Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — H1 2021 Earnings Presentation
31 slides from Graincorp Limited Class A's earnings presentation, May 13, 2021
Slide 1: HY21 Financial Results
This release has been authorised by the Board of GrainCorp Limited HY21 Financial Results 13 May 2021 Robert Spurway, Managing Director and CEO Ian Morrison, Chief Financial Officer
Slide 2: Disclaimer
WORK IN PROGRESS DRAFT 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.
Slide 3: Agenda
Agenda Overview / highlights 4 HY21 financial results 10 Outlook 18 Appendix 21
Slide 4: HY21 highlights
WORK IN PROGRESS DRAFT HY21 highlights Large East Coast Australia (ECA) crop and strong execution drives significant increase in earnings HY21 performance FY21 outlook Positive momentum Strong growth in Underlying FY21 guidance upgraded: Good sub-soil moisture positive for EBITDA to $140m (HY2
Slide 5: HY21 summary
WORK IN PROGRESS DRAFT HY21 summary Material improvement in key metrics Underlying EBITDA1 Underlying NPAT2 Grain receivals3 Continuing Operations Continuing Operations Million metric tonnes (mmt) $140m from $105m $51m from $27m 14.5 from 3.8 Dividend Per Share Core Debt Recordable Injury Frequency
Slide 6: Commitment to zero harm
WORK IN PROGRESS DRAFT Commitment to zero harm Solid performance; substantial increase in harvest activity RECORDABLE INJURY FREQUENCY LOST TIME INJURY FREQUENCY RATE (RIFR)1,2 RATE (LTIFR)1,3 10.7 1.9 1.8 7.7 7.5 1.5 6.5 6.1 1.1 0.8 HY19 FY19 HY20 FY20 HY21 HY19 FY19 HY20 FY20 HY21 Improvement in
Slide 7: Sustainability at the centre of our vision and strategy
WORK IN PROGRESS DRAFT Sustainability at the centre of our vision and strategy Refocusing GrainCorp’s approach to Environmental, Social & Governance (ESG) and sustainability Stakeholder engagement process commenced Assessing relevant ESG reporting frameworks Environment Communities Leader in
Slide 8: Strategic priorities to deliver shareholder value
WORK IN PROGRESS DRAFT Strategic priorities to deliver shareholder value VISION Lead sustainable and innovative agriculture through another century of growth PURPOSE Proudly connect with customers and rural communities to deliver value through innovation and expertise STRATEGIC Strengthen the core T
Slide 9: Strengthening the core underpins through-the-cycle earnings
WORK IN PROGRESS DRAFT Strengthening the core underpins through-the-cycle earnings Reduction in volatility and delivery of operating initiatives support ‘through-the-cycle’ EBITDA THROUGH-THE-CYCLE EBITDA1 ($M) International expansion: $15m • Delivering on GrainsConnect Canada JV, 15 25 240 includin
Slide 10: HY21 financial results
‘NX HY21 financial results
Slide 11: Operating initiatives driving substantial increase in earnings
WORK IN PROGRESS DRAFT Operating initiatives driving substantial increase in earnings FY21 performance shows material improvement on similar-sized crop years PROFORMA UNDERLYING EBITDA ($m)1 Post AASB-16 350 Proforma EBITDA 300 255-2852 FY21 guidance range 250 200 150 127 982 100 63 52 50 (63) 0 -50
Slide 12: Financial highlights
WORK IN PROGRESS DRAFT Financial highlights Strong HY21 result driven by increased grain volumes and margins Underlying EBITDA ($m) HY21 HY20 Agribusiness 125 82 Processing 24 23 Corporate (9) (0) Total 140 105 Underlying NPAT (Continuing Operations) 51 27 Statutory NPAT (Continuing Operations) 51 7
Slide 13: Agribusiness segment
WORK IN PROGRESS DRAFT Agribusiness segment Significant increase in earnings despite HY21 impact of CPC $m HY21 HY20 Revenue 2,560 1,972 EBITDA2 125 82 EBIT 88 43 Favourable turnaround in growing conditions for 2020/21 ECA winter Capex 18 8 crop. Total ECA production up 166% to 31.4mmt (ABARES’ es
Slide 14: Processing segment
WORK IN PROGRESS DRAFT Processing segment Solid result with strong momentum into 2H21 Oilseeds: $m HY21 HY20 High utilisation at Numurkah; 12% increase in oilseed crush volumes Revenue 320 306 compared to previous corresponding period EBITDA 24 23 Positive crush margins, driven by global premium
Slide 15: Core debt vs net debt profile
WORK IN PROGRESS DRAFT Core debt vs net debt profile Utilisation of inventory facilities supporting grain DEBT AND LIQUIDITY PROFILE accumulation in large crop year 31 Mar 30 Sep 31 Mar Components ($m) 2021 2020 2020 Term debt 150 150 150 Inventory and working capital 1,382 214 971 Core debt incre
Slide 16: Disciplined capital expenditure
WORK IN PROGRESS DRAFT Disciplined capital expenditure Lifting return on invested capital CAPEX – CONTINUING OPERATIONS ($m)1,2 DEPRECIATION & AMORTISATION (D&A) – CONTINUING OPERATIONS ($m)2 136 110 91 28 84 Target sustaining 53 68 capex $35-45m 44 87 89 86 82 13 32 12 24 52 19 5 40 23 32 13 19 FY1
Slide 17: Capital management framework
WORK IN PROGRESS DRAFT Capital management framework Conservative capital structure and disciplined investment approach CAPITAL MANAGEMENT FRAMEWORK Service debt obligations Surplus cash flow Sustaining capital Dividends - Capital investment in - Target minimal core debt expenditure Payout ratio = gr
Slide 18: Outlook
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Slide 19: FY21 outlook
WORK IN PROGRESS DRAFT FY21 outlook Upgrade to earnings guidance Chance of above median rainfall for June-August 20212 Underlying EBITDA of $255-$285m (previously $230-$270m) Underlying NPAT of $80-$105m (previously $60-$85m) Strong margins due to high global demand for Australian grain and oi
Slide 20: Conclusion
WORK IN PROGRESS DRAFT Conclusion Positive momentum into 2H21 Strong growth in HY21 earnings HY21 result includes $70m1 payout under CPC Focus on ESG; stakeholder engagement underway Progressing strategy to lift return on invested capital Positive momentum, favourable market conditions con
Slide 21: Appendix
Appendix
Slide 22: GrainCorp at a glance
WORK IN PROGRESS DRAFT GrainCorp at a glance High quality strategic infrastructure assets servicing customers worldwide International: GrainsConnect Canada JV: Global network of offices, originating grain, State-of-the-art grain supply chain connecting pulses and oilseeds from different regions and
Slide 23: 'Normalised' ECA grain flows
WORK IN PROGRESS DRAFT ‘Normalised’ ECA grain flows GrainCorp’s market share of grain volumes increases as the ECA crop size gets larger. The typical sequencing of grain flow in ECA for a normalised crop production year: Production: 10-year average of ECA total winter crop and sorghum production ~
Slide 24: ECA tonnes handled
WORK IN PROGRESS DRAFT ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin1 mmt FY16 FY17 FY18 FY19 FY20 FY21e2 ABARES – Total ECA winter + sorghum production 19.1 29.2 18.0 9.7 11.8 31.43 Carry-in 1.6 1.7 3.3 2.3 1.5 0.7 Receivals 8.8 15.0 6.8 3.1 4.2 15.5 - 16.
Slide 25: Crop Production Contract
WORK IN PROGRESS DRAFT Crop Production Contract Smoothing GrainCorp’s cash flows through the cycle CROP PRODUCTION CONTRACT – PRODUCTION PAYMENT PROFILE1 10-year contract (started FY20) with White Rock Insurance Production payments based on ABARES’ “total ECA winter crop production”2 estimate, d
Slide 26: Core debt vs net debt
WORK IN PROGRESS DRAFT Core debt vs net debt DEBT AND LIQUIDITY PROFILE 31 Mar 30 Sep 31 Mar $m 2021 2020 2020 Core debt = net debt less commodity inventory Term debt 150 150 150 Inventory and working capital 1,382 214 971 – More common metric for company valuations in Agribusiness financing due t
Slide 27: Seasonal movements in commodity inventory
WORK IN PROGRESS DRAFT Seasonal movements in commodity inventory TYPICAL SEASONAL MOVEMENT OF COMMODITY INVENTORY SHORT-TERM IMPACT OF EXPORT SHIPMENTS ON WORKING NET DEBT/CORE DEBT (GRAPHICAL REPRESENTATION ONLY) CAPITAL AND CORE DEBT Grain purchased using commodity inventory facility Commodity inv
Slide 28: Historical proforma earnings
WORK IN PROGRESS DRAFT Historical proforma earnings Proforma EBITDA includes the following adjustments, in order to provide a better PROFORMA UNDERLYING EBITDA ($m) comparative with prior years: Removal of earnings from ABLT and Allied Mills Proforma EBITDA Incorporation of the CPC, had it been
Slide 29: HY20 – HY21 earnings bridge
WORK IN PROGRESS DRAFT HY20 – HY21 earnings bridge UNDERLYING EBITDA FROM CONTINUING OPERATIONS ($m) Increase in ECA tonnes handled CPC and operating payment in initiatives HY211,3 Continued UMG fair (65) strong crush Reflective of value Other volumes / increase of corporate Agribusiness margins cos
Slide 30: Core debt bridge: FY20 – HY21
WORK IN PROGRESS DRAFT Core debt bridge: FY20 – HY21 Core debt increase from 30-Sep 20 in line with seasonal working capital requirements 113 (108) Harvest related increase in GST receivable on commodity (19) inventory expected to largely unwind in 2H21 (62) 140 Harvest related inventory procu
Slide 31: Proudly connecting with customers and rural communities
Proudly connecting with customers and rural communities to deliver www.graincorp.com.au value through innovation and expertise