Slide 1: Investor Presentation – Financial Half Year Ended 31 March 2019
9 May 2019 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam, GrainCorp Limited (ASX: GNC) Investor Presentation – Financial Half Year Ended 31 March 2019 Please find attached the Investor Presentation relating to the financial Half Year ended 31 Ma
Slide 2: HY19 results
HY19 results 9 May 2019
Slide 3: 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
Slide 4: Agenda
Agenda • Results overview • Segment performance • Balance sheet & capex • FY19 outlook
Slide 5: Commitment to safety is fundamental
Commitment to safety is fundamental RECORDABLE INJURY FREQUENCY RATE(1) LOST TIME INJURY FREQUENCY RATE(2) 12.2 12.0 12.2 11.6 11.5 11.3 10.6 4.4 4.1 3.6 3.0 3.0 2.7 2.2 HY16 FY16 HY17 FY17 HY18 FY18 HY19 HY16 FY16 HY17 FY17 HY18 FY18 HY19 • Reduction in injury rates due primarily to impact of ‘safe
Slide 6: HY19 results overview
HY19 results overview $M HY19 HY18 Underlying EBITDA(1) 27 119 Underlying NPAT(2) (48) 36 Statutory NPAT(3) (59) 36 Interim dividend (cents per share) – 100% franked 0 8 • Overview: East Coast Australian (ECA) drought had significant impact on HY19 earnings, with large decline in ECA grain productio
Slide 7: Earnings profile
Earnings profile UNDERLYING EBITDA(1,2) ($M) UNDERLYING NPAT(1) ($M) Malt Oils Allied Mills Grains Corporate 236 227 109 100 166 136 134 119 61 27 35 32 36 (48) HY13 HY14 HY15 HY16 HY17 HY18 HY19 HY13 HY14 HY15 HY16 HY17 HY18 HY19 HY19 1H 227 166 136 134 236 119 27 1H 109 61 35 32 100 36 (48) 2H 168
Slide 8: Earnings loss due to ECA drought and grain trade conditions
Earnings loss due to ECA drought and grain trade conditions HY18 - HY19 EARNINGS BRIDGE(1) ($M) Substantial decline in ECA grain production, receivals, exports. Grain trade (2) conditions impacting grain flows. Malt sales (7) volumes steady; 36 reduced ECA Weak oilseed barley supply crush margin (82
Slide 9: Segment performance
Segment performance 8
Slide 10: Financial summary
Financial summary Revenue EBITDA (1) $M HY19 HY18 HY19 HY18 Malt 610 534 73 75 Oils 471 490 22 29 Grains 1,508 1,027 (52) 30 Corporate - - (16) (14) Eliminations and other (96) (64) - - Total 2,493 1,987 27 119 1. Before significant items. 9
Slide 11: Malt: solid demand from craft and distilling customers
Malt: solid demand from craft and distilling customers $M HY19 HY18 Revenue 610 534 EBITDA 73 75 EBIT 47 49 Capex 21 11 • Malt sales volumes steady, revenue up. Capacity expansion – Scotland: • Lower ECA barley supply, weather issues in Canada. • £51 million project to expand malting capacity by 79,
Slide 12: Oils: lower canola supply impacting crush margins
Oils: lower canola supply impacting crush margins $M HY19 HY18 Revenue 471 490 EBITDA 22 29 EBIT 5 12 Capex 4 18 • Liquid Terminals: high utilisation, driven by strong customer Sale of Australian Bulk Liquid Terminals: demand across a range of product segments. • On 4 March 2019, GrainCorp announced
Slide 13: Grains: significant impact from ECA drought
Grains: significant impact from ECA drought $M HY19 HY18 • Drought has had a significant impact on ECA, with total production estimate (6) (winter + summer) of 7.7mmt (FY18: Revenue 1,508 1,027 16.7mmt). • Large disruption to grain trade conditions experienced in EBITDA (52) 30 February-March 2019.
Slide 14: Balance sheet and capex
Balance sheet and capex 13
Slide 15: Increase in gearing due to higher inventory levels
Increase in gearing due to higher inventory levels CORE DEBT(1) AND NET DEBT(2) 1,800 50% • Core debt at $880M(3) and net debt at $1,744M(3). 1,600 • Core debt gearing(4) at ~32% and net debt 1,400 40% gearing(5) at ~42%. Net debt gearing higher due to higher inventory levels and timing of commodity
Slide 16: Balance sheet - core debt profile
Balance sheet - core debt profile CORE DEBT(1) Short-term debt 294 405 less Grains - • Core debt ($880 million) has increased in 237 trading and Oils 205 167 122 inventories line with smaller crop reducing cash flow, 91 barley prices, capex and timing of receivables (~$140 million). 821 • Barley inv
Slide 17: Capital expenditure continues to decline
Capital expenditure continues to decline CAPEX(1) ($M) DEPRECIATION & AMORTISATION(2) ($M) Stay-in-business Growth Depreciation Amortisation 282 153 262 143 146 136 236 127 29 34 29 34 167 30 210 184 142 168 72 96 124 12 87 109 117 97 103 47 60 71 68 72 78 55 29 18 FY14 FY15 FY16 FY17 FY18 HY19 FY14
Slide 18: FY19 outlook
FY19 outlook 17
Slide 19: FY19 Malt outlook
FY19 Malt outlook Market fundamentals GrainCorp FY19 outlook • Global barley crop production ~141mmt (FY18: • High capacity utilisation. 144mmt)(1) – tight supply of malting barley. • Good demand for specialty products. • Continued growth in US craft beer market; 4% • Continue to benefit from effici
Slide 20: FY19 Grains and Oils outlook
FY19 Grains and Oils outlook Market fundamentals GrainCorp FY19 outlook • Most of east coast Australia (ECA) affected by drought in • Year-to-date(4) ECA grain receivals(5) of 2.3 mmt. 2018-19. • Continuation of grain imports (trans-shipments) • FY19 ECA winter crop production(1) estimate of 6.5mmt,
Slide 21: FY19 – second half variables
FY19 – second half variables GrainCorp’s FY19 full-year performance remains subject to a range of variables, including: • ECA: 2H19 receivals, port elevations and grain import volumes; • Impact of global crush margins on Australian edible oils; • Global grain trading conditions; • New season grain t
Slide 22: Portfolio optimisation
Portfolio optimisation 21
Slide 23: Portfolio review outcomes
Portfolio review outcomes • GrainCorp has commenced execution of a number of operational and value creation strategies which have been developed through the Portfolio Review Value creation strategy Status Grains initiatives to increase ‘through-the-cycle’ EBITDA Implemented - further benefits from F
Slide 24: Separation of GrainCorp portfolio
Separation of GrainCorp portfolio • On 4 April 2019, GrainCorp announced its intention to Proposed demerger would result in two demerge its global malting business (“MaltCo”). independent ASX-listed companies. • GrainCorp’s Grains and Oils businesses will be combined into an integrated grains and ed
Slide 25: Implementation of demerger
Implementation of demerger • GrainCorp is targeting implementation of the demerger by the end of CY19 – Expected to be implemented through a Scheme of Arrangement, subject to shareholder, final Board, Court and regulatory approvals. – Engagement with ATO underway regarding demerger tax relief. • Cre
Slide 26: Appendices
Appendices 25
Slide 27: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities COMMODITIES INVENTORY(1) ($M) Timing of receivables Grains, Oils grain, oilseed and Malt barley inventory Short-term debt Supplemented short 1,400 Supplemented short term debt with cash 1,269 term debt with cash 1,200 1,035 1,
Slide 28: HY19 results
HY19 results 9 May 2019