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Macquarie Securities Conference. 5 th May, 2005. AWB - a snapshot…. Australian Wheat Board created in World War I, privatised in 1999 and listed as AWB Limited (AWB) on Australian Stock Exchange in August 2001

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Macquarie securities conference

Macquarie Securities Conference

5th May, 2005

Awb a snapshot

AWB - a snapshot…

  • Australian Wheat Board created in World War I, privatised in 1999 and listed as AWB Limited (AWB) on Australian Stock Exchange in August 2001

  • Market capitalisation of $1.5 billion; revenues of $9 billion (including Pool revenue) and shareholder funds in excess of $1 billion

  • Consistently out performed the S&P / ASX 200 since listing

  • Markets wheat to more than 50 countries

  • Australian footprint includes more than 430 outlets across Australia with a spread of more than 2,700 staff reaching about 100,000 farmers

What we are today

100,000 customers




















& Insurance


loan book


on deposit



2,700 employees

431 outlets

What we are today …




Business characteristics

Business characteristics…

Business characteristics1

Business characteristics…


Our scorecard to date

Our scorecard to date…

Return on average equity*

Net Profit* & Production volume

Earnings per share* & Dividend per share

Share price since listing

*Pre goodwill & amortisation

What we have achieved

What we have achieved…

  • Acquired Landmark in August 2003 for around $825 million enterprise value:

    • Integration of Landmark 95% complete

    • EBIT enhancements for 2003/04 of $13 million exceeded target of $5-10 million. On track to achieve $20 - $25 million this year.

  • Established fertiliser joint venture – ELF

  • AWB constructed 21 grain centres with a total capacity of over 3 million tonnes

  • Strategic focus on customer management, introduction of CMS system

  • Successful development of international business – Geneva, India

  • Sold 2.5 million tonnes to China, the first significant sale since 1996

  • Positioned to tap into growing Asian markets

  • Progressive business expansion

Awb strategy

AWB Strategy

A solid foundation to our strategy

Leading position in Australian rural services

People and Capability

Leading rural financial services and insurance provider

Australia’s leading global grain trading business

A solid foundation to our strategy

To be Australia’s Leading Agribusiness

AWB’s overarching goal is to implement anIntegrated Business Model...

Three growth areas

Three growth areas…

  • Fertiliser and merchandise are the main areas targeted for growth

  • Cross selling

  • Leverage buying power in the network

  • Improve merchandise and supply chain effectiveness

Leading position in Australian rural services

  • Increase product base – build on AWB’s natural advantage to provide a wider range of products, better interest rates, and streamline credit processes

  • Specific areas targeted for growth include lending, deposits, wealth management and general insurance

Leading rural financial services and insurance provider

  • Continue to focus on mandate to maximise grower returns

  • Expand the suite of commodities, origins and risks managed

  • Strengthen the differentiated position for Australian wheat

Australia’s leading global grain trading business

The way ahead

Strengthen core business, in particular preserve and enhance the value of the Single Desk system

Grow and diversify to improve the quality of the earnings base and reduce wheat harvest volatility

The way ahead…

“To be both the primary producer’s and end-use consumers’ business partner of choice”

  • Acquisition expected to achieve target 15% ROE by FY2005

  • EPS accretive in FY 2004 and by more than 35% in FY2006

  • % of PBT not related to Australian wheat: >20% in 2004/05

  • Landmark will diversify AWB’s earnings base and reduce volatility of AWB’s earnings

  • AWB Group will achieve 15% ROE in the medium term

Financial objectives

Financial objectives…

Return on equity

- Achieve 15% return on equity for the AWB Group in the medium term

Solid EPS growth

- Landmark acquisition to be more than 35% EPS accretive (pre-goodwill, post synergies, post one-off costs) by 2005-06

Stable dividend payment

- Expect to maintain dividend payment at current levels for 2004-05

Improve quality of earnings

- Reduce exposure to crop by achieving more than 20% of PBT not related to Australian wheat by 2004-05





  • 2004/05:

  • Forecast comparable earnings to previous year


Wheat Crop:

  • Assuming normal seasonal conditions, wheat production expected to average around 22-23 million tonnes

  • Conditions in WA very good at present

  • SA, VIC, NSW and QLD remain largely dry and experiencing delayed planting

    Broader Agricultural Market:

  • Lamb prices set to remain positive with increased demand from export markets

  • Beef prices tipped to tail off with increased export competition from North and South America

  • Promising rural Real Estate market

  • Strong medium term growth for Financial Services business

  • Reduced commodity prices expected to impact Rural Services business

Going forward

Going forward…

  • Despite a difficult outlook, we are confident that Australian agriculture can be globally competitive

  • We have “comparative advantage”

    • Freight advantage to Asian region

  • Progress on trade reform will improve market access

  • AWB and Landmark can continue to capitalise on opportunities with our business model

  • Supplementary information

    Supplementary Information

    Global wheat market

    Global wheat market

    • Australia is the most export oriented grains industry in the world

      • Changes in the global wheat market impact directly on the Australian wheat industry

    • Traditional wheat exporters are increasingly under threat from new exporters, particularly Eastern Europe and South America

    • The number of companies involved in wheat and grain trade has shrunk, with a handful of multinational conglomerates dominating world grain trade

    • Developing countries now make up the majority of Australia’s customers

      • These countries (particularly in Asia) are undergoing rapid economic development, contributing to the substitution of rice for wheat-based products

      • Following major food scares around the world, the developed world is becoming more discerning

    World wheat production and consumption

    World wheat production and consumption

    Source: USDA

    Major wheat exporters

    Major wheat exporters

    Source: USDA

    Australia poised for continued success in the global market

    Australia poised for continued success in the global market

    • Australia’s grain industry is well poised to meet changes in the global market:

      • National acreage sown to wheat is continuing to rise, in contrast to other countries such as the US where wheat acreage is in decline

      • Australia’s share of the global market has been increasing

      • Australian growers are producing a better quality and more specialised crop

      • AWB sells a differentiated product tailored to meet the needs of its customers, eg. selling over 4 million tonnes of wheat as targeted or niche products in Asia alone

      • National Pool marketing strategy is focused on Asia, aiming to have 65% of AWB’s wheat export program going to Asia by 2009

    Macquarie securities conference

    For more information contact:

    Delphine Cassidy

    Head of Investor Relations

    Ph: +61 3 9209 2404

    Email: [email protected]

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