Slide 1: Investor Presentation – Financial Year Ended 30 September 2014
13 November 2014 The Manager For personal use only Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR PRESENTATION FINANCIAL YEAR ENDED 30 SEPTEMBER 2014 Please find attached the Investor Presentation relating to the financial year ended 30 Sept
Slide 2: FY14 Results
FY14 Results 13 November 2014 For personal use only
Slide 3: Disclaimer
Disclaimer For personal use only 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. T
Slide 4: Agenda
Agenda For personal use only • Introduction (Mark Palmquist) • Result Overview (Don Taylor) • Segment Performance (Don Taylor) • Balance Sheet & Capex (Alistair Bell) • FY15 Outlook (Mark Palmquist) • Strategic Initiatives Updates & CEO View (Mark Palmquist) • Questions 3
Slide 5: Commitment to values driving positive outcomes
Commitment to values driving positive outcomes For personal use only Safety Performance(1) Employee Engagement Values 12.0 88% 10.7 59% 7.0 FY12 FY13 FY14 Engagement Score Participation Rate Safety People • 34% reduction in Lost Time Injury • Sustained employee engagement Frequency Rate(1) across th
Slide 6: Diversified earnings support challenging period for grains businesses
Diversified earnings support challenging period for grains businesses For personal use only • FY14 earnings of $293M EBITDA(1) and $95M NPAT(2). • FY14 statutory NPAT of $50M after significant items (3). • Significant items: $44M(3) including: - $25M including Oils network optimisation and S&L netwo
Slide 7: Earnings profile highlighting benefits of diversification along the grain chain
Earnings profile highlighting benefits of diversification along the grain chain For personal use only EBITDA(1) $M NPAT(1) $M Malt Fiscal 1H Oils 414 395 Fiscal 2H 205 Allied Marketing 350 172 175 S&L 293 83 212 66 84 95 160 80 63 34 28 122 31 109 88 53 61 32 FY09 FY10 FY11 FY12 FY13 FY14 FY09 FY10
Slide 8: Processing businesses highlighting the importance of earnings diversification
Processing businesses highlighting the importance of earnings diversification For personal use only FY13 to FY14 Earnings Bridge(1) $M 107 175 30 3 2 8 24 2 18 1 95 Below- Lower High Lower foods Challenging Managing Recent Higher Lower normal grain margins due capacity volumes milling corporate cape
Slide 9: Diversified earnings supporting dividend, in line with policy
Diversified earnings supporting dividend, in line with policy For personal use only Total FY14 dividends (DPS1) Ordinary DPS Special DPS 65 55 45 30 20 7 FY09 FY10 FY11 FY12 FY13 FY14 6yr(3) Payout 23% 74% 64% 68% 59% 48% 60% ratio(2) • FY14 final dividend: fully franked final dividend of $0.05 per
Slide 10: Segment Performance
For personal use only Segment Performance
Slide 11: Portfolio of grain businesses capture value along the grain chain
Portfolio of grain businesses capture value along the grain chain For personal use only Revenue EBITDA(1) $M FY14 FY13 FY14 FY13 Storage & Logistics 444 655 72 179 Marketing 1,907 2,169 36 54 Malt(2) 1,049 977 125 101 Oils 937 962 73 75 Allied Mills(3) - - 10 12 Corporate Costs - - (23) (26) Elimina
Slide 12: Storage & Logistics – lower grain production resulting in lower volumes
Storage & Logistics – lower grain production resulting in lower volumes For personal use only • Lower earnings due to below-normal grain $M FY14 FY13 production resulting in lower volumes and Revenue 444 655 market share EBITDA 72 179 • Carry-in: 2.3mmt(1) (FY13: 4.3mmt) EBIT 23 128 • Country receiv
Slide 13: Marketing – lower grain production and competition for grain
Marketing – lower grain production and competition for grain For personal use only • Earnings lower due to lower grain $M FY14 FY13 production in eastern Australia, greater Revenue 1,907 2,169 competition for grain and margin EBITDA 36 54 pressure Interest expense(2) (16) (17) • 6.2mmt delivered sal
Slide 14: Malt – continued high capacity utilisation and underlying improvements
Malt – continued high capacity utilisation and underlying improvements For personal use only • Sales of 1.30mmt $M FY14 FY13 • Continued high capacity utilisation Revenue 1,049 977 above 90% EBITDA(1) 125 101 • Result benefitting from implementation EBIT(1) 79 62 of strategic initiatives Capital Exp
Slide 15: Oils – solid result and strategic initiatives on track
Oils – solid result and strategic initiatives on track For personal use only • Lower earnings from Foods offset by $M FY14 FY13 strong performances in Oilseeds, Liquid Revenue 937 962 Terminals and complementary businesses EBITDA 73 75 • Oilseeds: sales volumes of 0.33mmt(1); EBIT 47 50 higher volum
Slide 16: Allied Mills – challenging milling market conditions
Allied Mills – challenging milling market conditions For personal use only $M (60%) JV Share FY14 FY13 • Contributions from value add product initiatives EBITDA 27 27 • Challenging milling market Equity profit(1) 10 12 conditions Shareholder loan interest 1 1 received • To support value add product
Slide 17: Balance Sheet and Capex
Balance Sheet and Capex For personal use only
Slide 18: Strong and flexible balance sheet
Strong and flexible balance sheet For personal use only Core Debt(1) $M • Core debt increasing as expected and in line with Short-term 89 debt less 9 79 71 Marketing implementation of strategic and Oils 132 26 inventories initiatives 43 565 558 595 593 601 Long-term • FY14 Core Debt(1) of $483M 342
Slide 19: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities For personal use only Commodities inventory(1) ($M) Marketing and Oilseed funding strategy Marketing & Oils grain and oilseed inventory Short-term debt 829 792 • Marketing’s grain trading activities and Oils’ oilseed and tallo
Slide 20: Capex supporting safety, network efficiencies and strategic initiatives
Capex supporting safety, network efficiencies and strategic initiatives For personal use only Capex(1) $M Depreciation & Amortisation $M Depreciation Stay-in-business 167 127 Amortisation Growth 119 141 24 24 122 91 112 96 106 71 78 18 72 53 63 17 63 16 103 95 73 56 61 70 71 53 59 49 FY10 FY11 FY12
Slide 21: FY15 Outlook
For personal use only FY15 Outlook
Slide 22: Grains outlook – lower grain production eastern Australia
Grains outlook – lower grain production eastern Australia For personal use only Market fundamentals GrainCorp FY15 outlook • Eastern Australian crop production estimate of • Carry-in of 1.9mmt significantly lower than recent 16.2mmt(1) is below normal (FY14: 17.2mmt; years (FY14: 2.3mmt; FY13: 4.3mm
Slide 23: Lower grain production likely to result in lower S&L volumes
Lower grain production likely to result in lower S&L volumes For personal use only FY15 FY15 Drivers (mmt) FY14 FY15 Outlook Outlook YTD(1) Eastern Australia • Grain production forecast below normal and 17.2 16.2(2) Grain Production lower than prior year Storage & Logistics • Below average and lower
Slide 24: Processing outlook – well placed through strong competitive position
Processing outlook – well placed through strong competitive position For personal use only Market fundamentals GrainCorp FY15 outlook • Global barley crop production ~140mmt(1) • Forward sales of 1.1mmt YTD (FY14: 145mmt) • Sales expected to be consistent with FY14 • Weather related barley productio
Slide 25: Strategic Initiatives Updates & CEO View
Strategic Initiatives Updates & CEO View For personal use only
Slide 26: Focus on corporate objectives
Focus on corporate objectives For personal use only Manage variability Deliver growth Improve returns EBITDA by segment(1) $M EBITDA and NPAT(2) $M Return on Equity % FY09 FY14 6yr Avg FY09Malt Annual ROE % 0% Allied 304 13% 293 Rolling 5 yr avg ROE % 14.4% Marketing 13.0% 17% 160 11.2% 10.1% 131 95
Slide 27: Strategic initiatives targeting optimisation and growth in reliable earnings
Strategic initiatives targeting optimisation and growth in reliable earnings For personal use only Storage & Logistics Marketing Malt Oils Customer Operations Network service Customer excellence footprint focussed growth Network Liquid Initiatives Non-grain rationalisation Global model terminals opp
Slide 28: Storage & Logistics initiatives to deliver more efficient network and improved customer service
Storage & Logistics initiatives to deliver more efficient network and improved customer service For personal use only Updates Network rationalisation and revitalisation Project Regeneration on track • On track with all elements of Project Regeneration - Site closures according to plan - New cluster
Slide 29: Marketing initiatives to deliver global view and broadening grain origination footprint
Marketing initiatives to deliver global view and broadening grain origination footprint For personal use only Updates Strathmore container packing facility established Broaden grain origination footprint • Increased contribution from international offices, Western Australia and South Australia • Rec
Slide 30: Malt initiatives to improve efficiency and pursue growth in niche markets
Malt initiatives to improve efficiency and pursue growth in niche markets For personal use only Updates Operations excellence Calgary malt plant water usage improvement project delivered • Progress targeting cost reduction and other efficiencies energy, labour, water, waste Niche market growth • C
Slide 31: Oils initiatives to optimise processing footprint and grow liquid terminals capacity
Oils initiatives to optimise processing footprint and grow liquid terminals capacity For personal use only Updates Network footprint • ~$125M optimisation project on track Liquid terminal projects on track Port Kembla and - Several construction milestones achieved at West Footscray Fremantle compl
Slide 32: CEO view
CEO view For personal use only First Impressions Immediate Focus Outlook • Commitment to our values • Execute on our portfolio of • Strong fundamentals organic strategic initiatives through the cycle • “Zero Harm – Safe for Life” • Strong focus on capital • Well positioned along the • Passionate peo
Slide 33: Questions
For personal use only Questions
Slide 34: Appendix
For personal use only Appendix
Slide 35: Significant items
Significant items For personal use only Net Significant items(1) ($M) Segment EBITDA D&A Tax NPAT Details Interest Underlying 293.3 (126.5) (40.1) (32.2) 94.5 Claims and losses S&L (27.5) 8.3 (19.2) Increased allowance for claims due to higher likelihood of claims arising due to low grain volumes in
Slide 36: Grain volumes FY13 and FY14
Grain volumes FY13 and FY14 For personal use only Volume driver (mmt) FY13 FY14 Comments Grain carry-in (1 Oct) 4.3 2.3 • Grain stored at start of period • FY14 carry-in below average of ~3mmt Country network 10.4 8.0 • ~46% share of production(1) receivals • Lower receivals due to lower grain produ
Slide 37: Capex plan supporting strategic initiatives
Capex plan supporting strategic initiatives For personal use only Strategic initiatives capex plan by business unit ($M) FY13 and FY15 Business Capex Capex Initiatives announced and FY14 Capex Unit Balance Total underway Capex Plan • Customer service Storage & 16 ~4 – 10 ~24 – 30 ~50 • Non-grain opp
Slide 38: Eastern Australia competitive landscape
Eastern Australia competitive landscape For personal use only Upcountry Storage Capacity Upcountry Storage GrainCorp ~20mmt Competitors Competitors ~10mmt On-farm ~10mmt Ports Total GrainCorp Port ~40mmt Competing Port Production / Exports Announced Port Eastern Australia grain ~18mmt production QLD
Slide 39: Upcoming events and activities
Upcoming events and activities For personal use only Date Event / Milestone Location Online Oct 14 – Jan 15 Weekly Harvest Updates http://www.graincorp.com.au/investors- and-media/media/harvest-bulletins Sydney & Webcast 18 Dec 14 Annual General Meeting http://www.graincorp.com.au/investors- and-med