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INNOVATE COLLABORATE SUSTAIN PRELIMINARY RESULTS FY2020 23 September 2020
INNOVATECOLLABORATESUSTAIN
PRELIMINARY RESULTS FY202023 September 2020
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements. These
statements have been made by the Directors in good faith based
on the information available to them up to the time of the
preparation of this presentation. Due to the inherent
uncertainties, including both economic and business risk factors
underlying such forward-looking information, actual results
may differ materially from those expressed or implied by these
forward-looking statements.
The Directors undertake no obligation to update any forward-
looking statements contained in this presentation, whether as a
result of new information, future events or otherwise.
2
FY 2020 PERFORMANCE OVERVIEW
3
Financial
Operating profit of €44.1m
Group operating margin of 2.8%
Adjusted diluted EPS of 25.69 cent
Operational Strategic
Working Capital inflow of €30.3m
Strong Free Cash Flow of €64.3m
Decrease in net debt to €53.2m (€75.6m)
Final dividend susp. (total div 3.15c)
Resilient performance through unprecedented challenges
Continuity of operations and service maintained through COVID-19
Romania & Ukraine rebranded as Agrii
Investment in seed plants in UK, Poland and Romania
Dry Powder capacity in Fortgreen trebled
Doubled capacity of Invergordon Fertiliser Plant
1.4m digital hectares on-boarded
Appointment of Sean Coyle as Group CEO and TJ Kelly as Group CFO
Appointment of Alex Steel as Group Commercial Director and Brendan Kent as Managing Director of Agri-Inputs division
Continued progress monetising non-core investment properties
Positive volume development of inhouse micro nutrition product range
Disposal of 20% stake in Ferrari Zagatto
Development of Nutri CO2OL carbon footprint calculator
Addition of Amenity R&D centre at Throws Farm
BUSINESS REVIEW
4
Geography Revenue EBITIreland & the UK
Continental Europe
Latin America
FY 2020 OVERVIEW
51,000+Customers
103Distribution Points
>2,600Employees
7Countries
€1.6bnRevenue
€44.1mOperating Profit
64%34%
2%
53%
31%
16%
61%37%
2%
73%17%
10%
100-10,000 haCustomer Profile
€440mCrop Protection Revenue
2.3m TnsFertiliser & Crop Nutrition
€160mSeed Revenue
2020€1.6bn
2020€44.1m
2019€82.3m
2019€1.8bn
5
GROUP REVENUE1 ANALYSIS
1 Excludes crop marketing revenues and volumes
Movement in Group Revenue1
from FY 2019 to FY 2020(13.3%)1
+0.1%Currency
(13.5%)Underlying
+0.1%Acquisitions
(10.7%)Volume
(2.8%)Price
6
– Underlying volume reduction of 14.4%
– Wettest autumn winter planting season in 30 years
– Significant shift from winter to spring cropping
– Operating margin reduction of 2.8% as a smaller cropping area and prolonged unseasonal weather limited field activity
– Amenity activities curtailed by COVID-19 restrictions
– Digital services adoption continued to grow to 1.4m ha
7
TRADING REVIEWIreland & the UK
Year ended 31 July 2020 2019 Change Underlying3 Constant Currency4
€’m €’m % % %
Revenue 967.9 1,159.4 (16.5%) (17.0%) (16.8%)
Operating profit1 23.3 60.0 (61.1%) (61.4%) (61.3%)
Operating margin1 2.4% 5.2% (280bps) (280bps) (280bps)
Associates and joint venture2 5.8 6.7 (13.4%) (13.9%) (13.7%)
52.7 53.4 54.8 60.0
23.3
2016 2017 2018 2019 2020
Operating Profit (€’m)
1.Before amortisation of non-ERP intangible assets and exceptional items2 Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items3 Excluding currency movements and the impact of acquisitions 4 Excluding currency movements
– Reduction in underlying volumes of 1.9%
– Successful delivery of working capital and operating margin optimisation initiatives
– Operating margin improvement in both Poland and Romania
– Adoption of the Group’s single brand identity, Agrii, across Romanian and Ukrainian businesses
– Significant movement in FX prior to year end pushed Ukrainian business into a loss for the year
8
TRADING REVIEWContinental Europe
Year ended 31 July 2020 2019 Change Underlying3 Constant Currency4
€’m €’m % % %
Revenue 417.5 440.1 (5.1%) (5.9%) (5.9%)
Operating profit2 13.2 13.9 (4.7%) (2.3%) (2.3%)
Operating margin2 3.2% 3.2% - 10bps 10bps
14.9 16.2 16.2 13.9 13.2
2016 2017 2018 2019 2020
Operating Profit (€’m)
1. Excluding crop marketing. While crop marketing has a significant impact on revenue, its impact on operating profit is insignificant. For the year ending 31 July 2020 crop marketing revenues and profits attributable to Continental Europe amounted to €172.7 million and €0.4 million respectively (2019: €165.1 million and €0.3m respectively). An analysis of revenues, profits and margins attributable to agronomy services and inputs more accurately reflects the underlying drivers of business performance
2. Before amortisation of non-ERP intangible assets and exceptional items3 Excluding currency movements and the impact of acquisitions 4 Excluding currency movements
– Strong underlying volume growth of 4.3% against a delayed season and start to in-field operations
– Underlying profit growth of 4.8% was impacted by currency
headwinds in H2
– Capital investment increased dry powder capacity threefold
– Disposal of the Group’s 20% stake in Ferrari Zagatto
– B2B channel a specific focus for growth
– Investment in CRF plant in Minas Gerais planned for FY2021
9
TRADING REVIEWLatin America
Year ended 31 July 2020 2019 Change Underlying3 Constant Currency4
€’m €’m % % %
Revenue 31.1 33.6 (7.4%) 6.4% 7.6%
Operating profit1 7.1 8.1 (11.9%) 4.8% 4.9%
Operating margin1 22.9% 24.1% (120bps) (40bps) (60bps)
Associates and joint venture2 0.4 - 100.0% - 100.0%
Operating Profit (€’m)
1.Before amortisation of non-ERP intangible assets and exceptional items2 Profit after interest and tax before amortisation of non-ERP intangible assets and before exceptional items3 Excluding currency movements and the impact of acquisitions 4 Excluding currency movements
8.17.1
2019 2020
FINANCIAL REVIEW
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Revenue
€1.6bn(11.6%) (rc1)(11.6%) (cc1)
Operating Profit
€44.1m(46.4%) (rc1)(44.5%) (cc1)
Adjusted EPS
25.69c(51.2%) (rc1)(49.2%) (cc1)
Dividend per share
3.15c2019: 21.32c
Working Capital inflow
€30.3m2019: (€12.7m)
ROCE
7.3%2019: 13.2%
Net Debt
€53.2m2019: €75.6m
FY 2020 PERFORMANCE
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Summary
1. rc denotes reported currency; cc denotes constant currency
Free Cash Flow
€64.3m2019: €54.0m
FY 2020 FINANCIAL HIGHLIGHTS
2020
€’m
2019
€’m
Change
%
Constant Currency
%
Group revenue 1,589.1 1,798.2 (11.6%) (11.6%)
Group operating profit1
Agri-ServicesAssociates and joint venture2
44.16.2
82.36.7
(46.4%)(8.4%)
(44.5%)(8.6%)
Total group operating profit 50.3 89.0 (43.5%) (41.7%)
Finance costs, net (11.3) (11.8) (4.7%) (6.0%)
Profit before tax1 39.0 77.2 (49.5%) (47.2%)
Adjusted diluted EPS3 25.69 52.65 (51.2%) (49.2%)
Return on capital employed 7.3% 13.2% (590bps)
Dividend per share 3.15c 21.32c (85.2%)
Net debt4 (53.2) (75.6) 22.4
Year ended 31 July
1 Before amortisation of non-ERP intangible assets and exceptional items2 Profit after interest and tax before exceptional items3 Before amortisation of non-ERP intangible assets, net of related deferred tax (2020: €7.7m, 2019: €7.1m) and exceptional items, net of tax (2020: €5.2m, 2019: €7.0m)4 Net debt as defined for banking covenant purposes, before impact of IFRS 16 Lease transition 12
GROUP REVENUE
€1,798.2m
€1,589.1m
0
400
800
1,200
1,600
2,000
FY19 Underlying Acquisitions FY20 (excl. currency)
Currency FY20
Year ended 31 July
(€210.9m)(11.7%)
+€2.1m+0.1%
(€0.3m)0%
€’m
(€208.8m)(11.6%)
(€209.1m)(11.6%)
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GROUP OPERATING PROFIT
€82.3m
€44.1m
0
20
40
60
80
FY19 Underlying Acquisitions FY20 (excl. currency)
Currency FY20
(€36.6m)(44.5%)
Year ended 31 July
(€36.7m)(44.6%)
+€0.1m+0.1%
(€1.6m)(1.9%)
€’m
(€38.2m)(46.4%)
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EARNINGS PER SHARE
52.65c
25.69c
0
20
40
60
FY19 Underlying Acquisitions FY20 (excl. currency)
Currency FY20
Year ended 31 July
(26.47c)(50.3%)
+0.60c+1.1%
(1.09c)(2.0%)
€ cent per share
(25.87c)(49.2%)
(26.96c)(51.2%)
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OPERATING MARGIN ANALYSIS
4.57%
2.78%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
FY19 Volume Fertiliser price deflation
Cost savings incl. bonus
Other (incl. currency)
FY20
(1.79%)
Year ended 31 July
(26.57c)(50.5%)
%
(1.60%) (0.25%) +0.53% (0.47%)
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CASH FLOW
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Year ended 31 July
2020€’m
2019€’m
Cash flow from operating activities 63.8 92.8
Change in working capital 30.3 (12.7)
Interest and tax (16.6) (23.9)
Cash flow from ongoing operating activities 77.5 56.2
Exceptional and one off items (2.2) (3.1)
Net cash flow from operating activities 75.3 53.1
Strong cash generation with free cash flow performance
FY 2020 BALANCE SHEET
2020
€’m
2019
€’m
Tangible assets 178.6 136.8
Goodwill and intangible assets 235.9 271.1
Associates and joint venture 41.2 47.7
Working capital 5.5 46.0
Deferred and contingent acquisition consideration (25.5) (43.0)
Provisions for liabilities, including pension (2.2) (6.7)
Net debt (94.0) (75.6)
Taxation – including deferred tax (24.9) (31.4)
Other (2.3) 0.9
Shareholders’ funds 312.3 345.8
Year ended 31 July
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BANKING FACILITIES AND COVENANTS
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2020 2019
Leverage
Net debt to EBITDA 1.18 0.87
Covenant <3.50x <3.50x
Interest Cover
EBITDA to net interest 5.76 8.06
Covenant >3.00 >3.00
All terms as defined for bank covenant testing purposes
Committed banking facilities
€430 million
Weighted average debt maturity
3.3 years
(2019: 4.3 years))
CAPITAL ALLOCATION
20
Dividend
Suspended due to trading
Acquisitions
Reinvestment
PeopleCapex minimised
Digital platform Product capabilities
MaintainingFinancial
Discipline &Balance Sheet
Strength
Paused for near-term
STRATEGY AND DEVELOPMENT
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OUR 2023 AMBITION
22
A balance of organic and acquisitive growth
Focus on delivering
Ireland / UK
1-2%
Continental Europe
3-5%
Latin America
5-10%
Organic
3-4%EBIT CAGR
5-9%
EBIT CAGR Acquired
2-5%EBIT CAGR
Return on InvestmentGroup ROCE
12-15%
Free CashFlow Ratio
70-100%
Optimising existing routes to market
Sourcing Opportunities /
Product Mix Change
Digital Platform
4m Ha
Product Based Capabilities
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BREXIT
Issue Overview Origin’s Approach
Agriculture Bill • Framework to allocate UK government spending on agricultural support
• Focus on farm ROI delivery• Capture market share• Continue to evolve product offering
to support environmental goods
End of transition period; No trade deal scenario
• Failure to reach agreement on a trade deal between UK and EU before the transition period deadline of 31 December 2020
• Introduction of tariffs
• Contingency plans in place to ensure security of supply chain and commercial mitigation measures for the imposition of tariffs,
• Limited cross border activity in Ireland
Currency and interest rates
• Increased uncertainty may lead to continuing and sustained weakening of sterling
Import logistics • Additional customs checks at port • Authorised Economic Operator status held by required entities
• Hedging strategy in place• Weak sterling improves growers’
competitiveness in export markets
WORKING TOWARDS A SUSTAINABLE FUTURE
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Pillar
1
Promoting sustainable food production systems
On-farm products and services
Innovation
Engagement and partnerships
Pillar
2
Conductingbusiness responsibly
Resource efficiency and environmental impacts
Conducting business with integrity
Empowering our people
Pillar
3
Integrating sustainability in our decision-making and engagement with all stakeholders
Governance and Processes
Reporting and Transparency
PUTTING SUSTAINABLE AGRICULTURE INTO PRACTICE
Ind
ust
ry C
hal
len
ges Legislation Loss of
BiodiversityClimate Change
Limited Access to New Breeding Technology
Reduced farm Profitability
Pest, Weed and Disease Resistance
Loss of Crop Protection Products
Public Perception of Food Production
EU Farm to Fork Strategy
Environmental protection, more with less
Protect and replenish beneficial species
Increased frequency of extreme weather events
Growing policy response to help mitigate climate change
EU and UK lagging pace of new variety development across other continents
Shift in UK and EU farm payment structures placing greater emphasis on farm efficiency
Increasing resistance to plant protection products
Products removed from the market and increasing development costs
Lack of understanding of where food comes from and what technologies are required to deliver food security
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5 P
oin
t P
lan
Enhancing the environment
Improving soil health and fertility
Increasing farm productivity and
viability
Providing integrated whole farm
solutions
Increasing stakeholder engagement
Helping growers achieve a greener footprint
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CarbonFootprint
Purchasing
Measureto manage Production
IndependentlyVerified Product
Stewardship
Nitrogen Use Efficiency
Nutritionagronomy
Environmentalenhancement
Optimalnutrientbalance
Fertiliser carbon footprints to enable
informed choices
Innovative solutions
Encompassing our operating strategies
for sustainability
Prescription fertilisers to match soil and crop nutrient requirements
SUMMARY
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FY 2019 Q1 Trading Update H1 Trading Update
FY2019Q1 FY2020
Trading UpdateH1 FY2020
Trading Update
Early Winter
Spring Crops
Late Winter
Fallow
Cropping Mix
Gross Margin Mix
Impact of Weather on UK Cropping
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UK WHEAT AREA HAS HISTORICALLY REBOUNDED AFTER PREVIOUS YEARS WHERE WET AUTUMNS REDUCED PLANTINGS
1,000
1,200
1,400
1,600
1,800
2,000
2,200‘0
00
hec
tare
sWheat Area planted vs Autumn Days Rainfall
1,996
1,936
1,615
+361
1,635
+321
1,363
1,797
+435
*AHDB’s Planting and Variety Survey 2020 areas does not include Northern Ireland. The wheat area in Northern Ireland is typically around 8khaSource: Defra, AHDB
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SUMMARY AND OUTLOOK
– FY20 saw prolonged, unseasonal weather variation in our largest market
– Continuity of service maintained through COVID-19
– Excellent working capital and cash management by business divisions
– Continued work towards strategic goals in product mix & margin improvement, sustainability, branding, investment in areas for growth
– Continue to implement our prudent risk management approach and capital allocation strategy
– Possibility of Brexit without a trade deal on 31 December 2020 and the ongoing COVID-19 pandemic will bring challenges for FY21
– Business model and leadership team in place to deliver on the Group’s long-term 2023 strategic growth ambitions
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THANK YOU
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