2016 sunrice update · and listing on the nsx in 2007 • between fy12 (c11) and fy15 (c14): - 110%...
TRANSCRIPT
2016 SunRice Update
Laurie Arthur, SunRice Chairman
Rob Gordon, SunRice CEO
6 – 9 June 2016
Agenda
• SunRice FY16 (C15)
guidance
• World markets
• Capital Restructure
• Your questions and
comments
2
FY16 Business performance
3
• FY16 (C15) results to be announced in
June 2016
• Challenging trading environment and
market conditions during the second half
of FY16
• Excellent domestic and international
consumer market sales demonstrate
SunRice’s ability to leverage brand
strength
• Subject to audit, strong financial
performance in line with last year
anticipated
• SunRice remains well positioned for the
future, but anticipates a more challenging
year in FY17
FY17 (C16) Outlook
• Challenging trading environment in world
rice markets
• Impacts in dairy industry likely to affect
domestic sales for CopRice
• Potential PNG issues continue to be closely
monitored, including:
- Exchange rate movements (Kina has
declined almost 20% against the US$
since Jan 2015)
- Government policy changes
- Overall macroeconomic outlook
• PNG Kina liquidity issues have the potential
to materially impact SunRice’s business in
PNG in FY17:
- E.G. A sudden Kina devaluation is likely
to considerably reduce trading margins
and reduce the intercompany receivable
from Trukai to SunRice
• Strong track record of accurate market
guidance for A and B Class
Shareholders
• Demonstrated ability to balance the
needs of both shareholder classes
since converting to a company in 2005
and listing on the NSX in 2007
• Between FY12 (C11) and FY15 (C14):
- 110% increase in earnings per B
Class Share and 72% dividend
appreciation
- 44% increase in paddy price paid
per tonne for Reiziq
• Board continues to pursue strategies to
increase value to all shareholders
Track record of delivery
5
6
C16 Global pricing – Medium Grain
Source: SunRice
• Japonica surpluses still exist in
China and Taiwan
• US MG prices have halved since
mid 2014
• Spot paddy cash prices continue to
trade at lowest level of the US
marketing year
• Drought-breaking rains are boosting
anticipated planted area
• US growers are also being required
to move or sell old stock by storage
sheds and banks
• April-May paddy sales pricing
estimated to be $60-75 per tonne
under the Californian
cost of production
• Egypt has switched from exporting
to importing ahead of Ramadan
$300.00
$350.00
$400.00
$450.00
$500.00
$550.00
$600.00
$650.00
7/30/2014
8/29/2014
9/28/2014
10/28/2014
11/27/2014
12/27/2014
1/26/2015
2/25/2015
3/27/2015
4/26/2015
5/26/2015
6/25/2015
7/25/2015
8/24/2015
9/23/2015
10/23/2015
11/22/2015
12/22/2015
1/21/2016
2/20/2016
3/21/2016
4/20/2016
5/20/2016
Cash Trading Date
California21-Month Cash Paddy Prices
Cash Rice Network / Cal Rice Exchange
2014 Crop USA 2015 Crop USA
2013 Crop USA
$U
SD
pe
r to
nn
e
Note: Cash price does not include storage and drying costs,
which are deducted from this amount
7
C16 Global pricing – Long Grain
• 2016 Thai rice export projections
revised from 10 to 9 million
metric tonnes due to drought
• Prices have increased due to
dwindling stockpiles and the
effects of El Niño
• 74 of the country’s 77 provinces
are drought-affected, with dry
conditions set to continue until
the monsoon season starts
• In April, paddy supplies tightened
as exporters covered a sale of
130,000 metric tonnes to China
• Bullish sentiment encouraged by
news that off-season crop
production is expected to be
reduced by up to 60%
*Creed Thai LG 100% B
*Selling prices listed are in U.S. dollars per tonne and for
Finished Product tonnes (includes costs for milling and yield
losses, packing, distribution and administrative charges)
0
100
200
300
400
500
600
2013 J
an
2013 F
eb
2013 M
ar
2013 A
pr
2013 M
ay
2013 J
un
2013 J
ul
2013 A
ug
2013 S
ep
2013 O
ct
2013 N
ov
2013 D
ec
2014 J
an
2014 F
eb
2014 M
ar
2014 A
pr
2014 M
ay
2014 J
un
2014 J
ul
2014 A
ug
2014 S
ep
2014 O
ct
2014 N
ov
2014 D
ec
2015 J
an
2015 F
eb
2015 M
ar
2015 A
pr
2015 M
ay
2015 J
un
2015 J
ul
2015 A
ug
2015 S
ep
2015 O
ct
2015 N
ov
2015 D
ec
2016 J
an
2016 F
eb
2016 M
ar
2016 A
pr
2016 M
ay
Thai Long Grain Pricing - US $ / mt
Thai Long Grain
8
World markets outlook
• A more challenging trading
environment, particularly for Medium
Grain as prices come off
• Conversely, Thailand’s drought is
driving Long Grain prices up
• Lower Riverina production has
resulted in intensified global sourcing
activities for SunRice
• Riverina paddy pricing will continue
to be impacted by global supply and
demand mechanics and SunRice’s
business needs
9
Capital Restructure update
• The Capital Restructure is designed to
equip SunRice and all growers and
shareholders for the future, enabling the
company to:
- Invest for growth;
- Better manage business risk; and
- Have greater resilience to benefit all
growers and shareholders
• Significant time and resources have been
invested to develop a structure that enables
SunRice to realise these outcomes while
preserving both:
- Existing grower shareholder control;
and
- Existing economic rights of SunRice B
Class investor shareholders
10
Capital Restructure update
• Timing is being impacted by developments with
a joint venture (JV) partner, which recently
decided SunRice’s proposed Capital
Restructure justifies its own review of JV
arrangements
• SunRice is working cooperatively on the review,
which is in no way impacting on the JV’s trading
operations
• We will be progressing with the Capital
Restructure once the JV issue is resolved
• The timetable for any vote will now also take
into account the need to re-establish the strong
support received from growers and
shareholders to date, particularly in light of
recent developments in the dairy industry
• The Board remains firmly committed to the
success of the Capital Restructure and its ability
to deliver a strong future for SunRice and all
shareholders
QUESTIONS