Nufarm Limited · ASX:NUF
Nufarm — FY2016 Earnings Presentation
38 slides from Nufarm's earnings presentation, Sep 21, 2016
Slide 1: 2016 Full Year Results
For personal use only 2016 Full Year Results September, 2016
Slide 2: Disclaimer
Disclaimer For personal use only General This presentation has been prepared by Nufarm Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be us
Slide 3: 2016 Full Year results: Overview
For personal use only 2016 Full Year results Overview Greg Hunt Managing Director / CEO 3
Slide 4: Delivering on our plan
Delivering on our plan For personal use only • At the mid-point of our change program, these results demonstrate the strong progress we have made against our objectives − An accelerated contribution from the performance improvement program − A more cost-competitive business that is winning share in
Slide 5: Headline results
Headline results For personal use only (A$ millions) • Strong underlying EBIT growth of FY16 FY15 Change 21% Revenue 2,791 2,737 ▲ 2% • Improved quality of earnings – gross profit margin up 160bps year on year Underlying EBIT 287 237 ▲ 21% • Reported NPAT includes material items, primarily related t
Slide 6: 2016 Full Year results: Financials
For personal use only 2016 Full Year results Financials Paul Binfield Chief Financial Officer 6
Slide 7: Good operational result in challenging environment
2016 Full Year results Good operational result in challenging environment For personal use only • Commitment to performance improvement program results in benefits being realized earlier and driving margin expansion • Strong operating profit and continued improvement in capital management drives sig
Slide 8: 2016 results drivers
2016 results drivers For personal use only Performance improvement And drove quality of earnings program delivered net benefit of improvement, with better gross $60m in the year profit margin EBIT bridge (FY15 to FY16) Gross profit margin (FY13 to FY16) 30% 29.6% 29% 28% 28.0% 27.4% 27% 26.7% 26% FY
Slide 9: Performance improvement program progress report
Performance improvement program progress report For personal use only Targeted gross Initiatives Status Update savings by FY 2018 Europe benefits delivered. ANZ benefits Manufacturing footprint $40m offset by volume headwinds. Calgary benefits in FY17 FY17 full run rate Wyke, Laverton. Manufacturing
Slide 10: Structural shift in the Brazilian crop protection market
Structural shift in the Brazilian crop protection market For personal use only • Customer preference changed from being These issues are being actively invoiced in USD to BRL managed: • Strengthened treasury and risk Net USD working capital exposure FY15-16 USD $M USD /BRL functions 4.50 4.00 • Enco
Slide 11: Interest and net debt
Interest and net debt Higher net interest expense driven by Brazil funding For personal use only costs (A$ millions) Full year ended 31 July • Net interest expense increase due to high 2016 2015 cost to fund Brazil growth, exacerbated Interest income (15.7) (7.4) by structural shift in the market In
Slide 12: Foreign exchange losses
Foreign exchange losses For personal use only Underlying loss of $41.5 million, mainly driven by Latin America (66%) • Structural shift to BRL invoicing resulted in unhedged BRL/USD exposures that coincided with high currency volatility • In Latin America, active hedging of net USD exposures is cost
Slide 13: Operating expenses and tax expense remain well controlled
Operating expenses and tax expense remain well controlled For personal use only Control of operating expenses remains an important management objective (A$ millions) Full year ended 31 July • Expense ratio slightly down on prior 2016 2015 year as revenue growth outstrips Underlying sales, marketing
Slide 14: Active balance sheet management
Active balance sheet management For personal use only ANWC/Sales below FY16 target of 40% ANWC / Sales(3) • With the structural change in the Brazil market, non-current More than $200m of trade receivables grew to $62m in FY16, from $32m last working capital eliminated year. The non-current receivab
Slide 15: Material items relate largely to the performance improvement program
Material items relate largely to the performance improvement program For personal use only Benefits of program being delivered ahead of schedule • Material items related to performance NPAT reconciliation improvement program total $126m (A$ millions) • Cash outflow from material items is $52m in Ful
Slide 16: Cash flow
Cash flow • Good control maintained over net working capital For personal use only • Current year material item cash outflow $52m, reducing to $15m in FY17 • Divestment of non-core assets should realize cash proceeds of $50m in the first half of FY17 • Expect lower PPE capex in FY17, post completion
Slide 17: Segment results
For personal use only 2016 Full Year results Segment results Greg Hunt Managing Director / CEO 17
Slide 18: Major segments
Major segments For personal use only Product Geographic North America Insecticide 23% 10% Australia/ New Zealand Herbicide Fungicide 20% 63% 2016 11% 2016 $2,791m Asia $2,791m Other* Latin 5% America 11% Seed Tech 27% Seed Tech 5% 5% Europe 20% *Other includes equipment; adjuvants; PGR's; industrial
Slide 19: Regional review: Australia/New Zealand
Regional review For personal use only Australia/New Zealand Sales EBIT 650 52.7 60 33.9 47.0 A$(m) FY16 FY15 % 600 50 6% Sales 554.0 582.4 -4.9% 65% 6% 40 550 65% 6% 6% 30 Underlying EBIT 47.0 52.7 -10.8% 500 20 23% Underlying EBITDA 61.8 69.9 -11.6% 450 23% 10 606 582 554 400 0 Underlying EBITDA 11
Slide 20: Regional review: North America
Regional review For personal use only North America Sales EBIT 650 70 59.3 60 A$(m) FY16 FY15 % 600 10% 50 Sales 653.9 588.7 11.1% 73% 6% 550 38.8 65% 6% 40 9% Underlying EBIT 59.3 38.8 52.8% 500 8% 30 20.6 23% Underlying EBITDA 76.9 54.5 41.1% 20 450 Underlying EBITDA 11.8% 9.3% 10 Margin 514 589 6
Slide 21: Regional review: Latin America
Regional review For personal use only Latin America Sales EBIT 800 110 780 100.4 100 A$(m) FY16 FY15 % 760 Sales 740.7 706.5 4.8% 740 64% 6% 90 720 65% 25% 6% 76.7 Underlying EBIT 100.4 76.7 30.9% 700 80 71.6 680 Underlying EBITDA 104.4 79.6 31.2% 23% 70 660 11% 640 Underlying EBITDA 14.1% 11.3% 60
Slide 22: Regional review: Europe
Regional review For personal use only Europe Sales EBIT 580 73.0 75 570 A$(m) FY16 FY15 % 5% 70 560 6% Sales 550.4 544.8 1.0% 56% 550 64.465% 6% 18% 65 Underlying EBIT 73.0 64.4 13.4% 540 Underlying EBITDA 110.3 98.6 11.9% 530 23% 60 56.4 21% 520 Underlying EBITDA 20.0% 18.1% 55 Margin 510 555 545 5
Slide 23: Regional review: Asia
Regional review For personal use only Asia Sales EBIT 160 24 22.8 23 155 A$(m) FY16 FY15 % 22 4% Sales 148.6 155.2 -4.3% 150 80% 6% 21 8% 65% 18.1 6% 19.5 20 Underlying EBIT 22.8 18.1 26.0% 145 8% 19 Underlying EBITDA 26.7 21.7 23.0% 140 23% 18 17 Underlying EBITDA 18.0% 14.0% 135 16 Margin 141 155
Slide 24: Segment result: Seed technologies
Segment result For personal use only Seed technologies Sales EBIT 160 40 37.2 155 35 A$(m) FY16 FY15 % 31.8 150 Sales 143.6 159.6 -10.0% 55% 28.7 6% 30 65% 6% 145 Underlying EBIT 28.7 31.8 -9.7% 25 140 45% Underlying EBITDA 35.5 37.7 -5.8% 23% 20 135 Underlying EBITDA 24.7% 23.6% 144 160 144 Margin
Slide 25: Strategic priorities
For personal use only 2016 Full Year results Strategic priorities Greg Hunt Managing Director / CEO 25
Slide 26: The safety of our people
The safety of our people For personal use only • A focus on a step-change in safety performance • Development of a common system of processes and standards across the company is well progressed • Injury reporting and classification processes have been reset to ensure consistent company-wide reportin
Slide 27: Focus on core geographies & crops
Focus on core geographies & crops For personal use only PASTURE, SOYBEAN TREES, NUTS, CORN CEREAL TURF & VINES & ORNAMENTALS VEGETABLES 27
Slide 28: A stronger platform to support sustainable organic growth
A stronger platform to support sustainable organic growth For personal use only • A 'One Nufarm' approach to concentrating our focus on growing in the crop and market segments where we can be most successful • Development programs that generate a strong pipeline of new product introductions • Securi
Slide 29: We are building a better Nufarm
We are building a better Nufarm For personal use only Investments • Manufacturing footprint and efficiency program complete SUPPLY CHAIN • Supply chain system EXCELLENCE • Global procurement – to take advantage of our global scale investment $27m • Investing in better supply chain processes and syst
Slide 30: Near term objectives
Near term objectives For personal use only • Maintain positive momentum on performance improvement program: − Implement supply chain initiative − Progress roll-out of Salesforce.com and other customer excellence initiatives − Complete regional 'shared services' model • Rebuild share in Australia wit
Slide 31: 2017 Full Year results: Outlook
For personal use only 2017 Full Year results Outlook Greg Hunt Managing Director / CEO 31
Slide 32: Group outlook
Group outlook For personal use only • We anticipate a continuation of subdued general market conditions, with low commodity prices limiting value growth in the industry • Internally generated margin expansion will result from: − continued strong execution of the performance improvement program − mai
Slide 33: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.
Slide 34: Supplementary information
For personal use only Supplementary information
Slide 35: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions For personal use only Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items. Underlying EBIT Earnings before net finance costs, taxation and material items. Underlying EBITDA Earnin
Slide 36: Constant currency results
Constant currency results For personal use only Devaluation of BRL has had adverse impact (A$ millions) Full year ended 31 July 2016 2016 2015 Constant Reported Constant Reported currency Translation impact currency currency(1) currency % • Sales growth 3.2% on constant currency basis Revenue 2,791.
Slide 37: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only 12 months ended 31 July 2016 12 months ended 31 July 2015 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 2,791,217 - 2,791,217 2,737,163 - 2,737,163 Cost of sales (1,964,788) 24,773 (1,98
Slide 38: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Twelve months ended 31 July 2016 2015 $000 $000 Underlying EBIT 286,696 236,882 Material items impacting operating profit (83,610) (86,664) Operating profit 203,086 150,218 Underlying EBIT 286,696 236,882 add Depreciation and amortisation exc