ROS AGRO Analyst day presentation

58 Pages·2016·3.33 MB·English

ROS AGRO

Analyst day presentation
29 March 2016
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Table of Contents
1 Ros Agro at a glance 4
2 Investment highlights 7

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e 3 Business overview 17
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5 Financial overview 43
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Section 1
Ros Agro at a glance
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Ros Agro at a glance
Ros Agro – a leading vertically integrated diversified agriculture holding with exposure to highly attractive market segments in Russia and CIS
Business highlights Overview of Ros Agro segments3
•
#3 sugar producer in Russia with 14% market share1
• 6 sugar refineries 32.9
• #2 pork producer in Russia with 6% market share1 • Beet sugar 17.0 22.5
Sugar production 2015: 582kt
34%
•
• #1 consumer margarine producer in Russia with 45% market share1 Cane sugar 10% 21%
production 2015: 183kt
2013 2014 2015
•
#3 agricultural land holder in Russia with 504kha of land bank primarily located in the
Black Earth region of Russia2
•
13 pig farms

a • • 3 breeding facilities
e Ros Agro operates vertically integrated business model which serves as a natural • 17.8 18.1
hedge against commodity price fluctuations and helps to deliver strong margins: Meat Pork production 2015: 176kt
r • 7.4
A Compound feed production
50%
‒ Sugar is mainly produced from its own sugar beet 2015: 579kt 23% 42%
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n ‒ Meat business is secured by own fodder production 2013 2014 2015
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‒ In agricultural business Company's core crop yields are significantly higher than
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o Russia's average • Consumer margarine
W production 2015: 43kt
17.3
Oil and • Mayonnaise production 14.9
Consolidated sales and Adj. EBITDA dynamics Fats 2015: 65kt 8.9 13% 10%
•
Vegetable oil production 11%
2015: 170kt
Adj. EBITDA 2013 2014 2015
margin 19% 31% 34%
72.4
24.4
59.1
18.1 41% 47%
36.5 • Total land bank² of 504kha 28%
Agriculture
6.8 • 410kha of arable land2
10.7 14.2
8.5
2013 2014 2015 2013 2014 2015 2013 2014 2015
Sales (RUBbn) Adj. EBITDA (RUBbn) 2013-2015 Sales
Sales (RUBbn) Adj. EBITDA margin (%)
CAGR (%)
Source: Company data, Soyuzrossakhar, National Union of Pig Breeders, Russian Oil and Fats Union, BEFL
Notes: 1 Based on volumes in 2015; 2 Other companies' agricultural landholding data as of April 2015 BEFL report, Ros Agro landholding data as of 2015YE;3 Excluding Razgulay's assets to be acquired (subject to necessary 5
corporate and legal procedures)
Progress for the last 5 years
Ros Agro has demonstrated consistently strong operating performance across all of its core segments since the IPO
White sugar main players
by output
Share in
2015, %
[Продимекс] [20]%
Rusagro [14]%
[Доминант] [15]% Sugar Meat Oil & Fats Agriculture
[Сюкден] [10]%
[Разгуляй] [7]%
Other [34]%
Total 100% 1 n #3 Sugar producer2 #2 Pork producer #1/#5 Cmoanysounmnaeirs em parrgoadruinceer / #3 Agricultural land holder3,4
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a itis
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p Market share in white sugar production Market share in pork production Market share in consumer margarine Agricultural land under management
r t
A e production / mayonnaise production (kha)
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g raM 16% -2% 14%2 3.4% +2.6% 6.0% 32% +13%/4% 45% 424 CAGR 8.8% 5044
n /7% /11%
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k 2011 2015 2011 2015 2011 2015 2011 2015
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Beet sugar production (kt) Pork production (kt) Consumer margarine / mayonnaise Crop harvest (mt)
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production (kt)
CAGR
s CAGR 5.9% CAGR 28.8% 5.3%/3.3% CAGR 6.1%
cir 463 582 64 176 /3557 /4635 3.1 3.9
t
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m
2011 2015 2011 2015 2011 2015 2011 2015
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it
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u Share of beet sugar in total sugar Compound feed production (kt) Vegetable oil production (kt) Owned land (%)
d
o production (%)
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ye +35% CAGR 25.4% CAGR 26.2% +11%
K 41% 76% 234 579 67 170 32% 43%
2011 2015 2011 2015 2011 2015 2011 2015
Source: Company data, Soyuzrossakhar (Sugar), National Union of Pig Breeders (Meat), Russian Oil and Fats Union (Oil & Fats), BEFL (Agriculture)
Notes: 1 In Russia based on output volumes; 2 Excluding the 5% market share of Razgulay's assets to be acquired by Ros Agro in 2016 (subject to necessary corporate and legal procedures); 3 Other companies' agricultural 6
landholding data as of April 2015 BEFL report, Ros Agro landholding data as of 2015YE; 4 Excluding 90kha of agricultural land of Razgulay to be acquired in 2016 (subject to necessary corporate and legal procedures)
Section 2
Investment highlights
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Investment highlights
1 2 3
Agri Oil & Fats
business business
Meat Sugar
business business
Strong Russian agri sector Market leadership across core Vertically integrated and diversified
fundamentals categories in Russia with scale benefits
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Strategically located Strong brand portfolio across Experienced management with Strong financial performance
state-of-the-art facilities products and price points proven track record
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1 Strong Russian agri sector fundamentals
Ros Agro is enjoying favorable sector fundamentals in each of the four segments where it is present
Sugar Meat
Large, stable market with majority sugar production coming from high-margin Strong growth potential driven by further domestic production industrialisation,
sugar beet due to favorable sector regulation import substitution and expected pork consumption growth towards the EU levels
Dynamics of sugar Correlation between Per capita meat Evolution of the Russian
consumption in Russia local and global prices consumption 2015 (kg) pork market (mt)
Industrial production Import
Share of beet sugar (%) Sugar contract #11 NYM Annual total pork consumption (mt) Other domestic production
Total consumption (mt) Total production (mt) Krasnodar sugar contract¹ Pork consumption Other meat consumption
per capita per capita

a 90 87 89 1,000 4.4 1.7 3.4 3.8
erA 5.6 4.9 5.7 5.2 5.7 5.7 S)tU/$ 700 88.2 76.1 71.6 01..80 003...744 003...634
( 400
g 54.6 44.3 23.3 2.0 2.3 2.5
100
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2013 2014 2015 2013 2014 2015 Germany Poland Russia 2013 2014 2015
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k Source: Soyuzrossakhar, BMI Source: Factset, ISCO Source: BMI, National Union of Pig Breeders Source: National Union of Pig Breeders
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W Oil & Fats Agriculture
Russia is the largest mayonnaise and sunflower oil market globally One of the largest agri commodities exporters globally strategically located in close
proximity to major export destinations
Mayonnaise total Sunflower oil total Arable land across Russia agricultural
consumption 2015 (kt) consumption 2015 (kt) countries 20132 (mha) exports 2016YTD (mt)
Wheat Yield 2016YTD (t/ha) Share in global export (%)
709
605 1,960 2.4 5.9 3.8 14.4 2.9 11.4
980 23.5
223 700 122.0 108.0
33.0 3.8 3.0
Russia USA Mexico Russia Turkey Argentina Russia EU Ukraine Wheat Corn Barley
Source: BMI Source: USDA, Foreign Agricultural Services Source: USDA, Faostat Source: USDA
Note: 1 Converted from RUB using CBR average monthly exchange rates; 2 The latest available arable land data across countries
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Per capita consumption (kg) 4.9 1.9 1.7
1 Strong Russian agri sector fundamentals: government regulation
The agri sector enjoys strong government support aimed at protecting and developing domestic producers
Government support breakdown (2015) Government support of agricultural sector
Dairy cattle breeding
16%

The Russian agricultural sector receives constant government support Food Security doctrine Finance-payment system
 In 2014, interest rate subsidies covered the most part of interest rate  Ministry of Agriculture targets the following levels of self-sufficiency for 2020: sugar 32% Animal breeding
payments for agriculture companies that attract loans for investments Interest rate subsidies 90%, meat and meat products 85%, grains 95% and vegetable oil 90%, the majority of RUB 617bn 15%
 11% which have been already reached USD 11.0bn1 Agriculture
Ros Agro’s effective interest rate was 4% vs. usual rate of 3-5%
8% Crop growing (incl. indirect support) Infrastructure
 Interest rate subsidies
Agriculture companies in Russia benefit from favourable taxes. Currently
companies that are involved in producing agricultural produce have 0% tax; Animal breeding  In 2015, interest rate subsidies covered a substantial part of the interest rate payments 12% 14% Other
a 12% RUB 220bn
the same is true for those that produce meat products for agriculture companies that attract loans for investments 12%
e USD 3.6bn1 52% Infrastructure development
− Ros Agro has 0% tax for its agriculture and pork divisions, while other rA Favorable taxation
businesses are levied with the usual tax rate of 20% g 17% Other  Currently agricultural and meat producers are subject to 0% income tax Source: Ministry of Agriculture of the Russian Federation

Moreover, VAT for agriculture companies is 10% vs. usual 18% n  http://rg.ru/2015/09/21/prodbezopasnost.html
VAT for agriculture companies is 10% vs. usual 18%
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Sugar sector Pork sector
 
Nearly all support to sugar producers in the Russian Federation is provided in the form Pork sector support employs two major protection mechanisms: annual import quota
of market price support (MPS) through import duties (430 kt of pork) and high import duties for out of quota import
 
The system is primarily designed to support domestic sugar producers from sugar beet In addition, import of live pigs from EU and of meat from US was banned due to
when the global raw sugar prices are low and stabilise the market when the domestic veterinary rulings and as counter sanctions measures
sugar prices are high
Source: Ministry of Agriculture of the Russian Federation
Note: 1 Converted from RUB using 2015 average CBR exchange rate of 61.07 10