Ridley Corporation Limited · ASX:RIC
Ridley — Energy, Chemicals and Agriculture Conference 2011
32 slides from Ridley's conference presentation, Mar 11, 2011
Slide 1: Ridley Corporation
Ridley RidleyCorporation Corporation Energy, Chemicals and Agriculture Conference 11 March 2011 1
Slide 2: Ridley Corporation
Ridley Corporation Ridley Corporation Limited (RIC) is: Australia’s largest processor of stockfeed products – now including rendering after the recent acquisition of Camilleri Stockfeeds (Ridley AgriProducts) Australia’s largest producer and refiner of salt products (Cheetham Salt) In addition Ridle
Slide 3: An Agribusiness like no other
An Agribusiness like no other Ridley’s performance is most linked to salt and the intensive industries of poultry, aquafeeds, dairy and pork for which intensive feeding is critical to success Performance not linked to the size of the grain crop and so earnings less volatile Performance not linked to
Slide 4: Low Correlation to Crop Prodn and Prices
Low Correlation to Crop Prodn and Prices Low Correlation between Ridley EBIT* and Low Correlation between Ridley EBIT* and Crop Production Wheat Prices 450 $50.0 35.0 $50.0 Crop Production (mt) $45.0 400 $45.0 30.0 Ridley EBIT + JVs $40.0 350 $40.0 25.0 $35.0 $35.0 300 $30.0 $30.0 20.0 250 $25.0 $25
Slide 5: Ridley Resilient
Ridley Resilient Sustained periods of rainfall in dry season led to highest levels recorded on east coast for up to 50 years prior to onset of widespread flooding around half year end Abundance of natural pasture for dairy, beef and sheep sectors Less reliance placed on supplementary feeding 5
Slide 6: Ridley Resilient
Ridley Resilient Period of severe adverse weather conditions - sustained periods of widespread and unseasonally high rainfall Stress testing of businesses - wet weather contingency plans actioned $1.0 million uplift in NPAT - lower operating result boosted by lower tax and with strong underlying cas
Slide 7: Productivity Improvements
Productivity Improvements Agriproducts at $20.63 v’s $14.04 in FY08 – but targeting >$23.31 Agriproducts FY08 FY09 FY10 1H 1H FY10 FY11 Tonnes (kt) 1,610 1,573 1,570 790 829 EBITDA 22.6 31.1 36.6 17.4 17.1 EBITDA/Tonne $14.04 $19.77 $23.31 $22.03 $20.63 Cheetham at $18.07 v’s $14.64 in FY09 despite
Slide 8: Agriproducts Overview
Agriproducts Overview Market ~12mt of animal feed consumed annually in Australia ~6mt freely traded and the other 50% owned by integrators, feedlots etc Ridley has ~1.5mt (25%) of the freely traded market and ~12.5% of the total market Sale of 50% share in Champion Liquid Feeds Acquisition of Camill
Slide 9: Segment Summary
Segment Summary Poultry: 24% growth from ramp up of long term Sector 1H 1H customer contracts, market growth of chicken consumption and growth in niche turkey and duck FY10 FY11 sectors (kt) (kt) Aqua-feed: prior year sales growth and market penetration maintained with Ridley Aqua-feed Poultry 371 4
Slide 10: Camilleri Stockfeeds
Camilleri Stockfeeds Acquisition completed 1 March 2011 CSF represents an ideal bolt on for Ridley: Manageable size ($25-$35m) and wholly debt fundable EPS accretive (at least 5%) with robust reliable earnings and opportunities for growth Strong cash conversion Synergies with our Ridley Aqua-Feed bu
Slide 11: Camilleri Stockfeeds
Camilleri Stockfeeds Poultry and fish only – low exposure to weather and seasonal fluctuation Significant blending capacity Export licences and only holder of EU licence, AQIS accredited for importing Important supplier of protein to animal feed industry and key input into pet industry Scalable Stro
Slide 12: Cheetham Salt Overview
Cheetham Salt Overview Cheetham owns: 11 solar salt fields with combined production capacity of ~1.4mt 5 refineries (one in Indonesia) including a flake salt plant ~70% domestic market share Joint Venture interests: Salpak: JV with Cerebos in Australian retail salt (major brand Saxa) Western Salt Re
Slide 13: Segment Summary
Segment Summary 1H 1H Soda Ash volumes down due to lower Sector FY10 FY11 offtake by Penrice Soda Ash 290k 260k Chemical FY10 comparative included the one off sale of low grade, prior year Chemical 90k 83k harvest stac. Food 50k 48k Food reflects slight reduction in retail Pool 38k 43k volumes Hide
Slide 14: Conclusions and Outlook
Conclusions and Outlook Half year result - weather impacted, delayed the returns to come from capital projects, but delivered strong operational cash flows despite sharp and sustained rises in grain prices Impacts of recent and widespread flooding still to be fully assessed Second half raw material
Slide 15: Conclusions and Outlook
Conclusions and Outlook Integrate Camilleri acquisition to ensure EPS accretive in first 12 months Maintain strong cash conversion and recent dividend streams Manage capital expenditure within depreciation and amortisation levels Continue focus on effective management of working capital Position the
Slide 16: Why invest in Ridley
Why invest in Ridley Lowly geared at ~33% after Camilleri acquisition, with the facility and debt servicing capability to be proactive and opportunistic Strong conversion of operating result to cash Market leader in salt business domestically and in New Zealand with high barriers to entry Leading do
Slide 17: Why invest in Ridley
Why invest in Ridley Agri-sector stock but focused on diversified intensive feed solutions driven by Australian domestic food consumption High natural risk mitigation through broad sector and geographic diversification Less reliant on climate than other Agri-sector businesses Low volatility underpin
Slide 18: Total Shareholder Return
Total Shareholder Return From 6 May 2008 (day prior to announcement of outcomes of strategic review) $1.60 39% $1.40 17% $1.20 -4% $1.00 -8% $0.80 $0.60 $0.40 Ridley TSR Ridley Share Price Source: IRESS $0.20 ASX 200 Accum. Index (based to Ridley) Small Ords Accum. Index (based to Ridley) $- 6-May-0
Slide 19: Share Price Performance – Last 12 Months
Share Price Performance – Last 12 Months 19
Slide 20: Total Shareholder Return – Last 12 months
Total Shareholder Return – Last 12 months 20
Slide 21: Ridley Corporation
Ridley Corporation We feed the food that ends up on your plate Premium Solar Salt Ridley transformed and now a compelling proposition
Slide 22: Appendices
Appendices 1. Profit and Loss Half Year Results 2. Cashflow Half Year Results 3. Financial Ratios Half Year Results 4. Division Highlights 5. Camilleri Diagrams 22
Slide 23: Financial Highlights
Financial Highlights Group NPAT of $15.9m, up $1.0m or Consolidated result 1H 1H 6% on 1H FY10 FY10 FY11 EBIT result for AgriProducts of $12.8m Sales Revenue 381.8 373.6 includes $0.4m contribution from liquid feeds business up to and EBIT - AgriProducts 14.1 12.8 including its sale EBIT - Cheetham
Slide 24: Cashflow
Cashflow Consolidated 1H 1H FY10 FY11 Strong EBITDA performance despite severity of adverse weather conditions EBITDA (inc JV NPAT’s) 29.3 27.8 Inventory increase of $9.6m following rises in Movement in working capital (3.5) (5.8) grain prices. Other net cash outflows * (1.5) (6.9) Capex of $5.9m le
Slide 25: Financial Ratios
Financial Ratios Consolidated result 1H 1H Gearing stable reduced to 26.2% FY10 FY11 pre- Camilleri acquisition (33.5% post) with strong debt servicing Net Debt 78.4 75.8 capacity Equity 281.5 288.9 ROE maintained in double figures Total Assets 486.5 493.4 for the third successive period at Gearing
Slide 26: Ridley Agriproducts
Ridley Agriproducts 26
Slide 27: Agriproducts Highlights
Agriproducts Highlights EBIT result of $12.8m - temporary deviation from longer term growth path but highly resilient result in stressful period for the business Aqua-feeds - insulated from on-land adverse weather events Packaged Products – earnings stable despite pasture availability - new product
Slide 28: Cheetham Salt
Cheetham Salt Premium Solar Salt 28
Slide 29: Cheetham Highlights
Cheetham Highlights EBIT result of $11.3m, down $2.0m on corresponding period $2.0m adverse impact of severe weather events: 36% volume fall in stockfeed sector delays in reaching nameplate production capacity loss of harvested salt from the bank at Bajool harvest deferral at Bowen Cost savings of $
Slide 30: Property
Property LARA 912ha site at Lara adjacent to Avalon airport, Vic Medium term 1-3 years Land available now DRY CREEK Project on hold 316ha located 12kms from Adelaide CBD Redevelopment not feasible at the present time due to current contractual commitments to Penrice 30
Slide 31: Camilleri Stockfeeds
Camilleri Stockfeeds Camilleri Stockfeeds Pty Ltd (‘CSF’) is both a renderer of poultry bones, blood, feathers, offal and fish offal and a trader of protein and oil based products for the aquaculture, pet, poultry, and stockfeed industries 31
Slide 32: Camilleri Stockfeeds – Sydney basin
Camilleri Stockfeeds – Sydney basin Proximity to Sydney + yet distanced from urban growth corridors 32
Ridley — Energy, Chemicals and Agriculture Conference 2011 on 6ix