Nufarm Limited · ASX:NUF
Nufarm — H1 2014 Earnings Presentation
35 slides from Nufarm's earnings presentation, Mar 26, 2014
Slide 1: Interim Results 6 months to January 31, 2014
For personal use only Interim Results 6 months to January 31, 2014 26 March, 2014
Slide 2: Disclaimer
Disclaimer For personal use only Forward looking statements 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 no
Slide 3: Doug Rathbone, Managing Director
For personal use only Doug Rathbone Managing Director
Slide 4: Interim results: geographic diversification provides opportunities for growth
2014 Interim results Geographic diversification provides opportunities for growth For personal use only • Underlying EBIT up 20% • Excellent results and performance from South America • Australia remains challenged; but positive actions taken to improve performance and returns • Balance sheet is a k
Slide 5: Summary of business conditions
2014 Interim results Summary of business conditions For personal use only • Australia: Second consecutive year of poor climatic conditions impacting demand and margins • South America: Brazil continues to experience strong industry growth, with Nufarm taking market share • North America: One of the
Slide 6: 2014 Interim Results: Financials
For personal use only 2014 Interim Results: Financials Paul Binfield, Chief Financial Officer
Slide 7: Benefits of geographical diversity evident with strong EBIT growth
2014 Interim results Benefits of geographical diversity evident with strong EBIT growth driven by outstanding profitable growth in Latin America For personal use only • Underlying EBIT increased by almost 20% with strong growth in Latin America more than offsetting lower result in Australia, North A
Slide 8: Brazilian strategy delivering results
Brazilian strategy delivering results Brazil turn-around – a story of people and innovation For personal use only Brazil key metrics in local FX (BRL in millions) • EBITDA margin expanding rapidly 140 – Strategic focus on higher value segments of the 80% market has lifted the gross profit margin 120
Slide 9: Impact of foreign exchange
Impact of foreign exchange Significant depreciation of AUD versus major currencies for 1H:14 compared to 1H:13 For personal use only (A$ millions) Half year ended 31 January • Impact of FX on Revenue and Underlying EBIT 2014 at ‒ Significant depreciation of AUD versus USD, EUR and 2014 2013 2013 GBP
Slide 10: Operating and tax expense
Operating and tax expense Operating expenses remain well controlled and tax expense benefits from some non-recurring credits For personal use only (A$ millions) Half year ended 31 January • Expense to sales ratio benefits from 2014 2013 leveraging the fixed cost base Underlying sales, marketing & di
Slide 11: Working capital: net working capital build
Working capital Net working capital build relates to strength of Brazil season and elevated inventory levels For personal use only • Growth in NWC since July has been driven by: – Strength of Brazilian season – receivables up and inventory down in line with cropping season – Traditional build of inv
Slide 12: Working capital reduction program gaining traction
Working capital Working capital reduction program gaining traction For personal use only • Net working capital reduction program target to • Significant depreciation of AUD versus major <$1bn at 31 July 2014 in spite of rapid growth of currencies has had a material impact on NWC business balance for
Slide 13: Net debt and financing costs
Net debt and financing costs Interest expense adversely impacted by FX movements and higher average net debt For personal use only (A$ millions) Half year ended 31 January • Higher average net debt driven by higher 2014 2013 working capital balances and translation Interest income (2.6) (3.2) impact
Slide 14: Brian Benson, Marketing and Portfolio Development
For personal use only Brian Benson Group Executive Marketing and Portfolio Development
Slide 15: Sales revenue by region
Sales revenue by region Crop protection segment For personal use only 2014 2013 Europe Australia/ Europe 17% Australia/ 16% New Zealand New Zealand 23% 26% Asia 6% South America Asia South America 31% 7% 38% North America 17% North America 19% 2014: $1,084.2m 2013: $894.4m 15
Slide 16: HY results – regional review: Australia / New Zealand
2014 HY results – regional review Australia / New Zealand For personal use only Australia 2014 $m 2013 $m • Relatively dry finish to winter Sales 249.0 235.8 cropping season Underlying EBIT 8.9 10.3 • Extremely hot, dry conditions for summer cropping Other • Relatively high channel inventories 22% •
Slide 17: HY results – regional review: Asia
2014 HY results – regional review Asia For personal use only • Strong sales performance in 2014 $m 2013 $m Indonesia Sales 71.2 62.7 • Expanded footprint, with new offices established in South Korea Underlying EBIT 9.3 7.5 and Vietnam • Access to new products will help facilitate diversification int
Slide 18: HY results – regional review: North America
2014 HY results – regional review North America For personal use only USA 2014 $m 2013 $m • Unusually severe winter conditions Sales 180.7 170.3 ‒ Impacted Southern cropping regions Underlying EBIT -6.9 -0.4 • US sales down 12 % in local currency • Delayed timing of sales • Reduced cotton acreage Ot
Slide 19: HY results – regional review: South America
2014 HY results – regional review South America For personal use only Brazil 2014 $m 2013 $m • Generally average season; some dry conditions late in the period Sales 412.3 272.1 • Strong overall market growth; Nufarm Underlying EBIT 60.0 34.9 continues to build market share • First half sales up by
Slide 20: HY results – regional review: Europe
2014 HY results – regional review Europe For personal use only • Average seasonal conditions in 2014 $m 2013 $m most markets; but excessive wet weather in UK Sales 170.4 153.6 • Local currency growth in Spain; Underlying EBIT 1.5 11.3 Portugal; Greece; Romania; Hungary • Sales down – half on half –
Slide 21: Major product segments
Major product segments Crop protection - % total segment revenues For personal use only 2014 2013 Other 9% Other Herbicide Herbicide 10% 66% 66% Fungicide 9% Fungicide 12% Insecticide 16% Insecticide 12% 2014: $1,084.2m 2013: $894.4m Other includes equipment; adjuvants; PGR's; industrial 21
Slide 22: HY results – product segment review: herbicides and insecticides
2014 HY results – product segment review Herbicides Insecticides For personal use only 2014 2013 2014 2013 Group sales 710.7 588 Group sales 171.4 112.8 Average GM 25% 25% Average GM 32% 31% • South America key driver of growth: soy, • Very strong insect pressure in Brazil pasture and other segments
Slide 23: HY results – product segment review: fungicides and other
2014 HY results – product segment review For personal use only Fungicides Other* 2014 2013 2014 2013 Group sales 100.3 106.9 Group sales 101.7 87.1 Average GM 27% 29% Average GM 23% 25% • Lower fungal disease pressure in key • PGR sales continue to expand, with markets good results in cotton • Condi
Slide 24: HY results – Seed technologies
2014 HY results – Seed technologies % segment revenues For personal use only 2014 2013 Seed Seed Seed Seed treatment treatment 61% 57% 39% 43% 2014: $54.1m 2013: $40.0m 24
Slide 25: HY results – seed technologies review
2014 HY results – seed technologies review Seed technologies For personal use only • Dry conditions impact sorghum/ 2014 $m 2013 $m sunflower demand in Australia Sales 54.1 40.0 • Early season sales of canola seed very strong Average GM 49% 54% • New business model for confectionery Underlying EBIT
Slide 26: Doug Rathbone, Managing Director
For personal use only Doug Rathbone Managing Director
Slide 27: Changes in Australia
2014 Interim results Changes in Australia For personal use only • A significant reorganisation of the Australian business: ‒ We will be more competitive ‒ We will be more responsive ‒ We will be more efficient • Increased flexibility of manufacturing base will meet all current requirements and provi
Slide 28: Corporate growth strategy
Corporate growth strategy For personal use only Generate improved returns Key crop focus Turf & Ornamental Growing into higher value and more Differentiated defendable product and market formulations & mixtures segments Seed technologies Protect / Leverage the Invest in new enhance value of existing
Slide 29: Outlook – full year
2014 Interim results Outlook – full year For personal use only • Australia remains challenged. While some signs of pick-up in demand, we are anticipating a similar full year segment result to last year • North America delayed due to very cold winter, but we expect strong demand when season gets unde
Slide 30: Nufarm — Grow a better tomorrow
6A Nufarm — Growa better tomorrow.
Slide 31: Supplementary information
For personal use only Supplementary information
Slide 32: Non IFRS disclosures and definitions
Non IFRS disclosures and definitions For personal use only Term Definition Underlying NPAT Profit / (loss) for the period attributable to the equity holders of Nufarm Limited less material items. Underlying EBIT Earnings before net finance costs, taxation and material items. Underlying EBITDA Earnin
Slide 33: Non IFRS information reconciliation
Non IFRS information reconciliation 6 months ended 31 Jan 2014 6 months ended 31 Jan 2013 For personal use only Material Material Underlying items Total Underlying items Total $000 $000 $000 $000 $000 $000 Revenue 1,138,211 1,138,211 934,409 934,409 Cost of sales (832,434) - (832,434) (681,856) - (6
Slide 34: Non IFRS information reconciliation: EBIT and EBITDA
Non IFRS information reconciliation For personal use only Six months ended 31 January 2014 2013 $000 $000 Underlying EBIT 56,726 47,323 Material items impacting operating profit - (3,177) Operating profit 56,726 44,146 Underlying EBIT 56,726 47,323 add Depreciation and amortisation excluding materia
Slide 35: Nufarm — Grow a better tomorrow
Nufarm — Growa better tomorrow.