Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — FY2013 Earnings Presentation
35 slides from Graincorp Limited Class A's earnings presentation, Nov 14, 2013
Slide 1: FY13 Results and Strategy Update
FY13 Results and Strategy Update 14 November 2013
Slide 2: Disclaimer
Disclaimer This presentation includes both information that is historical in character and information that consists of forward looking statements. Forward looking statements are not based on historical facts, but are based on current expectations of future results or events. The forward looking sta
Slide 3: Agenda
Agenda FY13 Results Strategy Update ADM Offer • Highlights • Gamechangers • Overview • Segment • Asset Optimisation • Acceptances and Performance • Port Flexibility Relevant Interest • Balance Sheet and • Next Steps Capex • Outlook 3
Slide 4: Strong earnings due to strong grain volumes and diversification
Strong earnings due to strong grain volumes and diversification • Earnings of $395M EBITDA(1) (down 4%) and $175M NPAT(2) (down 15%) from strong grain volumes and successful diversification. • Statutory NPAT of $141M after significant items(3). • Storage & Logistics – strong performance from signifi
Slide 5: Earnings profile delivering on corporate objectives
Earnings profile delivering on corporate objectives EBITDA(1) NPAT(1) Fiscal 1H Fiscal 2H Fiscal 1H Fiscal 2H 500 250 400 200 179 168 83 300 150 177 66 84 200 100 100 79 235 227 28 122 100 173 50 31 109 88 112 53 82 32 0 $M 0 $M FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13 EBITDA 160 212 350 41
Slide 6: Diversified earnings supporting higher ordinary dividend
Diversified earnings supporting higher ordinary dividend Dividends per share • FY13 Final Dividend: Fully franked final dividend Ordinary DPS Special DPS of $0.20 per share 80 • FY13 Final Dividend Dates: 60 • Ex-dividend date: 26 November 2013 • Record date: 2 December 2013 30 25 5 • Payment date:
Slide 7: Diversified business and more 'normal' receivals
Diversified business and more ‘normal’ receivals FY12 to FY13 Earnings Bridge(1) - $M 2 1 71 28 25 Benefit of 8 75 strategic acquisitions 9 205 16 175 Lower receivals, Oils inclusion Higher debt Lower Sustained Strong More significant performance, and recent post Oils earnings capacity diversified g
Slide 8: 2013 Achievements: Safety & Health, Environment & People
Safety & Health, Environment & People Safety & Health Environment People • Achieved a 10.2% reduction in • Reduced hexane emissions in • Sustained engagement across lost time injury frequency vent air from the Numurkah the business at 60% rate(1), moving from 11.9 to solvent extraction plant • Conti
Slide 9: Segment Performance
Segment Performance GrainCorp
Slide 10: Portfolio of grain businesses capture value along the grain chain
Portfolio of grain businesses capture value along the grain chain Revenue EBITDA(1) $M FY13 FY12 FY13 FY12 Storage & Logistics 655 805 179 250 Marketing(2) 2,169 1,891 54 63 Malt(3) 977 945 101 117 Oils(4) 962 - 75 - Allied Mills(5) - - 12 10 Corporate Costs - - (26) (26) Eliminations and other (301
Slide 11: Storage & Logistics – strong earnings with significant exports and carry-in
Storage & Logistics – strong earnings with significant exports and carry-in • Strong earnings from significant grain export $M FY13 FY12 program and higher than average carry-in: Revenue 655 805 • Carry-in: higher than average at 4.3mmt(1) (6.0mmt in prior year) EBITDA 179 250 • Country receivals: 1
Slide 12: Marketing – sustained performance
Marketing – sustained performance • Earnings reflective of 17% lower $M FY13 FY12 eastern Australian grain production Revenue 2,169 1,891 volumes EBITDA 54 63 • 6.1mmt delivered sales(1) Interest expense(2) (17) (22) • 2.0mmt domestic, 4.1mmt export and PBTDA(2) 37 41 international Marketing invento
Slide 13: Malt – continued high capacity utilisation
Malt – continued high capacity utilisation • Sales of 1.28mmt $M FY13 FY12 • Earnings reflective of continued high Revenue 977 945 capacity utilisation above 90% with EBITDA(1) 101 117 margins in line with expectations EBIT(1) 62 81 • Effective margin management but lower Capital Expenditure 43 38 b
Slide 14: Oils – strong earnings across crushing, refining and terminals
Oils – strong earnings across crushing, refining and terminals $M FY13 FY12(1) • Crushing & Refining: consistent sales of 0.55mmt Revenue 962 1,115 • Liquid Terminals: continued high EBITDA 75 63 capacity utilisation of ~230K m3 of EBIT 50 42 storage and progress on asset Capital Expenditure 25 19 o
Slide 15: Allied Mills – improved earnings and capacity replacement on track
Allied Mills – improved earnings and capacity replacement on track $M (60%) JV Share FY13 FY12 • Improved earnings from value add product initiatives (eg frozen bakery EBITDA 27 25 products) Equity profit(1) 12 10 • Completed new Tennyson mill Shareholder loan interest 1.0 1.3 expansion in Queenslan
Slide 16: Balance Sheet and Capex
Balance Sheet and Capex
Slide 17: Strong and flexible balance sheet
Strong and flexible balance sheet Core Debt – $M • FY13 Core Debt(1) of $411M Schill Malz acquisition Creation of • Flexible balance sheet → FY13 Core GrainCorp Oils Gearing of 19% (in line with Short-term 9 79 71 debt less Marketing strategic target of <25%), debt and Oils 132 26 inventories facili
Slide 18: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities Marketing and Oilseed funding Commodities inventory(1) – $M strategy Commodities inventory Short-term debt • Marketing’s grain trading activities and 572 577 Oil’s oilseed and tallow positions are 528 519 498 predominantly fun
Slide 19: Capex supporting safety, network efficiencies and strategic initiatives
Capex supporting safety, network efficiencies and strategic initiatives Capex(1) – $M Depreciation & Amortisation – $M 141 119 Stay-in-business Depreciation 122 Growth Amortisation 24 112 106 91 71 78 18 63 72 53 63 17 16 42 2 95 32 73 3 70 56 61 53 59 49 40 29 FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY1
Slide 20: FY14 Outlook
FY14 Outlook
Slide 21: Grains outlook – lower volumes, lower margins
Grains outlook – lower volumes, lower margins Market fundamentals GrainCorp FY14 outlook • Most recent Eastern Australian crop production • Lower than average carry-in of 2.3mmt estimate of 17.4mmt(1) (18.3mmt(2) in prior (4.3mmt in FY13; 6.0mmt FY12) year) • Given lower production and carry-in, cou
Slide 22: Processing outlook – well placed through strong competitive position
Processing outlook – well placed through strong competitive position Market fundamentals GrainCorp FY14 outlook • Global barley crop production ~141mmt(1) • Forward sales of 1.1mmt YTD on track (compared to 130mmt in 2013) and good • Sales volumes expected to be consistent with quality in northern h
Slide 23: Strategy Update
Strategy Update GrainCorp
Slide 24: Earnings growth initiatives targeting ~$110M EBITDA by FY16
Earnings growth initiatives targeting ~$110M EBITDA by FY16 Gamechangers Asset Optimisation Port Flexibility Oils Synergies & Storage & Logistics 3 Year Port Protocol Optimisation Ports & Terminals Marketing Ports Code of Conduct Growth & Efficiencies Continuous Malt Improvement ~$45M EBITDA ~$45M E
Slide 25: Earnings growth initiatives and capex requirements
Earnings growth initiatives and capex requirements Incremental underlying EBITDA by FY16 and Capex from FY13 to FY16 ($M) 20 110 20 Oils 25 Malt 14 45 Marketing(2) 12 20 Storage & Logistics Storage & Marketing Malt Total Oils Port & Country Port Cumulative Logistics Game- optimisation optimisation f
Slide 26: Gamechangers
Gamechangers Storage & Logistics Marketing Malt Improved customer service • Global trading and risk • Port of Vancouver project • Improved country site efficiency management platform completed with new through 24 mobile grain successfully deployed in speciality capacity on line in handling stackers
Slide 27: Asset Optimisation & Port Flexibility
Asset Optimisation & Port Flexibility Oils Ports & Country Port Flexibility Capture Synergies Bulk liquid terminals 3 Year Port Protocol • Achieved FY13 synergies target of opportunities • New port protocol for bulk export $4.0 million • Capacity expansion at Fremantle grain agreed in November 2012
Slide 28: Recommended Offer
Recommended Offer GrainCorp
Slide 29: Recommended offer
Recommended offer Recommended Offer Value and Premium Formal Documentation Total value to shareholders of $13.20 comprising: • Bidder’s Statement and Target’s Statement were sent • $12.20 per share in cash to shareholders in July 2013 • Permitted Dividends totalling $1.00 per share(4) Recommendation
Slide 30: Questions
Questions
Slide 31: Appendix
Appendix
Slide 32: Significant items
Significant items Net $M Segment EBITDA D&A Tax NPAT Details Interest Underlying 395 (39) (119) (62) 175 GrainCorp Oils Corporate (19.3) - - 0.9 (18.4) Stamp duty of $13.5 million and acquisition and / Oils advisory and integration costs integration costs of $4.9 million in relation to the creation
Slide 33: Grain volumes
Grain volumes Volume driver (mmt) FY13 FY12 Comments Grain carry-in (1-Oct) 4.3 6.0 • Grain stored at start of period • FY13 carry-in above average of 3mmt • Higher FY12 carry-in due to larger FY11 crop Country network receivals 10.4 12.2 • ~55% share of crop production(1) • Lower receivals versus p
Slide 34: GrainCorp Oils key drivers
GrainCorp Oils key drivers Crushing Refining • Capacity utilisation • Capacity utilisation • Gross margin and commodity • Gross margin and commodity management management • Crush process cost • Refining process cost • Product mix Combined sales volumes (crude oil, meal, refined products) Pacific Ter
Slide 35: GrainCorp is Australia's leading agribusiness
GrainCorp is Australia’s leading agribusiness Integrated Business Model with an international “end-to-end” grain supply chain connecting consumers to growers Unique portfolio of local storage and logistics assets and local and international downstream processing assets linked by a global Mar