Q2FY23_Results-Presentation.pdf
- 1. Q2 & H1 FY23 Performance Presentation November 2022
- 2. 2 Presentation for Second Quarter ended 30th September 2022 This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of UPL Limited (UPL) and certain of the plans and objectives of UPL with respect to these items. Examples of forward- looking statements include statements made about our strategy, estimates of sales growth, future EBITDA and future developments in our organic business. Forward-looking statements can be identified generally as those containing words such as “anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will likely result”, “forecast”, “outlook”, “projects”, “may” or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, domestic and global economic and business conditions, the successful implementation of our strategy and our ability to realize the benefits of this strategy, our ability to develop and market new products, changes in legislation, legal claims, changes in exchange and interest rates, changes in tax rates, raw materials and employee costs, our ability to identify and complete successful acquisitions and to integrate those acquisitions into our business, our ability to successfully exit certain businesses or restructure our operations, the rate of technological changes, political, economic and other developments in countries where UPL operates, industry consolidation and competition. As a result, UPL’s actual future results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. For a discussion of factors that could cause future results to differ from such forward-looking statements, see also Risk management, of our Annual Report. Safe Harbor Statement
- 3. 3 Presentation for Second Quarter ended 30th September 2022 Note: All changes are year-on-year basis i.e., Q2 FY23 vis-à-vis Q2 FY22 Q2 FY23 Business Highlights – Solid Growth in Revenue and Profitability ₹ 12,506 Cr Revenue ₹ 2,768 Cr EBITDA ₹ 5,324 Cr Contribution +18% Vol.-7%, Price +21% FX +4% +35% Margin: 22.1% +27% Margin: 42.6% +28% ₹ 813 Cr Net Profit • Robust revenue growth led by significant pick-up in realizations across regions and favorable FX. Consciously focused on achieving improved product mix, portfolio rationalization and negotiating better credit terms • Contribution profit rose by 27% YoY (contribution margins expanded by ~290 bps) led by higher realizations and better product mix • EBITDA margin improved by ~278 bps YoY driven mainly by robust growth in contribution profit • Strong bottom-line expansion (+28% YoY) despite higher finance and hedging costs
- 4. 4 Presentation for Second Quarter ended 30th September 2022 Q2 FY23 Regional Highlights – Double Digit Across All Regions except Europe (₹ crore) • Improved herbicides pricing led growth in Brazil • Fungicide sales driven by new launch - Evolution® (vol. driven) • Mexico growth led by NPP BioSolutions • Other growth regions include Argentina and the Andean, driven by pricing in herbicides • Industry annual growth in double-digits in CYH1, supported by strong commodity prices • Herbicides key growth driver, led by pre-emergent products • Continuing dry weather in western US continues to impact specialty crops and rice market; additional impact due to high channel inventory • Flat revenue vs. LY due to Euro devaluation; however, growth in Euro terms, despite unfavorable weather, products ban and ongoing conflict • Strong growth in DACH and Central Europe driven by herbicide vol. and pricing • Strong growth in Differentiated products vs. LY, driven by herbicides in North Europe, and insecticides in Iberia • Robust growth in SE Asia and AUS/NZ, despite high channel stocks, price pressure from Chinese suppliers, unfavorable market economics for key crops • Southern Africa’s strong growth led by herbicides • Flat growth in Japan, despite significant JPY devaluation against INR • Growth led by glufosinate products • New Insecticides launches in Q2 in Paddy and Cotton • Significant growth in NPP Biosolutions and products in crop establishment segment • Improved pricing in Key crops : oilseeds +5%, cereals +15%, cotton -10%, sugarcane +10% 6,092 5,087 Latin America North America Europe Rest of World India 1,185 958 1,354 1,336 2,067 1,702 1,808 1,483 Q2FY23 Q2FY22 +20% +24% +1% +21% +22% Note: DACH includes Germany, Austria and Switzerland
- 5. 5 Presentation for Second Quarter ended 30th September 2022 Q2 FY23 Performance Highlights – Strong Growth led by Pricing and Favorable FX (₹ Crore ) Q2 FY 2023 Q2 FY 2022 YoY% Revenue 12,506 10,567 18% Contribution Profit 5,324 4,192 27% Contribution Margin 42.6% 39.7% 290 bps SG&A Expenses 2,557 2,147 19% EBITDA 2,768 2,045 35% EBITDA Margin 22.1% 19.4% 278 bps SG&A Variance (INR Crore) EBITDA bridge (vs. PY) (INR Crore) Revenue Variance (%) 2,045 2,768 734 2,674 807 410 Q2FY22 Vol/ mix Price & currency Production & Freight cost SG&A Q2FY23 2,147 2,557 155 36 64 155 Q2FY22 Employee A&P T&C Others Q2FY23 -7% 21% 4% Volume Price Exchange Others: Includes legal & professional fees, labour, insurance & registration charges, provisions for doubtful debts and advances, and others
- 6. 6 Presentation for Second Quarter ended 30th September 2022 H1 FY23 Performance Highlights – Strong Growth led by Proactive Pricing Actions (₹ Crore ) H1 FY 2023 H1 FY 2022 YoY% Revenue 23,328 19,082 22% Contribution Profit 10,058 7,911 27% Contribution Margin 43.1% 41.5% 166 bps SG&A Expenses 4,949 4,003 24% EBITDA 5,110 3,908 31% EBITDA Margin 21.9% 20.5% 143 bps SG&A Variance (INR Crore) EBITDA bridge (vs. PY) (INR Crore) Revenue Variance (%) 3,908 5,110 213 4,459 2,098 945 H1FY22 Vol/ mix Price & currency Production & Freight cost SG&A H1FY23 4,003 4,949 369 132 128 317 H1FY22 Employee A&P T&C Others H1FY23 -1% 20% 3% Volume Price Exchange Others: Includes legal & professional fees, labour, insurance & registration charges, provisions for doubtful debts and advances, and others
- 7. 7 Presentation for Second Quarter ended 30th September 2022 Q2 FY23 Reimagining Sustainability Highlights • Published UPL’s Task Force on Climate-Related Financial Disclosures Report, illustrating climate change related risks; mitigation strategies developed to increase our resilience • In partnership with FIFA foundation, launched the Gigaton Carbon Goal in Rwanda, Kenya and other western and southern African countries post the successful launch in Europe in Q1.” • UPL’s Initiative for Sustainable Sugarcane shortlisted in Best Environmental Initiative category at Bonsucro Inspire Awards • Signed MOU with Shreenath Mhaskoba Sugar Factory (India) to implement sustainable sugarcane production programme with Zeba • Partnered with World Business Council for Sustainable Development (WBCSD) on Wastewater Zero Commitment to eliminate wastewater pollution by 2030 • Joined World Banks Water Resources Group to support cross-sector policy making advocating stewardship and conservation of water • Strengthening Mexico and India relations through inauguration of new Organic Friendship Garden, providing NPP’s sustainable solutions to support soil health, water efficiency and help thriving of garden plants and biodiversity
- 8. 8 Presentation for Second Quarter ended 30th September 2022 Q2 FY23 Detailed Profit and Loss Statement All Figures are in ₹ Crore Particulars Q2 FY23 % of Sales Q2 FY22 % of Sales Change % Revenue from operation 12,506 100% 10,567 100% 18% Cost of Production 7,182 57% 6,375 60% Contribution Profit 5,324 43% 4,192 40% 27% SG&A Expenses 2,557 20% 2,147 20% EBITDA 2,768 22% 2,045 19% 35% Other Income / (Loss) (246) (67) Amortization / Depreciation 608 566 Finance Cost 644 359 PBT 1,270 10% 1,053 10% 21% Tax 231 249 PAT 1,038 8% 804 8% 29% Income/(Loss) from Associate Co. and JV (27) 10 Minority Interest 156 140 Profit After Tax, Associate Income & Minority Interest 856 7% 673 6% 27% Exceptional Cost 43 41 Net Profit 813 6% 633 6% 28%
- 9. 9 Presentation for Second Quarter ended 30th September 2022 H1 FY23 Detailed Profit and Loss Statement All Figures are in ₹ Crore Particulars H1 FY23 % of Sales H1 FY22 % of Sales Change % Revenue from operation 23,328 100% 19,082 100% 22% Cost of Production 13,269 57% 11,171 59% Contribution Profit 10,058 43% 7,911 41% 27% SG&A Expenses 4,949 21% 4,003 21% EBITDA 5,110 22% 3,908 20% 31% Other Income / (Loss) (370) (108) Amortization / Depreciation 1,196 1,117 Finance Cost 1,163 966 PBT 2,381 10% 1,717 9% 39% Tax 290 97 PAT 2,091 9% 1,620 8% 29% Income/(Loss) from Associate Co. and JV 3 6 Minority Interest 283 212 Profit After Tax, Associate Income & Minority Interest 1,811 8% 1,414 7% 28% Exceptional Cost 121 103 Net Profit 1,690 7% 1,311 7% 29%
- 10. 10 Presentation for Second Quarter ended 30th September 2022 Q2 & H1 FY23 Finance Cost and Other Income Breakdown (₹ crore) Particulars Q2FY23 Q2FY22 Change H1FY23 H1FY22 Change Interest on Borrowings 274 170 104 489 335 154 Interest on Leases & Others 261 114 147 524 232 292 Other Financial Charges 49 28 21 74 78 (4) Exchange impact in Finance Cost (125) (34) (91) (213) 169 (382) NPV – Interest & Finance 185 81 104 289 154 135 Total Finance Cost 644 359 285 1,163 966 197 Finance Cost Breakdown Particulars Q2FY23 Q2FY22 Change H1FY23 H1FY22 Change Interest Income (71) (39) (32) (128) (59) (69) Net Exchange Impact 324 114 210 521 203 318 Others (7) (8) 1 (23) (36) 13 Total Other (Income) / Loss 246 67 179 370 108 262 Other Income Breakdown (₹ crore)
- 11. 11 Presentation for Second Quarter ended 30th September 2022 141 130 147 124 117 134 137 114 Inventory Days Recievable Days Payable Days Net Working Capital Days Q2FY23 Q2FY22 Increase in NWC due to Robust Growth and Short-term Build up in Inventory Note: As a risk management measure, the company sells its receivables on non-recourse basis to banks. Receivables sold as of 30Sep’22 were INR 6,671 crore (31 March’22: INR 12,099 crore, 30 June’22: INR 9,010 crore, 30 Sep’21: INR 5,149 crore) • Working capital investment is higher in H1 FY23 primarily due to the - 1) robust growth of 22% in sales, and 2) short-term inventory build-up on the back of strong demand in H2 FY23 and in-lieu of uncertainties in supply chain (No. of days) Q2FY23: 19,457 Cr Q2FY22: 13,077 Cr Q2FY23: 18,044 Cr Q2FY22: 14,913 Cr Q2FY23: 20,374 Cr Q2FY22: 15,294 Cr Q2FY23: 17,127 Cr Q2FY22: 12,695 Cr
- 12. 12 Presentation for Second Quarter ended 30th September 2022 Increase in Net Debt and Net Working Capital as on 30th Sep 2022 Note: 1Taken Average USD/INR rate for H1 FY23 i.e., 78.44. USD/INR - 31 March 2022: INR 75.72, 30 September 2022: INR 81.47 3,500 734 2,497 269 Reported Net Debt as on 30 Sep'22 Reported Net Debt as on 31 March'22 Cash Returned to Shareholders (Buyback & Dividend) Increase in Net Debt Increase in Net Debt All figures are in US$ Mn Increase in Net Working Capital All figures are in US$ Mn 1 • Cash generation from operations is US$ 228 Mn in H1FY23 (increase in net working capital of US$ 962 Mn less the increase in net debt of US$ 734 Mn) • In-line with last year, ~75% to 80% of the increase in working capital in H1 is converted to cash in H2FY23. Estimated working capital release combined with the higher EBITDA in H2, will enable the company to meet its guidance of net debt reduction of US$ 400 Mn • In addition, the net cash inflow of US$ 259 Mn from the recently announced corporate realignment will be used to further bring down debt 2,102 962 1,140 Reported Net Working Capital as on 30 Sep'22 Reported Net Working Capital as on 31 March'22 Increase in Net Working Capital
- 13. 13 ANNEXURE
- 14. 14 Presentation for Second Quarter ended 30th September 2022 Q2 & H1 FY23 Advanta Performance Highlights – Robust Traction in Revenue and EBITDA (₹ Crore ) Q2 FY2023 Q2 FY2022 YoY% H1 FY2023 H1 FY2022 YoY% Revenue 982 757 30% 1,823 1,414 29% Contribution Profit 539 423 28% 1,026 801 28% Contribution Margin 54.9% 55.8% (99 bps) 56.3% 56.7% (40 bps) SG&A Expenses 286 228 26% 557 438 27% EBITDA 253 195 30% 469 364 29% EBITDA Margin 25.8% 25.7% 7 bps 25.7% 25.7% 4 bps +30% Revenue Growth vs LY • Strong Growth in Field Corn in ASEAN, South Asia and LATAM (ex-Brazil) • Renewal of Sunflower portfolio in Argentina • Traction in Grain Sorghum in Australia +28% Contribution Profit Growth vs LY • Contribution margin declined by 99 bps versus LY, as weather challenges in Argentina, Thailand and Indonesia resulted in lower seed yields (higher per unit cost) • Adverse impact of lower seed yields partially offset by increase in sales of high margin portfolios – Sunflower in Argentina, Field Corn in LATAM (ex-Brazil) and Grain Sorghum in Australia +30% EBITDA Growth vs LY • Robust growth in contribution profit coupled with lower SGA as % sales (29% in Q2FY23 vs. 30% in Q2FY22) drove faster EBITDA growth and 7 bps YoY expansion in margins Note: Proforma financials includes Longreach, a joint venture company
- 15. 15 Presentation for Second Quarter ended 30th September 2022 Debt Position as on 30th Sep 2022 Note: 1INR depreciated from 75.72 as on 31 March 2022 to 81.47 as on 30 Sep 2022 . 2Includes liquid investment of INR 405 crore. All figures are in ₹ Crore and US$ Mn Particulars Sep’22 Sep’21 Change Mar’22 Gross Debt 32,550 $3,995 27,146 $3,657 +5,404 +$338 25,866 $3,416 Cash and cash equivalent 4,0382 $496 2,867 $386 1,171 +110 6,960 $919 Reported Net Debt 28,512 $3,500 24,279 $3,271 +4,233 ($229) 18,906 $2,497 Net Debt Adjusted for Currency Impact 26,4991 24,279 +2,220 18,906
- 16. Thank You