Slide 1: ASX cover letter: FY20 Investor Presentation
12 November 2020 The Manager, Companies Australian Securities Exchange Companies Announcement Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, GrainCorp Limited 2020 Full Year Financial Results – Investor Presentation Please find attached the Investor Presentation relating to the financial ye
Slide 2: FY20 Financial Results
FY20 Financial Results 12 November 2020 Robert Spurway, Managing Director and CEO Ian Morrison, Chief Financial Officer
Slide 3: 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 4: Agenda
Agenda Overview / highlights 4-9 FY20 financial results 10 Outlook & strategy 17 Appendix 24
Slide 5: GrainCorp at a glance
WORK IN PROGRESS DRAFT GrainCorp at a glance High quality strategic infrastructure assets servicing customers worldwide International: onal: GrainsConnect Canada JV: Global network of offices, originating grain, State-of-the-art grain supply chain connecting pulses and oilseeds from different region
Slide 6: FY20 highlights
WORK IN PROGRESS DRAFT FY20 highlights Building momentum – strongly positioned for the future A year of transformation FY20 performance Well positioned for growth Statutory NPAT $343m Underlying EBITDA for State-of-the-art infrastructure Continuing Operations2 $108m assets Demerger of United
Slide 7: FY20 summary
WORK IN PROGRESS DRAFT FY20 summary Improved FY20 financial performance during third year of drought Statutory NPAT1 Underlying EBITDA Underlying NPAT2 Continuing Operations Continuing Operations from from $343m ($113m) loss $108m ($107m) loss ($16m) from ($158m) loss Dividend Per Share Core Debt Re
Slide 8: COVID-19 resilience
WORK IN PROGRESS DRAFT COVID-19 resilience An essential service in the food & agricultural supply chain Protecting our Physical and mental wellbeing programmes for people employees COVID-19 safe plans embedded at all offices and sites Protecting our Seamless operations supporting our customers
Slide 9: Commitment to zero harm
WORK IN PROGRESS DRAFT Commitment to zero harm Continued improvement in our safety performance LOST TIME INJURY FREQUENCY RECORDABLE INJURY FREQUENCY RATE (LTIFR)1,2 RATE1 3.9 13.2 12.6 3.7 11.7 3.1 1.8 7.7 6.5 New photo 0.8 FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20 Driving safety culture
Slide 10: Sustainability
WORK IN PROGRESS DRAFT Sustainability Fundamental to what we do Sustainable agriculture Managing impact of climate variability through the cycle FutureFeed, a partnership with CSIRO, developing a Unique 10-year Crop Production seaweed extract Contract (CPC) established (asparagopsis) based anima
Slide 11: FY20 financial results
FY20 financial results — —————a ee GrainCorp
Slide 12: Financial highlights
WORK IN PROGRESS DRAFT Financial highlights Stronger performance across all segments Underlying EBITDA ($m)1 FY20 FY19 Movement Agribusiness 52 (94) Processing 40 16 Corporate (19) (29) AASB-16 impact2 35 - Total 108 (107) Underlying NPAT (continuing operations) (16) (158) Statutory NPAT (continuing
Slide 13: FY19 - FY20 earnings bridge
WORK IN PROGRESS DRAFT FY19 - FY20 earnings bridge Stronger performance across all segments UNDERLYING EBITDA FROM CONTINUING OPERATIONS ($m) AASB-16 Decline in fair impact Stronger crush Lower corporate value of UMG Improved volumes / costs performance, 35 margins delivering on (2) operating 12 ini
Slide 14: Agribusiness segment
WORK IN PROGRESS DRAFT Agribusiness segment Significant improvement in financial performance despite $m FY20 FY19 continued drought Revenue 3,415 3,285 Underlying EBITDA (pre AASB-16)1 52 (94) FY20 tonnes handled lower than FY19 with continued impact of drought; imports slowed in 2H with improved
Slide 15: Processing segment
WORK IN PROGRESS DRAFT Processing segment Significant improvement, delivering on capex and operational initiatives $m FY20 FY19 Oilseeds - improved crush contribution due to: Revenue 621 541 Underlying EBITDA (pre AASB-16) 40 16 Numurkah plant expansion – delivering on capital investment; Underlyi
Slide 16: Core debt vs net debt profile
WORK IN PROGRESS DRAFT Core debt vs net debt profile Conservative balance sheet provides solid platform for growth DEBT AND LIQUIDITY PROFILE $m 30 Sep 2020 31 Mar 2020 Term debt 150 150 Core debt = net debt less commodity inventory Inventory and working capital financing 214 971 – More common met
Slide 17: Disciplined capital expenditure
WORK IN PROGRESS DRAFT Disciplined capital expenditure Major capital investment program completed in FY18 CAPEX – CONTINUING OPERATIONS ($m)1 DEPRECIATION & AMORTISATION (D&A) – CONTINUING OPERATIONS ($m) 147 143 15 7 98 110 95 89 96 90 85 84 4 9 28 8 9 4 45 68 36 1 81 87 89 86 82 4 12 47 52 19 23 3
Slide 18: Outlook & Strategy
Outlook & Strategy
Slide 19: 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 20: Capital management and dividends
WORK IN PROGRESS DRAFT Capital management and dividends Conservative capital structure and disciplined investment approach CAPITAL MANAGEMENT FRAMEWORK MANDATORY DISCRETIONARY Service debt obligations Surplus cash flow Sustaining capital Dividends - Capital investment in - Target minimal core debt e
Slide 21: FY21 outlook
WORK IN PROGRESS DRAFT FY21 outlook Expect ECA crop to be substantially above average; positive crush margins to continue ABARES’ September ECA 2020/21 winter crop forecast 24.4mmt GrainCorp harvest receivals year-to-date 3.9mmt: – very strong ECA crop – harvest underway – shaping to be similar
Slide 22: Attractive industry fundamentals
WORK IN PROGRESS DRAFT Attractive industry fundamentals AGRIBUSINESS GrainCorp well positioned to benefit from global trends GLOBAL PRODUCTION 1,2 Population (billion) Barley, Canola & Sorghum (mmt) Wheat (mmt) 7.8b 1,200 6.9b 1,000 6.1b Rising middle class, most prominent in developing 5.3b 800 r
Slide 23: Strategy
WORK IN PROGRESS DRAFT Strategy Overall focus is on improving Return on Invested Capital (ROIC) Lift returns Deliver further cost reduction through simplification Continued efficiencies and initiatives to drive utilisation Strengthen Leverage capabilities the core Optimise bulk material (non-g
Slide 24: Conclusion
WORK IN PROGRESS DRAFT Conclusion Delivering on our promises as we prepare for significant crop Substantial lift in FY20 financial performance despite drought Prudent balance sheet, minimal core debt Well positioned with a high quality integrated network of infrastructure assets Revised stra
Slide 25: Appendix
Appendix GrainCorp
Slide 26: Delivering operating initiatives
WORK IN PROGRESS DRAFT Delivering operating initiatives Operating initiatives being delivered – supporting ‘through-the-cycle’ earnings improvement Benefit Initiative Status p.a. ($m) Improvements in grain stocks management Full benefits in FY20 10 Agribusiness cost reduction initiatives Impleme
Slide 27: '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 28: 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 ABARES - ECA total winter + sorghum production 19.1 29.2 18.0 9.7 11.8 Carry-in 1.6 1.7 3.3 2.3 1.5 Receivals 8.8 15.0 6.8 3.1 4.2 Imports (trans-shipments) 0
Slide 29: FY20 earnings summary
WORK IN PROGRESS DRAFT FY20 earnings summary FY20 (Excl $m FY20 FY19 AASB-16) Underlying EBITDA from Continuing Operations 108 73 (107) Depreciation & Amortisation (110) (82) (90) EBIT (1) (9) (197) Interest (26) (19) (32) Income tax benefit 12 12 70 Underlying NPAT from Continuing Operations (16) (
Slide 30: FY20 reconciliation – underlying vs statutory results
WORK IN PROGRESS DRAFT FY20 reconciliation – underlying vs statutory results $m Segment EBITDA Net Interest D&A Tax NPAT Details Underlying – continuing operations 108 (26) (110) 12 (16) Relates to the gain on sale of ABLT Gain on sale of ABLT1 Agribusiness 86 (27) 59 Relates to costs incurred to su
Slide 31: FY16-FY20 proforma earnings
WORK IN PROGRESS DRAFT FY16-FY20 proforma earnings Proforma EBITDA includes the following adjustments, in order to provide a better comparative with prior years, in line with Demerger Scheme Booklet: Removal of earnings from ABLT and Allied Mills PROFORMA UNDERLYING EBITDA BY SEGMENT ($m) Incorp
Slide 32: Impact of AASB-16 leases
WORK IN PROGRESS DRAFT Impact of AASB-16 leases IMPACTS OF AASB16 ON FY2020 SEGMENT EARNINGS Effective 1 October 2019 and first reported in 31 March 2020 $m EBITDA D&A EBIT Interest NPAT statements Agribusiness 27 (20) 6 Brings most operating lease commitments onto the balance sheet as an asset
Slide 33: Core debt bridge: HY20 - FY20
WORK IN PROGRESS DRAFT Core debt bridge: HY20 - FY20 10 Inventory movement unwound every six months (18) 5 Settled transaction costs relating to Demerger and sale of ABLT Capex weighted to second half in preparation for larger harvest 25 (21) (34) – Yamala site open for harvest (37) – Berryban
Slide 34: Slide 34