Nufarm Limited · ASX:NUF
Nufarm — H1 FY2017 Earnings Presentation
34 slides from Nufarm's earnings presentation, Mar 22, 2017
Slide 1: Nufarm Interim Results
Nufarm Interim Results 6 months to January 31, 2017 March 22, 2017
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: 2017 Interim Results Overview
2017 Interim Results Overview Greg Hunt Managing Director / CEO 3
Slide 4: Strong first half results reflect focus on growth and business improvement
Strong first half results reflect focus on growth and business improvement • These results continue to demonstrate that the changes we have made are helping build a platform for continued profitable growth − Revenue growth, market share gains and margin expansion – all achieved in a highly competiti
Slide 5: Headline results
Headline results (A$ millions) • Revenue up 15% on last year 1H17 1H16 Change • Underlying EBIT growth 19% Revenue 1,360 1,188 ▲ 15% • Underlying NPAT growth 67%, Underlying EBIT 85.0 71.2 ▲ 19% with no significant material items Underlying NPAT 19.8 11.9 ▲ 67% • Continued good progress on Reported
Slide 6: Financials
2017 Interim Results Financials Paul Binfield Chief Financial Officer 6
Slide 7: 2017 Interim results
2017 Interim results Revenue growth translates to profit growth in first half • Strong revenue growth, together with further margin expansion driven by the performance improvement program • Underlying EBIT growth of 19% • Strong growth in NPAT, with no significant material items in the half • Profit
Slide 8: Operating expenses remain well controlled
Operating expenses remain well controlled Control of operating expenses remains an important management objective (A$ millions) Half year ended 31 January • SG&A spend largely in line with 2017 2016 revenue growth Underlying sales, marketing & distribution expenses(1) 201.7 166.0 • Further initiativ
Slide 9: Net financing expense
Net financing expense Higher net interest expense at half, but full year tracking to guidance (A$ millions) Half year ended 31 January • Net interest expense increase due to 2017 2016 Interest income (4.8) (8.1) higher debt levels in Brazil Interest expense 48.3 43.8 • Net interest expense expected
Slide 10: Active balance sheet management delivering results
Active balance sheet management delivering results ANWC/Sales down to 37.1% ANWC / Sales(3) • Average NWC lower by $39m, with primary drivers being better management of inventories and payables 49% • Outstanding ANWC/sales result at the half, despite strong revenue growth 47% • Investment in improve
Slide 11: Segment results
2017 Interim Results Segment results Greg Hunt Managing Director / CEO 11
Slide 12: Major segments
Major segments Product Geographic North America 21% Insecticide Australia/ 14% New Zealand Herbicide 23% 64% 2017 Fungicide 2017 $1,360m 9% $1,360m Asia Latin Other* 7% America 9% Seed Tech 34% Seed Tech 4% 4% Europe 11% *Other includes equipment; adjuvants; PGR's; industrial 12
Slide 13: Regional review: Australia/New Zealand
Regional review Australia/New Zealand Sales EBIT A$(m) HY17 HY16 % 350 14.6 16 13.3 14 Sales 306.3 231.6 32% 300 11.2 12 Underlying EBIT 13.3 14.6 -9% 250 10 8 Underlying EBITDA 19.6 22.1 -11% 200 6 Underlying EBITDA 6.4% 9.5% 4 150 Margin 2 238 232 306 100 0 HY15A HY16A HY17A Nufarm drivers Market
Slide 14: Regional review: North America
Regional review North America Sales EBIT A$(m) HY17 HY16 % 350 17.7 20 Sales 291.1 251.0 16% 300 0.5 7.4 15 Underlying EBIT 17.7 7.4 138% 250 10 Underlying EBITDA 27.1 15.5 75% 200 5 150 Underlying EBITDA 9.3% 6.2% 251 291 Margin 228 100 0 HY15A HY16A HY17A Nufarm drivers Market drivers • Revenue gr
Slide 15: Regional review: Latin America
Regional review Latin America Sales EBIT 480 55.8 70 460 68 65.0 66 A$(m) HY17 HY16 % 440 420 57.7 64 Sales 466.9 415.0 13% 62 400 Underlying EBIT 55.8 57.7 -3% 60 380 58 360 Underlying EBITDA 58.9 59.1 - 56 340 54 Underlying EBITDA 12.6% 14.2% 320 422 415 467 52 Margin 300 50 HY15A HY16A HY17A Nufa
Slide 16: Regional review: Europe
Regional review Europe Sales EBIT 190 8.8 10 180 7.1 9 3.2 8 A$(m) HY17 HY16 % 170 7 160 Sales 150.9 176.7 -15% 6 150 Underlying EBIT 8.8 7.1 24% 5 140 4 130 Underlying EBITDA 26.8 25.9 3% 3 120 2 Underlying EBITDA 17.8% 14.7% 110 169 177 151 1 Margin 100 0 HY15A HY16A HY17A Nufarm drivers Market dr
Slide 17: Regional review: Asia
Regional review Asia Sales EBIT 100 14.5 16 A$(m) HY17 HY16 % 90 8.6 14 Sales 94.3 71.6 32% 80 9.4 12 70 60 10 Underlying EBIT 14.5 9.4 55% 50 8 40 6 Underlying EBITDA 16.5 11.3 46% 30 4 20 Underlying EBITDA 17.5% 15.8% 10 83 72 94 2 Margin - 0 HY15A HY16A HY17A Nufarm drivers Market drivers • Indon
Slide 18: Seed Technologies
2017 Interim Results Seed Technologies Brent Zacharias Group executive - Nuseed 18
Slide 19: Regional review: Seed technologies
Regional review Seed technologies Sales EBIT -0.2 60 0 A$(m) HY17 HY16 % 50 -1 Sales 50.6 41.7 21% -5.2 -4.4 40 -2 Underlying EBIT -0.2 -4.4 30 -3 Underlying EBITDA 4.5 -1.3 20 -4 10 -5 Underlying EBITDA 8.9% -3.1% 43 42 51 Margin - -6 HY15A HY16A HY17A Nufarm drivers Market drivers • Stronger end p
Slide 20: Omega-3 canola opportunity
Omega-3 canola opportunity Global omega-3 market Omega-3 oils, particularly the long-chain EPA and DHA types typically found in oily fish, are important for human and fish health. Demand for Projected value: 2023 these oils is increasing year-on-year, while existing supply from fish oil is limited.
Slide 21: Strategy update
2017 Interim Results Strategy update Greg Hunt Managing Director / CEO 21
Slide 22: Focus on core geographies & crops
Focus on core geographies & crops PASTURE, SOYBEAN TREES, NUTS, CORN CEREAL TURF & VINES & 22 ORNAMENTALS VEGETABLES
Slide 23: Building a Better Nufarm
Building a Better Nufarm Expect net benefits from performance improvement program of approximately $20m in FY17. Will deliver at least $116m by FY18 Target of 16% return on funds employed by end of FY18 CUSTOMER PORTFOLIO SUPPLY CHAIN ONE NUFARM EXCELLENCE EXCELLENCE EXCELLENCE ENABLERS The simple a
Slide 24: Generating solid growth and driving greater efficiencies
Generating solid growth and driving greater efficiencies • Our focus on markets and segments where we can be most successful is delivering impressive growth in a competitive global market • Better execution on product development and well resourced new product launches are helping drive margin expan
Slide 25: Outlook
2017 Interim Results Outlook Greg Hunt Managing Director / CEO 25
Slide 26: Group outlook
Group outlook • Market conditions to remain competitive with relatively low soft commodity prices prevailing due to high inventories and strong global crop harvests • Positive second half performances expected in Australia, North America and Europe • Latin America impacted by negative market conditi
Slide 27: Supplementary information
Supplementary information 27
Slide 28: Constant currency
Constant currency (A$ millions) Half year ended 31 January • Impact of FX on revenue and underlying Constant 2017 Reported 2017 Constant 2016 Reported currency EBIT currency currency(1) currency % Revenue 1,360.1 1,387.8 1,187.6 16.9% – Appreciating BRL offset by stronger AUD against the USD, Euro a
Slide 29: No significant material items in first half result
No significant material items in first half result • Material items in 1H17 relate to additional proceeds from the sale of the Excel equity investment, and costs associated with the disposal of closed manufacturing properties NPAT reconciliation (A$ millions) Half year ended 31 January 2017 2016 Und
Slide 30: Cash flow
Cash flow • Net working capital increase +$237m in line with prior year (1H16: +$230m) • Current year material item cash inflow $39m, including asset sale proceeds $49m • Expect PPE capex of approximately $40m • Intangible asset capex to broadly in line with FY16, despite increased IT and Omega 3 in
Slide 31: 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
Slide 32: Non IFRS information reconciliation
Non IFRS information reconciliation 6 months ended 31 Jan 2017 6 months ended 31 Jan 2016 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,360,070 - 1,360,070 1,187,605 - 1,187,605 Cost of sales (964,773) - (964,773) (852,405) 25,653 (878,058) G
Slide 33: Non IFRS information reconciliation
Non IFRS information reconciliation 2017 2016 Six months ended 31 January $000 $000 Underlying EBIT 85,000 71,229 Material items impacting operating profit 264 (106,057) Operating profit 85,264 (34,828) Underlying EBIT 85,000 71,229 add Depreciation and amortisation excluding material items 43,696 4
Slide 34: Grow a better tomorrow.
Grow a better tomorrow. er Nufarm — Growa better tomorrow.