Nufarm Limited · ASX:NUF
Nufarm — Investor Day (April 2016)
72 slides from Nufarm's investor day presentation, Apr 21, 2016
Slide 1: Nufarm Strategy Overview
For personal use only Nufarm Strategy Overview Investor briefing April, 2016
Slide 2: Agenda
Investor Day Agenda For personal use only Time Activity / Event Presenter 09:30 Introduction Mark Keating 09:35 Group strategy Greg Hunt 10:00 Supply chain excellence Elbert Prado 10:15 Portfolio (inc. phenoxy business overview) Niels Pörksen 10:30 Customer excellence Michelle Monteiro 10:45 Morning
Slide 3: 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 4: Overview
For personal use only Overview Greg Hunt Chief Executive Officer 4
Slide 5: The safety of our people
The safety of our people For personal use only • We are committed to a goal of zero injuries • Safety performance is an important part of Nufarm's business improvement and transformation • We have put significant resources into our safety capability and our management team is ensuring safety is very
Slide 6: The evolution of Nufarm
The evolution of Nufarm For personal use only 1916 The New Zealand Farmers Fertilizer Beginning Company Limited (Fernz) founded in NZ 1957 Nufarm Australia Nufarm incorporated in Melbourne, Australia 1984 Achieved group 1990’s sales $200m Asia and Initial expansion into SE Asia NA Expansion
Slide 7: Nufarm's strengths
Nufarm's strengths For personal use only • Global manufacturing, marketing and distribution platform • Diversified business across geographies and product segments • Established position and recognised brand in target markets and segments • Established specialty seeds platform • Well positioned in g
Slide 8: Case for change
Case for change ROFE in FY14 at 9.1% put Nufarm in the For personal use only bottom quartile ROFE of Nufarm vs. Competitors FY 2014 Source – Gresham analysis October 2014 8
Slide 9: Case for change
Case for change For personal use only Rolling EBIT to July 2014 2012 2013 2014 Net Sales Underlying EBIT 9
Slide 10: One Nufarm
One Nufarm For personal use only CUSTOMER EXPERIENCE SUPEOPLE | VALUES | CULTURE Improvements in these areas and investment into a better customer experience will drive sustainable growth. 10
Slide 11: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* Est. gross savings Description of Area Specific Examples For personal use only Low High • Optimising plant utilisation • Consolidation of Australian manufacturing • Lowering fixed cost base $16M Manufacturing footprint (6 plant
Slide 12: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* For personal use only Est. gross savings Description of Area Specific Examples Low High • Optimising plant utilisation • Consolidation of Australian manufacturing • Lowering fixed cost base $16M footprint (6 plants to 3) Manufa
Slide 13: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* For personal use only Est. gross Description of Area Specific Examples savings Low High • Centralising to leverage global scale • Various initiatives that will deliver a 2-4% • Investing in better systems and saving on our annu
Slide 14: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* For personal use only Est. gross Description of Area Specific Examples savings Low High • Removing duplication and • Lowering head office costs via a more implementing an operating model $5M** Selling, streamlined management st
Slide 15: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* For personal use only Est. gross Description of Area Specific Examples savings Low High • Removing low margin and slow moving • Developing a product portfolio that products Product better meets the needs of our • Focusing produ
Slide 16: Our strategy
Our strategy For personal use only Branded sales Geographic Focus Crop Org structures & roles Performance Deliver great customer experience 16
Slide 17: Crop protection by country: size and projected growth rates
Crop protection by country: size and projected growth rates For personal use only Forecast >10% 7-10% 3-7% <3% Note: Regulated markets defined by time and cost of market entry growth (’12-’20) Source: Phillips McDougall; Euromonitor; Bain Analysis 17
Slide 18: 40% increase in global supply required to meet future demand
40% increase in global supply required to meet future demand for key staple grains For personal use only Total = Source: FAPRI; SAGE; FAOStat; Bain Analysis 18
Slide 19: Recommend core based on four geographies and nine crops
Recommend core based on relevant intersections of four geographies and nine crops For personal use only TNVV Country Soybean Corn Cereals Pasture Potato and Citrus Pome Fruit Vine Nuts tomato 46% 10% 2% n/a 1% n/a 0% 0% n/a Brazil 17% 29% 9% n/a 2% n/a 2% 2% n/a USA 0% 0% 49% n/a 1% n/a 1% 5% n/a Au
Slide 20: Our core geographies & crops
Our core geographies & crops For personal use only PASTURE, SOYBEAN TREES, NUTS, CORN CEREAL TURF & VINES & 20 ORNAMENTALS VEGETABLES
Slide 21: One Nufarm
One Nufarm For personal use only CUSTOMER EXPERIENCE SUPEOPLE | VALUES | CULTURE Improvements in these areas and investment into a better customer experience will drive sustainable growth. 21
Slide 22: Supply Chain excellence
Supply Chain For personal use only excellence Elbert Prado Group Executive – Supply Chain Operations 22
Slide 23: Supply Chain vision
Supply Chain vision For personal use only Deliver quality product on time at competitive cost 23
Slide 24: What is supply chain and what changes have we made
What is supply chain and what changes have we made For personal use only • Right size manufacturing footprint Manufacturing • Principles of manufacturing excellence -> improving operational efficiency • Applying procurement principles to improve purchasing of inputs Procurement • Optimising global i
Slide 25: Manufacturing
Manufacturing For personal use only • Manufacturing rationalisation effectively Expected savings – $40m completed • Manufacturing Excellence programs Expected savings – $21-26m - Wyke Phase 1 complete, Phase 2 to start - Laverton review completed - Linz/Gaillon sites in implementation - the program
Slide 26: The closure of plants enables $40M of the savings
The closure of 5 plants enables $40M of the savings For personal use only 16 plants 11 plants Botlek closed EUR 4 → 3 plants EUR NA NA 4 plants 3 → 2 plants 3 plants Calgary to close ASIA In FY17 2 plants ASIA 2 plants LATAM LATAM 1 plant 1 plant ANZ 6 → 3 plants ANZ 6 plants Lytton Tollers Welshpoo
Slide 27: Transforming our procurement function
Transforming our procurement function For personal use only • Moved to a strategic procurement model • Strategic - understand the global requirements and negotiate for products as 'One Nufarm' • Established a centre of excellence in China where we negotiate for products directly with producers • Rec
Slide 28: Procurement transformation benefits
Procurement transformation benefits For personal use only Nufarm SG&A Indirect Total Spend 5-10% Reduction Spend $0.5B $0.5B (50% $15-25m $2.5B addressable) COGS Direct Spend Materials $2.0B Indirect Spend $1.5B Regional Review 2-3% Reduction $30-$40m Direct Spend Tracking >120 Projects Logistics $0
Slide 29: Transforming our Supply Chain planning
Transforming our Supply Chain planning For personal use only From To Impact of LINK Every country (30+) made their own Regional decision making supply chain planning decisions Reduction in Each country used its own processes for demand and supply planning The same processes globally net working capi
Slide 30: Portfolio Solutions
For personal use only Portfolio Solutions Dr Niels Pörksen Group Executive Portfolio Solutions 30
Slide 31: Our ambition
Our ambition For personal use only Deliver a focused and optimised portfolio of solutions which progressively strengthens Nufarm's branded position in core crops and geographies 31
Slide 32: What are we changing?
What are we changing? For personal use only • Strategy: Focus on core crops • Structure: Portfolio pool to become a centre led function as part of a matrix model − Key leadership positions in the centre and the regions − Dedicated portfolio resources focused on strategy, development and registration
Slide 33: Cereal strategy
Cereal strategy For personal use only Nufarm Products and Solutions NUFARM Knockdown Pre-Emergent Post-Emergent Fungicides Pre-Harvest Fallow PRODUCTS Weedmaster® ARGO® Avadex® Xtra Eliminar™ C Tazer® Xpert™ weedmaster® DST® weedmaster® DST® Terrain® TriflurX® LVE Agritone® Amicide® Advance 700 Amic
Slide 34: Growth from the core – phenoxy
Growth from the core – phenoxy For personal use only • One of the first selective herbicide classes developed for broadleaf weed control, phenoxies have remained a corner stone in modern day weed management • Phenoxy herbicides generate approximately 20% of Nufarm's global crop protection sales • Th
Slide 35: Summary
Summary For personal use only • Deep understanding of growers future needs and economics in core crops and geographies • Less projects, yet globally leveraged to deliver on depth in core crops and countries • Strengthened core positions and globally optimised approach to portfolio gaps • Meaningful
Slide 36: Customer excellence
Customer For personal use only excellence Michelle Monteiro Director - REACH 36
Slide 37: How are we improving the customer experience?
How are we improving the customer For personal use only experience? • Nufarm has the opportunity to differentiate against its competitors by adopting customer centric principles, and: • Improving our supply chain and portfolio at a global level to allow the regions to focus on our customers and prov
Slide 38: Who is our customer?
Who is our customer? For personal use only Channel Partner Farmer Access to market User of our products • Both Channel partners and farmers or end users are Nufarm’s customers • Understanding our channel partners and our customers will enable us to design products and services that meet their needs
Slide 39: Customer experience
Customer experience For personal use only Our immediate priority will be our channel partners and how we deliver a great experience to them in each of our core markets Get the basics right Align our business Marketing around the customer Sales Pricing A One Nufarm Approach Customer Service Salesforc
Slide 40: Nufarm is implementing NPS with our channel partners
Nufarm is implementing NPS with our channel partners For personal use only What is NPS? • NPS or Net Promoter Score is a global brand benchmarking model of DETRACTORS PASSIVES PROMOTERS customer advocacy • It will be embedded into the customer service operations of Nufarm 0 1 2 3 4 5 6 7 8 9 10 • En
Slide 41: How will we use NPS?
How will we use NPS? We are building a visible customer For personal use only measurement system How likely is it that you would How would you Functional recommend Nufarm’s describe your most recent Improvement Actions products and services to a interaction with Nufarm's friend or colleague? product
Slide 42: Engine for customer centered growth
We are committed to establishing an engine for For personal use only customer centered growth 1. Identify most attractive target segments; understand needs better than 2. Design competitors differentially better value propositions 6. Earn emotional More profit loyalty/ per customer; retention out-in
Slide 43: Australia / New Zealand
Australia / For personal use only New Zealand Lachie McKinnon Regional General Manager - ANZ 43
Slide 44: ANZ footprint
Nufarm, Crop Care, Croplands & Nuseed ANZ footprint For personal use only Head office Australia Head office Head office NZ Head office Nufarm Australia / New Zealand Crop Care Croplands Nuseed Australia Nufarm Manufacturing facility 44
Slide 45: Australian agchem market
Australian agchem market For personal use only $2.50 Annual wholesale sales (A$B, inflation adjusted) $2.00 $1.50 $1.00 $0.50 $0.00 Fungicide (CAGR = 0.0%) Herbicide (CAGR = 2.4%) Insecticide (CAGR = 2.4%) Source: Nufarm Estimate Source: APVMA 15/04/2015 45
Slide 46: New Zealand agchem market
New Zealand agchem market For personal use only 300 250 200 Revenue NZ$M 150 100 50 0 2011 2012 2013 2014 2015 Herbicides Insecticides Fungicides Others Source: Nufarm Estimate 46
Slide 47: Australia/New Zealand sales & EBIT
Australia/New Zealand sales & EBIT For personal use only 5 year revenue & profit growth Underlying Revenue (A$m) EBIT (A$m) 800 120 675 701 700 106.0 604 606 582 600 94.7 80 500 400 300 52.7 40 200 35.4 33.9 100 0 0 2011 2012 2013 2014 2015 47
Slide 48: ANZ strategy – customer lens
ANZ strategy – customer lens For personal use only Each of our strategic pillars contribute to achieving our ambition of being known for providing our customers with innovative solutions and a superior experience. Deliver best in class customer experience CUSTOMER EXPERIENCE Identify and act upon De
Slide 49: Major ANZ performance improvement initiatives
High-level overview of major ANZ performance improvement initiatives For personal use only • Completion of the manufacturing rationalisation program SUPPLY CHAIN commenced in March 2014. EXCELLENCE • Manufacturing excellence program completed at Pipe Road facility • Completion of a freight and logis
Slide 50: Cereal strategy
Cereal strategy For personal use only Nufarm Products and Solutions NUFARM Knockdown Pre-Emergent Post-Emergent Fungicides Pre-Harvest Fallow PRODUCTS Weedmaster® ARGO® Avadex® Xtra Eliminar™ C Tazer® Xpert™ weedmaster® DST® weedmaster® DST® Terrain® TriflurX® LVE Agritone® Amicide® Advance 700 Amic
Slide 51: Full year outlook
Full year outlook For personal use only • Continued earnings recovery driven by lower cost base and improved quality of sales. • Completion of major performance improvement initiatives to contribute to EBIT benefit. • Challenging climatic conditions in February and March. Rain needed now for Eastern
Slide 52: Latin America
For personal use only Latin America Marcos Gaio Regional General Manager – Latin America 52
Slide 53: LATAM - Market Overview
LATAM - Market Overview LATAM By Countries 2015 (Market Value - Calendar Year ) For personal use only • Total Market - US$ 17.100 mill • Nufarm Presence – US$ 14.525 mill (85%) • Others - U$S 2.575 mill Mexico • Market U$S 1.275 mill • NUF U$S 6.3 Mill • MS 0.4% Brazil • Market U$S 9.600 mill • NUF
Slide 54: Brazil market value evolution & projection
Brazil market value evolution & projection For personal use only Assumptions 14,000 15-19 CAGR 3,68% 12,100 12,000 11,300 11,500 10,900 10,300 9,600 9,800 10,000 9,500 8,300 8,000 7,200 U$S Mill 6,600 6,000 4,000 2,000 0 2009 2010 2011 2012 2013 2014 2015 2016 fcst 2017 fcst 2018 fcst 2019 fcst
Slide 55: LATAM sales & EBIT
LATAM sales & EBIT For personal use only 5 year revenue & profit growth Underlying Revenue (A$m) EBIT (A$m) 800 120 706 700 662 600 80 500 431 76.7 400 71.6 325 333 300 40 200 40.6 100 4.1 17.5 0 0 2011 2012 2013 2014 2015 55
Slide 56: LATAM strategy – customer lens
LATAM strategy – customer lens For personal use only Each of our strategic pillars contribute to achieving our ambition of being known for providing our customers with innovative solutions and a superior experience. Deliver best in class customer experience CUSTOMER EXPERIENCE Identify and act upon
Slide 57: Major LATAM performance improvement initiatives
High-level overview of major LATAM performance improvement initiatives For personal use only • ISO 9001 Certification at Fortaleza plant SUPPLY CHAIN • Sales and demand forecast processes enhancement EXCELLENCE • Global procurement project • Discipline on execution • New logistics project in progres
Slide 58: LATAM Market Trends 2016
LATAM Market Trends 2016 For personal use only Brazil • Modest growth expected for 2016 (calendar year) • Soybean & corn area growth • Price recovery of devaluation impact • Dealers stocks consumption is a must Argentina • New government moving agribusiness very positively • Expected soybean, corn a
Slide 59: Nufarm dealer stocks & POG analysis
Nufarm dealer stocks & POG analysis For personal use only Brazil 59
Slide 60: Outlook
Outlook For personal use only • FY 2016 on track to deliver growth in local currency • POG growing and channel inventories at historical levels • Focused on collections • New product registrations and launches on plan • Sumitomo alliance delivering benefits • Performance improvement program contribu
Slide 61: Nuseed
For personal use only Nuseed Brent Zacharias Group Executive - Nuseed 61
Slide 62: Beyond Yield
Beyond Yield™ For personal use only • Use novel seed technology to solve problems • 'Output' vs. 'Input' emphasis • Fundamentally improve crop value in canola, sunflower and sorghum • Innovation and partnership through the value chain 62
Slide 63: Sequenced Strategic Effort
Sequenced Strategic Effort Value + Influence For personal use only Beyond Yield Downstream Positions & Brands Beyond Yield Downstream Beyond Platforms Yield Intellectual Property Native Trait Estate Pipeline Discovery Value Generated Discovery optimized science Global Beyond partnerships process and
Slide 64: Seeds sales & EBIT
Seeds sales & EBIT For personal use only 5 year revenue & profit growth Underlying Revenue (A$m) EBIT (A$m) 180 37.2 40 160 32.4 31.8 30.6 140 26.3 120 100 80 60 40 20 87 121 132 144 160 0 0 2011 2012 2013 2014 2015 64
Slide 65: Strong positions & medium term outlook
Strong positions & medium term outlook Short term For personal use only Canola challenges • #1 position in Australia, top 5 position globally •2 years drought • Potential for Australia market to double value (hybrids) • Leverage to Canada, Europe and LAS Sunflower • Global leader, food ingredient se
Slide 66: Pipeline highlights
Pipeline highlights: Concept Target Launch For personal use only 2017 2018 2019 2020-22 Canola: Monola Gen2 Canola Gen3 hybrid + gen2 HT Sunflower: High Oleic Gen2, Early Black type food ingredient White type food ingredient Novel oil Sorghum: AUS grain sorghum LAS Gen2 grain sorghum Novel HT Omega
Slide 67: Omega Supply: Scarcity unresolved
Omega 3 Supply: Scarcity unresolved For personal use only 960,000 Fish Oil Static ~900,000 MT Supply 940,000 920,000 900,000 880,000 860,000 840,000 820,000 Volume MT Projected Fish Oil Deficit (Feedstock) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 0 -100,000 -200,000
Slide 68: Divergence of pricing: Plant-based Omega3 opportunity
Divergence of pricing: Plant-based 0mega3 opportunity For personal use only US$ per MT Impact of scarcity in 2020+? Source: Oil World 68
Slide 69: Summary
For personal use only Summary Greg Hunt Chief Executive Officer 69
Slide 70: Summary
Summary For personal use only Meeting our targets • Performance improvements plan on track to deliver $116 million by FY2018 • Good progress towards 40% average net working capital target • Increasing our gross margin Growth platforms identified • Clear strategic growth plan with a focus on core geo
Slide 71: Trading update
Trading update For personal use only • Australia Earnings recovery expected, driven by lower cost base and disciplined pricing, however, dependent on seasonal rainfall • North America Business to benefit from expanded portfolio and stronger channel support • Latin America Market conditions still cha
Slide 72: Grow a better tomorrow
Grow a better tomorrow. For personal use only er Nufarm — Growa better tomorrow.