Nufarm Limited · ASX:NUF
Nufarm — FY2018 Earnings Presentation
42 slides from Nufarm's earnings presentation, Sep 26, 2018
Slide 1: 2018 Full Year Results
2018 Full Year Results For personal use only September, 2018
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: Overview
For personal use only 2018 Full Year Results Overview Greg Hunt Managing Director / CEO 3
Slide 4: Focused strategy that builds on our strengths
Focused strategy that builds on our strengths For personal use only Poland Germany France EUROPE NORTH AMERICA Serviced by Hubs in Serviced by a Hub in the USA USA Germany, France & Poland Brazil LATIN AMERICA AUSTRALIA / NEW ZEALAND Serviced by a Hub in Brazil Australia Serviced by a Hub in Austral
Slide 5: Key messages - 2018
Key messages - 2018 For personal use only • Improved safety performance Strategy execution over last • Revenue growth in all regions except ANZ 4 years has delivered: • Revenue growth of 6% (CAGR) • EBIT result in line with July 23 trading update • Margin expansion above 300 basis points • Australia
Slide 6: Prioritising the safety of our people
Prioritising the safety of our people For personal use only Nufarm Global LTIFR - rolling 12 month average 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 LTIFR – lost time injury frequency rate is the number of lost time injuries per one million hours worked Clea
Slide 7: Glyphosate safety
Glyphosate safety For personal use only • All major regulatory authorities have concluded that glyphosate is unlikely to be carcinogenic when used in accordance with label instructions, supported by over 800 scientific studies and reviews conducted over many decades. • A federally funded US Ag healt
Slide 8: Financials
2018 Full Year Results For personal use only Financials Paul Binfield Chief Financial Officer 8
Slide 9: 2018 Full year results
2018 Full year results For personal use only (A$ millions) • Growth in most of our strategic focus FY18 FY17 Change markets Revenue 3,308 3,111 6% Underlying gross profit ¹ 963 916 5% • Gross profit margin largely in line with prior year, when impact of Australia drought and Gross profit margin 29.1
Slide 10: EBITDA bridge by driver
EBITDA bridge by driver For personal use only A$m ANZ impacted by drought conditions, with Europe boosted by acquisition contribution 10
Slide 11: Operating expenses reflect investment in acquisitions and transformation
Operating expenses reflect investment in acquisitions For personal use only and transformation (A$ millions) • Investment in sales & marketing resources in Europe FY18 FY17 to support new acquisitions – 41 new staff recruited A$m %/sales A$m %/sales • Distribution costs impacted by higher freight in
Slide 12: Working capital
Working capital (A$ millions) For personal use only FY18 FY17 Change • ANWC/sales elevated to 40.3%, but expect reduction to below 40% in FY19, with medium term target of 35-37% Receivables 1,276 1,101 175 • NWC at 31 July higher caused by: Inventories 1,180 763 417 – higher inventories in Australia
Slide 13: Interest and net debt
Interest and net debt For personal use only (A$ millions) • Net debt increase due to increased net working capital at FY18 FY17 July 2018 of $287m and debt associated with acquisitions Interest income (11.0) (8.6) of $335m Interest expense ¹ 94.0 96.1 • Medium term average leverage target 2.0x Lease
Slide 14: Material items
Material items (A$ millions) Material items relate to: For personal use only NPAT reconciliation FY18 FY17 Underlying NPAT 98.4 135.8 • Impairment of the Australian business driven by the lower Material items earnings in FY18 and FY19, and a higher discount rate applied to future cash flows from the
Slide 15: Operating cash flow
Operating cash flow • Operating cash flow significantly impacted by higher July net working capital For personal use only • Expect FY19 PPE and intangibles capex to be $160m to $170m (FY18: $193m) • Expect FY19 depreciation and amortization to be $160m to $170m (FY18: $121m) A$m Future cash flow imp
Slide 16: Segment results
Presentation title 2018 Full Year Results For personal use only goes here Segment results Greg Hunt Managing Director / CEO Subtitle goes here 00 Month 2018
Slide 17: Major segments
Major segments For personal use only Gross profit by product Gross profit by geography North Insecticide America 13% 21% Other Herbicides 24% Fungicide Australia/ Latin 10% New America Zealand 2018 12% 2018 26% $963m Other* $963m 11% Seed Tech Phenoxies 9% 21% Seed Tech Asia 9% 4% Glyphosate Europe
Slide 18: Region – Australia/New Zealand
Region – Australia/New Zealand Sales EBITDA For personal use only A$(m) FY18 FY17 % 800 70.0 750 64.9 70 Sales 590.2 654.2 -10% 61.8 700 60 650 Underlying EBIT 9.2 51.6 -82% 50 600 550 40 Underlying EBITDA 23.7 64.9 -63% 500 30 450 Underlying EBITDA 4.0% 9.9% 582 554 654 590 23.7 400 20 Margin FY15A
Slide 19: Region – Australia/New Zealand: EBIT bridge and outlook
Region – Australia/New Zealand For personal use only EBIT bridge FY17 to FY18 Nufarm outlook for FY19 • Plant upgrade costs – one-off in FY18 • Partial recovery of margin/mix losses assuming average 2019 winter season and good post-emergent market • Continue to invest in brand and grower pull-throug
Slide 20: Region – North America
Region – North America Sales EBITDA For personal use only 99.5 A$(m) FY18 FY17 % 900 100 89.3 Sales 833.7 761.1 10% 90 800 76.9 80 Underlying EBIT 77.5 70.3 10% 700 70 600 Underlying EBITDA 99.5 89.3 11% 54.6 60 500 50 Underlying EBITDA 11.9% 11.7% 589 654 761 834 400 40 Margin FY15A FY16A FY17A FY1
Slide 21: Region – Latin America
Region – Latin America Sales EBITDA For personal use only A$(m) FY18 FY17 % 900 104.4 110 850 105 Sales 885.2 821.8 8% 95.6 97.4 100 800 95 Underlying EBIT 90.8 89.4 2% 750 90 700 85 79.6 650 80 Underlying EBITDA 97.4 95.6 2% 75 600 70 550 65 Underlying EBITDA 11.0% 11.6% 706 741 822 885 500 60 Marg
Slide 22: Region – Europe
Region – Europe Sales EBITDA For personal use only A$(m) FY18 FY17 % 700 160 149.9 150 Sales 642.6 539.8 19% 650 140 600 Underlying EBIT 86.5 85.8 1% 130 121.4 550 120 110.3 110 Underlying EBITDA 149.9 121.4 24% 500 98.5 100 450 90 Underlying EBITDA 23.3% 22.5% 545 550 540 643 400 80 Margin FY15A FY
Slide 23: Region – Asia
Region – Asia Sales EBITDA For personal use only A$(m) FY18 FY17 % 180 28.3 29 175 Sales 170.7 165.6 3% 26.7 25.2 170 27 165 25 Underlying EBIT 22.2 24.4 -9% 160 21.7 23 155 150 21 Underlying EBITDA 25.2 28.3 -11% 145 19 140 17 135 Underlying EBITDA 14.8% 17.1% 155 149 166 171 130 15 Margin FY15A FY
Slide 24: Seed technologies
2018 Full Year Results For personal use only Seed technologies Brent Zacharias Group Executive, Nuseed 24
Slide 25: Region – Seed technologies
Region – Seed technologies Sales EBITDA For personal use only A$(m) FY18 FY17 % 220 60 210 55 Sales 185.5 168.6 10% 200 190 43.6 50 45.3 Underlying EBIT 34.3 36.4 -6% 180 45 170 160 37.6 40 Underlying EBITDA 43.6 45.3 -4% 35.5 150 35 140 30 130 Underlying EBITDA 23.5% 26.9% 160 144 169 186 120 25 Ma
Slide 26: Omega-3 canola update
Omega-3 canola update For personal use only Commercialization on track, subject to appropriate regulatory approvals • Regulatory approval in Australia (food, feed and cultivation) • Regulatory approval in USA (cultivation) Regulatory status • Anticipate USA food and feed approval prior to 2019 crop
Slide 27: Growth opportunities
2018 Full Year Results For personal use only Growth opportunities Greg Hunt Managing Director / CEO 27
Slide 28: Growth opportunities remain strong
Growth opportunities remain strong For personal use only Portfolio Pipeline Partners Acquisitions Beyond Yield Growing our Strengthening our Building alliances Pursuing portfolio Investing in new seed share in our core pipeline of grower- with partners around acquisitions that align solutions and ge
Slide 29: Portfolio growth/pipeline
Portfolio growth/pipeline For personal use only Crop protection Key development targets Net Sales AUD(m) A$m split by Portfolio Category CAGR 3500 2014 - 2018 3000 Crop Target Timing Patented +8% Soybeans Herbicide – 2nd gen pre-em 2025 2500 Fungicide – ASB rust 2023 2000 Differentiated +8% Cereals
Slide 30: Our partnership with Sumitomo continues to grow
Our partnership with Sumitomo continues to grow A$m For personal use only 300 Growth has come from • Exclusive distribution agreements 250 for core crops and key countries 245 • Joint product innovation and formulation development with 233 200 core molecules • Increased access to a wider portfolio 1
Slide 31: European acquisitions expected to deliver FY19 financial targets
European acquisitions expected to deliver FY19 For personal use only financial targets Rationale FY19 • Acquired 50 brands and 260 product registrations Contribution (A$m) FY18 Target ¹ • Enhanced position with increased scale and broader portfolio strengthening channel partner relationships Sales 6
Slide 32: Outlook
2018 Full Year Results For personal use only Outlook Greg Hunt Managing Director / CEO 32
Slide 33: Group outlook
Group outlook For personal use only Assumptions • Outlook assumes average seasonal conditions for the major selling periods in our key markets, and no material impacts from government policy changes or third party supply interruptions outside of our control. It should also be noted that heightened v
Slide 34: Group outlook (continued)
Group outlook For personal use only Full year (continued) • Net interest expense is expected to increase in the 2019 financial year, given the full year funding of the acquisitions. Net foreign exchange impacts will continue to include anticipated hedging costs of approximately $20 million for Brazi
Slide 35: Thankyou
For personal use only Thankyou
Slide 36: Supplementary information
2018 Full Year Results For personal use only Supplementary information
Slide 37: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions For personal use only Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items Underlying EBIT Earnings before net finance costs, taxation and material items Underlying EBITDA Earnings
Slide 38: Revenue growth
Revenue growth For personal use only A$b Revenue growth in all regions, except ANZ 38
Slide 39: EBITDA bridge by region
EBITDA bridge by region For personal use only A$m ANZ impacted by drought conditions, with Europe boosted by acquisition contribution. 39 Growth in North America and Latin America
Slide 40: Constant currency results
Constant currency results For personal use only (A$ millions) Full year ended 31 July 2018 2018 2017 Constant Reported Constant Reported currency currency currency ¹ currency % Revenue 3307.8 3373.9 3111.1 8.4% Underlying SG&A expenses ² 666.6 676.8 585.4 15.6% Translation impact: Underlying EBITDA
Slide 41: Non IFRS information reconciliation
Non IFRS information reconciliation 12 months ended 31 July 2018 12 months ended 31 July 2017 Material Material For personal use only Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 3,,307,847 - 3,,307,847 3,111,115 - 3,111,115 Cost of sales (2,344,413) - (2,344,4
Slide 42: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Twelve months ended 31 July 2018 2017 $000 $000 Underlying EBIT 265,103 302,285 Material items impacting operating profit (89,604) (23,043) Operating profit 175,499 279,242 Underlying EBIT 265,103 302,285 add Depreciation and amortisation exc