UPL Limited has informed the Exchange about Investor Presentation
31st July 2023
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 2023.
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
Q1 FY24 Performance Presentation
July 2023
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 2023
2
Q1 FY24 – Maintained Market Share Amid Challenging Conditions
₹ 8,963 Cr Revenue
(17%) Price -10%, FX +2%, Vol -9%
₹ 4,098 Cr Contribution
₹ 1,593 Cr EBITDA
$3,193 Mn Net Debt
(13%)
(32%)
Margin: 45.7% 198 bps
Margin: 17.8% 387 bps
Lower by $160 Mn
• Crop protection business was impacted by industry-wide headwinds globally –
o
o
Channel Destocking - Distributors opting for need-based tactical purchases
Aggressive price competition from Chinese post patent exporters
• Demand at the farm level continues to remain strong; expect channel demand to recover in H2FY24
• Differentiated and sustainable portfolio has performed resiliently growing by 7% YoY, comprising 37% of the crop protection revenue versus 27% LY
• Contribution margin improved by 198 bps YoY led by improved portfolio and region mix combined with better margins at Advanta
• Undertaking cost reduction initiative of $100 Mn over period of next 24 months; with at least 50% being realized in FY24
• Reduced Net Debt by $160 Mn YoY and non-recourse factoring by $250 Mn YoY
Note: All changes are year-on-year basis i.e., Q1 FY24 vis-à-vis Q1 FY23
Presentation for First Quarter ended 30th June 2023
3
UPL Group: Agchem Market Headwinds Impacted Q1; Strong Growth in Seeds
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
SG&A Expenses
EBITDA
EBITDA Margin
Amortization / Depreciation
Net Finance Cost
FX Gain / (Loss)
Other Income / (Loss)
PBT
Tax
PAT
Income/(Loss) from Associates and JV
Minority Interest
PAT after Associate Income & Minority Interest
Exceptional Cost
Net Profit
Q1 FY 2024
Q1 FY 2023
8,963
4,098
45.7%
2,505
1,593
17.8%
636
750
-203
35
39
-164
203
-57
-64
209
43
166
10,821
4,734
43.7%
2,392
2,342
21.6%
588
550
-108
16
1,111
59
1,052
30
128
955
78
877
YoY%
(17%)
(13%)
198 bps
5%
(32%)
(387 bps)
(97%)
(81%)
(78%)
(81%)
Revenue Variance – Q1FY24 vs Q1FY23
Volume
Price
Exchange
-9%
-10%
2%
EBITDA Variance – Q1FY24 vs Q1FY23
2,342
992
1,593
113
1,222
866
Q4FY22
Volume
Price & Currency
Prd. Cost, Mix & FX
Fixed Overheads
Q4FY23
Presentation for First Quarter ended 30th June 2023
4
UPL Corporation: Subdued Q1 Performance in-line with Industry; Expect Recovery in H2
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
SG&A Expenses
EBITDA
EBITDA Margin
Q1 FY 2024
Q1 FY 2023
5,855
2,105
35.9%
1,541
564
9.6%
7,658
3,044
39.8%
1,431
1,614
YoY%
(24%)
(31%)
(381 bps)
8%
(65%)
Q1FY24 Performance Update
• Revenue Variance: Volume: -17%, Price: -10%, FX: +3%
• Significant decline in herbicide volume and prices, and product
bans in Europe
•
Increase in differentiated and sustainable portfolio, primarily led by volume; revenue share increased to 35% vs. 24% LY
Outlook
21.1%
(1,145 bps)
• Demand at the grower level continues to be strong. Channel
inventory gradually normalizing
Note: Above financials are after considering proforma adjustments
Revenue Variance – Q1FY24 vs Q1FY23
Volume
Price
Exchange
• Channel demand to remain weak in Q2FY24 with recovery
expected in H2FY24
• Undertaking cost reduction initiative of $100 Mn over a period of next 24 months; with at least 50% being realized in FY24
-17%
-10%
3%
Presentation for First Quarter ended 30th June 2023
5
UPL Corporation: Growth Impacted Across Regions
Latin America
-15%
3,189
2,708
North America
-56%
1,551
675
Europe
-19%
1,571
1,264
Q1FY24
Q1FY23
(₹ crore)
Rest of World
-10%
1,207
1,347
• Brazil: major mkt. degrowth - non-selective herbicides down ~81% in H1CY23, ~53% in Q1FY24, with high sales returns in H1CY23
• Glyphotal®, other herbicides led
decline, partially offset by differentiated vol. (Evolution®, Feroce®)
• Mexico and Argentina led by
herbicides volumes
• Channel inventory led challenges; need-based “tactical purchases”, cash mgmt., revaluation pressure
• Channel inventory continues to be a challenge, resulting in degrowth in some parts of Europe
• Growth despite high channel stocks,
price pressure from Chinese suppliers in SE Asia, Africa
• Non-selective herbicides impacted from China pricing; glufosinate (Interline®, Total®, Lifeline®), s- metolachlor, clethodim products impacted by lower volumes, and pricing pressure
• Decline across major portfolios due to lower volume; impact of product ban (e.g., bifenazate)
• Strong China growth from insecticides,
fungicides, soil & seed health vol.
• SE Asia impacted by lower insecticides vol, primarily in Indonesia and Thailand
• Lower clethodim vol. in ANZ region
Presentation for First Quarter ended 30th June 2023
6
UPL SAS: Delayed Sowing and Price Pressure Impacted Results; Q2 to be much better vs Q1
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
SG&A Expenses
EBITDA
Q1 FY 2024
Q1 FY 2023
1,203
334
27.8%
119
215
1,395
441
31.6%
125
316
YoY%
(14%)
(24%)
(392 bps)
(5%)
(32%)
EBITDA Margin
17.9%
22.7%
(484 bps)
Note: Above financials pertain to India Crop Protection business only based on proforma adjustments and exclude ‘Nurture’
• Q1FY24: Revenue: ₹ 6 crore (flat YoY); EBITDA: ₹ 42 crore loss vs
₹ 82 crore loss LY
Nurture – Update
• Strategic actions undertaken to streamline portfolio of nurture.retail
and nurture.farm platforms and optimize cost
• Launched an exclusive online product range with superior
contribution margins on nurture.retail platform
Q1FY24 Performance Update
• Revenue Variance: Volume: -7% YoY, Price: -7% YoY
• Revenue impacted by delayed Kharif sowing activities, pricing pressure on post-patent side, and high channel inventory
• Differentiated portfolio fared better led by traction in new /recent launches (Apache, Oxalis, Centurion and Canora) and helped curtail margin impact
•
Implemented cost optimization initiatives resulting in SG&A being lower by 5% YoY
Outlook
• Novel range of launches in pipeline - Spruce, Feego, Fascinate
Flash, Argyle, Sperto, Mono SG, Sekito, Lexicon
•
Improved monsoon from June-end onwards to aid demand recovery and drive much better performance in Q2FY24 as against Q1FY24
Presentation for First Quarter ended 30th June 2023
7
Advanta: Continued to Deliver Robust Growth with Improved Operating Profitability
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
SG&A Expenses
EBITDA
Q1 FY 2024
Q1 FY 2023
YoY%
1,061
662
62.4%
298
364
842
482
26%
38%
57.2%
523 bps
245
236
22%
54%
EBITDA Margin
34.3%
28.1%
626 bps
Q1 FY24 Performance Update
• Volume: +14%, Price: +9%, FX: +3%
• Revenue Growth driven by robust traction in following
portfolios -
o Field Corn across India, Thailand, Ecuador, Peru
o Fresh Corn in Indonesia
o Grain Sorghum in USA
• Contribution margins expanded by 523 bps YoY driven by -
o Improved Mix: Strong growth in high-margin portfolios
o Good recovery in India Vegetable business
Outlook
• Expect to see healthy demand for rest of FY24
Presentation for First Quarter ended 30th June 2023
8
UPL Specialty Chemicals: Revenue Impacted in-line with Crop Protection Biz; Margins Stable
(₹ Crore )
Revenue
Contribution Margin
Contribution Margin
SG&A Expenses
EBITDA
Q1 FY 2024
Q1 FY 2023
3,112
450
14.4%
10
440
3,877
501
12.9%
9
492
YoY%
(20%)
(10%)
+150 bps
35%
(11%)
EBITDA Margin
14.1%
12.7%
+140 bps
Note: Above financials are after considering proforma adjustments and is inclusive of intercompany revenue
Q1 FY24 Performance Update
• Decline in revenue primarily on account of slowdown in the
agrochemical as well as the broader chemical industry
• Entered a new chemistry by commissioning and commencing
production at the phosgene plant in Dahej during the quarter
o Manufacture and market phosgene derivative products
o Phosgene will also be used in group’s agchem production
• Commissioned the 61 MW hybrid wind and solar power plant
with commencement of power supplies in June’23
o Will help reduce energy costs and carbon footprint
Outlook
• Expected to perform better in line with the recovery in the
agro and specialty chemicals markets
Presentation for First Quarter ended 30th June 2023
9
Increase in NWC Primarily due to Reduced Factoring and Lower Payable Days
Q1FY24
Q1FY23
(No. of days)
125
128
124
125
145
127
122
108
Inventory Days
Recievable Days
Payable Days
Net Working Capital Days
Q1FY24: 17,711 Cr Q1FY23: 16,920 Cr
Q1FY24: 17,589 Cr Q1FY23: 16,514 Cr
Q1FY24: 18,055 Cr Q1FY23: 19,195 Cr
Q1FY24: 17,245 Cr Q1FY23: 14,240 Cr
Note: As a risk management measure, receivables are factored on non-recourse basis to banks. Non-recourse receivables factoring as of 30 June’23: ₹ 7,304 crore ($890 Mn), 31 March’23: ₹ 11,548 crore ($1.4 Bn), 30 June’22: ₹ 9,010 crore ($1.1 Bn)
• Working capital days increased by 14 days as on June 2023 primarily due to –
o Payable days declined by 18 days
o Reduction in non-recourse factoring by ₹ 1,706 crore on a YoY basis
Presentation for First Quarter ended 30th June 2023
10
Net Debt Stood at $3.19 Bn as of June’23, Down by $160 Mn vs LY
Gross & Net Debt Position – June 2023 vs June 2022
Particulars
Gross Debt
Cash and cash equivalent
Reported Net Debt
Net Debt Adjusted for Currency Impact
All figures are in US$ Mn and ₹ Crore
June’23
June’22
Change
$3,667
30,083
$474 3,8892
$3,193
26,194
25,2161
$3,814
30,123
$461
3,643
$3,353
26,480
26,480
($147)
(40)
$13
246
($160)
(286)
(1,264)
• In USD terms, net debt at $3.19 Bn as of June’23 - lower by $160 Mn YoY.
o Adjusted for lower factoring, net debt would have stood at $2.94 Bn (down by $410 Mn YoY)
•
Cash generated by business (before WC)*: ₹ 268 crores in Q1FY24 (vs ₹ 1,420 crores in Q1FY23)
Note: 1INR depreciated from 78.98 as on 30 June 2022 to 82.04 as on 30 June 2023. 2Includes liquid investment of INR 124 crore as of Jun’23 *Operating CF before WC less interest, tax and other cash expenses
Presentation for First Quarter ended 30th June 2023
11
UPL Group - FY24 Revised Guidance
Revised Guidance
+ 1 - 5%
+ 3 - 7%
Revenue Growth
EBITDA Growth
Old Guidance
+ 6 - 10%
+ 8 - 12%
Revenue Growth
EBITDA Growth
Presentation for First Quarter ended 30th June 2023
12
ANNEXURE
13
Breakdown of Net Finance Cost – Q1 FY24
Net Finance Cost Breakdown
(₹ crore)
Particulars
Q1FY24
Q1FY23
Change
Interest on Borrowings
Interest on Leases & Others
Other Financial Charges
NPV – Interest & Finance
Interest Income
Total Net Finance Cost
368
287
37
125
(66)
750
215
263
25
104
(57)
550
153
24
12
21
(9)
200
Presentation for First Quarter ended 30th June 2023
14
Thank You