GrainCorp Limited

Thank you for standing by and welcome to the Graincorp Limited FY25 results. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Robert Spurley, Managing Director and CEO. Please go ahead.

Good morning, everyone, and again, welcome to the Graincorp results call. This morning we're presenting from Sydney and I start today by acknowledging the Gadigal people of the Eora nation and paying our respects to elders past and present. If I refer you to slide four of the pack for today's agenda, I'll provide some updates to start with including our financial year 25 highlights, strategy and growth, financial performance will be covered by Ian Morrison. We'll update you on the balance sheet and capital management and provide some comments on the outlook ahead. For those following online, I will share with you the page numbers as we go through the presentation. So starting on slide five. Our financial year 25 underlying EBITDA of $308 million was a lift on the prior year. We saw total grain handled of 31.6 million tonnes and recorded a record again in oilseed crush volumes. We've seen improved contribution from our animal nutrition and bulk materials sectors, and it really demonstrates we are controlling what we can in the business. That's especially so given the financial year 25 operating context, which as we updated at the half year, has shown strong global production from all supply regions around the globe, meaning that Australian grain has had to compete for its place in the world. What that means is customers have been subdued in their purchasing behaviour and growers who are experiencing relatively weak grain prices haven't been that willing to sell. It demonstrates again that GrainCorp, given the strength of our result, is responding really well to that global environment. We're finding opportunities and delivering on them where they exist. What that's created for GrainCorp is a really strong balance sheet. We have $321 million in core cash, and including the 24-cent interim dividend, it brings total dividends fully franked for financial year 25 to 48 cents per share. We've also completed $38 million of the $75 million share buyback. I'm going to turn now to page six. This is the numbers slide, and you can all read it more quickly than I can share it with you. It does highlight, though, what I've covered in that introduction. Pretty much across the board in financial metrics, we've seen an uplift on the prior year. with that underlying EBITDA up to $308 million, the underlying net profit up to $87 million, and the strong core cash position of $321 million. Ian will talk you through the drivers behind that and the segment performance shortly. But before doing so, I just want to touch on some other highlights across other areas of the business and provide you with an update on our strategic progress. Moving to slide seven on health and safety, we always strive for zero harm at GrainCorp as a large and operational business that's at the centre of our values and what we do internally. We've, over the last 12 months, strengthened our critical risk frameworks, which has seen reduced critical incidents in areas like confined spaces, mobile plant and bunker management. And I think that highlights the sort of operations that we have across the board. So while it's disappointing to see a slight increase in incidents recorded through the year, our overall trend is in the right direction and we are focused on delivering that zero harm goal in everything we do. On page eight of the presentation, I share with you both the challenges and the opportunity of the climate transition and sustainability. I'd describe it as a real opportunity for the agriculture sector, and GrainCorp sits at the centre of that opportunity, and we're leading in the sector, connecting growers and customers. Over the last 12 months, we've had our near-term targets approved and set through the Science-Based Target Initiative. That results in a 42% reduction in absolute scope 1 and 2 emissions by 2030, with a roadmap in place to deliver that. We've also had scope three forest, land and agriculture emissions approved out to 2034. So to some extent, that defines the challenge. We're demonstrating the opportunity through initiatives like Grain Court Next. For those of you that follow us, I've spoken about that before. It really is an initiative that connects growers with customers around the world and demonstrates our ability to deliver on a low carbon supply chain, principally in our canola end-to-end value chain. It's allowed us to measure on-farm emissions and support growers in that respect. We've demonstrated best technology and practice in operational emissions reduction across our processing assets and logistics, and that's allowed us to engage with end global customers to deliver that opportunity both for growers and grain corp into the future. At the same time, we're making progress in areas like improving our energy efficiency by over 2.5% over the last 12 months, reducing dust and damaged grain to landfill. We've reached a milestone of a million kilograms of tarps recycled, and we've got formalised commitments in the sustainable packaging area. All of those areas and many more are covered in our Sustainability Report for 2025, which has also been released today. And I do commend that report to you to cover, as I said, all of those areas and many more. Moving to page 10. Our grain corp vision and strategy is about delivering sustainable growth through the cycle. We describe that in three key areas around enhance, expand, and evolve in terms of the way we look at growing our business. Perhaps page 11 is a really important way to start looking at that, where we talk about the macro trends that we're exposed to and the macro trends that, quite frankly, provide the opportunity and the positive outlook we have for GrainCorp into the future. We're continuing to see growing demand in population across our key markets across Asia, and our export capability and infrastructure is set up to meet that demand. We're also seeing quite strongly increasing supply on the east coast of Australia as farmers employ technology and innovation to improve their practices over time. The 10-year rolling average for east coast production improvement is at least 2.8% on a compound annual basis. So that increased production also supports the utilization of our assets as we meet that growing demand. BrainCorp's also really well set up and well protected through the diversification of the markets that we operate in. I think that's demonstrated really well in the top right-hand side of page 11. And another trend we're seeing across Asia in particular in the emerging economies is that real growth and demand for nutrition and protein and our animal feed business is exposed and aligned to the benefits that that trend is delivering. I'm going to cover page 12 fairly quickly because over the next few slides I'll go into some details and some examples on how we're delivering on enhance, expand and evolve. We have invested in our country network and our business more generally. We're seeing growth from the investment we've made in animal nutrition and across our nutrition and energy business more generally. And we continue to progress our business transformation and deliver benefits from that. And I look forward to sharing those with you shortly. Moving to page 13 to look at that enhanced area and the investments and improvements we're making in our upcountry network across our agribusiness. At the half year, we spoke about the rail upgrades at Kindoblin and the benefits that brings in terms of the efficiency of sites like that. It's one of several examples across the network. Over the second half and ahead of the harvest that's now underway, we've completed a $5 million upgrade at our Burren Junction site. I was in northern New South Wales last week and it was great to see those bunkers in operation and the opportunity that provides to receive more grain from growers in that region. It improves our segregation and storage capacity and improves the service and value that we can provide to growers and then pass through our network. We've also improved turnaround times and capabilities ahead of this harvest with $8 million invested in new grain stackers. Just for those that aren't familiar with the operation of our business, a grain stacker allows us to more efficiently unload growers' trucks and put it on our bunker storages. The ones we've got improve efficiency, improve the truck turnaround time, and provide greater mobility of assets across our East Coast network. So as the harvest rolls south, we'll be moving that equipment around so that many growers across our network benefit from that investment and improvement. Again, when I was in northern New South Wales last week, it was great to talk to growers and hear the positive feedback on their experience in response to those new investments. On page 14, at the last year's annual result for the first time, we shared with you and disclosed the contribution margin from our bulk materials business, demonstrating the diversification and utilization of our extraordinarily valuable port assets. I'm delighted to share with you today that that progress has continued, with contribution margin increasing to $41 million through 2025. We share with you that our focus in the future continues to be on disciplined investment in that infrastructure to further increase efficiencies and free up capacity to expand our customer relationships and pursue opportunities that improve the mix and marketing of the non-grain products we handle through our ports. Throughout 2025, we've been undertaking a strategic review of our Grains Connect joint venture in Canada. The update on that is shared on page 15, and as a result of that ongoing review, we have taken an impairment of $26 million in the carrying value of that asset. We do expect to provide a further update in the first half of 26 on our strategic review, but we would comment that over the last several years, Canada as a market has experienced some difficult and challenging trading conditions. Domestic capacity and expansion alongside the global margin environment has impacted end-to-end margins in that market. And whilst we're pleased on an ongoing basis with the operational performance and quality of our assets and the fact that the current season shows signs of improvement, we are keen to ensure that we operate that business and set it up for success in the best interests of GrainCorp shareholders into the future. As I said, we'll provide an update over the first half of 26. Moving across to page 16, this really is about expand and it highlights the investment and the growth in our nutrition and energy portfolio. Not only are we seeing the growth there in the results already, we're setting ourselves up for future growth through investment in our integrated value chain. We're undertaking improvements in our oil edible oil refining capability, our West Footscray Foods plant. That will lower operating costs and improve product quality for customers. It will also reduce greenhouse gas emissions and represents an investment of between $25 and $30 million phased over financial year 26 and 27. We've spoken several times over recent result periods about our focus on the animal nutrition area, and I'm pleased to report that sales have increased between 21 and financial year 25 by 83%, from 390,000 up to 713,000 funds. So not only are we seeing the bottom line impact of that flow through earnings, but it is underpinned by really strong fundamentals and growth and volume, including our acquisition of the XFA business, which continues to outperform its business case. and the expansion of that in our existing liquid feed and dry lift business provides opportunities for the future. In agri-energy, as you all know, we are in an MOU with Ampol and IFM, and we've been working closely with our partners on developing the end-to-end value chain for the development of feedstocks into biofuels in Australia. The recent federal government commitment of $1.1 billion to the Cleaner Fuels Program and $250 million to the Made in Australia Program demonstrates the improving environment and the confidence we have in our strategy in that area into the future. Moving to our business transformation program, much of which was initially focused around our nutrition and energy business. I'm pleased to share with you today some further detail on the benefits that we see from that program, but I just want to recap on the rationale for the program first. It is a business-wide transformation designed to unlock efficiencies and drive value across our integrated value chain. It includes an opportunity to address an end-of-life version of SAP and delivers a stronger business for the future. Where we're at in the program is about 90% of the build of the technical aspects are complete, which means we're moving into the testing and deployment phase. The progress has been slowed and had some challenges, but remains on track to complete now in the second half of 26, rather than the initial planned first half of 26. What that means is a slight increase over our previous estimate of $15 million in the cost for the program going forward. So although it's being de-risked, that slightly extra time is adding to the cost, but we're confident in our progress in the year ahead and the de-risking we've been able to achieve. In parallel, we've been working on the benefits that the program will achieve, and I'm pleased to share with you today the targeted run rates for the end of financial year 26 and the benefits beyond that. The early stage benefits we're seeing starting to flow are estimated to be 5 to 10 million by the end of 26 and are focused on areas like labour productivity and procurement savings initially. What we're seeing is the benefit of the overall end-to-end program, identifying opportunities and those flowing through to that commitment of 20 to 30 million in uplift as the program completes. At this point, I'm going to hand it across to our CFO, Ian Morrison, who will talk to you through the financial updates and performance. Thanks, Ian.

Thanks, Robert, and good morning, everyone. I'll start on slide 19 and summarize financial performance for FY25. At a headline level, our agribusiness segment is up from $162 million last year to $218 million this year. largely off the back of improvements in East Coast Australia crop production, which I'll touch on more shortly. In our nutrition and energy segment, that's slightly down year on year, and that's mainly as a result of lower crush margins. Other headlines, as Robert noted before, and we have recorded a non-cash impairment of 26 million relating to the investment in Brains Connect Canada. Last item I'll just touch on briefly on this slide is net interest costs. So they are up year on year, and that largely reflects higher commodity values on our, and volumes off the back of our commodity inventory funding. So now I'll move on to slide 20 to provide further detail on the agribusiness segment, and in particular starting off with East Coast Australia business. So as I touched on, we did see total ECA crop production of 34.7 million tonnes in FY25, increasing from the 26.1 in the prior year. And a feature of that crop production was stronger production in the north, in Queensland and northern New South Wales in particular, partly offset by lower production in Victoria. In terms of total grain handle, that led to a result of 31.6 million, up from 28 million in the prior year. Carry-in into FY25 of 2.5 million supported that, but that was lower than the carry-in coming into FY24 of 3.9 million. A feature of the result that we talked to back at the half-year was the opportunity the business took to really capitalise on better margins across commodities, including chickpeas and canola seed in particular. So that was really good opportunities captured by the business. A key element I just wanted to touch on in the results as well is the impact of the crop production contract. So the total impact of the P&L is $41 million in the results, and that's including the $6 million annual premium payments. And the overall cash impact was a payment of 58 million under that contract. But the key highlight to call out, though, is that that payment in FY25 means that we have reached the total cap under the contract. And so that means for the remaining four years of the crop production contract, there will be no net payments by Grain Corp. And we still of course, do retain the opportunity under the contract in the downside prediction in the event of a drought. And so, from an overall perspective, that leaves us in a strong position with the protection of that contract. And lastly, as Robert touched on earlier, really pleasing performance in our bulk materials business with our continued trajectory of improving contribution margins. I'll now move on to slide 21. and touch on our international business. So starting off with Western Australia, we did see a strong increase in crop production in WA this year with a 55% increase on the prior year and well above the five-year average also. But the global conditions we've seen did negatively impact margins out of that market. That's with the strong competition from many other regions. So we did see a decrease in earnings out of our international business, and in particular, WA this year. And as Robert touched on earlier, we've continued to see those challenging conditions expedient out of Canada, partly off the back of those strong global production conditions limiting opportunities, but also some of the specific factors within Canada also. I'll now move over onto slide 22, and our nutrition and energy segment. Our crush volumes reached another record in FY25 with total volumes of 557,000 tons, up 3% on the prior year. And that reflects good focus on operational efficiencies. And a key feature this year was really good restart time from the annual maintenance shutdown we have at our Newmarket plant. In terms of crush margins, as we touched on earlier in the year, they have been below what we've seen in recent years, and that's been impacted from a few factors, partly the smaller Victorian canola crop with the weaker crop conditions in southern regions, but also strong global supply from a large soybean crop we've seen in a number of regions. And then the last item to touch on here is we did ceased processing of edible oils at an East Tamaki plant this year following the strategic review in FY24, and have consolidated manufacturing into a West Footscray plant in Melbourne. Over the page on 23, animal nutrition has been a real highlight in the results with strong growth in volumes, as you can see in the chart on the right. That, of course, is benefiting from a full 12-month run rate of the XFA acquisition we completed last year compared to six months in FY24, but underlying sales volumes also grew across our pre-existing business, which was pleasing to see. And then from an XFA business point of view, that delivered a 12-month run rate EBITDA of $14 million, and that continues to outperform the business case and continues to support investment we continue to make in that segment overall. And then just touching on agri-energy, volumes remain strong and similar to prior year with good volumes across both tallow and used cooking oil. But renewable fuel feedstock demand has continued to be impacted by some of the uncertainty around U.S. biofuel policy, and that has had has had a modest impact on margins year on year. I'll now just move on to slide 24 on corporate costs. Underlying corporate costs are in line with the prior year, and we continue to stay focused on disciplined cost management. And then in terms of spend on growth projects, that continues to mainly represent our ongoing work on the oilseed crush feasibility. The business transformation costs noted on this slide are the OPEX costs of 30 million, and that increase year-on-year is, of course, as we've moved from the design phase during the course of FY24 into implementation this year. I'll now move to balance sheet and capital management, starting off with slide 26. So we finished this year with a strong core cash position of 321 million. That's up from 296 million at the half year and slightly down from the 337 million at last year end. Also, just touching on the slide, we took the opportunity recently to extend the maturity of our term date from March 27 out to November 2028. And that's on the principle of 150 million, which remains unchanged. Overall, our balance sheet is in a very strong position, which allows us to continue investing for growth and also providing strong returns to shareholders. Now moving on to CapEx on slide 27. The total capital expenditure of $77 million in FY25 includes sustaining CapEx of $59 million. That sustaining CapEx is slightly above the target range of 40 to 50 million, and that just reflects higher spending in an above-average crop year, partially on investments across our upcountry assets that Robert touched on earlier, but also in areas like tarpaulins with those higher volumes we saw in FY25. We are also anticipating to see CapEx higher in FY26, and that's partially as a result of the upgrade we're undertaking at our Westwood Square plant in relation to edible oil refining capability. On the right-hand side, DNA is broadly in line with FY24 and continues to stay steady. Now moving on to shareholder returns on slide 8. Slide 28, as Robert noted earlier, the board has declared a final dividend of 24 cents per share, fully frank. made up of an ordinary dividend of 14 cents per share and a special dividend of 10 cents per share. This takes total dividends in FY25 to 48 cents per share, and that's in line with the previous year. Also during the year, we completed 38 million of the previously announced 75 million share buyback. And overall, this year continues our strong record of capital management and positive returns to shareholders. We'll continue to assess capital management against growth opportunities across the business in line with our capital management framework. On that note, I'll now hand back to Robert.