)1, % • Key brand in the portfolio of EZhK with more than 50 years of history Provansal EZhK 29%2 • TOP 5 mayonnaise brand in Russia and leading brand in Urals region • Founded in 2001, the bran
Slide 33: Business overview: Agriculture segment
Business overview Agriculture segment 33
Slide 34: Overview of the agricultural market
Overview of the agricultural market One of the largest agri commodities exporters globally strategically located in close proximity to the major export destinations Highlights Arable land across countries 20132 (mha) Russia has the largest agricultural land bank in Europe Wheat yields 2016YTD (t/h
Slide 35: Agriculture segment – assets overview
Agriculture segment – assets overview # Elevators Ros Agro's land bank development Regional center Razgulay’s land Regions of Ros Agro operations ths. ha X% Arable Arable land, % to be acquired1 Other Orel 81% 84% 83% Kursk Orel 594 region 9 Kursk 463 464 81 region 76 94 87 Belgorod 4 2 1 Belgorod T
Slide 36: Agriculture segment – crops and production
Agriculture segment – crops and production Sugar beet production Wheat & Barley production Sunflower seeds & Soybean ths. tons XX Yield, tons/ha ths. tons ths. tons Wheat Barley Sunflower seeds Soybean 2.3 3.5 2.9 1.2 0.5 1.5 40.8 37.1 35.7 4.2 4.7 3.6 2.4 1.9 2.3 160 591 671 2,871 2,533 584 2,318 1
Slide 37: Agriculture segment – sales and distribution
Agriculture segment – sales and distribution Sugar beet sales split1 Wheat & Barley sales split1 Sunflower seeds sales split1 Internal External 100% 100% Internal 26% External 74% • The Company seeks to minimise its reliance on • The grain produced is both sold externally and • Ros Agro naturally he
Slide 38: Strategy and business development
Section 4 Strategy and business development 38
Slide 39: Key strategy pillars
Key strategy pillars Ros Agro strategy is focused on shareholders' value creation through market share expansion, geographic and business diversification, as well as development of the human capital 1 Growth in existing business • Screening for new assets and clusters to maintain and enhance market
Slide 40: Growth in existing business
Growth in existing business Ros Agro continues to monitor new areas of business for the ongoing business expansion Expansion of land bank Improve crop mix in favor of the crops with higher sales potential Land bank: • Further expansion of land bank in • Corn and soybean are expected to be the key +4
Slide 41: Development of new food clusters: Far East project
Development of new food clusters: Far East project Project success is expected to be driven by lack of sufficient domestic production in Primorsky Krai and high demand from Asian markets Start of the Project phase Further Commercial 1st phase full c. 27kha of construction of First pig
Slide 42: Development of new food clusters: Greenhouse project
Development of new food clusters: Greenhouse project Hi-tech greenhouse located in Tambov region (town of Michurinsk, Central Russia) Project concept Project catchment area Technologically advanced greenhouse system with supplementary lightening, automatic climate control and computer controll
Slide 43: Financial overview
Section 5 Financial overview 43
Slide 44: Financial Performance Overview
Financial Performance Overview Key Financial Indicators in 2013-2015 Key Highlights During 2013-15 the Company achieved strong top-line growth of ca. RUB m 2013 2014 2015 41% per annum with sales reaching over RUB 72bn in 2015 Rapid top-line The growth was primarily attributable to developments
Slide 45: Key Income Statement Metrics
Key Income Statement Metrics Sales (RUB bn) Gross Profit (RUB bn) Growth Growth 62% 23% 172% 31% 43% 72.4 41% 59.1 31.4 24% 24.1 36.5 8.9 2013 2014 2015 2013 2014 2015 Gross profit Gross profit margin Adjusted EBITDA (RUB bn) 1 Net Income (RUB bn) Growth Growth 166% 35% 530% 17% 34% 34% 33% 31% 24.4
Slide 46: Cost of Sales
Cost of Sales Cost of Sales (RUB bn) Cost of Sales Breakdown by Segment (RUB bn) 1 Growth Total eliminations (RUB bn) 35% 14% 4.8 5.1 8.1 43.3 38.0 28.1 12.7 10.6 2013 2014 2015 6.7 6.6 5.8 Cost of Sales Breakdown by Type (2015) 11.7 5.4 7% 10.1 6% 6.8 7% 20.3 16.6 14.1 80% Raw materials Depreciatio
Slide 47: Selling, General and Administrative Expenses
Selling, General and Administrative Expenses Selling, General and Administrative Expenses (RUB bn) 1 SG&A Breakdown by Segment (RUB bn) 1,3 Growth Total eliminations (RUB bn) 33% 26% 1.0 0.8 0.9 9.4 7.5 5.6 1.6 2013 2014 2015 1.1 3.3 0.5 SG&A Breakdown by Type (2015) 1 2.9 1.6 2.0 18% 36% 1.9 1.5 5%
Slide 48: Adjusted EBITDA and Margin Evolution
Adjusted EBITDA and Margin Evolution EBITDA FY15 vs. FY14 bridge by line item (RUB bn) EBITDA FY15 vs. FY14 bridge by segment (RUB bn) 7,292 937 24,423 2,254 24,423 6,259 (833) (339) (704) (783) 18,070 18,070 (1,157) (220) 1 2 Adj. EBITDA Gro ss p rofit Payroll Transportation Other costs Adju stment
Slide 49: Sugar Segment Performance
Sugar Segment Performance Financial Highlights (RUB bn) Beet Sugar Sales Volume (ths tons) 600 32.9 34% 22.5 545 21% 535 17.0 10% 11.1 4.8 2013 2014 2015 1.7 Cane Sugar Sales Volume (ths tons) 2013 2014 2015 Sales Adj. EBITDA Adj. EBITDA margin 218 Source: Audited IFRS accounts for FY13-FY15 184 Rec
Slide 50: Meat Segment Performance
Meat Segment Performance Financial Highlights (RUB bn) Total Pork Sales Volume Dynamics (ths tons) 17.8 18.1 50% 173 42% 141 115 23% 8.8 7.4 7.7 35 1.7 9 2013 2014 2015 2013 2014 2015 Sales Adj. EBITDA Adj. EBITDA margin Livestock Processed pork Source: Audited IFRS accounts for FY13-FY15 Source: Co
Slide 51: Oil & Fats Segment Performance
Oil & Fats Segment Performance Financial Highlights (RUB bn) Sales Volume and Price of Consumer Products Sales volume (ths. tons) Average price (RUB / kg) 1 17.3 14.9 73 66 71 57 58 8.9 47 41 43 59 57 11% 55 13% 10% 51 1.9 1.7 1.0 2013 2014 2015 2013 2014 2015 2013 2014 2015 2 2 Sales Adj. EBITDA Ad
Slide 52: Agriculture Segment Performance
Agriculture Segment Performance Financial Highlights (RUB bn) Sales Volume Dynamics (ths tons) 1,2 47% 2013 2014 2015 41% Barley 123 249 310 14.2 28% 10.7 Wheat 408 300 285 8.5 6.6 Sunflower seeds 35 99 22 4.4 2.4 Soy 26 11 12 2013 2014 2015 Corn 42 41 77 1 Sales Adj. EBITDA Adj. EBITDA margin Sourc
Slide 53: EBITDA to Net Profit Bridge
EBITDA to Net Profit Bridge FY15 Net profit bridge by line item (RUB m) Key Highlights Adjusted EBITDA In 2015 Adj. EBITDA reached RUB 24.4bn – an increase by RUB 6.4 bn (35% YoY) on the 1,326 3,276 back of sugar and agriculture segments demonstrating an increase in Adj. EBITDA of RUB 24,423 23,69
Slide 54: Capital Expenditures
Capital Expenditures Capital Expenditures (RUB bn) Capex Breakdown by Segment (RUB bn) 1 16% 12% 11.4 11.4 9% 6% 5.2 4.2 26% 2013 2014 2015 Capex % of total sales Source: Audited IFRS accounts for FY13-FY15 Capex Development 23% 5.2 During 2014-15 the Company significantly increased its asset base
Slide 55: Net Working Capital
Net Working Capital Net Working Capital Breakdown Dynamics (RUB bn) Net Working Capital Development NWC / Net Working Capital turnover does not follow specific trend and primarily driven by: Sales 39% 29% 32% – Seasonality factor of operations – The Company’s selling strategy with respect to h
Slide 56: Debt Profile
Debt Profile Leverage Development Net Debt and Net Debt / EBITDA Evolution (RUB bn) 1 Short-term and long-term borrowings increased by RUB 28bn (up 124%) to RUB 50bn as compared to 2014 – Most of the debt is RUB denominated 2.1x Net debt increased by RUB 11.5bn (up 319%) to RUB 15.1bn as compa
Slide 57: Razgulay Acquisition Financing Structure
Razgulay Acquisition Financing Structure Deal Structure In November 2015, Ros Agro made a cash payment of RUB 33.9bn to Vnesheconombank Group (“VEB”) for acquisition of 19.97% equity and 100% of all Razgulay’s Group debt 1 (loans and bonds) with a fair market value of ca. RUB 13.9bn In order to
Slide 58: Thank you for attention!
Thank you for attention! Your questions are welcomed! 58