Rusagro Group · RUS:RAGR
Rusagro — Ros Agro — Investor Presentation (November 2015)
48 slides from Rusagro's investor presentation, November 2015
Slide 1: ROS AGRO Presentation for Investors
ROS AGRO Presentation for Investors November 2015
Slide 2: Disclaimer
Disclaimer • This presentation was prepared using the information available to ROS AGRO PLC and its subsidiaries (the “Group”) at the time of its preparation. Some of the statements in this presentation regarding the Group's business activities, economic indicators, financial position, business and
Slide 3: Table of Contents
Table of Contents 1 Introduction to Ros Agro 4 2 Investment highlights 9 3 Strategy and business development 31 4 Financial performance 37 5 Appendix 46 3
Slide 4: Introduction to Ros Agro
Section 1 Introduction to Ros Agro 4
Slide 5: Ros Agro – The leader of the Russian agricultural sector
Ros Agro – The leader of the Russian agricultural sector Business highlights 2014 Key operational figures • #2 sugar producer in Russia with 15% market share1 Agricultural land bank2 500 ths. ha Vegetable oil production 188 ths. tons • #2 pork producer in Russia with 6% market share1 Sugar productio
Slide 6: Ros Agro demonstrated a solid track record of resilient performance
Ros Agro demonstrated a solid track record of resilient performance Revenue CAGR1 Resilient growth trend in revenue2 (2012-2014) US$ m Revenue EBITDA margin Ros Agro 18% JBS 15% 1,532 1,351 Tyson foods 9% 1,096 1,144 1,020 Cherkizovo 7% 779 31% 33% 716 26% 26% MHP (1)% 21% 19% 565 BRF (4)% 14% 13% I
Slide 7: Ros Agro’s diversified asset base
Ros Agro’s diversified asset base Location of the assets on the map of Russia Ros Agro assets by business segment Capacities (annual) Split by region1 R U S S I A Moscow • 6 sugar refineries with total 44% Sugar capacity of c. 35.1 ths. tons 56% BELGOROD per day SAMARA Belgorod Tambov TAMBOV YEKATER
Slide 8: Ros Agro’s footprint across the globe
Ros Agro’s footprint across the globe The group’s products are sold in more than 80 regions of Russia and are exported to 14 countries Denmark Germany Russia Belarus Moldova Japan Azerbaijan South Kazakhstan Mongolia Korea Turkey Uzbekistan Turkmenistan Egypt Israel Kyrgyzstan China Iran Afghanistan
Slide 9: Investment highlights
Section 2 Investment highlights 9
Slide 10: Ros Agro – Key investment highlights
Ros Agro – Key investment highlights 1 Ros Agro is the most prominent integrated agribusiness company in Russia • Ros Agro holds market leadership positions across all its businesses… • …operating a vertically integrated business model 2 Second largest sugar producer in Russia • Russia is one of the
Slide 11: Ros Agro holds leading positions across all its businesses
1 Ros Agro holds leading positions across all its businesses… Sugar Meat Oil & Fats Agriculture #1 • Sugar cube producer in #2 • Commercial pork production #1 • Margarine production 500 • Land bank (in ths. ha) Russia Key highlights (2014) 43% • Market share (by volume) in 6.3% • Market share in com
Slide 12: …operating a vertically integrated business model
1 …operating a vertically integrated business model Agriculture Oil and fats 4 Elevators with capacity to store up to 415 ths. tons of grain and 320 ths. tons of outdoor storage Sugar Meat Provides the Meat Agriculture Provides the Sugar segment with majority Surplus grain • The ingredients are sour
Slide 13: Russia is one of the largest consumers of sugar globally
2 Russia is one of the largest consumers of sugar globally… Market overview Russia has the highest per capita sugar consumption... • Russia boasts of the highest annual per capita sugar Annual per capita sugar consumption1, kg 42.4 consumption in the world (42.4 kg per capita vs. 36.5 kg for Brazil,
Slide 14: Ros Agro being the 2nd largest sugar producer in the country
2 …with Ros Agro being the 2nd largest sugar producer in the country... Business overview Ros Agro has been consistently increasing its market share • Ros Agro is the second largest sugar producer with a 15% market share Market share in 2014 (2014) 22% 15% 13% ‒ Ros Agro accounted for 33% of the tot
Slide 15: Operating sugar refineries strategically located near sugar beet farms
2 ...operating 6 sugar refineries strategically located near sugar beet farms… Belgorod region can process 15,600 tons of sugar beet per day and Tambov region can process 19,500 tons of sugar beet per day Capacity Sugar Beet 5,500 t/d Raw Cane 750 t/d Belgorod Capacity Capacity Nikiforovsky Tambov S
Slide 16: Strong branded product line covering different price categories
2 …and owning a strong branded product line covering different price categories Mon Cafe Russkii Sakhar • Extra grade • White sugar cubes • Shaped refined sugar • White sugar crystals Chaikofsky cubes Brauni Extra grade sugar: • Brown granulated cane • White sugar cubes sugar • White crystals • Brow
Slide 17: Russia is the fifth largest pork consumer globally per capita
3 Russia is the fifth largest pork consumer globally in per capita terms… Market overview Russia in the global pork market Annual per capita pork consumption1, kg • Russia is the fifth largest pork producer globally (2014) ‒ The country’s per capita pork consumption reaches 20.5kg, lagging 53.9 53.3
Slide 18: Ros Agro being the 2nd largest pork producer in the country
3 …with Ros Agro being the 2nd largest pork producer in the country… Ros Agro has a strong foothold in the Russian pork market… …positioned 2nd after Miratorg with a 6.3% market share… • Ros Agro has been one of the top 5 companies on the Russian 12.7% pork market since 2010 ‒ It is the second large
Slide 19: State-of-the-art facilities in Belgorod and Tambov regions
3 …operating state-of-the-art facilities in Belgorod and Tambov regions Belgorod region Tambov region Belgorod Regional presence Tambov Regional center Pig farm Feed plant • 6 commercial pig farms for 5,100 sows each • 7 commercial pig farms for 4,800 sows each Commentary • 1 breeding facility for 2
Slide 20: Russia is the largest consumer of mayonnaise and sunflower oil
4 Russia is the largest consumer of mayonnaise and sunflower oil in the world… Market overview Stable demand and supply of sunflower oil in the Russian market • Russia is the largest consumer of mayonnaise and sunflower oil m tons Production Domestic consumption 3.9 3.6 ‒ Per capita consumption of m
Slide 21: Ros Agro operating as one of the leading players in the market
4 …with Ros Agro operating as one of the leading players in the market… Business overview • Ros Agro is the largest producer of margarine and fifth largest producer of mayonnaise in Russia ‒ In 2014, the company strengthened its position on the margarine market by 12% points reaching 49% market shar
Slide 22: …with a strong portfolio of brands
4 …with a strong portfolio of brands… Top 10 mayonnaise brand in Leading margarine and Top 15 ketchup brand in Leading position in markets Russia spreads brand in Russia and Russia in Azeribaijan and Moldova Ural region 6% market share in Russia #1 ketchup brand in Ural Markets mayonna
Slide 23: Manufacturing footprint close to agricultural farmlands
4 …and manufacturing footprint situated in close proximity to agricultural farmlands • 1.25 ths. tons per day capacity for • Leading plant in the processing industry processing of sunflower seeds in Far East • Main products include unrefined sunflower • Plant produces vegetable oil, mayonnaise, Top1
Slide 24: Russia accounts for 9% of the world’s arable land
5 Russia accounts for 9% of the world’s arable land… Market overview World’s arable land by country1 • Russia’s population of c. 140m provides a vast market for agricultural products • Furthermore, Russia’s geographic position gives an inherent 11% 11% advantage of catering to the growing demand
Slide 25: Ros Agro as one of the largest agricultural companies in the country
5 … with Ros Agro as one of the largest agricultural companies in the country… Business overview Top 10 holders of agricultural land in Russia1 • Ros Agro’s farmland is located mainly in the Belgorod and ths. ha 570 Tambov regions, in close proximity to the company’s processing 550 500 495 facil
Slide 26: 500 thousand hectares of land under control
5 … with 500 thousand hectares of land under control… Overview of the assets Key regions of operations • Ros Agro’s key assets include 500 ths. ha of land, 4 elevators with Regional center Regions of Ros Agro operations 415 ths. tons of grain capacity and 320 ths. tons of outdoor storage in slee
Slide 27: Above market yields across majority of key crops
5 …providing above market yields across majority of its key crops Operating highlights Source: Rosstat Yields 2014 (tons per ha) Prices (RUB/kg) Ros Agro Russia's average 2013 2014 43% 5% 33% 8% 3% 15.8 4.7 4.4 3.6 3.5 9.8 9.0 8.2 2.5 2.3 1.9 5.9 6.4 6.2 1.7 4.9 1.4 1.4 4.9 4.0 Wheat Corn Barley S
Slide 28: Ros Agro is led by its best-in-class senior management
6 Ros Agro is led by its best-in-class senior management… Vadim Moshkovich Maxim Basov Vadim Moshkovich Maxim Basov Founder, Chairman of the Board of Directors Chief Executive Officer • In May 2015, Mr. Moshkovich was appointed the Chairman of • In July 2009, Mr. Basov joined Ros Agro as the General
Slide 29: Supported by a strong management bench
6 …supported by a strong management bench Name Title Biography Sergey Tribunsky Investment Director, Director for M&A, capital • Has served as Investment Director, Director for M&A, capital markets, investor relations since February 2015 markets, investor relations • Joined Ros Agro in 2009 • Previo
Slide 30: Consistent government support program
7 Consistent government support program Government support breakdown (2014) Government support by target sector (2015-2020) Interest rate subsidies Dairy cattle breeding 12% 16% Land development Finance-payment system 14% 32% Animal breeding 43% Crop growing (indirect support) RUB 193bn RUB 617bn 15
Slide 31: Strategy and business development
Section 3 Strategy and business development 31
Slide 32: Key pillars of Ros Agro’s development strategy
Key pillars of Ros Agro’s development strategy 1 Expanding • Ros Agro invested more than RUB 52bn in development of production in 2010-2014 presence in all • Ros Agro keeps considering acquiring new assets and investing in projects to expand existing capacity to maintain leading positions in the Rus
Slide 33: Expanding presence in all business areas (1/2)
1 Expanding presence in all business areas (1/2) Sugar production development1 Meat production development ths. tons ths. tons 187 717 604 611 135 57 109 219 73 547 502 498 2012 2013 2014 2012 2013 2014 From sugar beet From raw cane sugar • In 2014 company increased production in an attempt to benef
Slide 34: Expanding presence in all business areas (2/2)
1 Expanding presence in all business areas (2/2) Ongoing projects and plans for the future Construction of pig farming complexes in Primorsky Krai Expansion to new export markets Construction • Constructing pig farms with Current • Company will continue launch: capacity of 300 ths. tons of export ex
Slide 35: Further development of consumer brands
2 Further development of consumer brands Ongoing projects and plans for the future Further expansion of presence in all Development of B2C brands in the segments of the sugar market Further development of Mechta Khozyaiki brand meat segment Cost: • Expand presence in all segments of • Development of
Slide 36: Far East development cluster
3 Far East development cluster Overview Exclusive location between major export markets Current status Medium-term goals RUSSIAN FEDERATION Land • In 2014 acquired ca. 26.5 ths. • Plans to substantially ha of land increase the land bank • Received government support • Begin construction of 100 t
Slide 37: Financial performance
Section 4 Financial performance 37
Slide 38: Ros Agro summary income statement
Ros Agro summary income statement Income statement based on audited IFRS Commentary RUB m 2012 2013 2014 1H 2014 1H 2015 • In 1H 2015 company significantly increased its revenue and EBITDA Sales 34,064 36,490 59,112 26,645 32,589 margin mainly due to increased sales and profitability of sugar, meat
Slide 39: EBITDA development overview
EBITDA development overview 2013 – 2014 EBITDA development RUB m XX% - EBITDA margin 31% 2,014 857 18,069 7,103 (1,778) 19% 3,089 6,784 FY 2013 Sugar Meat Agriculture Oil & Fats Eliminations & FY 2014 Other 1H 2014 – 1H 2015 EBITDA development RUB m XX% - EBITDA margin 33% 546 67 46 10,697 24% 823 2
Slide 40: Sugar segment performance
Sugar segment performance Financial performance Operating performance Production Sales volumes and price RUB bn 22.5 31% ths. tons 39.6 17.0 28.4 27.1 24.6 21% 14.3 717 16% 611 752 10% 10.8 653 4.8 389 353 4.5 226 183 1.7 1.7 2013 2014 1H 2014 1H 2015 2013 2014 1H 2014 1H 2015 2013 2014 1H 2014 1H 2
Slide 41: Meat segment performance
Meat segment performance Financial performance Operating performance Production Sales volumes and price RUB bn ths. tons 50% 43% 47% 95.9 100.9 87.3 17.8 187 63.6 23% 135 8.8 8.5 7.4 7.2 89 92 182 3.1 4.0 115 1.7 80 83 2013 2014 1H 2014 1H 2015 2013 2014 1H 2014 1H 2015 2013 2014 1H 2014 1H 2015 Rev
Slide 42: Agriculture segment performance
Agriculture segment performance Financial performance Operating performance RUB bn Sales volumes (ths. tons) Prices (RUB/kg) 47% 2013 2014 1H14 1H15 2013 2014 1H14 1H15 41% 31% Sugar Sugar 2,935 2,330 12 - 1.5 2.1 1.6 - 28% beet beet 10.7 Wheat 408 299 57 129 Wheat 5.9 6.4 5.7 8.4 8.5 Barley 123 249
Slide 43: Oil and Fats segment performance
Oil and Fats segment performance Financial performance1 Key product sales RUB bn Samara oil plant (SAPP) Yekaterinburg fats plant (EZhK) Margarine 19% 17% 17% 21% 50.8 54.5 66.2 51.1 Sales volume (ths. tons) 7% 7% 6% 8.1 5% 6.8 41 47 20 20 Sale price (RUB/kg) 4.9 5.6 3.3 3.8 3.1 3.6 2013 2014 1H 201
Slide 44: Ros Agro debt portfolio overview
Ros Agro debt portfolio overview Cheap financing and abundant cash available Conservative leverage • Gross debt increased by RUB 2.7bn (up 12%) to RUB 25bn RUB bn ‒ 97% of total gross debt is subsidized 2.1x ‒ Effective average interest rate of 2.6% ‒ All debt is RUB denominated 14.6 0.2x • Since
Slide 45: Ros Agro working capital and CAPEX overview
Ros Agro working capital and CAPEX overview Net working capital dynamics Commentary RUB m 2013 2014 1H 20152 • Net working capital changes are mainly driven by Trade and other receivables 1,771 2,348 2,815 seasonality factor of operations Receivable days 17.7 14.5 15.8 + • In 2014 c.53% of trade and
Slide 46: Appendix
wZROS AGRO Wid PLC Section 5 Appendix
Slide 47: Ros Agro balance sheet and cash flow statement
Ros Agro balance sheet and cash flow statement Balance sheet Cash flow statement1 RUB m FY13 FY14 1H 2015 RUB m FY13 FY14 1H 2014 1H 2015 Current assets 38,146 43,910 51,115 Cash flows from operating activities Profit before taxation 3,533 20,892 6,278 7,954 Cash and cash equivalents 2,673 10,31
Slide 48: Developing markets peers
Trading Multiples of Comparable Companies EV / EBITDA P/E Market Cap Sector Company Country Div. Yield1 (US$ m) 2015E 2016E 2015E 2016E Ros Agro Russia 1,121 3.1x 3.0x 4.1x 4.1x 7.4%2 Cherkizovo Russia 600 4.8x 4.0x 6.1x 5.2x 12.8% MHP Ukraine 967 4.4x 4.4x 6.1x 4.1x 5.0% Core peers Kernel Ukraine 1