UPL Limited has informed the Exchange about Investor Presentation
1st August 2022
BSE Limited Mumbai
National Stock Exchange of India Ltd Mumbai
SCRIP CODE: 512070
SYMBOL: UPL
Sub: Investor presentation
Dear Sir/ Madam,
Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing the investor presentation for the quarter ended 30th June 2022.
We request you to take the above information on records.
Thanking you,
Yours faithfully, For UPL Limited
Sandeep Deshmukh Company Secretary and Compliance Officer (ACS-10946)
Encl: As above
Registered Office: 3-11, GIDC, Vapi 396 195, Gujarat, India. P +91 260 2432716 CIN: L24219GJ1985PLC025132
Q1 FY23 Performance Presentation
August 2022
Safe Harbor Statement
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 likely result”, “forecast”, “outlook”, as “anticipates”, “assumes”, “believes”, “estimates”, “expects”, “should”, “will”, “will “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.
Presentation for First Quarter ended 30th June 2022
2
Q1 FY23 Business Highlights – Solid Growth in Revenue and Profitability
₹ 10,821 Cr Revenue
43.7% Contribution Margin
₹ 2,342 Cr EBITDA
+27% Vol.+6%, Price +18% FX +3%
+7 bps
+26% Margin: 21.6%
₹ 877 Cr Net Profit
+29%
• Robust growth led by significant pick-up in realizations and higher volumes in a challenging macro-environment
• Contribution profit rose by 27% YoY. Better pricing, efficient supply chain management helped improve margins both YoY and sequentially
• EBITDA margin is marginally lower due to higher investments in SG&A as the company focused on building teams and capabilities to grow its differentiated and
sustainable portfolio, and normalization of overheads post Covid
• Higher EBITDA combined with lower finance costs drove robust growth in net profit
Note: All changes are year-on-year basis i.e., Q1 FY23 vis-à-vis Q1 FY22
Presentation for First Quarter ended 30th June 2022
3
Q1 FY23 Performance Highlights – Strong Growth led by Pricing
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
SG&A Expenses
EBITDA
EBITDA Margin
Q1 FY 2023
Q1 FY 2022
10,821
4,734
43.7%
2,392
2,342
21.6%
8,515
3,719
43.7%
1,856
1,862
21.9%
YoY%
27%
27%
7 bps
29%
26%
-23 bps
Revenue Variance (%)
18%
3%
6%
Volume
Price
Exchange
EBITDA bridge (vs. PY) (INR Crore)
SG&A Variance (INR Crore)
521
1,862
1,785
1,291
535
214
96
65
161
2,342
1,856
2,392
Q1FY22
Vol/ mix
Price & currency
Production & Freight cost
SG&A
Q1FY23
Q1FY22
Employee
A&P
T&C
Oth.
Q1FY23
Others: includes Legal & Professional fees and provisions for doubtful debts and advances
Presentation for First Quarter ended 30th June 2022
4
Q1 FY23 Regional Highlights – Double Digit Across All Regions except India
Latin America
North America
38%
3,464
2,507
1,796
47%
1,221
Europe
13%
1,728
1,522
Q1FY23
Q1FY22
Rest of World
31%
1,765
1,350
(₹ crore)
India
8%
2,067
1,914
Strong growth led by improved pricing in herbicides
Strong herbicide growth led by mix of volume and pricing
Growth despite challenging environment
Robust growth despite challenges
Moderate growth despite external challenges
• Improved herbicides pricing in Brazil as a key growth driver
• Herbicides were key driver, led by higher volume and pricing
• Strong growth in France led by
NPP BioSolutions
• Strong double-digit growth in NPP BioSolutions, led by Mexico and Andean region
• UPL and Bunge create Orígeo, to focus on large farms in parts of Brazil, subject to anti-trust approvals
• Positive outlook for the season: high commodity prices and strong demand, while drought in western US impacting specialty crops and winter wheat
• Expected channel inventory increase in herbicides due to heavy stocking driven by supply concerns
• Central Europe saw good mix of higher volumes in addition to significant improvement in pricing.
• Impact due to Euro devaluation, products ban (e.g., mancozeb), and ongoing conflict
• SE Asia and AUS/NZ led by insecticides and fungicides, despite supply constraints
• Overall growth led by NPP BioSolutions and other businesses
• WECA region led by herbicides
• Overall favorable commodity
• China sales impacted due to
lockdown, unfavorable weather affecting key crops, and high channel stock
• Japan impacted by devaluation of
JPY
prices for oilseeds, cereals, fruits and spices
• Delay in planting impacted overall
industry growth, key crop acreages (e.g., rice down 17% vs. LY)
Presentation for First Quarter ended 30th June 2022
5
Q1 FY23 Reimagining Sustainability Highlights
• Successfully hosted 2nd OpenAg Symposium in partnership with the University of Oxford and The Oxford India Centre for Sustainable Development looking at ‘Food Futures in a Changing climate: Reimagining the role of global agriculture on the path to Net Zero emissions’
• Release of first Africa Sustainability Report, showcasing UPL’s work in FY22 to Reimagining Sustainability
for farmers and food systems across the continent
• Published Cocoa and Forest Initiative (CFI) 2021 progress report towards delivering our vision of a
prosperous, respectful, and sustainable cocoa industry
• Natural Plant Protection (NPP) is listed in the Top 100 New Brands by Clarivate which have surged in the
last two years (2020 to 2021) and demonstrated exceptional ability in delivering value, impact and protection on a global scale.
• Gigaton Carbon Goal launches in Europe, a global ecosystem that will harness sustainable agricultural
practices to reduce atmospheric carbon dioxide by 1bn metric tonnes by 2040
Presentation for First Quarter ended 30th June 2022
6
Q1 FY23 Detailed Profit and Loss Statement
Particulars
Revenue from operation
Cost of Production
Contribution Profit
SG&A Expenses
EBITDA
Other Income / (Loss)
Amortization / Depreciation
Finance Cost
PBT
Tax
PAT
Income/(Loss) from Associate Co. and JV
Minority Interest
Profit After Tax, Associate Income & Minority Interest
Exceptional Cost
Net Profit
Q1 FY23
% of Sales
Q1 FY22
% of Sales
Change %
All Figures are in ₹ Crore
10,821
100%
6,087
4,734
2,392
2,342
(124)
588
519
1,111
59
1,052
30
128
955
78
877
56%
44%
22%
22%
10%
10%
9%
8%
8,515
4,796
3,719
1,856
1,862
(41)
551
607
664
(152)
816
(4)
72
741
63
678
100%
56%
44%
22%
22%
8%
10%
9%
8%
27%
27%
26%
67%
29%
29%
29%
Presentation for First Quarter ended 30th June 2022
7
Q1 FY23 Finance Cost and Other Income Breakdown
Finance Cost Breakdown
(₹ crore)
Other Income Breakdown
(₹ crore)
Particulars
Q1FY23
Q1FY22
Change
Particulars
Q1FY23
Q1FY22
Change
Interest on Borrowings
478
282
196
Interest Income
54
18
36
Other Financial Charges
25
50
(25)
Exchange impact in Finance Cost
(88)
203
(291)
NPV – Interest & Finance
Total Finance Cost
104
519
72
32
607
(88)
Net Exchange Impact
(197)
(89)
(108)
Others
(10)
(5)
(5)
Total Other Income / (Loss)
(124)
(41)
(83)
Presentation for First Quarter ended 30th June 2022
8
Sequential Increase in NWC due to Reduced Factoring, FX Impact & Inventory Build-up
Consciously reduced factoring quantum as compared to Q1FY22 to optimize interest cost in certain geographies
5,608
3,089
588
14,240
10,563
8,632
Q1FY23
Q1FY22
(No. of days)
128
118
125
118
145
145
108
80
91
NWC on 31st March 2022
QoQ Change in NWC
Reduction in Factoring
FX Impact
Implied NWC as on 30 June 2022
Actual NWC as on 30 June 2022
IN V E N TORY
RECE IVABLES
PAYABLES
N E T WORKIN G CAP ITAL
Q1FY23: 16,920 Cr Q1FY22: 12,640 Cr
Q1FY23: 16,514 Cr Q1FY22: 12,597 Cr
Q1FY23: 19,195 Cr Q1FY22: 15,457 Cr
Implied NWC Q1FY23: 10,563 Cr (80 days) Q1FY22: 9,780 Cr (91 days)
Note: As a risk management measure, the company sells its receivables on non-recourse basis to banks. Receivables sold as of 30 June’22 were INR 9,010 crore (31 March’22: INR 12,099 crore, 30 June’21: INR 7,004 crore, 31 March’21: INR 7,623 crore)
• Working capital higher in Q1 FY23 primarily due to - 1) robust growth of 27% in sales, 2) short-term inventory build-up due to strong demand and
uncertainties in supply-chain, and 3) increase in receivables on the back of strong growth in LATAM
• However, without reduced factoring and FX impact, the increase in net working capital on a sequential basis would have been lower at INR 1,931 crore
• Working capital days expected to be around 80 days by end of FY23 in-line with the guidance
Presentation for First Quarter ended 30th June 2022
9
Q1 FY23 Cash Flow and Debt Position as on 30th June 2022
Net Debt Position – June 2022
Cash generated by Business in Q1 FY23
Funds Utilized & Raised in Q1FY23
All figures are in ₹ Crore and US$ Mn
Particulars
June’22
Mar’22
Change
Gross Debt
Cash and cash equivalent
Net Debt
Adjusted Net Debt for Currency Impact
30,123
$3,814
3,643
$461
26,480
$3,353
25,866
$3,416
6,960
$919
18,906
$2,497
+4,257
+$398
(3,317)
($458)
+7,574
($856)
25,3871
18,906
+6,481
1,399
5,608
6,960
941
3,285
1,355
97
3,643
Opening Cash
Cash Generated by Business
Incremental WC Capex & other
investments
Equity Share Buyback
Net Borrowing
Others
Closing Cash
• Increase in net debt primarily because of significant build-up in working capital sequentially
• However, notwithstanding the 1) reduced quantum of factoring, and 2) FX impact; the implied increase in net debt on a sequential basis would
have been lower at ~INR 3,392 crore vis-à-vis INR 7,574 crore
• Working capital days to normalize to 80 days by end of the year, with the significant release in the second half of FY23, leading to lower debt levels
Note: 1INR depreciated from 75.72 as on 31 March 2022 to 78.98 as on 30 June 2022 . Cash Generated by Business = Operating cashflow below WC (INR 2,109 crore) less Finance cost, taxes and other cash expenses paid (INR 710 crore)
Presentation for First Quarter ended 30th June 2022
10
FY23 Guidance Revised Upwards
Revised Guidance
+12 - 15%
+15 - 18%
Revenue Growth
EBITDA Growth
Old Guidance
10%+
+12 - 15%
Revenue Growth
EBITDA Growth
Presentation for First Quarter ended 30th June 2022
11
APPENDIX
12
Q1 FY23 Advanta Performance Highlights – Robust Traction in Revenue and EBITDA
(₹ Crore )
Revenue
Contribution Profit
Q1 FY 2023
Q1 FY 2022
YoY%
841
487
657
379
28%
28%
Contribution Margin
57.9%
57.7%
20 bps
SG&A Expenses
EBITDA
270
216
210
169
EBITDA Margin
25.7%
25.7%
28%
28%
-
+28% Revenue Growth vs LY • Strong Growth in 1) Field Corn in India 2) Canola in Australia, and 3) Field and Fresh corn in Thailand
• Grain Sorghum season in Argentina got delayed
which impacted Q1FY23 performance
• Notwithstanding, the decline in Sorghum acres due to drought in USA, the growth in revenue expected to be robust
+28% EBITDA Growth vs LY
• Robust Contribution profit growth (+28% YoY) due to-
o Better realizations in Corn and Canola
o Favorable product mix
•
Increase in SG&A as % of sales on account of investments in overheads to pursue B2C strategy, partially offsetting contribution profit growth
Note: Proforma financials includes Longreach, a joint venture company
Presentation for First Quarter ended 30th June 2022
13
Thank You