Midway — FY2020 Earnings Presentation
30 slides from Midway's earnings presentation, Aug 27, 2020
Slide 1: Full Year Result – FY20 Analyst and Investor Presentation
Full Year Result – FY20 Analyst and Investor Presentation August 2020
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Midway Limited ACN 005 616 044 (Midway or the Company). The information contained in this presentation is current at the date of this presentation. The information is a summary overview of the current activities of the Company and does not purport to
Slide 3: Financials FY20
Financials FY20 Midway
Slide 4: Overview – FY20 Results
Overview FY20 Results Revenue • Adverse impacts from external market forces affected financial performance in FY20 $257.8M (9.1%) • EBITDA – S(1) of $12.0M (FY19: $37.1M) • Underlying net loss after tax before significant items of $0.4M n- • Statutory net loss after tax of $11.7M • Significant items
Slide 5: Financial Performance – FY20
Financial Performance – FY20 $Am FY20 FY19 % Change Sales Revenue 257.8 283.6 (9.1%) Other Income 6.5 5.6 16.1% Equity Accounted Share of Profits 2.8 6.8 (58.8%) Operating Costs (255.1) (258.9) 1.5% EBITDA – S(1) 12.0 37.1 (67.7%) Significant Items(2) (8.2) 3.1 (364.5%) AASB 16 impact 1.8 - - Net Fa
Slide 6: Midway Group EBITDA-S ($'M)
Financial Performance – FY20 Midway Group EBITDA-S ($'M) 40.0 35.0 30.0 11.7 25.0 20.0 10.6 37.1 1.6 0.8 2.3 4.6 15.0 0.2 0.9 1.8 10.0 5.0 12.0 - FY19 Volume Supply FX Bone Dry Price SWF PMP MWL Other FY20 costs(A) (A) Most supply costs are linked to the USD FOB pricing and they are adjusted typical
Slide 7: Cash Flow – FY20
Cash Flow – FY20 $Am FY20 FY19 $Am Change Operating Cash Flow(1) 11.1 9.9 1.2 Investing Cash Flow (3.6) (13.1) 9.5 Financing Cash Flow (11.9) 8.3 (20.2) Net Change in Cash (4.4) 5.1 (9.5) Net Debt(2) (39.4) (29.5) (9.9) Interest Cover 5.4 18.7 (1) Strong operating cash conversion in FY20, coming off
Slide 8: Balance Sheet – FY20
Balance Sheet – FY20 $Am FY20 FY19 $Am Change Total Current Assets 54.8 71.3 (16.5) Total Non-current Assets 205.8 205.7 0.1 Total Assets 260.6 277.0 (16.4) Total Current Liabilities 41.4 38.8 2.6 (1) Non-current Borrowings 38.9 38.4 0.5 Total Non-current Liabilities 89.1 95.5 (6.4) Total Liabilitie
Slide 9: A Significant Asset Base
A Significant Asset Base The Group has a strong asset base that underpins our banking covenants and provides funding options through asset sales. The Group recorded an increase in plantation land value of $7.1M during the period, reflecting higher market prices for agricultural land. The value
Slide 10: Business Improvement Actions
Business Improvement Actions LEAN Manufacturing Implementation LEAN projects and initiatives have generated >$0.5M in savings in FY20 LEAN projects to be implemented in FY21 are expected to deliver an additional $2.5M in savings Intention to roll out LEAN to other business units Midway Geelong
Slide 11: Business Improvement Actions
Business Improvement Actions Plantation Management Partners Pty Ltd (PMP) COVID-19 impacting access to Tiwi Islands Temporary closure of export operation on Tiwi Islands in response to lower global demand A range of initiatives implemented to minimize losses (R&M reduction, capex deferral) S
Slide 12: Business Improvement Actions
Business Improvement Actions Queensland Commodity Exports (QCE) Third year of improved earnings performance following restructuring of the business Working with private growers and contractors to increase timber and residue resource Growth opportunities are being explored from additional new f
Slide 13: Trading Conditions
Trading Conditions Midway
Slide 14: Pulp and Paper Market
Pulp and Paper Market Despite COVID-19, Pulp Markets Have Stabilised Over the Past 12 Months Bleached hardwood chemical pulp producer inventory days have normalised from 72 days in June 2019 to 49 days in June 2020. BHKP prices have remained steady in the $430 – $450/ADT range since June 2019. 1
Slide 15: COVID-19 Impacts on Pulp Market
COVID-19 Impacts on Pulp Market Major Short Term Impact in Japan Pulp Tissue Paper Packaging Markets Health Remote Work E Commerce Sustainability Intervention(#) # China ban on RCP imports. Source: Fastmarkets: RISI, ‘…the forces driving the next normal’, July 2020. increase decrease mix 15
Slide 16: Japanese Market
Japanese Market COVID-19 Impacts Lockdowns and office closures has seen Paper and Board production drop 8.9% with Printing and Writing grades down 16% in the Jan – May period. Recycled paper availability declining as well pushing up prices and reducing the discount to virgin pulp. Most pulp an
Slide 17: Chinese Market
Chinese Market COVID-19 Impacts Fast and hard lockdowns impacted Chinese demand, but appears to be recovering rapidly. Import woodchip volumes on a par with 2019 YTD. Imports from Australia, South Africa and Thailand all down. Future New capacity under construction and announced to come onli
Slide 18: Business Development
Business Development Midway
Slide 19: Business Development Focus
Business Development Focus Midway is focused on generating greater resilience in its earnings profile: Improve operational efficiency of existing assets Emerging e.g. increase site utilisation in Geelong and Brisbane, Technologies greater utilisation of harvest and haul assets. 10% Diversifying
Slide 20: Expanding Core Business
Expanding Core Business Midway has identified and developed the opportunity for the export Regrowth hardwood thinnings areas in NE Tasmania of woodfibre from eucalypt regrowth forests in the east and north-east of Tasmania. Midway has contracted significant wood supply from both Sustainable Timb
Slide 21: Developing Adjacencies
Developing Adjacencies Midway has developed an operating model for grain export services in Geelong, utilising the existing shiploader infrastructure at Berth 4. Midway is targeting to provide bulk grain export services to Australian grain exporters for the 2021/22 export season (from October 20
Slide 22: Divestment of Non Core Land Assets
Divestment of Non Core Land Assets Midway is continuing to pursue opportunities to divest its non-core land. There are 4,076 ha (valued at circa $25 million) north of Melbourne which is being targeted This land, particularly in the Hume Highway corridor is well suited to residential developmen
Slide 23: Emerging Technologies
Emerging Technologies Midway is collaborating with several technology providers in the following areas: Plantation residue conversion to pellets for delivery to Japanese biomass customers. Converting plantation residue to electricity and high quality biochar through a pyrolysis process. Invest
Slide 24: Securing Future Timber Supply
Securing Future Timber Supply Midway is seeking to attract new investment into Victoria’s south western plantation forestry catchments to ensure long term supply. Australian Carbon Credit Units will be generated from these developments. Midway will provide plantation management and secure offt
Slide 25: Potential Timber Volumes Growing with Changing Mix (Domestic and Export)
Potential Timber Volumes Growing with Changing Mix (Domestic and Export) Volumes FY20 FY21 FY22 FY23 Comments (000’s GMT) Geelong 683 862 800 700 Excludes grain and softwood Portland 851 550 800 800 Revised volumes (Alliance agreement renewal) Brisbane 231 279 350 400 Melville Island 122 60 150 220
Slide 26: Key Points
Key Points Global market • Global market uncertainty remains but signs of economic recovery in China and Japan • COVID-19 is driving structural change in global pulp and paper markets but underlying net benefit for woodfibre exporters Business development • Short term focus on leveraging our existin
Slide 27: Attachments
Attachments Midway
Slide 28: Safety Environment People
Safety Environment People Safety • LTIFR of 1.9 in FY2020, significantly lower than FY19 (8.7) • COVID-19 Response Plan 10.1 Environment 8.8 8.7 • Supporting CSIRO study into carbon plots on Tiwi Islands People 5.7 • Midway management and staff decreased from 266 to 167 at the end of the financial y
Slide 29: New Accounting Standards – Impacts FY20
New Accounting Standards – Impacts FY20 Key Impacts – AASB 16 Leases AASB 16 provides a new lease accounting model which requires a lessee to recognise a right of use asset representing its right to use the underlying asset and lease liabilities. The depreciation of the right of use asset and inte
Slide 30: Questions?
Questions? Midway