SIA Presentation
Andrew Lindberg
Managing Director
17th March 2004
Overview
• About AWB
• Landmark
• Growth Opportunities
• Outlook
• Questions
About AWB• AWB Limited is Australia’s leading
agribusiness and one of the world’s largest wheat managing and marketing companies.
• AWB is the exclusive manager and marketer of all Australian bulk wheat exports.
• With the acquisition of Landmark, AWB now offers a unique one-stop shop for Australian farmers. Landmark provides customers with rural merchandise, livestock, wool marketing, agronomy, insurance, real estate and rural financial services. It has 100,000 customers, 2,000 employees and 430 offices around Australia.
Market Cap: A$1,636 million (A$4.84 @ 16/03/04)
Shares on issue: 338 million
Shareholder’s equity: A$932 million
(as at 30/09/03)
Listed on ASX: 22 August 2001
Index inclusion:S&P / ASX 100
(75% weighted)
Average daily volume: 417,000 shares (average since listing)
AWB Evolution
2001 Listed on ASX
1999 Privatised
1998 Corporatised
1989 Domestic market deregulated and
Wheat Industry Fund established
1939 Australian Wheat Board established as a statutory authority
— Wheat Industry Fund converted to B class shares
— A class shares issued to wheat growers
— Government guarantee of AWB borrowings removed
2003 Landmark acquisition
Landmark acquisition is consistent with AWB’s strategyVision: “Australia’s leading global manager of agricultural commodity assets and
services”
Australian other grains
Australian other commodities
Australian wheat
International wheat
International other grains & commodities
Producers Relation-
ships
End-users Relation-
ships
Rural Services
Agricultural inputs and technology
Finance & Risk Mgmt.
Acquisition & Trading
Supply Chain
Milling & Processing
Pool Mgmt.
Val
ue
add
ing
pro
du
cts
an
d s
ervi
ces
Agricultural Commodities
In
teg
rate
d V
a lu
e C
ha i
n
Shipping
Landmark
Landmark strengthens AWB’s core wheat business & achieves substantial diversification in rural & financial services
• Integration, synergy benefits and building of growth platforms is a major focus in 2003-04
• Landmark distribution network and Rabobank relationship are growth enablers in Financial Services
• AWB will continue to strengthen its grain business by seeking arrangements with bulk handlers allowing competitive access to ports and by securing end user demand
• Strong focus on cost and capital management will help prioritise business opportunities, whether in existing business streams or beyond
The acquisition of Landmark creates a unique ‘one stop shop’ for the farmer
Enhanced access to global markets for Australian agriculture • Access to over 40 countries around the world
Cross-selling• Cross-selling of products and services to farmers and international customers
Supply chain cost savings• Consolidation of procurement functions
• Leveraged logistical capability
Overhead cost savings• Consolidation of AWB and Landmark head office and network functions, where
appropriate
AWB and Landmark
•Acquisition of Landmark dramatically expands AWB’s foot print across rural Australia:
• Better able to service customers and complement Single Desk marketing/risk management activities
• Platform to leverage growth for AWB financial services business
AWB office locations (49)
Landmark outlets (430)
Distribution Network
Growth Opportunities
• Environment becoming increasingly competitive‑ Traditional players – NAB, Rabo
‑ Others players– Westpac, ANZ
‑ AWB product enhancements for 2003
• Performance & take up rates‑ 70% market share
‑ Majority Harvest Loan, but other product use increasing
• Cross sell opportunities between AWB & Landmark‑ Product bundling
‑ Landmark finance staff to sell AWB Harvest Finance
Harvest finance market
The financial services opportunity
Segment ‘C’
5,000 Corporate Enterprise$8b loans
Segment ‘B’65,000 SME agribusiness
customers$20b loans
Harvest finance to grain growers
Small<$200k
Finance to all agribusiness
Medium$200k-$1m
Large>$1m
Turnover
‘Farmers’ ‘Corporations’
Product set
Segment ‘A’30,000 Grain / Broadacre
$2b loans
$30b of agribusiness lending in three broad segments
Source: ABARE, ABS, RBA, APRA, Jun 2002. Neil Clark & Assoc.
Competitive opportunities
Competitors vary in their primary focus
Profitability HighLow
Small
Large
Value Proposition #2:Finance led
Major BanksRabo
ERB
Oppor-tunity 1
Oppor-tunity 2
• 60 RFM/RFO’s• Understanding of
agribusiness risk• Rural distribution• Product bundling• Brand appeal to
agribusiness• Balance sheet
strength, funding, liquidity capacity
Value Proposition #1:Commodity led
• 300 agronomists• Broad product range• Rural distribution• Product bundling• Brand appeal to
agribusiness• Balance sheet
strength, funding, liquidity capacity
Landmark
Regionals
Growth in Agribusiness lending
0
10
20
30
40
50
1997 1998 1999 2000 2001 2002 2003(f) 2004(f)2005(f) 2006(f)
10% CAGR
$Bn’s
Source: ABARE, ABS, RBA, APRA, Jun 2002. Neil Clark & Assoc., Bank Annual Reports. (f) = forecast
CAGR: Compound Annual Growth Rate
Outlook
AWB is well positioned for 2003/04• Increase in Crop size
- Australian wheat production rebounds to approximately 25 million tonnes
- Positive impact on business streams
• Growth Potential in Financial Services & Insurance
- Four Pool Payment Options available this year; forecast 70% take up of total tonnes available for these options
- Cross selling between AWB Loan products and Landmark products to customers has commenced
- Insurance will benefit from the integrated business model, mainly via cross selling to AWB growers
• Fully Operational Grain Centres
- All 21 Grain Centres are operational
- AWB GrainFlow has received more than 1.8 million tonnes
• Strong Chartering Business- Pool tonnes chartered to double in 2003/04
• Rebound in merchandise and fertiliser
- Demand for farm inputs and fertiliser expected to recover due to increased availability of land after the heavy de-stocking during drought.
- Merchandise and fertiliser earnings to be at least 10% higher than previous year
• Slower recovery on livestock
- Due to major de-stocking during drought, it will take a few years to recover to pre drought levels
- However, livestock prices forecast to increase by at least 5%
2003-04 NPAT forecast is $110-$120 million(pre goodwill amortisation, including one off costs)
Questions