1 ‘The Transformation of AWB’ Andrew Lindberg, Managing Director.
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Transcript of 1 ‘The Transformation of AWB’ Andrew Lindberg, Managing Director.
1
‘The Transformation of AWB’Andrew Lindberg, Managing Director
‘The Transformation of AWB’Andrew Lindberg, Managing Director
2
Volatile trade flows
Volatile trade flows
‘Flat’ global demand
‘Flat’ global demand
Global trade distortedGlobal trade distorted
World Wheat Prices Over Time
A tough industry: global wheat market realities
3
Australian growers disadvantaged
High Exposure To World Price Volatility
Unprotected By Subsidies
Wheat Producer Subsidy Estimates: 1999-2001(A$/tonne)
925
147170
0
50
100
150
200
Aus Can US EU
21 30 3355
87
0
50
100
Aus Can Arg US EU
Domestic Consumption As % Total Wheat Production: 1995-2000
(%)
4
Global wheat trends
500
520
540
560
580
600
620
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04(
e)
2004
-05(
f)
(Pro
duct
ion
and
cons
umpt
ion
- m
illion
to
nnes
)
0
50
100
150
200
250
(End
ing
stoc
ks -
milli
on to
nnes
)
World production World consumption World ending stocks
2003-04(e) 2004-05(f)World production 549.61 588.67World consumption 587.93 594.15World ending stocks 128.75 123.36
Source: USDA, May 2004
5
Australia’s competitive position in the world wheat markets
Total wheat production for 2003-04(e) and 2004-05(f)
Argentina
9%
EU
15%Canada
14%
Australia
16%
USA
27%
All other
19%
Major exporters – estimated wheat market share for 2004-05(f)
Source: USDA, May 2004
0
20
40
60
80
100
120
140
Aus
tral
ia
EU
-25
Chi
na
Indi
a
Uni
ted
Sta
tes
Rus
sia
Can
ada
Pak
ista
n
Tur
key
Arg
entin
a
Kaz
akhs
tan
Ukr
aine
All
Oth
er
(Milli
on to
nnes
)
2003-04(e) 2004-05(f)
6
2001 Listed on ASX
1999 Privatised
1998 Corporatised
1989 Domestic market deregulated and Wheat Industry Fund established
1939 Australian Wheat Board establishedas 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
AWB Evolution
“Shareholders’
equity has grown
from around $600
million in 1999 to
over $1 billion as
at 31 March 2004”.
7
TO…
FROM…
Australian Wheat Board to AWB Limited
•a statutory authority•government owned and backed•wheat marketing authority
2.50
2.80
3.10
3.40
3.70
4.00
4.30
4.60
4.90
5.20
31-A
ug-0
1
30-S
ep-0
1
31-O
ct-
01
30-N
ov-0
1
31-D
ec-0
1
31-J
an-0
2
28-F
eb-0
2
31-M
ar-
02
30-A
pr-
02
31-M
ay-0
2
30-J
un-0
2
31-J
ul-02
31-A
ug-0
2
30-S
ep-0
2
31-O
ct-
02
30-N
ov-0
2
31-D
ec-0
2
31-J
an-0
3
28-F
eb-0
3
31-M
ar-
03
30-A
pr-
03
31-M
ay-0
3
30-J
un-0
3
31-J
ul-03
31-A
ug-0
3
30-S
ep-0
3
31-O
ct-
03
30-N
ov-0
3
31-D
ec-0
3
31-J
an-0
4
29-F
eb-0
4
31-M
ar-
04
30-A
pr-
04
31-M
ay-0
4
(AUD)
AWB S&P/ASX 200
Market capitalisation:Market capitalisation:
Shares on issue:Shares on issue:
Shareholder’s equity:Shareholder’s equity:
Index inclusion:Index inclusion:
Approx. $1.7 billionApprox. $1.7 billion
338 million338 million
Approx. $1 billionApprox. $1 billion
S&P/ASX 100 (75% IWF)S&P/ASX 100 (75% IWF)
•public company, listed in August 2001•75% grower owned; 25% institutional investors•grain company
8
AWB's success - the 'differentiation' strategy
Developing Market Access
Developing Market Access
Differentiating Products
Differentiating Products
Creating Origin-Specific Demand
Creating Origin-Specific Demand
• Developing new markets for higher quality wheat
• Increased proportion of high quality wheat - without significant price spread decline
• Strong share in markets with freight advantage• Grown or maintained share of stable and high
growth markets
Improving ProductivityImproving
Productivity • Reduced / contained supply chain costs
9
Grain Company to Australia’s Largest Agribusiness
430 outlets430 outlets
2,500 employees2,500 employees
Finance
$2.0b loan book
$300mon deposit
Finance
$2.0b loan book
$300mon deposit
100,000 customers100,000 customers
RealEstate
$800m sales
RealEstate
$800m sales
Wool
600kbales
Wool
600kbales
Livestock
2.0mcattle
11m sheep
Livestock
2.0mcattle
11m sheep
Fertiliser
1.2mtonnes
Fertiliser
1.2mtonnes
Merch
$1.2bsales
Merch
$1.2bsales
Grain company
$5-$6brevenue
Grain company
$5-$6brevenue
Insurance
$120m premium
Insurance
$120m premium
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Australia’s leading Agribusiness
Primary producer Business partner of choice End use customer
Our vision
delivered by..
Comprehensive product / service offering
managedthrough an...
Grain Marketing
andHandling
CharteringRisk
Manage-ment
FinancialServices
InsuranceMerchan-
diseAgronomy Wool Real EstateLivestock
IntegratedValue Chain
to ensure thatAWB is the…
BusinessPartnerof choice
Seedsand R&D
Farminputs
DomesticSupplyChain
Acquisitionand
TradingFreight
OffshoreSupplyChain
End usedemand
Millingand
Processing
The Integrated Business Model
11
AWB Limited
Pooling operationsCommercial operations
Supply Chain & Other InvestmentsSupply Chain & Other Investments
Pool Management ServicesPool Management Services
Finance & Risk Management Finance & Risk Management
Grain Acquisition & TradingGrain Acquisition & Trading
Grain TechnologyGrain Technology
LandmarkLandmark
Group structure
12
• Financial Performance
• Commercial skills and culture
• Diversified agribusiness
• Positive outlook for Australian agriculture
AWB is focused on delivering value…
13
QUESTIONSQUESTIONS