Slide 1: Investor Presentation – Financial Year Ended 30 September 2019
14 November 2019 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, GrainCorp Limited (ASX: GNC) Investor Presentation – Financial Year Ended 30 September 2019 Please find attached the Investor Presentation relating to the financial year ended 30 Se
Slide 2: FY19 results
FY19 results 14 November 2019
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 • Results overview • Segment performance • Balance sheet & capex • FY20 outlook • Portfolio optimisation
Slide 5: Commitment to safety is fundamental
Commitment to safety is fundamental RECORDABLE INJURY FREQUENCY RATE(1) LOST TIME INJURY FREQUENCY RATE(2) 21.6 7.0 13.9 12.2 3.8 4.1 11.3 11.5 3.0 2.7 7.7 2.2 FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 • GrainCorp achieved strong improvements in key safety metrics in FY19: • RIFR d
Slide 6: FY19 overview
FY19 overview $M FY19 FY18 Underlying EBITDA(1) 69 269 Underlying NPAT(2) (82) 71 Statutory NPAT(3) (113) 71 Dividend (cents per share) – 100% franked - 16 • Overview: Extremely challenging year with lower grain throughput and depressed oilseed crush margins due to drought in eastern Australia; and
Slide 7: Earnings profile
Earnings profile UNDERLYING EBITDA(1,2) ($M) UNDERLYING NPAT(1) ($M) Malt Oils Allied Mills Grains Corporate 390 293 256 269 142 235 69 95 71 45 53 (82) FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY18 FY19 1H 166 136 134 236 119 29 1H 61 35 32 100 36 (48) 2H 127 99 122 154 150 40 2H 34 10 21
Slide 8: Earnings bridge
Earnings bridge FY18 - FY19 EARNINGS BRIDGE(1) ($M) EBITDA Malt Oils Grains Corporate 6 (8) Strong customer demand Weak oilseed 71 crush margin (65) Impact from trade disruptions. Drought impact on (15) rail contracts Restructuring costs (5) (82) Higher Tax benefits Drought effect on commodity ECA g
Slide 9: Segment performance
Segment performance 8
Slide 10: Financial summary
Financial summary Revenue EBITDA (1) $M FY19 FY18 FY19 FY18 Malt 1,317 1,152 176 170 Oils 1,011 969 53 61 Grains 2,665 2,242 (131) 68 Corporate - - (29) (31) Eliminations and other (143) (110) - - Total 4,850 4,253 69 269 1. Before significant items. 9
Slide 11: Malt: solid customer demand
Malt: solid customer demand $M FY19 FY18 Revenue 1,317 1,152 EBITDA 176 170 EBIT 123 115 Capex 48 46 • Continued high utilisation of malting plants; • US craft beer market (by sales volume) grew 4% in 2018(1). • Solid demand for malt and brewing ingredients from brewing and distilling customers; • I
Slide 12: Grains: significant adverse impact due to drought and trade disruptions
Grains: significant adverse impact due to drought and trade disruptions • Drought had significant adverse impact on east coast $M FY19 FY18 Australian (ECA) grain production. ECA production of GNC’s five core grains (winter + summer)(5) 7.7mmt (FY18: 16.7mmt). Revenue 2,665 2,242 • Global trade tens
Slide 13: Oils: lower canola supply impacting oilseed crush margins
Oils: lower canola supply impacting oilseed crush margins $M FY19 FY18 Revenue 1,011 969 EBITDA 53 61 EBIT 24 28 Capex 13 46 • Bulk Liquid Terminals: high utilisation, driven by continuing Sale of Australian Bulk Liquid Terminals: customer demand across a range of product segments. • Announced in Ma
Slide 14: Balance sheet and capex
Balance sheet and capex 13
Slide 15: Core Debt and Net Debt
Core Debt and Net Debt CORE DEBT(1) AND NET DEBT(2) ($M) 1,800 50% 1,600 • Core debt at $802M(3) and net debt at $1,136M(3). 40% 1,400 • Core debt gearing(4) at ~30% and net debt 1,200 gearing(5) at ~45%. 30% 1,000 • Range of maturities on term debt from November 2022 to March 2023, with average ter
Slide 16: Balance sheet - core debt profile
Balance sheet - core debt profile CORE DEBT ($M) (1) Short-term debt 294 less Grains - 405 237 299 trading and Oils 91 167 122 inventories • The Core Debt bridge between FY18 ($514M) and FY19 ($802M) is set out on Slide 16. 792 821 748 753 763 758 768 Long-term debt • With the smaller crops in FY18
Slide 17: Core Debt bridge
Core Debt bridge FY18 - FY19 CORE DEBT(1) ($M) Final dividend – FY18 30 (14) 18 97 Capex Other funds 157 Transaction from costs operations Increased working 802 capital(2) 514 FY18 FY19 • Core Debt increased by $288M between FY18 and FY19. • Working capital increased in FY19 predominantly due to: –
Slide 18: Capital expenditure
Capital expenditure CAPEX(1) ($M) DEPRECIATION & AMORTISATION(2) ($M) Stay-in-business Growth 282 Depreciation Amortisation 262 236 167 153 210 184 143 146 142 142 136 168 127 29 34 29 24 96 97 34 30 87 55 117 124 118 97 103 109 71 68 72 78 55 42 FY14 FY15 FY16 FY17 FY18 FY19 FY14 FY15 FY16 FY17 FY1
Slide 19: FY20 outlook
FY20 outlook 18
Slide 20: FY20 Malt outlook
FY20 Malt outlook Market fundamentals GrainCorp Malt FY20 outlook • 2019-20 global barley production projection • High capacity utilisation of malt plants. ~154mmt (2018-19: 140mmt)(1). • Continued solid demand for base and specialty • US craft beer market (by sales volume) grew 4% in malts, and oth
Slide 21: FY20 Grains and Oils outlook
FY20 Grains and Oils outlook Market fundamentals GrainCorp FY20 outlook • Large parts of east coast Australia (ECA), particularly • Year-to-date(3) ECA grain receivals(4) of 0.4mmt. northern NSW and southern QLD, affected by • Minimal grain exports expected in FY20. drought in 2019-20 cropping seaso
Slide 22: Crop production contract to help manage variability
Crop production contract to help manage variability • GrainCorp has entered a 10-year crop production Key Contract terms Metric contract, effective for FY20, to manage the risk associated with the volatility of eastern Australian Grain production metric used for ABARES total winter grain production.
Slide 23: Portfolio optimisation
Portfolio optimisation 22
Slide 24: Portfolio separation to unlock shareholder value
Portfolio separation to unlock shareholder value The Board conducted a portfolio review during the year, announcing a separation of GrainCorp’s portfolio to unlock shareholder value: • Announced March 2019. Sale of Australian Bulk Liquid Terminals • ACCC currently reviewing transaction; decision bus
Slide 25: Appendices
Appendices 24
Slide 26: Commodity inventories funded with specific commodity inventory facilities
Commodity inventories funded with specific commodity inventory facilities COMMODITIES INVENTORY(1) ($M) 1,400 Grains, Oils grain, oilseed and Malt barley inventory Short-term debt 1,269 Supplemented short 1,200 term debt with cash 1,035 1,000 894 882 906 799 800 739 742 616 633 600 538 513 388 402 4
Slide 27: Reconciliation Underlying to Statutory NPAT
Reconciliation Underlying to Statutory NPAT $M Segment NPAT Details Underlying (81.7) Transaction costs Corporate (26.1) (i) Costs associated with the Portfolio Review including: • Proposed demerger of the Malt business unit; • Proposed sale of Australian Bulk Liquid Terminals. (ii) Costs associated
Slide 28: FY19 results
FY19 results 14 November 2019