Nufarm Limited · ASX:NUF
Nufarm — FY2020 Earnings Presentation
42 slides from Nufarm's earnings presentation, Sep 23, 2020
Slide 1: Nufarm FY20 Results Review and Presentation
23 September 2020 Nufarm Limited ACN 091 323 312 103-105 Pipe Road The Manager Laverton North VIC 3026 Company Announcements Office Australia ASX +61 3 9282 1000 Level 4 nufarm.com 20 Bridge Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir/Madam NUFARM FY20 RESULTS REVIEW AND PRESENTATION In acc
Slide 2: FY20 results: Lower earnings, stronger balance sheet, headwinds easing
Nufarm Limited ACN 091 323 312 23 September 2020 103-105 Pipe Road Laverton North VIC 3026 Australia +61 3 9282 1000 ASX Release – Company Announcement nufarm.com FY20 results: Lower earnings, stronger balance sheet, headwinds easing Nufarm today reported a statutory net loss after tax for financial
Slide 3: Omega-3 canola oil sales and European outlook (release continued)
costs and improved weather conditions would be the major drivers of improved profitability in the European business in FY21 and beyond. “In September 2020 we secured the first commercial sales and forward orders of our proprietary omega-3 canola oil to a major global salmon producer. This follows mo
Slide 4: FY20 Annual Results
FY20 Annual Results 23 September 2020
Slide 5: 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.. The information contained in this presentation is not investment or financial product advice and is not in
Slide 6: Agenda
Agenda Overview CEO Greg Hunt FY20 financial results CFO Paul Binfield Operational performance CEO Greg Hunt European result and outlook RGM EMEA Hildo Brilleman Seed technologies Group Executive Nuseed Brent Zacharias Outlook CEO Greg Hunt Q&A 3
Slide 7: Overview
Overview CEO Greg Hunt
Slide 8: Keeping safe and supporting customers
Safety and COVID-19 Keeping safe and supporting customers Record safety performance in FY20 Lost Time Injury Frequency Rate FY16-20 (rolling 12 month average per 1,000,000 hours worked) 3.00 Supporting customers through COVID-19 • Agriculture confirmed as essential service 2.50 • Limited impact on d
Slide 9: A refocused portfolio, a strengthened balance sheet and positive momentum as headwinds ease
FY20 overview A refocused portfolio, a strengthened balance sheet and positive momentum as headwinds ease Continuing operations • Headwinds easing in second half Revenue Underlying Statutory NPAT EBITDA • Balance sheet strengthened $2,847m ($362m) $236m • Cash generation improving loss 7% 21% • Comp
Slide 10: Improved momentum in 2H20 in most regions
2H20 revenue and earnings Improved momentum in 2H20 in most regions Overview 2H revenue (AUD$m) • Improved seasonal conditions in Australia, Indonesia, United States and Canada • Hot, dry conditions in northern and Eastern Europe and weak 4Q demand • Improved product availability for Europe with 4Q2
Slide 11: FY20 financial performance
FY20 financial performance CFO Paul Binfield 8
Slide 12: Lower earnings, improved cash flow
Lower earnings, improved cash flow FY20 earnings overview FY20 FY20 FY19 Change Results Summary pre AASB16 reported reported Continuing operations (excluding material items) Revenue 2,847 2,847 2,674 6.5% EBITDA 211 236 300 (21%) EBIT 31 34 135 (75%) NPAT n/a (81) 40 Large Operating cash flow 195 21
Slide 13: Material items
Material items FY20 earnings overview Continuing businesses AUD$m Restructuring costs 50.5 Nuseed legal fees 9.9 Impairment of carrying value of European assets 188.3 Total material items included in profit before tax 248.7 Tax loss write-off, other tax effects 33.1 Total material items included in
Slide 14: Improved cash flow generation
Improved cash flow generation Cash from continuing operations Cash from continuing operations Net working capital Average net working capital / sales (AUD$m) (continuing operations) (AUD$m) (%) 217 1125 49% 982 47% 46% 45% 40% 38% 80 Target range 35-40% FY19 FY20 FY19 FY20 1H18 2H18 1H19 2H19 1H20 2
Slide 15: Stronger financial position and liquidity
Stronger financial position and liquidity Debt, leverage, liquidity Net debt and leverage Liquidity • Net proceeds from sale of South (AUD$m) (AUD$m) American businesses used to repay group debt 1600 • Leverage reduced from 3.0x to 1.9x (1.5x 3.5 1400 3.0 excluding AASB 16 lease liabilities). 3.0 64
Slide 16: Operational performance
Operational performance CEO Greg Hunt
Slide 17: Australia New Zealand
Australia New Zealand Strong second half and improved working capital management FY20 Overview Regional Performance • Higher volumes and an estimated $10m contribution from the Revenue Underlying EBITDA performance improvement program lifted revenues 24% and AUD m AUD m underlying EBITDA 88%. Gross
Slide 18: Asia
Asia Strong performance in second half FY20 Overview Regional Performance Revenue Underlying EBITDA • 1H20 impacted by drought conditions in Indonesia and elevated AUD m AUD m inventory levels in sales channels that resulted in aggressive pricing • 2H revenue up 10% with seasonal conditions improvin
Slide 19: North America
North America Stronger second half despite COVID-19 demand impact in T&O segment FY20 Overview Regional Performance • Results benefited from a depreciation in AUD relative to USD. Revenue Underlying EBITDA Constant currency revenue declined 5% with revenue growth in the AUD m AUD m second half parti
Slide 20: European result and outlook
European result and outlook RGM EMEA Hildo Brilleman 17
Slide 21: Europe roadmap FY21+
Europe roadmap Nufarm Europe is an established and valuable business FY21+ Diversified portfolio & pipeline, competitive supply chain, efficient cost base FY18-20 Diversified and expanded Manufacturing footprint review - FY16-17 portfolio reinvest in Wyke to leverage globally competitive position St
Slide 22: Europe FY20 seasonal conditions
Europe FY20 seasonal conditions Percent of normal precipitation March – May 2020 19
Slide 23: Europe: We believe Europe has reached an earnings trough
Europe We believe Europe has reached an earnings trough FY20 Overview Regional Performance Reported results benefited from a depreciation in the Australian dollar Revenue Underlying EBITDA relative to the Euro. Constant currency revenue declined 8% AUD m AUD m • Revenue impacted by very poor seasona
Slide 24: FY20 earnings drivers
FY20 earnings drivers Europe EBITDA (AUD$m) Price pressure due to weaker demand, high channel stocks, pressure 2020 Europe drought - on base portfolio pricing particularly UK, Germany, France. COVID-19 impact on horticulture and ornamental markets. Increased raw material costs ~$12m and increased co
Slide 25: Drivers of FY21 earnings recovery
Drivers of FY21 earnings recovery Europe earnings recovery Performance Improved Raw material Seasonal conditions improvement program conversion costs prices and COVID-19 Phase I of improvement Increased waste water Raw material costs remained UK and France saw significant program commenced 2H20 trea
Slide 26: Seed technologies
Seed technologies Group Executive Nuseed, Brent Zacharias
Slide 27: Seed technologies: Positive sales momentum
Seed technologies Positive sales momentum FY20 Overview Regional Performance Revenue growth continued despite reduced seed treatment revenues. Revenue EBITDA Nuseed achieved sales growth in all regions and crops. AUD m AUD m • Seed treatment revenues impacted by high inventories in distribution chan
Slide 28: Nuseed: Sales growth across all regions & crops
Nuseed Sales growth across all regions & crops Canola Sunflower Sorghum Carinata • Continued shift to hybrid • Continued volume growth • Nuseed secures market • Approval of crop in sales in Australia, with end- in all markets leading position in Brazil Argentina & launch point royalties to positivel
Slide 29: Omega-3 canola oil: The next phase of value creation
Omega-3 canola oil The next phase of value creation AquaterraTM • Successful completion of large, commercial-scale fish feeding trials - Improved fish health & survivability - Improved sustainability outcomes • First commercial crop harvested and processed • Canadian regulatory approval • First comm
Slide 30: Carinata: A new commercial platform
Carinata A new commercial platform Best-in-class feedstock for renewable fuels and high protein non-GMO livestock feed • Agrisoma carinata selected assets acquired November 2019 • Nuseed Carinata cropping system independently assessed and RSB certified, achievement of best in class for Green House G
Slide 31: Outlook and priorities for FY21
Outlook and priorities for FY21 CEO Greg Hunt
Slide 32: Priorities and outlook
Priorities and outlook FY21 Priorities • Lock in safety performance improvement • Continue improvement in cash generation • Deliver Europe earnings recovery • Continue positive momentum in NA and APAC • Deliver targets from performance improvement program • Drive value from Nuseed growth platforms T
Slide 33: Supplementary information
Supplementary information
Slide 34: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions Term Definition Underlying EBIT Earnings before net financing costs, taxation and material items. Underlying EBITDA Underlying EBIT before depreciation and amortisation. Underlying net profit after tax Profit/(loss) for the period attributable to the equity holde
Slide 35: FY20 financial summary
FY20 financial summary Continuing operations Continuing Operations FY20 FY19 Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 2,847,375 - 2,847,375 2,673,572 - 2,673,572 Cost of sales (2,112,646) - (2,112,646) (1,906,168) (21,386) (1,927,554) Gros
Slide 36: Cash flow
Cash flow Material items impacting cash flows are as follows: Year ended 31 July 2020 Material Underlying items Discontinued Total continuing continuing operations group $000 $000 $000 $000 Cash flows from operating activities Net operating cash flows 216,553 (30,510) (417,557) (231,514) Cash flows
Slide 37: FY20 financial summary
FY20 financial summary Total operations Discontinued operations Total Operations FY20 FY19 Discontinuing Operations FY20 FY19 Material Material Material Material Underlying items Total Underlying items Total Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 $000 $000 $000 $
Slide 38: AASB16 reconciliation
AASB16 reconciliation AASB16 impact – total operations Underlying EBITDA Underlying EBIT AASB 16 AASB 16 ($000s) Reported im pact Excl. AASB 16 Reported im pact Excl. AASB 16 Crop protection Australia and New Zealand 38,800 4,238 34,562 22,519 316 22,203 Asia 30,481 740 29,741 25,918 (25) 25,943 Nor
Slide 39: Constant currency results
Constant currency results Year ended 31 July 2020 2020 2019 Constant Reported Constant Reported currency 1 currency % A$ million Revenue 2,847.4 2,744.7 2,673.6 2.7% Underlying EBITDA 235.8 226.3 300.1 -24.6% Underlying EBIT 34.3 31.6 135.3 -76.6% Average exchange rates FY20 v FY19 A$1 = FY20 FY19 %
Slide 40: Restatement of FY19 comparative period earnings
Restatement of FY19 comparative period earnings Underlying EBITDA Previously ($000s) reported Restated Change Com m ent Crop protection Australia and New Zealand 20,685 20,685 - Asia 26,979 26,979 - North America 107,762 107,602 (160) Inclusion of Mexico into North America Europe 167,608 163,849 (3,
Slide 41: Prior year comparatives for September year end
Prior year comparatives for 30 September year end Revenue Mar-20 Sep-19 Sep-19 Mar-19 ($000s) 6 m onths 12 m onths 6 m onths 6 m onths Post leases AASB 16 Pre leases No lease adj Crop protection Australia and New Zealand 261,744 - 261,744 451,116 219,899 231,217 Asia 86,581 - 86,581 179,232 77,117 1
Slide 42: Prior year comparatives for September year end
Prior year comparatives for 30 September year end Underlying EBIT Mar-20 Sep-19 Sep-19 Mar-19 ($000s) 6 m onths 12 m onths 6 m onths 6 m onths Post leases AASB 16 Pre leases No lease adj Crop protection Australia and New Zealand 8,367 156 8,211 4,037 7,839 (3,802) Asia 13,507 73 13,434 22,442 7,873