RCL Foods Limited · JSE:RCL
RCL Foods — FY2021 Earnings Presentation
57 slides from RCL Foods's earnings presentation, Sep 6, 2021
Slide 1: Investor Presentation: Results for the Year Ended June 2021
2021 INVESTOR PRESENTATION 06 SEPTEMBER 2021 RESULTS FOR THE YEAR ENDED JUNE 2021
Slide 2: Miles Dally, Chief Executive Officer
MILES DALLY CHIEF EXECUTIVE OFFICER
Slide 3: Headlines – Results for the Full Year Ended June 2021
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects HEADLINES – RESULTS FOR THE FULL YEAR ENDED JUNE 2021 STRONG PERFORMANCE NOTWITHSTANDING A DIFFICULT OPERATING ENVIRONMENT Meaningful improvement in statutory and underlying earnings • Portfolio delivers strong
Slide 4: Earnings Growth Driven by Sugar, Baking and Grocery
Salient Features: Miles Dally | Strategic Update | Financial Review | Operational Reviews | Prospects HEADLINES – RESULTS FOR THE FULL YEAR ENDED JUNE 2021 EARNINGS GROWTH DRIVEN BY A SOLID RESULT IN SUGAR, BAKING AND GROCERY Revenue up 14.0% assisted strong volume growth amidst market share gains i
Slide 5: Underlying EBITDA Growth per Business Unit
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects HEADLINES – RESULTS FOR THE FULL YEAR ENDED JUNE 2021 UNDERLYING EBITDA GROWTH (%) PER BUSINESS UNIT Strong Pet Food and a Strong improvement Improved sales mix and Agricultural challenges and ICL* acquisition e
Slide 6: Key Strategic Deliverables Review
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects KEY STRATEGIC DELIVERABLES REVIEW GOOD PROGRESS AGAINST TARGETED DELIVERABLES (AS HIGHLIGHTED IN INTERIM REPORTING) 1 ✓ COMPLETE THE STRATEGIC PORTFOLIO REVIEW 4 ✓ SCALE GROWTH POTENTIAL IN GROCERIES AND BAKING
Slide 7: Strategic Portfolio Review Completed
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects STRATEGIC PORTFOLIO REVIEW COMPLETED CLEAR INTENTION TO SHARPEN STRATEGIC FOCUS IN VALUE ADD BRANDED FOODS BUSINESS (“FMCG”) Rigorous review process confirmed that our current RCL FOODS NATIONAL PLATFORM portfol
Slide 8: Stand-alone Chicken Division Completed
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects STAND-ALONE CHICKEN DIVISION COMPLETED FOCUSED IMPLEMENTATION OF THE REVISED CHICKEN STRATEGY AIMED AT IMPROVING COMPETITIVENESS November Decision taken to establish Chicken as a stand-alone division within RCL
Slide 9: Launched LIVEKINDLY Collective Africa
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects LAUNCHED LIVEKINDLY COLLECTIVE AFRICA Plant-based protein is a key strategic investment focus – an opportunity for RCL FOODS to provide enhanced consumer choice and contribute towards a more sustainable food sys
Slide 10: Doing Business Sustainably
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects DOING BUSINESS SUSTAINABLY Digital transformation embedded as a mindset that is core to our strategy and acts as a key enabler for all strategic opportunities across the business. Highlighted most notably in our
Slide 11: Rob Field, Chief Financial Officer
ROB FIELD CHIEF FINANCIAL OFFICER
Slide 12: Financial Summary
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects FINANCIAL SUMMARY INCOME STATEMENT JUN 2021 JUN 2020 % VAR Revenue Rm 31 687.9 27 803.6 14.0 EBITDA Rm 2 409.1 1 636.0 47.3 EBITDA margin % 7.6 5.9 1.7ppts Underlying EBITDA* Rm 2 530.4 1 735.3 45.8 Underlying E
Slide 13: Operating Results Summary (Rm)
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATING RESULTS SUMMARY (Rm) UNDERLYING EBITDA UP 45.8% DRIVEN BY RECORD PERFORMANCE IN SUGAR, COUPLED WITH IMPROVEMENT IN BAKING AND VECTOR LOGISTICS 47.3% 45.8% 170.2 27.8 2 530.4 121.3 99.1 2 409.1 535.9 16
Slide 14: Headline Earnings Waterfall (Rm)
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects HEADLINE EARNINGS WATERFALL (Rm) JUNE 2021 47.3% 736.0% 170.9% JUNE 2020 14 * Relates to fair value adjustments on the Group’s commodity raw material procurement positions
Slide 15: Segmental Analysis – Revenue and EBITDA
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATING RESULTS SUMMARY - UNADJUSTED SEGMENTAL ANALYSIS – REVENUE AND EBITDA REVENUE (Rm) JUN 2021 JUN 2020 % VAR Groceries 5 522.0 4 984.2 10.8 Baking 5 849.0 5 195.1 12.6 Sugar 8 397.7 7 621.8 10.2 Chicken 1
Slide 16: Operating Results Summary – Underlying EBITDA
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATING RESULTS SUMMARY – UNDERLYING EBITDA OPERATING RESULTS SUMMARY – UNDERLYING EBITDA EXCLUDING MATERIAL ONCE-OFFS AND ACCOUNTING ADJUSTMENTS, UNDERLYING EBITDA UP 45.8% AND MARGIN IMPROVES TO 8.0% UNDERLY
Slide 17: Cash Flow Summary
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects CASH FLOW SUMMARY HEALTHY CASH POSITION Rm JUN 2021 JUN 2020 % VAR OPENING BALANCE* 1 030.0 (110.4) 1 033.2 Operating profit adjusted for non-cash flow items 2 034.1 1 252.1 62.5 Working capital changes (406.7)
Slide 18: Working Capital
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects WORKING CAPITAL WORKING CAPITAL REMAINS WELL MANAGED JUN JUN % WORKING CAPITAL (Rm) NET WORKING CAPITAL AS A % OF REVENUE 2021 2020 VAR Trade and other receivables 5 427.3 5 965.3 (9.0) 17.1 21.5 TRADE RECEIVABL
Slide 19: Capital Expenditure
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects CAPITAL EXPENDITURE CAPITAL EXPENDITURE WELL CONTROLLED CAPEX SPEND, UP R109.9m. EXPANSION (Rm) REPLACEMENT (Rm) PRIOR YEAR IMPACTED BY NATIONAL LOCKDOWN IN LAST QUARTER. Capital expenditure (including intangibl
Slide 20: Return on Invested Capital
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects RETURN ON INVESTED CAPITAL (ROIC) AT JUNE CAPITAL EXPENDITURE GROUP REPORTED ROIC IMPROVED 13.3% FROM NEGATIVE 4.8% IN 2020 TO POSITIVE 8.5% IN 2021. GROUP UNDERLYING ROIC IMPROVES TO 12.3% Group Food Division 1
Slide 21: Debt Package
Salient Features | Strategic Update | Financial Review | Operational 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 TERM VALUE (Rm) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 (DEC 19)* (
Slide 22: Debt Covenants
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects DEBT COVENANTS RCL FOODS REMAINS WELL WITHIN COVENANT REQUIREMENTS Required covenant ratios were revised on restructuring of the debt package in December 2018 COVENANT REQUIRED JUNE 2021 JUNE 2020 Senior leverag
Slide 23: Paul Cruickshank, Food Division COO
PAUL CRUICKSHANK FOOD DIVISION CHIEF OPERATING OFFICER
Slide 24: Operational Review: Food Division
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION JUN JUN % REVENUE (Rm) 2021 2020 VAR Groceries 5 522.0 4 984.2 10.8 Baking 5 849.0 5 195.1 12.6 Sugar 8 397.7 7 621.8 10.2 FOOD DIVISION SUB TOTAL 19 768.6 17 801.1 11.1 Chicke
Slide 25: Our Wins for the Period
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OUR WINS FOR THE PERIOD A clear strategy & focus driving a significantly improved EBITDA result Well executed COVID controls minimising disruption on operations Stronger than forecasted volume growth across most
Slide 26: Groceries
GROCERIES
Slide 27: Operational Review: Food Division – Groceries
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION - GROCERIES UNDERLYING EBITDA RESULT OF R 562.4m, UP 4.9% ON LAST YEAR DRIVEN BY GOOD VOLUME GROWTH JUN JUN % GROCERIES HEADLINES 2021 2020 VAR REVENUE Revenue excluding sundry
Slide 28: Groceries: Culinary
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION - GROCERIES GROCERY : CULINARY GROCERY: CULINARY MARKET SHARE 12mm 12mm 3mm (VOLUME) Jun 2020 Jun 2021 Jun 2021 Our Culinary brands have remained resilient despite a 40.7% 42.4
Slide 29: Groceries: Pet Food
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL OPERATIONAL REVIEW: REVIEW : FOOD FOOD DIVISION DIVISION – GROCERIES - GROCERIES GROCERY : PET FOOD MARKET SHARE 12mm 12mm 3mm (VOLUME) Jun 2020 Jun 2021 Jun 2021 Our major Pet Food brands have conti
Slide 30: Groceries: Pies and Beverages
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION - GROCERIES PIES A key focus in Pies has been on regaining volumes, lost during the lockdown period, through a strong “back to market” recovery plan. This plan together with th
Slide 31: Baking
BAKING
Slide 32: Operational Review: Food Division – Baking
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL OPERATIONAL REVIEW: REVIEW : FOOD FOOD - BAKING – BAKING DIVISION DIVISION UNDERLYING EBITDA OF R529.9m, UP 33.8% ON LAST YEAR MAINLY DUE TO STRONG DEMAND & IMPROVED OPERATIONS JUN JUN % BAKING HEADL
Slide 33: Baking: Breads, Buns & Rolls
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION - BAKING BREADS, BUNS & ROLLS Bread, buns and rolls generated a strong result which was largely a factor of focused strategic execution leading to a successful turnaround in th
Slide 34: Baking: Speciality and Milling
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : FOOD DIVISION - BAKING SPECIALITY SPECIALITY The Speciality operating unit continues to deliver strong results on the back of increased demand for speciality breads and cakes boosted by an i
Slide 35: Sugar
SUGAR
Slide 36: Operational Review: Food Division – Sugar
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: FOOD DIVISION - SUGAR SUGAR UNDERLYING EBITDA UP 144.2% TO R907.5m ON THE BACK OF STRONG DEMAND, A FAVOURABLE PRODUCT MIX AND STRONG COST CONTROL JUN JUN % SUGAR HEADLINES 2021 2020 VAR REVEN
Slide 37: Sugar: Local Demand and World Sugar Price
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: FOOD DIVISION - SUGAR SUGAR Increased local sugar demand amidst the ongoing COVID-19 lockdown, coupled with a shrinking industry crop supported a healthier supply-demand balance and drove an
Slide 38: Sugar continued: Sugar Master Plan
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL OPERATIONAL REVIEW: REVIEW : FOOD FOOD - SUGAR – SUGAR DIVISION DIVISION SUGAR continued Lastly, good progress was also made in addressing funding challenges for Sugar’s three cane-growing community-
Slide 39: Molatek
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL OPERATIONAL REVIEW: REVIEW : FOOD FOOD - SUGAR – SUGAR DIVISION DIVISION MOLATEK Although Molatek delivered a full year result that was in line with the prior year, the business has seen a marked tur
Slide 40: Food Division – Key Priorities
FOOD DIVISION – KEY PRIORITIES
Slide 41: Food Division Priorities for F22 Financial Year
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects FOOD DIVISION PRIORITIES FOR F22 FINANCIAL YEAR STRATEGIC OPERATIONAL Deliver on our Pies plant investment & innovation Minimise COVID-19 disruption on operations roadmap Execute phase 2 of the Beverage turnarou
Slide 42: Marthinus Stander, Chicken Division MD
MARTHINUS STANDER CHICKEN DIVISION MANAGING DIRECTOR
Slide 43: Operational Review: Chicken Division
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : CHICKEN DIVISION JUN JUN % REVENUE (Rm) 2021 2020 VAR Groceries 5 522.0 4 984.2 10.8 Baking 5 849.0 5 195.1 12.6 Sugar 8 397.7 7 621.8 10.2 Food Division Sub Total 19 768.6 17 801.1 11.1 CHI
Slide 44: Operational Review: Chicken Division – Headlines
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: CHICKEN DIVISION AGRICULTURAL BREED CHALLENGES, AVIAN INFLUENZA AND SIGNIFICANT RAW MATERIAL INPUT COSTS , DRIVING A 50.1% DECLINE IN UNDERLYING EBITDA JUN JUN % CHICKEN HEADLINES 2021 2020 V
Slide 45: Operational Review: Chicken Division – Market Share
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: CHICKEN DIVISION CHICKEN MARKET SHARE 12mm 12mm 3mm (VOLUME) Jun 2020 Jun 2021 Jun 2021 COVID-19 impact moderated since the first half of the year when large volumes of excess stock had to be
Slide 46: Chicken: Maize Prices, Imports and Master Plan
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: CHICKEN DIVISION CHICKEN CONTINUED SAFEX YELLOW MAIZE PRICE (R/Ton) 4 500 F20 F21 The substantial rally in commodity prices during the year has had 4 000 AVG Price AVG Price R2 699 R3 267 a n
Slide 47: Chicken Division: Animal Feed
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW: CHICKEN DIVISION ANIMAL FEED The business came under severe pressure after the first quarter due to a combination of commodity pricing and increased competitor activity Despite price increase
Slide 48: Progress Made: Chicken Division
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects PROGRESS MADE: CHICKEN DIVISION A DIFFERENTIATED APPROACH Senior dedicated and empowered team in place Decentralised model which entails managing all elements of the value chain implemented on a regional basis t
Slide 49: Chris Creed, Vector Logistics MD
CHRIS CREED VECTOR LOGISTICS MANAGING DIRECTOR
Slide 50: Operational Review: Vector Logistics
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : VECTOR LOGISTICS JUN JUN % REVENUE (Rm) 2021 2020 VAR Groceries 5 522.0 4 984.2 10.8 Baking 5 849.0 5 195.1 12.6 Sugar 8 397.7 7 621.8 10.2 Food Division Sub Total 19 768.6 17 801.1 11.1 Chi
Slide 51: Operational Review: Vector Logistics – Headlines
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects OPERATIONAL REVIEW : VECTOR LOGISTICS PLEASING REVENUE GROWTH AND SIGNIFICANT PROGRESS WITH THE CONSOLIDATION OF DUPLICATED NETWORKS DELIVERED AN IMPROVED PERFORMANCE JUN JUN % VECTOR LOGISTICS HEADLINES 2021 20
Slide 52: Pleasing Revenue Growth Despite COVID-19 Impact on Foodservice
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects PLEASING REVENUE GROWTH DESPITE CONTINUED COVID-19 IMPACT ON FOODSERVICE Revenue growth has been driven by the ICL new principal business landed in December 2019, as a result of being awarded the Shoprite and Ma
Slide 53: Progress in Consolidation of Duplicated Networks
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects SIGNIFICANT PROGRESS MADE IN THE CONSOLIDATION OF THE DUPLICATED NETWORKS There has been significant progress made to date in consolidating the duplicated networks and we are now busy with Phase 3 of the project
Slide 54: Vector Logistics Going Beyond
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects VECTOR LOGISTICS GOING BEYOND Vector has continued it’s journey of digital transformation with the introduction of an online ordering portal and Vicky the Vector BOT to improve our customer experience, and the u
Slide 55: Prospects
PROSPECTS
Slide 56: Prospects
Salient Features | Strategic Update | Financial Review | Operational Reviews | Prospects PROSPECTS: Pandemic and impact of recent social unrest will continue to strain the economy in coming months The current commodity price rally is expected to add pricing pressure to a constrained consumer Our Gro
Slide 57: RCL FOODS contact details
RCL FOODS 10 The Boulevard, Westway Office Park, Westville 3629, P.O Box 2734, 3635, KZN, South Africa