Nufarm Limited · ASX:NUF
Nufarm — FY2014 Earnings Presentation
38 slides from Nufarm's earnings presentation, Sep 23, 2014
Slide 1: 2014 Full Year Results
For personal use only 2014 Full Year Results September, 2014
Slide 2: Disclaimer
Disclaimer For personal use only Forward looking statements 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 no
Slide 3: FY 2014 results – Overview
For personal use only FY 2014 results – Overview Doug Rathbone Managing Director / CEO
Slide 4: Group FY14 headline results
Group FY14 headline results Underlying EBIT growth highlights benefits of a diversified business across geographies and products For personal use only • South America generates strong growth 12 months ended 31 July • European branded business ahead of prior year (A$ millions) 2014 2013 Change • Asia
Slide 5: Key messages
Key messages • Encouraging progress on working capital efficiency program – but more to be For personal use only done – Initial focus has been on inventory management – Committed to 40% ANWC/sales target within next two years • Stronger balance sheet will allow us to capture future growth opportunit
Slide 6: Good progress on implementing our strategy
Good progress on implementing our strategy Past 12 months For personal use only Growing into higher • New product launches across all major markets value and more • Valent distribution deal consolidates leadership position in US T&O defendable product/ • Additional access to third party products str
Slide 7: FY 2014 results – Financials
For personal use only FY 2014 results – Financials Paul Binfield Chief Financial Officer
Slide 8: 2014 full year results
2014 full year results Benefits of geographical diversity evident as outperformance in South America more than compensates for tough conditions in Aus and US For personal use only • Revenue growth in AUD terms in all regions except US, especially strong in South America – Growth in Brazil (63% in lo
Slide 9: Net working capital well below $1 billion target
Net working capital well below $1 billion target Net working capital initiatives gain traction in H2 For personal use only Net working capital (NWC) • Improvement initiatives started to gain traction in second half Year ended 31 July 2014 2013 Change – Improved inventory management the Receivables 7
Slide 10: Net working capital initiatives
Net working capital initiatives Significant improvements in net working capital being delivered by initiatives outlined in March For personal use only • Key actions underway: – Extensive Sales & Operations Planning (S&OP) projects in US, EU and Australia – Review of supplier lead times, lot sizes an
Slide 11: Brazilian working capital management remains strong
Brazilian working capital management remains strong Further incremental working capital improvements possible in Brazil For personal use only Brazil key metrics in local currency (BRL in millions) 140 90% 80% • Revenue growth in local currency 63% 80% 120 on top of prior year growth of 41% 70% • EBI
Slide 12: ANZ restructure project on track and delivering
ANZ restructure project on track and delivering ANZ asset rationalisation costs are the only material items in FY14 • Only material item in FY14 relates to previously announced restructure of the ANZ For personal use only business and rationalisation of the manufacturing footprint. • Pre-tax one-off
Slide 13: Operating and tax expense
Operating and tax expense Costs controlled and effective tax rate benefits from non recurring credits For personal use only (A$ millions) • Of $60m increase in SG&A almost a Year ended 31 July 2014 2013 third is currency related, a similar amount supports the growth in Brazil and Underlying sales, m
Slide 14: Net debt & financing costs
Net debt & financing costs Interest expense elevated due to higher average net debt For personal use only • Higher average net debt for the period driven by higher average net working capital • Syndicated banking facility successfully refinanced and up-sized and on improved terms • Receivables secur
Slide 15: FY 2014 results – Crop Protection
For personal use only FY 2014 results – Crop Protection Greg Hunt Group Executive Commercial Operations
Slide 16: Major product segments
Major product segments Crop protection % total segment revenues For personal use only 2014: $2,478.3m Average GM: 26% Group sales Herbicide Insecticide 67% 12% 2014 2013 Change Fungicide 10% Other* Europe Herbicides $1.67 billion 13% 11% 21% $1.48 billion Insecticides $290 million South $215 milli
Slide 17: Sales revenue by region
Sales revenue by region Crop protection segment For personal use only 2014: $2,478.3m 2013: $2,145.6m Average GM: 26% Average GM: 26% Europe Aust/NZ Europe Aust/NZ 24% Europe Aust/NZ 28% 22% 21% 22% 34% Asia South Asia South 6% America South 6% America North 16% America North 27% America 20% NorthAm
Slide 18: 2014 Results – regional review: Australia/New Zealand
2014 Results – regional review Australia/New Zealand For personal use only 2014 $m 2013 $m Regional revenues by major product segment Sales 605.8 604.4 Underlying EBIT 33.9 35.4 Herbicides Insecticides 6% 68% Fungicides 7% Australia Other* 19% • Continuation of dry conditions through first half *Oth
Slide 19: 2014 Results – regional review: Asia
2014 Results – regional review Asia For personal use only Regional revenues by major 2014 $m 2013 $m product segment Sales 140.9 125.2 Herbicides Underlying EBIT 19.5 19.6 84% Insecticides 3% Fungicides 7% Other 6% • Sales growth in all major regional markets • EBIT margin remains relatively strong,
Slide 20: 2014 Results – regional review: North America
2014 Results – regional review North America For personal use only Regional revenues by major 2014 $m 2013 $m product segment Sales 513.6 516.3 Herbicides Insecticides 5% Underlying EBIT 20.6 42.2 76% Fungicides 9% USA Other 10% • Severe winter impacts sales opportunities and generates price competi
Slide 21: 2014 Results – regional review: South America
2014 Results – regional review South America For personal use only 2014 $m 2013 $m Regional revenues by major product segment Sales 662.5 431.4 Underlying EBIT 71.6 40.6 Herbicides Insecticides 29% 59% Brazil Fungicides 9% • EBIT margin expansion reflects strong Other 3% revenue and profit growth as
Slide 22: 2014 Results – regional review: Europe
2014 Results – regional review Europe For personal use only Regional revenues by major 2014 $m 2013 $m product segment Sales 555.5 468.3 Herbicides Insecticides 6% Underlying EBIT 56.4 57.2 64% Fungicides 16% • Mostly average seasonal conditions, Other 14% with cold and dry weather impacting Eastern
Slide 23: Strategic focus: Crop Protection
Strategic focus: Crop Protection For personal use only 1 Customer service leadership – Implementing new CRM* systems – Utilising customer feedback to improve our offerings – Simplifying the customer experience 2 Manufacturing efficiencies – Restructure of ANZ footprint will provide more flex in cost
Slide 24: FY 2014 results – Seed technologies
For personal use only FY 2014 results – Seed technologies Doug Rathbone Managing Director / CEO
Slide 25: Seed technologies segment review
2014 Results – Seed technologies segment review Seed technologies For personal use only 2014 $m 2013 $m • Nuseed increases market share and consolidates leadership position in Sales 144.4 131.7 Australian canola Average GM 51% 55% • Dry summer in Australia impacts Underlying EBIT 37.2 32.4 sorghum a
Slide 26: Important progress on building high value pipeline
2014 Results – Seed technologies segment review Important progress on building high value pipeline For personal use only • DHA Omega 3 canola now in field trials – Strengthening intellectual property position – Substantial and growing end-market • New innovation centres opened in Horsham (Victoria)
Slide 27: FY 2014 results – Strategy & Outlook
For personal use only FY 2014 results – Strategy & Outlook Doug Rathbone Managing Director / CEO
Slide 28: Strategic focus
Strategic focus Next 12 months For personal use only Growing into higher • Key insecticide and fungicide product launches value and more • Drive portfolio renewal to support earnings recovery in Australia defendable product/ • Enhance formulation capabilities market segments • Launch of new disease
Slide 29: Group outlook for 2015 financial year
Group outlook for 2015 financial year • Spring/summer rainfall plus initial benefits of restructuring program to drive earnings For personal use only recovery in Australia • Broader product portfolio strongly positions US business to capitalise on return to more normal seasonal conditions • Growth a
Slide 30: Industry fundamentals provide strong 'macro' environment
Industry fundamentals provide strong 'macro' environment for long term growth For personal use only • Demand for more and better quality food to be produced on a declining availability of arable land continues to underpin the requirement for yield improvement: – Optimising crop protection inputs and
Slide 31: Investment highlights
Investment highlights For personal use only 1 We are a leading supplier of crop protection products, with a highly profitable and growing seeds platform 2 We have a strong and balanced global footprint, with sales in more than 100 countries around the world 3 We have a pipeline of new and differenti
Slide 32: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.
Slide 33: Supplementary information
For personal use only Supplementary information
Slide 34: 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 35: Impact of foreign exchange
Impact of foreign exchange Depreciation of AUD versus major trading currencies for FY14 compared with FY 13 For personal use only Impact of FX on Revenue and Underlying Underlying EBIT at constant FX EBIT • Weaker AUD versus USD, EUR and GBP has Year ended 31 July 2013 had beneficial impact on repor
Slide 36: Non IFRS information reconciliation
Non IFRS information reconciliation 12 months ended 31 July 2014 12 months ended 31 July 2013 For personal use only Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 2,622,704 2,622,704 2,277,292 2,277,292 Cost of sales (1,921,751) 33,612 (1,955,36
Slide 37: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Year ended 31 July 2014 2013 $000 $000 Underlying EBIT 200,607 186,803 Material items impacting operating profit (50,761) (3,177) Operating profit 149,846 183,626 Underlying EBIT 200,607 186,803 add Depreciation and amortisation excluding mat
Slide 38: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.