Slide 1: Cover letter to ASX
2 December 2013 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 Dear Sir / Madam, GrainCorp Limited (ASX:GNC) GrainCorp The attached presentation has been prepared for use in investor meetings over the coming weeks. Yours sincerely, BETTY IVANOFF Group General C
Slide 2: Investor Presentation December 2013
Investor Presentation December 2013 For personal use only
Slide 3: Disclaimer
Disclaimer For personal use only This presentation includes both information that is historical in character and information that consists of forward looking statements. statements Forward looking statements are not based on historical facts, but are based on current expectations of future results o
Slide 4: Contents
Contents For personal use only •G GrainCorp a Co p OOverview e e • FY13 Results Highlights • Balance B l Sh Sheet and d Capex C • FY14 Outlook • Earnings Growth Initiatives • Appendix 3
Slide 5: GrainCorp Overview
For personal use only GrainCorp p Overview
Slide 6: GrainCorp is Australia's leading agribusiness
GrainCorp is Australia’s leading agribusiness For personal use only Integrated I dBBusiness i Model M d l with i h an international i i l “end-to-end” “ d d” grain i supply l chain connecting consumers to growers Unique U i portfolio tf li off local l l storage t and d logistics l i ti assets
Slide 7: GrainCorp's corporate objectives
GrainCorp’s corporate objectives For personal use only 1 2 3 Improving Managing Delivering returns variability growth R t Return on Equity E it % EBITDA by segment(1) EBITDA - $M Annual ROE % 18% Rolling 3 yr avg ROE % Fiscal 1H Fiscal 2H 15% 12% 179 168 9% 177 6% 100 79 235 227 3% 173 112 82 0% FY0
Slide 8: Strength of our integrated business model
Strength of our integrated business model For personal use only Global grains traded(1) • Wheat, barley, canola → representing Other 35% of global traded grains and 8% Wheat 30% oilseeds il d Three core Corn grains • Focus on “drier climate” grains where 23% Barley we have a comparative advantage 3%
Slide 9: Integrated business model delivering strong financial and strategic performance
Integrated business model delivering strong financial and For personal use only strategic performance Retrospective proforma EBITDA ($M)(1) and country receivals (mmt) FY13 includes Post 2008 single ~$12M from wheat desk earnings removal i iti ti initiatives. 477 421 387 395 390 224 Storage & 172 Lo
Slide 10: Portfolio of grain storage and logistics assets and capabilities
Portfolio of grain storage and logistics assets and capabilities For personal use only Our eastern Australia grain network • 280 sites with ~21mmt of storage capacity • 7 of 11 bulk ports with ~16mmt elevation capacity • 2 packing facilities handling containerised grain exports • Up to 20 grain trai
Slide 11: Global portfolio of valuable grain processing and complementary facilities
Global portfolio of valuable grain processing and complementary For personal use only facilities • Produce ~35% of Australia’s malt • Produce ~35% of Australia's flour(1) • Produce ~40% of Australia’s canola oil and ~40% of Australasia’s refined edible oil • Import and export ~40% of Australasia’s e
Slide 12: Global exposure to attractive grain industry fundamentals
Global exposure to attractive grain industry fundamentals For personal use only Global grain demand Global malt demand Global canola oil demand • Global grain trade has • Global Gl b l malt l export trade d • Australian A t li canola l oil il doubled in the past 40 has doubled in the past 40 exports
Slide 13: Origination advantages to supply global demand growth markets
Origination advantages to supply global demand growth markets For personal use only Wheat Imports to 2050(1) Demand growth in proximate regions Current wheat imports (mmt) Wheat import growth to 2050 (mmt) • Australia has freight advantages to import- 44 Wheat import growth to 2050 (%) dependent and
Slide 14: Normalised grain receivals and exports
Normalised grain receivals and exports For personal use only Eastern Australia Grain Yield(1) (mt/Ha) GrainCorp receivals 30 3.0 25 year moving average 1.8mt/Ha Eastern Australia production 2.5 ~18.0mmt 2.0 x 1.5 GrainCorp receival share ~55-60% Yield 1.0 ~1.8mt/Ha = Normalised receivals 05 0.5 10.0
Slide 15: FY13 Results Highlights
FY13 Results Highlights g g For personal use only
Slide 16: Strong earnings due to strong grain volumes and diversification
Strong earnings due to strong grain volumes and diversification For personal use only • Earnings of $395M EBITDA(1) (down 4%) and $175M NPAT(2) (down 15%) from strong grain volumes and successful diversification. • Statutory NPAT of $141M after significant items(3). • Storage & Logistics – strong pe
Slide 17: Earnings profile delivering on corporate objectives
Earnings profile delivering on corporate objectives For personal use only EBITDA(1) NPAT(1) Fiscal 1H Fiscal 2H Fiscal 1H Fiscal 2H 500 250 400 200 179 168 83 300 150 177 66 84 200 100 100 79 235 227 28 122 100 173 50 31 109 88 112 53 82 32 0 $M 0 $M FY09 FY10 FY11 FY12 FY13 FY09 FY10 FY11 FY12 FY13
Slide 18: Diversified earnings supporting higher ordinary dividend
Diversified earnings supporting higher ordinary dividend For personal use only Dividends per share • FY13 Final Dividend: Fully franked final dividend Ordinary DPS Special DPS of $0.20 per share 80 • FY13 Final Dividend Dates: 60 • Ex-dividend date: 26 November 2013 • Record date: 2 December 2013 30
Slide 19: Diversified business and more 'normal' receivals
Diversified business and more ‘normal’ normal receivals For personal use only FY12 to FY13 Earnings Bridge(1) - $M 2 1 71 28 25 Benefit of 8 75 strategic acquisitions i iti 9 205 16 175 Lower receivals, Oils inclusion Higher debt Lower Sustained Strong More significant performance, and recent post O
Slide 20: Portfolio of grain businesses capture value along the grain chain
Portfolio of grain businesses capture value along the grain chain For personal use only Revenue EBITDA(1) $M FY13 FY12 FY13 FY12 Storage & Logistics 655 805 179 250 Marketing(2) 2,169 1,891 54 63 Malt(3) 977 945 101 117 Oils(4) 962 - 75 - Allied Mills(5) - - 12 10 Corporate Costs - - (26) (26) Elimi
Slide 21: Safety & Health, Environment & People
Safety & Health, Environment & People For personal use only Safety y & Health Environment People p • Achieved a 10.2% reduction in • Reduced hexane emissions in • Sustained engagement across lost time injury frequency vent air from the Numurkah the business at 60% rate(1), moving from 11 11.9 9 to s
Slide 22: Balance Sheet and Capex
Balance Sheet and Capex p For personal use only
Slide 23: Strong and flexible balance sheet
Strong and flexible balance sheet For personal use only Core Debt – $M • FY13 Core Debt(1) of $411M Schill Malz acquisition Creation of • Flexible balance sheet → FY13 Core GrainCorp Oils Gearing of 19% (in line with Short-term 9 79 71 debt less Marketing strategic target of <25%), debt and Oils 132
Slide 24: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities For personal use only Marketing and Oilseed funding Commodities inventory(1) – $M strategy Commodities inventory Short-term debt • Marketing’s grain trading activities and 572 577 Oil’s oilseed and tallow positions are 528 519
Slide 25: Capex supporting safety, network efficiencies and strategic initiatives
Capex supporting safety, network efficiencies and strategic initiatives For personal use only Capex(1) – $M Depreciation & Amortisation – $M 141 119 Stay-in-business Depreciation 122 Growth 24 112 Amortisation 106 91 71 78 18 63 72 53 63 17 16 42 2 95 32 73 3 70 56 61 53 59 49 40 29 FY09 FY10 FY11 F
Slide 26: FY14 Outlook
For personal use only FY14 Outlook
Slide 27: Grains outlook – lower volumes, lower margins
Grains outlook – lower volumes, lower margins For personal use only Market fundamentals GrainCorp FY14 outlook • Most recent Eastern Australian cropp pproduction • Lower than average g carry-in y of 2.3mmt estimate of 17.4mmt(1) (18.3mmt(2) in prior (4.3mmt in FY13; 6.0mmt FY12) year) • Given lower
Slide 28: Processing outlook – well placed through strong competitive position
Processing outlook – well placed through strong competitive position For personal use only Market fundamentals GrainCorp FY14 outlook • Global barley crop production ~141mmt(1) • Forward sales of 1 1.1mmt 1mmt YTD on track (compared to 130mmt in 2013) and good • Sales volumes expected to be consiste
Slide 29: Earnings Growth Initiatives
Earnings g Growth Initiatives For personal use only
Slide 30: Earnings growth initiatives targeting ~$110M EBITDA by FY16
Earnings growth initiatives targeting ~$110M EBITDA by FY16 For personal use only Gamechangers Asset Optimisation Port Flexibility Oils Synergies & Storage & Logistics 3 Year Port Protocol Optimisation Ports & Terminals i l Marketing Ports Code of Conduct Growth & Efficiencies Continuous Malt Improv
Slide 31: Earnings growth initiatives and capex requirements
Earnings growth initiatives and capex requirements For personal use only Incremental underlying EBITDA by FY16 and Capex from FY13 to FY16 ($M) 20 110 20 Oils 25 Malt 14 45 Marketing(2) 12 20 Storage & Logistics Storage & Marketing Malt Total Oils Port & Country Port Cumulative Logistics Game- optim
Slide 32: Gamechangers
Gamechangers For personal use only Storage & Logistics Marketing Malt Improved customer service • Global trading and risk • Port of Vancouver project • Improved country site efficiency management platform completed with new through 24 mobile grain successfully deployed in speciality capacity on line
Slide 33: Asset Optimisation & Port Flexibility
Asset Optimisation & Port Flexibility For personal use only Oils Ports & Country Port Flexibility Capture Synergies Bulk liquid terminals 3 Year Port Protocol • Achieved FY13 synergies target of opportunities • New port protocol for bulk export $4.0 million • Capacity expansion at Fremantle grain ag
Slide 34: Appendix
For personal use only pp Appendix
Slide 35: Storage & Logistics – volumes
Storage & Logistics – volumes For personal use only Country Receivals and Carry-in (mmt) Exports Handled(1) (mmt) Carry-in Country receivals Exports Non-grain exports 1.8 12 2 12.2 15 1.5 19 1.9 14.9 10.4 1.3 9.6 7.4 10.6 1.4 8.1 8.3 6.0 5.2 2.9 4.3 3.5 2.2 2.6 2009 2010 2011 2012 2013 2009 2010 201
Slide 36: Storage & Logistics – supply chain
Storage & Logistics – supply chain For personal use only Country Logistics Ports Storage fee per Storage fee week per month Road fee Nomination fee Outloading fee Receival fee Outloading In-take f fee Road Growers Upcountry fee Export Ports markets silos Rail Outloading Rail fee fee Growers / Domest
Slide 37: GrainCorp Malt earnings
GrainCorp Malt earnings For personal use only • Malt’s earnings are generated along the malt supply chain • Procurement → access, pricing and position management Barley • Barley quality → varietal management and yield procurement • Barley handling → elevation, storage and drying services Processing
Slide 38: GrainCorp Oils key drivers
GrainCorp Oils key drivers For personal use only Crushing Refining • Capacity utilisation • Capacity utilisation • Gross margin and commodity • Gross margin and commodity management management • Crush C h process costt • Refining R fi i process costt • Product mix Combined sales volumes (crude oil,
Slide 39: Storage & Logistics – strong earnings with significant exports and carry-in
Storage & Logistics – strong earnings with significant exports and carry-in For personal use only • Strong earnings from significant grain export $M FY13 FY12 program and higher than average carry carry-in: in: Revenue 655 805 • Carry-in: higher than average at 4.3mmt(1) (6.0mmt in prior year) EBITD
Slide 40: Storage & Logistics – throughput
Storage & Logistics – throughput For personal use only Volume driver (mmt) FY13 FY12 Comments Grain carry-in (1-Oct) 4.3 6.0 • Grain stored at start of period • FY13 carry-in above average of 3mmt • Higher FY12 carry-in due to larger FY11 crop Country network receivals 10.4 12.2 • ~55% share of crop
Slide 41: Marketing – sustained performance
Marketing – sustained performance For personal use only • Earnings reflective of 17% lower $M FY13 FY12 eastern Australian grain production Revenue 2,169 1,891 volumes EBITDA 54 63 • 6.1mmt delivered sales(1) Interest expense(2) (17) (22) • 2.0mmt domestic, 4.1mmt export and PBTDA(2) 37 41 internati
Slide 42: Malt – continued high capacity utilisation
Malt – continued high capacity utilisation For personal use only • Sales of 1.28mmt $M FY13 FY12 • Earnings reflective of continued high Revenue 977 945 capacity utilisation above 90% with EBITDA(1) 101 117 g margins in line with expectations p EBIT(1) 62 81 • Effective margin management but lower C
Slide 43: Oils – strong earnings across crushing, refining and terminals
Oils – strong earnings across crushing refining and terminals crushing, For personal use only $M FY13 FY12(1) • Crushing & Refining: consistent sales of 0.55mmt Revenue 962 1,115 • Liquid Terminals: continued high EBITDA 75 63 capacity p y utilisation of ~230K m3 of EBIT 50 42 storage and progress o
Slide 44: Allied Mills – improved earnings and capacity replacement on track
Allied Mills – improved earnings and capacity replacement on track For personal use only $M (60%) JV Share FY13 FY12 • Improved earnings from value add product initiatives (eg frozen bakery EBITDA 27 25 products) Equity profit(1) 12 10 • Completed new Tennyson mill Shareholder loan interest 1.0 1.3