Nufarm Limited · ASX:NUF
Nufarm — FY2013 Earnings Presentation
38 slides from Nufarm's earnings presentation, Sep 25, 2013
Slide 1: 2013 Full Year Results
For personal use only 2013 Full Year Results September 2013
Slide 2: Disclaimer
Disclaimer For personal use only Forward looking statements 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 no
Slide 3: FY 2013 results: Overview
For personal use only FY 2013 results: Overview Doug Rathbone, Managing Director / CEO
Slide 4: Group FY13 headline results
Group FY13 headline results Strong performance from overseas businesses mitigates weaker For personal use only Australian conditions • Exceptionally weak demand in Australia 12 months ended – Dry conditions prevail for most of the 31 July year (A$ millions) 2013 2012 Change – Margin pressure due to
Slide 5: A stronger global platform
A stronger global platform…. For personal use only Total Group Revenues 2013 Total Group EBITDA 2013 South South North America America America 19% 15% North Europe 23% Europe America 21% 18% 28% Asia Europe 5% 21% South Asia America Aust/NZ Seed Seed 8% 16% Aust/NZ 26% tech tech North Asia 12% 19% 6
Slide 6: FY 2013 results: Financials
For personal use only FY 2013 results: Financials Paul Binfield, Chief Financial Officer
Slide 7: 2013 full year results
2013 full year results Solid Group result despite unprecedented Australian climatic conditions, For personal use only demonstrating benefit of geographical diversification • All regions delivering profitable growth except for Australia / NZ – Strong performance in Brazil (>40% sales growth in local
Slide 8: Impact of foreign exchange
Impact of foreign exchange For personal use only • Movement in FX rates during year had little net impact on Underlying EBIT • Majority of FX loss for the year and occurred in 1H, with FX exposures largely hedged in 2H (aided by the implementation of the US High Yield Bond) – Majority of FX loss rem
Slide 9: Impact of material items
Impact of material items No material items in 2H13 For personal use only • Balance of class action settlement ($3.2 million) pre tax, $2.2 million after tax in 1H13 • FX gains/(losses) on the NSS have been included in net FX gains / (losses), consistent with the treatment in 1H13 Reconciliation of U
Slide 10: Operating and tax expense
Operating and tax expense Higher expenses due to growth related investment program For personal use only (A$ millions) Year ended 31 July 2013 2012 • Continued investment in the Seeds Underlying sales, marketing & distribution expenses (1) 269.6 235.7 business Underlying general & administrative exp
Slide 11: Working capital
Working capital Net working capital build relates to elevated inventory levels For personal use only • Net working capital remains a key focus across the Group, with the accumulation of inventory in FY13 expected to be temporary • Management remain committed to reducing ANWC/sales • Longer-term init
Slide 12: Working capital: inventory build is largely temporary
Working capital Inventory build is largely temporary For personal use only • Key drivers of the inventory build in FY13 are: – Build up of inventory in Brazil in anticipation of strong season – FX translation impact on overseas inventory balances (non-cash) – Excess inventory in Australia due to poo
Slide 13: Net debt & financing costs
Net debt & financing costs Interest expense elevated due to higher average net debt For personal use only • Higher average net debt for the period largely due to acquisitions completed ($30.7 million), higher net working capital compared to the prior period and payment of class action settlement ($4
Slide 14: FY 2013 results: Business report
For personal use only FY 2013 results: Business report Brian Benson, Group Executive Agriculture
Slide 15: Sales revenue by region
Sales revenue by region Crop protection segment For personal use only 2013 2012 Europe Europe Aust/NZ Aust/NZ 22% 21% 28% 34% South South Asia America America 6% 16% 20% North North Asia America America 6% 24% 23% $2,145.6m $2,060.6m 15
Slide 16: 2013 Results – regional review: Australia/New Zealand
2013 Results – regional review Australia/New Zealand For personal use only Australia 2013 $m 2012 $m • Very challenging seasonal/ climatic Sales 604.4 701.0 conditions impact demand Underlying EBIT 35.4 106.0 • Margins also impacted, with more competition for fewer sales and fixed overhead of a larg
Slide 17: Australia - update
2013 Results – regional review Australia - update For personal use only • Transition from BASF portfolio • Transition from 'Roundup' brand Excluding these arrangements, all other current third party distribution arrangements equate to approx. 5% of group revenues 17
Slide 18: Regional review: Asia
2013 Results – regional review Asia For personal use only • Indonesia impacted by palm oil and 2013 $m 2012 $m increased competition Sales 125.2 125.6 • Malaysia profitability grows as new mixture products gain traction Underlying EBIT 19.6 16.7 • Japan: Solid performance • New Asian strategic plan
Slide 19: Regional review: North America
2013 Results – regional review North America For personal use only USA 2013 $m 2012 $m • Late season reduces burndown Sales 516.3 470.2 opportunity • Cooler/weather conditions impact T&O Underlying EBIT 42.2 33.3 segment • Cleary acquisition completed • Increased focus and resource in TNV Insecticid
Slide 20: Regional review: South America
2013 Results – regional review South America For personal use only Brazil 2013 $m 2012 $m • Very strong growth on a local currency basis Sales 431.4 332.6 • Dry conditions in pasture segment Underlying EBIT 40.6 17.5 • Improved market penetration and additional sales resources • Expanded portfolio I
Slide 21: Regional review: Europe
2013 Results – regional review Europe For personal use only • Mixed seasonal conditions/impacts 2013 $m 2012 $m • Growth in cereal herbicides Sales 468.3 431.1 • Strong contributions from manufacturing plants Underlying EBIT 57.2 43.2 • 'One Europe' structural changes implemented • Refocus of R&D to
Slide 22: Major product segments
Major product segments Crop protection For personal use only % total segment revenues 2013 2012 Insecticides Insecticides 10% 9% Herbicides Fungicides Herbicides Fungicides 69% 10% 70% 10% Other Other 11% 11% $2,145.6m $2,060.6m 22
Slide 23: Product segment review: Herbicides
2013 Results – Product segment review Herbicides For personal use only • Lower demand and margin pressure 2013 2012 in Australia • Higher input costs and selling prices Group sales 1,478.6 1,426.4 for glyphosate Average GM 25% 26% • Phenoxy herbicides perform strongly despite weaker demand in some m
Slide 24: Product segment review: Insecticides
2013 Results – Product segment review Insecticides For personal use only 2013 2012 • Lower value product mix, with chlorpyrifos volumes up strongly in Brazil Group sales 215.1 184.3 • Low insect pressure in some markets Average GM 32% 35% • Regulatory pressure on imidacloprid • New lambda-cyhalothri
Slide 25: Product segment review: Fungicides
2013 Results – Product segment review Fungicides For personal use only 2013 2012 • Strong sales in South America, North America and Europe offset very low demand in Australia in the 2013 year Group sales 218.7 212.7 • Differentiated copper formulations Average GM 28% 28% secure support in Europe • A
Slide 26: Product segment review: Other
2013 Results – Product segment review Other* For personal use only 2013 2012 • Plant growth regulator (PGR) sales down in cotton, but up in European cereals Group sales 233.2 232.8 • Valent (Sumitomo) distribution Average GM 29% 26% arrangements in Canada drive growth in horticulture segment • Succe
Slide 27: Seed technologies segment review
2013 Results – Seed technologies segment review Seed technologies For personal use only • Dry conditions a negative 2013 $m 2012 $m impact on Australian canola seed sales Sales 131.7 121.0 • A record year for sorghum business Average GM 55% 53% Underlying EBIT 32.4 30.6 • Cold US spring impacted see
Slide 28: A stronger platform to drive sustainable growth
2013 Results – Seed technologies segment review A stronger platform to drive sustainable growth For personal use only • Expansion into South America with Atlantica acquisition • European breeding and product development capabilities enhanced • Investment in hybrid pipeline optimisation • Recruitment
Slide 29: FY 2013 results: Group outlook
For personal use only FY 2013 results: Group outlook Doug Rathbone, Managing Director / CEO
Slide 30: Corporate growth strategy
Corporate growth strategy For personal use only • Formulation • Build insecticides and • Higher sales/volume developments in phenoxy fungicides platform across fixed cost base herbicides • Biopesticides • Utilising manufacturing • Glyphosate product plants for adjacent development and • Seed treatme
Slide 31: Corporate growth strategy
Corporate growth strategy For personal use only Generate improved returns Key crop focus Turf & Ornamental Growing into higher value and more Differentiated defendable product and market formulations & mixtures segments Seed technologies Protect / enhance Invest in new Leverage the value of our core
Slide 32: Group outlook
Group outlook • Strong recovery anticipated in Australia based on return to more normal For personal use only seasonal conditions and demand patterns – Negative EBIT impact from loss of BASF distribution arrangements – Transition to 'Weedmaster' glyphosate brands in Australia to be earnings neutral
Slide 33: For personal use only
For personal use only
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: Non IFRS information reconciliation
Non IFRS information reconciliation 12 months ended 31 July 2013 12 months ended 31 July 2012 For personal use only Material Underlying Material items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 2,277,292 2,277,292 2,181,551 2,181,551 Cost of sales (1,653,991) (1,653,991) (1,5
Slide 37: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Year ended 31 July 2013 2012 $000 $000 Underlying EBIT 186,803 205,973 Material items impacting operating profit (3,177) (61,001) Operating profit 183,626 144,972 Underlying EBIT 186,803 205,973 Statutory depreciation and amortisation 73,986
Slide 38: For personal use only
For personal use only Head office – 103 Pipe Road, Laverton North, 3026, Australia Tel: +61 3 9282 1000 | Fax: +61 3 9282 1002 www.nufarm.com