Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — FY2010 Earnings Presentation
33 slides from Graincorp Limited Class A's earnings presentation, Nov 25, 2010
Slide 1: GrainCorp Full Year 2010 Results
25 November 2010 Alison Watkins, Managing Director and Chief Executive Officer G GRAINCORP CO FULL YEAR 2010 RESULTS S S 25/11/2010 1
Slide 2: Agenda
Agenda ge da • Financial Results • Business Unit Performance • Business Structure • Strategic Initiatives Update and Dividend • 2011 Outlook 25/11/2010 2
Slide 3: Malt diversification underpins sound result
Malt atd diversification e s cat o underpins u de p s sou sound d result esu t → EBITDA above guidance at $212 M Includes ~$10 M one‐off Malt and transaction adjustments → NPAT of $80 M at lower end of guidance Includes additional D&A of Malt assets → Eastern Australian 2009/2010 crop below norm
Slide 4: Financial Results
FINANCIAL RESULTS 25/11/2010 4
Slide 5: Diversification and stability
Diversification and stabilityy EBITDA ‐ $ M 90 NPAT ($ M) and ROE (%) 21% 240 Other Malt 210 60 14% 180 150 118.7 80.2 30 63.2 7% 120 90 31.7 161.1 60 120.9 0 0% 92.9 ‐19.8 ‐19.9 30 51.3 31.9 0 (30) ‐7% FY06 FY07 FY08 FY09 FY10 FY06 FY07 FY08 FY09 FY10 250 OPERATING CASH FLOW ‐ $ M GEARING (%) 75% C
Slide 6: Diversification drives NPAT growth
Diversification e s cat o d drives es NPAT ggrowth o t Inclusion of Diversification Malt 125 drives earnings 3 $M 0.4 100 Country receivals 29 down 2.2mmt 9 16 75 20 Lower external inventory finance 57 119 Merchandise 50 closed Grain exports down 1.7mmt 80 63 25 27 0 7 (25) 2009 Discont. Storage & P
Slide 7: Low core debt and strong cash flow
Low core debt and strongg cash flow • Operating p g cash flow strongg at $109 M → lower yyear on yyear due to higher FY2010 year end grain inventory held g g Stayy in Business capex • Ongoing p $ $40‐55 M → below FY2010 annualised depreciation and amortisation of $76 M • Total assets increased by 96
Slide 8: Debt levels low, trading inventory higher
Debt ebt levels e e s low, o , ttrading ad g inventory e to y higher g e • Current debt facilities for grain 650 Debt and Grain Trading Inventory ‐ $ M trading adjusted to match 600 trading requirements 550 500 • Up to $550 $ M off current d debt b 450 available for grain trading and 400 workingg ca
Slide 9: Depreciation and amortisation higher due to Malt
Depreciation p and amortisation higher g due to Malt Business Unit FY10 Annualised FY10 FY09 $M Depr. Amort. Depr. Amort. Depr. Amort. Malt1 18 17 16 14 ‐ ‐ Storage and Logistics 22 2 22 2 20 2 Ports 13 ‐ 13 ‐ 14 ‐ Trading and Corporate 4 ‐ 4 ‐ 6 ‐ Total 57 19 55 16 40 2 • Malt acquisition accountin
Slide 10: Stay in Business capex in line with depreciation
Stay in Business us ess cape capex in linee with t dep depreciation ec at o • FY2010 Stay in Business capex Capital Expenditure ‐ $ M of $53 M 120 Grain Stay in Business Grain Investment Malt Stay in Business Malt Investment • In line with FY2010 100 depreciation of $55 M 80 42.3 • $53 M investment
Slide 11: Business Unit Performance
BUSINESS UNIT PERFORMANCE 25/11/2010 11
Slide 12: Safety strong focus
Safety Sa ety a st strong o g focus ocus Medical AIFR1 Lost Time TOTAL – Treatment Injuries (LTI) All Injuries FY10 FY09 Injuries (MTI) Malt 27 15 42 35.1 ‐ Storage and Logistics 75 29 105 17.3 39.3 Total 102 44 147 20.3 39.3 • 2 major incidents in FY2010 including a fatality at Corio in August 2010
Slide 13: Performance reflects diversified earnings
Performance e o a ce reflects e ects diversified d e s ed ea earnings gs Business us ess Unit U t FY10 0 FY09 09 FY10 0 FY09 09 $M Revenue Revenue EBITDA EBITDA Malt 796 ‐ 119 ‐ Storage and Logistics 340 409 34 91 Ports 104 130 52 78 Trading 924 1,346 32 39 Allied Mills1 ‐ ‐ 9 10 Discontinued Operat
Slide 14: Malt - in line with expectation
Malt1 ‐ in line with expectation p Malt Sales Volume ‐ mmt $M FY10 FY09 1.0 Revenue 796 ‐ 0.8 0.6 EBITDA 119 ‐ 0.9 0.9 0.4 EBIT 90 ‐ 0.2 Capex 54 ‐ 0.0 FY09 FY10 • Underlying volume and margins in line with business case and guidance – Includes $8.7 M compensation payment from Port of Vancouver (WA)
Slide 15: Storage and Logistics - below normalised crop size
Storage g and Logistics g ‐ below normalised crop p size Country Network Grain Receivals and $M FY10 FY09 Eastern Australian Production1 ‐ mmt Grain carry‐in (mmt) 2.9 2.2 12.0 20.0 Grain carry‐out (mmt) 2.6 2.9 10.0 16.0 8.0 Domestic out load (mmt) 5.2 4.9 12.0 6.0 Revenue 340 409 10.8 9.6 8.0 40 4
Slide 16: Ports - grain export volumes lower
Ports ‐ ggrain export p volumes lower Grain Exports Handled1 ‐ mmt $M FY10 FY09 6.0 5.0 Total exports (mmt) 4.9 6.5 4.0 Revenue 104 130 30 3.0 5.3 5.2 EBITDA 52 78 2.0 3.5 1.0 EBIT 38 64 1.0 1.0 0.0 FY06 FY07 FY08 FY09 FY10 Capex 15 7 Non Grain Exports Handled ‐ mmt 2.5 • Grain G i received i d at p
Slide 17: Trading - improved market share
Tradingg ‐ improved p market share Tonnes Traded ‐ mmt $M FY10 FY09 5.0 Revenue 924 1,346 4.0 EBITDA 32 3 39 30 3.0 PBT 20 26 2.0 3.6 3.1 3.1 3.3 2.3 Tradingg inventoryy held 188 85 1.0 0.0 Tonnes Traded (mmt) 3.3 3.6 FY06 FY07 FY08 FY09 FY10 • Revenue lower due to decrease in grain prices • GrainCo
Slide 18: Allied Mills - retail and food service innovation
Allied Mills ‐ retail and food service innovation EBITDA ‐ $ M $M FY10 FY09 60.0 EBITDA 45 48 50.0 Equity Profit 40 0 40.0 9 10 (60% Joint Venture Share) 30.0 51.8 47.5 45.4 Net Asset Value 227 211 20.0 42.8 29 6 29.6 Capex 10 11 10.0 0.0 FY06 FY07 FY08 FY09 FY10 • Retail sales pressure and competit
Slide 19: Business Structure
BUSINESS STRUCTURE 25/11/2010 19
Slide 20: New team, clear accountabilities
New e tea team,, cclear ea accountabilities accou tab t es • New leadership p includingg appointments pp of GrainCorp p CFO, GrainCorp p Malt CEO, GM Storage and Logistics, GM Corporate Services and President Canada Malting Company Alison Watkins Chief Executive Officer Nigel Hart Ian Wilton Neil Jo
Slide 21: Executive remuneration review
Executive ecut e remuneration e u e at o review e e • Review of executive remuneration framework and in particular long term incentives • Committed to linking company executive incentive framework to longer term performance criteria Design g Proposals p Rationale 1. Introduce Long Term Provides lo
Slide 22: Strategic Focus and Dividend
STRATEGIC FOCUS AND DIVIDEND 25/11/2010 22
Slide 23: Strategic response in 2011
Strategic response in 2011 Australia’s largest g ASX agribusiness g operating p g in a changing g g environment... Efficient use of shareholder funds and debt 1 Effi 1. Efficient i t capital it l structure t t t fund to f d graini iinventory, t manage variability i bilit and growth ponse Competitive
Slide 24: Final and Special Dividend
Final and Special Dividend • The Board has approved a fully franked final dividend of $0.10 $ per share plus a fully franked special dividend of $0.05 per share • Record R dddate off 7 D December b 2010 2010, payable bl on 21 D December b 2010 • Combined with the fully franked interim dividend of $0
Slide 25: 2011 Outlook
2011 O OUTLOOK OO 25/11/2010 25
Slide 26: FY2011 Outlook and Drivers - Grain
FY2011 Outlook and Drivers ‐ Grain Outlook • ACF1 predicts di ~22mmt 22 • Harvest late by 4 weeks • Continued uncertaintyy on ggrain volume,, P&L Impact grain quality and harvest timing • Storage revenue reduced • Locusts ‐ minimal effect on total crop • Grain quality effects: - Receivals R i l timi
Slide 27: FY2011 Outlook and Drivers - Malt
FY2011 Outlook and Drivers ‐ Malt Outlook • Beer demand softening in mature markets • International barley crop 17%1 lower P&L Impact • GrainCorp Malt plants have sound competitive positions • Margin pressure • Reduced competitiveness of export Dri ers Drivers sales from Australia and Canada • Tight
Slide 28: Thank You Q&A
GrainCorp THANK YOU Q&A 25/11/2010 28
Slide 29: Appendix - Balance Sheet
Appendix ‐ Balance Sheet $M FY10 FY09 • Grain inventory higher at Cash 92 161 $279 M including: Grain inventory 279 85 – Grain trading $188 M Trade Debtors & other inventories 323 171 – Malting barley $91 M Other current assets 82 53 Fixed assets 754 414 • Core debt higher due to Other h non current
Slide 30: Appendix - Malt business highlights
Appendix ‐ Malt business highlights Arbroath malt p plant Acquisition November 2009 Arbroath opened in April 2010 Pinkenba scheduled to open early in 2011 Port of Vancouver redevelopment works commenced Pinkenba malt plant progress Calgary waste water sharing agreement signed Brewcraft U
Slide 31: Appendix - Storage and Logistics business highlights
Appendix ‐ Storage and Logistics business highlights New stock management system Grain Transact launched in July 2010 Grower Marketing Services expanded p to 17 customer facingg staff and extended to Western Australia Refurbishment of locomotives for NSW branchlines and take or pay agreement f
Slide 32: Appendix - Ports business highlights
Appendix ‐ Ports business highlights Pinkenba Pi k b bin bi refurbishment f bi h project j complete – first intake delivery in September p Portland woodchip elevation expansion on track including truck marshalling yard Pinkenba silo bins complete Cooks River container packing facility Portland
Slide 33: Disclaimer
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. The forward looking sta