Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Investor Day (March 2021)
56 slides from Graincorp Limited Class A's investor day presentation, Mar 24, 2021
Slide 1: ASX cover letter: 2021 Investor Day Presentation
For personal use only 24 March 2021 The Manager, Companies Australian Securities Exchange Companies Announcement Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, GrainCorp Limited – 2021 Investor Day Presentation Please see attached the presentation to be delivered by the Managing Director &
Slide 2: GrainCorp Limited Investor Day
For personal use only A shared passion. GrainCorp Limited Investor Day 24 March 2021
Slide 3: Disclaimer
WORK IN PROGRESS DRAFT Disclaimer For personal use only 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 futu
Slide 4: Our team
WORK IN PROGRESS DRAFT Our team For personal use only 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 Barke
Slide 5: Agenda
WORK IN PROGRESS DRAFT Agenda For personal use only 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 opportun
Slide 6: Safety and COVID directions
WORK IN PROGRESS DRAFT Safety and COVID directions For personal use only 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 fa
Slide 7: Our story
WORK IN PROGRESS DRAFT Our story For personal use only 6
Slide 8: Strategic overview
For personal use only Strategic overview Robert Spurway, Managing Director & CEO
Slide 9: GrainCorp at a glance
WORK IN PROGRESS DRAFT GrainCorp at a glance High quality strategic infrastructure assets servicing customers worldwide For personal use only International: GrainsConnect Canada JV: Global network of offices, originating grain, State-of-the-art grain supply chain connecting pulses and oilseeds from
Slide 10: Year of transformation provides strong platform for growth
WORK IN PROGRESS DRAFT Year of transformation provides strong platform for growth For personal use only 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
Slide 11: Delivering on commitments
WORK IN PROGRESS DRAFT Delivering on commitments Majority of operating initiatives delivered - supporting ‘through-the-cycle’ earnings For personal use only Benefit Initiative Delivered p.a. ($m) Improvements in grain stocks management 10 Agribusiness cost reduction initiatives 15 Agribusiness V
Slide 12: Strategic priorities to deliver shareholder value
WORK IN PROGRESS DRAFT Strategic priorities to deliver shareholder value For personal use only 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
Slide 13: 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: For personal use only Conducting stakeholder engagement Assessing relevant reporting frameworks Environment Communities Leader in recycling of used cook
Slide 14: 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 For personal use only 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
Slide 15: Strengthening the core
WORK IN PROGRESS DRAFT Strengthening the core Additional operating initiatives to boost sustainable earnings For personal use only Increasing Reducing EBITDA asset utilisation complexity uplift target Expansion of bulk materials at Revised International operating $25m GrainCorp ports (e.g. cemen
Slide 16: Confidence in through-the-cycle earnings
WORK IN PROGRESS DRAFT Confidence in ‘through-the-cycle’ earnings Reduction in volatility and sustained increase to For personal use only earnings supports ‘through-the-cycle’ EBITDA THROUGH-THE-CYCLE EBITDA1 ($M) ‘Through-the-cycle’ 25 240 assumptions 15 200 ‘Through-the-cycle’ represents a year wi
Slide 17: Conclusion
WORK IN PROGRESS DRAFT Conclusion For personal use only 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
Slide 18: Capital management
For personal use only Capital management Ian Morrison, Chief Financial Officer
Slide 19: Capital management framework
WORK IN PROGRESS DRAFT Capital management framework Conservative capital structure and disciplined investment approach For personal use only CAPITAL MANAGEMENT FRAMEWORK Service debt obligations Surplus cash flow Sustaining capital Dividends - Capital investment in - Target minimal core debt expendi
Slide 20: 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 For personal use only 30 Sep 31 Mar $m 2020 2020 Minimal core debt at 30 Sep 2020 - $37m Term debt 150 150 Core debt = net debt less commodity inventory I
Slide 21: Creating value from commodity inventory
WORK IN PROGRESS DRAFT Creating value from commodity inventory For personal use only TYPICAL SEASONAL MOVEMENT OF COMMODITY INVENTORY SHORT-TERM IMPACT OF EXPORT SHIPMENTS ON WORKING NET DEBT/CORE DEBT (GRAPHICAL REPRESENTATION ONLY) CAPITAL AND CORE DEBT Grain purchased using commodity inventory fa
Slide 22: Disciplined capital expenditure program
WORK IN PROGRESS DRAFT Disciplined capital expenditure program Major capital investment program completed in FY18; operating at sustaining capex levels For personal use only CAPEX – CONTINUING OPERATIONS ($m)1,2 DEPRECIATION & AMORTISATION (D&A) – CONTINUING OPERATIONS ($m)2 132 136 28 91 85 84 Targ
Slide 23: Focus on capital efficiency to drive shareholder value
WORK IN PROGRESS DRAFT Focus on capital efficiency to drive shareholder value For personal use only 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
Slide 24: 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 For personal use only ROLLING AVERAGE (KT)2 100 30,000 Receipt/(payment) $million 80 60 25,000 40 20 20,000 0 15,000
Slide 25: Capital management recap
WORK IN PROGRESS DRAFT Capital management recap For personal use only 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 consis
Slide 26: Q&A
For personal use only Q&A
Slide 27: Strengthening the core
For personal use only Strengthening the core Klaus Pamminger, Chief Operating Officer Sean Barker, GM Domestic Commercial Don Campbell, GM International Brad Glass, GM Oils Commercial
Slide 28: 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 For personal use only • Leading bulk grain handling business in ECA: • ~145 country receival sites (20Mt storage) • 7 bulk port facilities • supply chain ne
Slide 29: Understanding the intrinsic value of grain
WORK IN PROGRESS DRAFT Understanding the intrinsic value of grain For personal use only 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 utilisat
Slide 30: GrainCorp strategy responds to macro trends
WORK IN PROGRESS DRAFT GrainCorp strategy responds to macro trends For personal use only 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 4
Slide 31: GrainCorp strategy responds to macro trends
WORK IN PROGRESS DRAFT GrainCorp strategy responds to macro trends For personal use only 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 con
Slide 32: Panel question: evolving to meet industry trends
WORK IN PROGRESS DRAFT Panel question 1 For personal use only How is GrainCorp evolving to meet industry trends? 31
Slide 33: Strategic international footprint for customer relevance
WORK IN PROGRESS DRAFT Strategic international footprint for customer relevance Europe and Ukraine For personal use only 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 mar
Slide 34: Panel question 1: evolving to meet industry trends
WORK IN PROGRESS DRAFT Panel question 1: evolving to meet industry trends For personal use only • Diversifying origination International • International footprint for customer relevance • Expanding and diversifying global customer base • Integrated business model, efficient end-to-end value chain EC
Slide 35: Panel question: generating value from infrastructure assets
WORK IN PROGRESS DRAFT Panel question 2 For personal use only How does GrainCorp generate value from its network of infrastructure assets? 34
Slide 36: Canola lifecycle
WORK IN PROGRESS DRAFT Canola lifecycle Managing the full lifecycle of fresh oil from farm to plate, through to renewable energy For personal use only 35
Slide 37: Panel question 2: maximising value chain
WORK IN PROGRESS DRAFT Panel question 2: maximising value chain For personal use only • 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
Slide 38: Panel question: improving ROIC
WORK IN PROGRESS DRAFT Panel question 3 For personal use only What initiatives are in place to improve GrainCorp’s Return on Invested Capital (ROIC)? 37
Slide 39: Panel question 3: operational initiatives to improve ROIC
WORK IN PROGRESS DRAFT Panel question 3: operational initiatives to improve ROIC For personal use only • Expansion of bulk materials (non-grain) portfolio to increase port utilisation ECA grains • Reduce business complexity • Leverage technology to drive efficiencies • Deliver on GrainsConnect Canad
Slide 40: Q&A
For personal use only Q&A
Slide 41: Additional growth and innovation
For personal use only Additional growth and innovation Jesse Scott, Chief Innovation & Growth Officer Peter Johnston, Product Manager CropConnect
Slide 42: Strategic priorities to deliver shareholder value
WORK IN PROGRESS DRAFT Strategic priorities to deliver shareholder value For personal use only 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
Slide 43: Alternative Protein: Market
WORK IN PROGRESS DRAFT Alternative Protein: Market Fast growing, profitable and supported by increasing consumer demand For personal use only 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
Slide 44: 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 For personal use only Our right to win: Existing plays Strong track record of food science and innovation Canola R&D project Ability
Slide 45: Animal Nutrition: Market
WORK IN PROGRESS DRAFT Animal Nutrition: Market Growing market, with a shift to higher value products For personal use only Australian farm animal feed production Developments Revenue Industry value add1 Advanced nutrition – focus on livestock $2.2bn (2020) $334m (2020) optimisation and improving fe
Slide 46: 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 For personal use only Our right to win: Existing plays • Leading handler of key inputs for animal feeds across East Coast Australia (ECA) Investment in FutureFee
Slide 47: Digital and AgTech: Market
WORK IN PROGRESS DRAFT Digital and AgTech: Market Australian farmers are leading global innovation For personal use only 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
Slide 48: 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 For personal use only Our right to win: Existing plays • Depth of commodity and supply chain data and knowledge in Australia (100 years) Pilot
Slide 49: Q&A
For personal use only Q&A A shared passion.
Slide 50: Conclusion and wrap-up
WORK IN PROGRESS DRAFT Conclusion and wrap-up For personal use only 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-cycl
Slide 51: Conclusion of Investor Day
For personal use only A shared passion. Conclusion of Investor Day
Slide 52: Appendix
For personal use only Appendix
Slide 53: 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: For personal use only Production: 10-year average of ECA total winter crop an
Slide 54: ECA tonnes handled
WORK IN PROGRESS DRAFT ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin1 For personal use only 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
Slide 55: FY16-FY20 proforma earnings
WORK IN PROGRESS DRAFT FY16-FY20 proforma earnings Proforma EBITDA includes the following adjustments, in order to provide a For personal use only better comparative with prior years, in line with Demerger Scheme Booklet: Removal of earnings from Australian Bulk Liquid Terminals (ABLT) and PROFORM
Slide 56: A shared passion.
For personal use only A shared passion.