Rcl Foods Limited · JSE:RCL
Rcl Foods — H1 2022 Earnings Presentation
41 slides from Rcl Foods's earnings presentation, Feb 28, 2022
Slide 1: Results for the six months ended December 2021
2022 INVESTOR PRESENTATION 28 FEBRUARY 2022 RESULTS FOR THE SIX MONTHS ENDED DECEMBER 2021
Slide 2: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 3: Key highlights for the six months ended December 2021
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS KEY HIGHLIGHTS FOR THE SIX MONTHS ENDED DECEMBER 2021 SOLID PROGRESS AMIDST TOUGH TRADING CONDITIONS Staying on course despite a challenging operating environment • Continued consumer pressure due to record unemployment
Slide 4: Underlying EBITDA & growth per business unit
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS UNDERLYING EBITDA & GROWTH (%) PER BUSINESS UNIT KEY HIGHLIGHTS FOR THE SIX MONTHS ENDED DECEMBER 2021 UNDERLYING EBITDA & GROWTH (%) PER BUSINESS UNIT Resilient Groceries volumes Despite good volume Sugar’s result was
Slide 5: Strategic progress
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS STRATEGIC PROGRESS BUILDING A FOCUSED, FUTURE-FIT VALUE-ADDED CONSUMER FOODS BUSINESS Progress made with strategic intent announced in 2021 financial year: managed separation of value-added branded foods (“FMCG”), Chick
Slide 6: Strategic priorities
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS STRATEGIC PRIORITIES IMPERATIVE TO SCALE AND ENABLE SUSTAINABLE VALUE CREATION IN OUR CORE VALUE-ADD FOODS BUSINESS We want to build a focused value-added branded foods business that generates sustainable shareholder va
Slide 7: Rob Field, Chief Financial Officer
ROB FIELD CHIEF FINANCIAL OFFICER
Slide 8: Financial summary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FINANCIAL SUMMARY SUGAR IMPROVEMENT DRIVES GAINS IN REVENUE, EBITDA & UNDERLYING HEADLINE EARNINGS INCOME STATEMENT DEC 2021 DEC 2020 % VAR Revenue Rm 17 146.8 15 701.4 9.2 EBITDA Rm 1 292.7 1 130.0 14.4 EBITDA margin %
Slide 9: Operating results summary (Rm)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY (Rm) UNDERLYING EBITDA UP 2.5% DRIVEN MAINLY BY GAINS IN SUGAR, CHICKEN AND VECTOR LOGISTICS 9
Slide 10: Headline earnings waterfall (Rm)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS HEADLINE EARNINGS WATERFALL (Rm) 10 * Relates to fair value adjustments on the Group’s commodity raw material procurement positions
Slide 11: Operating results summary - unadjusted
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY - UNADJUSTED SEGMENTAL ANALYSIS – REVENUE AND EBITDA REVENUE (Rm) DEC 2021 DEC 2020* % VAR Groceries 3 078.2 2 762.5 11.4 Baking 2 980.3 2 917.4 2.2 Sugar 4 432.3 4 377.9 1.2 FOOD DIVISION SUB
Slide 12: Operating results summary – underlying EBITDA
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY – UNDERLYING* EBITDA EXCLUDING MATERIAL ONCE-OFFS AND ACCOUNTING ADJUSTMENTS, UNDERLYING EBITDA UP 2.5% HOWEVER MARGIN DECLINES TO 8.0% UNDERLYING* EBITDA (Rm) DEC 2021 DEC 2020** % VAR Groceri
Slide 13: Cash flow summary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CASH FLOW SUMMARY CASH GENERATED BY OPERATIONS IMPROVES TO R1.5BN Rm DEC 2021 DEC 2020 % VAR OPENING BALANCE* 897.0 1 030.0 (12.9) Operating profit adjusted for non-cash flow items 1 185.0 996.4 18.9 Working capital cha
Slide 14: Working capital
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS WORKING CAPITAL WORKING CAPITAL REMAINS WELL MANAGED DEC DEC % NET WORKING CAPITAL AS A % OF REVENUE WORKING CAPITAL (Rm) 2021 2020 VAR Trade and other receivables 6 018.8 7 175.6 (16.1) 18.2 24.5 TRADE RECEIVABLES Inve
Slide 15: Capital expenditure
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CAPITAL EXPENDITURE EXPANSION (Rm) REPLACEMENT (Rm) CAPEX SPEND UP R68.6M Capital expenditure (including intangibles) was R492.8m 253.5 239.4 247.9 (2020: R424.2m) 176.3 The only significant spend items were: Dec 2021 D
Slide 16: Return on invested capital (ROIC) at December
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RETURN ON INVESTED CAPITAL (ROIC) AT DECEMBER* GROUP REPORTED ROIC IMPROVED BY 13.8% TO POSITIVE 9.4% IN DECEMBER 2021 (DECEMBER 2020: NEGATIVE 4.4%) GROUP UNDERLYING ROIC IMPROVED TO 9.2%, UP 3.0% FROM THE PRIOR PERIOD
Slide 17: Debt package
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS DEBT PACKAGE DEBT PACKAGE RESTRUCTURED IN DECEMBER 2018 AT LOWER INTEREST RATES INTEREST RATE OF 3M JIBAR + MARGIN OF 1.5% TO 1.55% OVER 5 YEAR TERM REPAYMENT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TERM (Rm) (DEC 19)* (DEC
Slide 18: Debt covenants
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS DEBT COVENANTS RCL FOODS REMAINS WELL WITHIN COVENANT REQUIREMENTS COVENANT REQUIRED DEC 2021 JUNE 2021 DEC 2020 Senior leverage ratio (Net senior debt*/Adjusted <3.0 1.9 1.0 2.2 EBITDA) Senior interest cover ratio (Adj
Slide 19: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 20: Food Division
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION RESILIENT PERFORMANCE AIDED BY STEADY DEMAND • RESILIENT PERFORMANCE AIDED BY STEADY DEMAND DEC DEC REVENUE (Rm) % VAR 2021 2020 Groceries 3 078.2 2 762.5 11.4 Baking 2 980.3 2 917.4 2.2 Sugar 4 432.3 4 37
Slide 21: Food Division: Groceries
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: GROCERIES STRONG REVENUE GROWTH PARTIALLY OFFSET BY MARGIN PRESSURE DEC DEC GROCERIES % VAR 2021 2020 Headlines REVENUE Revenue excluding sundry sales 2 703.0 2 423.4 11.5 • Pleasing Grocery growth despit
Slide 22: Food Division: Groceries – Culinary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: GROCERIES VOLUME AND REVENUE GROWTH PARTIALLY OFFSET BY MARGIN PRESSURE IN PIES MARKET SHARE 6mm 6mm Grocery: Culinary (VOLUME) Dec 2020 Dec 2021 Our Culinary brands have remained resilient despite a trad
Slide 23: Food Division: Groceries – Pet Food
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: GROCERIES MARKET SHARE 6mm 6mm (VOLUME) Dec 2020 Dec 2021 Grocery: Pet Food 33.2% 34.8% Our major Pet Food brands have continued to outperform which is reflected in our growing market share position despi
Slide 24: Food Division: Groceries – Pies, Beverages
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: GROCERIES Pies Strong volume recovery aided by a “back to market” recovery plan and growth coming from the Pieman’s Big Deal Pie (forecourt channel) and the newly-launched frozen Pieman’s range (retail ch
Slide 25: Food Division: Baking
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: BAKING STRONG VOLUME GROWTH ALTHOUGH MARGINS UNDER PRESSURE DEC DEC BAKING % VAR 2021 2020 Headlines REVENUE 2 980.3 2 917.4 2.2 • Strong volume growth drove higher revenue in Bread, Buns EBITDA 243.8 265
Slide 26: Food Division: Baking – Bread, Buns and Rolls
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: BAKING Bread, Buns and Rolls As part of the Baking growth strategy, the capital expansion project at Polokwane is underway and will be commissioned before financial year-end A strategic new depot rollout
Slide 27: Food Division: Baking – Milling, Speciality
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: BAKING SAFEX WHEAT PRICE (R/Ton) Milling 7 500 Improved operational performance in Milling, aided by AVG Price AVG Price 7 000 business process changes implemented ahead of the new (6m) (6m) 10.5% R5 237
Slide 28: Food Division: Sugar
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: SUGAR CONTINUED STRONG PERFORMANCE IN SUGAR DESPITE KOMATIPOORT FIRE IMPACT DEC DEC SUGAR % VAR 2021 2020 Headlines REVENUE 4 432.2 4 377.9 1.2 • Strong underlying performance driven by good cost control,
Slide 29: Food Division: Sugar
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FOOD DIVISION: SUGAR Sugar Increased local demand supported by industry focus on the “Buy Local” campaign, coupled with Sugar Industry Master Plan A 41.8% increase in the international sugar price has also improved expo
Slide 30: Molatek
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS Molatek A strong underlying performance in light of an above- average prior year result, bolstered by farmers starting to rebuild their herds post the drought High raw material prices are starting to put pressure on mar
Slide 31: Marthinus Stander, Chicken Division Managing Director
MARTHINUS STANDER CHICKEN DIVISION MANAGING DIRECTOR
Slide 32: Chicken Division
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CHICKEN DIVISION A PLEASING IMPROVEMENT IN CHICKEN OFF A LOW BASE DEC DEC CHICKEN DIVISION % VAR Headlines 2021 2020 • An improved performance after REVENUE 5 517.9 4 875.2 13.2 an extremely tough start to the financial
Slide 33: Chicken Division: Chicken
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CHICKEN DIVISION MARKET SHARE 6mm 6mm Chicken (VOLUME) Dec 2020 Dec 2021 Improved performance aided by better agricultural results, higher price realisations amidst the AI outbreak, and strong strategic 9.6% 13.4% focus
Slide 34: Chicken Division: Epol
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CHICKEN DIVISION SAFEX YELLOW MAIZE PRICE (R/Ton) Epol 4 200 4 000 AVG Price AVG Price 10.6% 3 800 (6) (6m) R3 142 R3 474 Epol’s result improved mainly due to procurement 3 600 3 400 gains and sound cost control; howeve
Slide 35: Chris Creed, Vector Logistics Managing Director
CHRIS CREED VECTOR LOGISTICS MANAGING DIRECTOR
Slide 36: Vector Logistics
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS A PLEASING PERFORMANCE DRIVEN BY VOLUME RECOVERY AND NETWORK INTEGRATION PROGRESS DEC DEC VECTOR LOGISTICS % VAR 2021 2020 Headlines REVENUE 1 829.8 1 519.5 20.4 • Pleasing revenue growth driven by volu
Slide 37: Vector Logistics: revenue growth and network integration
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS Pleasing revenue growth during the period despite the civil unrest in the first quarter, driven by: • Food service volume recovery almost to pre-COVID-19 levels • Higher volumes in retail secondary busi
Slide 38: Vector Logistics: Going beyond
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS GOING BEYOND The Empty Trips digital freight matching platform has been rolled out with internal customers and is now being launched externally to create a smarter, more sustainable logistics marketplac
Slide 39: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 40: Prospects
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS PROSPECTS Difficult conditions expected to continue amidst a slower than anticipated economic recovery, with high commodity input costs a key risk Groceries expected to remain resilient despite the likelihood of higher
Slide 41: RCL FOODS contact details
RCL FOODS 10 The Boulevard, Westway Office Park, Westville 3629, P.O Box 2734, 3635, KZN, South Africa