Full Year 2024 Graincorp Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Apoorv Sehgal - UBS - Analyst : First question, just on the Nutrition and Energy segment. If we look like the second half EBITDA of about $58 million, like how close is that number to now sort of a fully rebased normal go-forward kind of EBITDA for a half year, especially just taking into account as well that I think the result for the full year does have $10 million of the East Tamaki losses and costs? So presumably, that $10 million number sort of doesn't repeat in '25?

Question: Apoorv Sehgal - UBS - Analyst : Got it. And just on the transformation program, I just wanted to sort of check a couple of things. In terms of like the total costs, am I right in saying it's about $90 million to $100 million as in you've got $25 million in FY24, plus a further $50 million to $60 million for Release 1 that's coming and then plus $15 million for Release 2 because that's the same as Release 1. So is that -- am I reading that right, $90 million to $100 million as a total over a couple of years?

Question: Apoorv Sehgal - UBS - Analyst : Yes. No, sorry, I misread the Release 2 line. The $20 million to $30 million EBITDA benefit, is that kicking in kind of after program completion? So we're thinking like FY27 is really when that starts? Or do you get some sort of benefit earlier? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 13, 2024 / 11:00PM, GNC.AX - Full Year 2024 Graincorp Ltd Earnings Call

Question: Apoorv Sehgal - UBS - Analyst : Yes. And just one final quick question. The vast majority of the overall spend here is operating expenditure, [rather than] CapEx.

Question: Owen Birrell - RBC Capital Markets - Analyst : I just wanted to dive a little bit deeper into that Nutrition and Energy business, obviously, sort of a new segment for us to sort of delve into. The volume trends looked quite positive year-on-year, but I noticed that the earnings have really sort of come under pressure. And I'm assuming that's largely pricing and margin led. Just wanted to get your views on the current margin environment and whether you think the current margins that we're seeing at the moment are, I guess, mid-cycle, bottom cycle. Like just where should we kind of get a sense of where the margins are for each of the different sub businesses?

Question: Owen Birrell - RBC Capital Markets - Analyst : And just in terms of, I guess, where you're seeing some of the pricing at the moment, are we at that mid-cycle? Or are we seeing some weakness coming through the markets?

Question: Owen Birrell - RBC Capital Markets - Analyst : Okay, that's great. Thank you.

Question: Owen Birrell - RBC Capital Markets - Analyst : Maybe another question for me. Just in terms of the outlook for the Victorian canola crop, you said it was going to be down 25% year-on-year. Does that suggest that your canola seed pricing is going to be somewhat higher than what you would normally see?

Question: Owen Birrell - RBC Capital Markets - Analyst : Great, thanks.

Question: John Campbell - Jefferies - Analyst : Just around the comments around sort of global grain production putting competitive pressure on margins. And Ukraine, I think historically, has been circa 10% of global production. And, obviously, the conflict in Ukraine has drove pricing up to high levels. It's come back a fair bit for most grains. But if by chance that conflict starts to settle itself out, could that potentially add significant production back into the system? Or are we really already seeing Ukraine back online as a normal supplier?

Question: John Campbell - Jefferies - Analyst : That's really helpful. Just one last question, if I could. Just around the SAP end-of-life effectively modernizing the systems. I mean, can you just sort of give us a quick view on the risks around SAP replacement? I mean, we've all heard horror stories about SAP implementations and reengineering. I mean, do you see it as a particularly high risk from a GrainCorp perspective?

Question: John Campbell - Jefferies - Analyst : Great. Thanks very much for that, Rob.

Question: James Ferrier - Wilsons - Analyst : Can I, first of all, ask you about the GrainsConnect business and what your updated view is there on the outlook for that business, its current earnings

Question: James Ferrier - Wilsons - Analyst : Thanks, Rob. Second question I wanted to ask about was the Agri-Energy part of the business and what your outlook or what your expectations are for the outlook into FY25, particularly around pricing for UCO and tallow?

Question: James Ferrier - Wilsons - Analyst : And then last one for me, and I appreciate your earlier comment that every harvest is different. But did I hear you describe this current harvest as tracking earlier? I mean, I'm just sort of -- perhaps I didn't pick it up, but whether you're referencing that to sort of earlier than normal or earlier than last year and how you'd phrase that up?

Question: Ben Wedd - Macquarie Research - Analyst : Just sort of looking at the balance sheet there, and congratulations on the strong core net cash position again. Can you sort of talk us through how you're thinking more broadly about some of the growth opportunities, particularly with the feeds business, take the XF Feeds acquisition that you completed this year? But sort of what else is there in the environment that you can see that gets you interested in that space?

Question: Ben Wedd - Macquarie Research - Analyst : Yes. Great. And then maybe just a follow-on from that question. I appreciate the dividend announcement today and healthy level of capital returns to shareholders. But with the sort of Agri-Energy CapEx being sort of many years down the road, do you think there's scope for further capital management and utilization of the balance sheet in that regard?

Question: Scott Ryall Ryall - Rimor Equity Research - Analyst : I was -- just two quick ones from me. In terms of the non-grain business that you've given us a little bit more color on today and I appreciate that. I wonder if you could just refresh us on what you believe is your competitive advantage and how big the opportunity you think is just in terms of utilizing the spare capacity that you have and smoothing out the earnings that you've spoken to?