Origin Enterprises Plc · EURONEXT:OIZ
Origin Enterprises — Investor Day (May 2022)
90 slides from Origin Enterprises's investor day presentation, May 10, 2022
Slide 1: Capital Markets Day
Capital Markets Day 10 May 2022 Prescriptive Solutions, Sustainable Production
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of the preparation of this presentation. Due to the inherent uncertainties, including both econom
Slide 3: Welcome and introduction
Welcome and introduction Sean Coyle originenterprises.com 3
Slide 4: Presenting today
Presenting today; Sean Coyle TJ Kelly Peter Scott Clare Bend Ronan Hughes Brendan Kent Chief Executive Officer Chief Financial Officer Technical Director Head of Product Managing Director Managing Director Origin Fertiliser Development & Sustainability Agrii UK Agri Inputs Division Monalisa Ungurean
Slide 5: Other colleagues present today
Other colleagues present today Barbara Keane Alex Faulkner Prof. Jimmy Burke John O’Connell Group General Counsel Group HR Director Group Head of R&D Group Treasurer and Company Secretary Derek Wilson Jim Rennie Jon Rhymes Brendan Corcoran Chief Information Officer Chairman - Agrii Head of Investor
Slide 6: Overview of today's agenda
Overview of today’s agenda Progress and delivery 2019-2022 TJ Kelly In-room presentation Underpinning of Origin strategy model Sean Coyle In-room presentation Portfolio growth themes Videos, In-room presentations and Full team and business strategies moderated panel discussion Financial model 2022-2
Slide 7: Progress and delivery 2019-22
Progress and delivery 2019-22 TJ Kelly originenterprises.com
Slide 8: Recent focus: progress to date
Recent focus Working capital Product mix and margin Earnings concentration investment levels improvement and volatility Progress to date originenterprises.com 8
Slide 9: Overview 2019-2022
Overview 2019-2022 Headwinds Response Delivery Core business stabilisation € € Portfolio disciplines Pandemic Brexit in cash and growth 2022 updated Progress to prior financial guidance 2023 targets New footholds for growth in core and adjacent markets Weather Currency Group capabilities and value-a
Slide 10: Key highlights
Key highlights Within business Across the portfolio Product mix and margin optimisation Expansion and leverage of Throws Farm R&D Centre Sustainability manifestos in Agrii and Fert Digital developments Fortgreen organic growth and expansion Portfolio entry into adjacencies Romanian business merger L
Slide 11: Evolving as a Group
Evolving as a Group • Health, Safety & Wellbeing • UN Global Compact • ERP • Digital capability • Governance • Adopting best practice • Core and adjacencies • Investment & pipeline originenterprises.com 11
Slide 12: Strong FY22 performance
Strong FY22 performance Solid growth in FY22 earnings › Trading momentum continued through Spring › All geographies performing ahead of expectations › Crops well established and in good condition Successfully navigating supply chain challenges Strength of soft commodity prices underpinning demand Ac
Slide 13: Progress on prior targets
Progress on prior targets 2019 Capital Markets Day Targets FY18 to FY23 2019 – 2023 Progress Target to date Comment Return on investment 12-15% Prudent balance sheet management across the Group Group ROCE Free Cash Flow 70-100% Underlying working capital reduction c.€50m Ratio Ireland / UK EBIT CAGR
Slide 14: Underpinnings of Origin strategy model
Underpinnings of Origin strategy model Sean Coyle originenterprises.com
Slide 15: Sustainability at the core of Origin
Sustainability at the core of Origin Model Commitments › ‘Advice-led Agronomy’ › Trusted advisor to customers > Green Horizons manifesto Origin Enterprises plc Board › Engage with the latest innovations > Fertile Future manifesto and best practices › Product innovation › Align to best-in-class carbo
Slide 16: Regulatory policy and social change
Regulatory policy and social change Climate Food & Energy Biodiversity Crisis Security Crisis Crisis • Occurrences of extreme • Geopolitical dynamics of armed • Human health weather events conflict and economic blocs • Wellbeing • Emissions reductions • State and corporate responses • Economic devel
Slide 17: Traditional thinking on land usage was overly siloed
Traditional thinking on land usage was overly siloed… Food, Timber, Sports, Urban, Protected areas, Fibre, & other Recreation, Infrastructure other habitat materials Social wellbeing restoration Production Amenity Development Ecosystems originenterprises.com 17
Slide 18: Undervalued importance of ecosystem services
….and thereby undervalued the importance of ecosystem services Ecosystem services provided by land and its biodiversity Provisioning Regulatory Water purification and Food Air quality regulation waste treatment Services Services Raw materials Climate regulation Disease and pest regulation Medicinal
Slide 19: Ecosystems and sustainable land use
Ecosystems and sustainable land use are core to addressing our global crises A model of sustainable land use Feeding Ourselves Sustainable land use Stabilising Restoring Climate Biodiversity Ecosystems originenterprises.com 19
Slide 20: Three macro growth drivers
Three macro growth drivers form the new market context Feeding Market macro-growth drivers Ourselves Sustainable Sustainable Agronomy land use Restoring Stabilising Climate Biodiversity Global Food Supply Responsiveness Emerging Nature Economy originenterprises.com 20
Slide 21: Origin's portfolio today
Origin’s portfolio today Products Channels Geographies Advisory Services Plant Protection Products B2B UK & Ireland Agronomy Digital Seed & Crop Nutrition B2C Central Europe Turf Agronomy Laboratory Biologicals D2C LatAm Environmental Trials Green Infrastructure Solutions Urban Greening Training Fee
Slide 22: Origin and sustainable land use
Origin and sustainable land use Established Origin presence Ecosystems Greentech acquisition brings new sectoral opportunities originenterprises.com 22
Slide 23: Origin's alignment to macro-growth drivers
Origin’s alignment to macro-growth drivers Sustainable Global Food Supply Emerging Nature Agronomy Responsiveness Economy UK / Irl (Ag) UK / Irl (Amenity) Continental Europe LATAM originenterprises.com 23
Slide 24: Portfolio positioning to market growth
Portfolio positioning to market growth Market macro-growth drivers Origin portfolio positioning Leading on technical advice and solutions Sustainable agronomy in UK and Ireland, Continental Europe and LATAM Transitioning to Biosolutions and Specialty Global Food Supply Responsiveness Nutrition Produ
Slide 25: Approach to Sustainable Agronomy
Origin’s approach to Sustainable Agronomy Pillars for Action 4 Enhancing biodiversity & Protecting Natural Capital 3 Innovative & Integrated Plant Protection 2 Soil Resilience & Plant Nutrition 1 Balancing Sustainability & Outputs originenterprises.com 25
Slide 26: Approach to Global Food Supply Responsiveness
Origin’s approach to Global Food Supply Responsiveness UK and Continental Latin Ireland Europe America Scope to address global Limited, but near market food Scope for both near market Significant growth shortfall security now in focus supply and yield enhancement Growth challenge Maintain yields in
Slide 27: Approach to the Nature Economy
Origin’s approach to the Nature Economy Drivers of the emerging Nature Economy strengthening Biodiversity Net Gain Environmental Land obligations in the Management in UK Environment Agricultural Policy Act 2021 Corporate reporting Ecosystems towards nature and Consumer and Societal biodiversity disc
Slide 28: Portfolio growth themes and business strategies
Portfolio growth themes and business strategies Approach to Sustainable Agronomy Balancing sustainability & outputs Soil resilience & plant Nutrition Innovative ways to protect crops UK & Ire Agriculture Businesses Origin Digital CE Agriculture Businesses 10 minute comfort Break Global Food Supply R
Slide 29: Approach to Sustainable Agronomy
Approach to Sustainable Agronomy originenterprises.com
Slide 30: Pillar 1: Balancing Sustainability & Outputs
Sustainable Agronomy Pillar 1 Balancing Sustainability & Outputs Ecosystems originenterprises.com 30
Slide 31: Video: Balancing Sustainability & Outputs
Video: Balancing Sustainability & Outputs originenterprises.com 31
Slide 32: Pillar 2: Soil Resilience & Plant Nutrition
Sustainable Agronomy Pillar 2 Soil Resilience & Plant Nutrition Ecosystems Peter Scott Technical Director - Origin Fertilisers originenterprises.com 32
Slide 33: 78% of the air we breathe is nitrogen
78% of the air we breathe is nitrogen 7 Nitrogen 14.007 Inert Gas originenterprises.com 33
Slide 34: Nitrogen: we can't live without it
Nitrogen: we can’t live without it…. 7 DNA Nitrogen 14.007 7 7 Nitrogen Nitrogen 14.007 14.007 7 7 7 Nitrogen Nitrogen Nitrogen Photosynthesis 14.007 14.007 14.007 7 7 7 7 Nitrogen 14.007 Nitrogen 14.007 Nitrogen 14.007 Nitrogen 14.007 Protein Building block of life originenterprises.com 34
Slide 35: But fertiliser
.... But …. 7 Nitrogen 14.007 Inert gas Haber Bosch “ Two out of every five people owe their lives to fertilizer ” Nitrogen Bill Gates Fossil fuel originenterprises.com 35
Slide 36: How do we live with it?
.... how do we live with it? Nitrous oxide (N2O) 74% from agriculture 7 Ammonia (NH3) Nitrogen 14.007 87% from agriculture Reactive Nitrogen Nitrate (NO3) 70% from agriculture originenterprises.com 36
Slide 37: Nitrogen: at the heart of sustainability
Nitrogen: at the heart of sustainability Nitrogen 14.007 Production Sustainable Agriculture Environment -20% Fertiliser originenterprises.com 37
Slide 38: Reducing N fertiliser: threat or opportunity?
Reducing N fertiliser: 20% reduction in fertiliser (baseline 2018) threat or opportunity? EU ‘Farm to Fork Strategy’ 408 kt N 350 kt N 325 kt N 2018 2025 2030 originenterprises.com 38
Slide 39: Nitrogen use efficiency
NITROGEN USE EFFICIENCY NUE Fertiliser Nitrogen A practical, agronomic and Grain economic lever that delivers Nitrogen environmental benefits Definable & measurable KPI: 60% cereals WIN x 3 Nitrogen use efficiency 25% dairy NUE = N Grain / N Fertiliser Increase NUE = NUE = 1 ✓ Increased crop product
Slide 40: How can Origin increase NUE?
How can Origin increase NUE? originenterprises.com
Slide 41: Soil health & resilience
1 Soil health & resilience Integrated nutrient management 2 planning (NMP) Digital tools to convert analytics into advice & farm practice Ecosystems Improve Soil Resilience & Plant Nutrition Enhanced Efficiency Fertilisers 3 (EEF) originenterprises.com 41
Slide 42: Soil health & resilience (SRS)
1 Soil health & resilience (SRS) Healthy, fertile soils are key to sustainable farming: Increase NUE Sequester carbon Increase productivity Improve resilience Decrease nutrient losses Farm Objective Investigation Analysis Interpretation Implementation originenterprises.com 42
Slide 43: Integrated Nutrient Management Planning (iNMP)
2 Integrated Nutrient Management Planning (iNMP) Origin businesses working together to build a leading integrated NMP tool: Increase NUE Soil & crop nutrition; Soil Increase productivity Sustainability Crop Compliance Organics Decrease nutrient losses Sequester carbon Improve resilience originenterp
Slide 44: Enhanced Efficiency Fertilisers
3 Enhanced Efficiency Fertilisers Multi-nutrient, prescription nutrition Choice of 14 nutrients Exact match to soil & crop requirements 15k products Determined from iNMP Ultimate USP of fertiliser blending model – total flexibility Increased efficiency Increased NUE Reduced GHG crop intensity origin
Slide 45: Video: Prescription fertilisers
Video: Prescription fertilisers originenterprises.com 45
Slide 46: Enhanced Efficiency Fertilisers
3 Enhanced Efficiency Fertilisers Inhibitors to reduce nitrogen losses Phosphate enhancers Micro-nutrient coatings Controlled Release Fertilisers (CRF) Sustain and Sweetgrass are registered trademarks of…. AGRI-START is a registered trademark of…. SOMMATech is a registered trademark of… originenterp
Slide 47: Video: Fertiliser facility
Video: Fertiliser facility originenterprises.com 47
Slide 48: Pillar 3: Innovative ways to protect Crops
Sustainable Agronomy Pillar 3 Innovative ways to protect Crops Ecosystems Clare Bend Head of Product Development & Sustainability originenterprises.com 48
Slide 49: Balancing conflicting challenges in sustainable food production
How do we balance today’s potentially conflicting challenges around sustainable food production protecting biodiversity improving food security driving towards Net Zero > Safe, affordable food > Digital tools > Soil resilience > Food security > Cropping limitations > Climate extremes > Viable farms
Slide 50: Video: Throws Farm R&D Centre
Video: Throws Farm R&D Centre originenterprises.com 50
Slide 51: The Importance of Yield gain using PPPs
The Importance of Yield gain using PPPs Plant Protection Products (PPP) 45% 40% What role do PPPs play 35% in food production? % Yield increase globally 30% Globally protect ~ 20 - 40% of yield 25% High yielding crops linked to lower GHG emissions (ADAS YEN ZERO project) 20% Only represent 1% of GHG
Slide 52: Synthetic PPPs are under pressure
But synthetic PPPs Number of new active substances introduced / decade are under pressure 140 Escalating 120 registration costs 100 Discovery Loss of active 80 challenges ingredients 60 Public 40 Resistance perception 20 0 Regulation Residues 1950s 1960s 1970s 1980s 1990s 2000s 2010s Herbicides Inse
Slide 53: What other ways can we protect crops?
What other ways can we Protect crops? Origin have always advised growers and landscape managers to follow Integrated Pest Management principles to lessen risk of economic crop loss Crop rotation Resistant varieties Competitive crops Decision-support tools Balanced nutrition Sowing date Companion cro
Slide 54: Impacts of Innovative Emerging Technologies and Practices
Impacts of Innovative Emerging Technologies and Practices Effect on: Mechanical Plant Breeding BioSolutions Plant Diversity Precision practices Agriculture Crop yield Farmer income Biodiversity Climate change Public health All of the above will have a Positive, Negative or Neutral Food safety effect
Slide 55: Impacts of Innovative Emerging Technologies and Practices
Impacts of Innovative Emerging Technologies and Practices Effect on: Mechanical Plant Breeding BioSolutions Plant Diversity Precision practices Agriculture Crop yield Farmer income Biodiversity Climate change Public health Food safety Food security Competitive Agri Negative Neutral Positive Strongly
Slide 56: What are BioSolutions?
What are BioSolutions? Glasshouse / Field Trials Bioprotectants Biostimulants Lab Screening Natural products that can be Substance or microorganism applied to applied to crops to control Pests, enhance Nutrition efficiency, Abiotic stress Weeds and Diseases tolerance and / or Crop quality Registered
Slide 57: What are BioSolutions? Bioprotectants
What are BioSolutions? Glasshouse / Field Trials Bioprotectants Biostimulants Lab Screening Fungal endophytes – Fungal / Bacterial aid pest resilience biopesticides – aid pest & disease control Elicitors - stimulate plant defence Pheromones & other semio mechanisms – chemicals / attractants Plant ex
Slide 58: What are BioSolutions? Biostimulants
What are BioSolutions? Glasshouse / Field Trials Bioprotectants Biostimulants Lab Screening Bacterial plant growth Titanium – promoters – help fix Improved water use Nitrogen Natural plant proteins Seaweeds – help plant – improve marketable health & rooting yield in potatoes Amino acids – help plant
Slide 59: BioSolutions usage is increasing rapidly across the EU
2018 – 2021 BioSolutions usage is increasing rapidly across the EU 2022 – 2025 For example, Bioprotectants… Global Bioprotection Market Value, US $bn Global Regional Bioprotectant Market Value, US $m 12 4000 3500 10 3000 8 2500 $bn $m 6 2000 1500 4 1000 2 500 originenterprises.com 2021 0 0 2018 2019
Slide 60: BioSolutions role in food production and amenity
BioSolutions will play an increasing role in Food Production & Amenity Management ✓ Potential to replace agronomy gaps left by losses in conventional PPP ✓ Different mode of action reduces selection pressure for resistance to PPP ✓ Help reduce PPP residues, especially in Horticulture Performance is
Slide 61: Rigorous evidence based testing procedure
A rigorous evidence based testing procedure is in place Criteria for BioSolution benchmarking: + + + Laboratory Positive field Positive effect on Good analysis & trials data the environment product support scientific facts originenterprises.com 61
Slide 62: Fortgreen's expertise and new AgBiotech Project
Helped and supported by Fortgreen’s expertise and new AgBiotech Project 2022 - 2028 A R$20m investment into proprietary range of Bioprotectants and Biostimulants is planned over the next 5 years Laboratory Propagation Field Trials originenterprises.com 62
Slide 63: Video: Product development collaboration
Video: Product development collaboration originenterprises.com 63
Slide 64: Conclusion on BioSolutions
Conclusion on BioSolutions Whilst there are many promising emerging technologies to help protect crops, in the short – medium term synthetic Plant Protection Products remain critical BioSolutions offer promising alternatives to compliment existing PPPs and IPM systems Origin’s “What Works”, Evidence
Slide 65: Panel discussion Ireland and UK Agriculture businesses
Panel discussion Ireland and UK Agriculture businesses Participants B. Kent R. Hughes Facilitator M. Kelliher originenterprises.com
Slide 66: Origin Digital
Origin Digital Supporting transition through digital solutions Ecosystems originenterprises.com 66
Slide 67: Video: Origin Digital
Video: Origin Digital originenterprises.com 2021 67
Slide 68: Panel discussion – Continental Europe
Panel discussion – Continental Europe Participants A. Steel M. Ungureanu Facilitator M. Kelliher originenterprises.com 68
Slide 69: Comfort Break
Comfort Break 10 minutes originenterprises.com
Slide 70: Panel discussion – LATAM
Panel discussion – LATAM Participants E. Machado L. Pereira Facilitator M. Kelliher originenterprises.com 70
Slide 71: Emerging Nature Economy
Emerging Nature Economy Enhancing biodiversity and protecting Natural Capital Ecosystems originenterprises.com 71
Slide 72: Video: Enhancing biodiversity and protecting Natural Capital
Video: Enhancing biodiversity and protecting Natural Capital originenterprises.com 72
Slide 73: Panel discussion – Amenity & enhancing biodiversity
Panel discussion – Amenity & enhancing biodiversity Participants C. Clark R. Mann Facilitator M. Kelliher originenterprises.com 73
Slide 74: Financial Overview
Financial Overview TJ Kelly originenterprises.com
Slide 75: Continued focus areas
Continued focus areas Working capital Product mix and margin Earnings concentration investment levels improvement and volatility Progress to date Priority level Maintain Continue Upweight 2022-26 originenterprises.com 75
Slide 76: Strategic Ambition: Cumulative targets
Strategic Ambition Cumulative targets Operating Profit €240m Ireland & UK FY22 to FY26 € €75m Continental Europe FY22 – FY26 Cumulative Group Operating Profit1 €$ €415m €50m Latin America 2017-2021 Cumulative Group Operating Profit1 €50m M&A impact €329m originenterprises.com 76 1 Prior to contribut
Slide 77: Strategic Ambition
Strategic Ambition Average and range FY22 – FY26 Group Operating Profit1: FY17 – FY21 Group Operating Profit1: FY22 – FY26 100 €’m 95 90 85 80 75 70 65 60 55 50 45 40 35 30 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 originenterprises.com 77 1 Prior to contribution from associates and joint ve
Slide 78: Capital Allocation Framework
Capital Allocation Framework FY17 – FY21 Stakeholder Allocation Cash Generation Shareholders FY17 – FY21 Free Cash Generation 39% €257m Business Reinvestment 61% Disposals (including Property) Total Cash Proceeds Generation €28m €285m originenterprises.com 2022 78
Slide 79: Strategic Ambition: Free Cash Flow
Strategic Ambition Cumulative targets Free Cash Flow FY22 to FY26 Average cash €$ conversion >100% FY17 – FY21 € Working capital FY22 – FY26 optimisation Free Cash Flow largely complete €$ €325m Average cash FY17 – FY21 €$ conversion >80% Free Cash flow FY22 – FY26 €257m originenterprises.com 79
Slide 80: Capital allocation framework
Capital allocation framework Disciplined capital allocation driving shareholder return Free Cash Free Cash Flow Flow Ratio: to exceed >80% €325m Strategic Capex M&A €$ Shareholder returns originenterprises.com 80
Slide 81: Capital deployment
Capital deployment FY17 – FY21 M&A European or LATAM speciality product businesses Bolt on Fertiliser and Amenity opportunities with market share Focus on Bolt on distribution businesses Returns on Investment in existing markets Reasonableness of Multiple Opportunity to use existing routes to market
Slide 82: Disciplined Approach to Capital Allocation
Disciplined Approach to Capital Allocation FY22 – FY26 M&A €150m European or LATAM To spend FY23 – FY26 speciality product businesses Bolt on Fertiliser and Amenity opportunities with market share Focus on Environmental Bolt on distribution & Ecological businesses Returns on investment in existingan
Slide 83: Shareholder returns
Shareholder returns FY22 to FY26 Free Cash Free Cash Flow Flow Ratio: to exceed Dividend >80% €325m 35% Pay Out Ratio* €$ Shareholder Returns Share Buyback/ Special Dividend c.50% of FCF* As appropriate: (after strategic Capex / Investments) originenterprises.com 83 * Profit after tax, assumes norma
Slide 84: Concluding Remarks
Concluding Remarks Sean Coyle originenterprises.com
Slide 85: Strategic positioning to macro-growth drivers
Origin’s strategic positioning to macro-growth drivers Macro growth drivers Origin positioning Leading on technical advice and solutions Sustainable agronomy in UK and Ireland, Continental Europe and LATAM Transitioning to Biosolutions and Specialty Global Food Supply Responsiveness Nutrition Produc
Slide 86: Selective M&A can enhance current positioning
Selective M&A can enhance Origin’s current positioning Sustainable Global Food Supply Emerging Nature agronomy Responsiveness Economy Current portfolio UK / Irl (Ag) UK / Irl (Amenity) Continental Europe LATAM M&A priorities Sustainable Agronomic Product Technologies Environmental and Ecological Pro
Slide 87: Complementary M&A Targets
Complementary M&A Targets Sustainable agronomic Environmental & ecological product technologies products and services • Biologicals • Green Infrastructure Solutions • Seed technologies • Forestry & landscaping supplies • Micronutrients • Ecological services & products • Plant Nutrition • Tree protec
Slide 88: Priority Actions in next 12-18 Months
Priority Actions in next 12-18 Months Growth in Ecology Services Biologicals Acquisition Working Capital Product Innovation Invest Discipline and Mix for growth Strengthen Foundations Broaden Amenity Landscaping Products Service Offer Bolt Ons Improved Use of Invest in Technology Our People originen
Slide 89: Thank you
Thank you originenterprises.com
Slide 90: Capital Markets Day – Thank you
Capital Markets Day Thank you Prescriptive Solutions, Sustainable Production