Nufarm Limited · ASX:NUF
Nufarm — FY2015 Earnings Presentation
38 slides from Nufarm's earnings presentation, Sep 23, 2015
Slide 1: 2015 Full Year Results
For personal use only 2015 Full Year Results September, 2015
Slide 2: Disclaimer
Disclaimer For personal use only Forward looking statements This presentation has been prepared by Nufarm Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is no
Slide 3: FY 2015 results – Overview
For personal use only FY 2015 results – Overview Greg Hunt Managing Director / CEO
Slide 4: Group FY15 headline results
Group FY15 headline results Strong Underlying EBIT growth and early benefits from performance improvement program For personal use only • Strong recovery in earnings from 12 months ended Australian business 31 July • North America posts improved (A$ millions) 2015 2014 Change performance Revenue 2,7
Slide 5: Key messages
Key messages • Core crop protection business has helped drive strong earnings growth For personal use only – Focus on higher margin sales – New product introductions help strengthen portfolio • Cost savings and performance improvement program delivers early benefits – Internal commitment to positive
Slide 6: FY 2015 results – Financials
For personal use only FY 2015 results – Financials Paul Binfield Chief Financial Officer
Slide 7: 2015 full year results
2015 full year results Strong results from the crop protection business, despite challenging trading conditions, demonstrates benefits of geographic diversity For personal use only • Solid top line growth – Revenue growth of 4.4% • Stronger profitability – Underlying EBIT growth of 18.1% − Improved
Slide 8: Continued improvement in average net working capital
Continued improvement in average net working capital On-track to meet target of ANWC/Sales of 40% by end FY16 For personal use only ANWC / Sales(2) • Average NWC lower by $105m driven by focus on 50% capital discipline • Average NWC lower in all major crop protection 48% businesses 46% • Achieving r
Slide 9: Net working capital initiatives
Net working capital initiatives Reduction in year end NWC position with improvement in key working capital metrics For personal use only Net working capital (NWC) • Key initiatives to reduce NWC have included: Year ended 31 July − Continued focus on Integrated Business Planning process (A$ millions)
Slide 10: Financial metrics continue to improve in Brazil
Financial metrics continue to improve in Brazil despite challenging industry conditions Profitability, working capital and return metrics all improve in Brazil For personal use only Brazil key metrics in local currency (BRL in millions) • Further profitable growth in difficult trading conditions, 16
Slide 11: Material items relate to the business improvement projects
Material items relate to the business improvement projects Benefits of business improvement projects already being delivered For personal use only • One-off costs total $87m (pre-tax), of which $43m is Reconciliation of Underlying to Reported NPAT cash and $44m is non-cash Year ended 31 July (A$ mil
Slide 12: Net impact of foreign exchange relatively minor
Net impact of foreign exchange relatively minor Further benefit of geographic diversity For personal use only Underlying metrics at constant FX Impact of FX on income statement Year ended 31 July • Weaker AUD versus USD and GBP has had 2014 beneficial impact on reported revenue and earnings Constant
Slide 13: Operating and tax expense
Operating and tax expense Costs controlled and effective tax rate benefits from one-off credit For personal use only Year ended 31 July • A major driver of the lift in SG&A expenses is a large (A$ millions) 2015 2014 increase in doubtful debt expense, principally in Brazil Underlying sales, marketin
Slide 14: Net debt & financing costs
Net debt & financing costs Net debt adversely impacted by depreciating AUD For personal use only Year ended 31 July • Depreciating AUD adversely impacted year end net (A$ millions) 2015 2014 debt position Interest income (7) (5) • Lower average net working capital drives lower Interest expense 73 68
Slide 15: FY 2015 results – Crop Protection
For personal use only FY 2015 results – Crop Protection Greg Hunt Managing Director / CEO
Slide 16: Major product segments
Major product segments Crop protection % total segment revenues For personal use only 2015: $2,577.6m Average GM: 28% Group sales Herbicide Insecticide 68% 11% 2015 2014 Change Fungicide 10% Europe Herbicides $1.75 billion 5% 21% $1.67 billion Other* 11% Insecticides $282 million South $290 million
Slide 17: Sales revenue by region
Sales revenue by region Crop protection segment For personal use only 2015: $2,577.6m 2014: $2,478.3m Average GM: 28% Average GM: 26% Europe Aust/NZ Europe Aust/NZ 21% 23% 22% 24% Asia Asia 6% 6% South South America North America North 27% America 27% America 23% 21% A balanced and diversified geogr
Slide 18: 2015 Results – regional review: Australia/New Zealand
2015 Results – regional review Australia/New Zealand For personal use only 2015 $m 2014 $m Australia Sales 582.4 605.8 • Dry summer and autumn conditions Underlying EBIT 52.7 33.9 • Focus on higher margin sales • Benefits of restructuring coming through Regional revenues by major product segment Her
Slide 19: 2015 Results – regional review: Asia
2015 Results – regional review Asia For personal use only • Local currency sales growth in 2015 $m 2014 $m major regional markets of Sales 155.2 140.9 Indonesia and Malaysia Underlying EBIT 18.1 19.5 • Continued investment in regional expansion and product portfolio Regional revenues by major produc
Slide 20: 2015 Results – regional review: North America
2015 Results – regional review North America For personal use only 2015 $m 2014 $m USA Sales 588.7 513.6 • Sales grow by 5% in local currency Underlying EBIT 38.9 20.6 • Increased sales into glyphosate resistant weeds segment • Better spring conditions and more effective marketing drive stronger Reg
Slide 21: 2015 Results – regional review: South America
2015 Results – regional review South America For personal use only 2015 $m 2014 $m Brazil Sales 706.5 662.5 • Tougher market conditions see value of total crop protection sales contract Underlying EBIT 76.7 71.6 • Further market share gains with 8% sales growth in local currency • Stronger product p
Slide 22: 2015 Results – regional review: Europe
2015 Results – regional review Europe For personal use only 2015 $m 2014 $m • Mixed seasonal conditions, with dry Sales 544.8 555.5 weather impacting last quarter Underlying EBIT 64.4 56.4 • Local currency sales growth in most European country markets • Strong performance in expansion markets of Mid
Slide 23: FY 2015 results – Seed technologies
For personal use only FY 2015 results – Seed technologies Brent Zacharias Group Executive, Nuseed
Slide 24: Seed technologies segment review
2015 Results – Seed technologies segment review Seed technologies For personal use only 2015 $m 2014 $m • Tougher market conditions generally with lower commodity prices impacting Sales 159.6 144.4 decisions on seed purchases Average GM 44% 51% • Lower canola plantings in Australia, Underlying EBIT
Slide 25: Maintaining a strong outlook
2015 Results – Seed technologies segment review Maintaining a strong outlook For personal use only • Advancement of key trait projects and hybrid pipeline in all 3 crops • 8 key trait projects advancing: 5 will launch in 2016- 2020 • Hybrid pipeline: 18 new launches in 2016; 20 in 2017 • DHA Omega 3
Slide 26: Performance improvement program
For personal use only FY 2015 results Performance improvement program Greg Hunt Managing Director / CEO
Slide 27: Performance improvement program
Performance improvement program We have a clear focus on improving the performance of the business, lifting returns on investment and securing our For personal use only growth opportunities Return on Funds Employed % 20 • Our primary returns measure is Target ROFE, and we have a medium 15 16% term t
Slide 28: Performance improvement program – examples of cost savings and benefits
Performance improvement program – examples of cost savings and benefits* Est. gross savings Description of Area Specific Examples Low High For personal use only • Optimising plant utilisation • Consolidation of Australian manufacturing • Lowering fixed cost base $16M Manufacturing footprint (6 plant
Slide 29: Cost savings & performance improvement program
Cost savings & performance improvement program For personal use only Reinvestment in systems, resources Targeted savings Initiatives and capabilities that protect margins by FY 2018 and ensure sustainable performance Manufacturing footprint $40m improvement Manufacturing efficiencies $17-27m Procure
Slide 30: Outlook
For personal use only FY 2015 results Outlook Greg Hunt Managing Director / CEO
Slide 31: Group outlook for 2016 financial year
Group outlook for 2016 financial year • Earnings growth to be driven by underlying growth across product positions, crop segments and geographies, together with the further benefits of our of cost savings and performance For personal use only improvement program • Earnings recovery to continue in Au
Slide 32: Strategic focus
Strategic focus Next 12 months For personal use only Improving our • Continued implementation of working capital efficiency programs balance sheet • Reviewing return metrics on non current assets • Rationalising underperforming SKUs Strengthening the • Ensuring development spend delivers ‘across-the
Slide 33: Building a better Nufarm
Building a better Nufarm Our steps to success For personal use only A company that consistently A clearly delivers defined strategy Investing in that focuses the earnings growth Cost-out and sustainable business on and generates performance improvement where we can strong returns improvement and in
Slide 34: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.
Slide 35: Supplementary information
For personal use only Supplementary information
Slide 36: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions For personal use only Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items. Underlying EBIT Earnings before net finance costs, taxation and material items. Underlying EBITDA Earnin
Slide 37: Non IFRS information reconciliation
Non IFRS information reconciliation 12 months ended 31 July 2015 12 months ended 31 July 2014 Material Material For personal use only Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 2,737,163 2,737,163 2,622,704 2,622,704 Cost of sales (1,971,941) 48,349 (2,020,29
Slide 38: Non IFRS information reconciliation
Non IFRS information reconciliation For personal use only Year ended 31 July 2015 2014 $000 $000 Underlying EBIT 236,882 200,607 Material items impacting operating profit (86,664) (50,761) Operating profit 150,218 149,846 Underlying EBIT 236,882 200,607 add Depreciation and amortisation excluding ma