Slide 1: HY22 Financial Results
This release has been authorised by the Board of GrainCorp Limited HY22 Financial Results 11 May 2022 Robert Spurway, Managing Director and CEO Ian Morrison, Chief Financial Officer
Slide 2: 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 3: Agenda
Agenda HY22 highlights 4 Safety and ESG 6 Strategy update 9 HY22 financial performance 13 Balance sheet 18 Outlook and conclusion 21 Appendices 25
Slide 4: Record first half result
WORK IN PROGRESS DRAFT Record first half result Strong global demand, outstanding supply chain performance HY22 performance FY22 outlook $427 million EBITDA1 FY22 guidance reaffirmed: Excellent performance across all business – Underlying EBITDA2 $590-$670 million areas – Underlying NPAT3 $310
Slide 5: HY22 highlights
WORK IN PROGRESS DRAFT HY22 highlights Outstanding financial and operational performance EBITDA NPAT Return on invested capital (ROIC)1 $427m from $140m $246m from $51m 25.7% 2 from 11.1% (Sep 21) Total grain handled3 Oilseed crush volumes Core cash / (debt) $129m from ($90m) 38.0mmt from 30.4mmt 23
Slide 6: Commitment to Zero Harm
WORK IN PROGRESS DRAFT Commitment to Zero Harm Relentless focus on safety of our people RECORDABLE INJURY FREQUENCY LOST TIME INJURY FREQUENCY RATE (RIFR)1 RATE (LTIFR)2 12.6 3.9 8.9 3.0 8.5 7.7 2.3 6.5 1.8 0.8 FY18 FY19 FY20 FY21 HY22 FY18 FY19 FY20 FY21 HY22 Pleasing improvement to RIFR; however
Slide 7: Sustainability at the core of GrainCorp
WORK IN PROGRESS DRAFT Sustainability at the core of GrainCorp Following our clear roadmap of actions for sustainable growth Environment Social Governance • Aligning financial reporting with Task • GrainCorp Community Foundation • Aligning with GRI1 and UNSDG2 Force on Climate-related Financial appr
Slide 8: Operations in Ukraine
WORK IN PROGRESS DRAFT Operations in Ukraine GrainCorp Ukraine: Impacts to global trade: • GrainCorp has a small trading team in Kyiv, with no fixed assets, and • Supply from Black Sea region has been disrupted; originates Ukrainian grain for international customers. buyers are seeking alternative s
Slide 9: Strategic priorities delivering shareholder value
WORK IN PROGRESS DRAFT Strategic priorities delivering shareholder value VISION Lead sustainable and innovative agriculture through another century of growth PURPOSE Proudly connect with customers and rural communities to deliver value through innovation and expertise STRATEGIC Strengthen the core T
Slide 10: Delivering on our core initiatives
WORK IN PROGRESS DRAFT Delivering on our core initiatives International expansion • • Improved performance in HY22; diversifying origination. Fraser Grains Terminal1 operational, providing end-to- end supply chain capability in Western Canada. $15m Core uplift On track for • Increase in bulk mater
Slide 11: Growth initiatives aligned with macro trends
WORK IN PROGRESS DRAFT Growth initiatives aligned with macro trends Alternative Protein Partnering with CSIRO and v2food – plant-based protein research - $1.8 million grant1 AgTech Grower pilot programs to assess testing applications for crop quality, crop characteristics and carbon 15% invest
Slide 12: Launch of GrainCorp Ventures
WORK IN PROGRESS DRAFT Launch of GrainCorp Ventures Investing up to $30 million into AgTech over next three years Four key investment areas: Analytics and optimisation Optimising the value and quality of agricultural commodities from the farmgate Smart supply chains Driving increased value across th
Slide 13: HY22 financial performance
HY22 financial performance
Slide 14: Financial highlights
WORK IN PROGRESS DRAFT Financial highlights Record result for both business segments Business segment EBITDA ($m) HY22 HY21 Agribusiness 376 125 Processing 70 24 Corporate (19) (9) Total EBITDA 427 140 Depreciation & Amortisation (57) (53) Interest (15) (13) Tax (109) (24) NPAT 246 51 Corporate resu
Slide 15: Agribusiness
WORK IN PROGRESS DRAFT Agribusiness Outstanding result, driven by elevated global demand and Agribusiness strong export supply chain margins $m HY22 HY21 East Coast Australia (ECA): Revenue 3,879 2,560 EBITDA 376 125 Large increase in grain handled following second consecutive bumper ECA crop. EBI
Slide 16: Agribusiness: International
WORK IN PROGRESS DRAFT Agribusiness Strong performance by International business, connecting Australian grain to global markets International: Key International metrics Increase in contracted grain sales from both ECA and International (non-ECA) origins. Million metric tonnes (mmt) HY22 HY21 Str
Slide 17: Processing
WORK IN PROGRESS DRAFT Processing Exceptional Oilseeds and Foods results – driven by strong Processing global demand for vegetable oils $m HY22 HY21 Revenue 456 320 Oilseeds: EBITDA 70 24 Continued high utilisation and delivery of efficiencies at GrainCorp’s crushing EBIT 57 11 plants at Numurkah
Slide 18: Balance sheet
Balance sheet
Slide 19: Core debt vs net debt profile
WORK IN PROGRESS DRAFT Core debt vs net debt profile Strong financial position with core net cash position DEBT AND LIQUIDITY PROFILE 31 Mar 30 Sep 31 Mar Components ($m) 2022 2021 2021 Term debt 150 150 150 Inventory and working capital 2,158 576 1,382 GrainCorp in a $129 million core cash positi
Slide 20: Disciplined capital expenditure
WORK IN PROGRESS DRAFT Disciplined capital expenditure Lifting return on invested capital Capex and investments – Continuing Operations ($m)1 Depreciation & Amortisation (D&A) ($m)1,2 Sustaining Growth Investments AASB-16 impact D&A 91 110 107 81 98 90 28 28 26 68 44 57 46 5 14 1 98 16 11 26 90 82 7
Slide 21: Outlook and conclusion
Outlook and conclusion GRAINCORP VICTORIA 21
Slide 22: FY22 outlook
WORK IN PROGRESS DRAFT FY22 outlook Chance of above median rainfall for June-August 20223 FY22 earnings guidance1,2 Underlying EBITDA $590-$670 million Underlying NPAT $310-$370 million FY23 outlook High carry-out grain expected at Sep-22 Root zone soil moisture3 Positive conditions for FY23
Slide 23: Capital management framework
WORK IN PROGRESS DRAFT Capital management framework Conservative capital structure and disciplined investment approach Capital Management Framework Service debt obligations Sustaining capital Dividends Surplus cash flow - Target minimal core debt expenditure Payout ratio = - Capital investment in gr
Slide 24: Conclusion
WORK IN PROGRESS DRAFT Conclusion Record financial result delivered in HY22 On track for exceptional result in FY22 Resilient supply chain; disciplined cost control Ongoing strong global demand for Australian soft commodities Favourable ECA conditions, positive outlook for FY23 Strong financial posi
Slide 25: Appendices
Appendices 25
Slide 26: Earnings bridge: HY21 to HY22
WORK IN PROGRESS DRAFT Earnings bridge: HY21 to HY22 UNDERLYING EBITDA FROM CONTINUING OPERATIONS ($m) Strong oilseed crush Growth & UMG fair Increase in ECA Other margins project value tonnes handled FFO Agribusiness initiatives International decrease and very strong (10) 46 4 (3) (7) export margin
Slide 27: ECA tonnes handled
WORK IN PROGRESS DRAFT ECA tonnes handled Total grain handled has a high correlation to ECA contribution margin1 mmt FY17 FY18 FY19 FY20 FY21 FY22e2 ABARES – Total ECA winter + sorghum production 29.2 18.0 9.7 12.6 31.8 32.93 Carry-in 1.7 3.3 2.3 1.5 0.7 4.3 Receivals 15.0 6.8 3.1 4.2 16.5 16.0 - 17
Slide 28: 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 $70m gross 90 Production payments based on ABARES’ “total ECA winter payment crop pr
Slide 29: Seasonal movements in commodity inventory
WORK IN PROGRESS DRAFT Seasonal movements in commodity inventory TYPICAL SEASONAL MOVEMENT OF COMMODITY INVENTORY SHORT-TERM IMPACT OF EXPORT SHIPMENTS ON WORKING NET DEBT/CORE DEBT (GRAPHICAL REPRESENTATION ONLY) CAPITAL AND CORE DEBT Grain purchased using commodity inventory facility Commodity inv
Slide 30: Core debt bridge: FY21 – HY22
WORK IN PROGRESS DRAFT Core debt bridge: FY21 – HY22 Core Debt bridge (FY21 – HY22) ($M) Working capital decrease in HY22 largely driven by a high (117) amount of deferred grower payments, which will unwind in 156 the second half of FY22 (21) (152) Mark-to-market asset reflective of strong unrea
Slide 31: Detailed cash flow statement
WORK IN PROGRESS DRAFT Detailed cash flow statement ($m) 31 Mar 2022 31 Mar 2021 Statutory EBITDA 427 140 Net Interest (15) (13) Income taxes paid (18) - Changes in working capital related items (183) (133) Net operating cash flow excl inventory funding & commodity 211 (6) inventory Proceeds for ban
Slide 32: Macro themes supporting strategic priorities
WORK IN PROGRESS DRAFT Macro themes supporting strategic priorities Global Supply Chain Pressure Index1 Projected average GDP growth rates (2022-33)3 (%) 5.00 5.0 4.00 4.0 3.00 3.0 2.00 Reinforces importance Australia well located 2.0 1.00 of supply chain 1.0 to service Asia – 0.00 ownership, resili
Slide 33: Proudly connecting with customers and rural communities
Proudly connecting with customers and rural communities to deliver www.graincorp.com.au value through innovation and expertise