emerging companies conference presentation 17 october 2001
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TRANSCRIPT
Emerging Companies Conference Presentation
17 October 2001
2
Contents
• State of global wheat markets
• Domestic wheat production for 2001/2002
• Business stream strategies & risk allocation
• Investment highlights
3
State of global wheat markets
4
Wheat production – major exporters
Australia20.320.9
EU-1594.0
104.0
Argentina18.016.4
Canada21.526.8
Production 01/02Production 00/01(million tonnes)
United States54.360.5
USDASeptember 2001
5
Historical world wheat production & consumption
440
490
540
590
640
Mill
ion
To
nn
es
World Production World Consumption
USDASeptember 2001
6
Global stocks and stocks to use ratio
0
20
40
60
80
100
120
140
160
180
200
1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02
0
5
10
15
20
25
30
35
Global Stocks Global STU
Mill
ion
To
nn
es
USDASeptember 2001
%
7
World wheat trade
0
20
40
60
80
100
120
1980
/81
1981
/82
1982
/83
1983
/84
1984
/85
1985
/86
1986
/87
1987
/88
1988
/89
1989
/90
1990
/91
1991
/92
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
1999
/00
2000
/01
2001
/02
Mill
ion
Tonn
es
World Excluding FSU/PRC FSU CHINAUSDA
September 2001
8
Domestic wheat production
for 2001/2002
9
ABARE Forecast
@ 4 Sept 2001
AWF Forecast
@ 24 Sept 2001
Production Prospects
QLD 0.90 MT 0.69 MT Well below average
NSW 7.20 MT 7.27 MT Average
VIC 2.50 MT 2.67 MT Average
SA 3.99 MT 4.13 MT Above average
WA 5.46 MT 5.67 MT Below average
TOTAL 20.07 MT 20.44 MT Slightly below average
Australian wheat production forecasts
USDA forecast @ 4 September 2001: 20.3MT
10
Business stream strategies
&
risk allocation
11
Business streams
2001F EBIT$9.3m
Pool Management Services
2001F PBT$80.2m
Finance and Risk Management Products
2001F EBIT$70.3m
Grain Acquisition and Trading
2001F EBIT($3.0m)
Grain Technology
2001F EBIT$15.4m
Supply Chain and Other Investments
12
New Pool Management Services Remuneration Model
• Two-tiered payment system
– A base fee
– An out-performance incentive (OPI)
• There is a cap on the total payments by AWBI to AWB. The base fee and the OPI combined will be capped at 3% of GPV
• Effective from October 2001
13
Finance and Risk Management Products
• Opportunities for new financial products being evaluated and pursued
• Growth in risk advisory services to provide business cash flow management for more growers
14
Grain Acquisition and Trading
• Domestic grain and deregulated non wheat export market growth potential
• Investigation of opportunities in global trading in overseas markets
15
Grain Technology
• Focus on the development of a proprietary position in plant genetics and new cereal varieties
– MOA signed with Syngenta
• Undergoing divestment of non strategic assets
– Agrifood Toowoomba
– AWB Seeds Dimboola
– Agrifood Seed Testing Business
16
Supply Chain and Other Investments
• Six new storage and handling sites being constructed in NSW and Victoria
• Chartering restructure providing potential to increase share of wheat volume and other bulk cargoes
• Opportunities for further value chain integration being evaluated with respect to end use processing, distribution and marketing to final consumers
17
1. Continue to dominate and grow business of wheat growers
2. Increase revenue from active management of national wheat pool
3. Increase revenue from the supply chain and other investments
4. Diversify revenue streams by offering products and services to other growers and customers
Summary of our growth strategy as an integrated global grains asset manager
18
Risk allocation
National Pool Underwritten loans Principal trading
• Final net pool return – final sale price– foreign exchange
• Credit risk manage-ment outcomes
• Supply chain costs
Grower risk AWB risk
• Pool return falls below 80%
• Size of pool impacts revenue derived from products and services
• Incentive in pool management fee
• Margin on loans• Underwriting fees• Fees from basis
contracts
• Principal positions• Multi-varietal and fixed
grade contracts
19
Investment highlights
20
Investment highlights
• Significant expertise and scale in global wheat marketing
• One of the largest integrated global wheat managers
• Large existing customer base
• Manager of the Single Desk
• Potential to broaden range of products, services and customers in Australia and overseas
• Strong balance sheet and dividend paying capacity
21
2000/2001 Results Announcement
• 2000/2001 results released on Wednesday 28th November
• Analyst briefing at 2:30pm on 28th November
• Domestic institutional briefings on 29th and 30th November
• Singapore and Hong Kong institutional briefings on 3rd- 6th December
Investor Relations ContactMichael Thomas
Head of Investor Relations03 92092064