Rainbow Chicken Limited · JSE:RBO
Rainbow Chicken — H1 2012 Earnings Presentation
41 slides from Rainbow Chicken's earnings presentation, Feb 21, 2012
Slide 1: Rainbow Chicken Limited Interim results
Rainbow Chicken Limited (RCL) Interim results 6 month period ended 31 December 2011 21 February 2012
Slide 2: Introduction
Introduction RCL • During the prior year RCL changed its financial year-end to 30 June to align with its holding company, Remgro Limited • This presentation covers the results for the 6 month period to December 2011 • Results comparison is less meaningful as it is compared against previously publish
Slide 3: 2011 Statutory Highlights
2011 Statutory Highlights (Note: current period to December, comparatives to September) RCL Revenue + 15.8% HEBITDA + 13.3% Rm 3917,5 Rm 3384,4 3360,5 394,8 3326,7 348.4 305,5 300,3 200 200 201 201 2008 2009 2010 2011 8 9 0 1 Operating margin + 0.7% Headline earnings + 25.0% % Rm 7.7 202,1 7.4 169.8
Slide 4: Overview
Overview RCL Market Conditions What has RCL done? • Consumer demand still under pressure • Delivered a stable margin through difficult despite lower interest rates market conditions which reinforces • Chicken imports up 67% for 6 months to strategic focus as appropriate December, now estimated at 15
Slide 5: Interim Highlights
Interim Highlights RCL Statutor Sept Dec % y 20103 2011 3 Revenue Rm 384,4 917,5 +15.8 Headline EBITDA Rm 316,0 394,8 +24.9 Headline EBIT Rm 236,3 303,9 +28.6 Effective tax rate % 33,6 33,6 - Headline earnings Rm 161,7 202,1 +25.0 Headline earnings per share cents 55,2 68,7 +24,5 Interim dividend pe
Slide 6: Segmental Analysis
Segmental Analysis RCL • First time reflection of Vector as a separate segment • Market related charges across all services by Vector to Rainbow only Inter-segment implemented in July Rainbow Vector sales Group 2011 so comparatives are not meaningful Revenue 3582.0 653.0 (317.5) 3917.5 Operatingprof
Slide 7: Market Conditions - Yellow maize (SAFEX)
Market Conditions - Yellow maize (SAFEX) RCL • Summary: – Average market price for yellow maize increased by 66% vs. the comparable 6 R/ton months to December 2,750 • Context: +66% – Last year SA had high stock levels compared to previous 2,500 years. – SA maize was cheap relative 2,250 to the rest
Slide 8: Market Conditions - Soya (CBOT)
Market Conditions - Soya (CBOT) RCL • Summary: – Average CBOT soya meal price decreased by 2% vs. US $ per ton the comparable 6 months to December 450.0 • Context: – More recently, and up until 400.0 September 2011, prices had been firm trading in a 350.0 range of $340 - $395 – The bullishness was o
Slide 9: Market Conditions - Exchange rate
Market Conditions - Exchange rate RCL • Although only 7% weaker on average than the R/US$ exchange rate comparable 6 months, the Rand weakened materially 11 in this interim period + 1% • The Rand weakened to the R7.20:US$ resistance 10 level in late September 2011 before weakening dramatically to tr
Slide 10: Market Conditions - Imports
Market Conditions - Imports RCL Calendar Growth: MDM 24% Chicken 59% 124 78 94 22 100 Tons '000 MDM 34 84 Turkey 75 93 Chicken 39 51 25 25 24 27 30 226 182 146 142 123 103 112 98 2004 2005 2006 2007 2008 2009 2010 2011 Source: SAPA 10
Slide 11: Financial review: Revenue
Financial review RCL Revenue + 15.8% • Revenue increased by 3917,5 Group 15.8% to R3.9 billion 653,0 largely as a consequence Vector of the higher trading 3384,4 3360,5 quarter included in the 6 3326,7 3582,0 Rainbow month period ended 31 December 2011 2871,4 • Comparative split not available • Inte
Slide 12: Financial review: HEBITDA
Financial review RCL • Chicken prices have HEBITDA (pre IAS39) +11.6% remained under pressure due to increased imports and consumers’ lower disposable income. Operational efficiencies 9.9% 9.3 implemented have % limited the impact of Margin 9.0% 9.1% % significant feed and utility 388,7 cost increas
Slide 13: Financial review: Cash flow
Financial review RCL • Increase in working Cash flow capital funding requirements explained by the ACTUAL CASH FLOW - YTD peak December Rm trading period Series1 469.5 Series1 399.4 • Higher December sales resulted in an increase in trade and other receivables Series1 34.9 Series1 0.2 Series1 9.3 •
Slide 14: Financial review: Capex spend
Financial review RCL • Increased capex relates Capex spend to the new plant based cold storage at Rustenburg 90,9 79,9 Dep 75,2 Rm 72,3 142,2 Capex 139,6 Rm 133,3 130,1 200 200 201 201 8 9 0 1 (Note: current period to December, comparatives to September) 14
Slide 15: Financial review: Headline EBIT
Financial review RCL • Profit and Margin contributed to by inclusion of peak trading quarter in current period results 7.8 Headline EBIT 6.9 7.3 7.0 7.6 margin (%) 6.9 303,9 5.3 6.8 297,7 243,7 Pre IAS39 233,8 236,3 228,1 228,9 Post IAS39 175,2 Headline EBIT (Rm) 2008 2009 2010 2011 (Note: current p
Slide 16: Financial review: comparison to December 2010
Financial review RCL • Growths are more Comparison to 6 months to December 2010 moderate than September comparative. • Growths still positive 6 6 despite difficult trading Mont Mont conditions. hs hs 30 31 Dec Dec 2010 2011 % var Revenue (Rm) 3 3 586.3 917.5 9.2 Headline EBIT (Rm) 257.5 303.9 18.0 H
Slide 17: Brand Highlights: Rainbow Mainstream Chicken
Brand Highlights RCL Rainbow Mainstream Chicken • The South African mainstream chicken category has had to contend with significant feed cost increases • This on the back of record high sustained imports which have caused oversupply • Consequentially during the lower demand winter months prices and
Slide 18: Added Value Performance
Brand Highlights RCL Added Value Performance Rainbow owned further processed brands • Added value ranges have continued their good performance • The chilled processed meats sector of this was underpinned by the existing Rainbow Simply Chicken market leading Polony and Viennas and Rainbow Family Polo
Slide 19: Added Value Performance: Woolworths, FoodSolutions
Brand Highlights RCL Added Value Performance Woolworths • Strong collaboration between Rainbow and Woolworths saw good volume growth for Woolworths in the W Cape FoodSolutions • Quick Service Restaurants have seen a return to better volume growths after a difficult 18 months • Increased store openin
Slide 20: Vector infrastructure
Vector infrastructure RCL Key Figures Employees – 2974 16 distribution sites 3 Plant based cold storage facilities Northern Primary fleet – 104 (86 Own) Windhoek Province Secondary fleet – 275 (262 Own) Customer drop points – 7200 Cases delivered – 162000/day Botswana ISO 22000 accre
Slide 21: Introduction to the Vector business
Introduction to the Vector business RCL Primary Principal Secondary Customer Secondary Manufacturers Primary Transport Sales Solutions Credit & Information Warehousing Distribution Distribution (PBCS) (VPT) (VSS) Management (VCS) (PSD) (CSD) Primary Primary Transport Secondary Secondary Plant Based
Slide 22: Vector clients
Vector clients RCL Customers Principals In Customer Secondary Distribution Vector is contracted by the customer ( eg. CLC, Nandos, Spur) to deliver their full basket of products directly to the outlets In Principal Secondary Distribution Vector is contracted by the principal e.g. Mc Cains to deliver
Slide 23: Business Initiatives - Roodepoort
Business Initiatives - Roodepoort RCL • The upgrade and re-organisation of the Roodepoort facility was completed in July 2011 • Inland stock shrinkage has reduced through improved business processes and targeted security measures 23
Slide 24: Business Initiatives - Midrand
Business Initiatives - Midrand RCL • Food Service business was consolidated into Midrand A in August 2010 A B • Bulk storage facilities were provided to McCain from June 2011 at Site B • Pick n Pay frozen business will be D C consolidated at Midrand D in July 2012 • Total network capacity will be in
Slide 25: Business Initiatives - Advanced Planning System
Business Initiatives - Advanced Planning RCL System • An advanced planning system, Demand Planning Supply Planning Adexa, is being implemented across the business • The Demand Planning module has been implemented and the Supply Planning module will be implemented during the latter half of the year •
Slide 26: Conclusion
Conclusion RCL • Overall outlook still looks challenged, especially considering unemployment crisis and volatility in commodity and currency markets • Some relief expected on imports with interim anti dumping tariff on Brazil although limited to whole birds and fillets categories (not leg quarters)
Slide 27: Appendices
Appendices RAINBOW = @
Slide 28: Complex business chain
Complex business chain RCL • Integrated supply chain from “farm to fork” GP OPERATION AGRICULTURE PROCESSING Grandparent Grandparent farms Parent Parent farms BroilerBroiler farms chicks chicks chicks Broilers Processing Rearing Laying Hatching Rearing Laying Hatching Growing 3 plants + 2 FP plants
Slide 29: RCL National Footprint
RCL National Footprint RCL • South Africa’s largest processor and marketer of chicken • 8,008 employees (excluding seasonal casual workers) Limpopo Province Botswana Mpumalanga Gauteng Swaziland North West Namibia KwaZulu Natal Free State Lesotho Northern Cape Eastern Cape Western Cape 29
Slide 30: RCL National Footprint
RCL National Footprint RCL • South Africa’s largest processor and marketer of chicken • 8,008 employees (excluding seasonal casual workers) • 209 rearing, laying and broiler farms and hatcheries • 34m birds on the ground Limpopo Province Botswana Mpumalanga Rustenburg Gauteng Swaziland North Carolin
Slide 31: RCL National Footprint
RCL National Footprint RCL • South Africa’s largest processor and marketer of chicken • 8,008 employees (excluding seasonal casual workers) • 209 rearing, laying and broiler farms and hatcheries • 5 34m birds on the ground • feed mills • 20,600 tons per Limpopo week Province (1,1m tons per Botswana
Slide 32: RCL National Footprint
RCL National Footprint RCL • South Africa’s largest processor and marketer of chicken • 8,008 employees (excluding seasonal casual workers) • 209 rearing, laying and broiler farms and hatcheries • 34m birds on the ground • 5 feed mills • 20,600 tons per week Limpopo Province • (1,1m tons per year) 3
Slide 33: RCL National Footprint
RCL National Footprint RCL • South Africa’s largest processor and marketer of chicken • 8,008 employees (excluding seasonal casual workers) • 209 rearing, laying and broiler farms and hatcheries • 34m birds on the ground Limpopo Province Windhoek • 5 feed mills Botswana • 20,600 tons per Polokwane w
Slide 34: RCL's past
RCL's past RCL 1991 - 1998 1999 - 2003 1991 - 1998 Business in trouble • Revenue was growing, but so were losses. Revenue 3,7 • The business had lost its way, and required (Rbn) 3,0 recapitalisation (Remgro injected R750m). 2,5 2,1 2,2 2,2 2,3 1,7 1,9 1,5 1,5 1,6 1999 - 2003 0,5 Fixing the basics 91
Slide 35: RCL's transformation
RCL’s transformation RCL 1991 - 1998 1999 - 2003 2004 - 2010 2004 - 2010 7,0 6,8 Transformation to consumer 6,0 focused business 4,7 Focused on: 4,0 4,1 3,8 Clarifying our strategic Revenue 3,7 (Rbn) 3,0 framework 2,5 Restructuring the company and 2,1 2,2 2,2 2,3 1,7 1,9 board (regional to funct
Slide 36: RCL's future focus
RCL’s future focus RCL 8.6 1991 - 1998 1999 - 2003 2004 - 2010 6,8 7,0 2011 - 2015 6,0 4,7 2011 - 2015 4,0 4,1 Revenue 3,7 3,8 Growth phase (Rbn) 3,0 2,3 2,5 2,1 2,2 2,2 1,9 1,5 1,5 1,6 1,7 0,5 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11* 765 Further processed capacity enhanced
Slide 37: Group strategy
Group strategy RCL Vision Rainbow Chicken will be Vector will be Africa’s chosen at the heart of every meal. multi-temperature route to market solution. We will achieve this by creating Vector delivers supply chain excellence innovative solutions and strong brands. through innovative customised solu
Slide 38: Chicken industry perspective
Chicken industry perspective RCL • Estimated per capita consumption of broiler meat in Kilograms per capita 39.1 37.9 36.6 33.9 34.8 32.9 29.6 26.2 25.9 26.8 24.3 23.6 00 01 02 03 04 05 06 07 08 09 10 11 Source: SAPA 38
Slide 39: Chicken industry perspective
Chicken industry perspective RCL •Average broiler production per week (in millions) excluding imports 18.5 18.7 17.8 16.8 14.6 12.9 12.8 11.8 11.8 11.9 11.0 11.0 10.5 9.8 9.8 9.2 8.5 8.0 94 95 96 97 98 99 00 1 2 3 4 5 6 7 8 9 10 11 Source: SAPA 39
Slide 40: Chicken industry perspective
Chicken industry perspective RCL • 18.7m broilers produced per 5.0 week 4,5 • 1,5m tons per annum 4,0 • Astral = Earlybird Farms + County Fair • Tydstroom acquisition of Tonko has placed them as 4th largest producer. 1,3 1.2 1,0 • 0,9 0,8 Others = Numerous smaller producers producing less Rainbow As
Slide 41: Chicken industry perspective
Chicken industry perspective RCL 2011 Source: Red Meat Abbatoir Association 41