Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Wilsons / CIP 'Rapid Insights' Trans-Tasman Investment Conference 2023
34 slides from Graincorp Limited Class A's conference presentation, Jun 29, 2023
Slide 1: ASX cover letter for conference presentation
29 June 2023 The Manager, Companies Australian Securities Exchange Companies Announcement Centre 20 Bridge Street For personal use only SYDNEY NSW 2000 Dear Sir/Madam, GrainCorp Limited – Presentation to the Wilsons / CIP ‘Rapid Insights’ Trans-Tasman Investment Conference Please see attached the pr
Slide 2: Wilsons / CIP Rapid Insights Conference
Wilsons / CIP Rapid Insights Conference Queenstown, New Zealand For personal use only 29 June 2023
Slide 3: Disclaimer
Disclaimer For personal use only 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. T
Slide 4: Agenda
Agenda For personal use only • About GrainCorp • 1H23 results • Balance sheet / capital management • Strategy update • Outlook • Appendices 3
Slide 5: Executive profiles
Executive profiles For personal use only Robert Spurway Ian Morrison Managing Director & CEO Chief Financial Officer Robert Spurway joined the Board as MD & CEO in March 2020. He was previously Chief Ian Morrison was appointed Chief Financial Officer in July 2020. As Chief Operating Officer, Global
Slide 6: About GrainCorp
About GrainCorp For personal use only 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. > > 5
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 marketplaces through our For personal use only end-to-end supply chain and infrastructure assets. We develop innovative solutions to create high quality and sustainable International p
Slide 8: 1H23 results
For personal use only 1H23 results
Slide 9: Outstanding 1H23 performance
Outstanding 1H23 performance Strong financial results and balance sheet For personal use only 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 $50
Slide 10: 1H23 highlights
1H23 highlights Excellent all-round performance For personal use only 9
Slide 11: Balance sheet and capital management
Balance sheet and capital management For personal use only
Slide 12: Balance sheet strength
Balance sheet strength Strong cash generation to end half-year at $200m core cash For personal use only Core cash / (debt) ($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
Slide 13: 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 For personal use only 800 10 40 9 700 35 8 600 30 7 Total ECA winter + sorghum GrainCorp exports (mmt) 25 500
Slide 14: Delivering strong returns
Delivering strong returns Creating a consistent dividend profile through-the-cycle For personal use only 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 ea
Slide 15: Strategy
For personal use only Strategy
Slide 16: Strategy aligned to macro trends
Strategy aligned to macro trends For personal use only 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 inn
Slide 17: Strategic priorities driving higher return on invested capital
Strategic priorities driving higher return on invested capital For personal use only Strengthen the core Targeted growth opportunities 16
Slide 18: Delivering on our strategic initiatives – strengthening the core
Delivering on our strategic initiatives – strengthening the core For personal use only Strengthening the core ECA1 network investment – capacity upgrade, new mobile fleet Asset utilisation – port throughput; oilseed and foods volumes International expansion – Fraser Grains Terminal, Vancouver Buildi
Slide 19: Pipeline of growth initiatives to support future earnings diversification
Pipeline of growth initiatives to support future earnings diversification Animal nutrition Alternative protein Agri-Energy Digital/AgTech Grower services For personal use only • Developing sustainable • Collaborating with CSIRO • GrainCorp already a • GrainCorp Ventures Loam Bio: feed solutions and
Slide 20: 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 For personal use only GrainCorp’s existing integrated portfolio of feedstocks Used Cooking Oil (UCO) Canola oil Tallow • Assessing options for new oilseed crush capacity
Slide 21: Outlook
For personal use only Outlook
Slide 22: Positive near-term and long-term outlook
Positive near-term and long-term outlook For personal use only FY23 guidance – upgraded on 11 May 20231,2: Good rainfall in most areas through March and April has supported ECA grower planting • EBITDA $500-560m2 (from $470 – 530m) • NPAT $220-260m2 (from $180 – 220m) Outlook – near-term: • Expect f
Slide 23: Average earnings through-the-cycle lifted to $310 million
Average earnings through-the-cycle lifted to $310 million Structural improvements and leverage to ECA crops drive higher average earnings For personal use only • GrainCorp’s average earnings through-the-cycle1 has risen to Average EBITDA through-the-cycle ($m) ~$310m due to: ― Increase in oilseed cr
Slide 24: Average earnings through-the-cycle
Average earnings through-the-cycle Structural improvements and leverage to ECA crops drive higher average earnings Average EBITDA through-the-cycle ($m)1 Increase in interest For personal use only costs on commodity inventory (higher interest rates) – Sustainable passed on to Demonstrated Sustainabl
Slide 25: Appendices
For personal use only Appendices
Slide 26: 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 27: 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 emissions • GrainCorp Community Foundation: • Submission of Reconciliation Action Plan red
Slide 28: 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: – High number of Safety, Health & Environment (SHE) eng
Slide 29: 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 For personal use only ABARES – total ECA winter + sorghum 29.2 18.0 9.7 12.6 32.0 33.9 31.6 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
Slide 30: Significant operating leverage in large ECA crop years
Significant operating leverage in large ECA crop years Underlying EBITDA ($m)1 For personal use only 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 initiati
Slide 31: 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 For personal use only 90 $70m gross Production payments based on ABARES’ “total ECA winter crop payment bas
Slide 32: Capital management framework
Capital management framework For personal use only • 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 pro
Slide 33: 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 34: GrainCorp Corporate Office
GrainCorp Corporate Office: For personal use only Level 28 175 Liverpool Street Sydney NSW 2000 Australia Postal address: PO Box A268 Sydney South NSW 1235 Australia graincorp.com.au 33
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