Origin Enterprises Plc · EURONEXT:OIZ
Origin Enterprises — Investor Day (May 2019)
122 slides from Origin Enterprises's investor day presentation, May 8, 2019
Slide 1: Capital Markets Day 2019
Capital Markets | (5 Day :2019 ee
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of the preparation of this presentation. Due to the inherent uncertainties, including both econom
Slide 3: Welcome – Tom O'Mahony, Group CEO
Capital Markets Day 2019 Welcome Tom O’Mahony Group CEO
Slide 4: 2019 Capital Markets Day: what we would like to discuss
2019 Capital Markets Day What we would like to discuss with you today… Our market place, strategy and 2023 ambition How we add value through our agronomic R&D and digital capabilities Our opportunity to grow organically Review our marketplace and business in LATAM Financial strategy, capital allocat
Slide 5: Origin Presenters & Senior Management
Origin Presenters & Senior Management Clare Bend Simon Beck Ronan Hughes Brendan Kent Alex Faulkner Chris Matthews Liam Larkin Brendan Corcoran Head of Technical Head of Digital Managing Director Chief Operating Officer Group Head of Human Group Head of Crop Head of B2B Agri-Inputs Head of Investor
Slide 6: Agenda
Agenda Introduction Agronomic Ireland Coffee Continental Latin Financial Q&A Lunch & Overview Capability & UK Break Europe America Overview Tom Clare Ronan Rafal Declan Sean All O’Mahony Bend Hughes Prendke Giblin Coyle Management Simon Brendan Monalisa Leonardo Beck Kent Ungureanu Pereira Chris Cla
Slide 7: Capital Markets Day: Perform, Sustain, Grow
Capital Markets Day Perform Sustain Grow Tom O’Mahony Group CEO 7
Slide 8: Origin at a glance
Origin at a glance Origin is a leading international agri-services group providing crop inputs, specialist agronomy advice and digital agricultural solutions to farmers, growers and amenity professionals Customer Customers Locations Employees Profile Revenue Operating Profit 50,000 + 7 Countries 2,7
Slide 9: Our market place
Our market place Negligible Trends Global Grain Greater increase in Key & Oilseeds management Evolution in global area 12% growth to complexity at farm services cultivated for 2025 farm level crops Expected Market Growth 2019 - 2023 Ireland and the UK Continental Europe Latin America €1.2bn €3.2bn €
Slide 10: The Origin business model
The Origin business model Our purpose: Sustaining land and lives through our expertise, innovation and R&D Research & Development Own Crop Input Crop Technology Own Digital Formulation 10,000+ Partnerships 50,000+ Services customer 800,000 ha fertiliser serving onboarded prescriptions 12.7m ha Field
Slide 11: Our values
OUR VALUES PEOPLE INTEGRITY INNOVATION COMMUNITY PARTNERSHIPS 11
Slide 12: Strategy for growth
Strategy for growth SCALE MARKET FOCUS Concentrate on target Customisation and geographies with long localisation term growth potential Investments in digital Build complementary and agronomic product based and capabilities distribution capabilities PORTFOLIO PEOPLE & POSITIONING ORGANISATION Our Vi
Slide 13: Structural themes in our marketplace
Structural themes in our marketplace Mega Mergers & Takeovers Farm Professionalisation Brexit Regulatory Process Digital and Agri Tech Sustainability 13
Slide 14: Origin's business model aligns with farm professionalisation trends
Origin’s business model aligns with farm professionalisation trends Shift to farm specialisation Trends of increasing farm size 80 65.0 No. of Farms 000’s Ha 70 60.0 60 Farm Size Ha’s 50 55.0 Greater technology enablement and 40 50.0 30 agronomic adoption 20 45.0 10 0 40.0 2005 2007 2010 2013 2016 2
Slide 15: Brexit
Brexit Key influences of farm profitability Favourable farm crop margin outlook – GBP/ha Euro/GBP exchange Short term 651 628 rate 553 594 464 Support payments 372 (BPS) 2000-10 2011-13 2014-16 2017 2018E 2019E Real output Wheat, Barley & Oilseed Rape prices Source: Rabobank Key influences of farm p
Slide 16: Brexit: key takeaways
Brexit Key takeaways Fixed costs as a % of output Farm productivity and competitiveness are key Medium performing High performing UK policy themes 64% 42% Greater concentration of agricultural production on larger farm sizes expected over the course of the 2021 - 2028 transitional phase Biggest retu
Slide 17: Origin's contribution to the Sustainable Development Goals
Origin’s contribution to the Sustainable Development Goals Balanced Fertilisation Enhancing Field Level Beneficial Digital Decision Integrated Crop Organisms Support Management Soil Health Habitats & Cultivation & Biodiversity Techniques Feed Technologies 17
Slide 18: Our focus points for growth
Our focus points for growth Sustain Perform Grow Ireland and the UK Continental Europe Latin America – Accelerate product & service – Grow volume & market share – Build volume & market share in extension – Leverage own-product based growing specialty nutrition segments – Establish leading digitally
Slide 19: Our 2023 Ambition
Our 2023 Ambition Mix of organic and M&A driven growth EBIT1 >40% EBIT1 Digital CAGR Contribution Hectares From Geographies outside +5-9% Ireland/UK 4m Ha 1 Group EBIT excl. JV’s including acquisitions up to 2023 19
Slide 20: Summary: our opportunity and capability
Summary Our opportunity and capability Portfolio Highly relevant business model Customer enhancement for our suppliers and – Agronomy led – Value Added input segments customers – New models Three geographical divisions Supplier Digital with comprehensive growth – Group wide partnerships – Agronomist
Slide 21: Clare Bend, Head of Technical Communications
Capital Markets Day Perform Sustain Grow Clare Bend Head of Technical Communications 21
Slide 22: Sustainable agronomy: an R&D strategy fit for the future
Sustainable agronomy An R&D strategy fit for the future How our research is evolving to solve agronomic problems in a sustainable fashion, and in doing so capture value for our customers and ourselves via classical technologies and new digital directions 22
Slide 23: Research and Development
Research and Development Cornerstone of our competitive advantage Core innovation capability delivering agronomic solutions Key enabler of value added selling Agronomist and farm customer attraction and retention Relevance Principles Sustainable Independent Evidence based, localised and situation sp
Slide 24: Sustainable agronomy
Sustainable agronomy We recognise competing priorities and adapt accordingly Food production vs Environmental protection Food Environment Agricultural Soil and water intensification quality Increasing Enhancing population biodiversity Reducing GHG Food security emissions 24
Slide 25: Defining solutions to yield constraints
Defining solutions to yield constraints Farming needs to remain profitable Novel methods of pest & agronomy Integrated approach to Focus on soil resistant grassweeds Digital disease control Selecting the best genetics health Origin R&D delivers the aggregation of marginal gains ….Driving commercial
Slide 26: Agronomy is both an art and a science
Agronomy is both an art and a science Intuition is also important Agronomy is a complex, moving feast It isn’t just about scientific principles and trials data It’s about utilising all of the below: Knowledge + Experience + Chemistry + Biology + Physics + Psychology + Economics + Data Sets Agricultu
Slide 27: How do we satisfy technical and commercial needs
How do we satisfy the technical and commercial needs of Customers, Origin, Suppliers and Environment We have identified the biggest challenges in agronomy We have updated our R&D strategy accordingly We have placed sustainability at its heart 27
Slide 28: Freedom to farm
Freedom to farm Challenges facing farming Legislation pressures Fluctuating grain prices Industry disconnect with science Capturing the value of Digital & Precision Manufacturer consolidation Changing customer needs High cost of new introductions: €300m per ai Too much data? Fewer new modes of actio
Slide 29: Research pillars – towards sustainability
Research pillars – towards sustainability Future direction has been updated Integrated between all sectors EMERGING TECHNOLOGIES PRECISION AGRONOMY NUTRITION AND SOILS CROP PROTECTION GENETICS Origin Advanced Sustainable Agronomy 29
Slide 30: Sustainable agronomy
Sustainable agronomy Soils & Integrated Environment Pest Management Origin Advanced Sustainable Agronomy 30 R&D Digital (RHIZA)
Slide 31: How do we satisfy technical and commercial needs
How do we satisfy the technical and commercial needs of Customers, Origin, Suppliers and Environment We have identified the biggest challenges in agronomy We have updated our R&D strategy accordingly We have placed sustainability at its heart We have expanded our geographic reach and knowledge excha
Slide 32: Expanded geographic scale
Expanded geographic scale A systematic approach to research and knowledge transfer A platform of scale to ‘capture the space’ Integrating crop science, agronomy and rapid decision support tools All designed to maximise the genetic potential of crops A systemised and partnership approach Enabling the
Slide 33: Expanded geographic scale
Expanded geographic scale A systematic approach to research and knowledge transfer Exchange of expertise Integrated agronomy: resistant blackgrass Exchange of Drill 1.0 Adjuvants: “Drill” showing year on year growth sales aids Drill 0.5 No Drill Exchange of Seed treatments: Zax on Maize / OSR concep
Slide 34: Expanding geographic reach - R&D in Romania
Expanding geographic reach - R&D in Romania A systematic approach to research and knowledge transfer Research into value – Evidence based 34
Slide 35: Product replacement strategy in place
Product replacement strategy in place Trials conducted in 2018 6 novel insecticides 6 novel nutrition delivery methods 13 new potato options 16 biostimulants 25 crops for developing end markets 20 development herbicides 2000 wheat lines 18 21 19 13 new fruit integrated novel seed new & veg weed cont
Slide 36: Is our approach successful?
Is our approach successful? Agrii customer yields over last 5 years compared to DEFRA average AGRII CROP YIELD DATA 2014 – 2018 v DEFRA average Actual farm data from 70,000 acres in South-West UK Agrii Average W. Wheat Agrii Best W. Wheat Agrii Average W.Barley Agrii Best W.Barley + 19% + 38% + 16%
Slide 37: Summary
Summary Our commitment to the highest standards of Crop Technology & Transfer is central to: • Facilitating the best industry knowledge, dissemination and translational capability • Positively influencing the profitability, competitiveness and sustainability of crop production systems • Ensuring tha
Slide 38: Simon Beck, Head of Digital
Capital Markets Day Perform Sustain Grow Simon Beck Head of Digital 38
Slide 39: oz= F %
oz= 8 F % SSS . ore v= AAPL AWN 39
Slide 40: Impact of technology on UK agricultural workforce
Impact of technology on UK agricultural workforce 40 Source: House of Commons Agriculture, Historical Statistics
Slide 41: Digital vision
Digital vision For “New Digital For the efficiency & “Digitally Enhanced” Business Models” agricultural business value chain development DATA On-farm & remotely acquired For farmers & growers “Digitally Enabled” 41
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Slide 43: The benefits for agronomists
The benefits for agronomists “ Contour images are confirming many of the things we know about our fields from their history. They‘re also telling us much more about them, allowing us to see things that are completely invisible to the naked eye. And see them early enough in the growing cycle to adjus
Slide 44: The benefits for growers
The benefits for growers The poorest 10% of fields are on average 45% lower yielding, than the field average. Currently the input cost are the same on these areas. RHIZA can help to • Identify • Understand • Manage 44
Slide 45: Social media testimonials
Social media testimonials 45
Slide 46: Rhiza Digital
Rhiza Digital Helping the agronomist identify Soil variation Biology Compaction Organic Matter Nutrition Crop health Pest damage Disease infestation Weed population Crop density Variable Rate seed Varietal choice 46
Slide 47: Digital not a solution on its own
Digital not a solution on its own The interaction of digital and agronomist is key 47
Slide 48: Ronan Hughes, UK Agronomy Services
Capital Markets Day Perform Sustain Grow Ronan Hughes Managing Director UK Agronomy Services 48
Slide 49: Ireland and UK at a glance
Ireland and UK at a glance Origin is a leading international agri-services group providing crop inputs, specialist agronomy advice and digital agricultural solutions to farmers, growers and amenity professionals Customer Customers Locations Employees Profile Revenue Operating Profit 30,000 + 2 Count
Slide 50: UK market overview
UK Market overview Arable ha Total agricultural area 9.1m ha Trend to professionalisation cropping Millions Average farm size 90 ha 180 Wheat 1.8 Target customer profile 100 - 2,000 ha 160 Barley 1.1 140 OSR 0.6 Beans 0.2 120 Farm size ha 4.6m ha Arable land Oats 0.2 100 65% Winter crops Potato 0.1
Slide 51: UK crop inputs market overview
UK Crop Inputs market overview Drivers of input demand Total market 2018 Market position Crop Protection Stg £m 693 #1 Cropping profile Seed Stg £m 280 #1 Impacted by agronomic factors Nutrition Tons m 4 #2 Winter Crops require more inputs Outlook Outlookfor to Inputs 2023 Evolution of farm input sp
Slide 52: Agrii UK: what is agronomy?
Agrii UK What is agronomy? Advisory & service focussed Agronomist visits farm (up to 25x per year) Crop Marketing Digital & Precision Agronomy Business / Environment Analyse farmer’s needs Establishment Seed / Genetics Prescription creation Soil / Nutrition Transmission of Delivery to Crop Protectio
Slide 53: Winter wheat cropping year
Winter wheat Cropping year NUTRITION WEEDS Key PESTS LODGING DISEASE Aug - Sept Oct - Dec Feb March April May June July - Aug Seedbed fertiliser (P&K) Nitrogen Plant growth regulators Stubble hygiene Residual herbicides Contact herbicides Desiccation Fungicides Pest control Pest control Micro-nutrit
Slide 54: Agrii UK at a glance
Agrii UK At a glance UK’s largest agronomy advice & inputs provider We Advise or influence agronomic decisions taken on: 860 staff across 40 locations 260 agronomists in 20 agronomy teams 33% of UK Combinable crops Highly concentrated on fully serviced agronomy The most extensive R&D capability in t
Slide 55: Agrii UK: why are we different?
Agrii UK Why are we different? Integrated agronomic approach => “Advanced Sustainable Agronomy” Throws Farm – R&D HQ Crop Marketing Digital & Precision Agronomy Business / Environment • Industry leading R&D • Evidence based Establishment research • Integrated Independent Seed / Genetics advice • 95%
Slide 56: What are our farmers' key concerns?
Agrii UK What are our farmers Farm profitability Crop output price volatility key concerns ? Increasing Environmental pest, disease & legislation & weed pressure greening Brexit Succession 56
Slide 57: Our position of strength to serve our customers
Agrii UK Our position of strength to serve our customers Agronomist Breadth of Relative footprint offering market shares Agrii Market Supplier Reputation leading R&D influence 57
Slide 58: Our growth drivers to 2023
Agrii UK Our growth drivers to 2023 - Portfolio extension Maintain our technological - Seed growth strategy differentiation through a Technological Sales Focus Growth - Nutrition growth strategy focused and collaborative - Digital agronomy approach - Farm partnership Ongoing optimisation of Proactiv
Slide 59: Brendan Kent, COO B2B Agri Inputs
Capital Markets Day Perform Sustain Grow Brendan Kent Chief Operating Officer B2B Agri Inputs 59
Slide 60: Fertiliser – at a glance
Fertiliser – at a glance Buy & Build: Delivering scale and competitive advantage #1 Fertiliser volume development 2,500 2,000 Ireland ‘000 Tonnes 1,500 #2 1,000 500 0 1978 Ireland blending 1985 1990 2000 Enter UK and scale through acquisitions 2004 2008 Direct farm sales channel Masstock 2011 Romani
Slide 61: Our fertiliser production footprint
Our Fertiliser production footprint 18 Fertiliser Blending Sites 5 in Ireland 12 in Britain 1 in Belgium 1 steam-granulation plant Ghent 10,000+ different analyses 61
Slide 62: Fertiliser macro overview
Macro overview Key influencers of fertiliser usage Key influencer (Ireland) - Dairy Cow numbers Fertiliser market 1800 1400 1600 Ireland 1200 Fertiliser Volume Tonnes Cow No’s 000’s 1400 15 % 1200 1000 1000 800 800 000’s 85 600 % 600 400 400 200 200 0 0 UK 2012 2013 2014 2015 2016 2017 2018 30 % Fer
Slide 63: Recent acquisitions
Recent acquisitions Closed geographic gaps in our Managed extension of Ireland/UK plant footprint fertiliser platform Strengthened our position in the Fragmented market with open solid fertiliser market borders UK Volumes grown by over 40% Storage/blending/packing facility near Ghent Accelerated the
Slide 64: Summary
Summary Maintain our leading market positions Key strategic relationships with customers / suppliers Strong capability to provide bespoke nutrition formulations Experienced staff across all functions Strong focus on Enhanced Efficiency range of fertilisers Well located blending plants Strong links w
Slide 65: Chris Clark, Head of Origin Amenity
Capital Markets Day Perform Sustain Grow Chris Clark Head of Origin Amenity 65
Slide 66: Our Amenity business: what we do
Our Amenity business What we do Retail B2C Sports turf maintenance and optimisation solutions Landscaping & lawn service programmes Street scene, public spaces and facilities maintenance products Broad based technical product range Wembley Stadium 66
Slide 67: Our Amenity business: what we do
Our Amenity business What we do Digital Turf management cloud based software Manufacturing B2B Specialist fertiliser manufacturing • Niche agriculture & growers • Amenity • Home & garden • Exports / Specialist applications Line marking paint • Specialist paint manufacturing Etihad Stadium • 3D adver
Slide 68: Amenity testimonial
Amenity testimonial “ We have had huge success with our use of Microlife fertiliser. All our tees are treated and we notice how uniform in size are the micro-granules, which enable us to achieve excellent spreading consistency. Following watering-in, the turf starts to colour up very quickly and eve
Slide 69: Amenity at a glance
Amenity- at a glance Buy & Build: Delivering scale and competitive advantage Amenity revenue development UK market leading positions 50 Retail 40 #1 Rigby Taylor # 1 Ireland £'m Turnover 30 Headland #3 20 Symbio # 1 10 Digital 0 1997 2001 2005 2011 2013 2016 2017 2018 Turfkeeper # 1 PB Kent Dingley
Slide 70: Strengths within our Amenity business
Strengths within our Amenity business Geographic reach Scale Integrated management c.35% of UK Broad portfolio framework market reps with technical depth B2B-B2C Origin Amenity Clear sales / marketing Strong innovative Amenity group structure manufacturing base Strong R&D Experienced team - PB Kent
Slide 71: Amenity Growth Strategy
Amenity Growth Strategy Further strengthen R&D to drive innovation Leverage and extend manufacturing technology Develop further group synergies Focus on sustainability Organic growth focus Acquisition opportunities in Europe 71
Slide 72: Rafal Prendke, Chief Executive of Continental Europe
Capital Markets Day Perform Sustain Grow Rafal Prendke Chief Executive of Continental Europe 72
Slide 73: Continental Europe at a glance
Continental Europe at a glance Origin is a recognised leader in the provision of Agronomy Services and Crop Inputs across our Continental European markets in Poland, Romania and the Ukraine. Customer Digital Customers Locations Employees Profile Ag Revenue Operating Profit 19,000 + 4 Countries 1,100
Slide 74: Historical Context
Historical Context POLAND Established 1996 Acquired 2015 Rebranded 2016 UKRAINE Established 2002 Acquired 2014 Poland ROMANIA Ukraine Established 1999 Acquired 2015 Established 1992 Romania Acquired 2015 Established 2015 74
Slide 75: Poland market overview
Poland Market overview Total agricultural area 14.6m ha Arable Ha Trend to professionalisation cropping millions Average farm size <10 ha 5,000 Wheat 2.3 Target customer profile 100-1,000 ha 4,500 Barley 1.1 8k farms within target range 4,000 OSR 0.7 3,500 3,000 Beans 0.2 10m ha arable land 2,500 Oa
Slide 76: Poland crop inputs market overview
Poland Crop Inputs market overview Drivers of input demand Total market 2018 Market position Crop Protection PLN bln 2.7 #2 Yield gap Seed PLN bln 1.1 #1 Average yield <60% potential Nutrition Tonnes m 4.0 Top 10 Evolution of farm input spend Outlook to 2023 EU subsidies 250 400 Crop Nutrition Impro
Slide 77: Romania market overview
Romania Market overview Arable Ha Total agricultural area 8m ha Trend to professionalisation cropping millions Average farm size <4 ha 5,000 Wheat 2.1 Target customer profile 100-1,000 ha 4,500 Barley 0.4 12k farms within target range 4,000 OSR 0.7 3,500 Pulses 0.1 3,000 7.4m ha Arable Land Oats 0.2
Slide 78: Romania crop inputs market overview
Romania Crop Inputs market overview Drivers of input demand Total market 2018 Market position Crop Protection RON bln 2.9 #2 Yield gap Seed RON bln 1.4 #2 Average yield 50% potential Nutrition Tonnes m 2.3 #1 Evolution of farm input spend Outlook to 2023 EU subsidies 250 300 Crop Nutrition Promoting
Slide 79: Ukraine market overview
Ukraine Market overview Total agricultural area 32m ha Arable Ha Farm ownership structure cropping Millions Over 40% of farms 500 ha plus Wheat 6.6 Target customer profile 500-10,000 ha 50,000 45,000 Barley 2.8 15k farms within target range 40,000 OSR 1.2 35,000 Maize 4.5 30,000 25m ha Arable Land S
Slide 80: Ukraine crop inputs market overview
Ukraine Crop Inputs market overview Drivers of input demand Total market 2018 Market position Crop Protection USD m 850 #3 Seed USD m 700 #6 Yield gap Nutrition Tons m 6.5 N/A Average yield 30% of potential Evolution of farm input spend Outlook to 2023 Economic stability Inputs spend, $ per ha Crop
Slide 81: Overview of CE farm service providers
Overview of CE farm service providers Poland Romania Ukraine Origin’s market position #2 #2 #3 Top 6 represent 73% 42% 88% Market consolidation over 100 → 30 300 → 150 3,000 → 100 past 5 years We expect consolidation Smaller distributors Scale and competent across all three markets exit, being acqui
Slide 82: Origin's position of strength
Origin’s position of strength Origin is favourably positioned to capitalise on opportunities in a consolidating market Group synergies Agronomist footprint High agronomy competence Origin Continental Europe Digital solutions Formulation capabilities 82
Slide 83: Commercialisation of R&D investment
Commercialisation of R&D investment Digital as agronomist’s tool Technology based selling Demonstration of agronomy techniques Centres of excellence Selected product offer 83
Slide 84: Own product based capabilities
Own product based capabilities WHY? Higher value creation Complementary to on farm product suite Better market reputation WHAT? • Coating and blending fertilizer plant in Romania • FoliQ plant in Poland • Seed processing in Romania 84
Slide 85: Monalisa Ungureanu, Chief Executive Origin Romania
Capital Markets Day Perform Sustain Grow Monalisa Ungureanu Chief Executive Origin Romania 85
Slide 86: Origin Romania: revenue growth 2016-2018
Origin Romania Revenue growth 2016 - 2018 Crop Protection +11% Seeds +17% Fertiliser +32% Acquisitions Grain Trading Flat 2015 2016 2017 2018 Farmers Building central capability Integration 86
Slide 87: Path to Agrii Romania
Path to Agrii Romania Logistic and Commercial business integration Commercial support Completion setup integration integration of integration 2019 2020 2021 2022 Procurement Marketing and Logistic model Final integration centralization technical activities suitable for each alignment area Sales Comm
Slide 88: New approach to business model
New approach to business model 1 R&D – Product development 2 Customer segmentation Selection of products Who are they and what they want? Marketing How we target them? Target Sales management Monitor 3 Internal competencies 4 Sale “Tech” packs 5 On farm demo Technical skills transfer & Promoted tech
Slide 89: Declan Giblin, Executive Director and CEO of LATAM
Capital Markets Day Perform Sustain Grow Declan Giblin Executive Director and CEO of LATAM 89
Slide 90: Latin America at a glance
Latin America at a glance Origin is focused on the development and manufacture of value added crop nutrition and speciality inputs Customers Locations Employees Customer Profile Revenue Operating Profit 118 Resellers 1 Country 158 50-5,000 ha €28m €9m Profit by ‘Customer reach’ Geography 1 #5 1 26m
Slide 91: Brazil – market overview
Latin America Brazil – market overview Primary producers Global player % Global Trade Increasing professionalisation #2 Production #2 Export 39% Soy Increasing intensification and farm consolidation #3 Production Corn #2 Export 21% Speciality nutrition #1 Production Sugar #1 Export 44% Second stage
Slide 92: Brazil - land in abundance
Latin America Brazil - Land in abundance Only 7% of the available Significant Pastureland land mass (851m Ha) used available for conversion to Soya represents 54% of for agriculture arable production crop output Planted Forest 1% Fruits Protected 6% Coffee Other Areas Beans 3% Environme 30% Soybean
Slide 93: Soya pricing / farmland pricing / China factor
Latin America Soya pricing / farmland pricing / China factor 22,645 Average Farmland Prices in Select Countries – In US Dollars per Hectare 14,793 12,000 8,136 7,003 6,508 6,041 3,008 3,532 3,419 2,989 1,409 0,63 U.K RIBEIRÃO USA/ CORN IRATI USA ARGENTINA SORRISO CANADA BRAZIL URUGUARY SOUTH AUSTRAL
Slide 94: Production costs x revenue / logistics
Latin America Production costs x revenue / logistics 94 Source IEG/FNP
Slide 95: Brazil investment – pre entry period
Latin America Brazil investment – pre entry period 2014 2015 2016 2017 2018 Origin initial review of Origin conducted Due Diligence on Exchange on Brazilian market a number of targets FG and FZ All great businesses BUT We were looking for an entry point with the following : » In a prepared state (fo
Slide 96: Brazil Investment
Latin America Brazil Investment Paraná State 200,000km2 Crop input development > 2x Total area of Ireland Resellers Turnover Customers Turnover • Farm Size – 100 – 1,000 ha 118 €28.4m1 4,000 €88.2m1 • Two crops per year • Fragmented market • Well capitalised primary producers Sales Force Sales Force
Slide 97: Distribution model to the farmer
Latin America Distribution model to the Farmer Direct Sales to 25% Farmers Crop Protection Manufacturers Resellers Fortgreen 50% (4,000) Resellers Farmer 75% 24% Cooperatives 1% Trading Companies 97
Slide 98: Speciality fertiliser: growing our business
Speciality fertiliser Growing our business PLUS Formulation B2B Market 80+ Companies 80+ Companies PLUS Organic Push PLUS On Farm Services 4,000+ Companies 2023 US$2.0bln Adds ‘shelf space’ for 2017 » 118 Resellers Fortgreen (plus own US$1.4bln » FZ 11% of Sales profit and other synergy potential) 9
Slide 99: Our medium term focus
Latin America Our medium term focus Grow what we have at Fortgreen (Primary focus) Delivering on our commitments to all Stakeholders More market share in Brazil Market share in Paraguay Market share in Bolivia Penetrate Origin Europe Other opportunities Top 10 36% Significant ongoing consolidation u
Slide 100: Leonardo Pereira, Head of Technical and Operations Fortgreen
Capital Markets Day Perform Sustain Grow Leonardo Pereira Head of Technical and Operations Fortgreen 100
Slide 101: Fortgreen: our business
Fortgreen Our business Market Growth 158 Our Product Range 2 USD$ bln 1.5 Employees 1 2% 1% 0.5 82 30% Sales 0 2017 2023 team Micros Biostimulats 1 Adjuvants CR/SR 118 Resellers 66% Fragmented Market Source IEG/FNP 101 1 Control and Slow release fertilizer
Slide 102: Our facilities
Our facilities Co-located R&D and formulation facility ✓ Well Invested Infrastructure ✓ Sufficient Capacity to meet 5 year growth target ✓ Continuous investment in our People ✓ 10% of Employee’s focused on Product innovation Post Acquisition investment in Dry Fertiliser Capacity 3x Pre Acquisition P
Slide 103: 'On farm' trials
‘On farm’ trials The cornerstone of sales development + 2,000 On Sales Team Farm Trials + Resellers Team Per Year + Technical Team (2 Crops) 103
Slide 104: Marketing support
Marketing support How we drive sales Sales campaigns Distributor team Field days Facility Tours Road signs (advertisements) 104
Slide 105: 'On farm cycle'
‘On farm cycle’ Driving sales On Farm Trials Grower Approved Product On Farm Trials = = New Buy Value Generation 105
Slide 106: Fortgreen portfolio
Fortgreen portfolio Nutritional Functional System (SFN) SFN CONCEPT : “Fortgreen's functional nutrition system is a technical concept that utilizes the knowledge gained from experimental research and fieldwork generating recommendations for technologies at each stage of crop development, minimizing
Slide 107: Example: on farm commercial trial
Example ‘‘On farm’ commercial trial Fortgreen PATRIOT versus STANDARD Grower: Josias Carvalho Farm: Faz. Torres e Vauzinho Variety: Anta 82 Treatment: Patriot 120 ml/ha + FortSeed Dry 75 g/ha Sowing: 02/11/2016 Harvest: 28/02/2017 107
Slide 108: Example: on farm commercial trial
Example ‘‘On farm’ commercial trial Evaluation + Harvest STANDARD: FORTGREEN: AREA: 3,971 hectare AREA: 8,958 hectare Weight: 14,892 KG Weight: 38.235 kg Productivity: 62,5 bags/ha Productivity: 71,1 bags/ha Standard: Good Performance In The Field 17,6 Plants/Meter Vs + 8 bags/ha Standard: 18,8 Harv
Slide 109: Added value generation
Added value generation Side by side Products That Are Tailored For Farming Solutions Fortgreen Methodology: Side By Side Soja Plus Gold Grower: Adalto Sotolani Variety: 6210 Ipro Harvested area: 0,5 hectare Sowing: October, 17th, 2018 Base fertilizer: 250 kg/ha (2-20-20) Control (Untreated): 46,84 b
Slide 110: Added value generation
Added value generation Side by side Products That Are Tailored For Farming Solutions Investment = R$ 5,00/ha/application Investment R$ 5,00 Return = better application, //ha/application low drift, high efficiency 110
Slide 111: Added value generation
Added value generation Side by side Products That Are Tailored For Farming Solutions Return average 6 soybean bag/ha Investment 1 soybean bag/ha 111
Slide 112: Financial Summary – Sean Coyle, Group CFO
Capital Markets Day Perform Sustain Grow Financial Summary Sean Coyle Group CFO 112
Slide 113: Strong Cash Flow and Investor Returns
Strong Cash Flow and Investor Returns FY 2014 to FY 2018 Cash generation Allocation Stakeholders Capex (Investment) €29 m Free Cash Flow €257 m Acquisitions Shareholders €179 m * 52% Dividends €132 m Total €445 m Business Reinvestment Disposals Capital Return €100 m 48% €188 m Other €5 m 113 *Includ
Slide 114: Ambition to 2023
Ambition to 2023 Mix of organic and M&A driven growth 2018 EBIT Organic CAGR to 2023 Acquired EBIT to 2023 2023 Ambition Brazil (Pro Forma) €9m + 5-10% Europe €16m + 3-5% Ireland / UK €55 m + 1-2% Total CAGR + 3-4% + 2-5% + 5-9% 114
Slide 115: Improving Returns on Existing Portfolio
Improving Returns on Existing Portfolio ROIC Development v EBIT CAGR FY 19 - 23 High IRELAND / UK LATAM CONTINENTAL ROIC EUROPE Key Objective: ROIC 2019-2023 12% - 15% Low Low EBIT CAGR – 2019 to 2023 High “Return on Invested Capital” or “ROIC” means Group earnings before interest, tax and amortizat
Slide 116: Strong focus on Cash Conversion
Strong focus on Cash Conversion Driving returns through working capital management Free Cash Flow 2019-2023 > €300m Free Cash Flow 2014-2018 €257m Key Objective: FCF Ratio 2019-2023 Working Capital 70% - 100% Free Cash Flow Ratio Management Free Cash Flow Ratio 2014-2018 2019-2023 90%+ 90%+ 60% Rang
Slide 117: Balance Sheet Management
Balance Sheet Management What outcomes would we like to achieve? Cereal Farming Full and Half Year Net Debt to EBITDA Covenant Analysis Typical 1.5 x to 2 x 3.5 Working Capital Unwind between January and July 3 2.81 2.5 2.57 2.18 2.17 1.97 1.95 2 1.74 1.5 Movement into LATAM has no major impact on W
Slide 118: Capital Allocation focus areas
Capital Allocation focus areas M&A and Strategic Capex M&A Specialist European or LATAM Focus on formulation businesses Bolt on Fertilizer and Amenity Returns on Investment opportunities with market share Reasonableness of Multiple Bolt on distribution businesses in existing markets Opportunity to u
Slide 119: Management Remuneration and KPI's
Management Remuneration and KPI’s Aligned to 2023 Ambition Short Term vs Long Term Short Term Long Term EPS EPS Growth Personal or ROIC Business Unit Operating Cash FCF Ratio Flow 119
Slide 120: Summary Ambition
Summary Ambition Balancing growth and margin, key focus on returns EBIT CAGR EBIT CAGR EBIT CAGR (Total) 5-9% (Organic) (Acquisitions) 3-4% 2-5% Maintain Half Year Net Debt/EBITDA Group ROIC 2023 Digital Hectares <3x 12-15% 4m 2023 Diversified EBIT outside Ireland / UK 40%+ Capital Allocation FCF Ra
Slide 121: Summary
Summary Our opportunity and capability Portfolio Highly relevant business model Customer enhancement for our suppliers and – Agronomy led – Value Added input segments customers – New models Three geographical divisions Supplier Digital with comprehensive growth – Group wide partnerships – Agronomist
Slide 122: Capital Markets Day 2019
Capital Markets i o> Day 2019 rigin ENTERPRISES PLC