Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Investor Day (May 2015)
103 slides from Graincorp Limited Class A's investor day presentation, May 20, 2015
Slide 1: ASX announcement cover letter: Investor Day Presentation
20 May 2015 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR DAY PRESENTATION GEELONG PORT TERMINAL Please find attached the Investor Day Presentation being presented by Managing Director & CEO, Mr Mark Palmquist, and the Executive
Slide 2: 2015 Investor Day: Delivering the value in Grain
2015 Investor Day Delivering the value in Grain 20 May 2015
Slide 3: Disclaimer
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. The forward looking sta
Slide 4: Investor Day - Safety Briefing
Investor Day - Safety Briefing 3
Slide 5: Investor Day - Safety Briefing cont'd
Investor Day - Safety Briefing cont’d 4
Slide 6: Agenda
Agenda Time Mins Activity Presenting 9.00am 10 min Welcome & Safety Ben Gray (Strategy & Development) 9.10am 35 min Global View & Strategy Mark Palmquist (MD & CEO) 9.45am 30 min Malt Greg Friberg (President & CEO Malt) 10.15am 15 min Morning Tea 10.30am 30 min Storage & Logistics Neil Johns (Group
Slide 7: GrainCorp Global View & Strategy
GrainCorp Global View & Strategy Delivering the value in grain Mark Palmquist – Managing Director & Chief Executive Officer
Slide 8: Global View and Strategy
Global View and Strategy A. Macro Trends • Global themes • Industry trends B. GrainCorp Approach • Business Model • Corporate Objectives C. Strategic Direction • Priorities • Strategic direction 7
Slide 9: Global themes and industry trends in agribusiness and food
Global themes and industry trends in agribusiness and food Global themes Access to supply and food security Increasing demand for food quality and transparency Increasing competition domestic and international Industry trends Supply chain Diversification and Customer investment consolidation relev
Slide 10: Grain demand and supply
Grain demand and supply Wheat, barley, canola, sorghum (mmt) (1) EU 17 Russia 26 9 Canada 28 21 Black Sea USA 34 North Africa 32 42 East Asia 7 Mexico 7 23 Middle East South Asia South America 17 Sub-Saharan Africa 16 Australia 23 11 Argentina Major Export Regions Major Import Regions 1. Global expo
Slide 11: Major export and import regions
Major export and import regions Wheat, barley, canola, sorghum (mmt) (1) Exports Imports 42 34 32 28 26 23 23 21 17 17 16 11 7 7 9 Wheat Barley Canola Sorghum Total 1. Global exports / imports – wheat, barley, canola, sorghum. 10 year average to 2014. Source: USDA (accessed May 2015). 10
Slide 12: Our strategy: customer and people driven and aligned to create value
Our strategy customer and people driven and aligned to create value Values, Vision & Mission Safety, People & Safety Our People Customer Excellence Customer Driven Our Community Sustainability Sustainability Business Model Integrated Integrated Operating Approach Core grains Activities Geographies
Slide 13: Our values, vision & mission
Our values, vision & mission people and customer driven Values Vision To grow as our customers’ preferred partner – driven by our passionate people and assets around the world. Mission To be an international leader in food ingredients and agribusiness, creating value by connecting consumers and pr
Slide 14: Our business model: integrated approach
Our business model integrated approach 2 3 1 Core grains Operating geographies Integrated activities Global grains exported(1) Origination Wheat Soybean 34% 32% Supply Processing chain Barley Corn 5% 24% Canola 3% Sorghum 2% Expertise in drier climate Capture value along the Insight across core gr
Slide 15: Core grains: expertise in drier climate grains
1. Core grains expertise in drier climate grains 1 Core grains Expertise in drier climate grains Global grains exported(1) Eastern Australian grain supply chain Eastern Australian origination Wheat Soybean 34% 32% Global barley processing Barley Corn 5% Australian wheat processing 24% Canola 3% So
Slide 16: Operating geographies: insight across core grains
2. Operating geographies insight across core grains 2 Operating geographies ‘Visibility’ of global exports 85% 70% 62% 45% Wheat Barley Canola Sorghum Australia EU North America Other 15
Slide 17: Integrated activities: capture value along the chain
3. Integrated activities capture value along the chain 3 Integrated activities Capture value Storage & Logistics Origination Marketing Supply Processing Malt chain Oils Allied Mills 1. Global exports / imports – wheat, barley, canola, sorghum. 10 year average 2004/05 – 2014/15. Source: USDA (acces
Slide 18: Our corporate objectives: aligned with shareholder interests
Our corporate objectives aligned with shareholder interests Manage variability Deliver growth Improve returns Earnings by segment(1) $M EBITDA and NPAT(2) $M Return on Equity % FY09 FY14 6yr Avg Allied Annual ROE % S&L + 304 Marketing 293 Rolling 5 yr avg ROE % Oils 14.4% 13.0% 160 11.2% 10.1% 131
Slide 19: Strategic lenses to deliver tangible outcomes
Strategic lenses to deliver tangible outcomes Strategic Approach Outcomes Lenses Strengthen supply chains Enhance competitiveness Improve Supply of supply chains through customer Chain investment and continuous performance improvement Streamline and integrate Complexity Deliver on & Remove complex
Slide 20: Strategic lenses to shape business unit priorities
Strategic lenses to shape business unit priorities Strategic Business unit priorities Outcomes Lenses Storage & Strengthening our grain Logistics handling proposition Supply Chain Grow our grain Marketing Marketing business Deliver on Complexity Delivering additional Malt Malt corporate & value In
Slide 21: Pipeline of organic initiatives and supporting developments
Pipeline of organic initiatives and supporting developments Oils Malt S&L Numurkah Expansion Pocatello Expansion Supply Chain Investment • Announced 20 May • Announced 19 May • Announced 11 May • Growth: capacity increase • Growth: capacity increase • Supply chain: first tranche to support internati
Slide 22: Disciplined approach to capital management
Disciplined approach to capital management • Majority of investment underway in processing businesses more stable earnings, less dependent on grain production in Eastern Australia • Building a pipeline of organic opportunities • Flexibility with the timing of capital investment for a number of the
Slide 23: Empowering employees to achieve safety vision
Empowering employees to achieve safety vision Safety Vision: “Zero Harm – Safe for Life” Safety Performance(1) 14.0 12.0 12.6 12.0 10.0 10.7 8.0 7.3 7.0 6.0 6.3 4.0 2.0 - FY12 HY13 FY13 HY14 FY14 HY15 1. Lost Time Injury Frequency Rate ('LTIFR’) calculated as the number of lost time injuries per mil
Slide 24: Strong executive leadership team, senior leaders and emerging talent
Strong executive leadership team, senior leaders and emerging talent Executive Leadership Team Betty Ivanoff (Group General Mark Palmquist Andrew Baker Alistair Bell Counsel & Head of (MD & CEO) (Group CIO) (Group CFO) Corporate Services) Klaus Greg Friberg Neil Johns Pamminger Sam Tainsh (President
Slide 25: GrainCorp Malt
GrainCorp Malt Delivering additional Malt value Greg Friberg – President & CEO GrainCorp Malt
Slide 26: Malt
Malt A. Industry Trends B. Value Proposition • Assets and capabilities • Value chain • Customers segments and drivers C. Strategic Direction & Initiatives 1.Investment in global malt operations 2.North America craft growth 3.Pocatello expansion 4.Collaboration Supplementary Information 25
Slide 27: Malt industry trends
Malt industry trends Malt industry trends Growth markets Traditional beer Craft continued growth in North Developed markets sales stabilising America; emerging growth elsewhere Developing markets sales increasing Distilling significant malt requirement Customer relevance Brewer consolidation
Slide 28: Global barley and malt production
Global barley and malt production Global barley production (mmt) (1) Global malt production and consumption (mmt) (2) Non-malting Malting Production Malt production Beer Whisky Food varieties varieties 135 70% 22 94% 30% 5% 1% Production Consumption Production Yield 150 3.00 125 2.50 100 2.00 75 145
Slide 29: Global malt production & exports
Global malt production & exports Global malt production (mmt) EU North America 9.1 China 3.4 4.1 South America Australia 2.1 0.9 Malt production (mmt per annum) Maltster volumes (approximate) Total Major regions Rest of world Independent maltsters Integrated brewers 22 20 75% 2 25% 28 1. Estimated g
Slide 30: Growth markets
Growth markets Craft Beer (1) Whisky (2) North American Craft Beer - Malt Scottish Whisky - Malt Requirement (kmt) Requirement (kmt) 845 830 830 830 768 762 680 679 625 586 540 444 376 326 2010 2011 2012 2013 2014 2015F 2016F 2009 2010 2011 2012 2013 2014E 2015E 1. Source: Brewers Association 2. Sou
Slide 31: Malt assets and capabilities
Malt assets and capabilities North America Europe Australia Region North America Europe Australia Total Plants UK: Witham, Grantham, Arbroath, Canada: Montreal, Thunder Pencaitland, Inverness Bay, Calgary Perth, Brisbane, Melbourne, Germany: Worms, Mulheim, 17 plants USA: Pocatello, Vancouver Geelon
Slide 32: Malt is more than just a commodity business
Malt is more than just a commodity business • Procurement: access, pricing and position management Barley • Barley quality: varietal management and yield procurement • Barley handling: elevation, storage and drying services Processing fees • Customers either purchase malt: – Contract basis with agre
Slide 33: Customer segments and drivers
Customer segments and drivers Customers Value Proposition Drivers Global offering, price & Quality malt Global brewers compliance Consistency Regional brewers Relationships, quality & price Global / regional offering Relationships, offerings, quality Microbrewers Malt quality & service Consistency R
Slide 34: Malt strategic direction
Malt strategic direction Malt Approach Enhance competiveness Pursue growth Malt Strategic Initiatives 1 Investment in global malt operations support and enhance customer offering 2 Craft sector growth pursuing growth in craft in North America and other growth opportunities emerging 3 Collaborati
Slide 35: Investment in global malt operations
1 Investment in global malt operations Focus areas Achievements to date Operations excellence Significant number of projects completed Targeting cost reduction and other including: Geelong kiln, water treatment; efficiencies in energy, labour, waste, and Montreal barely container unloading; Arbroath
Slide 36: North American craft sector growth
2 North American craft sector growth GrainCorp Malt footprint North America Craft sector growth Incremental investment to serve customers and evolving industry trend • Craft beer sector growth (USA) • ~18% sales growth 2014; avg ~12% per annum growth 2005 to 2014(1) • ~11% market share of beer sale
Slide 37: Collaboration with global platform and marketing
3 Collaboration with global platform and marketing Integrated Activities Malt & Marketing Presence Collaboration • Malt operations corresponding to GrainCorp Marketing presence in key barley growing regions North America, Europe, Australia • Integrated activities and insights • Increasing opport
Slide 38: Pocatello expansion
Pocatello expansion Pocatello Expansion Customer support & Positioning Opportunity Customer support • Increase production capacity at Pocatello • Expansion backed by support from a number of by 120kmt (total plant capacity 220kmt existing customer contracts and continued after expansion) demand for
Slide 39: Malt journey
Malt journey Opportunity Position • Good base to continue Integrate growing into craft malt and • Operational excellence – focus on distribution • Integrated malt reducing water, energy, production • Assess regional capacity portfolio efficiency expansion opportunities • Incremental • Portfolio opti
Slide 40: Malt Supplementary Information
Malt Supplementary Information Barley growing regions • North America • Europe • Australia 39
Slide 41: Barley growing regions: North America
Barley growing regions North America Canada USA Vancouver, WA Champlain, NY Chicago, IL Pocatello, ID Stockton, CA South Holland, IL Hayward, CA Aurora, CO Riverside, CA Doraville, GA New Orleans, LA 40
Slide 42: Barley growing regions: Europe
Barley growing regions Europe UK Germany Inverness Arbroath EDINBURGH Pencaitland Grantham Key barley growing regions Witham Regional offices Malt houses LONDON 41
Slide 43: Barley growing regions: Australia
Barley growing regions Australia Australia Key barley growing regions Regional offices Malt houses Pinkenba Welshpool Melbourne Geelong Burnley 42
Slide 44: GrainCorp Storage & Logistics
GrainCorp Storage & Logistics Strengthening our grain handling proposition Neil Johns – Group General Manager S&L
Slide 45: Storage & Logistics
Storage & Logistics A. Industry Trends B. Value Proposition • Customer proposition • Grain supply chain C. Strategic Direction & Initiatives 1. Lower supply chain cost 2. Lower operating cost 3. Loyal grain growers 4. Loyal grain buyers 5. Containers and non-grain Supplementary Information 44
Slide 46: S&L industry trends
S&L industry trends S&L industry trends Variable Multiple production markets and channels Port access Export deregulation deregulation Supply chain New investment global entrants More competitive supply chain Excess capacity Consolidation and Increased variability Alliances 45
Slide 47: Eastern Australian grain landscape: Variability
Eastern Australian grain landscape 1. Variability Eastern Australia Production and Exports for major grains Production Cropped Area Mill Tonnes Mill Hectares 25Mt 12MHa Cropped area (RHS) Production 20Mt 10MHa Normalised Production increasing with crop area and yield gains 15Mt 7MHa Exports 10Mt 5MH
Slide 48: Eastern Australian grain landscape: Multiple Markets & Channels
Eastern Australian grain landscape 2. Multiple Market & Channels 1 2 3 Normalised Volumes Normalised Markets Current Grain Capacity Country storage capacity 5.5 - 6.0mmt GrainCorp ~20mmt ~8mmt Bulk Competitors ~10mmt Export On-farm (2) ~12mmt Surplus 2.0 - 2.5mmt Total ~42mmt ~18mmt Container ~40% u
Slide 49: Eastern Australian grain landscape: Excess capacity
Eastern Australian grain landscape 3. Excess capacity 1 2 3 Normalised Volumes GrainCorp Share New Port Terminals GrainCorp Port Competing Port New Port ~18mmt 9.5mmt 50-55% Receivals Grain Production(1) ~10mmt ~4.5mmt ~45% Domestic Domestic Consumption ~8mmt ~5.5mmt ~70% Exports New Port Capacity E
Slide 50: S&L Grain Supply Chain Customer Proposition
S&L Grain Supply Chain Customer Proposition Bringing growers and buyers together Customers Drivers Value Proposition Private Growers Grain prices ~8,000 Turnaround time Corporate Optionality Network scale Growers Integrated supply chain Domestic >25 Consumers Market place Supply chain cost Merchants
Slide 51: S&L Grain Supply Chain: Network scale
S&L Grain Supply Chain 1. Network scale Eastern Australian network Assets & Capabilities Assets • Country Sites: ~175 country sites with ~20mmt of storage capacity • Port Terminals: 7 bulk ports with ~15mmt elevation capacity • Container Packing: 2 packers with ~0.7mmt packing capacity • Rail: Manag
Slide 52: S&L Grain Supply Chain: Integrated supply chain
S&L Grain Supply Chain 2. Integrated supply chain Road Export Growers Country Port consumers silos Rail terminals Domestic Non-S&L consumers storages S&L provide integrated services to growers and buyers Warehousing Growers Croptimiser Marketing Tools Domestic LTAs Proactive swaps Domestic Merchants
Slide 53: S&L strategic direction
S&L strategic direction Storage & Logistics Approach Network Scale Integrated Supply Chain Competitive supply chain Compete as a supply chain Defend volume through Attract volume through lower cost differentiated services Storage & Logistics Strategic Initiatives 1 Lower supply chain cost 2 Lowe
Slide 54: Lower Supply Chain Cost: Transforming rail capability
1 Lower Supply Chain Cost Transforming rail capability Project Regeneration Achievements to date $200M to improve rail load capability $60M first tranche works commenced 1. Objectives 1. Works for 2015 harvest announced • Reduce rail cost by $5 per tonne • 4 sites (2 new sites) with new loaders •
Slide 55: Lower Operating Cost: Managing variability
2 Lower Operating Cost Managing variability Reduce fixed costs and complexity Achievements to date New processes and systems Lower unit operating cost 1. Objective 1. Less permanent staff • Lower fixed support costs • 17% reduction in past 2 years • Variabilise operating costs 2. Improved producti
Slide 56: Loyal grain growers: Market place at every silo
3 Loyal grain growers Market place at every silo New products and services Achievements to date New products and tools Take-up of new accumulation products 1. Objective 1. Growers engaged on-line • Choice of buyers for growers • 22,000 downloaded silo price app • Effective accumulation for buyers
Slide 57: Loyal grain buyers: Convenience and flexibility
4 Loyal grain buyers Convenience and flexibility New products and services Achievements to date Align buyers to our supply chain Reduced port regulation 1. Objective 1. Improved services for exporters • Bundled services • 2014: ~80% exported under LTAs • Long term relationships • 2015: ~70% under
Slide 58: Container & Non-grain businesses: Diversify port earnings
5 Container & Non-grain businesses Diversify port earnings Complementary port activities Achievements to date Base and more stable port earnings Significant volume growth achieved 1. Objective • New Geelong packer opened in 2015 • Grow complementary agri-products • Containers • Grow container pack
Slide 59: Container & Non-grain businesses: Geelong case study
5 Container & Non-grain businesses Geelong case study for S&L Meals @ 3 Ports Containers @ 2 Ports Woodchips @ 3 Ports Fertiliser Bulk Grain @ 4 Ports Other BUs @ 3 Ports 58
Slide 60: S&L journey
S&L journey Opportunity Position • Competitive supply chain Deregulation - $5/t reduction in rail costs • Securing port code exemptions to • Export deregulation compete on a level playing field - Return 1Mt of grain to rail - Single exporter • Updating supply chain: • More effective and simplified t
Slide 61: Storage & Logistics Supplementary Information
Storage & Logistics Supplementary Information • Eastern Australia crop cycle • Port access regulation evolution 60
Slide 62: Eastern Australian crop cycle
Eastern Australian crop cycle Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ANZAC Melb Christmas Day Cup Winter Crop (wheat, Planting barley, Growing canola) Harvest Planting Planting Summer Crop Growing Growing (sorghum) Harvest 61
Slide 63: Port access regulation evolution
Port access regulation evolution 2009 – 2014 Code of Since 1 Oct 2014 Conduct Port Protocol for access Mandatory Code introduced Legislation Long Term Agreements repealed Exemption from Code Benefits of Ports Code of Conduct Status of ACCC exemptions Terminal Status 1. Improved customer service Exem
Slide 64: GrainCorp Marketing
GrainCorp Marketing Grow our grain Marketing business Klaus Pamminger – Group General Manager Marketing
Slide 65: Marketing
Marketing A. Industry Trends B. Value Proposition • Marketing presence and capabilities • Marketing value proposition C. Strategic Direction & Initiatives 1. Expand origination capability 2. Deeper customer relationships 3. Global operating model & collaboration 64
Slide 66: Marketing industry trends
Marketing industry trends Marketing industry trends Importance of access to Consolidation of grain multi-origin supply participants Requirement for reliability Importance of integrated and quality supply chains 65
Slide 67: International origination and destination
International origination and destination Wheat, barley, canola, sorghum (mmt) (1) EU 17 Russia 26 9 Canada 28 21 Black Sea USA 34 North Africa 32 42 East Asia 7 Mexico 7 23 Middle East South Asia South America 17 Sub-Saharan Africa 16 Australia 23 11 Argentina Major Export Regions Major Import Regi
Slide 68: Core grains: destinations
Core grains destinations Wheat, barley, canola, sorghum (mmt per annum1) EU 6 2 1 East Asia North Africa Middle East Mexico 30 4 22 1 21 11 4 2 5 3 South Asia 1 South America Sub-Saharan 7 Africa 14 1 16 1 1 Wheat Barley Canola Sorghum 1. Global exports / imports – wheat, barley, canola, sorghum.
Slide 69: Core grains: origination
Core grains origination Wheat, barley, canola, sorghum (mmt per annum1) Canada EU 19 2 22 4 7 Black Sea USA 16 4 29 5 1 Eastern WA/SA Australia 12 2 4 2 Argentina 1 1 1 8 2 Wheat Barley 1 Canola Sorghum 1. Global exports / imports – wheat, barley, canola, sorghum. 10 year average to 2014. Source:
Slide 70: Marketing presence & capabilities
Marketing presence & capabilities Marketing Presence Marketing Capabilities • Global intelligence UK Hamburg Calgary • Access to supply Shanghai Singapore • Customer relevance Australia • Risk management GrainCorp Marketing office / presence • Technical Expertise 69
Slide 71: Customer segments, drivers and value proposition
Customer segments, drivers and value proposition Customers Drivers Value Proposition Supply chain access Domestic consumers Reliability and consistency of supply Expertise in dry grains Ease of doing business International presence & International consumers Independent alternative Customer base & sa
Slide 72: Marketing strategic direction
Marketing strategic direction Marketing Approach Expand origination Leverage strengths capability Eastern Australian grain origination, pursue opportunities in WA/SA and international offices and cross-BU internationally collaboration Marketing Strategic Initiatives 1 Expand origination capabili
Slide 73: Expand origination capability: the opportunity
1 Expand origination capability the opportunity Eastern North WA/SA Europe Other Australia America Region 4 2 12 2 48 2 22 4 24 6 Exports (mmt)(1) 1 1 1 7 5 1 1 Maintain Objective strong Increase origination capability presence Participate in Leverage on increasing Leverage port LTAs and internati
Slide 74: Expand origination capability: the approach
1 Expand origination capability the approach Marketing Approach Assess Establish Engage Understand options to presence / customers customer access Expand and needs supply capability producers Approach “Asset light” “Asset heavy” Definition: partnerships; Definition: integrated joint ventures; long
Slide 75: Develop deeper customer relationships
2 Develop deeper customer relationships Marketing Approach Assist with Source supply Understand technical and and quality in customers’ market most efficient business knowledge manner Partner with the customer 74
Slide 76: Leverage global operating model and collaboration
3 Leverage global operating model and collaboration Global Operating Model Collaboration & enabling technology • Presence: International presence • S&L: leverage strong Eastern established Australian supply chain • Positions: Global positions by • Malt: leverage position as major commodity approach
Slide 77: Marketing journey
Marketing journey Opportunity Position Deregulation • Move to global business model • Leverage international • Adjust to - Implementation of global trading marketing and malt and risk management system to deregulation of bulk facilitate global model presence wheat exports • Increase proportion of no
Slide 78: GrainCorp Oils
GrainCorp Oils Building our Oils business Sam Tainsh – Group General Manager GrainCorp Oils
Slide 79: Oils
Oils A. Industry Trends B. Value Proposition • Assets and capabilities • Value chains • Business drivers C. Strategic Direction & Initiatives 1. Network optimisation 2. Crush expansion 3. Bulk liquid terminals expansion 4. Innovation 78
Slide 80: Oils industry trends
Oils industry trends Oils industry trends Demand Growth Health focus increasing demand for fats and increasing demand for “healthier” oils oils and related products Australian production Canola oil consumption Increase in canola grown and increase per capita crushed 79
Slide 81: Industry trends in canola oil demand and consumption
Industry trends in canola oil demand and consumption Canola oil consumption - Asian demand (1) Canola oil consumption – important growth countries (2) ‘000s mt Canola Oil Consumption Canola Oil Consumption – Litres Per Capita Litres Per Capita 8,000 9 7,000 8 6,000 7 5,000 6 4,000 5 3,000 4 2,000 3
Slide 82: Australian oilseed production and canola crushing
Australian oilseed production and canola crushing Australian canola production(1) Victoria NSW 4.1 3.8 Other 3.4 3.1 1.8 2.4 1.6 2.2 1.6 1.9 1.1 1.5 1.3 1.1 0.9 0.9 0.8 0.3 0.9 0.7 0.7 0.6 0.3 0.5 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 1. Five year average canola production. Source: ABARES
Slide 83: Oils assets and capabilities
Oils assets and capabilities Oils Assets Assets & Capabilities China Assets • Crushing: 3 plants; ~415kt capacity • Refining: 3 plants (going to 2); ~315kt capacity • Port Terminals: 14 bulk liquid terminals with ~295k m3 • Complementary businesses: Feeds, Auscol Capabilities Oilseed crushing facili
Slide 84: Oils value chain: activities, products, drivers, customers
Oils value chain activities, products, drivers, customers Crushing Refining Storage Bulk Liquid Edible oils Terminals Products Basic & complex fats and Bulk Liquid Terminals: Crushed oil (~40%) and oils products oils and fats; fuels and Meal (~60%) services Packaged products chemicals Food manufac
Slide 85: Oils strategic direction
Oils strategic direction Oils Approach Investment in growth and Product development supply chain integration Partner with customers, more value Enhance capabilities, lower supply add products chain cost Oils Strategic Initiatives 1 Network optimisation Investment to boost the competitiveness o
Slide 86: Network optimisation
1 Network optimisation Edible oils crushing and refining network ~$125M investment 1. Numurkah: expansion and upgrade; capabilities expanded to include vegetable oil processing 2. West Footscray: expansion and upgrade; capabilities expanded to include retail spreads, complex oil 3. Murrarie blends (
Slide 87: Crush expansion
2 Crush expansion Edible oils crushing and refining network ~$50M investment Numurkah expansion • Expansion of crush capacity from 240kt to 330kt • Conversion of oil extraction process from expeller to solvent Customer demand • Increasing canola oil exports demand to Asia 1. Numurkah • Canola meal f
Slide 88: Bulk liquid terminals capacity expansion
3 Bulk liquid terminals capacity expansion Bulk liquid terminals ~$70M investment China Targeted investment to accommodate additional requirements of industrial customers 3. Brisbane 1. Fremantle: completed on time and budget; servicing chemical, mining 1. Fremantle sectors 2. Port Kembla 2. Port Ke
Slide 89: Innovation to drive further growth
4 Innovation to drive further growth Crushing – Meal for dairy and poultry Foods – Infant formula Meal production Infant formula • Infant formula is 27% vegetable oil • Numurkah currently produces meal predominantly servicing dairy market • The oil helps mimic the nutritional profile of breast milk
Slide 90: Oils journey
Oils journey Opportunity Position • Capitalise on exposure to Integration growth markets – • Defend our position in Food Manufacturing and deliver on fuel/chemicals storage, • Formation of organic growth plans Infant Formula, Asia food GrainCorp Oils and integration of • Deliver on strategic capital
Slide 91: Capital Management
Capital Management Financial strategies supporting corporate objectives Alistair Bell – Group Chief Financial Officer
Slide 92: Capital Management
Capital Management A. Earnings Growth and Diversification B. Capital Investment • Strategic growth initiatives and profile C. Debt Profile • Debt profile matching growth initiatives 91
Slide 93: Earnings profile benefiting from diversification
Earnings profile benefiting from diversification Earnings profile(1) $M Earnings composition(2) 414 395 S&L and Marketing 350 293 Allied S&L 212 Marketing Oils 160 Allied Oils Malt Malt FY09 FY10 FY11 FY12 FY13 FY14 FY09 FY10 FY11 FY12 FY13 FY14 Post current organic projects Objective: Improve ROE t
Slide 94: Business unit performance
Business unit performance Malt Oils S&L Malt sales & EBITDA/t(1) Oils sales(2) & EBITDA/t S&L Throughput & EBITDA/t(3) Volume (Oilseeds) Volume (Foods) Volume EBITDA/t EBITDA/t 30 10.0 1.40 105.00 9.0 0.60 25 160 8.0 1.20 100.00 140 0.50 20 7.0 1.00 95.00 120 0.40 0.23 0.23 0.20 6.0 0.24 0.25 0.80 0
Slide 95: Capital investment for growth in reliable earnings
Capital investment for growth in reliable earnings Storage & Logistics Marketing Malt Oils Invested (1) Over next ~3+ years Underway (2) Balance (3) 140 First tranche announced ~$325M(2) May 2015 162 underway 104 60 26 24 15 26 ~$169M 104 invested Capital investments S&L S&L Marketing Malt Oils • Cu
Slide 96: Strategic initiatives implementation and associated capex
Strategic initiatives implementation and associated capex FY13 FY14 FY15 FY16 FY17 FY18 Business Project Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Unit 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Integration C apacity relocation Fremantle terminal expanison Oils Port Kembla terminal develo
Slide 97: Balance sheet & dividends
Balance sheet & dividends Core Debt & Net Debt Dividends • HY15 core debt at $595M and Net Debt $1,170M • Dividend policy: payout 40 – 60% NPAT through the • Core debt gearing at ~25% and Net debt gearing at business cycle ~37% (rolling quarterly average) • Targeting to pay an ordinary dividend each
Slide 98: Good balance in debt, liquidity, maturity and structure
Good balance in debt, liquidity, maturity and structure Use and Position Strategy Implications • Use: Marketing’s grain trading activities, Malt and • Marketing: flexible facilities to fund international Short term debt Oilseeds activities, working capital requirements grain trading activities and m
Slide 99: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities Supplemented short term debt with cash Commodities inventory $M Marketing & Oils grain and oilseed inventory 829 792 Short-term debt 708 Supplemented short 572 577 574 term debt with cash 528 519 498 387 365 353 322 321 338 31
Slide 100: Wrap Up and Questions
Wrap Up and Questions Mark Palmquist – Managing Director & Chief Executive Officer
Slide 101: Wrap Up and Questions
Wrap Up and Questions 1 Global view macro themes driving industry trends 2 Greater diversification and building scale 3 Disciplined approach to capital management 4 Strategy execution and delivery of initiatives 5 Focus on values driving performance Safety, People, Customers 100
Slide 102: Site Tours
Site Tours
Slide 103: 2015 Investor Day: Delivering the value in Grain
2015 Investor Day Delivering the value in Grain 20 May 2015