Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — FY2018 Earnings Presentation
26 slides from Graincorp Limited Class A's earnings presentation, Nov 15, 2018
Slide 1: FY18 results
FY18 results 15 November 2018
Slide 2: 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 3: Agenda
Agenda • Results overview • Segment performance • Balance sheet & capex • FY19 outlook
Slide 4: Commitment to safety is fundamental
Commitment to safety is fundamental RECORDABLE INJURY FREQUENCY RATE(1) LOST TIME INJURY FREQUENCY RATE(2) 10.7 38.8 7.0 21.6 13.9 3.8 4.1 11.3 11.5 12.2 3.0 2.7 FY13 FY14 FY15 FY16 FY17 FY18 FY13 FY14 FY15 FY16 FY17 FY18 • GrainCorp’s RIFR and LTIFR both increased in FY18, which is an unsatisfactor
Slide 5: FY18: solid Malt performance; Group earnings down due to significantly smaller eastern Australian crop
FY18: solid Malt performance; Group earnings down due to significantly smaller eastern Australian crop $M FY18 FY17 Underlying EBITDA(1) 269 390 Underlying NPAT(2) 71 142 Statutory NPAT(3) 71 125 Dividend (cents per share) – 100% franked 16 30 • Overview: Malt performed solidly, with strong contribu
Slide 6: Earnings profile demonstrates strength of diversification
Earnings profile demonstrates strength of diversification UNDERLYING EBITDA(1,2) ($M) UNDERLYING NPAT(1) ($M) Malt Oils Allied Mills Grains 205 1H 2H 414 390 175 395 142 293 269 256 235 95 71 53 45 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1H 235 227 166 136 134 236 119 1
Slide 7: Dividends
Dividends DIVIDENDS PER SHARE (DPS)(1) Ordinary DPS Special DPS 30 25 5 40 35 30 30 20 16 10 11 8yr avg(3) FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Payout 64% 68% 59% 48% 51% 48% 48% 52% 58% ratio(2) FY18 - final dividend dates • FY18 final dividend: fully franked final dividend of 8 cents per share.
Slide 8: Decline in earnings driven by Grains
Decline in earnings driven by Grains FY17 - FY18 EARNINGS BRIDGE(1) ($M) Substantial decline in ECA grain production; supply chain costs; includes 3 integration costs 12 Efficiency benefits (138) in Foods; weak Increased oilseed crush malting capacity; 142 continued strong margin; restructuring cost
Slide 9: Segment performance
Segment performance 9
Slide 10: Financial summary
Financial summary Revenue EBITDA $M FY18 FY17 FY18 FY17 (1) Malt 1,152 1,106 170 158 Oils 969 946 61 58 Grains 2,242 2,622 68 206 Corporate - - (31) (32) Eliminations and other (110) (97) - - Total 4,253 4,576 269 390 1. Before significant items. 10
Slide 11: Malt: good result, solid customer demand
Malt: good result, solid customer demand $M FY18 FY17(1) Revenue 1,152 1,106 EBITDA 170 158 EBIT 115 108 Capex 46 92 • Continued to operate at high utilisation. Capacity expansion - Scotland: • Full second-half contribution from expanded plant at • In October 2018, announced £51 million (A$94 Pocate
Slide 12: Oils: strong liquid terminals result, weak oilseed crush margins
Oils: strong liquid terminals result, weak oilseed crush margins $M FY18 FY17(1) Revenue 969 946 EBITDA 61 58 EBIT 28 24 Capex 46 47 • Liquid Terminals: high utilisation, driven by consistent • Feeds: improved performance due to strong customer demand across a range of product segments. demand for s
Slide 13: Grains: decline in ECA production and export volumes
Grains: decline in ECA production and export volumes $M FY18 FY17(1) • Significantly smaller east coast Australia (ECA) crop, following near-record harvest in FY17; lower exportable Revenue 2,242 2,622 surplus. • ~145 silos operated during ECA harvest (FY17: ~160 EBITDA 68 206 sites). Continued to f
Slide 14: Balance sheet and capex
Balance sheet and capex 14
Slide 15: Smaller ECA crop reducing cash flow, impacting net debt gearing
Smaller ECA crop reducing cash flow, impacting net debt gearing CORE DEBT(1) AND NET DEBT(2) 1,400 50% • Core debt at $514M(3) and net debt at $930M(3). 1,200 40% • Core debt gearing(4) at ~21% and net debt gearing(5) at ~38%. Net debt gearing higher due to 1,000 higher inventory levels. 30% • Range
Slide 16: Strong and flexible balance sheet
Strong and flexible balance sheet CORE DEBT(1) Short-term debt less Grains - • Core debt has increased in line with 294 141 205 237 trading and Oils smaller crop reducing cash flow. 167 122 inventories 91 • Barley inventory facilities for Malt; ~$200 million included in core debt. 789 785 792 821 74
Slide 17: Capital intensity down significantly as investment program winds down
Capital intensity down significantly as investment program winds down CAPEX(1) ($M) DEPRECIATION & AMORTISATION(2) ($M) Stay-in-business Growth Depreciation Amortisation 282 262 153 143 146 236 136 127 29 119 29 34 34 30 167 24 210 184 141 142 168 96 71 87 117 124 103 109 95 97 70 71 68 72 78 55 FY1
Slide 18: FY19 outlook
FY19 outlook 18
Slide 19: FY19 processing outlook
FY19 processing 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; 5% • Continue to benefit from
Slide 20: FY19 Grains outlook
FY19 Grains outlook Market fundamentals GrainCorp FY19 outlook • Drought has affected most of east coast Australia (ECA) • Year-to-date(4) total ECA grain receivals(5) of 0.3 in 2018. mmt. • ECA winter crop production(1) estimates of 5.9mmt (ACF • Continuation of grain imports (transshipments) from
Slide 21: Appendices
Appendices 21
Slide 22: Strategic priorities
Strategic priorities Strategic priorities Outcomes Growth and diversification in 1 Strengthen core businesses earnings and cashflow, stronger returns Disciplined approach to capital 2 management Maintain strong credit profile Earnings growth and improvement on return on 3 Growth and portfolio optimi
Slide 23: Strengthen core businesses
Strengthen core businesses Grains Oils Malt • Simplification of Grains business unit Foods repositioning; accelerated Oilseed crush • Malt capacity cost reduction program capacity expansion and upgrade • Re-shaping country network (network) expansion – – Pocatello, Idaho • GrainsConnect Canada (GCC)
Slide 24: Capital management and portfolio optimisation
Capital management and portfolio optimisation • Improving return on invested capital remains a key focus. • Maintaining a disciplined approach to capital management - balance sheet continues to strengthen as capital investment program winds down. • Continue to explore opportunities to optimise the f
Slide 25: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities COMMODITIES INVENTORY(1) ($M) Supplemented short Grains, Oils grain, oilseed and Malt barley inventory term debt with cash Short-term debt 1,000 Supplemented short 906 894 882 900 829 term debt with cash 792 799 800 708 739 74
Slide 26: FY18 results
FY18 results 15 November 2018