Nufarm Limited · ASX:NUF
Nufarm — FY2010 Earnings Presentation
42 slides from Nufarm's earnings presentation, Sep 29, 2010
Slide 1: 2010 Full Year Results
For personal use only 2010 Full Year Results September, 2010
Slide 2: Doug Rathbone, Managing Director
For personal use only Doug Rathbone Managing Director
Slide 3: 2010 Full Year results
2010 Full Year results For personal use only Major impacts Headline results Glyphosate-related 2010 2009 write-downs and 12 mths to 12 mths to margin pressure July 31 July 31 Group revenues $2.17 billion $2.68 billion Adverse climatic conditions Reported profit/ (loss) ($22.6 million) $79.9 mill
Slide 4: Overview
2010 Full Year results For personal use only Overview Glyphosate-related impacts continued into 2010 financial year with additional pricing pressure and oversupply issues resulting in further write-downs and margin loss…..but signs of stability are emerging Nufarm took measures to support distribu
Slide 5: The glyphosate impact
2010 Full Year results For personal use only The glyphosate impact Glyphosate the BUBBLE the BURST 2008 2009 2010 Sales $962m $868m $597m % of total 39% 32% 27% Av. gross margin % 31% 18% 12% GM $ contribution $296m $155m $69m % of total gross margin 39% 21% 13% contribution Write-downs and customer
Slide 6: Glyphosate
2010 Full Year results For personal use only Glyphosate We assume excess capacity over the long term 'Tech' pricing will remain competitive Market pricing will also remain competitive Nufarm will have different margin opportunities/leverage in different markets/segments 'Arbitrage' opportunity f
Slide 7: Other segments
2010 Full Year results For personal use only Other segments Sales of non-glyphosate products fell 13% year on year In local currency non-glyphosate sales increased by 15% in USA and fell by just 4% in Brazil and Europe Gross margin contributions from phenoxy herbicides increased on lower sales A
Slide 8: Some positives
2010 Full Year results For personal use only Some positives Market access and market share positions maintained Growth in US turf and ornamental segment Additional market penetration and margin growth in Asia Successful expansion in Eastern Europe Significant product launches 'Nuprid' (imi
Slide 9: Kevin Martin, Chief Financial Officer
For personal use only Kevin Martin Chief Financial Officer
Slide 10: Profit analysis
2010 Full Year results For personal use only Profit analysis $'000s Net profit after tax 2010 2009 Operating profit 58,566 159,632 Material items <82,556> <79,755> Attributable to shareholders <23,990> 79,877 Minority Interest 1,338 665 Headline result <22,652> 80,542 10
Slide 11: Material items
2010 Full Year results For personal use only Material items $'000s Net of tax 2010 2009 Due diligence / Competition Commission 4,548 11,546 Glyphosate related costs 30,074 63,456 Restructuring costs 11,034 2,713 Other <636> 2,040 Tax loss write off 37,536 82,556 79,755 11
Slide 12: Profit rollforward
2010 Full Year results For personal use only Profit rollforward $'000s 2010 2009 Movement Sales 2,168,630 2,677,083 <508,453> Gross profit excl. material items 529,890 677,439 <147,549> Expenses excl. material items <403,399> <412,910> 9,511 Other income 8,641 11,054 <2,413> Associates profit 47 3,0
Slide 13: Analysis of gross profit movement
2010 Full Year results For personal use only Analysis of gross profit movement $'000s Glyphosate <99> Insecticide <16> Phenoxy herbicide <10> Other herbicide <20> Net all other <3> <148> 13
Slide 14: Working capital movement
2010 Full Year results For personal use only Working capital movement $'000s 2010 2009 Movement Receivables 852,986 787,760 65,226 Inventory 553,432 797,383 <243,951> Payables <393,868> <407,421> 13,553 Net working capital 1,012,550 1,177,722 <165,172> 14
Slide 15: Net debt
2010 Full Year results Net debt For personal use only $'000s 2010 2009 Borrowings short term 794,164 620,361 Long term 13,633 402,327 Cash <188,741> <84,312> Net debt 619,056 938,376 Opening balance net debt <938> Less capital raising 246 Less cash from operations 195 Capital expenditure <46> Busine
Slide 16: Brian Benson, Group General Manager - Agriculture
For personal use only Brian Benson Group General Manager - Agriculture
Slide 17: Nufarm sales by geography
2010 Full Year results For personal use only Nufarm sales by geography 2010 2009 North Australia North Australia America 27% America 24% 26% 29% NZ - 2% South NZ – 2% South Asia - 6% America Europe America Europe Asia – 7% 15% 16% 22% 24% Total sales - $2.17 billion Total sales - $2.68 billion 17
Slide 18: Regional overview: Australasia
2010 Regional overview For personal use only Australasia Key drivers Australia Summer crop plantings down by more than 20% on previous year Eastern/Southern States experience positive autumn/winter growing conditions Western Australia is well below average Glyphosate volumes up, but pricing/
Slide 19: Regional overview: North America
2010 Regional overview For personal use only North America Key drivers USA Climatic conditions impact timing and demand Continued instability and pricing pressure in glyphosate segment Aggressive de-stocking by distribution Strong performance in turf and ornamental segment Expanded portfol
Slide 20: Regional overview: South America
2010 Regional overview For personal use only South America Key drivers Brazil Intense competition and margin pressure Support measures provided to distribution customers Credit issues improving….but still a factor 'Nuprid' launch and performance in pasture segment both positive New managem
Slide 21: Regional overview: Europe
2010 Regional overview Europe For personal use only Key drivers Climatic conditions difficult across most markets Dry autumn Long, cold winter Cool, dry spring Grower purchases declined in line with lower farm incomes Significant volume reductions in some segments Total sales declined by 9%
Slide 22: Sales by key products
2010 Full Year results For personal use only Sales by key products 2010 2009 Glyphosate - 28% Glyphosate - 31% Phenoxies - 22% Phenoxies - 21% Other herbicides - 21% Other herbicides - 20% Insecticides - 8% Insecticides - 8% Fungicides - 10% Fungicides - 7% *Other - 13% *Other - 13% Total sales - $2
Slide 23: Key segments review
2010: Key segments review For personal use only Our growth will be driven by profitable expansion into higher value product segments Phenoxies Fungicides Non Glyphosate Glyphosate Other Seed treatment 27% 73% herbicides Insecticides Seeds 2010 sales: $2.17b 23
Slide 24: Major segments review: Phenoxies
2010: Major segments review For personal use only Phenoxies Global leadership position 2010 sales CAGR 2006-2010 and fully integrated $475m 5% Increased competition in some 2,4-D markets Av. GM % 2010 % total GM $ Operational efficiencies realised 33% 30% in methyls Dichlorprop-p registratio
Slide 25: Major segments review: Other herbicides
2010: Major segments review For personal use only Other herbicides 2010 sales CAGR 2006-2010 Lower sales value but higher GP achieved $453m 6% Strong growth in pyridines Av. GM % 2010 % total GM $ Mixtures development with 31% 26% Bromoxynil continues Brazil pastures growth strong Dicamba
Slide 26: Major segments review: Insecticides
2010: Major segments review For personal use only Insecticides Focus on 4 big insecticide families (Neonics; OP's; Pyrethroids; 2010 sales CAGR 2006-2010 insecticide growth regulators) $174m 27% Nuprid (Imidacloprid) provides strong 'foundation' position Av. GM % 2010 % total GM $ 'Nuprid' ent
Slide 27: Key segments review: Fungicides
2010: Key segments review For personal use only Fungicides Consolidation and growth of 2010 sales CAGR 2006-2010 tebuconazole market $217m 13% Used in large number of cops Both foliar and seed treatment Av. GM % 2010 % total GM $ applications Many mixture options available 31% 13% Cornerstone acti
Slide 28: Key segments review: Seed treatment
2010: Key segments review For personal use only Seed treatment A growth market as growers and breeders seek to protect the increasing value of high performance germplasm Offers a bolt-on, value add revenue stream for Nufarm's expanding seeds portfolio Able to utilise tebuconazole and imidaclopri
Slide 29: Key segments review: Seeds
2010: Key segments review For personal use only Seeds A focused approach aimed at building a global scale, high margin business in a number of core crops The successful acquisition and integration of elite germplasm and breeding assets – Herbicide tolerance, disease resistance, feed value improvem
Slide 30: New product revenues
2010 Full Year results New¹ product revenues For personal use only New herbicides New insecticides Total new products revenue revenue revenue 300 160 80 Millions Millions Millions 140 70 250 120 60 100 50 80 40 200 60 30 40 20 150 20 10 100 CAGR: 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 53%
Slide 31: Sumitomo relationship
For personal use only Sumitomo relationship
Slide 32: Sumitomo relationship
Sumitomo relationship For personal use only A mutual commitment to identify areas of commercial co-operation that will add value to both companies Product distribution agreements that put Sumitomo chemistry across Nufarm distribution bases – Brazil, Indonesia, UK and Germany now underway – More to
Slide 33: Outlook statement
For personal use only Outlook statement
Slide 34: Outlook
Outlook For personal use only Glyphosate segment expected to stabilise – Pricing will remain very competitive – Various 'one-offs' in 2010 should not recur – Nufarm is now cost competitive and has retained strong market access A return to more normal/average climatic conditions will result in in
Slide 35: Financing update
For personal use only Financing update
Slide 36: Financing update
2010 Full Year results For personal use only Financing update Waiver agreement secured – Funding commitments provided through to mid December – Lenders to be updated on progress against forecast earnings and cash flow projections – Updates also to be provided on strategic and management plans Ad
Slide 37: Strategic Review
For personal use only Strategic Review
Slide 38: Strategic review
2010 Strategic review For personal use only A comprehensive review of the business is underway … 1 … Revisiting/challenging strategic growth plan 2 ... Reviewing business models 3 ... Challenging revenue growth and margin assumptions for products and segments 4 ... Ensuring we have a cost/capital ba
Slide 39: Strategic Review: Deloitte scope
2010 Strategic Review For personal use only Deloitte scope: To review budgeting and forecasting processes; financial reporting and management reporting systems Benchmark against best practice and recommend improvements To ensure forward looking forecasts are rigorous and encompass realistic as
Slide 40: Strategic review: Gresham scope
2010 Strategic review For personal use only Gresham scope: Focuses on business/strategy issues Ensures review process/structure is rigorous Challenges assumptions and analysis Will make independent recommendations on review outcomes Initial report to Board identifies key areas of focus for g
Slide 41: Strategic review: Building a better company
2010 Strategic review Building a better company For personal use only Glyphosate Other herbicides Insecticides Fungicides 2006 - 30-40% 35-40% 3-8% 6-10% 2008 Approx gross margin contributions (% of total GM $) Reporting & information systems Product portfolio Efficiency program Development
Slide 42: For personal use only
For personal use only