Slide 1: Investor Presentation cover letter - Half Year ended 31 March 2015
14 May 2015 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR PRESENTATION FINANCIAL HALF YEAR ENDED 31 MARCH 2015 Please find attached the Investor Presentation relating to the financial Half Year ended 31 March 2015. GrainCorp is
Slide 2: HY15 Results
HY15 Results 14 May 2015
Slide 3: 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 4: Agenda
Agenda • Result Overview (Mark Palmquist) • Segment Performance (Mark Palmquist) • Balance Sheet & Capex (Alistair Bell) • FY15 Outlook (Mark Palmquist) • Other Updates (Mark Palmquist) • Questions 3
Slide 5: Commitment to values driving positive outcomes
Commitment to values driving positive outcomes Values Safety Performance(1) 14.0 12.0 12.6 12.0 10.0 10.7 8.0 7.3 7.0 6.0 6.3 4.0 2.0 - FY12 HY13 FY13 HY14 FY14 HY15 Rolling 12 month average LTIFR(1) 14% lower than same time last year. 1. Lost Time Injury Frequency Rate ('LTIFR’) calculated as the n
Slide 6: Earnings from Malt and Oils support challenging period for grains businesses
Earnings from Malt and Oils support challenging period for grains businesses • HY15 earnings of $136M EBITDA(1) and $35M NPAT(2). • HY15 statutory NPAT of $30M after significant items (3). • Dividend: fully franked HY15 interim dividend of 7.5 cents per share. • Malt: consistent levels of high capac
Slide 7: Earnings profile highlighting benefits of diversification along the grain chain
Earnings profile highlighting benefits of diversification along the grain chain EBITDA(1) $M NPAT(1) $M Malt Oils Allied Marketing S&L 235 227 173 122 166 109 136 111 88 81 61 53 32 35 HY09 HY10 HY11 HY12 HY13 HY14 HY15 HY09 HY10 HY11 HY12 HY13 HY14 HY15 1H 82 112 173 235 227 166 136 1H 32 53 88 122
Slide 8: Processing businesses demonstrating the importance of earnings diversification
Processing businesses demonstrating the importance of earnings diversification HY14 to HY15 Earnings Bridge(1) $M 6 12 Additional volumes and margin 36 improvement in Oilseeds Strategic and initiatives commodity benefits, management, customer offset by segmentation, reduction in FX 8 NZ Feeds and Lo
Slide 9: Diversified earnings supporting dividend
Diversified earnings supporting dividend Dividends per share1 Ordinary DPS Special DPS 30.0 25.0 20.0 15.0 15.0 7.5 0.0 HY09 HY10 HY11 HY12 HY13 HY14 HY15 Payout 0% 54% 48% 44% 65% 68% 49% ratio(2) HY15 Dividend Dates • HY15 interim dividend: fully franked interim dividend of 7.5 cents per share • R
Slide 10: Segment Performance
Segment Performance
Slide 11: Portfolio of grain businesses capture value along the grain chain
Portfolio of grain businesses capture value along the grain chain Revenue EBITDA(1) $M HY15 HY14 HY15 HY14 Malt(2) 533 507 69 57 Oils 471 476 42 36 Storage & Logistics 209 280 27 63 Marketing 917 966 8 16 Allied Mills(3) - - 4 4 Corporate Costs - - (13) (10) Eliminations and other (155) (173) - - To
Slide 12: Malt – continued high capacity utilisation and underlying improvements
Malt – continued high capacity utilisation and underlying improvements • Sales of 0.62mmt; continued high capacity $M HY15 HY14 utilisation above 90% (higher than prior Revenue 533 507 year given plant closure) EBITDA(1) 69 57 • Better than expected processing results from EBIT(1) 45 35 poor quality
Slide 13: Oils – solid result and strategic initiatives on track
Oils – solid result and strategic initiatives on track • Oilseeds: sales volumes of $M HY15 HY14 0.18mmt(1); higher volumes and Revenue 471 476 improved margins EBITDA 42 36 • Foods: sales volumes of 0.10mmt(1); EBIT 27 24 volumes stabilising however lower Capital Expenditure 47 21 margins due to sa
Slide 14: Storage & Logistics – lower grain production resulting in lower volumes
Storage & Logistics – lower grain production resulting in lower volumes • Lower earnings due to below-normal grain $M HY15 HY14 production resulting in lower volumes Revenue 209 280 • Carry-in: 1.9mmt(1) (HY14: 2.3mmt) EBITDA 27 63 • Country receivals: 6.7mmt (HY14: EBIT 1 38 7.6mmt); ~47% share of
Slide 15: Marketing – lower grain production and strong international competition
Marketing – lower grain production and strong international competition • Earnings lower due to lower grain production in $M HY15 HY14 eastern Australia, greater competition for grain Revenue 917 966 domestically and margin pressure on exports EBITDA 8 16 • Alternative origination sources competing
Slide 16: Allied Mills
Allied Mills $M (60%) JV Share(1) HY15 HY14 • Changing retail market conditions EBITDA 11 12 • Tullamarine expansion of frozen Equity profit(1) 4 4 bakery products completed in first Shareholder loan interest 1 1 received half Net Asset Value(2) 182 174 • Strategy remains focussed on value 60% Net A
Slide 17: Balance Sheet and Capex
Balance Sheet and Capex
Slide 18: Strong and flexible balance sheet
Strong and flexible balance sheet Core Debt(1) $M Long term debt Short-term debt less marketing and oils • Core debt increasing as expected and in Cash line with implementation of strategic Short-term 134 debt less initiatives, ahead of earnings Marketing 26 79 71 89 and Oils • Debt facilities match
Slide 19: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities Supplemented short term debt with cash Commodities inventory $M Marketing & Oils grain and oilseed inventory 829 792 Short-term debt 708 Supplemented short 572 577 574 term debt with cash 528 519 498 387 365 353 322 321 338 31
Slide 20: Capex supporting safety, network efficiencies and strategic initiatives
Capex supporting safety, network efficiencies and strategic initiatives Capex(1) $M Depreciation & Amortisation $M 167 Stay-in-business Growth Depreciation Amortisation 127 119 141 30 122 24 91 112 106 96 78 71 72 18 86 85 67 53 63 16 17 63 16 95 97 58 73 70 71 56 61 59 51 53 49 28 FY10 FY11 FY12 FY
Slide 21: FY15 Outlook
FY15 Outlook
Slide 22: FY15 Grains outlook – lower grain production eastern Australia
FY15 Grains outlook – lower grain production eastern Australia Market fundamentals GrainCorp FY15 outlook • Eastern Australian crop production estimate of • Carry-in: 1.9mmt significantly lower than recent 16.3mmt(1) is below normal (FY14: 17.3mmt) years (FY14: 2.3mmt) • Domestic demand for grain in
Slide 23: Below normal grain production resulting in lower S&L volumes
Below normal grain production resulting in lower S&L volumes FY15 FY15 Drivers (mmt) FY14 FY15 Outlook YTD(1) Outlook Eastern Australia Grain • Grain production forecast below normal and 17.3 16.3(2) lower than prior year Production • Below average and lower than recent years Grain carry-in (1-Oct)
Slide 24: FY15 Processing outlook – well placed through strong competitive position
FY15 Processing outlook – well placed through strong competitive position Market fundamentals GrainCorp FY15 outlook • Global barley crop production ~141mmt(1) • Forward sales of 1.2mmt YTD (FY14: 145mmt) • Malt sales volume: ~1.27mmt • Weather related barley production issues in • Better than antic
Slide 25: FY15 Earnings Guidance
FY15 Earnings Guidance EBITDA NPAT • EBITDA (before significant items): • Underlying NPAT (before significant items): Guidance $240M – $270M $45M – $60M • Includes 60% share of Allied Mills NPAT before • Depreciation & Amortisation: ~$135M significant items • Tax: ~26% Assumptions / Variables Variab
Slide 26: Other Updates
Other Updates
Slide 27: Other updates
Other updates 2015/16 Winter Crop Announcements • Favourable rain in late April / • S&L: Network revitalisation – first tranche of works May in Eastern Australia announced (11 May) • Planting underway; rain required • S&L: Favourable draft ruling on exemption for in critical growing period Geelong;
Slide 28: Questions
Questions
Slide 29: Appendix
Appendix GrainCorp
Slide 30: Significant items
Significant items Net $M Segment EBITDA D&A Tax NPAT Details Interest Underlying 136.1 (66.5) (21.8) (13.1) 34.7 Restructuring costs S&L, Oils, (1.8) (1.5) 0.6 (2.7) Relating to Oils network Allied Mills optimisation, S&L Project Regeneration costs and Allied Mills. Impairment of assets Malt (1.8) (
Slide 31: Grain volumes HY14 and HY15
Grain volumes HY14 and HY15 Volume driver (mmt) HY14 HY15 Comments Grain carry-in (1 Oct) 2.3 1.9 • Grain stored at start of period • HY14 & HY15 carry-in below average of ~3mmt Country network 7.6 6.7 • ~47% share of winter crop production(1) receivals • Lower receivals due to lower grain productio
Slide 32: Strategic initiatives targeting optimisation and growth in reliable earnings
Strategic initiatives targeting optimisation and growth in reliable earnings Storage & Logistics Marketing Malt Oils Crushing & Customer Customer Operations refining service focussed excellence footprint Network growth Liquid Non-grain rationalisation Global model terminals opportunities and Broaden
Slide 33: Eastern Australia competitive landscape
Eastern Australia competitive landscape Upcountry Storage Capacity Upcountry Storage GrainCorp ~20mmt Competitors Competitors ~10mmt On-farm ~10mmt Ports Total GrainCorp Ports ~40mmt Competing Ports Announced Port Production / Exports Eastern Australia grain ~18mmt production QLD Domestic demand ~10
Slide 34: Upcoming events and activities
Upcoming events and activities Date Event / Milestone Location 20 May 15 2015 Investor Day Geelong 12 Nov 15 FY15 Results Release TBA 18 Dec 15 FY15 AGM TBA 33