2004 Year End Results

Size: px
Start display at page:

Download "2004 Year End Results"

Transcription

1 2004 Year End Results Doug Rathbone Managing Director year end

2 Headline Results mths to July mths to July 31 Group revenues up 8% $1.58 billion $1.46 billion Operating profit up 18% $76.2 million $64.3 million Earnings per share up 14% 47.1 cents 41.3 cents Full year dividends up 15% 23 cents 20 cents Operating cash flow $203 million $218 million Net debt to equity 61% 98%

3 Income Group Revenues $m 1,577 Operating Profit $m 76.2 Earnings / Share ,429 1,

4 Nufarm Group Sales A$M

5 Nufarm Group EBITDA A$M

6 Nufarm Group Earnings per Share

7 Nufarm Group Return on Average Funds Employed %

8 Kevin Martin Chief Financial Officer

9 Financials Analysis of sales / profit growth Sales Profit before tax Result , Industrial chemicals <87> <8.3> Crop protection 208 1,579 Other <2> 1, <2.6> 109.9

10 Business split Revenues 2003 $1.46 billion 2004 $1.58 billion 85% 15% 91% 9% Crop Protection Industrial

11 Business split Divisional Operating Profit (pre tax, interest and corporate charges) 2003 $156.6 million 2004 $169.9 million 86% 14% 95% 5% Crop Protection Industrial/Other

12 Business split Sales & Divisional Operating Profit 1,600 Crop Protection $m 1, Industrial $m 200 1,400 1,200 1,000 1,050 1,

13 Financials Cashflow highlights Operating cashflow 202.7m Working capital reduction 65m Debt reduction 109m Share issue proceeds 58m

14 Financials Relative growth analysis NPAT Compound growth 11.7% EBITDA Compound growth 8.5% Sales Compound growth 5.8% sales ebitda npat

15 Doug Rathbone Managing Director

16 Crop Protection Major Drivers: Strong organic growth in USA, Germany, UK Solid performance in Australia, helped by BASF products Expanded product portfolio Realignment of French business - lower sales Margin improvement (branded sales; efficiencies)

17 Crop Protection Nufarm Sales by Geography Americas - 28% Europe - 21% New Zealand - 5% Australia 41% Asia - 5% Total sales - $1,441 million

18 Crop Protection $m Regional markets - Sales (AUD) Australia/NZ Mixed seasonal conditions BASF products a positive Growth in total glyphosate market NZ Captec sales down

19 Crop Protection Regional markets - Sales (AUD) The Americas $m 700 US Ag up by 30% (USD) -increased sales of glyphosate, 600 phenoxies, copper fungicides US Turf/Specialty up by 50% (USD) -glyphosate, phenoxy mixtures, new products 200 Canadian sales flat Branded sales in Brazil, Argentina

20 Crop Protection $m Regional markets - Sales (AUD) Europe Strong growth in Germany (up 70%) & UK (up 50%) 500 BASF brands performed well 400 Realignment of French business Recovery in methyls

21 Crop Protection $m Regional markets - Sales (AUD) Asia Benefited from China glyphosate shortage Increased sales in Japan

22 Major products review Phenoxy herbicides: 3-5% growth in global market (by volume) Big 2,4-D seasons in USA and Brazil (60% of total market) Increased 2,4-D use in GM cropping systems BASF acquisition supports Nufarm move to branded sales Some volume / price / margin recovery in Nufarm methyls business

23 Major products review Glyphosate: Global demand remained strong Approximately 12% price decline in USA (post patent impact); pricing stronger in other markets Strong volume growth in Australia - Other Nufarm brands Roundup brands - Another record glyphosate season - Nufarm market share maintained - Premium brands increase by 15%

24 Industrial chemicals Chlor alkali plants - WA SEAC (pharma intermediates) - France Fine / Performance / Specialty - USA/Europe % total revenues 15% 9% Divisional sales $222m $135m Divisional profit $23.6m $15.3m Sale of Fernz business (2003) Lower sales in other businesses Lower revenues Higher costs in some areas

25 Proposed investment September, 2004

26 Brazil Agriculture: A snapshot Accounts for 40% of GDP; employs 50% of workforce World s largest producer of sugarcane, coffee, oranges; #2 soybeans 150 million hectares of land available for agricultural production Major increase in conservation farming (glyphosate), with more than 200% increase in glyphosate use since 1995 (only used on 50% of total grain growing area) Jan Aug 04 agribusiness trade surplus was USD22.8 billion (41.3% up on same period in 2003)

27 Sustainable growth in Brazil Total cultivable area estimated Total crop area Permanent crop area Seasonal crop area Millions of ha % of total land 17.9% 7.3% 1.8% 5.0% Planted Forests % Cultivable area not used % Pasture area % Brazil has 19% of the world's arable land Forest areas and protected nature areas % Source: FAO Source: MAPA, Conab and IBGE

28 Brazil: Crop protection market Crop protection sector revenues US$ MM Source: SINDAG Projected

29 Brazil: Crop protection market Crop protection sector breakdown by crop US$ MM Soya 1,376 Corn 262 Cotton 320 Beans Rice Sugar 250 Wheat Citrus Coffee Herbicides Insecticides Fungicides Miticides Adjuvant Source: SINDAG Based on 2003 numbers Source: SINDAG Based on 2003 numbers

30 Brazil: Crop protection market Growth drivers: Increased plantings - soybean, corn, wheat, sugar cane, fruit, cotton Increased technology - the use of inputs like fertilizers and agrochemicals is increasing every year New diseases / pests - eg soybean rust Government support of agribusiness Growing domestic consumption

31 Major players Major players 3,100 1,913 2,350 TOTAL Others Ihara Cheminova Hokko Nortox Agripec FMC Milenia DuPont Dow Monsanto BASF Syngenta Bayer Ranking / Sales Companies Crop Protection - Brazilian ranking (US$MM) Source: SINDAG

32 Agripec Company background: Established in 1961, moved to current location in 1986 Employs 365 people (5 sales managers; 40 sales reps) Head office: Fortaleza plus 6 regional offices/distribution centres Privately owned by Studart family (father/son in senior management)

33 Agripec sales structure

34 Agripec sales growth 250,000 Sales Turnover US$M 200, , ,000 50,

35 Market 2004 Market % TOTAL OTHERS MITICIDES INSECTICIDES FUNGICIDES HERBICIDES CLASSES 16% % Market 64% % Agripec % VAR % VAR YEAR FORECAST JAN TO JULY

36 Agripec sales Product split 2003 Insecticide 40.75% Fungicide 3.67% Other 1.38% Herbicide 54.20% USD $122M

37 Agripec sales Largest selling products Projected sales % 11% 14% 49% 20% 15% 22% 16% USD $122M USD $200M Glyphosate Monocrotophos Glyphosate Tebuconazole Methamidophos Other Methamidophos Other

38 Agripec sales breakdown by crop Soya 60.9% Corn 19.1% Bean 3.8% Cotton 3.5% Citrus 2.4% Wheat 2.2% Others 8.1% USD $122M Strength in key and growing market segments Illustrates opportunity for expansion into other developing segments (sugarcane)

39 Agripec production

40 Agripec production # Site area recently doubled through purchase of adjacent property - total area approx 10 hectares # Good standard of plant and equipment, with recent expansions also improving the facilities Formulation capacity existing: - 70 million litres soluble liquid herbicides - 40 million litres insecticides/fungicides Planned expansion (2005): - 6 million litres suspension concentrates - 10 million litres additional liquid herbicides

41 Rationale for investment Meets strategic objectives Growth via geographic expansion and portfolio diversity Builds strategic relationships and alliances Solid platform / business foundation Well resourced sales and development team Excellent geographic coverage Strong product portfolio Will support Nufarm core chemistries Local manufacturing/formulation Financial benefits 65% of sales occur in 1 st half Nufarm financial year Sound financial management and reporting Sales/profit growth potential

42 Agripec acquisition Nufarm will acquire 49.9% of Agripec Agripec to retain management control Total consideration US$120M (approx AUD$170m) Fully debt funded Subject to due diligence Forecast net earnings contribution 05: - $12 million (post interest and goodwill amortisation)

43 Corporate activity Planned divestments SEAC pharma intermediates business (France) Nufarm Specialty Chemicals (Lobeco, South Carolina) Anticipated total proceeds - $80 million

44 Corporate activity Forecast gearing levels Net debt to equity at July 31, % Net debt to equity at July 31, including Agripec deal 88% - Agripec plus divestments 75%

45 Outlook Agripec deal and non core business divestments reflect strong focus on crop protection Agriculture sector strong in most markets Nufarm well positioned for growth - Americas - Europe -Asia Further portfolio expansion via a number of new product launches Opportunity for additional efficiencies in certain areas

46 Track record Growth objective: average approx. 10% profit growth per year 1600 Sales & Operating Profit after Tax

47