Slide 1: Investor Presentation - Financial Half Year Ended 31 March 2018
For personal use only 11 May 2018 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR PRESENTATION FINANCIAL HALF YEAR ENDED 31 MARCH 2018 Please find attached the Investor Presentation relating to the financial Half Year ended 31 Mar
Slide 2: HY18 results
For personal use only HY18 results 11 May 2018
Slide 3: Disclaimer
Disclaimer For personal use only 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. T
Slide 4: Agenda
For personal use only Agenda • Results overview • Segment performance • Balance sheet & capex • FY18 outlook • Questions
Slide 5: Commitment to safety is fundamental
Commitment to safety is fundamental For personal use only LOST TIME INJURY FREQUENCY RATE(1) RECORDABLE INJURY FREQUENCY RATE(2) 18.3 6.3 13.9 4.4 12.2 12.0 11.3 11.6 11.5 3.8 3.6 3.0 2.7 2.2 HY15 FY15 HY16 FY16 HY17 FY17 HY18 HY15 FY15 HY16 FY16 HY17 FY17 HY18 LTIFR and RIFR increased in HY18, emph
Slide 6: HY18 earnings down due to substantial drop in eastern Australian grain production
HY18 earnings down due to substantial drop in eastern Australian grain production For personal use only $M HY18 HY17 Underlying EBITDA(1) 119 236 Underlying NPAT(2) 36 100 Statutory NPAT(3) 36 90 Dividend (cents per share) – 100% franked 8 15 • Overview: Earnings declined due to a ~40% reduction in
Slide 7: Earnings profile highlights volatility of eastern Australian grain production
Earnings profile highlights volatility of eastern Australian grain production and benefits of diversified portfolio For personal use only UNDERLYING EBITDA(1,2) ($M) UNDERLYING NPAT(1) ($M) Malt Oils Grains 235 236 227 122 109 166 100 136 134 119 61 35 32 36 HY12 HY13 HY14 HY15 HY16 HY17 HY18 HY12 H
Slide 8: HY18 interim dividend
HY18 interim dividend For personal use only DIVIDENDS PER SHARE (DPS)(1) Ordinary DPS Special DPS 15 5 5 20 15 15 15 15 8 8 8 HY11 HY12 HY13 HY14 HY15 HY16 HY17 HY18 8yr avg(3) Payout 45% 49% 53% 56% 49% 53% 34% 51% 48% ratio(2) HY18 dividend dates • HY18 interim dividend: fully franked interim divi
Slide 9: Decline in earnings driven by Grains business
Decline in earnings driven by Grains business For personal use only HY17 - HY18 EARNINGS BRIDGE(1) ($M) Substantial decline in ECA grain production; supply chain costs; Grains 1 (3) integration costs. Continued good Weaker oilseed malt demand crush margins and restructuring costs Lower tax 100 (115)
Slide 10: Segment performance
For personal use only Segment performance 9
Slide 11: Financial summary
Financial summary For personal use only Revenue EBITDA $M HY18 HY17 HY18 HY17 (1) Malt 534 538 75 74 Oils 490 459 29 32 Grains 1,027 1,549 30 145 Corporate - - (14) (15) Eliminations and other (64) (90) - - Total 1,987 2,456 119 236 1. Before significant items. 10
Slide 12: Malt: continued good customer demand
Malt: continued good customer demand For personal use only $M HY18 HY17(1) Revenue 534 538 EBITDA 75 74 EBIT 49 49 Capex 11 45 • Malt sales volumes down slightly on HY17. • Integration of Cryer Malt, a distributor of craft • Upgraded existing Pocatello plant in Q1 FY18 brewing ingredients in Austral
Slide 13: Grains: below-average crop and low ECA exportable surplus
Grains: below-average crop and low ECA exportable surplus For personal use only $M HY18 HY17(1) Revenue 1,027 1,549 EBITDA 30 145 EBIT (2) 115 Capex 28 49 • Significantly smaller east coast Australia (ECA) crop, • ~145 silos operated during harvest (2017: ~160 sites). following near-record harvest i
Slide 14: Oils: strong liquid terminals performance, weaker oilseed crush margins
Oils: strong liquid terminals performance, weaker oilseed crush margins For personal use only $M HY18 HY17(1) Revenue 490 459 EBITDA 29 32 EBIT 12 15 Capex 18 19 • Liquid Terminals: high utilisation, driven by strong Foods repositioning - update: customer demand across a range of product segments. •
Slide 15: Balance sheet and capex
For personal use only Balance sheet and capex 14
Slide 16: Increase in core debt gearing, smaller ECA crop reducing cash flow
Increase in core debt gearing, smaller ECA crop reducing cash flow For personal use only CORE DEBT (1) AND NET DEBT (2) 1,400 50% • Core debt at $627M(3) and net debt at $1,366M(3). 1,200 40% • Core debt gearing(4) at ~25% and net debt 1,000 gearing(5) at ~36%. 30% 800 • Range of maturities on term
Slide 17: Strong and flexible balance sheet
Strong and flexible balance sheet For personal use only CORE DEBT(1) ($M) • Core debt has increased in line with 294 Short-term debt smaller crop reducing cash flow. 205 237 less Grains - 141 167 134 91 trading and Oils • Barley inventory facilities for Malt - ~$144 inventories million included in c
Slide 18: Capital intensity down significantly as investment program winds down
Capital intensity down significantly as investment program winds down For personal use only CAPEX(1) ($M) DEPRECIATION & AMORTISATION(2) ($M) Stay-in-business Growth 281 Depreciation Amortisation 261 143 146 236 136 127 119 29 34 34 167 30 209 183 24 141 168 74 96 12 71 109 117 59 95 97 103 62 70 71
Slide 19: FY18 outlook
For personal use only FY18 outlook 18
Slide 20: FY18 processing outlook
FY18 processing outlook For personal use only Market fundamentals GrainCorp FY18 outlook • Global barley crop production ~142mmt (FY17: • High capacity utilisation. 146mmt)(1). • Good demand for specialty products. • Continued growth in US craft beer market; 5% • Continue to benefit from efficient d
Slide 21: FY18 Grains outlook
FY18 Grains outlook For personal use only Market fundamentals GrainCorp FY18 outlook • Total east coast Australian (ECA) winter crop • Year-to-date total grain receivals of 5.6mmt(3,4). production of 15.1mmt (FY17: 27.2mmt)(1). • Year-to-date grain exports of 1.4mmt(4). Expect • Low exportable surpl
Slide 22: FY18 Earnings Guidance
FY18 Earnings Guidance For personal use only EBITDA NPAT • Underlying EBITDA (before significant items): • Underlying NPAT (before significant items): $50 – Guidance $240 – 265 million. 70 million. • This includes the ongoing tax benefit from the recent change in US corporate tax rate, and an initia
Slide 23: Appendices
For personal use only Appendices 22
Slide 24: Strategic priorities
Strategic priorities For personal use only Strategic priorities Outcomes Growth and diversification in 1 Strengthen core businesses earnings and cashflow, stronger returns Disciplined approach to capital Maintain strong credit profile 2 management Earnings growth and improvement on return on 3 Growt
Slide 25: Strengthen core businesses
Strengthen core businesses For personal use only Grains Oils Malt • Integration to form Grains unit Bulk liquid storage Foods repositioning – Oilseed crush Malt capacity expansion capacity expansion undertaking accelerated cost capacity and upgrade – • Re-shaping country network (network) reduction
Slide 26: Disciplined approach to capital management
Disciplined approach to capital management For personal use only CORE DEBT (1) AND NET DEBT (2) 1,400 50% • Balance sheet continues to strengthen as 1,200 capital investment program winds down and 40% with portfolio optimisation. 1,000 • Reduction in net debt gearing driven by 30% 800 reduced capex
Slide 27: Portfolio optimisation
Portfolio optimisation For personal use only • Improving return on invested capital remains a key focus. • Continue to explore opportunities to optimise the full value of invested capital, consistent with strategy and operational needs: – Sale of Allied Mills completed 31 March 2017 - GrainCorp 60%
Slide 28: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities For personal use only COMMODITIES INVENTORY(1) ($M) Supplemented short Grains, Oils grain, oilseed and Malt barley inventory term debt with cash 1,000 Short-term debt Supplemented short 894 906 882 900 829 term debt with cash
Slide 29: HY18 results
For personal use only HY18 results 11 May 2018