Rusagro Group · RUS:RAGR
Rusagro — ROS Agro — Investor Presentation (March 2019)
35 slides from Rusagro's investor presentation, March 2019
Slide 1: Ros Agro Investor Presentation
ROS AGRO INVESTOR PRESENTATION March 2019 20 November 2018
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: Ros Agro at a Glance
ROS AGRO AT A GLANCE A LEADING AGRICULTURAL COMPANY IN RUSSIA WITH OVER 20 YEARS HISTORY AND STRONG FINANCIAL PERFORMANCE BUSINESS OVERVIEW HIGHLIGHTS SALES 2018 EBITDA 2018 5 segments Cycle neutral 5% 83 RUB bn 16% 16 RUB bn 24 brands 80 regions EBITDA MARGIN NET DEBT / as a part of largest vertica
Slide 4: From sugar-focused producer to leading Russian agricultural platform
ROS AGRO: FROM SUGAR-FOCUSED PRODUCER TO THE LEADING RUSSIAN AGRICULTURAL PLATFORM SUCCESSFUL DIVERSIFICATION BY STRENGTHENING MARKET POSITIONS AND ENTERING NEW BUSINESS SEGMENTS 2011 2016 2018+ Initial Public Offering Secondary Public Offering Leading agricultural platform set for further growth Da
Slide 5: Investment highlights
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Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS 1 Unique agribusiness platform with leading positions across diverse segments 2 Robust vertical integration: from field to consumer capitalizing on leading brands 3 State-of-the-art facilities in strategically important locations 4 Established platform for further organic and M
Slide 7: Unique agribusiness platform with leading positions across diverse segments
1 UNIQUE AGRIBUSINESS PLATFORM WITH LEADING POSITIONS ACROSS DIVERSE SEGMENTS MEAT OIL & FATS AGRICULTURE SUGAR MILK PRODUCTS TOP-4 PORK PRODUCERS TOP-3 MAYONNAISE TOP-3 LAND HOLDERS TOP-3 SUGAR PRODUCERS TOP-15 CHEESE PRODUCERS 1 PRODUCERS PRODUCER TOTAL LAND BANK, KHA № IN RUSSIA PRODUCER PRODUCER
Slide 8: Robust vertical integration: from field to consumer
2 ROBUST VERTICAL INTEGRATION: FROM FIELD TO CONSUMER CAPITALIZING ON LEADING BRANDS MEAT SEGMENT OIL & FATS SEGMENT SUGAR SEGMENT MILK PRODUCTS B2B B2C B2B B2C 1 B2B B2C B2B B2C SALES TO B2B AND B2C CLIENTS Select clients Select clients Select clients IN RUSSIA AND ABROAD #13 • Dehydrated whey #23
Slide 9: State-of-the-art facilities
3 STATE-OF-THE-ART FACILITIES… OVER RUB 90BN INVESTED SINCE 2011 MEAT OIL & FATS AGRICULTURE SUGAR MILK PRODUCTS 18 pig farms 3 Plants 652 k ha – a total land bank 9 Sugar plants 2 Plants ASSETS OVERVIEW 234 kt – total annual 423 kt p.a. – sunflower seed 93% of the land bank under 54 kt / day – suga
Slide 10: Strategically important locations throughout Russia
3 …IN STRATEGICALLY IMPORTANT LOCATIONS THROUGHOUT RUSSIA CAPITALIZING ON CLOSE PROXIMITY BETWEEN KEY BUSINEES SEGMENTS Tambov and Voronezh Samara and Ulyanovsk Orel and Kursk regions Belgorod region Yekaterinburg Primorsky region regions region To be launched in 2019-20: 10 pig farms 8 pig farm
Slide 11: Established platform for organic and M&A growth
4 ESTABLISHED PLATFORM FOR FURTHER ORGANIC AND M&A GROWTH FAVOURABLE MARKET STRUCTURE… … COUPLED WITH STRONG ROS AGRO DEVELOPMENT PLATFORM STRONG BALANCE SHEET SATURATION OF DOMESTIC MARKET FRAGMENTED MARKET STRUCTURE Ongoing strategy to keep leverage low to maintain flexibility in executing attract
Slide 12: Government support for agriculture sector
5 GOVERNMENT SUPPORT FOR AGRICULTURE SECTOR TOTAL SUPPORT RUSSIA (2018E) RECEIVED BY ROS AGRO IN 2018 RUB bn RUB bn Ros Agro could potentially draw down 14.5 10.0 0.1 0.2 1 RUB 150bn using subsidized by the 49.7 0.3 government lending facilities at below Total amount: Total amount: RUB 159bn RUB 2.3
Slide 13: Seasoned management team and corporate governance
6 SEASONED MANAGEMENT TEAM AND BEST-IN-CLASS CORPORATE GOVERNANCE PRACTICES PUBLICLY LISTED SINCE 2011 KEY MANAGEMENT TEAM MEMBERS CORPORATE GOVERNANCE STRUCTURE Maxim Basov GENERAL SHAREHOLDERS MEETING Chief Executive Officer • 10 years at ROS AGRO Election Recommendations Nikolai Zhirnov Roman Dan
Slide 14: Strong financial performance
7 STRONG FINANCIAL PERFORMANCE … KEY FINANCIAL INDICATORS IN 2016-2018 KEY HIGHLIGHTS • In 2018, the Company’s sales recovered reaching ca. RUB 83.0bn comparing RUB m 2016 2017 2018 to ca. RUB 79.1bn in 2017 Sales 84,257 79,058 82,978 • The growth was primarily attributable to positive developments
Slide 15: And moderate leverage
7 … AND MODERATE LEVERAGE NET DEBT DEVELOPMENT LEVERAGE DEVELOPMENT RUB bn • Net debt increased by RUB 47.7bn to RUB 54.3bn as compared to 2017 NET DEBT / ADJUSTED EBITDA 1 – Long-term borrowings increased by RUB 24.8bn (up 66%) to RUB 62.6bn as 0.5x 1.6x 3.4x compared to 2017 8.7 3 – Increase in to
Slide 16: Segments update
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Slide 17: Meat industry overview
MEAT INDUSTRY OVERVIEW PORK PRODUCTION (Carcass-weight) PORK PRICE (Live-weight)1 COMPANY’S POSITION m tons 3.7 RUB / kg 3.5 3.4 3.1 0.6 Average 2017: 102 RUB / kg 3.0 0.6 0.7 Average 2018: 106 RUB / kg 0.7 0.7 2.9 3.1 Average 2019 (YTD): 89 RUB / kg 125 #4 Producer with 5% production share 2.7 2.2
Slide 18: Meat segment performance
MEAT SEGMENT PERFORMANCE FINANCIAL HIGHLIGHTS TOTAL PORK SALES VOLUME DYNAMICS RUB bn ths tons TOTAL SALES VOLUME 22.4 20.5 17.9 162 176 169 53% 31% 39% 31% 22% 76 74 26% 65 6.3 7.0 57 4.0 42 32 31 30 27 19 22 12 16 2016 2017 2018 4 Sales Adj. EBITDA Adj. EBITDA margin 2016 2017 2018 Livestock Carca
Slide 19: Meat segment strategy
MEAT SEGMENT STRATEGY SEGMENT KEY INDUSTRY TRENDS MID-TERM GOALS 1 Increasing focus on B2C products Timely launch of ongoing expansion projects 2 Increasing share of export sales Slaughterhouse expansion MEAT 3 Sales prices volatility Retail sales development Increase productivity gains of live pigs
Slide 20: Oil & Fats industry overview
OIL & FATS INDUSTRY OVERVIEW GROSS OILSEED HARVEST SUNFLOWER OIL PRICE1 COMPANY’S POSITION m tons ths RUB / ton PROCESSING CAPACITY UTILISATION 78% 70% 74% 64% 82% Average 2017: 39.1 ths RUB / ton Average 2018: 40.6 ths RUB / ton #2 Producer on the vegetable oil market with 18% production share 2 19
Slide 21: Oil & Fats segment performance
OIL & FATS SEGMENT PERFORMANCE FINANCIAL HIGHLIGHTS SALES VOLUME2 AND PRICE OF CONSUMER PRODUCTS RUB bn MID-TERM GOALS SALES VOLUME AVERAGE PRICE1 ths tons RUB / kg 83.2 26.3 11% • Grow bottled sunflower oil sales TOTAL SALES VOLUME 80.5 to B2C and industrial fats 132 115 174 76.7 81.3 19.9 19.4 pro
Slide 22: Agriculture industry overview
AGRICULTIRE INDUSTRY OVERVIEW TOTAL HARVEST GRAINS PRICE1 COMPANY’S POSITION m tons ths RUB / ton 12.0 134 11.3 119 10.9 #3 14 117 102 104 14 Largest land 17 11 12 9.5 9.6 bank holder 9.2 9.0 9.0 120 105 100 7.7 91 93 7.1 KEY MARKET TRENDS • Increasing export of crops (by 45% over the last 5 years)
Slide 23: Agriculture segment performance
AGRICULTURE SEGMENT PERFORMANCE FINANCIAL HIGHLIGHTS SALES VOLUME DYNAMICS1 RUB bn MID-TERM GOALS ths tons TOTAL SALES 21.2 20.8 VOLUME 1,119 1,271 970 18.8 • Improved control over fields 10 105 29% 7 84 • Increase yields per hectare and 91 50 24% 169 quality of production 54 182 109 193 54 91 6.2 •
Slide 24: Sugar industry overview
SUGAR INDUSTRY OVERVIEW SUGAR PRODUCTION ISCO KRASNODAR PRICES1 COMPANY’S POSITION m tons RUB / kg 6.5 6.1 Average 2017: 28.1 RUB / kg 5.7 5.9 Average 2018: 28.7 RUB / kg #3 0.3 5.2 0.6 Average 2019 (YTD): 31.9 RUB / kg Producer with 13% 0.6 production share 38.0 5.8 5.1 4.6 KEY MARKET TRENDS 33.1 3
Slide 25: Sugar segment performance
SUGAR SEGMENT PERFORMANCE FINANCIAL HIGHLIGHTS SUGAR BEET HARVEST AREA RUB bn ths ha 26% HARVEST YIELDS, tons / ha 20% 18% 44.2 37.8 39.1 37.2 98 93 30.4 89 24.1 9.6 5.5 4.9 2016 2017 2018 SUGAR PRODUCTION ths tons 984 2016 2017 2018 809 773 Sales Adj. EBITDA Adj. EBITDA margin 59 750 RECENT PERFORM
Slide 26: Sugar segment strategy
SUGAR SEGMENT STRATEGY SEGMENT KEY INDUSTRY TRENDS MID-TERM GOALS 1 Stable direct and indirect consumption Sugar loss decrease through the launch of new desugarization station 2 Import/export alternatives to determine price pattern SUGAR Increase storage term for sugar beet Integration of the leadin
Slide 27: Milk industry overview
MILK INDUSTRY OVERVIEW DAIRY PRODUCTION CHEESE PRODUCTION COMPANY’S MID-TERM GOAL m tons ths tons Growth 666 2014-2018 29 499 105 Whole-milk products 11.7 2% 62 #3 54 Cheeses and cheese 101 products 0.7 34% 25 223 Producer on the 98 Margarine and 0.6 (5%) 115 189 market spreads 107 57 Ice-cream 0.4
Slide 28: Dairy products segment performance
DAIRY PRODUCTS SEGMENT PERFORMANCE FINANCIAL HIGHLIGHTS DAIRY PRODUCTS OPERATIONAL HIGHLIGHTS (SEP-DEC 2018) RUB m MID-TERM GOALS ths tons SALES BY FEDERAL DISTRICT 5.3 Other Adj. EBITDA margin • Expansion to Far East Ural 5% 854 13% 4.2 • Development of relationships 7% Volga with retail distributi
Slide 29: Overview of SolPro deal
Overview of SolPro deal wZros acro Wii PIC
Slide 30: SolPro deal highlights: transaction overview
SOLPRO DEAL HIGHLIGHTS TRANSACTION OVERVIEW TRANSACTION DESCRIPTION ILLUSTRATIVE TRANSACTION STRUCTURE V. Burov • ROS AGRO is undergoing acquisition of SolPro1 (Solnechnye 100% Products), one of the leading Russian Oil & Fats holdings with leading position in key consumer products (#4 in Mayonnaise2
Slide 31: SolPro deal highlights: deal rationale
SOLPRO DEAL HIGHLIGHTS DEAL RATIONALE INSTANT STRENGTHENING OF ROS AGRO POSITIONS IN PRODUCTION MAYONNAISE CONSUMER MARGARINE #1 3 #2 1 Margarine Mayonnaise 67% 25% 25% 20% 20% 17% 41% 27% 26% 8% 5 6 5 6 VEGETABLE OIL INDUSTRIAL FATS #2 2 24% Vegetable Oil 53% 4 18% #2 Industrial Fats 14% 12% 23% 22
Slide 32: SolPro deal highlights: key assets
SOLPRO DEAL HIGHLIGHTS Major SolPro brands OVERVIEW OF KEY ASSETS 1 Saratov Oil & Fat plant Atkarsky Oil Extraction plant Moscow Oil & Fat plant Novosibirsk Oil & Fat plant Volzhskiy terminal Founded in 1953 Founded in 2013 Largest producer of margarine and Founded in 1913 Founded in 1935
Slide 33: Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18 (RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18 ASSETS LIABILITIES AND EQUIТY Current assets Current liabilities Cash and cash equivalents 6,751 ,712 4,860,335 1,728,396 Short-term borrowings 11,704,276 8,863,525 32,513,595
Slide 34: Consolidated statement of profit or loss
CONSOLIDATED STATEMENT OF PROFIT OR LOSS Year ended Year ended Year ended (RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18 Sales 84,256,585 79,057,860 82,977,711 Net (loss)/gain on revaluation of biological assets and agricultural produce 48,176 (2,976,169) 2,850,788 Cost of sales (58,915,613) (58,115,770) (
Slide 35: Consolidated statement of cash flows
CONSOLIDATED STATEMENT OF CASH FLOWS (RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18 (RUB ths) 31-Dec-16 31-Dec-17 31-Dec-18 Cash flows from operating activities Cash flows from investing activities Profit before income tax 14,212,306 5,981,011 13,531,793 Purchases of property, plant and equipment (16,642,7