Rcl Foods Limited · JSE:RCL
Rcl Foods — FY2022 Earnings Presentation
46 slides from Rcl Foods's earnings presentation, Sep 5, 2022
Slide 1: 2022 Investor Presentation: Results for the Year Ended June 2022
2022 INVESTOR PRESENTATION 05 SEPTEMBER 2022 RESULTS FOR THE YEAR ENDED JUNE 2022
Slide 2: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 3: Key Highlights for the Year Ended June 2022
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS KEY HIGHLIGHTS FOR THE YEAR ENDED JUNE 2022 RESILIENCE AMIDST A CHALLENGING OPERATING ENVIRONMENT Forward momentum despite a difficult operating environment • Constrained consumer with rising inflation and record unempl
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 YEAR ENDED JUNE 2022 EBITDA & GROWTH (%) PER BUSINESS UNIT Resilient Groceries performance Despite good volume Sugar produced another Good progress
Slide 5: Progress with Strategic Transformation Journey
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS PROGRESS WITH STRATEGIC TRANSFORMATION JOURNEY BUILDING A PROFITABLE, SUSTAINABLE VALUE-ADDED CONSUMER BUSINESS OF SCALE Good progress made with managed separation of Rainbow and Vector Logistics from RCL FOODS Successf
Slide 6: Rob Field, Chief Financial Officer
ROB FIELD CHIEF FINANCIAL OFFICER
Slide 7: Financial Summary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS FINANCIAL SUMMARY PLEASING PERFORMANCE, ESPECIALLY CASH MANAGEMENT INCOME STATEMENT JUNE 2022 JUNE 2021 % VAR Revenue Rm 34 907.0 31 687.9 10.2 EBITDA Rm 2 595.7 2 409.1 7.7 EBITDA margin % 7.4 7.6 (0.2ppts) Underlying*
Slide 8: Operating Results Summary (Rm)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY (Rm) UNDERLYING EBITDA UP 2.0% DRIVEN MAINLY BY RAINBOW’S TURNAROUND AND GAINS IN VECTOR LOGISTICS 7.7% 2.0% 8
Slide 9: Headline Earnings Waterfall (Rm)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS HEADLINE EARNINGS WATERFALL (Rm) JUNE 2022 7.7% 10.0% 1.8% JUNE 2021 9
Slide 10: Operating Results Summary - Unadjusted
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY - UNADJUSTED SEGMENTAL ANALYSIS – REVENUE AND EBITDA REVENUE (Rm) JUNE 2022 JUNE 2021* % VAR Groceries 6 005.9. 5 522.0. 8.8 Baking 6 214.5. 5 849.0. 6.2 Sugar 9 001.3. 8 397.7. 7.2 VALUE-ADDED
Slide 11: Operating Results Summary – Underlying EBITDA
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS OPERATING RESULTS SUMMARY – UNDERLYING* EBITDA UNDERLYING EBITDA UP 2.0% HOWEVER MARGIN DECLINES BY 0.6% DUE MAINLY TO PERVASIVE COMMODITY INPUT COST PRESSURE UNDERLYING* EBITDA (Rm) JUNE 2022 JUNE 2021** % VAR Grocerie
Slide 12: Cash Flow Summary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CASH FLOW SUMMARY FREE CASH FLOW IMPROVES TO R2.4BN Rm JUNE 2022 JUNE 2021 % VAR OPENING BALANCE* 897.0. 1 030.0. (12.9) Operating profit adjusted for non-cash flow items 2 273.1. 2 034.1. 11.7. Working capital changes
Slide 13: Working Capital
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS WORKING CAPITAL WORKING CAPITAL REMAINS WELL MANAGED JUNE JUNE % NET WORKING CAPITAL AS A % OF REVENUE WORKING CAPITAL (Rm) 2022 2021 VAR Trade and other receivables 6 099.6. 5 427.3. 12.4. 17.5 17.1 TRADE RECEIVABLES I
Slide 14: Capital Expenditure
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS CAPITAL EXPENDITURE CAPITAL EXPENDITURE BY SEGMENT (Rm) EXPANSION (Rm) 16.2 CAPEX SPEND UP R379.4M 70.4 169.0 Capital expenditure (including intangibles) was R1 300.7m (2021: R921.3m) 287.4 614.6 The significant spend i
Slide 15: Return on Invested Capital (ROIC) at June
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RETURN ON INVESTED CAPITAL (ROIC) AT JUNE GROUP REPORTED ROIC IMPROVED BY 0.3%, UNDERLYING ROIC DECLINED BY 0.1% SUGAR’S GOOD BUT LOWER THAN 2021’S RECORD RESULT WAS LARGELY OFFSET BY RAINBOW’S RECOVERY VECTOR LOGISTICS
Slide 16: 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 DEBT PACKAGE EXPIRES IN DECEMBER 2023, ANTICIPATED THAT IT WILL BE RES
Slide 17: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 18: Strategic Progress on RCL FOODS Value-Added Business Strategy
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS STRATEGIC PROGRESS ON RCL FOODS VALUE-ADDED BUSINESS STRATEGY A VISION TO CREATE A BUSINESS OF THE RIGHT SCALE WHICH HAS BEEN BUILT TO LAST WITH A DIVERSE AND HIGH PERFORMANCE CULTURE THAT ENHANCES STAKEHOLDER VALUE 3 P
Slide 19: Strategic Progress on RCL FOODS Value-Added Business Strategy
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS STRATEGIC PROGRESS ON RCL FOODS VALUE-ADDED BUSINESS STRATEGY A VISION TO CREATE A BUSINESS OF THE RIGHT SCALE WHICH HAS BEEN BUILT TO LAST WITH A DIVERSE AND HIGH PERFORMANCE CULTURE THAT ENHANCES STAKEHOLDER VALUE 1 D
Slide 20: RCL FOODS Value-Added Business (Groceries, Baking, Sugar)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS (Groceries, Baking, Sugar) RESILIENT PERFORMANCE AIDED BY STEADY DEMAND JUNE JUNE REVENUE (Rm) % VAR 2022 2021 Groceries 6 005.9. 5 522.0. 8.8. Baking 6 214.5. 5 849.0. 6.2. Sugar 9 001.3.
Slide 21: Value-Added Business: Groceries
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: GROCERIES STRONG REVENUE GROWTH PARTIALLY OFFSET BY MARGIN PRESSURE JUNE JUNE GROCERIES % VAR 2022 2021 Headlines REVENUE Revenue excluding sundry sales 5 284.5 4 813.0 9.8 • Despite sign
Slide 22: Groceries: Culinary
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: GROCERIES VOLUME AND REVENUE GROWTH PARTIALLY OFFSET BY MARGIN PRESSURE IN PIES MARKET SHARE 12mm 12mm Grocery: Culinary (VOLUME) June 2021 June 2022 Our Culinary brands have remained res
Slide 23: Groceries: Pet Food
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: GROCERIES MARKET SHARE 12mm 12mm Grocery: Pet Food (VOLUME) June 2021 June 2022 Our Pet Food brands outperformed the market, which has 34.3% 35.1% continued to feel the pressure of reduce
Slide 24: Groceries: Pies and Beverages
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: GROCERIES Pies Strong volume growth driven by innovation and successful activation plans resulted in the Pieman’s brand holding its market-leading position Despite the upward volume trend
Slide 25: Value-Added Business: Baking
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: BAKING STRONG VOLUME GROWTH ALTHOUGH MARGINS UNDER PRESSURE JUNE JUNE BAKING % VAR 2022 2021 Headlines REVENUE 6 214.5 5 849.0 6.2 • Strong volume growth drove higher revenue in Bread, Bu
Slide 26: Baking: Bread, Buns and Rolls
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: BAKING Bread, Buns and Rolls The business is positioning itself for longer-term growth in Bread Buns & Rolls and has just commissioned its newly expanded bread line in Polokwane to increa
Slide 27: Baking: Milling and Speciality
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: BAKING SAFEX WHEAT PRICE (R/Ton) Milling Improved operational performance in Milling was offset by lower volumes and margin pressure 10.5% The business is focused on protecting margins in
Slide 28: Value-Added Business: Sugar
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: SUGAR CONTINUED STRONG PERFORMANCE IN SUGAR JUNE JUNE SUGAR % VAR 2022 2021 Headlines REVENUE 9 001.3. 8 397.7. 7.2. • Sugar produced another excellent EBITDA performance, which EBITDA 81
Slide 29: Sugar
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: SUGAR Sugar Operations successfully crushed their full 2022 season cane crop and delivered improved mill recoveries and efficiencies Improvement in cane quality and yields post aphid infe
Slide 30: Sugar: Molatek
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RCL FOODS VALUE-ADDED BUSINESS: SUGAR Molatek Molatek delivered a pleasing revenue performance, with the business successfully pivoting towards selling higher-value bagged products Escalating raw material costs remain a
Slide 31: Marthinus Stander, Rainbow Managing Director
MARTHINUS STANDER RAINBOW MANAGING DIRECTOR
Slide 32: Rainbow's Turnaround Strategy: Focus and Basics
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RAINBOW’S TURNAROUND STRATEGY: FOCUS and BASICS over past year and a half DELIVER A SUSTAINABLE EBIT MARGIN AND BE THE NUMBER ONE INTEGRATED CHICKEN COMPANY IN SOUTH AFRICA FOR BOTH ITS CUSTOMERS AND CONSUMERS 1 2 3 Med
Slide 33: Progress
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS PROGRESS NOTABLE PROGRESS MADE DURING THE YEAR Good progress on the turnaround strategy, with the focus in the last year being on establishing the team, halting loss-making trends and laying the foundations for the futu
Slide 34: Rainbow (Previously Chicken Division)
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RAINBOW (PREVIOUSLY “CHICKEN DIVISION”) GOOD PROGRESS MADE ON THE TURNAROUND STRATEGY DESPITE SIGNIFICANT HEADWINDS DURING THE YEAR JUNE JUNE RAINBOW % VAR Headlines 2022 2021* REVENUE 11 384.8 10 335.9 10.1 • Improveme
Slide 35: Rainbow: Chicken
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RAINBOW Chicken MARKET SHARE 12mm 12mm (VOLUME) Jun 2021 Jun 2022 Sales favourably impacted by buoyant Quick Service Restaurant (QSR) volumes and favourable pricing in the Retail Wholesale (RWS) category 10.1% 13.6% Sim
Slide 36: Rainbow: Epol
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS RAINBOW Epol SAFEX YELLOW MAIZE PRICE (R/Ton) Record raw material costs placed margins under pressure To mitigate some of the raw material cost increase, considerable effort was invested in diet formulation and optimisa
Slide 37: Chris Creed, Vector Logistics Managing Director
CHRIS CREED VECTOR LOGISTICS MANAGING DIRECTOR
Slide 38: Vector Logistics – Going Beyond: 5 Year Strategy
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS – GOING BEYOND Vector’s 5 Year Strategy - Driven by revenue growth, underpinned by 3 strategic pillars of Core, Adjacent and Transformational Revenue growth is key Achieved by optimizing our core busine
Slide 39: Vector Logistics
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS A PLEASING PERFORMANCE DRIVEN BY VOLUME RECOVERY AND NETWORK INTEGRATION PROGRESS JUNE JUNE VECTOR LOGISTICS % VAR Headlines 2022 2021 • Pleasing revenue growth driven by REVENUE 3 691.9 3 153.6 17.1 vo
Slide 40: Vector Logistics: Revenue Growth and Diesel Price
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 41: Vector Logistics – Going Beyond: Network Capacity
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS – GOING BEYOND Capacity builds are now complete and expected to realise cost savings into the future. The final synergised network will continue to unlock synergies of scale, reduce the cost base and se
Slide 42: Vector Logistics: Sustainability Projects
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS – GOING BEYOND Focus on sustainability has driven good results through targeted projects across the network. • Solar panels deliver energy savings ahead of expectation • Successfully concluded solar pow
Slide 43: Empty Trips Digital Freight Matching Platform
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS VECTOR LOGISTICS – GOING BEYOND The Empty Trips digital freight matching platform has been rolled out to internal and external customers to create a smarter, more sustainable logistics marketplace. Whilst still in early
Slide 44: Paul Cruickshank, Chief Executive Officer
PAUL CRUICKSHANK CHIEF EXECUTIVE OFFICER
Slide 45: Prospects
SALIENT STRATEGIC FINANCIAL OPERATIONAL FEATURES REVIEW REVIEW REVIEWS PROSPECTS PROSPECTS High commodity costs expected to continue creating a volume risk as consumers struggle to make ends meet Groceries expected to remain resilient through the delivery of our strong innovation pipeline and margin
Slide 46: RCL FOODS
RCL FOODS 10 The Boulevard, Westway Office Park, Westville 3629, P.O Box 2734, 3635, KZN, South Africa