Nufarm Limited · ASX:NUF
Nufarm — H1 2015 Earnings Presentation
37 slides from Nufarm's earnings presentation, Mar 25, 2015
Slide 1: Interim Results 6 months to January 31, 2015
For personal use only Interim Results 6 months to January 31, 2015 25 March, 2015
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: 2015 Interim Results – Overview
For personal use only 2015 Interim Results – Overview Greg Hunt, Acting CEO
Slide 4: Headline results
Headline results For personal use only 6 months ended • Profitable growth on first half of 31 January previous year (A$ millions) 2015 2014 Change • Good progress on working capital Revenue 1,184 1,138 4% management efficiencies Underlying EBIT 63.4 56.7 12% • Lower net debt Underlying NPAT 26.5
Slide 5: Change program well underway
Change program well underway For personal use only • Rationalisation of manufacturing footprints in Australia and Europe • Better processes and systems to support permanent improvements in working capital management • Initial $100m cost savings and performance improvement program that addresses all
Slide 6: 2015 Interim Results – Financials
For personal use only 2015 Interim Results – Financials Paul Binfield, Chief Financial Officer
Slide 7: 2015 interim results
2015 interim results Steady profitable growth in the half For personal use only • Underlying EBIT growth of almost 12% with growth in all major crop protection regions more than offsetting lower result in Seeds – Solid result in Australia with improved seasonal conditions providing strong momentum g
Slide 8: Operating expenses and tax expense
Operating expenses and tax expense Operating expenses remain well controlled and will be subject to increased scrutiny as cost efficiency programs are implemented For personal use only (A$ millions) Half year ended 31 January • Expense ratio in line with prior year 2015 2014 Underlying sales, market
Slide 9: Impact of foreign exchange on P&L
Impact of foreign exchange on P&L Significant strengthening of USD in 1H15 For personal use only (A $ millio ns) Half year ended 31 January • Impact of FX on revenue and underlying EBIT 2015 at – Immaterial impact in 1H15 as benefit of strengthened 2015 2014 2014 (1) USD has been more than offset by
Slide 10: Net working capital improvements are sustainable
Net working capital (NWC) improvements are sustainable On track to deliver ANWC/sales of 40% by FY16 For personal use only • All key working capital metrics show improvement over prior corresponding period • ANWC/sales at 43.9%. Substantial improvement over 49.4% in prior year • Six month ANWC reduc
Slide 11: Net working capital improvements consistently delivered across the regions
Net working capital improvements consistently delivered across the regions All major crop protection regions contributed to the improved For personal use only working capital outcomes • NWC has improved $167 million compared to January last year • All major crop protection regions have improved thei
Slide 12: Net debt and financing costs
Net debt and financing costs Working capital improvements drives strengthened balance sheet For personal use only (A$ millions) Half year ended 31 January • Average net debt for the period of $793 2015 2014 million is $116 million below prior period as Interest income (4.2) (2.6) benefits of working
Slide 13: 2015 Interim Results – Crop Protection
For personal use only 2015 Interim Results – Crop Protection Greg Hunt, Acting CEO
Slide 14: Major product segments
Major product segments Crop protection % total segment revenues For personal use only 2015: $1,140.8m Group sales Herbicide Insecticide 67% 14% 6 months to 6 months to 31 January 2015 31 January 2014 Change Fungicide $m $m 9% Other* Europe 10% Herbicides 761 21% 711 7% 2014: $1,084.2m Insecticides
Slide 15: Sales revenue by region
Sales revenue by region Crop protection segment For personal use only 2015: $1,140.8m 2014: $1,084.2m Europe Australia/ Europe 16% Australia/ 15% New Zealand New Zealand 21% 23% Asia Asia 7% 6% South America South America 37% 38% North America North America 20% 17% 15
Slide 16: Regional review: Australia / New Zealand
2015 Interim results – regional review Australia / New Zealand For personal use only 6 months to 6 months to Australia 31 January 2015 31 January 2014 $m $m • Stronger margins driven by more disciplined selling and solid performance Sales 238.3 249.0 of new products, including 'Weedmaster' Underlyin
Slide 17: Regional review: Asia
2015 Interim results – regional review Asia For personal use only 6 months to 6 months to • Higher export sales to regional 31 January 2015 31 January 2014 markets $m $m Sales 83.0 71.2 • Promising early sales in South Korea and Vietnam Underlying EBIT 8.6 9.3 • Product development targeted at rice
Slide 18: Regional review: North America
2015 Interim results – regional review North America For personal use only 6 months to 6 months to USA 31 January 2015 31 January 2014 $m $m • Sales up by 28% in USD Sales 228.0 180.7 • Successful early order program in Turf & Underlying Ornamental segment EBIT 0.5 - 6.9 • New product launches to su
Slide 19: Regional review: South America
2015 Interim results – regional review South America For personal use only 6 months to 6 months to Brazil 31 January 2015 31 January 2014 $m $m • Sales in line with prior period Sales 422.2 412.3 • Dry, late start to major season Underlying EBIT 65.0 60.0 • Impact of softer commodity prices Regional
Slide 20: Regional review: Europe
2015 Interim results – regional review Europe For personal use only 6 months to 6 months to • Branded sales up 11% on prior 31 January 2015 31 January 2014 period $m $m Sales 169.4 170.4 • Favourable autumn conditions Underlying 3.2 1.5 • New product launches help drive EBIT growth Regional revenues
Slide 21: 2015 Interim Results – Seed technologies
For personal use only 2015 Interim Results – Seed technologies Brent Zacharias, General Manager, Nuseed
Slide 22: Seed technologies segment result
2015 Interim results – seed technologies Segment result For personal use only 6 months to • Disappointing first half with sales 6 months to and margin down from previous 31 January 31 January 2014 2015 $m year $m Sales 42.9 54.1 • Dry Australian summer and China market deterioration key drivers of A
Slide 23: Mix and timing of first half key segments
Seed technologies The mix and timing of first half key segments For personal use only • Typical margins of first half segments ‒ Forage sorghum ‒ Less differentiated seed treatment products ‒ 3rd party sales contracts • Australia summer crop ‒ Reduced from drought • Seed treatment ‒ Down slightly ‒
Slide 24: Staged investment increase – exciting pipeline, broader capability
Seed technologies Staged investment increase – exciting pipeline, broader capability For personal use only • First half expense – meaningful increase • Numerous project stage gate advancements • Greater market capability ‒ Commercial Nuseed Europe ‒ Regional seed treatment ‒ Marketing ‒ Downstream b
Slide 25: Second half segments and mix – continued margin performance
Seed technologies Second half segments and mix – continued margin performance For personal use only • Highest value segments (50-70% GM) ‒ Canola ‒ USA elite sunflower ‒ USA customised seed treatment ‒ LAS grain sorghum ‒ Global confection sunflower ‒ European elite sunflower • Expansion ‒ Australia
Slide 26: Seed technologies outlook
Seed technologies Outlook For personal use only • Continued EBIT growth FY15 ‒ Expect continued (more modest) EBIT growth FY15 ‒ Risk: Australia canola planting could be reduced although share of highest value market segments will continue to increase ‒ Efficiency initiatives expected to offset some
Slide 27: 2015 Interim Results – Outlook and performance improvement program
For personal use only 2015 Interim Results – Outlook and performance improvement program Greg Hunt, Acting CEO
Slide 28: Group outlook for full year
Group outlook for full year Major markets For personal use only • Australia More positive start to second half, but pre-planting rains still needed, particularly in Western Australia • USA Forecast is for more normal spring conditions. Channel inventories higher than normal • Brazil Safrinha corn pl
Slide 29: Performance improvement program
Performance improvement program For personal use only • Our initial $100 million target is our objective for a net benefit resulting from this program • There will be both opportunities and needs to reinvest in the business to support further efficiencies and profitable growth • The program represen
Slide 30: Performance improvement program timeline
Performance improvement program A considered and systematic approach that has been carefully scoped and properly resourced For personal use only Detailed benchmarking against industry peers; scoping of $100m target performance improvement announced program and establishment of project management off
Slide 31: Performance improvement program work streams
Performance improvement program A comprehensive review of all parts of the business, involving change in many areas For personal use only Work streams and areas of focus Customers Operations Products Costs • Develop the best channel • Optimise footprint • Reduce the complexity of • Apply Procurement
Slide 32: Focus and priorities for immediate term
Focus and priorities for immediate term For personal use only • Achievement of current budget objectives – both earnings and balance sheet • Execution of announced restructuring initiatives in ANZ and Europe – on time and with full value of projected savings • Implementation of further initiatives a
Slide 33: Nufarm — Grow a better tomorrow
6A Nufarm — Growa better tomorrow.
Slide 34: Supplementary information
For personal use only Supplementary information
Slide 35: 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 36: Non IFRS information reconciliation
Non IFRS information reconciliation 6 months ended 31 Jan 2015 6 months ended 31 Jan 2014 Material Material For personal use only Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,183,730 - 1,183,730 1,138,211 - 1,138,211 Cost of sales (867,182) - (867,182) (832,4
Slide 37: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Six months ended 31 January 2015 2014 $000 $000 Underlying EBIT 63,426 56,726 Material items impacting operating profit (4,539) - Operating profit 58,887 56,726 Underlying EBIT 63,426 56,726 add Depreciation and amortisation excluding materia