Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — Investor Day (June 2022)
75 slides from Graincorp Limited Class A's investor day presentation, Jun 21, 2022
Slide 1: Investor Day
_ Investor Day 21 June 2022
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: Acknowledgement of Country
Acknowledgement of Country We acknowledge the Gadigal People of the Eora Nation as the traditional custodians of the land on which we gather today, and pay our respects to their Elders - past, present and emerging. 3 GrainCorp Silo Art in Sheep Hills, VIC
Slide 4: Executive team and presenters
Executive team and presenters Robert Spurway Ian Morrison Stephanie Belton Jesse Scott Klaus Pamminger Cate Hathaway Managing Director & CEO Chief Financial Officer Chief Corporate Affairs Chief Innovation & Chief Operating Officer Chief People & Officer & Group Growth Officer Transformation Officer
Slide 5: GrainCorp is exceptionally well positioned, delivering outstanding results
GrainCorp is exceptionally well positioned, delivering outstanding results Well-invested, strategic Outstanding execution – driving infrastructure assets record financial results Confidence in GrainCorp’s strategy and long-term outlook Strategy aligned to key global Strong financial position, with m
Slide 6: Agenda
Agenda Introduction and strategy Panel session 1 Panel session 2 Session 3 execution Global macro trends GrainCorp – Australia and Growth and Innovation Robert Spurway GrainCorp International New Zealand ESG and sustainability Stephanie Belton Speakers: Speakers: Speakers: Capital management and • K
Slide 7: GrainCorp in 2021/22
GrainCorp in 2021/22 © GrainCorp AO WY GrainCorp’s strategic priorities: A closer look MORE VIDEOS GrainCorp > ) 001/436 & Youlube 13
Slide 8: Introduction and strategy execution
Introduction and strategy execution Robert Spurway, Managing Director & CEO
Slide 9: About GrainCorp
About GrainCorp <> Our Vision Lead sustainable and innovative agriculture through another century of growth -S& our Purpose Proudly connect with customers and rural communities to deliver value through innovation and expertise Value Proposition Excellent fundamentals * Favourable macro trends * Outs
Slide 10: 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. Strategically located assets, connecting growers to global markets 10
Slide 11: 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 products across the food, feed and in
Slide 12: Climate risks: Reshaping our global food and agriculture industries
Climate risks: Reshaping our global food and agriculture industries 1/3 Food system’s contribution to global 50% “If we don’t drastically change food production and eating Increase in food production required by greenhouse gas (GHG) emissions (2019) 2050 (vs 2005) to feed the world's habits, climate
Slide 13: Sustainable agriculture: Vital to feeding more people with fewer resources
Sustainable agriculture: Vital to feeding more people with fewer resources • UNSDG: 17 core global goals backed by 193 member states • UNSDG #2 supported by significant policy and financial investment focused on: – Food sources – Food waste – Resource management • Alternative proteins projected to a
Slide 14: GrainCorp well positioned to lead sustainability in Australian agriculture
GrainCorp well positioned to lead sustainability in Australian agriculture Sustainability and innovation embedded in GrainCorp’s business and vision Sustainability remains at the core of Ability to partner with, influence and All our strategic growth areas have GrainCorp as we follow our roadmap sup
Slide 15: Strategic priorities delivering shareholder value
Strategic priorities delivering shareholder value Strengthen the core Targeted growth opportunities Lifting return on invested capital 15
Slide 16: Enhancing the performance of GrainCorp's infrastructure assets
Enhancing the performance of GrainCorp’s infrastructure assets ECA port throughput (mmt) 12 10 8 Bulk materials 6 4 Grain imports 2 Grain exports1 0 FY18 FY19 FY20 FY21 FY22 forecast GrainCorp bulk port terminal, Port Kembla, NSW Oilseed crush volumes – first half (kmt) 126 170 196 220 232 36% 2018
Slide 17: Strong execution generating material earnings uplift
Strong execution generating material earnings uplift Significant increase in earnings reflecting: 590-670 • Capital investment and delivery of operating initiatives • Highly efficient supply chain execution 331 • Strong global demand for Australian 90% grain, oilseeds and vegetable oils 108 • Back-t
Slide 18: Operating initiatives supporting 'through-the-cycle' earnings
Operating initiatives supporting ‘through-the-cycle’ earnings With significant, additional leverage in bumper crop years • Supporting ‘through-the-cycle’ EBITDA of International expansion $240 million by 2023/24 • ‘Through-the-cycle’ represents a year of Core uplift $40m EBITDA uplift by • average v
Slide 19: Increasing return on invested capital
Increasing return on invested capital Focus on enhancing the performance of existing business and assets Return on invested capital (ROIC)1 25.7% • Disciplined investment approach – strict hurdles for capital allocation • Growth capex peaked in 2018 – operating largely at sustaining capex levels 11.
Slide 20: Delivering shareholder value
Delivering shareholder value TSR of 239% since Demerger GrainCorp vs S&P/ASX200 Accumulation Index Total Shareholder Return (TSR) (24 March 2020 to 15 June 2022) 239% 50% GNC ASX 200 Acc Index 20
Slide 21: Innovation driving next phase of growth
Innovation driving next phase of growth Progressing multiple growth initiatives AgTech • GrainCorp Ventures – investing up to $30 million in AgTech over next three years • Investment in Hone, an AgTech start-up that tests grain, soil and crop samples Alternative protein • Partnering with CSIRO and v
Slide 22: Capital management and cash flow
Capital management and cash flow Ian Morrison, Chief Financial Officer
Slide 23: Capital management framework
Capital management framework Conservative capital structure and disciplined investment approach • Disciplined approach to capital management • Target minimal core debt • Surplus cash flow for re-investing into business Service debt obligations • Debt finance commodity inventory and returning to shar
Slide 24: Strong balance sheet position
Strong balance sheet position Debt and liquidity profile • Strong core cash position of $129m at 31 March 2022 Components ($m) 31 Mar 30 Sep 31 Mar 30 Sep 2022 2021 2021 2020 Net debt 1,997 599 1,401 239 • Net debt supports grain accumulation – currently above- normal due to increased volumes and hi
Slide 25: Disciplined capital investment
Disciplined capital investment Capex remains below depreciation; short payback period from recent capacity expansion Capex and investments – Continuing Operations ($m)1 Depreciation & Amortisation (D&A) ($m)1,2 Sustaining Growth Investments AASB-16 impact D&A 91 110 107 81 98 90 28 28 26 68 44 57 46
Slide 26: Outstanding financial performance supporting returns to shareholders
Outstanding financial performance supporting returns to shareholders Dividends Dividends Per Share (DPS) Share buy-back • Reliable dividend payer. • $50m share buy-back announced November 2021. Commenced 3 June 2022. Ordinary Special • Optionality to pay special dividends in years 12 with surplus ca
Slide 27: Capital management and cash flow - summary
Capital management and cash flow - summary • Core cash position, with additional flexibility of UMG holding • Well invested asset base • Disciplined approach to capital investment • Reliable dividend payer • Strong balance sheet and positive outlook provides opportunity for both investment in the bu
Slide 28: Global macro trends
Global macro trends Klaus Pamminger, Chief Operating Officer Jesse Scott, Chief Innovation & Growth Officer
Slide 29: Macro trends
Macro trends Growing demand Global supply / supply Decarbonisation for food chain disruptions 29
Slide 30: Global population to reach 11.2 billion by end of the century
Global population to reach 11.2 billion by end of the century 11.2b Global population growth 2022 – 2100 2100 9.8b 2050 ~3.2b 8b 2022 30
Slide 31: Grain and oilseeds consumption rising
Grain and oilseeds consumption rising Asia outstripping other regions Global grains consumption (mmt) Edible oils consumption growth 2,500 900 450 800 400 2,000 700 350 600 300 Index 2000/01 = 100 1,500 500 250 400 200 1,000 300 150 500 200 100 100 50 0 0 0 2000/01 2001/02 2002/03 2003/04 2004/05 20
Slide 32: Asian consumers driving shifts in consumption habits
Asian consumers driving shifts in consumption habits Demographics and consumer preferences driving demand 50% Growing populations Increasing urbanisation, increased demand for food smaller households growing demand for convenient Asian market share of global food market (2020) food options $4.4 tril
Slide 33: Global wheat stocks at tightest level in two decades
Global wheat stocks at tightest level in two decades Adverse weather conditions have led to declining global stock levels over past six years Global wheat stocks (outside of India and China) 160 30% 140 25% 120 20% 100 million tonnes STU (%) 80 15% 60 10% 40 5% 20 0 0% Russian & Ukrainian Wheat Stoc
Slide 34: Ukraine conflict placing additional squeeze on grain supply
Ukraine conflict placing additional squeeze on grain supply Wheat, corn, barley and sunflower oil supply chains remain disrupted Top wheat exporters (2012-22) – average annual exports (mmt) European Union • Ukraine and Russia are critical Russia 30.0 sources of supply in wheat, corn, United States b
Slide 35: Global supply chains under significant pressure
Global supply chains under significant pressure Surging oil and gas prices and Labour tightness shortages of supply COVID, Ukraine conflict and other domestic/regional events placing substantial strain on manufacturing Black Sea shipping traffic High agricultural input costs plants, infrastructure a
Slide 36: Supply chain resilience proving to be critical
Supply chain resilience proving to be critical Global disruptions have underscored the urgency for Management and resilient and responsive visibility of end-to-end Access to labour operations supply chain Scalability and Risk management adaptability of processes operations Optimising inventory Cost
Slide 37: Agriculture to play a key role in transition to low carbon economy
Agriculture to play a key role in transition to low carbon economy • Agriculture is a large emitter of greenhouse gases – predominantly through cows/livestock and land clearing • Agriculture to play a significant role in global decarbonisation: ― More efficient animal feed, lowering methane emission
Slide 38: Growth in renewable fuels driving demand for agricultural feedstocks
Growth in renewable fuels driving demand for agricultural feedstocks SAF + RD forecast global production volumes, by major markets (million tonnes/year)1 • The world is demanding energy diversity – now CAGR 45 +19% 41 • Governments, companies and consumers driving acceleration of China renewable fue
Slide 39: GrainCorp well-positioned to respond to macro trends
GrainCorp well-positioned to respond to macro trends Growing demand Global supply / supply Decarbonisation for food chain disruptions GrainCorp will play a GrainCorp well-positioned Sustainability and key role through its with resilient end-to-end innovation are embedded multi-origin strategy, suppl
Slide 40: GrainCorp International
GrainCorp International Don Campbell, GM International
Slide 41: Origination footprint supports year-round supply to customers
Origination footprint supports year-round supply to customers Source: USDA. Represents average annual total volumes imported/exported to/from the region 41
Slide 42: Canada is a key part of GrainCorp's multi-origin strategy
Canada is a key part of GrainCorp’s multi-origin strategy One of the world’s largest grain-exporting regions GrainsConnect Canada (GCC) • 50-50 JV between GrainCorp and Zen- Noh Grain • State-of-the-art supply chain - Four country elevators in Alberta and Saskatchewan; each with 35,000mt storage, hi
Slide 43: Fraser Grains Terminal completes GCC supply chain
Fraser Grains Terminal completes GCC supply chain Gateway to the Pacific • Capacity to export up to 4 million tonnes of wheat, barley, oilseeds, pulses and other commodities per annum • Capability to handle and discharge 120 railcars • 70,000 tonnes of storage
Slide 44: Question & Answer session 1
| Question & Answer session 1
Slide 45: GrainCorp Australia and New Zealand
GrainCorp Australia and New Zealand Sean Barker, GM Commercial Nigel Lotz, GM Operations Brad Glass, GM Oils Commercial
Slide 46: East Coast Australia
East Coast Australia Sean Barker, GM Commercial Nigel Lotz, GM Operations
Slide 47: Record crop production in ECA, positive longer-term trend
Record crop production in ECA, positive longer-term trend Consecutive bumper crops, potential for third in 2022-23 ECA winter grain production1 30.4 30.4 First ABARES forecast for the season (June) 28.2 24.7 2.3% 24.2 CAGR of 10-year rolling average2 21.6 25.0 20.2 18.1 17.0 17.3 16.8 20.0 15.7 15.3
Slide 48: Exportable surplus exceeding export capacity in ECA
Exportable surplus exceeding export capacity in ECA Supply chains running at full capacity to move grain to domestic and international customers ECA – total export capacity / exportable surplus (2021/22) 24.0 19.0 Million metric tonnes Export capacity Exportable surplus 2021/22* Source: ACCC, ABARES
Slide 49: Integrated, end-to-end supply chain in ECA
Integrated, end-to-end supply chain in ECA Strategically located, valuable country and port infrastructure assets • 7 bulk grain port terminals • ~160 up-country storage sites • Rail and road freight capability • Connecting growers to end-markets, maximising end-to-end value of grain • Import/export
Slide 50: Transforming the network to create a more efficient supply chain
Transforming the network to create a more efficient supply chain Significant investment to create an efficient, agile and resilient supply chain Investment in infrastructure Operating initiatives • Significant investment in network over • Network ability to flex up and down past seven years: to ensu
Slide 51: Maximising utilisation to improve return on assets
Maximising utilisation to improve return on assets Strategic and versatile assets provide opportunity to extend operations beyond bulk grain ECA port throughput (mmt) 12 10 8 6 4 2 Bulk materials expansion Reversing supply chain during drought 0 FY18 FY19 FY20 FY21 FY22 • Focus on building non-seaso
Slide 52: Supply chain extremely resilient
Supply chain extremely resilient Outstanding execution in 2021/22 despite COVID, floods, labour constraints Grain received Harvest casuals secured 15.4mmt 3,000+ Year-to-date 3,500 required for 2022/23 Grain exports Bulk materials 6.3mmt Year-to-date 1.3mmt HY22 52
Slide 53: Processing
Processing Brad Glass, GM Oils Commercial
Slide 54: Leading oils processor in Australasia
Leading oils processor in Australasia Extensive network of assets across Australia and New Zealand • ANZ’s leading liquid animal feeds business • Portside liquid storage across ANZ • ANZ’s leading supplier of tallow and used cooking oil (UCO) for processing into renewable fuel • Leading edible oil p
Slide 55: Key Processing metrics
Key Processing metrics 1 DIFOT - delivery in full, on time Numbers rounded to nearest percent 55
Slide 56: Operating at all stages of the oils lifecycle
Operating at all stages of the oils lifecycle Managing the full lifecycle of fresh oil from farm to plate, through to renewable energy 1. Sourcing 2. Storage and logistics 3. Processing and production • Direct farmer relationships • Quality management • Oilseed crushing / refining • Traceability • F
Slide 57: Our role in the value chain
Our role in the value chain We provide services and generate margins along the value chain Value added • Quality control • Direct procurement from farmers Sourcing • Traceability • Sustainable sourcing • Ocean freight imports – long term needs • Import commodities & materials directly Storage + logi
Slide 58: Question & Answer session 2
| Question & Answer session 2
Slide 59: Growth and innovation
Growth and innovation Jesse Scott, Chief Innovation & Growth Officer
Slide 60: Strategic priorities delivering shareholder value
Strategic priorities delivering shareholder value Strengthen the core Targeted growth opportunities 60
Slide 61: Alternative protein: the opportunity
Alternative protein: the opportunity Forecast global protein demand Developments over the past 12 months Our right to win: 2020-35E - CSIRO estimates that the domestic and export • Strong track record of 285 Mt opportunity for alternative proteins could reach food science and 827 Mt $4.1b and $2.5b
Slide 62: Alternative protein: our approach
Alternative protein: our approach Partnering with producers Driving research and innovation • GrainCorp has partnered with a leading plant-based protein producer • $4.4m collaboration project with the CSIRO and v2food • Deploying our expertise in oils to enhance blending of plant-based • Investigati
Slide 63: Animal nutrition: the opportunity
Animal nutrition: the opportunity Farm animal feed production - revenue Developments over the past 12 months Our right to win: $AUD billions, 2017-25E - IPCC identify methane as the second largest • #1 handler of key inputs contributor to global warming over past 10 for animal feeds across 2% 1% yea
Slide 64: Animal nutrition: our approach
Animal nutrition: our approach Investor in FutureFeed Increased production capacity Supporting livestock producers • Driving the adoption of Asparagopsis as a • Enabling livestock producers to adopt • RationAssist Program launched to help feed ingredient to reduce methane supplementary feeding progr
Slide 65: Digital AgTech: the opportunity
Digital AgTech: the opportunity Estimated value of agritech products globally Developments over the past 12 months Our right to win: $AUD billions, 2021-24E - Forecast number of IoT device installations in • Depth of commodity and 13% agriculture expected to reach 75 million by the supply chain data
Slide 66: Digital AgTech: our approach
Digital AgTech: our approach Investment in Hone Launch of GNC Ventures AgTech pilots Growth of CropConnect • An Australian AgTech start-up • Launched GrainCorp Ventures in • Innovative sensor technology for • GrainCorp’s digital platform that tests grain, soil and crop May 2022 enhanced inventory an
Slide 67: Additional grower services: our approach
Additional grower services: our approach Innovative carbon collaborations Enhancing customer experience • Loam Bio is an Australian carbon company that has developed a • Hired new Head of Customer Experience microbial solution for the mitigation of greenhouse gas emissions • Implementing refreshed C
Slide 68: Growth and Innovation - summary
Growth and Innovation - summary • Clear strategy, with focus on both core business and growth opportunities • Aligned with macro trends, including sustainability • Leveraging our existing capabilities • Collaborating with leading organisations • Partnering with our growers to deliver greater value 6
Slide 69: Question & Answer session 3
| Question & Answer session 3
Slide 70: Conclusion
Conclusion Robert Spurway, Managing Director and CEO
Slide 71: GrainCorp is exceptionally well positioned, delivering outstanding results
GrainCorp is exceptionally well positioned, delivering outstanding results Well-invested, strategic Outstanding execution – driving infrastructure assets record financial results Confidence in GrainCorp’s strategy and long-term outlook Strategy aligned to key global Strong financial position, with m
Slide 72: Appendix
| Appendix
Slide 73: Intrinsic value of grain
Intrinsic value of grain ECA Multiple Varying harvest Ukraine commodities periods: 1–3 and grades month windows Canada Location Quality Time Grower ECA Canada Integrated trading, Maximising asset risk management utilisation and and supply chain margins Multiple commodities Year-round 50+ countries a
Slide 74: 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 75: Investor Day
Investor Day Contact and further information: Luke Thrum Senior Manager, Investor Relations E: luke.thrum@graincorp.com.au 21 June 2022 Ph: +61 447 894 834