Slide 1: 2023 Full Year Results Presentation
Monday 13 November 2023 2023 Full Year Results Presentation Attached is the Elders Limited (ASX:ELD) presentation of the financial results for the 12-month period ended 30 September 2023. Further Information: Mark Allison, Managing Director & Chief Executive Officer, 0439 030 905 Media Enquiries: Me
Slide 2: Full Year Results Presentation for FY23
Full Year Results Presentation for FY23 13 November 2023 Presented by Mark Allison Managing Director and CEO Paul Rossiter CFO 1 Elders Limited
Slide 3: Disclaimer And Important Information
Disclaimer And Important Information The material in this presentation has been prepared by Elders Limited and is general background about Elders' activities and performance at the date of this presentation. The information is in summary form, does not purport to be complete, and where derived from
Slide 4: Agenda
ELDERS LIMITED AGENDA Agenda 01 Executive Overview 04 Outlook 02 Financial Results 05 Questions 03 Strategy 06 Appendix 3
Slide 5: Executive Overview
Executive Overview Presented by Mark Allison (Managing Director and CEO) 4 Elders Limited
Slide 6: Key Investment Drivers
ELDERS LIMITED EXECUTIVE OVERVIEW Key Investment Drivers Australia's most trusted agribusiness brand amongst farmers four years in a row Geographic, product and Attractive market and Transformational initiatives Significant pipeline of Robust balance sheet EPS Growth channel diversification company
Slide 7: Earnings Growth and Resilience
ELDERS LIMITED EXECUTIVE OVERVIEW Earnings Growth and Resilience Second highest EBIT result in the last 10 years notwithstanding volatility across several key markets First Eight Point Plan Second Eight Point Plan Third Eight Point Plan Achievement Achievement Achievement EBIT³ +37.5% EPS³ +735.2% R
Slide 8: Operational Highlights
ELDERS LIMITED EXECUTIVE OVERVIEW Operational Highlights 3 lost time injuries 43% women in the workforce 10.1 total recordable injuries #1 most trusted 20% frequency rate agribusiness brand women in senior positions amongst farmers fourth year in a row 48 77% net promoter score employee engagement 2
Slide 9: Safety, Health and Wellbeing
ELDERS LIMITED EXECUTIVE SUMMARY Safety, Health and Wellbeing Nothing is so important that it cannot be done safely Lost Time Injuries (LTI) Total Recordable Injuries Frequency Rate (TRIFR)1 9 18.7 -13% 17.8 6 15.1 12.6 5 Average 10.1 3 3 2 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 1. All fa
Slide 10: Sustainability Performance
ELDERS LIMITED EXECUTIVE SUMMARY Sustainability Performance CLIMATE TARGETS1 OUR PROGRESS Targets set to reduce our Scope 1 and 2 greenhouse gas emissions: TARGET FY23 FY22 ▪ Launched the Elders Sustainability Framework ▪ Established Thomas Elder Sustainable Agriculture to 100% renewable electricity
Slide 11: Financial Highlights
ELDERS LIMITED EXECUTIVE OVERVIEW Financial Highlights Resilient financial result despite market volatility $170.8m 16.0% 163% 1.4x Underlying EBIT Return on Capital Cash Conversion Leverage Ratio R12 EBIT/ R12 avg net operating assets YTD Operating cash flow / YTD U’NPAT Balance date net debt / R12
Slide 12: Financial Results
Financial Results Presented by Paul Rossiter (CFO) 11 Elders Limited
Slide 13: Five Year Financial Performance
ELDERS LIMITED FINANCIAL RESULTS Five Year Financial Performance Strong track record of delivering 5-10% EBIT and EPS growth through the cycles Sales Revenue ($m) Gross Margin ($m) +15.1% +19.6% 653 619 3,445 3,321 529 2,549 438 2,093 352 1,626 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Costs
Slide 14: Five Year Shareholder Returns
ELDERS LIMITED FINANCIAL RESULTS Five Year Shareholder Returns Compelling shareholder value proposition over time Underlying Earnings per Share (cents) Adjusted Underlying Earnings per Share (cents)¹ +13.6% 134.1 96.7 97.3 96.7 69.9 66.3 87.6 52.6 69.9 52.6 97.3 66.3 FY19 FY20 FY21 FY22 FY23 FY19 FY
Slide 15: FY23 Financial Summary
ELDERS LIMITED FINANCIAL RESULTS FY23 Financial Summary Resilient performance despite volatility across multiple markets Key metrics ($m) FY23 FY22 Var Var % Sales revenue 3,321.4 3,445.3 (123.9) (4%) Gross margin 619.0 652.7 (33.7) (5%) Gross margin % 18.6% 18.9% (0.3%) n/a Costs 448.2 420.6
Slide 16: Product Performance
ELDERS LIMITED FINANCIAL RESULTS Product Performance Mixed results across the product portfolio compared with exceptional market and other conditions in FY22 Change in product margin ($m) FY22 FY22 FY23 152.2 NPAT Retail Products (3.1) 310.0 306.9 Retail Products Agency Services Wholesale (1.4) 73.1
Slide 17: Key Performance Indicator Trends
ELDERS LIMITED FINANCIAL RESULTS Key Performance Indicator Trends Elders diversified business model provides earnings resilience against market volatility Agency Services: Cattle Volume (‘000) Agency Services: Sheep Volume (‘000) Rural Products: Gross Margin ($m) Real Estate Services: Property Manag
Slide 18: Industry Backdrop – Livestock
ELDERS LIMITED FINANCIAL RESULTS Industry Backdrop – Livestock Historically high volatility in cattle and sheep prices has adversely impacted Agency Services gross margin EYCI ($/Head) Mutton ($/Head) -1,516 -162 (-70%) 200 (-84%) 193 2,159 180 2,250 2,000 160 1,750 140 1,500 120 1,250 100 1,000 80
Slide 19: Industry Backdrop – Rural Products
ELDERS LIMITED FINANCIAL RESULTS Industry Backdrop – Rural Products Sales volume growth has partially offset the impact from significant market volatility Glyphosate 95% ($/kg) UREA Index ($/tonnes)² -695 -8.3 (-62%) (-66%) 14.0 9-Yr Mean 1,200 10-Yr Mean 5 Std 3.2 Std 1,130 +/-1 Std Dev 12.6 1 Std
Slide 20: Continued Volume Growth Across Key Products
ELDERS LIMITED FINANCIAL RESULTS Continued Volume Growth Across Key Products Continued sales volume growth, indicative of market share traction, offset by softening input prices Volumes (Tonnes’ 000) 1,452 55 6 5 Animal Health Crop Protection 58 1,329 ▪ Organic growth driven by herd rebuild and ▪ Vi
Slide 21: Gross Margin Diversification
ELDERS LIMITED FINANCIAL RESULTS Gross Margin Diversification Continued focus on product diversification through organic and acquisition growth -8.2% Total Gross Margin ($m) 172.9 652.7 619.0 -22.7% 529.4 158.8 147.0 141.3 130.4 FY21 FY22 FY23 113.7 -1.9% -3.4% -20.4% +39.0% 73.1 +21.0% 71.7 +19.1%
Slide 22: Geographical Diversification
ELDERS LIMITED FINANCIAL RESULTS Geographical Diversification Geographical diversification mitigates regional risk events 24% 17% 26% WESTERN SOUTH VICT O RIA AND AU ST R AL I A AU ST R AL I A RIVERINA $50.5m $36.4m $57.1m -21% YOY -17% YOY -31% YOY 21% 10% 2% NEW SOUTH Q U EEN SL AN D AN D T ASM AN
Slide 23: Cost Drivers
ELDERS LIMITED FINANCIAL RESULTS Cost Drivers Disciplined focus on cost management in FY24 Costs ($m) Underlying Cost Base ($m) Commentary FY22 Costs 420.6 227 225 People: 223 ▪ 65 additional FTE (29 graduates, 36 network and business growth) People 11.8 194 ▪ Wage growth ▪ Offset by lower performan
Slide 24: Capital Allocation
ELDERS LIMITED FINANCIAL RESULTS Capital Allocation Return on capital exceeds target benchmark of 15% despite significant decline from livestock earnings Return on Capital (%)1 Working Capital at Balance Date ($m) Trade and Other Receivables ($m) Average -81 Balance Date 820 -6.5 734 735 738 607 625
Slide 25: Cash Flow
ELDERS LIMITED FINANCIAL RESULTS Cash Flow Strong cash returns benefiting from lower market prices and focus on capital efficiency Operating Cash Flow ($m) Cash Conversion (%)2 +88% 17.1 163% 81.3 (106.3) 75% (16.2) 239.1 26.9 FY22 FY23 57.6 (62.0) 170.8 169.2 Working Capital to Sales (%)3 EBIT Depr
Slide 26: Net Debt and Financial Ratios
ELDERS LIMITED FINANCIAL RESULTS Net Debt and Financial Ratios Strong balance sheet provides flexibility for future growth Leverage ratio Interest cover Gearing ratio Net debt, balance date ($m) Balance date net debt / EBITDA / net interest Balance date net debt / closing EBITDA equity +178.4 + 0.7
Slide 27: Strategy
Strategy Presented by Mark Allison (Managing Director and CEO) 26 Elders Limited
Slide 28: Eight Point Plan Evolution
ELDERS LIMITED STRATEGY Eight Point Plan Evolution Three generations of the Eight Point Plan strategy since FY14, delivering compelling shareholder value proposition FY15 to FY17 FY18 to FY20 FY21 to FY23 Financial metrics1: Financial metrics1: Financial metrics1: EBIT +37.5% EBIT +22.8% EBIT +17% E
Slide 29: New Format, simplified priorities
Option 3 – New Format, simplified priorities Compelling shareholder returns Industry leading sustainability outcomes Most trusted Agribusiness brand 5-10% EBIT and EPS growth through the cycles at across health and safety, community, environment and in rural and regional Australia minimum 15% ROC go
Slide 30: Our Strategic Priorities: Run
ELDERS LIMITED STRATEGY Our Strategic Priorities: Run Optimising the existing business Deepening customer relationships ▪ Increasing sources of insights on clients’ needs and drivers of loyalty ▪ Continue to be the most trusted agribusiness brand amongst farmers Investing in our people ▪ Focus on ca
Slide 31: Our Strategic Priorities: Transform
ELDERS LIMITED STRATEGY Our Strategic Priorities: Transform Future-proofing our business STREAMLINING OUR SUPPLY CHAIN MODERNISING OUR SYSTEMS Modernising our platforms to deliver more efficient Gross margin efficiency and reduced safety stock in Rural Products business processes and an enhanced cli
Slide 32: Our Strategic Priorities: Innovate & Grow
ELDERS LIMITED STRATEGY Our Strategic Priorities: Innovate & Grow Expanding and innovating our portfolio Portfolio Elders’ Points of Presence ▪ Growing our portfolio of products, services, 600 geographic footprint and channels 3.9% CAGR ▪ 21 additional points of presence 579 558 ▪ Enhancing margins
Slide 33: Our Strategic Priorities: Innovate & Grow
ELDERS LIMITED STRATEGY Our Strategic Priorities: Innovate & Grow Innovating to create sustainable solutions for our customers and communities Sustainable Solutions OUR We provide our customers We support our people and We do our part to look We operate ethically and PRINCIPLES and clients with the
Slide 34: Market Outlook
Market Outlook Presented by Mark Allison (Managing Director and CEO) 33
Slide 35: ABARES September 2023 Market Outlook
ELDERS LIMITED OUTLOOK ABARES September 2023 Market Outlook Strong livestock volume outlook moderated by subdued prices and weaker crop outlook Beef and Veal1 Sheep1 Wool1 Winter Cropping2 Summer Cropping2 Average saleyard prices (c/kg) Average saleyard prices (c/kg) Eastern Market Indicator (c/kg)
Slide 36: Market Outlook
ELDERS LIMITED OUTLOOK Market Outlook Favourable cropping outlook with expectations of reduced volatility from livestock and cropping input prices FEED AND RURAL AGENCY REAL FINANCIAL COSTS AND PROCESSING PRODUCTS SERVICES ESTATE SERVICES CAPITAL SERVICES ▪ Dry and El Niño outlook ▪ Cattle and sheep
Slide 37: Questions
Questions 36 Elders Limited
Slide 38: Appendix
Appendix 37 Elders Limited
Slide 39: Business Model
ELDERS LIMITED APPENDIX Business Model Geographic and product diversification mitigate impact of individual market volatility Feed and Digital and Rural Products Agency Services Real Estate Services Financial Services Processing Services Technical Services Retail Wholesale Product and Fee for Servic
Slide 40: Gross Margin Sensitivity
ELDERS LIMITED APPENDIX Gross Margin Sensitivity Geographic and product diversification mitigates the impact of individual market volatility $m 14 12 10 8 6 4 2 +$50 +100k head +$10 +500k head +$25m +50bps +100bps +100bps +10% 0 -$50 -100k head -$10 -500k head -$25m -50bps -100bps -100bps -10% -2 -4
Slide 41: Elders Capital Management Framework
ELDERS LIMITED APPENDIX Elders Capital Management Framework Elders Eight Point Plan aspires to deliver Total Shareholder Return (TSR) in the top quartile of ASX200 companies at investment grade risk Capital Management Framework Key Features of our capital management framework Compelling Total Shareh
Slide 42: Elders Limited
Elders Limited