andrew lindberg managing director content: result highlights financial performance (cfo) business...

Andrew LindbergManaging Director

Content:

• Result highlights

• Financial performance (CFO)

• Business streams

• Global wheat market & outlook

2003 Half-year results impacted by drought

• Net profit after tax of $29.9m, down 61%

• Total operating revenue of $1.03b, down 34%

• Earnings per share of 10.9 cents, down 61%

• Interim dividend of 14 cents per share

• Drought impacted wheat crop of 9.7 million tonnes

• Loan book peaked at $1.6b in December 2002

• Gross Pool Value at $1.3b

Paul InglebyChief Financial Officer

Content:

• Statement of financial performance

• Cashflow

• Capital expenditure

• Statement of financial position

Statement of financial performance

$million

For the 6 months ended

31-Mar-03


31-Mar-02 Change

Revenue from ordinary activities 1,030.3 1,559.7 (34%)

Cost of sales (883.0) (1,354.1) (35%)

Borrowing costs (42.7) (42.3) 1%

Depreciation & amortisation (12.2) (5.6) 118%

Other (52.4) (50.4) 4%

Share of net profit of associates 2.8 1.9 47%

Operating profit before tax 42.8 109.2 (61%)

Net profit 29.9 77.1 (61%)

Cashflow$million


31-Mar-03

Operating profit before tax 42.8

Tax paid (39.2)

Depreciation & amortisation 12.2

Working capital changes 19.3

Increase in net cash & short term deposits (195.1)

Purchase of non-current assets (49.1)

Purchase of investments (121.7)

Dividends paid (30.2)

Net new equity 1.9

Decrease in loan book 250.1

Increase in debt (109.0)

Capital expenditure

$million


31-Mar-03


31-Mar-02 Change

Grain centres construction 40.7 8.6 373%

System Development &

Other Plant & Equipment

8.4 18.3 (54%)

Total 49.1 26.9 83%

Depreciation 12.2 5.6 118%

Statement of financial position$million As at 31-Mar-03 As at 31-Mar-02

Assets

Cash 61.9 11.7

Receivables 1,721.3 2,987.1

Investments 381.8 109.9

Inventories 310.8 169.3

Property, plant & equipment 206.9 126.2

Other 52.8 18.4

2,735.5 3,422.6

Liabilities

Payables 121.1 188.6

Interest bearing liabilities 1,746.6 2,355.8

Provisions 8.8 47.3

Other 43.1 41.5

1,919.6 2,633.2

Net Assets 815.9 789.4

Business operations

$million


31-Mar-03


31-Mar-02Change

Pool Management Services 8.3 1.8 361%

Grain Acquisition & Trading 15.0 52.5 (71%)

Grain Technology (2.5) (0.9) 178%

Supply Chain & Other Investments 2.8 22.5 (88%)

Interest expense (18.6) (10.4) 79%

Finance & Risk Management 35.5 50.7 (30%)

Corporate 2.3 (7.0) 133%


Net profit after tax 29.9 77.1 (61%)

Opportunities to develop markets

As part of AWB’s strategic objective of strengthening its core wheat business, AWB is using its competitive advantage to develop various markets, including:

Egypt Tanzania Morocco

Egypt – record volumes in 2001-02

• AWBI achieved the highest volume sold to the Egyptian market since 1992-93 for the 2001-02 AWB National Pool

• Driven by record sales to the General Authority for Supply Commodities (GASC) with the highest volume sold since 1992-93.

• Sales to GASC consistently out-performed the WIB

• Australian market share has significantly increased from 16% to 24% since 1992-93, whilst US market share declined from 72% to 55%

• AWBI shipped over 1 million tonnes ASW to GASC versus the nearest competitor grade, SWW, where only 120,000 tonnes was shipped

Tanzania – exclusive supply agreement

• AWBI successfully negotiated a long term supply commitment for 2003 with the largest miller in Tanzania, Said Salim Bakhresa & Co. (SSB) which represents 80% of the domestic Tanzanian market

• This agreement strengthens the relationship between the two organisations to incorporate other revenue opportunities such as chartering and joint venture opportunities

• The benefit for SSB is that they have secured supply for their mills and logistics to their silos and can focus on other areas of their business

• The benefit for AWB is that the maximum tonnage allocated to the market is secured to a strategically important long term customer

• AWBI has shipped over 200,000 tonnes which would have previously been imported from the US, Canada and Argentina

Morocco – seven continuous shipments

• AWBI has successfully entered Morocco with seven continuous shipments of APW

• 200,000 tonnes have been shipped which would have previously been imported from Canada

• AWBI intend to target Morocco again and continue to build on this success with the expectation of a larger Australian wheat crop for the 2003-04 season

Business operations

$million


31-Mar-03


31-Mar-02Change

Pool Management Services 8.3 1.8 361%

Grain Acquisition & Trading 15.0 52.5 (71%)

Grain Technology (2.5) (0.9) 178%

Supply Chain & Other Investments 2.8 22.5 (88%)

Interest expense (18.6) (10.4) 79%

Finance & Risk Management 35.5 50.7 (30%)

Corporate 2.3 (7.0) 133%


Net profit after tax 29.9 77.1 (61%)

AWB will continue supplying Iraq

• Wheat supply is continuing via the UN Oil-For-Food program under direction from the World Food Program

• Indications are that the UN Oil-For-Food program, or similar will be extended beyond 3rd June 2003 and the UN and the US administration will continue to honour contracts previously awarded

• Australian wheat is widely used and recognised throughout the Middle East region as a clean quality white wheat

• Australia has been supplying Iraq with this wheat for more than 54 years. AWB expects to retain a strong market share in Iraq in the future

Global supply and demand

• 2003-04 world wheat production

is forecast to rebound strongly

following a 5% fall in 2002-03

due to limited production in

Australia, Canada and US

• Carryover stocks are at

relatively low levels,

representing approximately

three months supply.

• Production in other major

exporting countries are forecast

to increase

530

540

550

560

570

580

590

600

610

620

2000-01 2001-02 2002-03(f) 2003-04(z) 2004-05(z)

(mt)

0

50

100

150

200

250(mt)

World Production

World Consumption

World stocks (ending)

(f) = forecast. (z) = projection. Source: ABARE 2003

Global export market share 2003-04

EU15% Canada

14%

Argentina9%

All other20%

Australia16%

USA26%

• Australian, Canadian and US wheat crops expected to rebound significantly

• 2003-04 total exports by major exporting countries forecast to increase to 79.3mt, an increase of 17mt from 2002-03

• Major wheat exporting countries continue to face competition from non-traditional exporters in 2003-04

(above figures are forecasts). Source: USDA May 2003

Non-traditional exporters• Non-traditional exporters have increased their export program over the last

two years due to good production, large carryover stocks and increased investment in transport and infrastructure

• However, some of these exporters will produce significantly lower tonnage in 2003-04, reducing total exports by non-traditional exporters to only 13.2mt compared with 34.9mt in 2002-03

0

2

4

6

8

10

12

14

(mt)

Russia Ukraine Kazakhstan EasternEurope

India Pakistan

2001-02

2002-03(e)

2003-04(f)

(e) = estimate. (f) = forecast. Source: USDA May 2003

Outlook• AWB is forecasting full-year NPAT result in the range of $40-

$45m

• AWB has forecast 2003-04 wheat production between 22-24mt, around 10-15% above the 5 year average. The 2002-03 El Niño is officially finished

• Stable dividend payment for 2002-03 despite reduction in earnings. The Board intends to maintain a stable dividend policy

• Strategic investment in Futuris Limited

• Capital management and ring fencing

• Expand Finance and Risk Management products

• Further growth and diversification – aim to be less than 80% reliant on the wheat crop by end of 2004

QUESTIONS

For more information contact:

Delphine Cassidy

Head of Investor Relations

Ph: +61 3 9209 2404

Email: [email protected]

www.awb.com.au

andrew lindberg managing director content: result highlights financial performance (cfo) business...

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