Slide 1: GrainCorp presentation to the 8th Annual Austock Conference
Company announcement For personal use only GrainCorp Limited ABN 60 057 186 035 Date: 10 March, 2011 To: The Manager Announcements Company announcements office PUBLIC ANNOUNCEMENT GRAINCORP PRESENTATION TO THE 8TH ANNUAL AUSTOCK CONFERENCE Michael G. A. Smith Company Secretary GrainCorp Limited Leve
Slide 2: Austock Conference
For personal use only Ms Alison Watkins (Managing Director and Chief Executive Officer) AUSTOCK CONFERENCE 10th March 2011 1
Slide 3: Today's presentation
Today’ss presentation... Today presentation For personal use only • Highlights GrainCorp GrainCorp’ss... - International business model, assets and capabilities - Five Fi strategies t t i to t further f th develop d l and d utilise tili comparative ti advantages - Sustained d focus f on improving sh
Slide 4: Strategy Overview
For personal use only STRATEGY OVERVIEW 3
Slide 5: Sustainable business in a changing market
Sustainable business in a changing market For personal use only Competitive Landscape GrainCorp’ss Position GrainCorp • Removal of single wheat desk • Focus on increasing shareholder monopoly return – managing variability and • Rapid internationalisation of growth Australian grains industry • Expand
Slide 6: Demand side factors benefit Australian grain
Demand side factors benefit Australian grain For personal use only World (1 2% pa) over next 8 years(1) • Forecast to grow 10% (1.2% population • 40% of this in countries(2) where Australia has a grain supply growth freight and quality advantage • Expanding demand outside of traditional markets – no
Slide 7: Positioned to increase market participation
Positioned to increase market participation For personal use only GrainCorp’s business model operates at every stage along the grain chain Storage & Transport Ports Processing Handling Trading (grain ownership along the chain) • 280+ sites serving • Contract 15+ and • 7 bulk export • ~1.1mmt ~1 1mmt
Slide 8: Growing international commercial connections
Growing international commercial connections For personal use only • GrainCorp’s international operations provide a platform for global reach G i Grain G i Processing Grain P i Australia • Storage & Logistics • Barrett Burston • Ports • Allied Mills • Trading North • Canada Malting Co • Canada Malti
Slide 9: Well placed to meet market requirements
Well placed to meet market requirements For personal use only Market opportunities GrainCorp advantage • Increased marketing alternatives • Assets along the value chain for customers – Infrastructure network • Increased consumer requirements q – Access to grain – Reliable supply – ‘End to end’ manag
Slide 10: Five strategies to consolidate and expand
Five strategies to consolidate and expand For personal use only 1. Maintain a strong market presence → Leading provider of grain supply chain services 2. Operate along the grain chain → ‘End to end’ supplier of grain to domestic and international consumers 3. Increase participation in grain processi
Slide 11: Grow as an integrated international agribusiness
Grow as an integrated international agribusiness For personal use only Customer requirements Country C t IInventory t Price P i risk ik Proposition Accumulation storage mgt Transport Ports mgt Open access ong markett Storage & prresence Logistics services 1. Stro The market Conssumers owers place Gr
Slide 12: Operate along the grain chain
Operate along the grain chain For personal use only Trading Solution and Customer Support → Connect growers and consumers → ‘Grain market’ with daily pricing → Risk management → Market knowledge → Technical support Accumulation Transport & Ports → Growers – logistics / delivery → Rail and road manag
Slide 13: Establishing sustainable export relationships
Establishing sustainable export relationships For personal use only Market Share of GrainCorp p Port GrainCorp p FY10 Bulk Wheat Export p Trade 50% Elevations (%) Destination by Volume (%) Removal of bulk Other 40% Africa wheat export Middle monopoly Europe East 30% 20% 10% SE Asia 0% FY04 FY05 FY06
Slide 14: Improved diversification and a focus on ROE
Improved diversification and a focus on ROE For personal use only Diversify earnings Improve Return on Equity • EBITDA from grain processing has • Increase normalised earnings increased to ~50% of total EBITDA • Accretive organic and acquisitive • End E d to t endd supply l chain h i service i growt
Slide 15: FY11 earnings forecast stronger year on year
FY11 earnings forecast stronger year on year For personal use only 320 EBITDA ‐ $M Guidance 280 $ $275‐310M 240 200 160 • Higher earnings reflect 120 record receivals, receivals large export 80 programme and sound malt 40 0 contribution FY05 FY06 FY07 FY08 FY09 FY10 FY11 (f) • Main variables: NPAT ‐
Slide 16: Emerging Macro Issues
For personal use only EMERGING MACRO ISSUES 15
Slide 17: Urgent need for rail infrastructure investment
Urgent need for rail infrastructure investment For personal use only • Rail is most efficient long distance bulk haulage infrastructure → lower costs and carbon emissions • Successive Governments have under‐invested under invested in heavy rail in Eastern Australia → network neglect • Forcing long d
Slide 18: Carbon price will increase costs to growers
Carbon price will increase costs to growers For personal use only • Storing, Storing handling, handling transporting and processing components of the agribusiness supply chain not exempt from proposed carbon price • Rising energy costs will increase grain supply chain costs → make Australian exports
Slide 19: Q&A – Thank you
For personal use only Q&A THANK YOU – 18