Elders Limited · ASX:ELD
Elders — 13th PAC Partners Agribusiness and Food Conference (April 2016)
36 slides from Elders's conference presentation, Apr 19, 2016
Slide 1: Presentation to the 13th PAC Partners Agribusiness and Food Conference
For personal use only 19 April 2016 Presentation to the 13th PAC Partners Agribusiness and Food Conference Attached is a presentation delivered today by Elders’ CEO Mark Allison to the 13th PAC Partners Agribusiness and Food Conference. Sanjeeta Singh Joint Company Secretary 1
Slide 2: Elders Limited
For personal use only Elders Limited Mark Allison, MD & CEO 13th PAC Partners Agribusiness and Food Conference 19 April 2016
Slide 3: Agenda
Agenda For personal use only Background Business Model Eight Point Plan FY15 Year in Review Financial Performance FY16 Priorities Outlook – By Commodity Outlook – By Product and Service Summary
Slide 4: Elders Transformation
Elders Transformation For personal use only Then Now (2008) (2016) 2
Slide 5: Our Journey
Our Journey For personal use only FY08 to FY13 – Survival FY13 to FY15 – Turnaround FY16 to FY20 – Growth 3
Slide 6: Elders Today
Elders Today For personal use only Iconic Australian agribusiness Over 177 years old 1,800 employees 440 points of presence in Australia, Indonesia, Vietnam and China 4
Slide 7: Business Model
Business Model For personal use only Feed & Retail Financial Live Export Agency Services Processing Products Services Services Services ` Short haul livestock Long haul livestock Elders Indonesia Farm Supplies Killara Feedlot Elders China Real Estate Livestock Insurance Fertiliser Banking Grain Wool
Slide 8: Points of Presence
Points of Presence For personal use only Elders’ footprint in Australian agriculture • Over 440 points of presence in Australia and overseas including full service branches, real estate and insurance franchises • Key produce areas covered through our footprint • Focus on improving reach into horticu
Slide 9: Proximity to Growth Markets
Proximity to Growth Markets For personal use only Key operations in China, ASEAN, North-East Asia, and access to world markets Proximity to Asia provides opportunity to capitalise on growing middle class demand for premium agricultural products 7
Slide 10: Eight Point Plan
Eight Point Plan For personal use only Our strategic vision for becoming an efficient user of capital and a business that generates returns for its stakeholders 8 8
Slide 11: FY15 Year in Review
FY15 Year in Review For personal use only Positive environment, solid progress • Statutory net profit after tax of $38.3m up $35.3m • Underlying net profit after tax of $32.6m up $23.5m • Underlying EBIT of $45.8m up $18.2m • Operating cash outflow $5.3m for the year • Return on capital of 21.9% up
Slide 12: FY15 Financial Performance
FY15 Financial Performance For personal use only $ million FY15 Change FY14 Sales revenue 1,514.2 82.7 1,431.5 Underlying EBIT 45.8 18.2 27.6 Underlying finance cost (10.0) 5.7 (15.7) Underlying profit after tax 32.6 23.5 9.1 Reported profit after tax 38.3 35.3 3.0 Net debt (136.2) 1.4 (137.6) Opera
Slide 13: Performance by Product
Performance by Product For personal use only Strong performance with livestock price tailwind Underlying profit movement $ million Product margin 3.1 (3.5) 5.7 (0.4) (1.0) (0.4) 16.3 32.6 3.7 9.1 FY14 Retail Agency Financial Feed & Live Export Costs Net finance Tax & NCI FY15 Underlying Products Ser
Slide 14: Performance by Geography
Performance by Geography For personal use only Improvement across all geographies Underlying profit movement $ million 0.7 5.1 (5.9) 5.7 (0.4) 6.7 11.6 32.6 9.1 FY14 Northern Southern Western International Corporate and Interest Tax & NCI FY15 Underlying Australia Australia Australia unallocated Und
Slide 15: Net Debt
Net Debt For personal use only Key debt ratios improved Net debt $ million 228.4 Key ratios Sept-14 Sept-15 Change Leverage [net debt to EBITDA] 7.8 3.3 + 4.5 137.6 136.2 Interest cover [EBIT to net interest] 0.6 3.4 + 2.8 At balance date Annual average 122.4 Gearing [net debt to equity] 241% 122% +
Slide 16: Capital Structure
Capital Structure For personal use only Committed to simplifying capital structure • Progress to date in line with plan • $30m hybrid acquisition successfully completed in August 2015 using earnings cash flow • Ongoing review of optimal capital structure in relation to funding business growth and ac
Slide 17: Eight Point Plan Actions Delivered
For personal use only Values, Performance Geographical Coverage Retail Products & Brand & Distribution Channels • Consignment stock • “Elders. Live it.” • Wholesale strategy • Margin management • “Stand Up. Speak Up” • livestock.com.au • Better supplier terms, • Performance culture • 45
Slide 18: Growth Strategy by Product
Growth Strategy by Product For personal use only Livestock Real Estate Acquisition Insurance Banking Farm supplies Grain Fertiliser Long haul Organic China Short haul Wool Indonesia Vietnam Financial Planning Killara Fix and Hold Controlled Growth 16
Slide 19: FY16 Priorities
FY16 Priorities For personal use only Safety Operational Key Efficiency and Performance Performance Relationships Growth • Continued emphasis on safety • Implementation of Eight Point • Maintain high levels of • Launch Elders Grain platform Plan initiatives employee effectiveness and • Strengthen em
Slide 20: Eight Point Plan FY16 Initiatives
For personal use only Values, Performance Geographical Coverage Retail Products & Brand & Distribution Channels • Home brand strategy • Invest in leadership capabilities • Elders Online and wholesale • Agency product • Brand campaign strategy • Vendor managed inventory • Sponsorship acti
Slide 21: Outlook – By Commodity
Outlook – By Commodity For personal use only ABARES Agricultural Commodities Outlook 2016 Cattle Live exports Sheep Wool Dairy Wheat Coarse grains, oilseeds and pulses Horticulture Sugar Cotton Note: ABARES data presented are based on 30 June financial years 19
Slide 22: Cattle
Cattle For personal use only Record cattle prices but increased competition likely in key export markets. Australian cattle herd and slaughter • Cattle prices are forecast to remain strong driven by Million head Herd (LHS) Slaughter (RHS) 30 11 increased restocker demand, reduced supply and strong i
Slide 23: Live Cattle Exports
Live Cattle Exports For personal use only Demand remains robust in Indonesia and Vietnam. • From a record 1.3 million heads in FY15, live Australian live cattle exports feeder and slaughter cattle exports are forecast Thousand heads 1,400 to fall 9% to 1.18 million heads in FY16 as the supply of exp
Slide 24: Sheep and Lamb
Sheep and Lamb For personal use only Prices to rise, lamb slaughter and production to fall. Sheep flock and lamb prices • Sheep and lamb prices are forecast to increase Million heads Ac/kg cwt strongly in response to increased restocker 80 +37% 700 demand, low supply, and strong export demand 75 600
Slide 25: Wool
Wool For personal use only Prices to rise on the back of declining production. Shorn wool production and EMI • Shorn wool production is expected to slip 7% in Thousand tonnes greasy Ac/kg clean +34% FY16 to 322,000t greasy, driven by a smaller sheep 400 1,500 360 flock and lower fleece weights. 346
Slide 26: Dairy
Dairy For personal use only Global prices to rise. World Dairy Prices USD/tonne • China’s imports of whole milk powder and skim 5,000 Forecast milk powder is expected to recover in FY16, 4,000 increasing by 14% and 5% respectively. 3,000 • In response to firmer demand from China and 2,000 other deve
Slide 27: Wheat
Wheat For personal use only Production rises but values decline on lower global wheat prices. World Wheat indicator Australian wheat production and exports $/Tonne, Nominal Million Tonnes 350 30 US$/tonne A$/tonne 300 20 10 250 0 200 13 14 15e 16f 17f 18f 19f 20f 21f 14 15e 16f 17f 18f 19f 20f 21f W
Slide 28: Coarse Grains, Oilseeds and Pulses
Coarse Grains, Oilseeds and Pulses For personal use only Global prices to decline, Australian production remaining steady. World indicator prices • The world indicator price for corn, barley and US $/Tonne, Nominal oilseeds are expected to fall in FY17 following an 560 abundance in supply, large car
Slide 29: Horticulture
Horticulture For personal use only Modest growth in production, imports and exports. Gross value of horticulture production $ billion, 2014-15 • The gross value of horticultural production is 14 expected to rise gradually to reach $10.2bn in 12 Other FY21, driven by modest growth in fruit, nut and 1
Slide 30: Sugar
Sugar For personal use only Higher returns to Australian cane growers, sugar production and exports. • The world sugar price is expected to remain at an average of 14 US c/lb in FY16 before increasing to 17.5 US c/lb in the medium term. Australian sugar production and exports Million tonnes • Over t
Slide 31: Cotton
Cotton For personal use only World cotton production, consumption and price World cotton stocks projected to decline. Million tonnes US c/lb • Global cotton prices are predicted to decline in the 30 150 short term, reflecting large carry-over stocks and 20 sluggish global demand for cotton. 100 • Wo
Slide 32: Commodity Outlook Summary
Commodity Outlook Summary For personal use only Short-term outlook • The gross value of farm production is forecast to increase by 9.3% to around $58.7 billion in 2015-16 despite a predicted decline in total volume of farm production of 1.8%, driven primarily by livestock production. • Earnings from
Slide 33: Outlook – By Product and Service
Outlook – By Product and Service For personal use only Mixed operating conditions for 2016 • Retail: Prospect of a strong El Nino likely to bring drier spring and summer in eastern Australia • Agency: • Livestock: Cattle and sheep prices to remain high driven by reducing global supply and strong int
Slide 34: Summary
Summary For personal use only Turnaround phase complete Eight Point Plan largely on track Embracing Growth phase Industry and company fundamentals solid 32
Slide 35: For personal use only
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Slide 36: Disclaimer and Important Information
Disclaimer and Important Information For personal use only Forward looking statements This presentation is prepared for informational purposes only. It contains forward looking statements that are subject to risk factors associated with the agriculture industry many of which are beyond the control o
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