Graincorp Limited Class A · ASX:GNC
Graincorp Limited Class A — FY2017 Earnings Presentation
32 slides from Graincorp Limited Class A's earnings presentation, Nov 21, 2017
Slide 1: ASX announcement: Investor Presentation FY17
21 November 2017 The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000 GRAINCORP LIMITED: GNC INVESTOR PRESENTATION FINANCIAL YEAR ENDED 30 SEPTEMBER 2017 Please find attached the Investor Presentation relating to the financial year ended 30 September 2017. GrainCorp
Slide 2: FY17 results
FY17 results 21 November 2017
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 • FY18 Outlook • Questions
Slide 5: Commitment to safety is fundamental
Commitment to safety is fundamental LOST TIME INJURY FREQUENCY RATE(1) RECORDABLE INJURY FREQUENCY RATE(2) 11.9 38.8 10.7 36.1 7.0 21.6 13.9 3.8 11.3 11.5 2.7 3.0 FY12 FY13 FY14 FY15 FY16 FY17 FY12 FY13 FY14 FY15 FY16 FY17 LTIFR and RIFR increased marginally in FY17, emphasising the need for continu
Slide 6: Strong performance – driven by large Australian crop and increased grain volumes
Strong performance – driven by large Australian crop and increased grain volumes $M FY17 FY16 Underlying EBITDA(1) 390 256 Underlying NPAT(2) 142 53 Statutory NPAT(3) 125 31 Dividend (cents per share) – 100% franked 30 11 • Overview: 2017 was a strong year; benefited from large Australian crop and a
Slide 7: Earnings profile highlights benefits of portfolio and east coast grain production
Earnings profile highlights benefits of portfolio and east coast grain production UNDERLYING EBITDA(1,2) ($M) UNDERLYING NPAT(1) ($M) Malt Oils Allied Mills (NPAT) Marketing (EBITDA) S&L Fiscal 1H 414 Fiscal 2H 395 390 205 350 172 175 293 256 142 235 212 95 80 34 53 53 45 FY10 FY11 FY12 FY13 FY14 FY
Slide 8: Increase in dividend reflects growth in earnings
Increase in dividend reflects growth in earnings DIVIDENDS PER SHARE (DPS)(1) Ordinary DPS Special DPS 30 25 5 5 40 35 30 30 25 20 10 11 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 8yr avg(3) Payout 74% 64% 68% 59% 48% 51% 48% 48% 59% ratio(2) FY17 Dividend Dates • FY17 final dividend: fully franked fin
Slide 9: Higher earnings driven by grains businesses
Higher earnings driven by grains businesses FY16 - FY17 EARNINGS BRIDGE(1) ($M) (10) (4) (3) (1) Allied Mills 51 sold with In line with effective recent capex date of 2 program (41) October Volumes and 2016 margins Higher earnings, higher tax 104 Continued strong Margin customer compression in deman
Slide 10: Segment performance
Segment performance 9
Slide 11: Financial summary
Financial summary Revenue EBITDA(1) $M FY17 FY16 FY17 FY16 Malt 1,106 1,191 158 161 Oils 946 924 58 61 Storage & Logistics 665 399 152 48 Marketing 2,209 1,939 54 3 Allied Mills(2) - - 0 10 Corporate Costs - - (32) (28) Eliminations and other (350) (295) - - Total 4,576 4,158 390 256 1. Before signi
Slide 12: Malt – ongoing good performance with continued strong customer demand
Malt – ongoing good performance with continued strong customer demand $M (1) FY17 FY16 Revenue 1,106 1,191 EBITDA 158 161 EBIT 108 108 Capital expenditure 92 130 • Continued strong demand for malt and brewing • Expect continued growth in North American ingredients/products from craft beer and distil
Slide 13: Oils – challenging year, re-positioning our Foods business
Oils – challenging year, re-positioning our Foods business $M (1) FY17 FY16 Revenue 946 924 EBITDA 58 61 EBIT 24 29 Capital expenditure 47 74 • Oilseeds: improved performance with stronger crush Foods repositioning underway: margins – higher canola supply, reduced oilseed costs. • GrainCorp Oils is
Slide 14: Storage & Logistics – large harvest, substantial increase in grain throughput
Storage & Logistics – large harvest, substantial increase in grain throughput $M (1) FY17 FY16 • Substantial increase in grain receivals and grain exports, benefiting from large east coast Australian (ECA) crop. Revenue 665 399 • EBITDA increased despite ~$20 million negative impact from supply chai
Slide 15: Marketing – benefiting from large Australian crop and increased export activity
Marketing – benefiting from large Australian crop and increased export activity $M (1) FY17 FY16 • Benefited from larger export program. Revenue 2,209 1,939 • 8.3mmt delivered sales(2) 2.8mmt domestic, 5.5mmt export and international. EBITDA 54 3 • Continued diversification of grain origination, w
Slide 16: Balance sheet and capex
Balance sheet and capex 15
Slide 17: Reduction in gearing, in line with capital expenditure and portfolio optimisation
Reduction in gearing, in line with capital expenditure and portfolio optimisation CORE DEBT(1) AND NET DEBT(2) 1,400 50% • Core debt at $450M(3) and net debt at $696M(3). 1,200 40% • Core debt gearing(4) at ~20% and net debt 1,000 gearing(5) at ~37%. 30% 800 • Net debt gearing(5) peaked in 1H17 – 60
Slide 18: Strong and flexible balance sheet
Strong and flexible balance sheet CORE DEBT (1) $M • Core debt has declined in line with Short-term increased cash flow, reduced capex and 294 205 237 debt less 141 Marketing portfolio optimisation. 134 91 and Oils 89 inventories • Barley inventory facilities for Malt - ~$156 789 785 792 821 748 mil
Slide 19: Commodities inventory funded with specific commodity inventory facilities
Commodities inventory funded with specific commodity inventory facilities Supplemented short COMMODITIES INVENTORY(1) ($M) term debt with cash 894 900 Marketing, Oils grain, oilseed and Malt 829 792 799 800 barley inventory 739 742 708 700 Short-term debt Supplemented short 577 574 term debt with ca
Slide 20: Capital intensity is reducing as investment program winds down
Capital intensity is reducing as investment program winds down CAPEX(1) ($M) DEPRECIATION & AMORTISATION(2) ($M) 281 Stay in Business Growth 251 Depreciation Amortisation 146 143 236 136 127 119 29 34 34 30 167 24 209 183 91 141 168 18 112 96 71 117 103 109 63 95 97 73 70 71 68 72 78 49 FY12 FY13 FY
Slide 21: Capital investment – major projects underway
Capital investment – major projects underway Grains Oils Invested (1) Underway (2) Balance (3) 101 24 ~$65M(2) underway 36 29 30 ~$109M 79 invested(1) Grains Oils • Project Regeneration • Numurkah crush expansion • Container packing • Hurdle rate of >12% IRR(4) • Excludes Pocatello malt plant expans
Slide 22: FY18 outlook
FY18 outlook 21
Slide 23: FY18 processing outlook
FY18 processing outlook Market fundamentals GrainCorp FY18 outlook • Global barley crop production ~142mmt(1) (FY17: • High capacity utilisation. 147mmt). • Continued strong demand for specialty products, • Growing US craft beer market; 6% growth in sales distribution. volumes on previous year(2) (U
Slide 24: FY18 Grains outlook
FY18 Grains outlook Market fundamentals GrainCorp FY18 outlook • Independent forecasters estimating, on average, a • Season to date country grain receivals of 1.4mmt(2). total east coast Australian winter crop of 16.2mmt(1) • Year to date grain exports of 0.4mmt. (FY17: 27.2mmt(1)). However size and
Slide 25: Questions
Questions 24
Slide 26: Appendices
100 YEARS OF GROWTH 2
Slide 27: FY17 significant items
FY17 significant items Net $M Segment EBITDA D&A Tax NPAT Details Interest Underlying 390.1 (146.4) (39.0) (63.1) 141.6 Restructuring costs Oils (3.4) 1.0 (2.4) Relating to Oils site decommissioning and product transition costs Impairment and Malt, Corporate (16.6) 2.6 (14.0) Portfolio optimisation:
Slide 28: Strategic priorities - recap
Strategic priorities - recap Strategic priorities Outcomes Growth and diversification in Deliver on strategic growth 1 initiatives earnings and cashflow, stronger returns Disciplined approach to 2 capital management Maintain strong credit profile Growth and portfolio Earnings growth through 3 optimi
Slide 29: 1. Delivering strategic growth initiatives
1. Delivering strategic growth initiatives Focus on successful execution of growth projects Oils Oils Malt Grains Bulk liquid storage Edible Oils network optimisation – Crush Malt capacity • Re-shaping of country network capacity expansion Footscray and Numurkah, VIC capacity expansion – • GrainsCon
Slide 30: 2. Disciplined approach to capital management
2. Disciplined approach to capital management • Majority of recent investment in processing businesses – more stable earnings, less dependent on grain production in Eastern Australia • Maintaining a disciplined approach to capital management as growth projects are completed – retaining flexibility w
Slide 31: 3. Growth and portfolio optimisation
3. Growth and portfolio optimisation • Improving return on capital remains key focus • Sale of Allied Mills completed 31 March 2017: – GrainCorp 60% share of equity value: $190 million(1) – Equates to Allied Mills enterprise value: $455 million(2) • Sale of three German malt plants during FY17 • Con
Slide 32: FY17 results
FY17 results 21 November 2017