Rainbow Chicken Limited · JSE:RBO
Rainbow Chicken — Investor Presentation (May 2006)
30 slides from Rainbow Chicken's investor presentation, May 2006
Slide 1: Investor presentation May 2006
Investor presentation May 2006
Slide 2: Agenda
Agenda ¾ About Rainbow ¾ Industry perspective ¾ Market conditions ¾ 2006 highlights ¾ Financial review ¾ Strategic update ¾ Further Processed products launch ¾ Prospects ¾ Questions and answers Investor presentation May 2006
Slide 3: About Rainbow
About Rainbow Facts Our common purpose ¾ South Africa’s largest processor and marketer of chicken “Rainbow at the heart ¾ Listed on the JSE Securities Exchange of every meal” ¾ Founded in 1955 ¾ Headquartered in KwaZulu-Natal, South Africa ¾ Revenue R4,1 bn ¾ 6,686 employees ¾ 5 feed mills ¾ 4 proce
Slide 4: Major facilities
Major facilities Zimbabwe Botswana Windhoek Northern Province Mozambique Gaborone Namibia Mpumalanga Gauteng Johannesburg Feed mills North Maputo West Swaziland Processing plants Free KwaZulu State Natal Northern Northern Cape Cape Lesotho Durban Springbok Eastern Cape Eastern East London Cape Weste
Slide 5: Sales
Sales Statutory Revenue (R4101,5m) By Distribution Channel External sales * R654,2m 15,9% Foodservice Retail 33% 32% Chicken R3447,3m Wholesale 84,1% Independents 10% 25% * Cobb, Epol, Vector Investor presentation May 2006
Slide 6: Distribution channels
Distribution channels Retail Foodservice Quick Service Full Service Contract Hyper stores Supermarkets Restaurants Restaurants Caterers Wholesale & Independents Cash & Carry Independents Chains Independents Sub-Distributors Butcheries Specialist Wholesalers Investor presentation May 2006
Slide 7: Strong national brands
Strong national brands Rainbow Farmer Brown will become the preferred choice will be unashamedly our consumers’ for South African chicken premium choice in fresh and value- consumers, by taking ownership added chickens. This will be delivered of all customer poultry contact through consumer points t
Slide 8: Industry perspective
Industry perspective Estimated per capita consumption of poultry meat 22,4 21,1 20,5 19,7 20,1 19,4 19,7 18,6 18,9 17,6 17,8 16,2 15,5 14,5 14,5 14,4 Kg Per capita 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 ¾ Continues to reflect growing trend, different to other protein sources (beef consumpti
Slide 9: Industry perspective
Industry perspective Estimated poultry consumption growth 8,7 8,5 8,2 6,8 Growth % 3,9 3,0 3,1 (1,3) 1,253 1,153 1,080 1,047 1,016 Tons 950 937 914 ‘000 845 98 99 00 01 02 03 04 05 06 Source: SAPA Investor presentation May 2006
Slide 10: Industry perspective
Industry perspective Average broiler production per week Excludes imports 12,1 12,4 11,8 11,4 11,5 11,1 11,0 10,5 9,8 9,8 9,2 8,5 8,0 7,6 7,5 7,1 7,1 Million broilers 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 ¾ Steady growth over last 3 years ¾ Recent investments in the industry likely to s
Slide 11: Industry perspective
Industry perspective Average broiler production per week by producer ¾ 12,4m broilers produced per week Million broilers per week as at March 2006 ¾ 1m tons per annum 4,0 ¾ Astral = Earlybird Farms + County Fair 3,4 ¾ Others = approximately 48 smaller producers producing less than 200k broilers per
Slide 12: Industry perspective
Industry perspective Beef, Pork and Poultry prices R / kg 15 Beef abattoir 14 selling prices 13 12 11 10 Pork abattoir contract prices Broiler 9 producer price 8 7 2002 2003 2004 2005 ¾ Poultry prices becoming less volatile ¾ Beef prices increased significantly Source: SAPA Investor presentation May
Slide 13: Industry perspective
Industry perspective ¾ Imports increased Total poultry imports (‘000 tons) 225 substantially over past 69 few years 198 ¾ Chicken products still 60 focused mainly on small range of products (dark 156 meat and offal) 47 24 ¾ Extension of anti-dumping tariff (USA) under review 27 132 112 2006 origin 9
Slide 14: Market conditions
Market conditions ¾ Economy grown by 4,4%, assisted by: Further tax relief Increased consumer Low inflation spending Stable interest rates ¾ Local chicken industry grown by 8% in volume terms ¾ Reduced planting and lower anticipated yields resulted in 63% increase in 31 March year-on- year mai
Slide 15: 2006 highlights
2006 highlights Revenue (Rm) + 1,8% Headline EBITDA (Rm) + 86,9% 4,104 688,1 4,027 3,830 367,0 368,2 2004 2005 2006 2004 2005 2006 Cash generated (Rm) + 69,1% Dividends per share (cents) + 86,9% 680,1 57,0 402,2 309,8 29,0 30,5 2004 2005 2006 2004 2005 2006 Investor presentation May 2006
Slide 16: Financial review
Financial review 2005 2006 Revenue Rm 4 027,0 4 101,5 + 1,8% Headline EBITDA Rm 368,2 688,1 + 86,9% Effective tax rate % 32,7 31,9 - 0,8% Headline earnings Rm 211,0 400,3 + 89,7% HEPS - fully diluted cents 75,0 140,2 + 86,9% Cash generated by ops Rm 402,2 680,1 + 69,1% Net cash Rm 106,0 394,4 + 272,
Slide 17: Financial review
Financial review Revenue (Rm) + 1,8% Chicken sales + 5,1% 4101,5 ¾ Volumes up 3,1% in total. Growth in sales to 4027,0 targeted customers and in branded products up External 746,0 654,2 14%, offset by reduction of supply to re- processors 3447,3 ¾ Food inflation remains low Chicken 3281,0 ¾ Average
Slide 18: Financial review
Financial review Headline EBITDA margin + 7,7% Cash generated by ops + 69,1% 16,8% Headline 680,1 EBITDA Margin 9,1% % 688,1 7,4% 402,2 Cash 309,8 367,0 368,2 Headline Rm EBITDA Rm 2004 2005 2006 2004 2005 2006 ¾ Improved mix ¾ Function of improved overall group performance ¾ Lower feed input cost ¾
Slide 19: Financial review
Financial review Capex spend + 17,2% Dividends per share + 86,9% 109,7 Dividend cover 2,8 2,5 2,5 Depreciation & (times) Amortisation Rm 78,0 57,0 63,7 40,0 234,4 Dividends 200,0 per share (cents) 29,0 30,5 21,0 21,0 Final Capex 86,9 Spend 17,0 Rm Interim 8,0 9,5 2004 2005 2006 2004 2005 2006 ¾ R156
Slide 20: Financial review - Raw material procurement
Financial review - Raw material procurement Yellow maize spot prices Rainbow policy R / ton 1,200 _ 30% + Forward purchase 1,100 contracts 05 / 06 1,000 900 _ 30% + Options and futures 800 700 04 / 05 Over the counter / direct + _ 40% 600 forward contracts with producers and spot 500 purchases 400 A
Slide 21: Financial review
Financial review ¾ As noted previously, reporting the financial effects of only 14,1 Pre IAS39 certain procurement instruments in terms of IAS39 introduces volatility to statutory results. Post IAS39 ¾ Underlying (Pre IAS39) profitability and margins improving. 12,5 577,8 7,9 8,5 514,3 EBIT margin (
Slide 22: Strategic update - key initiatives
Strategic update - 5 key initiatives The Consumer is at the heart of Our Customers are our Supply chain’s focus is to Appropriate investment is key • Our Common Purpose our business. partners in reaching produce the right size bird at to ensuring continued growth. “Rainbow at the heart Consu
Slide 23: Strategic update
Strategic update Poultry market by channel Market growth +9% +9% 12,2 Rainbow focus Total market 11,2 2005 Contribution 2006 Rbn Retail Retail Foodservice 25% Foodservice 32% 32% 33% Wholesale 11% Wholesale Independents Independents 10% 32% 25% +6% Source: Management estimate +9% +6% +7% 3,8 28 3,4
Slide 24: Further Processed products launch
Further Processed products launch Background Retail opportunity identified ¾ FoodSolutions driven ¾ Expertise leveraged into Retail ¾ Expanding volume capability ¾ Differentiated brand offerings ¾ 18 new products ¾ 3 new categories ¾ Category management - only national brand offering consumers Raw,
Slide 25: Further Processed products launch
Further Processed products launch Retail opportunity Frozen Crumbed Chicken ¾ Major new product launch ¾ 48 new products A range of superior quality chicken products made from 100% RAINBOW Grade A chicken meat, giving consumers products that are tastier and more nutritious. The loved and trusted FAR
Slide 26: Further Processed products launch
Further Processed products launch Chilled Processed Meats Fully Cooked Chicken easybraai Viennas Polony easyserve Sliced Chicken Chicken Mayonnaise Investor presentation May 2006
Slide 27: Further Processed products launch
Further Processed products launch Big Brand Support ¾ 3 TV ads ¾ 2 “Brand Power” ads ¾ Impactful Point-Of-Sale ¾ Activation In-store Out of store at events Investor presentation May 2006
Slide 28: Prospects
Prospects ¾ Good growth in Earnings. Pre IAS39 ¾ 2005 compromised by feed contamination impact. ¾ Past 3 years focus on improving quality of earnings. 12,5 ¾ Significant investment in last two years. ¾ 3year Compound Annual Growth Rate to 2006: 30,6% ¾ Well positioned for the future. 8,5 514,3 7,4 E
Slide 29: Prospects
Prospects ¾ Consumer spending expected to remain positive. Demand for chicken specifically as an affordable protein source is also expected to remain strong. ¾ Maize prices likely to remain at current higher levels, with the impact on feed input costs only partly offset by the lower soya price. ¾ Re
Slide 30: Questions and answers
Investor presentation May 2006 Questions and answers Investor presentation May 2006