Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — HY20 Earnings Presentation
21 slides from Graincorp Limited Class A's earnings presentation, May 2020
Slide 1: HY20 Results
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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: Executing against strategy
Executing against strategy Demerger of United Malt Portfolio Sale of Australian Bulk Liquid Terminals repositioning Profit of $388 million1 and a well funded balance sheet Maintaining business resilience through COVID-19 Building Undertaking “harvest readiness” - preparing for larger winte
Slide 4: Creating platform for growth
Creating platform for growth Delivering on operational initiatives to strengthen GrainCorp’s core and drive greater value creation Harvest readiness Operational initiatives Preparing to handle larger East Coast Effectively managing crop variability Australia (ECA) crop – Crop Production Contract
Slide 5: Resilience through COVID-19
Resilience through COVID-19 Food & Agriculture an essential service – GrainCorp playing critical role supporting supply chain Our people Our business continuity Our stakeholders Maintaining operations, Supply chain and Industry and protecting jobs processing plants government Office roles wo
Slide 6: Improved financial performance
Improved financial performance Large increase in earnings, notwithstanding third consecutive year of drought Underlying EBITDA1 Earnings skewed to 1H in line with tonnes handled $183 million New operating model, more flexible rail contracts and from $27 million Crop Production Contract ECA gra
Slide 7: Substantial turnaround since HY19
Substantial turnaround since HY19 HY19 – HY20 Earnings Bridge1 ($M) Reflecting new Increase in ECA grain structure and fair throughput, Crop value increase in Production Contract, UMG holding. new rail contract. Non- repeat of negative 16 impact from disrupted grain trade flows. 25 Increase in oilse
Slide 8: Crop Production Contract – effectively managing ECA crop production risk
Crop Production Contract – effectively managing ECA crop production risk FY20 – Year 1 outcome of contract: Crop production contract – production payment profile2 • ABARES’ 2019/20 total winter crop production 100 estimate (Feb 2020) : 11.44mmt1 80 74 69 • Total gross production payment of ~$58 54 6
Slide 9: Outlook
Outlook Root zone soil moisture1, April 2020 Small FY20 ECA summer crop Earnings skewed to 1H in line with tonnes handled Reduced imports as domestic demand likely to taper in Q4 with positive crop outlook for FY21 Favourable ECA soil moisture has supported widespread planting for FY21 crop
Slide 10: Questions
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Slide 11: Supplementary information
Supplementary information
Slide 12: Commitment to safety is fundamental
Commitment to safety is fundamental Lost Time Injury Frequency Rate (LTIFR)1,3 Recordable Injury Frequency Rate (RIFR)2,3 5.4 13.2 13.5 12.6 12.0 3.9 10.7 3.7 2.8 7.7 7.5 1.9 1.8 1.5 HY17 FY17 HY18 FY18 HY19 FY19 HY20 HY17 FY17 HY18 FY18 HY19 FY19 HY20 Improvement in key safety metrics with increa
Slide 13: Financial summary – continuing operations
Financial summary – continuing operations Revenue EBITDA2 $M1 HY20 HY19 HY20 HY19 Agribusiness 1,972 1,798 82 (28) Processing 306 256 23 (2) Corporate - - - (16) Eliminations and other (319) (159) - - Total 1,959 1,895 105 (46) 1. Continuing operations (excludes United Malt) 2. Before significant it
Slide 14: Agribusiness – managing drought with Crop Production Contract and new rail contracts
Agribusiness – managing drought with Crop Production Contract and new rail contracts $M HY20 HY19 Year-to-date1 volumes (mmt)2 HY20 HY19 Revenue 1,972 1,798 Total grain sales 4.6 3.9 EBITDA 82 (28) Grain receivals (ECA)3 3.8 2.3 Grain exports (ECA)4 0.6 0.2 EBIT 43 (63) Grain trans-shipments (throug
Slide 15: Processing – improvement in crush margins
Processing – improvement in crush margins $M HY20 HY19 Revenue 306 256 EBITDA 23 (2) EBIT 11 (12) Capex 3 3 Oilseeds: oilseed crush margins have recovered New Zealand Feeds and Foods businesses have strongly due to increased ECA canola supply and both passed COVID-19 ‘essential business’ stronge
Slide 16: Maximising our assets, simplifying the business
Delivering on initiatives to strengthen the core Initiative Description / benefits Status – FY20 10-year contract to • 10-year Crop Production Contract (CPC), effective • Important support for GrainCorp in drought year. Managing variability manage ECA crop from FY20, ensures GrainCorp’s cash flows a
Slide 17: Crop Production Contract – effectively managing ECA crop production risk
Crop Production Contract – effectively managing ECA crop production risk Crop Production Contract - summary Crop production contract – production payment profile1 GrainCorp entered a 10-year Crop Production Contract (starting 100 FY20) with White Rock Insurance (SAC) Ltd, a subsidiary of 74 80 69
Slide 18: Debt / cash profile
Debt / cash profile GrainCorp had core net cash at 31 March 2020, a well-funded and strong position to be in post the Demerger of United Malt. Core debt gearing1 of 0% and net debt gearing1 of 44% Debt and Liquidity Profile ($M) Debt balances are subject to variances in cash flows, including: 31
Slide 19: Disciplined capital expenditure
Disciplined capital expenditure GrainCorp’s capital expenditure peaked in FY17 and has since declined as major capital works have completed Capex – Continuing Operations1 ($M) Capex was elevated in FY16-FY18 due to investment in future grain network and Processing assets, including: Investment in
Slide 20: FY20 outlook
FY20 outlook Market fundamentals GrainCorp FY20 outlook Large parts of east coast Australia (ECA) affected by Higher grain exports expected in 2H, however offset by drought in 2019/20 cropping season. lower imports as domestic demand likely to taper in Q4 with recent rainfall positive for FY21 s
Slide 21: Reconciliation – underlying to statutory NPAT
Reconciliation – underlying to statutory NPAT $M Segment NPAT Details Underlying – continuing 27 operations Underlying – discontinued 28 operations (Malt) Underlying – including continuing and discontinued 55 operations Transaction costs Corporate (8) Relates to costs incurred to support the Board a