Slide 1: Company announcement: GrainCorp Investor Presentation Half Year Ended 31 March 2011
Company announcement GrainCorp Limited ABN 60 057 186 035 Date: 26 May 2011 To: The Manager Announcements Company announcements office PUBLIC ANNOUNCEMENT GRAINCORP INVESTOR PRESENTATION FOR THE HALF YEAR ENDED 31 MARCH 2011 Results Presentation Michael G. A. Smith Company Secretary GrainCorp Limite
Slide 2: GrainCorp Half Year 2011 Results
Ms Alison Watkins (Managing Director and Chief Executive Officer) 26th May 2011 GRAINCORP HALF YEAR 2011 RESULTS 1
Slide 3: Agenda
Agenda • Financial Results • Segment g Performance • Dividend • Strategic Initiatives and Update • Guidance and Outlook 2
Slide 4: Stronger earnings in a record half year
Stronger earnings in a record half year → EBITDA and NPAT higher g to $ $173M and $ $88M respectively p y → Storage & Logistics, ports and grain marketing performance higher Record Eastern Australian harvest and record GrainCorp receivals Improved grain marketing volumes and earnings → Malt marg
Slide 5: Financial Results
GrainCorp FINANCIAL RESULTS
Slide 6: Earnings and Cash Flow higher
Earnings and Cash Flow higher EBITDA(1) ‐ $M NPAT ‐ $M 100 250 Fiscal 1H Fiscal 2H Fiscal 1H Fiscal 2H 200 75 28 100 150 50 31 79 88 100 173 53 25 19 112 50 32 82 5 40 32 (7) 0 0 (8) (25) (13) (50) (25) FY07 FY08 FY09 FY10 FY11 FY07 FY08 FY09 FY10 FY11 Operating Cash Flow ‐ $M Core debt and gearing(
Slide 7: Stronger grains earnings
Stronger grains earnings Higher grain production leading to higher country 125 receivals, exports and marketing volumes 2 2 3 $M 5 2 20 100 20 Lower processing earnings due to demand side pressures and FX 34 75 Inclusion of Malt and higher net earnings 8 50 88 54 25 0 1H10 1H10 NPAT Storage & Storag
Slide 8: Record grain volumes
Record grain volumes Earnings driver (mmt1) HY11 HY10 Comments Grain carry‐in (1‐Oct) 2.6 2.9 • Grain stored at period start • Higher storage fees and costs, unchanged outload fee Country network receivals 14.4 7.0 • Receival fee and monthly storage fee Grain exports handled(2) 3.2 1.5 • Received fr
Slide 9: Grains and Malt earnings per tonne
Grains and Malt earnings per tonne Grain EBITDA/t and Throughput(1) Malt EBITDA/t(2) 14 32 160 1.2 12 28 140 1.0 10 24 4.9 120 0.8 8 20 1.9 100 0.6 6 16 2.5 4 12 80 0.4 6.5 5.8 6.1 5.0 2 3.8 8 60 0.2 0 $/t 4 mmt (0.8) AUD/t 40 AUD: 0.0 (2) 0 USD CY07 CY08 LTM Jun‐09 1H10 2H10 1H11 FY07 FY08 FY09 FY1
Slide 10: Inventory held in line with crop size and strategy
Inventory held in line with crop size and strategy Debt Profile ‐ $M Inventory Profile ‐ $M 800 (1) (2) 675 Core debt Net debt Grain Marketing inventory Malting barley inventory 700 600 88 600 525 500 450 400 375 756 300 601 561 300 528 445 91 200 403 225 79 337 275 289 278 301 237 240 239 228 326 1
Slide 11: Capex supporting large harvest and growth
Capex supporting large harvest and growth CAPEX ‐ $ M Grains and 125 Malt(1) Grains and Head Office Malt $M H d Office Head Offi 100 HY11 HY10 HY11 HY10 Amortisation 7 4 1 1 75 57 D Depreciation i i 8 6 20 20 50 36 Total D&A 15 10 21 21 25 47 Stay‐in‐business capex 5 5 20 16 24 31 31 32 0 Investment
Slide 12: Segment Performance
GrainCorp SEGMENT PERFORMANCE 11
Slide 13: Increased revenue and earnings
Increased revenue and earnings Segment g earnings g HY11 HY10 HY11 HY10 $M Revenue Revenue EBITDA EBITDA Malt 417 328 57 59 Storage & Logistics 284 191 43 35 Ports 90 46 55 21 M k i (1) G i Marketing Grain 664 408 35 15 Allied Mills(2) ‐ ‐ 2 4 Di Discontinued ti d Operations O ti ‐ 13 ‐ (1) Corporat
Slide 14: Malt – sound first half
Malt – sound first half Malt Sales Volume – ‘000 tonnes $M HY11 HY10(1) 600 500 Revenue 417 328 400 EBITDA(2) 57 59 300 499 483 EBIT 42 48 200 Capital Expenditure 36 24 100 0 (3) HY10 HY11 • Former Bairds Malt President, Steve Haydon, appointed GrainCorp Malt CEO • Revenue higher h h d due to higher
Slide 15: Malt – regional update and achievements
Malt – regional update and achievements • Sales and production volumes in line with plan despite lower barley Canada quality and cold weather challenges • ENMAX water sustainability initiative progressing • Stronger volumes due to additional specialty sales and improved United performance in warehou
Slide 16: (S&L) Country Operations – record harvest
(S&L) Country Operations – record harvest $M HY11 HY10 • Receivals include 13.8mmt winter and d00.6mmt 6 summer Revenue 284 191 EBITDA 43 35 • Higher capex and opex including tarps, p , equipment, q p , bunkers,, re‐ EBIT 30 24 commissioned sites and extended Capital Expenditure 23 20 harvest due to
Slide 17: Ports – large export task being successfully handled
Ports – large export task being successfully handled $M HY11 HY10 • Grain exports handled of 3.2mmt → 30 3.0mmt b bulk lk and d 0.2mmt 02 containers i Revenue 90 46 • Several ports operating at monthly EBITDA 55 21 elevation capacity p y → Port Kembla EBIT 49 15 and Geelong Capital Expenditure 6 7 •
Slide 18: Grain Marketing – improved volumes and earnings
Grain Marketing – improved volumes and earnings $M HY11 HY10 • Revenue higher due to increased grain Revenue 664 408 volumes and grain prices EBITDA 35 15 • Market volatility due to local weather and international supply Interest expense (9) (5) • Over 75% of Grain Marketing sales PBT 26 10 executed
Slide 19: Allied Mills – wheat prices higher
Allied Mills – wheat prices higher • Margins lower due to higher wheat $ M (60% JV share) HY11 HY10 prices and lower mill run prices EBITDA 7 11 • Toowoomba flour mill closed due to Equity Profit 2 4 flood damage → loss fully insured Shareholder loan • Management reviewing options to 1 1 interest re
Slide 20: Safety a major focus
Safety a major focus Medical AIFR(1) Lost Time TOTAL – Treatment Injuries (LTI) All Injuries HY11 HY10 Injuries (MTI) Malt 20 14 34 53.4 ‐ Grains and Head Office 66 32 98 20.4 17.8 Total 86 46 132 24.3 ‐ • 1,100 near misses due to higher casual employees and a record receivals task • Launch of revis
Slide 21: Dividend
GrainCorp DIVIDEND 20
Slide 22: Targeting to pay a dividend each year
Targeting to pay a dividend each year Dividend and Earnings Per Share ($) • Th The B Board dh has approved d ffully ll 0.8 1.0 0.6 0.8 franked HY11 dividends per share of: 0.4 0.5 0.05 – $0.15 interim 0.2 0.10 0.05 0.3 0.10 0.15 0.15 – $0.05 special 0.0 0.07 0.0 • Record date of 7 July 2011 and (0.2
Slide 23: Strategic Initiatives and Update
STRATEGIC INITIATIVES AND UPDATE 22
Slide 24: GrainCorp Mission and Vision
GrainCorp Mission and Vision An international agribusiness g creatingg value byy connectingg Mi i Mission consumers to growers along the grain chain Grow as our grain customers’ preferred partner – driven by our Vision passionate people, and assets around the world Storage g & Transport Handling Por
Slide 25: GrainCorp is well positioned
GrainCorp is well positioned Corporate objectives: 1 2 3 Improve Returns Manage Variability Growth Manage earnings Scale through accretive Increase underlying through the cycle and organic and acquisitive shareholder return consistent dividends growth Supported by positive fundamentals: • Increasing
Slide 26: Strategic initiatives
Strategic initiatives • Strategic initiatives developed to support GrainCorp’s 5 strategic themes • Successful f l implementation l off strategic initiatives over the h next 3 years will: ll → Maintain and increase market share → Set a target of increased underlying EBITDA by ~$40M $40M (excluding a
Slide 27: Strategic achievements in last 12 months
Strategic achievements in last 12 months 1 Maintain a New integrated stock system (Grain Transact) implemented strong market New trains and rapid rotation trains → increased rail productivity presence Introduce time slotting for trucks → increased road productivity 2 Operate New service cont
Slide 28: FY11 Guidance and FY12 Outlook
FY11 GUIDANCE and FY12 OUTLOOK 27
Slide 29: FY11 earnings and volume guidance upgrade
FY11 earnings and volume guidance upgrade 375 EBITDA ($M) • Volume guidance: 30 300 – Country receivals ~15 15.0mmt 0mmt 225 – Grain exports handled 7.0‐8.0mmt 150 310 – Malt a sales sa es 1.0‐1.1mmt 0 212 75 161 • Earnings guidance: 51 0 32 – EBITDA $310‐340M FY07 FY08 FY09 FY10 FY11 (f) – NPAT $14
Slide 30: FY12 Grains Outlook – large carry-in
FY12 Grains Outlook – large carry carry‐in in 2011/2012 Winter Crop Outlook((1)) GrainCorp FY12 Earnings Drivers • Good sub soil moisture profile • Busy storage and logistics, and export • Firm global grain prices mitigated by programmes expected: unfavourable FX - Above average carry‐in ~6mmt • ACF
Slide 31: FY12 Malt Outlook – demand side pressures
FY12 Malt Outlook – demand side pressures 2011/2012 Malt Market Outlook GrainCorp FY12 Earnings Drivers • Soft demand in mature beer markets • Malting capacity increase to 1.2mmt • Increasing demand in emerging beer with Pinkenba and Perth partially markets offset by Toowoomba closure • USDA(1) worl
Slide 32: Thank You – Q&A
GrainCorp THANK YOU — Q&A 31
Slide 33: 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