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Company PresentationGolden Agri-Resources LtdMay 2019
22
DISCLAIMER
This presentation has been prepared by Golden Agri‐Resources Ltd. (“GAR” or “Company”) for informationalpurposes, and may contain projections and forward looking statements that reflect the Company’s currentviews with respect to future events and financial performance. These views are based on current assumptionswhich are subject to various risks and which may change over time. No assurance can be given that futureevents will occur, that projections will be achieved, or that the Company’s assumptions are correct. Actualresults may differ materially from those projected. A prospective investor must make its own independentdecision regarding investment in securities.
Opinions expressed herein reflect the judgement of the Company as of the date of this presentation and maybe subject to change without notice if the Company becomes aware of any information, whether specific tothe Company, its business, or in general, which may have a material impact on any such opinions.
The information is current only as of its date and shall not, under any circumstances, create any implicationthat the information contained therein is correct as of any time subsequent to the date thereof or that therehas been no change in the financial condition or affairs of GAR since such date. This presentation may beupdated from time to time and there is no undertaking by GAR to post any such amendments or supplementson this presentation.
The Company will not be responsible for any consequences resulting from the use of this presentation as wellas the reliance upon any opinion or statement contained herein or for any omission.
© Golden Agri‐Resources Ltd. All rights reserved.
33
CONTENTS
Corporate Overview 41
Key Competitive Strengths 72
Growth Strategy 163
Financial Performance 204
4
CORPORATE OVERVIEW
55
Planted Area (as of 31 Mar 2019)1: 500,202 haOutput of Palm Products (CPO and PK)
1Q 2019 : 629,000 MTFY 2018 : 3,049,000 MT
OVERVIEW OF GAR
• Listed on SGX since 1999 •A leading Indonesian plantation group with integrated operations for the production of a broad range of value added palm‐based products
• Increasing presence in destination markets with on shore refining in China and India
Plantation Profile
Key Products
• Cooking oil• Margarine• Shortening• Specialty fats• Stearin• Oleo‐chemicals
• Crude palm oil (CPO)• Palm kernel (PK)• Palm kernel oil (PKO)• Palm kernel meal• Soybean oil and meal• Biodiesel
Financial Statistics (in US$ million)
Notes:1. Including plasma2. Earnings before tax, non‐controlling interests, interest on borrowings,
depreciation and amortisation, net gain/loss from changes in fair value of biological assets, foreign exchange gain/loss and exceptional items
1Q 2019 FY 2018Revenue : 1,617 7,167EBITDA2 : 121 573Underlying Profit3 : 12 181Equity4 : 4,195 4,169
3. Net profit attributable to owners of the Company, excluding net effect of net gain/loss from changes in fair value of biological assets, depreciation of bearer plants, exceptional items and other non‐operating items (foreign exchange gain/loss, and deferred tax income/expenses)
4. Attributable to owners of the Company
6
LEADING INDONESIAN PLANTATION GROUP WITH INTEGRATED OPERATIONS
Notes:1. Data as of 31 Mar 20192. Including plasma3. Including operations under JV
Collaborationwith CIRAD
Research & Development
Seedling
Dami Mas Seed Garden & SMART Biotechnology Center
Plantation & Harvesting
Planted area1,2Total 500k haNucleus 396k haPlasma 104k ha
Mature area2475k ha
FFB production22.17mn MT(1Q 2019)10.53mn MT (FY 2018)
CPO Milling
No of mills46
Capacity113.27mn MT FFB p.a.
Basic Products
Production501k MT(1Q 2019)2.44mn MT (FY 2018)
Production128k MT(1Q 2019)613k MT (FY 2018)
No of plants6Capacity14.98mn tpa
Capacity1,3440k tpa
CPO
Palm Kernel
Refining
Biodiesel
Kernel Crushing
Oleo‐chemicals
Processing
Branded & Unbranded Cooking OilMargarineSpecialty Fats
Biodiesel
PK OilPK Meal
Fatty AcidsFatty AlcoholGlycerineSoap Noodles
No of plants10Capacity11.76mn tpa
Capacity1600k tpa
Processed Products
7
KEY COMPETITIVE STRENGTHS
8
LEADING IN SCALE WITH VERTICALLY INTEGRATED OPERATIONS
2,436 1,900 1,967
921 824
351
2,653 758 855
2,959
0
1,000
2,000
3,000
GAR Astra Agro Wilmar Indo Agri FirstResources
Sampoerna Sime Darby IOI KLK Felda
500
285 268 337211 136
600
175 214341
0
200
400
600
GAR Astra Agro Wilmar Indo Agri(incl
Lonsum)
FirstResources
SampoernaSime Darby IOI KLK Felda
Largest plantation group in Indonesia and third largest globally in term of CPO production
Notes:1. Based on latest full fiscal year data2. Felda is the largest CPO producer with about 68% of its FFB processed sourced from plasma farmers and other parties
Largest plantation group in Indonesia and second largest globally in term of planted areaIndonesia Malaysia
Indonesia Malaysia
Note: Based on latest publicly available information (including plasma, except Wilmar and Felda)
‘000 MT
‘000 ha
9
25,188
29,158
206,518163,767
75,571Immature (0‐3 years)
Young (4‐6 years)
Prime 1 (7‐18 years)
Prime 2 (19‐25 years)
Old (> 25 years)
4.9
3.5
0.8 0.8 0.5
0
1
2
3
4
5
Palm Oil(GAR)
Palm Oil(Industry)
Rape Oil Sun Oil Soy Oil
(MT/
ha)
MANAGEMENT EXPERTISE DELIVERS HIGH PRODUCTION YIELDS
22.5
18.3 18.0
21.6
15.9
14
16
18
20
22
24
GAR Astra Agro FirstResources
Wilmar Indo Agri
(MT/
ha)
Palm is the highest yielding vegetable oil
Note: Based on latest full fiscal year data
CPO yield per hectareFFB yield per hectare
Notes:•Based on latest full fiscal year data•CPO yield/ha is derived from FFB yield/ha multiply by extraction rate
Source: Oil World and Company; Data as per 2018
GAR Age Profile
Note:Data as of 31 Mar 2019, include plasma. Average age is 17 years
15%5%
6%
41%33%
GAR is one of the lowest cost producers with industry‐leading efficiencies
4.9
3.94.1
4.3
3.5
3.0
3.4
3.8
4.2
4.6
5.0
GAR Astra Agro FirstResources
Wilmar Indo Agri
(MT/
ha)
10
UNRIVALLED TECHNOLOGY PLATFORM ENHANCING OPERATIONAL EFFICIENCY
0
500
1000
1500
2000
2500
3000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
CPO PK
• War Room utilises SAP, GIS and Google Earth applications
• Block‐by‐block Performance Analysis (30 ha per block) is updated daily
• Facilitates problem identification (e.g. low yielding areas), enhancing management’s ability to address issues early and prioritise improvements/changes
To monitor and manage its widely spread operations efficiently, GAR utilises a state‐of‐the‐art proprietary information technology system
Output of Palm Products(‘000 MT)
Note:2010, 2013 and 2016 output declined due to unfavourable weather conditions and biological tree stress
1,0391,201
1,3431,433
1,6661,7941,890
1,9672,073
2,3472,273
2,640
2,9112,768
2,9532,966
2,5102,724
3,049
11
UNRIVALLED TECHNOLOGY PLATFORM OPTIMISING THE PRODUCTION YIELDS AND MINIMISING COST
Superior fertiliser cost management through operational control and R&D
• GAR utilises GPS‐guided aerial manuring to cover expansive and hilly plantation area
•With this advanced aerial manuring, fertilisers are applied more effectively compared to manual application
• Fertiliser program developed with CIRAD1
• Accurate fertiliser plan to optimize benefit especially with more volatile climate conditions
• Application and dosage based on cost/benefit analysis using leaf sampling (“blood test”), analysingcondition of each plantation
Note:1 CIRAD = Centre de cooperation Internationale en Recherche Agronomique pour le Développement
(French Agricultural Research Centre for International Development)
12
STRONG POSITION ACROSS THE DOWNSTREAM VALUE CHAIN
•Broad range of products including Food, Industrial products and Biodiesel
•Increasing sales of palm based refined products
•Golden Stena is the largest palm oil basedcharter
•Broad global coverage including Middle East and India
•Increasing presence in destination markets
•On shore refining in China and India, and ex‐tank operations in many countries
Origination of Raw Materials
Processing & Product Customisation
Logistic Excellence
Sourcing with increasing traceability:•Owned estates• Third parties
Destination Market Expertise
1313
TOWARDS RESPONSIBLE PALM OIL PRODUCTION
Progress on Traceability to the Plantation• Full TTP for around 60% of the palm supply chain• Over 50 third‐party mills have reported full TTP with over
150 taking part in the TTP exercise
Human rights and supply chain• Together with Nestlé and Verite, we are carrying out an
assessment of our suppliers on labour and human rights issues
• 5 mills chosen for the assessment• Aims to determine risks of noncompliance with the GSEP,
Nestlé’s Responsible Sourcing Standard and provide concrete recommendations for remediation
14
EMPOWERING COMMUNITIES
Employment and Infrastructure• GAR provides employment for about 171,700 people in Indonesia
• 62,100 permanent employees, 40,200 fixed‐term employees and 69,400 smallholders• We promote small and micro enterprises near our operation areas• Builds and maintains public infrastructures and facilities
• Roads, bridges, places of worship and sporting facilities
Education and Healthcare
The palm oil industry is effective in creating jobs and alleviating poverty
Note:Data as per 2018
15
GAR AWARDS & SUSTAINABILITY RATINGS
GAR received several awards in 2018 in the area of corporate, sustainability and governance• Winner: ASEAN Business Awards in the Priority
Integration Sector ‐ Agribusiness• Winner: Singapore APEX Corporate Sustainability
Award• Asia’s Best Supply Chain Reporting at 2017 Asia
Sustainability Reporting Award• Runner‐up: Most Transparent Company Award in
Agribusiness at the SIAS 19th Investors’ Choice Awards
Being reviewed by many ratings for its sustainability performance, GAR is encouraged to make continuous improvement in this area• Debuted on FTSE4Good ASEAN 5 and Developed Indexes since mid 2018• Member of SGX Sustainability Index• Ranked 6th by NUS‐CGIO for best practices in sustainability reporting in Singapore
16
GROWTH STRATEGY
1717
STRATEGIC PRIORITIES
Build on core competitive strengths and leverage scale to maximise long‐term shareholder returns
Continued strong commitment to be leading in sustainability
To strengthen our position as the world’s leading palm oil plantation company
Accelerate presence and optimise margins in every sector of the value chain
Be the best, fully‐
integrated, global
agribusiness and
consumer product
company –the Partner of Choice
Leading global merchandiser for Indonesia palm oil products while
focusing on higher margin customers
Deliver value added services and solutions to
customers
Cost Efficiency –mechanisation and automation
Yield Improvement –research and development
Operational Excellence –best‐in‐class plantation
management
World class producer of
diversified value added, quality and sustainable
products
Breakthrough competitive edge with cutting edge technology
1818
GROWTH STRATEGY AND OUTLOOK
• Focus on replanting with higher‐yielding seeds to sustain production growth• Continued efforts in yield improvement, cost efficiency and sustainability initiatives• Projected 2019 capex US$150 million
• Extending product portfolio, global market reach and logistic facilities to enhance our integrated operations
• Evaluating strategic options and business model restructuring• Projected 2019 capex US$100 million
• GAR remains confident in the robust demand growth for palm oil in the long term • We expect CPO price to remain supported by global demand growth including from biodiesel
Capitalising on the robust fundamentals of the industry, GAR continues to enhance its integrated operation capabilities to optimise profit opportunities across the value chain
Upstream
Outlook
Downstream
1919
INDONESIA BIODIESEL
Indonesia growing biodiesel mixture mandate is a major catalyst to the industry
• Global feedstock for biodiesel grew by 14% to 41 million MT in 2018 and expected to further expand by 9% in 2019
• Indonesia implemented a subsidised B20 programme in 2016 with full implementation since Sep 2018. B30 programme is expected to be implemented in 2H 2019.
• Indonesian biodiesel production outperformed at 6.0 million kltr in 2018 versus 3.4 million kltra year earlier, and estimated at 9.5 million kltr for 2019*
Indonesia Biodiesel Consumptionin million kltr
4.0
1.36
7.4
2018A 2M 2019A 2019F*
• In 2018 Indonesia domestic biodiesel totaled 4.0 million kltr while 2019 volume is expected at 7.4 million kltr*
• Domestic biodiesel realisation in 2019 is on track• Indonesia biodiesel export reached 157k MT in
1Q 2019
Notes:* Assuming B30 programme implementation in 2H 2019Source: Data processed from the Company’s estimates, Oil World, Ministry of Energy and Mineral Resources, and GAPKI
20
FINANCIAL PERFORMANCE
2121
FINANCIAL PERFORMANCE
Notes:1. Net profit or loss attributable to owners of the Company, excluding net effect of net gain or loss from changes in fair value of biological assets,
depreciation of bearer plants, exceptional items and other non‐operating items (foreign exchange gain or loss and deferred tax income or expense)2. Earnings before tax, non‐controlling interests, interest on borrowings, depreciation and amortisation, net gain or loss from changes in fair value of
biological assets, foreign exchange gain or loss and exceptional items
1Q 2019 EBITDA was steady compared to the same period last year as stronger contribution from downstream business compensated weaker upstream performance
(in US$ million) 1Q 2019 1Q 2018 2018 2017
Revenue 1,617 1,816 7,167 7,508
Gross Profit 193 248 1,007 1,097
Gross Profit Margin 12% 14% 14% 15%
Operating Profit 32 41 148 241
Tax (8) (4) (84) (35)
Underlying Profit1 12 25 181 254
Net Profit or Loss attributable to owners of the Company 18 12 (2) 74
EBITDA2 121 121 573 665
EBITDA margin 7% 7% 8% 9%
2222
SEGMENTAL RESULTS
Note:1.This segment refers to processing and merchandising of palm and oilseed based products i.e. bulk, branded, oleo‐chemicals and other vegetable oils, as well as production and distribution of other consumer products in China and Indonesia mainly food and beverages
• Plantations and palm oil mills: 1Q 2019 EBITDA margin impacted by weaker prices and lower production• Palm, laurics and others: Despite CPO price volatility, EBITDA margin expanded by 2.1% year‐on‐year on increasing benefits from integrated business model and enhanced customer relationships in destination markets
US$ million 1Q 2019 1Q 2018 2018 2017
RevenuePlantations and palm oil mills 308 343 1,451 1,673 Palm, laurics and others1 1,610 1,805 7,102 7,433 Inter‐segment eliminations (301) (332) (1,385) (1,598) Consolidated Revenue 1,617 1,816 7,167 7,508
EBITDAPlantations and palm oil mills 61 95 391 499
20% 28% 27% 30%Palm, laurics and others1 59 28 184 166
3.7% 1.6% 2.6% 2.2%Inter‐segment eliminations 0.5 (1.7) (1.8) (0.2) Consolidated EBITDA 121 121 573 665
2323
FINANCIAL POSITION
Robust balance sheet amidst challenging environment
US$ million 31‐Mar‐19 31‐Dec‐18 Change
Total Assets 8,591 8,546 1%Cash and short‐term investments 562 545 3%Fixed assets1 3,746 3,716 0.8%
Total Liabilities 4,246 4,236 0.3%
Net Debt2 1,854 1,734 7%Total debt3 3,028 3,010 1%Cash, short‐term investments and liquid working capital4 1,174 1,276 ‐8%
Total Equity Attributable to Owners of the Company 4,195 4,169 1%
Net Debt2/Equity5 0.44x 0.42xNet Debt2/Total Assets 0.22x 0.20xNet Debt2/EBITDA6 3.84x 3.03xEBITDA/Interest 2.92x 3.55xNotes:1. Includes Bearer Plants, Property, Plant and Equipment, and Investment Properties2. Interest bearing debt less cash, short‐term investments and liquid working capital3. Interest bearing debt
4. Liquid working capital is trade receivables, inventories (excluding consumables), deposits and advances to suppliers less trade payables and advances from customers
5. Equity attributable to owners of the Company6. 31 March 2019 figure is based on annualised EBITDA
2424
CONTACT US
Golden Agri‐Resources Ltdc/o 108 Pasir Panjang Road#06‐00 Golden Agri PlazaSingapore 118535
Telephone : +65 65900800Facsimile : +65 65900887
www.goldenagri.com.sg
Contact Person : Richard Fung [email protected]
If you need further information, please contact: