2013 saskatchewan real estate forum murad al-katib ... · 2013-05-01 · • founded in 2001 by...
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2013 Saskatchewan Real Estate Forum Murad Al-Katib, Alliance Grain Traders (TSX: AGT)
www.alliancegrain.com April 2013
Forward Looking Statements Certain statements in this presentation are forward-looking statements. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by AGT at the time of preparation, may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of AGT (including its operating subsidiaries) to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the actual results of harvests, fluctuations in the price of lentils and other crops, failure of plant, equipment or processes to operate as anticipated, accidents or labour disputes, risks relating to the integration of acquisitions or to international operations, as well as those factors referred to in the section entitled “Risk Factors” in the Annual Information Form of AGT dated February 21, 2013 which is available on SEDAR at www.sedar.com, and which should be reviewed in conjunction with this document. Although AGT has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. AGT expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
* Non-IFRS Financial Measures
AGT provides some non-IFRS measures as supplementary information that Management believes may be useful to investors to explain AGT's financial results. These non-IFRS measures include EBITDA* (earnings before finance expense, income taxes, depreciation and amortization, and any effects of non-recurring costs and non-cash foreign exchange adjustment), Adjusted Net Earnings* (earnings before any effects of non-recurring costs and non-cash foreign exchange adjustments), Net Debt* (bank indebtedness, short term financing and long term debt less cash) and Net Working Capital* (current assets less current liabilities). Management believes that these are important measures in evaluating performance and in determining whether to invest in AGT. However, EBITDA*, Adjusted Net Earnings*, Net Debt* and Net Working Capital* are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. In addition, AGT may calculate these measures differently than other companies; therefore, such measures may not be comparable. Investors are cautioned that EBITDA*, Adjusted Net Earnings*, Net Debt* and Net Working Capital* should not be construed as an alternative to net earnings (loss) or cash flows as determined in accordance with IFRS as an indicator of AGT's performance or liquidity. For a reconciliation of net earnings (loss) determined in accordance with IFRS to EBITDA* and Adjusted Net Earnings*, see the table on page 35 in the management's discussion and analysis for the three and twelve months ended December 31, 2012 available under AGT's profile on www.sedar.com and on the AGT web site at www.alliancegrain.com.
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Alliance Grain Traders Inc.
Company Overview Global Company and Brands
• Global leader in pulse, staple food and food ingredient processing and distribution, with merchandising offices and value-added processing facilities in Canada, the U.S. Turkey, Australia, China and South Africa; European sales offices, Russian origination office and a global customer base
• Founded in 2001 by Murad Al-Katib and the Arslan Family (Arbel) in Turkey
• TSX Listing : AGT • Headquarters: Regina, SK, Canada • 2012 Sales: $855.3 Million
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Alliance Grain Global Operations
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AGT Limited Company (Russia) (5%)
(1%)
(15%) (1%)
(15%)
(38%)
Number in parentheses represent crop sourcing by origin
AGT sells to all countries shaded in red
Global Facilities and Offices • AGT operates 29 facilities in 6 key agricultural production
origins on 5 continents with over 1.7 million mt of annual production capacity as well as sales offices in Europe and origination office in Russia
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Global Facilities and Offices
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• Pulse crops include lentils, chickpeas, peas and beans, which produce edible seeds, called pulses
• Represent a major source of protein and fibre, which developing nations particularly rely on (i.e. vegetable sources for their protein and energy requirements)
• Increasing consumption (both directly and as an input in other food products) in developed countries where pulses are increasingly viewed as healthy
Overview of Pulses
Composition and Types of Pulses
Moisture 7-14%
Starch 38-55%
Protein 20-35%
Crude Fibre
3-14%
Sugars 3-8%
Ash 2-4%
Fat 2-4%
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AGT’s Diverse Product Offering Key Products Category Product Pillar Highlight
Lentils Red, green, yellow
Split, Football and whole
• #1 exporter in lentils globally, estimated 30% market share Largest red lentil splitter in the world and largest colour sorter of green lentils globally
Chickpeas Kabuli, B90, desi, split desi • #1 exporter in Kabuli type chickpeas globally with a multi-
origin chickpea program for the canning, packing and hummus processing sector
Beans Navy, romano, pinto, faba, dark light red kidney, black
• Growing platform for multi-origin bean shipped globally with processing and origination in 10 countries
Peas Yellow and Green Split and Whole
• World’s largest peas splitter • Focus on value-added peas rather than bulk shipment
Milled Durum Wheat
Pasta, semolina, bulgur • Turkey: #3 domestic brand and #1 export brand for pasta • 12% pasta market share in Turkey and 80 counties of
export
Rice Medium and long grain • New rice processing mill in Turkey
Food and Feed Ingredients
flour, protein, starch, fibre, • New food ingredient facility located in Minot, North
Dakota: largest US pulse ingredient factory
Other Products Popcorn, sunflower seeds, flax seeds, specialty crops,
• Largest multi-origin popcorn importer and exporter in Turkey and South Africa
Source: Management estimates
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Markets for Pulses New Markets for Pulses Traditional Markets for Pulses
Growth Driver: Population & Global Demand for Food
• 2050 - Global population expected to rise 30%
• Global food output will have to grow by
70% to feed the world (UN FAO)
• Pulses are a sustainable source of protein, a key
nutrient for large numbers of the world’s populations
Growth Driver: Health, Nutrition and Sustainability
• High Protein and Fibre, Nutrient Dense, Low Fat,
Gluten Free, non-GMO, Low Allergenicity
• Lower Energy Use, Reduce Greenhouse Gas
Emissions, Improve Soil Health through Rotational
Cropping, Increase Water Use Efficiency
South Asia
Middle East and
North Africa
Latin & Central America
Europe
North America
China
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Pulses and Sustainable Agriculture Pulses Produce Their Own Fertilizer
by Fixing Nitrogen Pulses Use Less Non-Renewable Energy
Relative to Other Crops Increased Water Use Efficiency
Source: Arjen Y. Hoekstra and Ashok Chapagain, Globalization of Water, U. of Twente, Waterfootprint.org National Geographic, April 2010
43 gallons of water to produce one pound of pulses
1,857 gallons of water to produce one pound of beef
1,857 Gallons/
lbs
43
Gallons/ lbs
Pulses
70% of the non-renewable energy used in cropping systems in western Canada is attributable to fertilizers (Zentner et al. 2004)
756
Gallons/ lbs
469 Gallons/
lbs
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Global Pulse Production (millions of tonnes)
• Globally, pulse trade is valued at more than $100 billion annually (CICLS/IPTIC)
– Approximately two-thirds of the market is destined for human consumption
• Developing countries often meet their growing pulse requirements through increased imports
– Approximately 75% of total consumption is in developing countries
• Growth accelerating due to increased demand from food manufacturers for pulse ingredients and consumer movement towards healthy lifestyles in non-traditional markets
Strong Underlying Demand
143 138131
138 144 148139
146 149155 153 152 150 155 161 165 168 174 171
183193
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: FAO; Pulse Canada, StatsCan data, AAFC data
Canadian Pulse Production (thousand hectares/tonne)
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Whole Pulses
Whole Pulse Flour
Split Pulses
Split Pulse Flour
Pulse Hull Fibre
~ 75 – 90% Fibre
Pulse Fraction
Pulse Protein
~ 50 – 85% Protein
Pulse Starch
~ 50 – 95% Starch
Inner Pulse Fibre
~ 30 – 40% Fibre
Pulse Market Products
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© 2012 Institute of Food Technologists
Factors Influencing Pulse Demand
FOOD MANUFACTURING
FOOD SERVICE
CONSUMERS
Nutrition
Health
Sustainability
Increased Products = Increased Consumption Pulse Marketing Attributes
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Market for Pulses is Growing
• Conclusion is that consumption of pulses is increasing in traditional and non-traditional markets like North America and Europe – Popularity of Ethnic food
– Health and Nutrition
– Ingredients in foods you are already eating
• How many have had hummus recently?
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Increased Ingredient Use in Products
INGREDIENTS: Bean Flour (Lentil, Garbanzo & Adzuki Beans), Potato and/or Pea Starch, Potato Fiber, Vegetable Oil (High Oleic Sunflower Oil and/or High Oleic Safflower Oil, and/or Non Gmo Expeller Pressed Canola Oil), Seasoning (Sea Salt, Cane Sugar, Black Pepper, Tapioca Maltodextrin, Onion Powder, Garlic Powder, Autolyzed Yeast Extract, Malic Acid, White Pepper, Expeller Pressed Canola Oil), Potassium Chloride
Gluten free Good source of fibre
(3 g fibre per serving)
Low fat
INGREDIENTS: Semolina, Grain and legume flour blend (lentils, chickpeas, oats, spelt, barley, egg whites, ground flaxseeds and wheat fiber), Niacin, Ferrous Lactate (Iron), Thiamine, Mononitrate, Riboflavin, Folic Acid
Good source o f Protein
(10 g protein per serving)
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Pet Food and Aquaculture Approximately $19.85 Billion spent on pet food in the U.S. in 2011
Accounts for approximately 47% of the world’s fish food production for human consumption
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Source: American Pet Products Association Report; UN SOFIA report
Increased Focus on Sustainability Retailers Food Companies
• Pepsico • UK – 50% reduction of carbon emissions/water
use in 5 years
• Unilever • Source 100% of agricultural products sustainable
by 2020
• Heinz • 20% reduction in carbon emissions by 2015
• Wal-Mart – #1 in world • Locally sourced products
• Support 3rd world farmers
• Track pesticides, fertilizer and water use
• Carrefour – France, #2 in world • Carbon legislation
• Social welfare
• Tesco – UK, #3 in world • Carbon labeled products
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Food With a Message
“Climate Neutral from Cow to Cone”
• Raises awareness of climate change
• Promotes Climate Change College that Ben & Jerry helped establish
Sun Chips “Small Steps Sweepstakes”
• Sun Chips plant in Modesto, CA, uses a field of solar concentrators for heat
• Frito Lay purchases renewable energy credits to offset 100% of electricity used in its U.S. facilities
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Pulses – Enhance Everyday Foods Traditional Formulation: 100% Durum Semolina Pasta
Reformulated: Pulse Inclusion 25% Lentil, 75% Durum
25% lower carbon footprint
100% increase in fibre 25% increase in protein
Adapted from: Gan et al. 2011. Unpublished results, Agriculture and Agri-Food Canada;
U.S. Department of Agriculture, Agricultural Research Service. 2010. USDA National Nutrient Database for Standard Reference.
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Food Industry Statistics
Source: FDA; USDA; A.C. Nielsen; StatsCan; Ag Canada; CFIA; Figures based on industry reports and estimates
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Category Estimated Market Value
Annual Spending on Food (U.S.) $1.6 Trillion (E)
Functional Foods and Nutraceuticals $50 Billion (E)
Sports Nutrition and Weight Loss $15 Billion (E)
Soy Products $5.5 Billion (E)
Vegetarian Markets $2 Billion (E)
Top 5 Food Companies in the U.S.
Source: 2012 Food Processing Magazine Survey and Rankings
(USD $billions) 2011 Food Sales 2011 Total Sales
Pepsico Inc. $38.4 (E) $66.5 (E)
Tyson Foods $31.0 (E) $32.3 (E)
Nestle (U.S. and Canada) $26.2 (E) $94.0 (E)
Kraft Foods $25.2 (E) $54.4 (E)
Anheuser-Busch InBev $15.3 (E) $39.0 (E)
$136 Billion Combined Top 5 Food Companies Food Only Sales
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Top 5 Global Food Retailers
$843.9 Billion Combined 2011 Sales – Top 5
Source: Supermarket News 2011 Rankings
2011 Sales (USD $billions)
Wal-Mart (U.S.) - U.S. Ranking #1 $443.9 (E)
Carrefour (France) $113.1 (E)
Tesco (U.K.) $103.5 (E)
Metro Group (Germany) $92.8 (E)
Schwarz Group (Germany) $90.6 (E)
(6) Kroeger (U.S.) .) - U.S. Ranking #2 $90.4 (E)
(7) Costco (U.S.) - U.S. Ranking #3 $87.4 (E)
(9) Target (U.S.) - U.S. Ranking #4 $69.9 (E)
(20) Safeway (U.S./Canada) - U.S. Ranking #55 $43.6 (E)
(24) Loblaw Cos. (Canada) – Canada Ranking #1 $31.6 (E)
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Saskatchewan - Growth and Opportunity
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According to Statistics Canada's revised estimates, Saskatchewan posted a GDP at market prices of $57.5 billion (in 2007 chained dollars) in 2011
(November 19, 2012)
Top 10 Exports by Product from Saskatchewan 2006 and 2010 (CAD ‘000s)
Saskatchewan Landscape
• Resource sector boom is real: many factors beyond our control i.e. global demand for commodities, pace of growth in emerging markets, credit, liquidity and macroeconomic factors
• Economic growth in our Province is truly multi-dimensional: agriculture, mining, oil and gas, manufacturing, technology, services, education.
• We all feel pretty good right now • Population up, economy doing relatively well
• Perception of the Province is high outside our borders
• Export dominated economy
• Seem to be doing it “right”!
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Key Opportunities • AGT is an example of how a Saskatchewan company can become
globally successful reaching world markets from Saskatchewan
• Opportunity exists to leverage our raw material commodity base to create refinery/value added industries to capture the wealth creation here
• Key elements to this strategy: • Quality inputs: we have it!
• Technology: available and R&D are key elements: SRC, PRC, U of S, U of R, CDC
• Innovation
• Talent: workforce available and productive
• Infrastructure: PPP, Gov’t alone
• “Enabling Environment” from a policy perspective: labour legislation, tax policy, investment attraction, immigration policy and settlement, infrastructure, education and skills
• Cost competitive jurisdiction
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Key Drivers of Success • Market access and diversification of exports: strong advocate of
the Government of Canada’s Pro-Trade Plan
• Gateway Initiatives: Asia and Emerging markets will be the key drivers: BRIC; next ones CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa).
• Transportation is key: i.e. Global Transportation Hub (GTH)
• Innovation agenda and productivity gaps: we are losing ground
• SME’s are the driver of our economy and Saskatchewan is export successful and diversified
• Access to talent: migration, immigration: what matters? Jobs, Education, Housing, Healthcare, Infrastructure, Leisure
• Access to capital i.e. venture capital?
• Perception of business climate
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Seize the Opportunity – Build it! • Skills shortage is real: engage the existing pool more effectively but
recognize that we talk of skills shortage.
• We have a critical LABOUR SHORTAGE
• We shall all be judged on how this Province looks 10 years and 20 years from now, not 10 to 20 weeks from now
• Meaningful change in the way we think of Government’s role: Private sector is the driver of many elements: PPP
• Balance of Urban and Rural interests: cities and adjacent areas need a coordinated approach to sustainable growth: lets not make the same mistakes that Alberta made and is making
• “Up the Chain” insulates you from the short term macro effects and makes you a seller of “products” not commodities
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Alliance Grain Traders Inc. [email protected] www.alliancegrain.com