Slide 1: 2019 Interim Results
2019 Interim Results Six months to 31 January 2019 20 March, 2019
Slide 2: Disclaimer
Disclaimer General 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 not intended to be used as the basis for ma
Slide 3: Overview
2019 Interim Results Overview Greg Hunt Managing Director / CEO
Slide 4: Key messages – 1H19
Key messages – 1H19 • Revenue growth of 8% in the period (A$ millions) • Strong performance in North America (+19%), HY19 HY18 Change continued growth in Latin America (+18%) and seed Revenue 1,576 1,460 8% technologies (+12%) Underlying EBITDA ¹ 120.9 123.2 2% • Europe delivers sales growth (+15%),
Slide 5: Second half initiatives
Second half initiatives • Accelerating supply transition to bring supply chain for acquired European portfolios under Nufarm control prior to the autumn selling season • Performance improvement program initiated in Australia, targeting $10 to 15 million cost out/productivity initiatives to: - Reduce
Slide 6: Financials
2019 Interim Results Financials Paul Binfield Chief Financial Officer
Slide 7: 2019 Interim results
2019 Interim results (A$ millions) • Revenue growth in most of our strategic focus markets HY19 HY18 Change Revenue 1,576 1,460 8% • Gross profit margin below prior year, with competitive pressure in Brazil and drought Underlying gross profit ¹ 423.0 412.2 3% impact in Australia Gross profit margin
Slide 8: Working capital
Working capital (A$ millions) • Increased net working capital from July 18 (+$449m), driven by HY19 FY18 HY18 LATAM receivables +$233m, North American receivables +$148m, Receivables 1,590 1,276 1,295 North American inventories $146m and Europe inventories +$118m • Expect LATAM and North American re
Slide 9: Working capital – region bridge to July estimate
Working capital – region bridge to July estimate • Summer cropping down 33% on prior year • Very dry Dec through March period, with low sub soil moisture levels heading into winter cropping • Focus on inventory reduction with low 2H production levels • Expecting some relief from the drought leading
Slide 10: Working capital – region bridge to July estimate
Working capital – region bridge to July estimate • Main soybean selling season June through November, with plantings in Sept/October and collection period April to June • Higher first half sales will be collected in second half, with 2018 being an improved year for customer liquidity with favourable
Slide 11: Operating expenses
Operating expenses (A$ millions) • Effective expense control, with underlying cash selling, HY19 HY18 general & administrative, and research expenses A$m %/sales A$m %/sales (SG&AR) at 20.5% of sales compared to 21.1% in prior period Underlying cash SG&AR ¹ 323.0 20.5% 309.0 21.1% Depreciation and a
Slide 12: Interest and net debt
Interest and net debt (A$ millions) • Delivering a July 2019 net working capital in a $1.3 to $1.4 billion HY19 HY18 range would and give a leverage ratio well below 3x at July 2019. Medium term target remains an average 2x leverage ratio Net interest expense 44.3 42.1 Net fx (gains)/losses ¹ 5.7 14
Slide 13: Operating cash flow
Operating cash flow • Operating cash outflow of $386m in first half due to the higher net working capital at January • Against July 2018, receivables are $314m and inventories $342m higher • Receivables should be largely collected and inventories sold through in the second half • Expect net working
Slide 14: Segment Results
2019 Interim Results Segment Results Greg Hunt Managing Director / CEO
Slide 15: Region – Latin America
Region – Latin America • Brazil sales growth 18%, driven by market share gains for key products and higher soy plantings A$(m) HY19 HY18 % • Return to normal climatic conditions in Argentina Sales 534.2 450.9 18% • EBITDA and EBIT growth delivered despite competitive pricing in glyphosate segment, a
Slide 16: Region – North America
Region – North America • Strong sales growth of 19%, driven by early- order program for turf and ornamental, slightly offset by lower burndown sales caused by wet A$(m) HY19 HY18 % fall season. Higher mix of T&O sales drives Sales 442.5 371.7 19% improved margins Underlying EBIT 28.4 22.4 27% • Inve
Slide 17: Region – Europe
Region – Europe • Slow start to the season with dry weather in central and northern Europe and high channel A$(m) HY19 HY18 % inventories delaying purchases Sales 199.6 173.1 15% • Supply challenges and COGS increases from acquired portfolios Underlying EBIT (36.4) 2.5 - • Plant recoveries $5m behin
Slide 18: Europe acquisitions – short term supply issues
Europe acquisitions – short term supply issues Supply issues Actions • Product supplied to Nufarm by the portfolio • Transfer of the product registrations has vendors is at cost under the transitional been expedited and will be completed in supply agreements April 2019 • There have been supply disru
Slide 19: Europe acquisitions - rationale
Europe acquisitions - rationale Strategic rationale behind acquisitions remains unchanged Acquired portfolios are complimentary to Nufarm’s European business and align with the strategy Customer demand for the portfolio is strong. Customers want to deal with Nufarm Portfolio includes well-kn
Slide 20: Region – Australia/New Zealand
Region – Australia/New Zealand A$(m) HY19 HY18 % Sales 222.2 300.5 (26%) Underlying EBIT (1.4) 6.5 (122%) Underlying EBITDA 4.0 13.5 (70%) Underlying EBITDA 1.8% 4.5% Margin • High channel inventories impacted first half sales and margins, with continued dry conditions effecting sales into the summe
Slide 21: Australian performance improvement program
Australian performance improvement program • Next phase of performance improvement program for Australia • Business recovery will come from reduction to cost base and return to an average season • Targeting $10 to $15 million reduction in cost base, to come from SG&A expense, supply chain, logistics
Slide 22: Seed technologies
2019 Interim Results Seed technologies Brent Zacharias Group Executive, Nuseed
Slide 23: Region – Seed technologies
Region – Seed technologies • Strong contribution from European sunflowers with new products providing greater market A$(m) HY19 HY18 % access to higher value segments Sales 76.8 68.7 12% • Good performance in LATAM, leveraging our new Underlying EBIT 8.2 4.5 81% leading products in sorghum, sunflowe
Slide 24: Omega-3 canola update
Omega-3 canola update Each 1% share of the fish oil First commercial crop to be planted in upcoming US season deficit projected to generate ~$8.5M EBITDA in 2028 • Regulatory approval in Australia (food, feed and cultivation) • Regulatory approval in USA (cultivation) Regulatory status • Anticipate
Slide 25: Outlook
2019 Interim Results Outlook Greg Hunt Managing Director, CEO
Slide 26: Group outlook
Group outlook Full year • EBITDA expected to be in a range of $440 to $470 million • Assumptions in EBITDA range - Continued deterioration of conditions in Australia, with slow 2H sales and sub-soil moisture levels very low in key eastern state cropping areas. A focus on inventory reduction in Austr
Slide 27: Addressing the priorities that will deliver stronger shareholder returns
Addressing the priorities that will deliver stronger shareholder returns in the near term • Implementing supply chain improvements that • ‘Right-sizing’ the Australian business to will deliver sustainable reductions in working enhance its competitiveness and reduce capital volatility of earnings - g
Slide 28: Nufarm – Grow a better tomorrow
BA Nufarm Grow a better tomorrow
Slide 29: Supplementary information
2019 Interim Results Supplementary information
Slide 30: Constant currency results
Constant currency results (A$ millions) HY19 HY19 HY18 Constant Reported Constant Reported currency currency currency ¹ currency % Revenue 1576.1 1592.4 1460.1 9.1% Underlying SG&A expenses 308.5 309.8 289.9 6.9% excluding depn & amortisation ² Underlying EBITDA ² 120.9 120.5 123.2 (2.2%) Translatio
Slide 31: Non IFRS information reconciliation
Non IFRS information reconciliation 6 months ended 31 January 2019 6 months ended 31 January 2018 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,576,108 - 1,576,108 1,460,130 - 1,460,130 Cost of sales (1,153,099) - (1,153,099) (1,047,905) - (1
Slide 32: Non IFRS information reconciliation
Non IFRS information reconciliation Six months ended 31 January 2019 2018 Underlying NPATA $000 $000 Underlying EBIT 38,924 74,962 Material items impacting operating profit 2,093 50 Operating profit 36,831 75,012 Underlying EBIT 38,924 74,962 add Depreciation and amortisation excluding material item
Slide 33: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items Underlying EBIT Earnings before net finance costs, taxation and material items Underlying EBITDA Earnings before net finance co
Slide 34: Material items
Material items (A$ millions) NPAT reconciliation HY19 HY18 Material items relate to: Underlying NPAT (11.5) 10.7 • Legal costs associated with the enforcement of the Material items omega-3 trademark and patent matters for $2.1m Asset rationalization and • The prior year material items largely relate
Slide 35: Thank you
Thank you