Nufarm Limited · ASX:NUF
Nufarm — H1 2016 Earnings Presentation
35 slides from Nufarm's earnings presentation, Mar 23, 2016
Slide 1: Nufarm Interim Results
For personal use only NUFARM INTERIM RESULTS 6 months to January 31, 2016 March, 2016
Slide 2: Disclaimer
Disclaimer For personal use only General This presentation has been prepared by Nufarm Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be us
Slide 3: 2016 Interim Results Overview
For personal use only 2016 Interim Results Overview Greg Hunt Managing Director / CEO
Slide 4: Headline results
Headline results For personal use only (A$ millions) • Revenue in line with last year, 1H16 1H15 Change but up 4% in constant currency Revenue 1,188 1,184 ▲ 0% • Underlying EBIT growth 12% Underlying EBIT 71.2 63.4 ▲12% • Underlying NPAT impacted by foreign exchange losses Underlying NPAT 11.9 26.5
Slide 5: Highlights
Highlights For personal use only • Good underlying EBIT growth of 12% • Strong improvement in gross profit margin • Market share gains in Latin America despite tougher economic conditions • Good progress towards 40% average net working capital target • Performance improvement program on track to del
Slide 6: The safety of our people
The safety of our people For personal use only • In September, 2015 Nufarm had a fatality at the Linz manufacturing site in Austria. We have taken this loss very seriously and are focused on improvements across our global operations • Nufarm is building a step change in safety performance through ou
Slide 7: 2016 Interim Results – Financials
2016 Interim Results – For personal use only Financials Paul Binfield Chief Financial Officer
Slide 8: 2016 Interim results
2016 Interim results For personal use only Solid profit growth in challenging circumstances • Strong gross profit margin expansion demonstrating performance improvement program delivering gains • Underlying EBIT growth of 12%. Local currency profit improvement in all businesses TITLE • Reported NPAT
Slide 9: Significant impact of foreign exchange
Significant impact of foreign exchange For personal use only Devaluation of BRL has had significant adverse impact in 1H16 (A$ millions) Half year ended 31 January • Impact of FX on revenue and underlying EBIT 2016 2016 2015 Constant Reported Constant Reported currency – Volatile and depreciating BR
Slide 10: Continued improvement in average net working capital
Continued improvement in average net working capital For personal use only On-track to meet target of ANWC/Sales of 40% by end FY16 ANWC / Sales(2) • Average NWC lower by $53m driven by focus on capital discipline and favourable fx impact TITLE 50% • All components of NWC improved over the prior yea
Slide 11: Material items relate largely to the performance improvement program
Material items relate largely to the performance improvement program For personal use only Benefits of performance improvement program already being delivered • One-off costs total $122m (pre-tax), of NPAT reconciliation which $36m is cash and $86m is non-cash TITLE (A$ millions) • Useful life of pr
Slide 12: Operating expenses and tax expense
Operating expenses and tax expense For personal use only Control of operating expenses remains an important management objective (A$ millions) Half year ended 31 January • In constant currency the expense TITLE 2016 2015 ratio in line with prior year at 20.3% Underlying sales, marketing & 166.0 157.
Slide 13: Net debt & financing costs
Net debt & financing costs For personal use only Working capital improvements drive stronger balance sheet (A$ millions) Half year ended 31 January • Net debt in constant currency flat on 2016 2015 prior year TITLE Interest income (8.1) (4.2) Interest expense 43.8 33.3 • Net finance expense driven h
Slide 14: Crop Protection
For personal use only 2016 Interim Results Crop Protection Greg Hunt Managing Director / CEO
Slide 15: Major crop protection segments
Major crop protection segments For personal use only Product Geographic North America Insecticide Australia/ 22% New Zealand 13% 20% Herbicide 66% 2016 2016 Fungicide $1,145.9m $1,145.9m 11% Asia Latin 6% America Other* 36% 10% Europe 16% *Other includes equipment; adjuvants; PGR's; industrial
Slide 16: Regional review: Australia/New Zealand
Regional review For personal use only Australia/New Zealand Regional revenues by major product segment ((A$ millions) Insecticide Reported currency Constant currency Herbicide 6% Fungicide 1H16 1H15 % 1H16 % 65% 6% Sales 231.6 238.3 -2.8% 231.2 -3.0% Underlying EBIT 14.6 11.2 30.4% 14.2 26.8% 23% Un
Slide 17: Regional review: North America
Regional review For personal use only North America Regional revenues by major product segment ((A$ millions) Reported currency Constant currency Herbicide 1H16 1H15 % 1H16 % 73% Insecticide Sales 251.0 227.9 10.1% 218.2 -4.3% 10% Underlying EBIT 7.4 0.5 6.7 9% Fungicide Underlying EBITDA 15.5 8.3 8
Slide 18: Regional review: Latin America
Regional review For personal use only Latin America Regional revenues by major product segment ( Reported currency Constant currency Herbicide 1H16 1H15 % 1H16 % 64% Insecticide Sales 415.0 422.2 -1.7% 502.5 19.0% 25% Underlying EBIT 57.7 65.0 -11.2% 70.3 8.2% Underlying EBITDA 59.1 66.6 -11.3% 71.9
Slide 19: Regional review: Europe
Regional review For personal use only Europe Regional revenues by major product segment ((A$ millions) Insecticide Reported currency Constant currency Herbicide 5% 1H16 1H15 % 1H16 % 56% Sales 176.7 169.4 4.3% 167.4 -1.2% 18% Fungicide Underlying EBIT 7.1 3.2 121.9% 6.3 96.9% Underlying EBITDA 25.9
Slide 20: Regional review: Asia
Regional review For personal use only Asia Regional revenues by major product segment ((A$ millions) Reported currency Constant currency Herbicide 1H16 1H15 % 1H16 % 80% Insecticide 4% Sales 71.6 83.0 -13.7% 70.4 -15.2% 8% Fungicide Underlying EBIT 9.4 8.6 9.3% 9.5 10.5% Underlying EBITDA 11.3 10.3
Slide 21: Segment result: Seed technologies
Segment result For personal use only Seed technologies Regional revenues by major product segment ((A$ millions) Reported currency Constant currency 1H16 1H15 % 1H16 % Seed 55% Sales 41.7 42.9 -2.8% 41.2 -4.0% Underlying EBIT -4.4 -5.2 15.4% -3.3 36.5% 45% Underlying EBITDA -1.3 -2.1 38.1% -0.3 85.7
Slide 22: Strategy update
For personal use only 2016 Interim Results Strategy update Greg Hunt Managing Director / CEO
Slide 23: Building a better Nufarm
Building a better Nufarm For personal use only We have more clearly defined our growth strategy by focusing on markets and crops where we can leverage our expertise. CUSTOMER We will grow by focusing on FOCUS depth, not breadth, and we will invest in developing and supplying solutions that support c
Slide 24: Focused on our core markets
Focused on our core markets For personal use only • Nufarm has four hubs, Latin America, North America, Australia & New Zealand & Europe. • From our hubs we access markets where we have the greatest prospects for profitable growth. • For longer term growth options we have a presence in Asia and othe
Slide 25: Focused on our core crops
Focused on our core crops For personal use only Demand for major crops is projected to increase significantly to feed a growing population. Our opportunity is about depth not breadth. We are prioritising our investments to leverage our deep expertise in these crops: PASTURE, SOYBEAN TREES, NUTS, COR
Slide 26: Nuseed
Nuseed For personal use only • A growth platform in three key crops • The next wave of value creation in agriculture will come from output traits • These technologies will fundamentally improve crop value TITLE • Canola: specialty oil platform − Monola (high oleic oil) trait expansion − Omega 3 on t
Slide 27: Focused on customer excellence
Focused on customer excellence For personal use only Our performance improvement program is focused on leveraging Nufarm’s global scale to improve the efficiency of our supply chain and streamline our product portfolio. CUSTOMER EXPERIENCE SUPEOPLE | VALUES | CULTURE Improvements in these areas and
Slide 28: Performance improvement program
Performance improvement program For personal use only Targeted Review Further Initiatives savings by completed In progress analysis FY 2018 Manufacturing footprint $40m Manufacturing efficiencies $17-27m Procurement $32-64m Supply Chain/Logistics $10-15m SG&A $18-25m Product rationalisatio
Slide 29: Outlook
2016 Interim Results – For personal use only Outlook Greg Hunt Managing Director / CEO
Slide 30: Group outlook for 2016 financial year
Group outlook for 2016 financial year For personal use only Margin expansion • Earnings recovery to continue in Australia, driven by lower cost base and stronger margins • North American business to benefit from expanded portfolio and stronger channel support • In Brazil, larger safrinha plantings (
Slide 31: Grow a better tomorrow
: £ Ae Me) S Z \ 4 : yg ae 4 1g i es Grow a better tomorrow, For persona wSere 6A Nufarm — Growa better tomorrow.
Slide 32: Supplementary information
For personal use only Supplementary information
Slide 33: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions For personal use only Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items. Underlying EBIT Earnings before net finance costs, taxation and material items. Underlying EBITDA Earnin
Slide 34: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only 6 months ended 31 Jan 2016 6 months ended 31 Jan 2015 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,187,605 - 1,187,605 1,183,730 - 1,183,730 Cost of sales (852,405) 25,653 (878,058) (
Slide 35: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Six months ended 31 January 2016 2015 $000 $000 Underlying EBIT 71,229 63,426 Material items impacting operating profit (106,057) (4,539) Operating profit (34,828) 58,887 Underlying EBIT 71,229 63,426 add Depreciation and amortisation excludi