Nufarm Limited · ASX:NUF
Nufarm — H1 2018 Earnings Presentation
29 slides from Nufarm's earnings presentation, Mar 21, 2018
Slide 1: Interim Results 6 months to January 31, 2018
Nufarm For personal use only Interim Results 6 months to January 31, 2018 March 21, 2018 1
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: 2018 Interim Results Overview
For personal use only 2018 Interim Results Overview Greg Hunt Managing Director / CEO 3
Slide 4: Key highlights
Key highlights For personal use only • Strong revenue growth despite challenging market conditions • EBIT in line with guidance, however, lower than last year, driven by scheduled plant upgrade in ANZ and challenging conditions in LATAM • European Century and FMC product acquisitions completed • Ome
Slide 5: Strong momentum heading into major selling seasons in second half
Strong momentum heading into major selling seasons in second half For personal use only • Revenue up 7% on first half (A$ millions) 1H18 1H17 Change last year (up 10% in constant currency) Revenue 1,460 1,360 ▲ 7% • Underlying EBIT down 12%, Underlying EBIT 75.0 85.0 ▼ 12% mainly due to ANZ plant up
Slide 6: Regional review: Latin America
Regional review For personal use only Latin America Market drivers • Market share growth in Brazil, when A$(m) HY18 HY17 % total market down 7% in CY2017 Sales 450.9 466.9 -3% • Competition-related pricing pressure Underlying EBIT 52.7 55.8 -6% impacting margins Underlying EBITDA 55.9 58.9 -5% • Bra
Slide 7: Regional review: Australia/New Zealand and North America
Regional review Australia/New Zealand North America For personal use only A$(m) HY18 HY17 % A$(m) HY18 HY17 % Sales 300.5 306.3 -2% Sales 371.7 291.1 28% Underlying EBIT 6.5 13.3 -51% Underlying EBIT 22.4 17.7 27% Underlying EBITDA 13.5 19.6 -31% Underlying EBITDA 32.2 27.1 19% Underlying EBITDA 4.5
Slide 8: Regional review: Europe and Asia
Regional review Europe Asia For personal use only A$(m) HY18 HY17 % A$(m) HY18 HY17 % Sales 173.1 150.9 15% Sales 95.3 94.3 1% Underlying EBIT 2.5 8.8 -72% Underlying EBIT 14.9 14.5 3% Underlying EBITDA 23.0 26.8 -14% Underlying EBITDA 16.4 16.5 -1% Underlying EBITDA 13.3% 17.8% Underlying EBITDA 17
Slide 9: Seed Technologies
For personal use only 2018 Interim Results Seed Technologies Brent Zacharias Group executive - Nuseed 9
Slide 10: Seed technologies
Seed technologies For personal use only A$(m) HY18 HY17 % Sales 68.7 50.6 36% Underlying EBIT 4.5 -0.2 n/a Underlying EBITDA 10.2 4.5 129% Underlying EBITDA 14.9% 8.9% Margin Market drivers • Achieved first regulatory approval in Australia for omega-3 canola. USA and Canada approval process proceedi
Slide 11: Omega-3 canola update
Omega-3 canola update Regulatory approval secured in Australia; on track for 2019 For personal use only commercialisation • Regulatory approval secured in Australia; approvals pending in the United States and Canada – Australian approval is for commercial cultivation and uses in food and feed Regula
Slide 12: Financials
For personal use only 2018 Interim Results Financials Paul Binfield Chief Financial Officer 12
Slide 13: Strong revenue growth, but EBIT down
2018 Interim results Strong revenue growth, but EBIT down 12% For personal use only • Strong revenue growth, however, gross profit margin impacted by scheduled plant upgrade in ANZ and tougher Brazil market • Underlying EBITDA down 4% (up 1% in constant currency), and underlying EBIT down 12% (down
Slide 14: Material items
Material items Largely related to acquisitions For personal use only NPAT reconciliation (A$ millions) Half year ended 31 • Material items in 1H18 relate to January acquisition costs of $4.9m and the 2018 2017 hedging cost of the acquisition of $20.1m. Underlying NPAT $10.7 $19.8 There will be furth
Slide 15: Operating expenses remain well controlled
Operating expenses remain well controlled Control of operating expenses remains an important For personal use only management objective (A$ millions) Half year ended 31 January • SG&A spend largely in line with revenue 2018 2017 growth. Increased expense largely freight cost in USA and higher amorti
Slide 16: Net financing expense
Net financing expense Lower net interest expense at half, but higher exchange loss For personal use only (A$ million) Half year ended 31 • Net interest expense decrease due to lower January base rates in Brazil and receipt of equity 2018 2017 raise proceeds Net interest expense 42.1 46.3 • Net inter
Slide 17: Continued focus on net working capital
Continued focus on net working capital For personal use only ANWC/Sales at 37.8% • Net working capital management remains an important ANWC / Sales(3) focus of management and a key driver in the business. 45% Targeting 37% ANWC/sales by year end 44% • Average NWC higher by $112m, with primary driver
Slide 18: Cash flow
Cash flow For personal use only • Seasonal build in net working capital increase +$234m in line with prior year (1H17: +$237m) • Expect PPE and intangibles capex of approximately $180m for FY18, with increased IT and Omega 3 investment. Expect total capex (PPE and intangibles) to be approximately $1
Slide 19: Strategy and outlook
For personal use only 2018 Interim Results Strategy and outlook Greg Hunt Managing Director / CEO 19
Slide 20: Focus on core geographies & crops
Focus on core geographies & crops For personal use only PASTURE, SOYBEAN TREES, NUTS, CORN CEREAL TURF & VINES & 20 ORNAMENTALS VEGETABLES
Slide 21: Acquisitions completed - integration underway
Acquisitions completed - integration underway For personal use only • Acquisitions completed – FMC 1 February and Century on 16 March • Integration well planned; execution underway • Recruitment of new sales/marketing resources on track • Transitional sourcing (TSA) in place for 1-2 years, whilst al
Slide 22: Strategy continues to generate solid growth
Strategy continues to generate solid growth For personal use only • Our strategic focus on markets and segments where we can be most successful is delivering impressive growth in a competitive global market • Better execution on pipeline projects and well resourced new product launches are helping d
Slide 23: Group outlook
Group outlook For personal use only • Positive second half performances expected in Australia, North America and Europe • Latin America impacted by competitive market conditions in Brazil and drought in Argentina • Positive outlook for Australian canola and the seed technologies segment • Minimal EB
Slide 24: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.
Slide 25: Supplementary information
For personal use only Supplementary information 25
Slide 26: Constant currency
Constant currency For personal use only (A$ millions) Half year ended 31 January • Impact of FX on revenue and 2018 2018 2017 Constant Reported Constant Reported currency underlying EBIT currency currency(1) currency % Revenue 1,460.1 1495.0 1,360.1 9.9% – Stronger AUD against the USD and Underlying
Slide 27: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only 6 months ended 31 Jan 2018 6 months ended 31 Jan 2017 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,460,130 - 1,460,130 1,360,070 - 1,360,070 Cost of sales (1,047,905) - (1,047,905) (9
Slide 28: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only 2018 2017 Six months ended 31 January $000 $000 Underlying EBIT 74,962 85,000 Material items impacting operating profit 50 264 Operating profit 75,012 85,264 Underlying EBIT 74,962 85,000 add Depreciation and amortisation excluding material i
Slide 29: 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