Elders Limited · ASX:ELD
Elders — Morgans Agrifood Investment Seminar 2015
26 slides from Elders's conference presentation, Apr 16, 2015
Slide 1: Presentation to Morgans Agrifood Investment Seminar
16 April 2015 Presentation to Morgans Agrifood Investment Seminar Attached is a presentation delivered today by Elders’ CEO Mark Allison to the Morgans Agrifood Investment Seminar. Peter Hastings Company Secretary 1
Slide 2: Morgans Agrifood Investment Seminar
Morgans Agrifood Investment Seminar Mark Allison, MD & CEO Elders 16th April 2015
Slide 3: Agenda
Agenda FY13 – The transformation FY14 – The turnaround FY15 – The consolidation FY17 – The galvanising Market Outlook Industry Context Year 3 to 5 Slide 2
Slide 4: FY13 – The transformation
FY13 – The transformation Slide 3
Slide 5: Business model
Business model Retail Financial Feed & Agency Services Live Export Products Services Processing ` Short haul livestock Long haul livestock Elders Indonesia Farm Supplies Killara Feedlot Elders China Real Estate Livestock Insurance Fertiliser Banking Grain Wool $1b retail sales 9.1m head sheep $2.8b
Slide 6: Eight point plan
Eight point plan Our strategic vision for becoming an efficient user of capital and a business that generates returns for its stakeholders Slide 5
Slide 7: FY14 – The turnaround
FY14 – The turnaround Safety Operational Leadership Capital Performance Performance Renewal Management Lost time injuries from 33 $77.3m underlying profit Board renewal with two ROC improved in line to 20 turnaround new NEDs and new Chair with renewed focus Target is to be LTI free All s
Slide 8: FY14 – The turnaround
FY14 – The turnaround 30 Sept Change from $ million 2013 2014 2013 Sales revenue 1,431.5 1,422.1 + 9.4 Underlying EBIT 27.3 (48.9) + 76.2 Underlying profit / (loss) after tax 8.8 (68.5) + 77.3 Reported profit / (loss) after tax 3.0 (505.3) + 508.3 Net debt (137.6) (255.2) - 117.6 Term debt* (34.1) (
Slide 9: FY15 – The consolidation
FY15 – The consolidation Safety Operational Key Efficiency and Performance Performance Relationships Growth • Continued emphasis on • Increase underlying EBIT • Create a values, safety and • Implement comprehensive safety performance based culture branch benchmarking • Improve ROC program • Implemen
Slide 10: FY17 – The galvanizing
FY17 – The galvanizing Underlying EBIT opportunities $ million 60 27 FY14 Values, Geographical Retail Products Agency Services Financial Services Feed & Processing Live Export Costs, Capital & FY17 Performance & Coverage & Services Services Efficiency Brand Distribution Channel Slide 9
Slide 11: Market Outlook
Market Outlook • Grains and oilseeds • Sugar • Cotton • Horticulture • Cattle, beef and veal • Live cattle exports • Sheep & lamb • Wool Slide 10
Slide 12: Grains and oilseed production to rise
Grains and oilseed production to rise • Australian grain and oilseed production is forecast to rise over the next five years to reach 42.6 million tonnes by the end of the decade, but no spectacular price rises are forecast on the horizon • The total area planted to grains and oilseeds is forecast t
Slide 13: Sugar - growth in plantings, prices and exports
Sugar - growth in plantings, prices and exports • The world sugar glut will push down mill-gate returns to Australian cane growers by 1% to $36 a tonne in FY15, the lowest since FY08. • Prices will rise slightly to $39 a tonne in FY16 on the back of the lower Australian dollar and higher sugar conte
Slide 14: Cotton – growth expected next season
Cotton – growth expected next season • Australian cotton production is projected to increase over the medium term (on the back of better seasonal conditions), almost doubling from a forecast low of 470,000 tonnes in FY15, to 818,000 tonnes by FY20 • In FY14, the area planted to cotton is estimated t
Slide 15: Horticulture - increasing gradually
Horticulture - increasing gradually • The gross value of horticultural production is expected to increase gradually to $9.8 billion in FY20 • For some fresh lines, the weaker Australian dollar and increased opportunities in Asia are expected to stimulate an increase in exports. • Export opportunitie
Slide 16: Cattle prices to remain strong
Cattle prices to remain strong • Driven by reduced supply and solid export demand, underpinned by a low Australian dollar. • Herd rebuilding following two years of drought has to date only put a slight check on the supply of cattle slaughter - largely because the continued threat of drought is by no
Slide 17: Strong demand for Australian beef to continue
Strong demand for Australian beef to continue • Supported by an assumed lower Australian dollar and tariff reductions in some major markets (as a result of recent FTA’s) • The United States is likely to remain Australia’s largest beef export market out to 2019. • Beef exports to Japan are expected t
Slide 18: Live cattle exports to remain high
Live cattle exports to remain high • In FY15 live feeder and slaughter cattle exports are forecast to remain at 1 million head, before falling 10% in FY16 as supplies of exportable cattle shrink • ABARES expects those numbers to rise back to a million head by 2019-20, supported by growth in Indonesi
Slide 19: Lamb and sheep prices to rise
Lamb and sheep prices to rise • The national sheep flock is expected to decline by 3% to 70.7 million head by FY15, before commencing a gradual rebuilding phase to reach 76 million head by FY20 • Lamb slaughter will riser to 22.3 million in FY15, the highest number for 43 years, as producers enjoy a
Slide 20: Lamb production and exports
Lamb production and exports • Domestic lamb consumption is expect to remain at the current level over the next few years • Lamb exports are predicted to reach a record 240,000 tonnes in FY15, driven by strong demand from the US and the Middle East, and corresponsing forecast rise in lamb slaughter.
Slide 21: Wool prices to rise in FY16
Wool prices to rise in FY16 • The EMI is forecast to decline 2% in FY15, before rising 3% in FY16, driven by an increase in the demand for woollen clothing and a lower Australian dollar • Shorn wool production is expected to slip 2% in FY16 to 328,000t greasy, and then rebound slowly to reach 345,00
Slide 22: Market context
Market context Growing global demand for food and fibre, particularly from Asia, presents opportunities for Australian agriculture and Elders Global trends Australian competitive advantage Population growth World population 8 billion by 2025 Diversified geography and product base 85% of growth fro
Slide 23: Proximity to growth markets
Proximity to growth markets Operations in Indonesia, Vietnam, China, Mexico and Pakistan and access to world markets Proximity to Asia provides opportunity to capitalise on growing middle class demand for premium agricultural products Slide 22
Slide 24: Market position
Market position Pursuing $60M EBIT and 20% ROC by 2017 EBIT by Rural Service Company Market share by Rural Service Company Per cent (2014 ) 100% Elders Other 80% ~17% ~29% 60% 40% 20% ~33% 21% Landmark 0% Ruralco FY13 A FY14 A FY15 F FY16 F FY17 F Elders Landmark Ruralco Other Source: PAC Partners E
Slide 25: Year 3 to 5
Year 3 to 5 Solid domestic growth platform Industry consolidation options Capital structure optimisation Strong international growth Slide 24
Slide 26: Summary
Summary Focussed agribusiness Strong brand Well positioned Stable growth platform Solid progress