by Edwin Bowater of FJB Systems...Edwin Bowater of FJB Systems +44 (0) 1372-468839 AdAgenda About FJB Systems Overview of the Middle Eastern Meat Industry Overview of the Business

MeatMeatExperiences of the Economics of Setting

up Meat Plants in theMiddle EastMiddle East

bybyEdwin Bowater

ofofFJB Systems

www.fjb.co.uk+44 (0) 1372-468839

A dAgenda

About FJB SystemsAbout FJB Systems

Overview of the Middle Eastern Meat Industry

Overview of the Business Planning Tool

Case Study

Summary

FJB S tFJB SystemsOne-stop Service for the Meat Industry

• Feasibility Studies/Business PlanningFJB SystemsM.E. Overview

• Process LayoutsA hit t

• M & E DesignR f i ti

Feasibility Studies/Business PlanningM.E. OverviewBusiness ToolCase StudySummary • Architecture

• Building Design• Refrigeration• Insulation

• Project Management• Training, Commissioning & Managementg, g & g

FJB SFJB Systems

• Fields of Expertise - Beef, Sheep, Pork & Poultry• Experience in slaughtering boning value adding • Experience in slaughtering, boning, value-adding,

rendering, canning & cold storageFJB SystemsM.E. Overview

cold storage

M.E. OverviewBusiness ToolCase StudySummary

Value addedfeedlot abattoir boning Value-addedfeedlot abattoir boning

rendering

FJB SFJB Systems

Worldwide Experience

FJB SystemsM.E. OverviewM.E. OverviewBusiness ToolCase StudySummary

Middl E O iMiddle Eastern Overview

• Sheepmeat - preferred proteinp p p• Increasing Oil Wealth since 1973• Preference for fresh meat Live Imports

FJB SystemsM.E. Overview • Preference for fresh meat Live Imports

• Australia & New Zealand


• Increasing personal wealth: Mutton Lamb• High quality gas flushed productg q y g p• Still large preference for fresh meat


China

World Sheep Inventories

EU

AustraliaFJB SystemsM.E. Overview

Iran

India


New Zealand

Sudan

S i

South Africa

Turkey

0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000

Spain

Source: FAO


Leading Lamb & Mutton producing Countries

EU

ChinaFJB SystemsM.E. Overview

New Zealand

AustraliaM.E. OverviewBusiness ToolCase StudySummary

Turkey

Somalia

India

Iran

Turkey

P ki t

Syria

India

0 500,000 1,000,000 1,500,000

Pakistan

Source: FAOTonnes cwt

B i T lBusiness Tool

• Powerful computerised business toolp

• Models existing or proposed businesses via computer FJB SystemsM.E. Overview

spreadsheets

• Model based on real operational experience

M.E. OverviewBusiness ToolCase StudySummary • Model based on real operational experience

• Allows “What If” scenarios to be instantly tested

• Identifies sensitivities/weaknesses of a business

• Is the proposed or existing business viable?

C S dCase Study

• Proposed New Middle Eastern Slaughter & Rendering Plant to replace existing 2000 Head Sheep/Day & Plant to replace existing - 2000 Head Sheep/Day & 50 Cattle/CamelsP i t O ti

FJB SystemsM.E. Overview • Private OperationM.E. OverviewBusiness ToolCase StudySummary

C S dCase Study

Example of Middle Eastern Public Slaughterhouse


Note: Not built to International Standards

C S dCase StudyDual Purpose Low Throughput Public/Private Slaughterhouse


C S dCase Study

• Proposed New Middle Eastern Slaughter & Rendering Plant to replace existing 2000 Head/Sheep Day & Plant to replace existing - 2000 Head/Sheep Day & 50 Cattle/CamelsI ti Li Sh

FJB SystemsM.E. Overview • Importing Live Sheep

• Monthly Animal Shipments


• Feedlot RequirementB ilt t USDA & EU St d d• Built to USDA & EU Standards

• Will it make money?y• What are the business weaknesses?

C S dCase Study

Key Variables

DIAGRAMATIC REPRESENTATION OFINTERACTIVE BUSINESS PLANNING MODELMIDDLE EAST SLAUGHTERHOUSE

Plant Service CostsWethers

Offal & RenderingCredits

HoggetsOffal & Rendering

Credits VIXIIXIDirect Costs

VI

Planned StockThroughput

Numbers & Costs III

IIa & IIb

FJB SystemsM.E. Overview

Packaging &Production Material

CostsHoggets

Carcass RevenueWethers

Carcass Revenue VIXIIXI

M.E. OverviewBusiness ToolCase StudySummary XIIXI

Income Statement

Feedlot Direct & Fixed Costs

IX

Project Finance

Wages &Surcharges

TradingP fit & L

VIII

V

Cattle

Monthly

Project FinanceCharges

Profit & LossAccount

Overheads

COSTS

VIIIV VIICarcass Revenue

CattleOffal & Rendering

X

yCash Flow

INCOME

XIIIOffal & Rendering

CreditsX

C St dCase StudyModel includes over 100 separate variables which can be independently changed - illustrated by these examples:

Livestock Purchase Price:

Exchange Rate:

27 A$/head (FAS Western Australia)

US$/A$0.585FJB SystemsM.E. Overview g

Throughput:

Average Local Feed Prices: US$/tonne

%

Sheep/day2000

235

44


Dressing Yield:

Employee Wage Rates:

Meat Prices:

US$/day

%

%44

15

100Meat Prices: %100

Base Profitability is calculated at Base Profitability is calculated at US$1.61m (year 8) incl. Deprec.

C St dCase StudyAssume 10% increase in Livestock Purchase Price


Exchange Rate:


US$/A$0.585

30FJB SystemsM.E. Overview g

Throughput:


%

Sheep/day2000

235

44


Dressing Yield:


Meat Prices:

US$/day

%

%44

15


and process the results ….

C St dCase StudyUS $1.61 million Adjusted profit US $0.45 m10% livestock price 72% profit


3

S$

Profit & Loss Statement3

S$

Profit & Loss Statement

0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

ss a

fter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m

Y 1 Y 2 Y 3 Y 4 Y 5 Y 6 Y 7 Y 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

C St dCase StudyAssume 10% decrease in Exchange Rate


Exchange Rate:


US$/A$0.5850.526FJB SystemsM.E. Overview g

Throughput:


%

Sheep/day2000

235

44


Dressing Yield:


Meat Prices:

US$/day

%

%44

15



C St dCase StudyUS $1.61 million Adjusted profit US $3 million10% exchange rate 86% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

s af

ter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

C St dCase StudyAssume 10% increase in Throughput


Exchange Rate:



Throughput:


%

Sheep/day2000

235

44

2200M.E. OverviewBusiness ToolCase StudySummary

Dressing Yield:


Meat Prices:

US$/day

%

%44

15



C St dCase StudyUS $1.61 million Adjusted profit US $2.3 million10% throughput 43% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

ss a

fter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m


C St dCase StudyAssume 10% increase in Feed Prices


Exchange Rate:



Throughput:


%

Sheep/day2000

235

44

259


Dressing Yield:


Meat Prices:

US$/day

%

%44

15



C St dCase StudyUS $1.61 million Adjusted profit US $1.17 million10% feed price 27% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

ss a

fter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m


C St dCase StudyAssume 1% increase in Dressing Yields


Exchange Rate:



Throughput:


%

Sheep/day2000

235

44


Dressing Yield:


Meat Prices:

US$/day

%

%44

15

100

45

Meat Prices: %100


C St dCase StudyUS $1.61 million Adjusted profit US $2.27 million1% dressing yields 40% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

s af

ter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

C St dCase StudyAssume 10% increase in Wage Rates


Exchange Rate:



Throughput:


%

Sheep/day2000

235

44


Dressing Yield:


Meat Prices:

US$/day

%

%44

15

100

16.50

Meat Prices: %100


C St dCase StudyUS $1.61 million Adjusted profit US $1.56 million10%wage rates 3% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

ss a

fter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m


C St dCase StudyAssume 1% increase in Meat Prices


Exchange Rate:



Throughput:


%

Sheep/day2000

235

44


Dressing Yield:


Meat Prices:

US$/day

%

%44

15

100101Meat Prices: %100101


C St dCase StudyUS $1.61 million Adjusted profit US $2.14 million1%meat prices 33% profit


3

S$


S$


0

1

2

s af

ter t

ax U

Sm

illio

ns

0

1

2

ss a

fter t

ax U

Sm

illio

ns

-3

-2

-1

Prof

it/Lo

s m

-3

-2

-1

Prof

it/Lo

s m


C S dCase StudySummary of Plant Operating Costs:-

Livestock Purchase 44.74%Freight Costs 41.59%

C %95.27%FJB Systems

M.E. Overview Feedlot Costs 8.94%Direct Labour 1.17%Production Consumables 0 22%

M.E. OverviewBusiness ToolCase StudySummary Production Consumables 0.22%

Services Costs 0.95%Inspection Costs 0.56%pOverheads & Misc. 1.83%

(Excl. Depr. & Finance) 100.00%

C S dCase StudyAustralian live wether export prices to the Middle East

February 1992 to April 2004

200

150

175FJB SystemsM.E. Overview

125

150

rs p

er h

ead.


75

100

stra

lian

Dol

lar

25

50Aus

0Feb1992

Aug1992

Feb1993

Aug1993

Feb1994

Aug1994

Feb1995

Aug1995

Feb1996

Aug1996

Feb1997

Aug1997

Feb1998

Aug1998

Feb1999

Aug1999

Feb2000

Aug2000

Feb2001

Aug2001

Feb2002

Aug2002

Feb2003

Aug2003

Feb2004

DateDateAll prices free alongside ship (FAS) Western Australian Source: MLA

C S dCase StudyAustralian live wether export prices to the Middle East

February 1992 to April 2004

200 200

150

175

150

175

AU$/head

U.A.E.Drhm/head (Adjusted to prevailing exchange rate)


125

150

rs p

er h

ead.

125

150

m p

er h

ead


75

100

stra

lian

Dol

lar

75

100

U.A

.E. D

irham

25

50Aus

25

50

0Feb1992

Aug1992

Feb1993

Aug1993

Feb1994

Aug1994

Feb1995

Aug1995

Feb1996

Aug1996

Feb1997

Aug1997

Feb1998

Aug1998

Feb1999

Aug1999

Feb2000

Aug2000

Feb2001

Aug2001

Feb2002

Aug2002

Feb2003

Aug2003

Feb2004

Date

0

DateAll prices free alongside ship (FAS) Western Australian Source: MLA

SSummary

• Live Import Slaughterhouse extremely sensitive


Live Import Slaughterhouse extremely sensitive

• Exchange RatesM.E. OverviewBusiness ToolCase StudySummary • Livestock Price & Quality

• Feed Prices

• Freight Charges

• Business Model allows scientific analysis and

determination of risk for such a businessdetermination of risk for such a business

by Edwin Bowater of FJB Systems...Edwin Bowater of FJB Systems +44 (0) 1372-468839 AdAgenda About FJB Systems Overview of the Middle Eastern Meat Industry Overview of the Business

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