Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Macquarie ANZ Corporate Day 2023
28 slides from Graincorp Limited Class A's conference presentation, Sep 6, 2023
Slide 1: Cover letter to ASX: Presentation to Macquarie ANZ Corporate Day
The Manager, Companies GrainCorp Limited Australian Securities Exchange ABN 60 057 186 035 Companies Announcement Centre Level 28, 175 Liverpool Street 20 Bridge Street Sydney NSW 2000 Australia SYDNEY NSW 2000 t +61 2 9325 9100 f +61 2 9325 9180 graincorp.com.au PO Box A268 Sydney South NSW 1235 6
Slide 2: Macquarie ANZ Corporate Day Singapore / Hong Kong
For personal use only Macquarie ANZ Corporate Day Singapore / Hong Kong September 2023
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 For personal use only historical facts but are based on current expectations of future results or events. Th
Slide 4: Contents
Contents For personal use only • About GrainCorp • Strategy update • 1H23 results • Balance sheet / capital management • Outlook • Appendices 3
Slide 5: Executive profiles
Executive profiles For personal use only Robert Spurway Ian Morrison Managing Director & Chief Financial CEO Officer Robert Spurway joined the Board as MD & CEO in March 2020. He was Ian Morrison was appointed Chief Financial Officer in July 2020. As Chief previously Chief Operating Officer, Global
Slide 6: About GrainCorp
About GrainCorp GrainCorp is a leading Australian agribusiness and For personal use only processing company, with integrated operations across four continents and a proud history of delivering for customers for more than 100 years. 7 Ports across East Coast Australia (ECA) 500kmt Oilseed crush capac
Slide 7: How we operate
How we operate We partner with growers to maximise the value of their crops, connecting them to domestic and global For personal use only marketplaces through our end-to-end supply chain and infrastructure assets. We develop innovative solutions to create high quality and sustainable products across
Slide 8: Strategy aligned to macro trends
Strategy aligned to macro trends For personal use only Population growth Decarbonisation Disrupted global Technology/digital / changing and sustainability supply chains acceleration demographics • Multi-origin strategy • Sustainability and • Resilient, end-to- • Progressing digital innovation embedd
Slide 9: Strategic priorities driving higher return on invested capital
Strategic priorities driving higher return on invested capital For personal use only Our Vision Lead sustainable and innovative agriculture through another century of growth Proudly connect with customers and rural communities to deliver value through Our Purpose innovation and expertise Strategic P
Slide 10: Evaluating new oilseed crush plant
Evaluating new oilseed crush plant Opportunity to build on GrainCorp’s position as a leading supplier of renewable feedstocks For personal use only Assessing options for new oilseed crush capacity GrainCorp’s existing integrated portfolio of feedstocks • Creating the opportunity to: Used Cooking Oil
Slide 11: Outstanding 1H23 performance
Outstanding 1H23 performance Strong financial results and balance sheet in the six months ending 31 March 2023 For personal use only Outstanding 1H23 Earnings outlook Strong balance sheet Driving shareholder value performance • 1H23 EBITDA1 of • FY23 EBITDA guidance • $200m core cash • FY23 interim
Slide 12: 1H23 Highlights
1H23 Highlights Excellent all-round performance in the six months ending 31 March 2023 For personal use only Return on invested capital EBITDA NPAT1 (ROIC)2 $383m $200m 22.7% (1H22: $427m) (1H22: $246m) (1H22: 25.7%) Total grain handled3, 4 Oilseed crush volumes4 Core cash5 34.8mmt 256kmt $200m (1H2
Slide 13: Balance sheet strength
Balance sheet strength Strong cash generation to end half-year at $200m core cash Core cash / (debt) Debt and Liquidity Profile For personal use only (AUD millions) (AUD millions) Components 31 Mar 2023 30 Sep 2022 31 Mar 2022 Term debt 150 150 150 200 Inventory and working capital 1,584 713 2,158 1
Slide 14: Long-term ECA winter grain production
Long-term ECA winter grain production ECA winter grain crop production1,2 For personal use only 32.6 31.3 2.3% 29.5 35.0 28.2 CAGR of 10-year rolling average3 24.2 30.0 21.6 20.2 20.8 25.0 19.0 18.4 19.2 19.7 18.2 18.1 16.3 17.0 17.3 16.8 15.7 15.3 20.0 12.2 15.0 9.9 8.5 10.0 6.3 6.5 5.0 0.0 1999-00
Slide 15: Average earnings through-the-cycle of $310 million
Average earnings through-the-cycle of $310 million Structural improvements and leverage to ECA crops drive higher average earnings For personal use only Average EBITDA through-the-cycle GrainCorp’s average earnings through-the-cycle1 (AUD millions) of ~$310m due to: 310 • Increase in oilseed crush v
Slide 16: Significant operating leverage in large ECA crop years
Significant operating leverage in large ECA crop years Underlying EBITDA For personal use only (AUD millions)1 703 Commentary Avg. EBITDA FY20-23 5303 (since UMG demerger): • GrainCorp has significant operating leverage ~$415m in large ECA crop years, as demonstrated in 331 FY21-23 Average EBITDA •
Slide 17: Investment proposition
Investment proposition Attractive returns underpinned by outstanding execution and positive long-term fundamentals For personal use only Positive long-term fundamentals – rising global demand for food Strategically located, well invested assets – significant replacement cost Attractive growth opport
Slide 18: Appendices
For personal use only Appendices 17
Slide 19: Commitment to environment and sustainability
Commitment to environment and sustainability ESG is fundamental to GrainCorp’s long-term performance and sustainability For personal use only Our environment Our people Our integrity • Commenced development of • GrainCorp Community Foundation: • Submission of Reconciliation emissions reduction roadm
Slide 20: Commitment to Zero Harm
Commitment to Zero Harm The safety of our people is our highest priority • Colleague fatally injured in NSW in April 2023 For personal use only • Focus on initiatives to drive improvements in safety systems and processes • Developments in 1H23: o High number of Safety, Health & Environment (SHE) eng
Slide 21: ECA tonnes handled
ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin For personal use only Million metric tonnes (Mmt) FY17 FY18 FY19 FY20 FY21 FY22 ABARES – total ECA winter + sorghum production1 29.2 18.0 9.7 12.6 34.3 33.9 Carry-in 1.7 3.3 2.3 1.5 0.7 4.3 Receivals2 15.0 6.8 3
Slide 22: Average earnings through-the-cycle
Average earnings through-the-cycle Structural improvements and leverage to ECA crops drive higher average earnings Average EBITDA through-the-cycle For personal use only Increase in interest (AUD millions)1 costs on commodity inventory (higher Sustainable increase in interest rates) – Demonstrated l
Slide 23: Crop production contract
Crop production contract Smoothing GrainCorp’s cash flows through-the-cycle • 10-year contract (started FY20) with White Rock Crop Production Contract | Production Payment Profile1 For personal use only Insurance • Production payments based on ABARES’ “total ECA 74 74 74 69 winter crop production”2
Slide 24: Capital management framework
Capital management framework For personal use only • Target minimal core debt Service Debt • Debt finance commodity Obligations inventory and working capital Sustaining Capex • $40m - $50m p.a. • Payout ratio = 50-70% of Dividends NPAT through-the-cycle • Capital investment in growth projects Surplu
Slide 25: Delivering strong returns
Delivering strong returns Creating a consistent dividend profile through-the-cycle Dividends For personal use only (Cents per share) Special Dividend Ordinary dividend • 1H23 interim dividend: total 24cps, fully franked • Ordinary dividend reflects Board’s confidence in through-the-cycle 16 earnings
Slide 26: Working capital movements
Working capital movements Working capital currently elevated – expected to unwind as cycle moderates GrainCorp Net Working Capital (NWC) For personal use only (AUD millions)1 800 • NWC has been elevated due to short- 700 term funding requirements for grain 600 shipments and high commodity prices 500
Slide 27: Glossary
Glossary Term Definition Term Definition AASB Australian Accounting Standards Board IFRS International Financial Reporting Standards For personal use only ABARES Australian Bureau of Agricultural and Resource Economics JV Joint Venture CAGR Compound Annual Growth Rate KMP Key Management Personnel Ca
Slide 28: GrainCorp Corporate
For personal use only GrainCorp Corporate Office: Level 28 175 Liverpool Street Sydney NSW 2000 Australia Postal address: PO Box A268 Sydney South NSW 1235 Australia graincorp.com.au 27