Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Credit Suisse Asian Investment Conference 2017
35 slides from Graincorp Limited Class A's conference presentation, Mar 29, 2017
Slide 1: ASX cover letter to Company Announcements Office
29 March 2017 The Manager For personal use only Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR PRESENTATION The attached Investor Presentation will be used by GrainCorp for the purpose of investor meetings at the Credit Suisse Asian Investme
Slide 2: Investor Presentation
Investor Presentation Credit Suisse Asian Investment Conference: 29-30 March 2017 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. Forward looking statements are not based on historical facts, but are based on current expectations of future results or events. T
Slide 4: Agenda
Agenda For personal use only 1 Corporate overview Financial results – year ended 30 September 2 2016 3 Strategy update 4 FY17 guidance 3
Slide 5: Corporate overview
For personal use only Corporate overview
Slide 6: Our business model – integrated approach
Our business model integrated approach For personal use only Core grains Operating geographies Integrated activities Global grains exported(1) Other 8% Origination Wheat 32% Corn 27% Supply Processing chain Barley Soybean 5% 25% Canola Sorghum 2% 1% Expertise in drier climate Insight and visibilit
Slide 7: Our corporate objectives aligned with shareholder interests
Our corporate objectives aligned with shareholder interests For personal use only Manage variability Deliver growth Improve returns EARNINGS BY SEGMENT(1) $M EBITDA & NPAT(3) $M RETURN ON EQUITY % Allied FY09 FY16 8 yr avg Annual ROE % Rolling 5yr avg Grains(2) 289 14.4% Oils 256 13.0% 11.2% 10.1%
Slide 8: Global themes and industry trends in agribusiness and food
Global themes and industry trends in agribusiness and food For personal use only Global themes Global commodity markets operating in disinflationary pricing environment Access to supply and food security Increasing demand for food quality and transparency Fragmenting of mass markets to better meet n
Slide 9: Financial results – year ended September 2016
Financial results – year ended 30 September 2016 For personal use only
Slide 10: FY16: Solid performance in a challenging year
FY16: Solid performance in a challenging year For personal use only FY16 FY15 Underlying EBITDA(1) $256 million $235 million Underlying NPAT(2) $53 million $45 million Statutory NPAT(3) $31 million $32 million Total Dividend 11 10 (cents per share) • Malt: operational improvements, strong demand for
Slide 11: Effectiveness of diversification
Effectiveness of diversification For personal use only UNDERLYING EBITDA(1) ($M) S&L Marketing (EBITDA) Allied Mills (NPAT) Oils Malt 414 395 350 293 256 235 212 160 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 2H 78 100 177 179 168 127 99 122 1H 82 112 173 235 227 166 136 134 Malt and Oils earnings plat
Slide 12: Dividend in line with policy
Dividend in line with policy For personal use only DIVIDENDS PER SHARE (DPS)(1) Ordinary DPS Special DPS 30 25 5 5 40 35 30 25 20 7.3 10 11 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 8yr avg(3) Payout 23% 74% 64% 68% 59% 48% 51% 48% 59% ratio(2) FY16 Dividend Dates • FY16 final dividend: fully franked
Slide 13: Strategy update
For personal use only Strategy update
Slide 14: Strategic priorities
Strategic priorities For personal use only Strategic priorities Outcomes Growth and diversification Deliver on strategic 1 growth initiatives in earnings and cashflow; stronger returns Disciplined approach to Maintain strong credit 2 capital management profile Earnings growth through Growth and port
Slide 15: Delivering strategic growth initiatives
Delivering strategic growth initiatives For personal use only Focus on successful execution of growth projects Oils Oils S&L Malt Marketing Edible Oils network optimisation – Bulk liquid Re-shaping of Malt capacity 50-50 JV in Footscray and Numurkah, Victoria storage capacity country network expansi
Slide 16: Growth & portfolio optimisation
Growth & portfolio optimisation For personal use only • Sale of Allied Mills announced 31 January 2017: – GrainCorp 60% share of equity value: $190 million(1) – Equates to Allied Mills enterprise value: $455 million(2) – Subject to usual regulatory approvals – Expect to complete during 1H17 • Sale o
Slide 17: Disciplined approach to capital management
Disciplined approach to capital management For personal use only Operating productivity – • Majority of investment in processing portfolio performance and Capital growth – strategic initiatives businesses – more stable earnings, less intrinsic value dependent on grain production in Eastern Australia
Slide 18: FY17 outlook and guidance
FY17 outlook and guidance For personal use only
Slide 19: Grains outlook: above-average harvest leading to strong FY17 export program
Grains outlook: above-average harvest leading to strong FY17 export program For personal use only Market fundamentals • Record Eastern Australian crop production estimate of 28.0mmt(1) for FY17 (FY16: 18.6mmt) • 2017 sorghum crop impacted by poor seasonal conditions – current estimate 1.3mmt(2) (FY1
Slide 20: Increased grain production driving higher S&L and Marketing volumes
Increased grain production driving higher S&L and Marketing volumes For personal use only Drivers (mmt) FY16 FY17 Comments • Wheat, barley, canola, chickpeas and sorghum Eastern Australia grain 18.6 28.0 (current FY17 sorghum production estimate production(1) 1.3mmt(2)) Storage & Logistics • Close t
Slide 21: Eastern Australia - Winter crop post harvest review
Eastern Australia - Winter crop post harvest review For personal use only Production and receivals • Well above average grain production in eastern Australia with sound quality • ~160 silos operated during harvest with average receivals per site of ~70,000mt; compared to ~180 sites in FY16 with ~40,
Slide 22: Malt outlook – continued strong demand and high utilisation
Malt outlook – continued strong demand and high utilisation For personal use only Market fundamentals GrainCorp FY17 outlook • Global barley crop production • Forward sales of 1.2mmt YTD(2) ~144.1mmt(1) (FY16: 148.7mmt) • Malt sales volume: ~1.3mmt (FY16: • Beer demand in mature markets 1.3mmt) cont
Slide 23: Oils outlook – competitive food ingredients sector
Oils outlook – competitive food ingredients sector For personal use only Market fundamentals GrainCorp FY17 outlook • Australian canola crop production • Strong competition across food estimate of 4.2mmt(1) (FY16: 2.9mmt) ingredients sector – pressure on volume – favourable for crush margins and mar
Slide 24: FY17 Earnings Guidance
FY17 Earnings Guidance For personal use only EBITDA NPAT • Underlying EBITDA (before significant • Underlying NPAT (before significant items): Guidance items): $385M – $425M $130M – $160M Variables • Depreciation & Amortisation: ~$150M Assumptions / Variables • 2H17 volumes: sorghum receivals; direc
Slide 25: Appendices
For personal use only Appendices
Slide 26: Malt assets and capabilities
Malt assets and capabilities For personal use only NORTH AMERICA EUROPE AUSTRALIA Malt plant Warehouse Region North America Europe Australia Total Plants Canada: Montreal, Thunder Bay, UK: Witham, Grantham, Calgary Arbroath, Pencaitland, Perth, Brisbane, 16 plants USA: Pocatello, Vancouver Inverness
Slide 27: Malt – value proposition
Malt – value proposition For personal use only Customer Procurement Handling Processing Distribution solutions • Production of a • Support • Access, pricing and position • Bagging, range of services to management. warehouse and specialty craft market. distribution • Global footprint. malts. Capabili
Slide 28: Malt capacity expansion – Pocatello, Idaho
Malt capacity expansion – Pocatello, Idaho For personal use only Opportunity • Increasing production capacity at GrainCorp’s malting plant in Pocatello, Idaho by 120kmt (total plant capacity 220kmt after expansion) • Scheduled for completion in mid 2017 Rationale • Reliable barley production region
Slide 29: Oils – value proposition
Oils – value proposition For personal use only Value Chain Crushing Refining Storage Bulk Liquid Edible oils Terminals 2 plants; ~315kt refining 2 plants; ~390kt crushing 14 bulk liquid terminals; capacity (producing basic & Capability capacity (producing 60% complex fats and oils ~295km3 capacity:
Slide 30: S&L – value proposition
S&L – value proposition Network Scale For personal use only Capability Business value Customer value • 175 country silos • Scale economies • Manage variability Primary Silo • 7 port terminals • Geographic • Access to grain Port Terminal coverage • 3 box packers Container Packer Integrated Network Ca
Slide 31: Marketing – value proposition
Marketing – value proposition For personal use only Marketing – value proposition • Origination, marketing and delivery of grains, pulses and oilseeds to customers globally – through both bulk and container shipments. Capabilities • Eight offices in Australia, the UK, Germany, China, Singapore and C
Slide 32: Broadening our grain origination
Broadening our grain origination For personal use only Europe Canada • Diversified sourcing of barley and wheat • Joint venture with Zen-Noh • Increasing exposure to SE Asian customers WA & SA • Increasing origination and exports • Enhanced service offering to existing customers 31
Slide 33: Increase in gearing in line with capital expenditure and seasonal turnover
Increase in gearing in line with capital expenditure and seasonal turnover For personal use only CORE DEBT(1) AND NET DEBT(2) ($M) 1,600 50% • Core debt at $721M(3) and net debt at 1,400 $872M(3). 40% 1,200 • Core debt gearing(4) at ~29% (or ~24% 1,000 30% excluding barley inventory) and net debt 80
Slide 34: Strategic initiatives implementation and associated capex
Strategic initiatives implementation and associated capex For personal use only Business Unit Project FY14 FY15 FY16 FY17 FY18 Integration Oils refining/packing relocation Oils Bulk Liquid Terminals expansion Port Kembla Terminal development Numurkah crush expansion Project operational excellence Ma
Slide 35: Credit Suisse Asian Investment Conference
Investor Presentation Credit Suisse Asian Investment Conference: 29-30 March 2017 For personal use only
GrainCorp — Credit Suisse Asian Investment Conference 2017 on 6ix