Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — SunRice — Corporate Update (July 2014)
24 slides from Ricegrowers Ltd. Class B's corporate update, July 2014
Slide 1: SunRice Pre-Season Grower Meetings
SunRice Pre-Season Grower Meetings July 2014
Slide 2: Today's Agenda
Today’s Agenda Rice market update Rob Gordon, SunRice CEO Independent economic assessment of cropping options Michael Ryan, Booth Associates Technology and rice farming: How it is assisting growers Russell Ford, RRAPL Mike Hedditch, SunRice GM Grower Services 2
Slide 3: Rice Market Update
SunRice Pre-Season Grower Meetings Rice Market Update SunRice CEO July 2014
Slide 4: Today's Topics
Today’s Topics SunRice four years after drought SunRice growth trends Global market outlook 4
Slide 5: Where we are now
Where we are now • The business is in a strong position: – We continue to grow our presence in domestic and international markets with a focus on sales of value-added, branded product – We are re-investing further capital in our milling and manufacturing infrastructure to drive improved productivity
Slide 6: Where we are now (cont'd)
Where we are now (cont’d) • As announced earlier this month, we anticipate a C14 paddy return of more than $320/t for Medium Grain (Reiziq) • This translates to higher pricing for specialty varieties, including $440/t for Kyeema and more than $450/t for Koshihikari • We hope to better these estimate
Slide 7: Australia's rice industry – from drought recovery to a position of strength
Australia’s rice industry – from drought recovery to a position of strength Australian Rice Crop Size – recovered remarkably well post drought (2006-2015E, ‘000 tonnes) Crop Size 1,161 (‘000 tonnes) 1,038 963 >950 825 800 205 167 66 19 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E Price per ton
Slide 8: Core Rice sales growth of 7% p.a
Core Rice sales growth of 7% p.a Consumer Markets (C11 – C14) FP Tonnes 8
Slide 9: Specialty Varietals growth of 16% p.a
Specialty Varietals growth of 16% p.a Consumer Markets (C11 – C14) FP Tonnes 9
Slide 10: Rice Food Group sales growth of 9% p.a
Rice Food Group sales growth of 9% p.a Consumer Markets (C11 to C14) FP Tonnes 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 C11 Actual C12 Actual C13 Actual C14 Forecast Rice Flour Rice Cakes Microwave Rice Ready to Go Meals 10
Slide 11: Growth in demand outstripping supply of Australian grown rice
Growth in demand outstripping supply of Australian grown rice 1,180 989 Paddy Equivalent Tonnes ('000) 953 831 Japan MA Potential Japan MA Actual Alternate Sources Vietnamese LG Other Seed 30k & Paddy Moisture 1.5% Tender Markets Rice Consumer Rice C11 C12 C13 C14 Forecast C15 Potential 11
Slide 12: We Need More Rice!
WE NEED MORE RICE! 12
Slide 13: Factors affecting price for C15
Factors affecting price for C15 • Mix of businesses • International supply and demand • Foreign exchange • Our cost controls 13
Slide 14: The California drought – USDA key stats
The California drought – USDA key stats YTD rainfall totals are running around 50% of normal The final readings conducted this year measured water levels in the state's northern Sierra snowpack at 7% of the average level California crop acres estimated at 495,000 in 2014/15, down nearly 13% Dr
Slide 15: The California drought – another point of view
The California drought – another point of view According to the latest Drought Jul 10 2014 U.S Drought Monitor Monitor Report, 79% of California California is in extreme or exceptional drought Drought and water concerns continue to mount U.S Federal forecasters predict downgrade in expected El
Slide 16: Influences on global prices
Influences on global prices 2013/14 Minimum Access $20.25 $19.25 $18.25 $17.25 $16.25 Paddy Premium $15.25 $14.25 $13.25 $12.25 $11.25 $10.25 $9.25 $8.25 Sept Oct Nov Dec Jan Feb Mar 2013 2013 2013 2013 2014 2014 2014 16
Slide 17: Long Grain prices are softening
$100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 US$ /mt May 05 Jul 05 Sep 05 Nov 05 Jan 06 Mar 06 17 Sources: Creed Rice Market Report May 06 Jul 06 Creed – Thai LG Prices Sep 06 2005 – 2014 US$/t (FOB) Nov 06 Jan 07 Mar 07 May 07 Jul 07 Sep 07 Nov 07 Jan 08 Creed Tha
Slide 18: Foreign exchange historical movement
Foreign exchange historical movement Crop Year C11 C12 C13 C14 C15 Price per tonne 275 317 293 >320 - Unhedged FX USD$* 1.04 1.04 0.92 0.91 (est) - * RBA average by crop year 18 Sources: Yahoo7
Slide 19: Foreign exchange outlook
Foreign exchange outlook USD to AUD 2014 (Sep) 2015 (Sep) Westpac 0.91 0.93 CBA 0.94 0.92 ANZ 0.90 0.84 NAB 0.90 0.82 Avg 0.91 0.88 19 Sources: Westpac, CBA, ANZ, NAB
Slide 20: Cost control - C14 milling yields return to more normal levels
Cost control - C14 milling yields return to more normal levels Whole Grain Milling Yield 2005-2014E, % Tonnes 000’s W/G Yield 65% 1161 1,200 1,038 1,100 963 1,000 900 60% 825 900 800 700 55% 600 500 400 50% 300 205 167 200 66 100 19 45% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
Slide 21: Cost control - Investing in plant and equipment
Cost control - Investing in plant and equipment • We continue to invest for future growth in both our Rice Milling and Marketing and Specialty businesses • In 2013/14 we committed significant capital investment across the Group, including: – Upgrades to core rice milling equipment – A new rice cakes
Slide 22: Rice is an attractive prospect for C15
Rice is an attractive prospect for C15 • Price prospects are positive for C15 • As Michael Ryan will show, profit and returns on capital are superior • We are now targeting 950,000 tonnes of rice annually as our production base • There is strong growth in demand across premium markets with premium p
Slide 23: Questions
Questions SunRice Pre-Season Grower Meetings Rice Market Update SunRice CEO July 2014
Slide 24: Key points to take away and consider
Key points to take away and consider 1 Rice is a contemporary industry with a very bright future. 2 There is strong demand across premium markets for high quality rice grown in the Riverina. 3 For the majority of you, rice yields better on-farm returns than other options. 4 We want rice to be the “f