Nufarm Limited · ASX:NUF
Nufarm — Investor Presentation (March 2020)
33 slides from Nufarm's investor presentation, Mar 25, 2020
Slide 1: Financial results for the half-year ended 31 January 2020
25 March 2020 Nufarm Limited ABN 090 323 312 103-105 Pipe Road Laverton North Vic 3026 The Manager Australia Market Announcements Office Australian Securities Exchange +61 3 9282 1000 4th Floor, 20 Bridge Street nufarm.com SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam Nufarm Limited - Finan
Slide 2: Good progress against key priorities in difficult market conditions
Nufarm Limited 25 March 2020 ABN 090 323 312 103-105 Pipe Road Laverton North VIC 3026 Australia Market Announcement +61 3 9282 1000 nufarm.com Good progress against key priorities in difficult market conditions Nufarm today announced a loss for the first half of 2020 of $122 million (1H19: $14m). O
Slide 3: 1H20 Financial Results
1H20 Financial Results for six months ended 31 January 2020 25 March 2020
Slide 4: Disclaimer
Disclaimer General 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 not intended to be used as the basis for ma
Slide 5: 1H20 Highlights
1H20 Highlights Progress against key priorities • Improved safety performance • Maintained gross margins • Improved cash flow management • Expanded ANZ performance improvement program across the organisation • Improved product availability in Europe • Preparing for first sales of omega-3 canola oil
Slide 6: Safety
Safety Nufarm Global SIFR & LTIFR Rolling 12 month averages 4
Slide 7: 1H20 financial performance
1H20 financial performance Earnings impacted by difficult trading conditions Underlying Underlying Lease Material items Reported EBITDA EBITDA (continuing operations) accounting (EBITDA impact of AASB 16 (pre tax) NPAT on continuing and discontinued operations) ($85m underlying) $66m ($6m) $15m ($27
Slide 8: Underlying EBITDA
Underlying EBITDA The Americas contribute majority of earnings in the first half EBITDA contribution by region EBITDA movement by region A$m A$m $121m 13 Corporate 7 Europe 15 ANZ $66m Seeds 2 12 Asia 40 North America 16 South America > 90% > 150% 72 earnings 71 earnings -10 • Steady earnings in Sou
Slide 9: COVID-19
COVID-19 Our products and services are considered essential for food production • Farmers need to protect their crops • Improved seasonal conditions have stimulated stronger demand • Our customers are heavily exposed to end markets in food production • Currently well stocked with finished goods in N
Slide 10: Financial results
Financial results • Gross margin maintained in competitive markets • Improved cash flow management • Group-wide program to simplify the business, optimise cost base and improve efficiencies underway • Balance sheet to be strengthened post sale of South American businesses
Slide 11: Underlying earnings
Underlying earnings Gross margin maintained despite competitive markets Revenue Gross profit EBITDA A$m (6%) (9%) (45%) $1,576m $423m $121m $1,477m $387m Gross margin 553 144 27% 576 26% 145 72 $66m Gross margin 71 1,024 279 27% 27% 49 901 242 -6 1H19 1H20 1H19 1H20 1H19 1H20 Discontinued operations
Slide 12: Underlying EBITDA - continuing operations
Underlying EBITDA - continuing operations Additional contribution from acquisitions offset by external headwinds and increased costs EBITDA movement by earnings type A$m • FY19 rebates reflected in 1H20 accounts as previously advised • AASB 16 first adopted in 1H20 • Higher earnings from acquired Eu
Slide 13: Material items and AASB 16
Material items and AASB 16 Adoption of new lease standard in 1H20 and material items Material Items AASB 16 Leases 1H20 A$m 1H20 A$m South American business disposal – transaction costs 4.7 Reduction in operating lease costs (continuing operations) 13.7 South American business disposal – cancelled d
Slide 14: Cash flow
Cash flow Disciplined working capital management has improved cash flow Free cash flow (Group) Free cash Flow (continuing operations) A$m A$m • Cash outflows are typical for first half as 1H19 1H20 1H19 1H20 working capital is built for main selling -7 season in second half -96 -203 • Cash flow from
Slide 15: Net working capital
Net working capital Improved performance in ANZ and significant opportunity to liberate funds in other regions Net working capital Average net working capital / sales A$m % • Net working capital builds in first half for main selling season in second half $1,774m $1,734m $1,481m • Net working capital
Slide 16: Net debt and financing costs
Net debt and financing costs Sale of South American businesses strengthens balance sheet and reduces financing costs Net debt Financing costs A$m A$m • Increase in net debt due to inclusion $1,707 of lease liabilities following adoption $1,577 $61m of AASB 16 143 $50m • FX losses drove increase in f
Slide 17: Operational review
Operational review • Improved safety performance • Carry over impacts from unprecedented weather events • Maintained gross margins in continuing businesses • Good progress on key initiatives to lift performance • COVID-19 creates uncertain outlook
Slide 18: Europe
Europe Improved product availability and increased market share in key segments Revenue A$m Revenue up with market share gains in key cereals markets - Nufarm sales increased in a flat market 615 - Improved product availability for acquired portfolio as supply chain transitions to 374 470 Nufarm con
Slide 19: North America
North America Difficult half but recent investments strengthen market presence and relevance Revenue A$m Revenue impacted by weak demand due to channel de-stocking - Demand in crop protection markets impacted by adverse weather and tariffs, 578 leading to high channel inventory and a challenging per
Slide 20: Australia and New Zealand
Australia and New Zealand Delivered cost savings of ~$5m and reduced net working capital ~$170m Revenue A$m Extreme drought Continued drought conditions reduced demand in 1H20 - Reduced demand in Australia with limited sales into summer crop markets 348 290 322 Net working capital reduced ~$170m 230
Slide 21: Asia
Asia Earnings impacted by drought conditions in Indonesia Revenue A$m Reduced demand in Indonesia due to prolonged drought and high channel inventories 90 71 75 77 Sales into other Asian markets delayed with revenue falling into second half of 101 financial year 94 95 72 73 Increased sales in Februa
Slide 22: South America (discontinued operations)
South America (discontinued operations) Strong demand and competitive market conditions Revenue A$m 22 Strong demand for crop protection products in Brazil - Increased soy plantings 22 Margins impacted by strong competition 554 Expect completion of sale of South American businesses 1 April 2020 531
Slide 23: Seeds
Seeds Weather conditions impacted first half Revenue A$m 16 Poor weather conditions in Australia and North America impacted demand and margins 128 - Lower royalty income due to smaller canola crop in Australia last year - Higher channel inventory reduced demand for seed treatment in North America 22
Slide 24: Omega 3 canola oil
Omega 3 canola oil Preparation for first sales in 2H20 well underway • Facilitation of customer scale-up well progressed • ADM contracted for crushing and processing services • FY21 oil volume production target more than doubled • Advancing scale-up for 2021+ with improved agronomics • Achieved Exce
Slide 25: Summary
Summary • First half earnings impacted by carry-over impact from 2019 weather impacts • Good progress on key priorities – safety, margin improvement and cash flow management • Group wide program to simplify the business, optimise cost base and improve efficiencies is underway • We continue to monito
Slide 26: Appendix – Non IFRS information reconciliation
Appendix – Non IFRS information reconciliation
Slide 27: 1H20 financial summary - Continuing Operations
1H20 financial summary Continuing Operations 1H20 1H19 Underlying Material item s Total Underlying Material item s Total $000 $000 $000 $000 $000 $000 Revenue 901,155 - 901,155 1,023,603 - 1,023,603 Cost of sales (658,735) - (658,735) (744,574) - (744,574) Gross profit 242,420 - 242,420 279,029 - 27
Slide 28: 1H20 financial summary - Discontinuing Operations
1H20 financial summary Discontinuing Operations 1H20 1H19 Underlying Material item s Total Underlying Material item s Total $000 $000 $000 $000 $000 $000 Revenue 575,790 - 575,790 552,505 - 552,505 Cost of sales (430,589) - (430,589) (408,525) - (408,525) Gross profit 145,201 - 145,201 143,980 - 143
Slide 29: 1H20 financial summary - Total Operations
1H20 financial summary Total Operations 1H20 1H19 Underlying Material item s Total Underlying Material item s Total $000 $000 $000 $000 $000 $000 Revenue 1,476,945 - 1,476,945 1,576,108 - 1,576,108 Cost of sales (1,089,324) - (1,089,324) (1,153,099) - (1,153,099) Gross profit 387,621 - 387,621 423,0
Slide 30: AASB reconciliation
AASB 16 reconciliation AASB 16 Impact - total operations Underlying EBITDA Underlying EBIT AASB 16 Excl AASB AASB 16 Excl AASB ($000s) Reported Im pact 16 Reported Im pact 16 Crop protection Australia and New Zealand 1,202 2,764 (1,562) (7,802) 160 (7,962) Asia 11,524 607 10,917 9,282 92 9,190 Europ
Slide 31: Restatement of comparative period earnings
Restatement of comparative period earnings Segment restatement - FY19 comparative Underlying EBITDA Previously ($000s) reported Restated Change Com m ent Crop protection Australia and New Zealand 3,996 3,996 - Asia 14,462 14,462 - Europe 15,068 12,826 2,242 Removal of royalty income from South Ameri
Slide 32: Constant currency group results
Constant currency group results Despite weaker AUD across key currencies, minimal earnings impact in 1st Half (A$ millions) Half year ended 31 January 2020 2020 2019 Constant Reported Constant Reported currency currency currency ¹ currency % Revenue 1,476.9 1,445.4 1,576.1 (8.3%) Underlying EBITDA ²
Slide 33: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions 31