Nufarm Limited · ASX:NUF
Nufarm — H1 FY24 Earnings Presentation
36 slides from Nufarm's earnings presentation, May 23, 2024
Slide 1: Nufarm HY24 results presentation
Nufarm Limited 23 May 2024 ACN 091 323 312 103-105 Pipe Road ASX Release – Company Announcement Laverton North VIC 3026 Australia +61 3 9282 1000 nufarm.com Nufarm HY24 results presentation Attached is Nufarm Limited’s (ASX: NUF) (Nufarm) HY24 results presentation which will be delivered by Nufarm E
Slide 2: Nufarm FY24 Half Year Results
Nufarm FY24 Half Year Results 15 November 2023
Slide 3: Disclaimer
Disclaimer General This presentation has been prepared by Nufarm Limited. The information contained in this presentation is for informational purposes only as at the date of this presentation on 23 May 2024. The information contained in this presentation is not investment or financial product advice
Slide 4: 1H24 Results Overview
1H24 Results Overview CEO, Greg Hunt
Slide 5: Group – key messages
Group – key messages • Underlying EBITDA $217m. Statutory NPAT $49m. • Interim dividend 4cps. Solid performance • Strong year on year growth expected in 2H FY24.1 • FY24 outlook EBITDA $350m to $390m.1 • Flexible, covenant light debt financing. • Working capital position improved - 20% YoY reduction
Slide 6: Segment results – key messages
Segment results – key messages • Volume growth in crop protection. Strong focus on reducing inventory. Price Resilient pressures impacted revenue and margin. crop protection • Impact of industry wide inventory destocking continuing. Price and margin pressures expected to continue in near term. Posit
Slide 7: Regional performances
Regional performances North America Europe Segment Financials $m 1H24 1H23 Change Revenue • Strong volume growth. • Volumes impacted by weather and APAC 459 546 -16% • Sales and margin impacted by lower prices distributor destocking. North America 637 679 -6% for non-selective herbicides. • Wyke imp
Slide 8: Financial Performance
Financial Performance CFO, Paul Townsend CFO, Paul Townsend
Slide 9: Results summary
Results summary Moving towards anticipated more normal 1H/2H phasing of revenue and profit. $m 1H24 1H23 Change Revenue 1,758 1,955 -10% uEBITDA 217 316 -31% uEBIT 119 228 -48% uNPAT 51 142 -64% Statutory NPAT 49 149 -67% Net financing costs1 -53 -36 48% Underlying effective tax rate2 23% 26% -3 ppt
Slide 10: Crop Protection revenue bridge
Crop Protection revenue bridge Reduction in crop protection revenue driven by price. Volume increased, growing market relevance. • Revenue decline driven by price. • Channel destocking leading to market wide reduction in active ingredient prices. • Lower active ingredient prices driving lower Crop P
Slide 11: Half Year Cash flow Movement
Operating Cash Flow Improvement in operating cash flow compared with pcp. • Operating cash outflow $207m. NWC Balance $m • Large improvement in operating cash flow relative to pcp. • Concerted focus on inventory reduction. • Operating cash flow reflects normal seasonal movement in NWC. • Consistent
Slide 12: Net working capital
Net working capital Material reduction in inventory and moving towards more normal supply and demand cadence. Trade & Other Receivables Inventories • ~20% year on year reduction in inventory. Trade & Other Payables Considerable progress made. 1,707 • Lower payables as inventory reduced. Expect 1,662
Slide 13: Inventory bridge
Inventory bridge Inventory reduction driven by volume of inventory on hand. • Inventory in crop protection reduced by $435m year on year, mainly due to lower volume of 1,788 stock on hand. -62 • Inventory in Seed Technologies increased, 62 1,422 supporting growth. -373 -14 Inventory $m Mar-23 Price/
Slide 14: CAPEX management
CAPEX management Increased investment in crop and seeds portfolios. • Intangibles spend $54m. • Includes an element of growth. Continuing investment in crop protection R&D and seeds IP. • PP&E spend $56m, including investments Capital expenditure $m • HSE, asset integrity and plant efficiency spend
Slide 15: Robust balance sheet with covenant light structure
Robust balance sheet with covenant light structure Leverage is anticipated to return to the upper end of the target range by end FY241 Net debt, leverage & liquidity Summary debt profile $m $m 31-Mar-24 31-Mar-23 3.6X Bank loans – secured 710 675 2.4X Bank loans – unsecured 1.9X 107 63 1,214 Senior
Slide 16: FY24 leverage expectations
FY24 leverage expectations Leverage reduction is expected to be driven by historical 2H cash generation and FY24 EBITDA outlook.1 Illustrative example H2 operating cashflows benefit from working capital unwind – average 2H Net debt (A$m) reduction in receivables over the last 3 years is >$500m Expec
Slide 17: Expected other financial items
Expected other financial items • Corporate costs for FY24 expected to be marginally below pcp. • Depreciation expense in 2H expected to be broadly in line with 1H • 2H net interest expense expected to be marginally above 1H. • Tax rate expected to be 23% for FY24. 16
Slide 18: Outlook
Outlook -_ < S <= D ® PJ cv) fe) uw oO
Slide 19: Expected recovery from cyclically low pricing
Expected recovery from cyclically low pricing We believe that we are at or near bottom of cycle pricing. Return to historical average supports growth Issue Resolution • Prices for crop protection products are well below • Demand is expected to normalise and create a better historical average due to
Slide 20: Building a foundation for sustainable growth
Building a foundation for sustainable growth We are targeting revenues of $3.8b to $3.9b from crop protection by FY26.1 Building long-term sustainability in our crop protection business Expected recovery in $70bn crop protection market market prices Predominantly off Laverton & patent Chicago Height
Slide 21: Rapidly growing omega-3
Rapidly growing omega-3 Omega-3 contributing to our aspiration of $600-700m revenue from Seed Technologies in FY26.¹ Rapid growth of omega-3 revenue 1 million MT of fish FY25 target 2x omega- oil traded annually 3 revenue from FY24 Target Omega-3 Aquaterra Norway entry revenue $50-70m Sustainability
Slide 22: Scaling biofuels as a long-term growth platform
Scaling biofuels as a long-term growth platform Our carinata and energy cane platforms provide growth potential significantly beyond 2026. Scaling our biofuels platform Planned expansion and diversification of Carinata southern carinata planting USA, Argentina, Global activity commercial Uruguay Exp
Slide 23: Positive outlook
Positive outlook • Growing population and incomes create increasing global food needs, driving Attractive industry growth for seed & crop protection solutions. fundamentals • Omega-3, carinata and energy cane create additional growth platforms for Nufarm. • FY24 underlying EBITDA $350 - $390m. • Exp
Slide 24: Q&A
Q&A
Slide 25: Appendices
Appendices
Slide 26: Appendix 1: Non-IFRS disclosures & definitions
Appendix 1: Non-IFRS disclosures & definitions1 Term Definition Gross profit margin Gross profit as a percentage of revenue Underlying gross profit Gross profit excluding the impact of material items Underlying gross profit margin Underlying gross profit as a percentage of revenue Underlying SG&A Sa
Slide 27: Appendix 2: Segment table
Appendix 2: Segment table 6 months ended 6 months ended 6 months ended 6 months ended 12 months ended 12 months ended 12 months ended Revenue - Underlying 31 Mar 2021 31 Mar 2022 31 Mar 2023 31 Mar 2024 Change Change Revenue - Underlying 30 Sep 2021 30 Sep 2022 30 Sep 2023 ($000s) $000 $000 $000 $00
Slide 28: Appendix 3: Underlying and statutory profit
Appendix 3: Underlying and statutory profit 6 months ending 31 Mar 2024 6 months ending 31 Mar 2023 Underlying Material items Total Underlying Material items Total $000 $000 $000 $000 $000 $000 Revenue 1,758,042 - 1,758,042 1,954,578 - 1,954,578 Cost of sales (1,249,903) (26,680) (1,276,583) (1,345,
Slide 29: Appendix 4: Material items
Appendix 4: Material items 6 months ended 6 months ended 6 months ended 6 months ended 31 March 2024 31 March 2024 31 March 2023 31 March 2023 $000 $000 $000 $000 pre-tax after-tax pre-tax after-tax Material items by category: Idle plant capacity (26,680) (19,417) - - Deferred tax asset recognition
Slide 30: Appendix 5: Cash flow
Appendix 5: Cash flow Underlying Material items Total group 6 months ended 31 March 2024 $000 $000 $000 Cash flows from operating activities Net operating cash flows (180,470) (26,698) (207,168) Cash flows from investing activities Net investing cash flows (109,518) - (109,518) Cash flows from finan
Slide 31: Appendix 6: Free cash flow
Appendix 6: Free cash flow NWC outflow driven by seasonality & re-stocking/ phasing of sales $m • Operating cash flow generation is highly correlated with changes in Net Working Capital & underlying EBITDA • NWC cash outflow due seasonality and phasing of sales • Negative net free cash flow generate
Slide 32: Appendix 7: Segment Information & reconciliation
Appendix 7: Segment Information & reconciliation 6 months ended 6 months ended Revenue - Underlying 31 Mar 2024 31 Mar 2023 Change Change ($000s) $000 $000 $000 % Crop protection APAC 458,873 546,076 (87,203) (16%) North America 636,643 678,861 (42,218) (6%) Europe 406,468 498,255 (91,787) (18%) Tot
Slide 33: Appendix 8: Constant currency results
Appendix 8: Constant currency results 6 months ended Mar 2024 Mar 2024 Mar 2023 Constant Reported Constant1 Reported currency A$ million currency % Change Revenue 1,758.0 1,716.0 1,954.6 -12% Underlying EBITDA 217.4 213.0 316.0 -33% Underlying EBIT 119.4 119.2 227.9 -48% Average exchange rates HY24
Slide 34: Appendix 9: Global crop protection product development pipeline
Appendix 9: Global crop protection product development pipeline Our crop protection pipeline continues to advance, delivering across multiple years, crops, segments and geographies 33 1. Estimated launch year indicated is for first country. For products launched in more than one country, the estimat
Slide 35: Appendix 10: 1H24 Portfolio Solutions Milestones & Updates
Appendix 10: 1H24 Portfolio Solutions Milestones & Updates Foundational Innovative Biological Emerging Integrated Solutions Solutions Solutions Solutions Solutions Joust/Gauntlet® Duplosan® Exsolant / Simpell® Precision application Sealicit Fungicide containing Proprietary herbicide containing
Slide 36: Appendix 11: Price indices for major product groups
Appendix 11: Price indices for major product groups Herbicides Insecticides 150 60% 120 25% 45% 130 30% 100 5% 110 15% 0% 80 -15% Herbicide price indices 90 -15% 70 -30% 60 -35% 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024 Premium to mean (RHS) Herbicide price index Mean Pre