Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Investor Day (March 2021)
55 slides from Graincorp Limited Class A's investor day presentation, Mar 24, 2021
Slide 1: GrainCorp Limited Investor Day
A shared passion. GrainCorp Limited Investor Day 24 March 2021
Slide 2: Disclaimer
WORK IN PROGRESS DRAFT 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.
Slide 3: Our team
WORK IN PROGRESS DRAFT Our team EXECUTIVE LEADERSHIP TEAM AND PRESENTERS Robert Spurway Ian Morrison Klaus Pamminger Jesse Scott Managing Director & CEO Chief Financial Officer Chief Operating Officer Chief Innovation and Growth Officer Stephanie Belton Cate Hathaway Sean Barker Don Campbell Group G
Slide 4: Agenda
WORK IN PROGRESS DRAFT Agenda 9.00am Strategic overview Robert Spurway 9.25am Capital management Ian Morrison 9.40am Q&A and break Klaus Pamminger Panel: Strengthening Sean Barker 10.15am the core Don Campbell Brad Glass 10.50am Q&A and break Jesse Scott 11.25am Growth opportunities Peter Johnston 1
Slide 5: Safety and COVID directions
WORK IN PROGRESS DRAFT Safety and COVID directions EVACUATION PLAN COVID In the event of an emergency situation requiring the Guests are urged to avoid entering the hotel if feeling hotel to be evacuated, attendees will be alerted by: unwell Guests are required to wear face masks when in – An
Slide 6: Our story
WORK IN PROGRESS DRAFT Our story 6
Slide 7: Strategic overview
Strategic overview Robert Spurway, Managing Director & CEO
Slide 8: GrainCorp at a glance
WORK IN PROGRESS DRAFT GrainCorp at a glance High quality strategic infrastructure assets servicing customers worldwide International: GrainsConnect Canada JV: Global network of offices, originating grain, State-of-the-art grain supply chain connecting pulses and oilseeds from different regions and
Slide 9: Year of transformation provides strong platform for growth
WORK IN PROGRESS DRAFT Year of transformation provides strong platform for growth Business transformation – demerger, sale of ABLT1 Crop Production Contract working effectively, supporting cash flows New strategy developed Handling one of the largest ECA crops on record in FY21 Enhanced focus on ESG
Slide 10: Delivering on commitments
WORK IN PROGRESS DRAFT Delivering on commitments Majority of operating initiatives delivered - supporting ‘through-the-cycle’ earnings Benefit Initiative Delivered p.a. ($m) Improvements in grain stocks management 10 Agribusiness cost reduction initiatives 15 Agribusiness Variable rail contracts
Slide 11: Strategic priorities to deliver shareholder value
WORK IN PROGRESS DRAFT Strategic priorities to deliver shareholder value VISION Lead sustainable and innovative agriculture through another century of growth PURPOSE Proudly connect with customers and rural communities to deliver value through innovation and expertise STRATEGIC Strengthen the core T
Slide 12: Sustainability at the centre of our vision and strategy
WORK IN PROGRESS DRAFT Sustainability at the centre of our vision and strategy Stand-alone Sustainability Report continues to evolve in 2021: Conducting stakeholder engagement Assessing relevant reporting frameworks Environment Communities Leader in recycling of used cooking oil Silo art mov
Slide 13: ECA grain production stable and growing on a 10-year view
WORK IN PROGRESS DRAFT ECA grain production stable and growing on a 10-year view ECA WINTER CROP PRODUCTION AND 10-YEAR ROLLING AVERAGE (KT)1 30,000 Grain production increasing over time, with 25,000 enhanced farm management practices, new seed varieties and technology 20,000 Low volatility in 1
Slide 14: Strengthening the core
WORK IN PROGRESS DRAFT Strengthening the core Additional operating initiatives to boost sustainable earnings Increasing Reducing EBITDA asset utilisation complexity uplift target Expansion of bulk materials at Revised International operating $25m GrainCorp ports (e.g. cement, model: fertiliser)
Slide 15: Confidence in 'through-the-cycle' earnings
WORK IN PROGRESS DRAFT Confidence in ‘through-the-cycle’ earnings Reduction in volatility and sustained increase to earnings supports ‘through-the-cycle’ EBITDA THROUGH-THE-CYCLE EBITDA1 ($M) ‘Through-the-cycle’ 25 240 assumptions 15 200 ‘Through-the-cycle’ represents a year with average grain metri
Slide 16: Conclusion
WORK IN PROGRESS DRAFT Conclusion Customer focused agribusiness with leading assets and capabilities Year of transformation provides strong platform for growth Delivering on operating commitments Refreshed vision, purpose and strategy Confidence in ‘through-the-cycle’ earnings of $200m; rising to $2
Slide 17: Capital management
Capital management Ian Morrison, Chief Financial Officer
Slide 18: Capital management framework
WORK IN PROGRESS DRAFT Capital management framework Conservative capital structure and disciplined investment approach CAPITAL MANAGEMENT FRAMEWORK Service debt obligations Surplus cash flow Sustaining capital Dividends - Capital investment in - Target minimal core debt expenditure Payout ratio = gr
Slide 19: Core debt vs net debt profile
WORK IN PROGRESS DRAFT Core debt vs net debt profile Conservative balance sheet provides solid platform for growth DEBT AND LIQUIDITY PROFILE 30 Sep 31 Mar $m 2020 2020 Minimal core debt at 30 Sep 2020 - $37m Term debt 150 150 Core debt = net debt less commodity inventory Inventory and working c
Slide 20: Creating value from commodity inventory
WORK IN PROGRESS DRAFT Creating value from commodity inventory TYPICAL SEASONAL MOVEMENT OF COMMODITY INVENTORY SHORT-TERM IMPACT OF EXPORT SHIPMENTS ON WORKING NET DEBT/CORE DEBT (GRAPHICAL REPRESENTATION ONLY) CAPITAL AND CORE DEBT Grain purchased using commodity inventory facility Commodity inven
Slide 21: Disciplined capital expenditure program
WORK IN PROGRESS DRAFT Disciplined capital expenditure program Major capital investment program completed in FY18; operating at sustaining capex levels CAPEX – CONTINUING OPERATIONS ($m)1,2 DEPRECIATION & AMORTISATION (D&A) – CONTINUING OPERATIONS ($m)2 132 136 28 91 85 84 Target sustaining 68 44 ca
Slide 22: Focus on capital efficiency to drive shareholder value
WORK IN PROGRESS DRAFT Focus on capital efficiency to drive shareholder value Opportunities to generate cash through sale of non-operational sites Opportunities to monetise non-operational sites Primary focus on sales of: – country sites no longer part of core ECA network; and – former Foods site in
Slide 23: Crop Production Contract smooths cash flow through the cycle
WORK IN PROGRESS DRAFT Crop Production Contract smooths cash flow through the cycle TOTAL ECA WINTER CROP PRODUCTION AND 10-YEAR CROP PRODUCTION CONTRACT – PRODUCTION PAYMENT PROFILE1 ROLLING AVERAGE (KT)2 100 30,000 Receipt/(payment) $million 80 60 25,000 40 20 20,000 0 15,000 -20 -40 10,000 -60 5,
Slide 24: Capital management recap
WORK IN PROGRESS DRAFT Capital management recap Minimal core debt with flexibility of UMG holding Disciplined approach to capital expenditure Targeting $50m cash generation from sale of non- operational sites over FY21-FY23 10-year CPC reduces volatility, supporting more consistent cash flow and ear
Slide 25: GrainCorp.
2 GrainCorp.
Slide 26: Strengthening the core
Strengthening the core Klaus Pamminger, Chief Operating Officer Sean Barker, GM Domestic Commercial Don Campbell, GM International Brad Glass, GM Oils Commercial
Slide 27: Integrated Agribusiness and Processing network
WORK IN PROGRESS DRAFT Integrated Agribusiness and Processing network Leading grain bulk handler in ECA and edible oil processor/crusher in ANZ • Leading bulk grain handling business in ECA: • ~145 country receival sites (20Mt storage) • 7 bulk port facilities • supply chain network difficult to rep
Slide 28: Understanding the intrinsic value of grain
WORK IN PROGRESS DRAFT Understanding the intrinsic value of grain ECA Multiple Varying harvest Ukraine commodities periods: 1-3 Canada and grades month windows Grower Location Quality Time ECA Canada management and supply Integrated trading, risk Maximising chain asset utilisation and margins Multip
Slide 29: GrainCorp strategy responds to macro trends
WORK IN PROGRESS DRAFT GrainCorp strategy responds to macro trends GLOBAL GRAIN & OILSEED PRODUCTION 1,2 1,200 Population (billion) 7.8b International Barley, Canola & Sorghum (mmt) 6.9b Wheat (mmt) 6.1b 5.3b • Growing consumption of protein and feed grains 800 4.4b 3.7b 3.0b 400 • Growth of Black S
Slide 30: GrainCorp strategy responds to macro trends
WORK IN PROGRESS DRAFT GrainCorp strategy responds to macro trends ECA grains Oils / Foods processing • Rising demand for healthier oils • Improving agricultural practices • Growing demand for products for use in bio-fuels • Increasing sophistication of growers • Increasing consumption of proteins •
Slide 31: Panel question 1: How is GrainCorp evolving to meet industry trends?
WORK IN PROGRESS DRAFT Panel question 1 How is GrainCorp evolving to meet industry trends? 31
Slide 32: Strategic international footprint for customer relevance
WORK IN PROGRESS DRAFT Strategic international footprint for customer relevance Europe and Ukraine exports 85Mt Canada exports 44Mt Middle East imports Asia 76Mt imports 180Mt 32Mt Marketing offices Australia exports GNC supply chain operations Net export markets Net import markets GrainCorp’s origi
Slide 33: Panel question 1: evolving to meet industry trends
WORK IN PROGRESS DRAFT Panel question 1: evolving to meet industry trends • Diversifying origination International • International footprint for customer relevance • Expanding and diversifying global customer base • Integrated business model, efficient end-to-end value chain ECA grains • Simplifying
Slide 34: Panel question 2: How does GrainCorp generate value from its network?
WORK IN PROGRESS DRAFT Panel question 2 How does GrainCorp generate value from its network of infrastructure assets? 34
Slide 35: Canola lifecycle
WORK IN PROGRESS DRAFT Canola lifecycle Managing the full lifecycle of fresh oil from farm to plate, through to renewable energy 35
Slide 36: Panel question 2: maximising value chain
WORK IN PROGRESS DRAFT Panel question 2: maximising value chain • ECA network operates efficiently for bulk volumes ECA grains • Integrated supply chain provides GNC with greater optionality • Network efficiencies • Asset-light approach for International business International • Asset ownership in s
Slide 37: Panel question 3: initiatives to improve ROIC
WORK IN PROGRESS DRAFT Panel question 3 What initiatives are in place to improve GrainCorp’s Return on Invested Capital (ROIC)? 37
Slide 38: Panel question 3: operational initiatives to improve ROIC
WORK IN PROGRESS DRAFT Panel question 3: operational initiatives to improve ROIC • Expansion of bulk materials (non-grain) portfolio to increase port utilisation ECA grains • Reduce business complexity • Leverage technology to drive efficiencies • Deliver on GrainsConnect Canada investment Internati
Slide 39: GrainCorp
© GrainCorp
Slide 40: Additional growth and innovation
Additional growth and innovation Jesse Scott, Chief Innovation & Growth Officer Peter Johnston, Product Manager CropConnect
Slide 41: Strategic priorities to deliver shareholder value
WORK IN PROGRESS DRAFT Strategic priorities to deliver shareholder value VISION Lead sustainable and innovative agriculture through another century of growth PURPOSE Proudly connect with customers and rural communities to deliver value through innovation and expertise STRATEGIC Strengthen the core T
Slide 42: Alternative Protein: Market
WORK IN PROGRESS DRAFT Alternative Protein: Market Fast growing, profitable and supported by increasing consumer demand 1 in 3 Australians are …and 6 in 10 have tried Developments consciously limiting their or are interested in meat consumption… plant-based alternatives Product development – signifi
Slide 43: Alternative Protein: Our right to win and existing plays
WORK IN PROGRESS DRAFT Alternative Protein: Our right to win and existing plays Strong track record in food science and innovation, with access to key ingredients Our right to win: Existing plays Strong track record of food science and innovation Canola R&D project Ability to leverage assets and
Slide 44: Animal Nutrition: Market
WORK IN PROGRESS DRAFT Animal Nutrition: Market Growing market, with a shift to higher value products Australian farm animal feed production Developments Revenue Industry value add1 Advanced nutrition – focus on livestock $2.2bn (2020) $334m (2020) optimisation and improving feed conversion 1.1% gro
Slide 45: Animal Nutrition: Our right to win and existing plays
WORK IN PROGRESS DRAFT Animal Nutrition: Our right to win and existing plays Access to key inputs, growers and supply chain infrastructure Our right to win: Existing plays • Leading handler of key inputs for animal feeds across East Coast Australia (ECA) Investment in FutureFeed Supporting commercia
Slide 46: Digital and AgTech: Market
WORK IN PROGRESS DRAFT Digital and AgTech: Market Australian farmers are leading global innovation Global Digital and AgTech Market Market fundamentals US$22b Strong demand - production in Australia is (2025) volatile and asset heavy, driving demand for US$14b (2020) innovation at scale Adoption lea
Slide 47: Digital and AgTech: Our right to win and existing plays
WORK IN PROGRESS DRAFT Digital and AgTech: Our right to win and existing plays GrainCorp is an industry leader in digital, with extensive grower connections Our right to win: Existing plays • Depth of commodity and supply chain data and knowledge in Australia (100 years) Pilot initiatives • Detailed
Slide 48: Q&A
A shared passion. Q&A
Slide 49: Conclusion and wrap-up
WORK IN PROGRESS DRAFT Conclusion and wrap-up Customer focused agribusiness with leading assets and capabilities Year of transformation provides strong platform for growth Delivering on operating commitments Refreshed vision, purpose and strategy Confidence in ‘through-the-cycle’ earnings of $200m;
Slide 50: Conclusion of Investor Day
A shared passion. Conclusion of Investor Day
Slide 51: Appendix
Appendix
Slide 52: 'Normalised' ECA grain flows
WORK IN PROGRESS DRAFT ‘Normalised’ ECA grain flows GrainCorp’s market share of grain volumes increases as the ECA crop size gets larger. The typical sequencing of grain flow in ECA for a normalised crop production year: Production: 10-year average of ECA total winter crop and sorghum production ~
Slide 53: ECA tonnes handled
WORK IN PROGRESS DRAFT ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin1 mmt FY16 FY17 FY18 FY19 FY20 FY21e2 ABARES – Total ECA winter + sorghum production 19.1 29.2 18.0 9.7 11.8 31.43 Carry-in 1.6 1.7 3.3 2.3 1.5 0.7 Receivals 8.8 15.0 6.8 3.1 4.2 15.5 - 16.
Slide 54: FY16-FY20 proforma earnings
WORK IN PROGRESS DRAFT FY16-FY20 proforma earnings Proforma EBITDA includes the following adjustments, in order to provide a better comparative with prior years, in line with Demerger Scheme Booklet: Removal of earnings from Australian Bulk Liquid Terminals (ABLT) and PROFORMA UNDERLYING EBITDA BY
Slide 55: A shared passion.
A shared passion.