Slide 1: 1H23 Results
This release has been authorised by the Board of GrainCorp Limited 1H23 Results For the half-year ended 31 March 2023 11 May 2023
Slide 2: 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 3: Agenda
Agenda Speakers Contents • Safety Robert Spurway Managing Director and CEO • 1H23 results • Strategy update Ian Morrison Chief Financial Officer • Balance sheet and capital management GrainCorp Silo Art in Sheep Hills, VIC • Outlook and conclusion GrainCorp acknowledges Aboriginal and Torres Strait
Slide 4: 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 • Focus on initiatives to drive improvements in safety systems and processes • Developments in 1H23: – High number of Safety, Health & Environment (SHE) engagements – Increase in
Slide 5: Outstanding 1H23 performance
Outstanding 1H23 performance Strong financial results and balance sheet Outstanding 1H23 Improved earnings Strong balance sheet Driving shareholder performance outlook value • 1H23 EBITDA1 of $383m • FY23 EBITDA guidance • $200m core cash • FY23 interim dividend upgraded to $500-560 million2 declare
Slide 6: 1H23 highlights
1H23 highlights Excellent all-round performance 6
Slide 7: Commitment to environment and sustainability
Commitment to environment and sustainability ESG is fundamental to GrainCorp’s long-term performance and sustainability Our environment Our people Our integrity • Commenced development of emissions • GrainCorp Community Foundation: • Submission of Reconciliation Action Plan reduction roadmaps for Sc
Slide 8: Strategic priorities driving higher return on invested capital
Strategic priorities driving higher return on invested capital Strengthen the core Targeted growth opportunities 8
Slide 9: Evaluating new oilseed crush plant
Evaluating new oilseed crush plant Opportunity to build on GrainCorp’s position as a leading supplier of renewable fuel feedstocks GrainCorp’s existing integrated portfolio of feedstocks Used Cooking Oil (UCO) Canola oil Tallow • Assessing options for new oilseed crush capacity Leading Australian UC
Slide 10: 1H23 financial performance
| 1H23 financial performance
Slide 11: 1H23 financial performance
1H23 financial performance A strong result, following record high achieved in 1H22 $m 1H23 1H22 • See slides 12-14 for descriptions of business segment performance • Increase in corporate costs due to investment in growth programs • Increase in fair value of UMG investment2 reflects share price appr
Slide 12: Agribusiness
Agribusiness Excellent all-round performance, leveraging GrainCorp’s leading ECA footprint and capabilities Agribusiness East Coast Australia (ECA) $m 1H23 1H22 Revenue • Positive cropping conditions supported ECA grain production of 31.4mmt in 2022-23 EBITDA • Large carry-in of 4.9mmt supported tot
Slide 13: Agribusiness
Agribusiness Strong International and FFO contributions supporting Agribusiness result International1 Key International metrics mmt 1H23 1H22 • Strong result, benefiting from multi-origination strategy and execution from Western Contracted grain sales - ECA Australia Contracted grain sales - • Globa
Slide 14: Processing
Processing Outstanding performance with improved efficiencies, higher volumes and stronger margins Oilseeds Processing • Record half-year oilseed crush volumes with continued operational improvements $m 1H23 1H22 being delivered Revenue • Excellent crush margins, driven by: EBITDA EBIT – Elevated do
Slide 15: Balance sheet and capital management
Balance sheet and capital management
Slide 16: Balance sheet strength
Balance sheet strength Strong cash generation to end half-year at $200m core cash Core cash / (debt) ($m) Debt and liquidity profile Components 31 Mar 2023 30 Sep 2022 31 Mar 2022 200 177 Term debt Inventory and working capital 129 financing Cash Net debt Commodity inventory (1) Core cash / (debt)1
Slide 17: Working capital movements
Working capital movements Working capital currently elevated - expected to unwind as cycle moderates ECA grain production / GrainCorp exports (mmt) GrainCorp Net Working Capital (NWC) ($m)2 800 10 40 9 700 35 8 600 30 7 Total ECA winter + sorghum GrainCorp exports (mmt) 25 500 6 production (mmt) 5 2
Slide 18: Continued capital allocation discipline
Continued capital allocation discipline Investing prudently in ECA network to support results during current cycle Capex and investments ($m)1 Depreciation & Amortisation (D&A) ($m)1,2 Sustaining Growth Investments D&A AASB-16 depreciation 117 86 110 107 81 6 90 36 28 28 1 26 44 57 46 5 41 1 17 14 1
Slide 19: Delivering strong returns
Delivering strong returns Creating a consistent dividend profile through-the-cycle Dividends (cents per share) Ordinary dividend Special dividend 16 10 12 • 1H23 interim dividend: total 24cps, fully franked • Ordinary dividend reflects Board’s confidence in through-the-cycle earnings • $50 million s
Slide 20: Outlook and conclusion
| Outlook and conclusion
Slide 21: FY23 outlook and guidance
FY23 outlook and guidance Positive near-term and long-term outlook FY23 guidance upgraded1,2: Good rainfall in most areas through March and April has supported ECA grower planting • EBITDA $500-560m (from $470-530m2) • NPAT $220-260m (from $180-220m2) Outlook – near-term: • Expect full export progra
Slide 22: Lifting average earnings through-the-cycle to $310 million
Lifting average earnings through-the-cycle to $310 million Structural improvements and leverage to ECA crops drive higher average earnings • GrainCorp’s average earnings through-the-cycle1 has risen to Average EBITDA through-the-cycle ($m) ~$310m due to: ― Increase in oilseed crush volumes: 460kmt t
Slide 23: Conclusion
Conclusion Conclusion Outstanding 1H23 performance Strong balance sheet with significant flexibility Progressing strategy – evaluating new oilseed crush plant Upgrading FY23 EBITDA guidance from $470-530m to $500-560m Lifting average earnings through the cycle from $240m to $310m Delivering strong f
Slide 24: Appendices
| Appendices
Slide 25: About GrainCorp
About GrainCorp GrainCorp is a leading Australian agribusiness and processing company, with integrated operations across four continents and a proud history of delivering for customers for more than 100 years. > > 25
Slide 26: How we operate
How we operate We partner with growers to maximise the value of their crops, connecting them to domestic and global marketplaces through our end-to-end supply chain and infrastructure assets. We develop innovative solutions to create high quality and sustainable International products across the foo
Slide 27: Investment proposition
Investment proposition Attractive returns underpinned by outstanding execution and positive long-term fundamentals Positive long-term fundamentals – rising global demand for food Strategically located, well invested assets – significant replacement cost Attractive growth opportunities, each with str
Slide 28: Strategy aligned to macro trends
Strategy aligned to macro trends Population growth / Decarbonisation and Disrupted global Technology/digital changing demographics sustainability supply chains acceleration • Multi-origin strategy • Sustainability and • Resilient, end-to-end • Progressing digital capability innovation embedded in su
Slide 29: Lifting average earnings through-the-cycle to $310 million
Lifting average earnings through-the-cycle to $310 million Structural improvements and leverage to ECA crops drive higher average earnings Average EBITDA through-the-cycle ($m)1 Increase in interest costs on commodity inventory (higher interest rates) – Sustainable passed on to Demonstrated Sustaina
Slide 30: Significant operating leverage in large ECA crop years
Significant operating leverage in large ECA crop years Underlying EBITDA ($m)1 703 Average EBITDA FY20-23 (since UMG demerger): ~$415m 5303 • GrainCorp has significant operating leverage in large ECA crop years, as demonstrated in FY21-23 Average EBITDA 331 • Operating initiatives and the Crop Produ
Slide 31: Earnings bridge: 1H22 to 1H23
Earnings bridge: 1H22 to 1H23 EBITDA ($m) 427 9 383 48 (179) (4) 34 48 1H22 EBITDA CPC impact1 Lower volumes and Strong Strong crush Growth & project UMG fair value 1H23 EBITDA export margins International and volumes initiatives increase2 FFO performance and margins Agribusiness Processing Corporat
Slide 32: ECA tonnes handled
ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin mmt FY17 FY18 FY19 FY20 FY21 FY22 FY23e ABARES – total ECA winter + sorghum 29.2 18.0 9.7 12.6 32.0 33.9 31.4 production1 Carry-in 1.7 3.3 2.3 1.5 0.7 4.3 4.9 Receivals2 15.0 6.8 3.1 4.2 16.5 16.3 13.5 – 14.5 Im
Slide 33: Crop Production Contract
Crop Production Contract Smoothing GrainCorp’s cash flows through the cycle Crop Production Contract – production payment profile1 10-year contract (started FY20) with White Rock Insurance 90 $70m gross Production payments based on ABARES’ “total ECA winter crop payment based production”2 estima
Slide 34: Cash flow
Cash flow ($m) 31 Mar 2023 31 Mar 2022 Statutory EBITDA 383 427 Net Interest (33) (15) Income taxes paid (142) (18) Changes in working capital and other related items (59) (181) Net operating cash flow excl inventory funding & commodity inventory 149 211 Proceeds for bank loans – inventory funding 8
Slide 35: Core (debt)/cash bridge: FY22 – HY23
Core (debt)/cash bridge: FY22 – HY23 81 (76) (21) (45) Core cash position increased from $177m at 30 Sep 2 (41) 2022 to $200m at 31 Mar 2023 (67) Harvest related inventory procurement trade payable 383 (33) facility expected to unwind in the second half of FY23 (142) Harvest related increase i
Slide 36: Capital management framework
Capital management framework • Target minimal core debt Service debt obligations • Debt finance commodity inventory and working capital Sustaining capital expenditure • $40m–$50m p.a. Dividends • Payout ratio = 50-70% of NPAT through the cycle • Capital investment in growth projects Surplus cash flo
Slide 37: Glossary
Glossary Term Definition Term Definition AASB Australian Accounting Standards Board IFRS International Financial Reporting Standards ABARES Australian Bureau of Agricultural and Resource Economics JV Joint Venture CAGR Compound Annual Growth Rate KMP Key Management Personnel Carry-in Grain inventory
Slide 38: GrainCorp Corporate Office
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 38