Sd Guthrie Bhd · MYX:SDG
Sd Guthrie Bhd — Sime Darby Plantation — Invest Malaysia Kuala Lumpur 2018
52 slides from Sd Guthrie Bhd's conference presentation, Jan 24, 2018
Slide 1: Sime Darby Plantation – Invest Malaysia Kuala Lumpur 2018
SIME DARBY PLANTATION Invest Malaysia Kuala Lumpur 2018 23 – 24 January 2018
Slide 2: Disclaimer
Disclaimer This document is strictly confidential to the recipient. It is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. Upon request, you shall p
Slide 3: Table of Contents
Table of Contents Section Page 1 Company Overview 4 2 Key Investment Highlights 9 3 Business Strategies & Future Plans 21 4 Industry Outlook 33 5 Financial Overview 36 6 Appendix 42 3
Slide 4: Company Overview
Sime Plantation Company Overview
Slide 5: Business Overview
Business Overview Integrated Plantation Company Involved in the Entire Palm Oil Value Chain Upstream Downstream Others Oil palm estate Mill Refinery Food application High-yielding Renewables genome seeds Oil palm, rubber & sugarcane estates Bulk and refined oils & fats R&D Developing, cultivating
Slide 6: Snapshot of Oil Palm Plantation Operational Statistics
Snapshot of Oil Palm Plantation Operational Statistics FY16/17 unless otherwise PNG & stated Malaysia Indonesia Liberia Total Solomon Islands Total oil palm 303,367 202,191 86,493 10,401 602,452 planted area(1) (ha) Mature area(1) (ha) 251,629 161,621 76,281 9,356 498,887 Palm tree age profile & ave
Slide 7: Snapshot of Downstream Operations
Snapshot of Downstream Operations NETHERLANDS ~4.0 million MT Sime Darby Unimills B.V. Refining Capacity (450,000 MT/year) UNITED KINGDOM New Britain Oils Ltd. VIETNAM Golden Hope Nha Be 12 (300,000 MT/year) (99,000 MT/year) Refineries THAILAND Morakot Industries (379,500 MT/year) Industrial Enterpr
Slide 8: Downstream – Our renowned brands and winning products are used worldwide
Downstream – Our renowned brands and winning products are used worldwide TOP 3 BRANDS (IN TERMS OF REVENUE) Jomalina Nuri Kempas Austral Nusantara Morakot IE Nha Be Unimills Liverpool H&K Kumbango Vema Bulk Bulk Bulk Bulk (no logo) Bulk B2B SD Food & Beverage Malaysia (SDFBM)* Morakot Nha Be & SD Ed
Slide 9: Key Investment Highlights
Sime Plantation Key Investment Highlights
Slide 10: Investment Highlights
Investment Highlights 1 Strong Investment Proposition 2 The World’s Largest Oil Palm Plantation Company by Oil Palm Planted Area, with Established Reputation as the World’s Largest Producer of Certified Sustainable Palm Oil 3 Well Positioned to Benefit from Sound Industry Fundamentals & Strong Deman
Slide 11: Sime Darby Plantation's Strong Investment Proposition
1 Sime Darby Plantation’s Strong Investment Proposition 25 MT/ha 61% 55% 19 MT/ha As at 30 Jun As at 30 Sep FY17 FY25 Target 2017 2017 of Net Profit FFB YIELD GEARING FFB STRENGTHENING LOWERING IMPROVING HIGH PRODUCTION DOWNSTREAM COST GEARING & DIVIDEND GROWTH CONTRIBUTIONS CASH FLOW POLICY POTENTI
Slide 12: World's Largest Oil Palm Plantation Company with More Than 600,000 Hectares
2 World’s Largest Oil Palm Plantation Company with More Than 600,000 Hectares of Planted Area We are the world’s largest oil palm plantation company by oil palm planted area with c.2.8% market share(1) and total landbank of more than 983,000 hectares across Malaysia, Indonesia, PNG & Liberia ~600,00
Slide 13: Our Journey to Sustainability
2 Our Journey to Sustainability Future: “RSPO and Beyond” vision • To prevent value 2015 erosion in our • Acquisition of New businesses from Britain Palm Oil Limited, 2017 unethical behavior a 100% RSPO certified & • Edison Awards • To maintain established traceable palm oil (Bronze) under sustainab
Slide 14: Sustainability – Committed to Good Agriculture Practices
2 Sustainability – Committed to Good Agriculture Practices RSPO Certification Status Open Palm Traceability 97% Sime Darby Open Palm Traceability Dashboard Upstream – Mill Traceable up to RSPO-certified provides SD Plantation’s plantations As at 30 Sep 2017 customers with access to source the produc
Slide 15: Sustainability – Driving Market Demand
2 Sustainability – Driving Market Demand CSPO PRODUCTION CAPACITY NURI REFINERY (MALAYSIA) NEW BRITAIN OILS (UK) 11.8 mn MT Global CSPO Production Capacity (as of 31 Jul 2017) All of SD Plantation’s refineries are RSPO- certified New Britain Oils’ refinery in Liverpool is a fully Certified Segre
Slide 16: Well Positioned to Benefit from Sound Industry Fundamentals & Strong Demand Growth Trends
3 Well Positioned to Benefit from Sound Industry Fundamentals & Strong Demand Growth Trends Our wide & diverse geographical reach of business operations will allow us to leverage on strong industry fundamentals Strong Geographical Presence Upstream Operations FY17 Total Revenue = RM14,779 mm Prese
Slide 17: Well Positioned to Benefit from Sound Industry Fundamentals (cont'd)
3 Well Positioned to Benefit from Sound Industry Fundamentals & Strong Demand Growth Trends (cont’d) Our wide & diverse geographical reach of business operations will allow us to leverage on strong industry fundamentals Capitalising on strong demand growth for palm oil Demand for Palm Oil Estimated
Slide 18: Fully Integrated Business Model with Diversified Operations Along the Palm Oil Value Chain
4 Fully Integrated Business Model with Diversified Operations Along the Palm Oil Value Chain With a fully integrated business model, we are able to diversify our earnings risk from volatility of commodity price and leverage on operational synergies Upstream Downstream Mills – Bulk Specialty Palm Oil
Slide 19: Market Leading R&D Supports Operational Efficiency & Productivity
5 Market Leading R&D Supports Operational Efficiency & Productivity Market Leading Research & Development • Global network of 5 R&D centres in Malaysia, Indonesia & PNG, and 3 innovation centres in Malaysia, the Netherlands and South Africa • Supports operational efficiency and improvements to upstr
Slide 20: Experienced and Sound Board & Management Team
6 Experienced and Sound Board & Management Team Our Board and management team have the ability to drive our Group through transformation into the next phase of growth which is to innovate, execute and create value Board of Directors Board members have held Tan Sri Dato’ Tan Sri Dato’ Seri Dato’ Moha
Slide 21: Business Strategies & Future Plans
Business Strategies & Future Plans 21
Slide 22: The Strategy Moving Forward – What is Different?
The Strategy Moving Forward – What is Different? VISION ‘The Leading Global Integrated Palm Oil Player’ The global brand for plantation sustainability 1 UPSTREAM 2 DOWNSTREAM 3 INTEGRATION DRIVING OPERATIONAL SERVING THE MAXIMISING RETURNS STRATEGY GROWTH EXCELLENCE VIA CUSTOMERS OF THE ACROSS THE P
Slide 23: Medium to Long Term Targets
Medium to Long Term Targets FY2025 FY2022 25 FFB Yield FY2017 24 (MT/ha) FFB Yield (MT/ha) 25.0% 19 23.0% OER FFB Yield (MT/ha) OER >20% reduction2 10-20% 21.3% reduction2 Cost to customer OER Cost to customer 15-20% Downstream 5.2% 10-15% Contribution1 Downstream Downstream Contribution1 Contributi
Slide 24: Profit Growth Through Value Creation Initiatives
Profit Growth Through Value Creation Initiatives SDP strives to grow PBIT by 10-15% CAGR over the next 5 years 10-15% CAGR RM2.0bn FY2017 FY2022 PBIT PBIT FY2017 FY2022 UPSTREAM FY2022 FY2022 DOWNSTREAM FY2022 INTEGRATED FY2022 KEY VALUE CREATION Replanting Water management Downstream Cost Different
Slide 25: Value Creation Timeline & Targeted Achievements
Value Creation Timeline & Targeted Achievements TARGETED ACHIEVEMENTS TARGETED ACHIEVEMENTS TARGETED ACHIEVEMENTS • FFB Yield: 20-21 MT/ha • FFB Yield: 22-23 MT/ha • FFB Yield: 24 MT/ha • OER: 21-22% • OER: 22-23% • OER: 23% Others • Cost1: Reduce by 1-5% • Cost1: Reduce by 5-10% • Cost1: Reduce by
Slide 26: Upstream – Driving Operational Excellence
Upstream – Driving Operational Excellence ELEVATING YIELD PERFORMANCE THROUGH ON- GOING PROCESS ENHANCEMENTS A ACCELERATED B SUPERIOR C WATER D MECHANISATION REPLANTING PLANTING MANAGEMENT • Enhancing automation • Group : 5% MATERIAL • Effective water & digitisation (Indonesia : 7% • High yielding m
Slide 27: Upstream – Replanting with High Yielding Materials
A ACCELERATED REPLANTING B SUPERIOR PLANTING MATERIAL Upstream – Replanting with High Yielding Materials Replanting Rate 5-7% Average Age 10 years By 2025 Oil Palm 30.0 28.4 31.4 31.2 30.3 28.8 Replanting 10.8 12.3 15.5 20.9 20.6 22.9 291,900 ha (‘000 ha) 8.8 BY FY2022 Total Area Coming into 201,600
Slide 28: Upstream – Innovative Watering Initiatives
C WATER MANAGEMENT Upstream – Innovative Watering Initiatives Innovative and cost effective irrigation techniques to ensure that our estates and mills maintain adequate and consistent water supply during prolonged dry months PAPUA NEW GUINEA MALAYSIA INDONESIA LIBERIA & SI • Installing mobile pumpin
Slide 29: Upstream – Focusing on Cost Reduction
D MECHANISATION Upstream – Focusing on Cost Reduction Cost to Customer MECHANISATION RM/MT pp to drop 10-20% by FY2022 • Enhanced processes, new technologies and automation to drive better OER • Target 1:15 Ha Manpower Ratio TRANSFORMATIVE FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 RESTR
Slide 30: Upstream – Moving Towards a Connected, Integrated, Automated and Sustainable Plantation
D MECHANISATION Upstream – Moving Towards a Connected, Integrated, Automated and Sustainable Plantation SIME DARBY DIGITAL SIME DARBY DRONE MECHANISATION INITAITIVE SUPERVISION (SDDS) MONITORING Among the first in the Malaysian Lower manpower requirement Deployment of unmanned aerial oil palm in
Slide 31: Downstream – Preferred Sustainable Palm Oil & Fats Specialist
Downstream – To become the preferred sustainable palm oil&fats specialist and customer solutions provider HOW DO WE DELIVER VALUE ? • Focus on differentiated, sustainable and traceable high value products • Explore & expand opportunities to increase our presence in key geographical markets Such as I
Slide 32: Downstream – Shifting Into High Margin Specialty Products & Deriving Full Value from CSPO
Downstream – Shifting Into High Margin Specialty Products & Deriving Full Value from CSPO A Physical Sales vs. Green Certificate B Commodity vs. Differentiated Drive physical sales vs Emphasis on Drive production of Differentiated : differentiated products Green certificates Physical CSPO Commodity
Slide 33: Industry Outlook
Sime Plantation Industry Outlook 33
Slide 34: Demand Drivers of the Global Oil Palm Plantation and Edible Oils Industry
Demand Drivers of the Global Oil Palm Plantation and Edible Oils Industry Growing Competitive Wide Range of Increased Demand for Pricing of Palm Uses for Palm Oil, Increased in consumer Food due to Oil and Price Palm Kernel Oil Biodiesel awareness on Increase in Affordability of and their Related De
Slide 35: Outlook of the Global Palm Oil and Edible Oils Market
Outlook of the Global Palm Oil and Edible Oils Market Global CPO production, palm oil consumption, demand Demand for Edible Oils Expected to Remain Strong Over for CSPO and CPO prices expected to increase the Next 5 Years Global CPO Production and Consumption Forecast Global Consumption of Selected
Slide 36: Financial Overview
Sime Plantation Financial Overview 36
Slide 37: Key Financial Metrics
Key Financial Metrics FY2015 – FY2017 Note: FY17’s PBIT and PATAMI excluded the gain from the divestment of land to Kumpulan Sime Darby Berhad 37
Slide 38: 1QFY2018 Financial Performance
1QFY2018 Financial Performance Breakdown by Segment Rise in core1 Upstream PBIT by +66% YoY due to higher FFB production and CPO price realised Malaysia1 172% 217% 92% 39% 66% 220 305 220 305 1QFY2017 1QFY2018 Downstream PBIT declined by -5% due to lower profit generated by refineries in Malaysia &
Slide 39: Snapshot of Capital and Debt
Snapshot of Capital and Debt Working Capital Turnover Period Indebtedness by Maturity (as at 30 Jun 2017) Days RM’mn Receivables Inventory Payables 4,690.5 85 78 71 52 46 44 39 38 1,325.4 34 1,037.0 685.0 Within 1 year 1-2 years 2-5 years More than 5 As at 30 Jun 2015 As at 30 Jun 2016 As at 30 Jun
Slide 40: Debt Reduction Plans in FY2018
Debt Reduction Plans in FY2018 Borrowings & Gross Gearing Ratio (1) (RM’mn) 55% < 45% 8,815 Reduction of Borrowings through: < 7,000 Internally generated funds 69% Improvement in working capital position 19% Disposal of non- strategic assets 12% As at 30 Sep 2017 As at 30 Jun 2018 Intercompany
Slide 41: Dividend Policy
Dividend Policy We propose to pay dividends out of cash generated from our operations after setting aside necessary funding for capital expenditure and working capital requirements. As part of this policy, our Company targets a dividend payout ratio of not less than 50.0% of our consolidated profit
Slide 42: Appendix
Sime Plantation Appendix 42
Slide 43: Revenue and PBIT
Revenue and PBIT FY2017 Breakdown FY17 Revenue FY17 Revenue Revenue by Segment by Geography RM’mn Increase was primarily due to the Others Increase was primarily due to the 0.4% increase in sales of our refined increase in the sales of our palm South PNG China Liberia oil products (i.e. our upstream
Slide 44: Expenses, Operating Profit & PAT
Expenses, Operating Profit & PAT FY2015 – FY2017 Operating Expenses Operating Profit & Operating Profit Margin RM’mn RM’mn The lower overall operating profit Increase due to the higher margin is a result of lower FFB revenue and gain from the Increase is mainly due to yield. However, this was partia
Slide 45: Financial Highlights
Financial Highlights 1QFY2018 in RM’mn 1Q FY2018 1Q FY2017 YoY % Revenue 3,541 2,819 +26% Operating Profit 1,281 344 +272% One-offs1: RM771mn PBIT 1,284 329 +290% PBT 1,239 227 +446% PATAMI 1,019 151 +575% Basic EPS (RM sen) 169.8 25.2 +574% Proforma Basic EPS2 15.0 2.2 +582% (RM sen) 1 One-offs ref
Slide 46: Financial Performance by Segment 1Q FY2018
Financial Performance by Segment 1QFY2018 1Q FY2018 External RM3,541mn (+26% YoY) Revenue 1QFY17: RM2,819mn PBIT RM1,284mn (+290% YoY) 1QFY17: RM329mn • PBIT excluding FFB 2.70mn MT, +25% YoY RM1,208mn one-offs: production (1QFY17: 2.15mn MT) +359% YoY RM437mn, Upstream (1QFY17: +66% YoY Average CPO
Slide 47: Breakdown of External Revenue and PBIT by Segment
Breakdown of External Revenue and PBIT by Segment 1QFY2018 vs 1QFY2017 In RM'mn 1QFY2018 1QFY2017 YoY % Upstream Group 782 600 30% Upstream Malaysia 322 172 87% Upstream Indonesia 38 117 -68% Upstream PNG 412 308 34% Upstream Liberia 10 3 233% Downstream 2,743 2,203 25% Others 16 16 0% TOTAL EXTERNA
Slide 48: Summary of Operational Statistics
Summary of Operational Statistics As at 30 September 2017 Malaysia Indonesia PNG Liberia Group YoY YoY YoY YoY YoY 30 30 % 30 30 % 30 30 % 30 30 % 30 30 % Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep ’17 ’16 ’17 ’16 ’17 ’16 ’17 ’16 ’17 ’16 FFB Production 1.55 1.26 +23% 0.72 0.57 +26% 0.40 0.32 +27% 0.014
Slide 49: Upstream Geographical Coverage
Upstream Geographical Coverage As at 30 September 2017 Sabah Sarawak Planted : 46,375 ha Planted : 38,894 ha Landbank : 53,796 ha Landbank : 47,280 ha Sulawesi Planted : 3,952 ha Kalimantan Landbank : 4,712 ha Planted : 129,229 ha Landbank : 175,133 ha Sumatera Planted : 70,778 ha Landbank : 99,846
Slide 50: Oil Palm Age Profile
Oil Palm Age Profile As at 30 September 2017 MALAYSIA INDONESIA 8% 7% 17% 20% 18% 12.6 yrs 20% 14.3 yrs 9% 39% Average Palm Average Palm Tree Age Tree Age 12.9 yrs Average Palm Tree Age 37% 25% LIBERIA PNG 5% 10% 12% 12% Sime Darby has 602,452 ha of oil palm planted area of 4.7 yrs Average Palm 11.9
Slide 51: Credit Ratings
Credit Ratings RATING AGENCY RATING & OUTLOOK RATING DATE Baa1, Stable As at 26 May’17 BBB+, Stable As at 27 Nov’17 AAAIS , Stable PERPETUAL SUKUK As at 23 Jun’17 51
Slide 52: Thank You
THANK YOU SIME DARBY PLANTATION INVESTOR RELATIONS investor.relations@simedarbyplantation.com +(603) 7848 5339 http://www.simedarbyplantation.com/investor-relations
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