UPL Limited has informed the Exchange about Investor Presentation
30th October 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 and half year ended 30th September 2023.
We request you to take the above information on records.
Thanking you,
Yours faithfully, For UPL Limited
Raj Tiwari Wholetime Director DIN: 09772257
Encl.: As above
Q2 FY24 Performance Presentation
October 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 Second Quarter ended 30th September 2023
2
Q2 FY24: Industry Destocking Continues; Gained Market Share in International CP Business
₹ 10,170 Cr Revenue
₹ 4,060 Cr Contribution
₹ 1,573 Cr EBITDA
$3,696 Mn Net Debt
(19%) Volume: -7%, FX +3%, Price: -15%
(24%)
(43%)
Margin: 39.9% 265 bps
Margin: 15.5% 666 bps
Sharp reduction in payables and lower factoring led to increase
• Global ‘channel destocking’ drove revenue decline – “tactical purchases”
• Differentiated and sustainable segment continued to show resilience -
and cost management by distributors
growing YoY; share in CP revenue up by ~8% to ~38%
• Farmgate demand continues to be strong; higher channel inventory to gradually subside in H2 as NAM, LATAM, EU enter cropping season
• Cost reduction initiatives of $100 Mn over next two years on track -
realized $9M in Q2; balance ~$40M to be realized in H2
• Liquidation of high-cost inventory, higher than usual sales returns and rebates to support channel partners impacted contribution margin
• Decline in payables (lower by $526 Mn) due to lower manufacturing activity, and reduced factoring (down by $86M) drove higher net debt
o Adjusting for the above, H1FY24 contribution margin would have been higher by ~300bps vs LY (instead of reported 48 bps decline) o Above challenges to continue and may impact H2 contribution margin
Note: All changes are year-on-year basis i.e., Q2 FY24 vis-à-vis Q2 FY23
• Target to reduce gross debt by $500 Mn by Mar’24 vs LY
Presentation for Second Quarter ended 30th September 2023
3
UPL Group: CP Market Headwinds Continued to Impact Q2; Seeds Reported a Healthy H1
Q2 FY24 Q2 FY23
YoY%
H1 FY24 H1 FY23
YoY%
Q2FY24 vs Q2FY23
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
Fixed Overheads
EBITDA
10,170
12,506
(19%)
(24%)
19,133
23,328
8,158
10,058
(18%)
(19%)
5,324
42.6%
(265 bps)
42.6%
43.1%
(48 bps)
2,557
2,768
(3%)
(43%)
4,991
3,167
4,949
5,110
1%
(38%)
4,060
39.9%
2,486
1,573
EBITDA Margin
15.5%
22.1%
(666 bps)
16.6%
21.9%
(535 bps)
Revenue Variance
EBITDA Variance
Volume
Price
FX
2,768
-7%
-5%
-15%
-25%
-15%
3%
856
1,573
1,481
1,072
70
Q2FY23
Volume
Price & Currency
Prd. Cost, Mix & FX
Fixed Overheads
Q2FY24
1,196
1,248
-308
23
2,381
290
Amortization /Depreciation
Net Finance Cost
FX Gain / (Loss)
Other Income / (Loss)
PBT
Tax
PAT before AI, MI and Exceptional Items Income/(Loss) from Associates & JV
Exceptional Cost
Net Profit before MI
Minority Interest
Net Profit
656
822
-229
35
-99
-96
-3
-203
88
-293
-105
-189
608
698
-200
7
1,270
231
1,038
-27
43
969
156
814
1,293
1,572
-431
69
-60
-260
200
-261
130
-191
-168
-23
-
-
-
-
H1FY24 vs H1FY23
-
Revenue Variance
EBITDA Variance
2,091
(90%)
Volume
Price
FX
5,110
3
121
1,974
283
1,691
-
-
-5%
-8%
-15%
-25%
-13%
3%
1,847
3,167
43
2,347
2,294
H1FY23
Volume
Price & Currency
Prd. Cost, Mix & FX
Fixed Overheads
H1FY24
Presentation for Second Quarter ended 30th September 2023
4
Platform-wise Performance Update - Q2 & H1FY24
- UPL Corporation
- UPL SAS
- Advanta Enterprises
- UPL Specialty Chemicals
UPL Corporation: Continue to Gain Market Share Driven by Volumes
(₹ Crore )
Revenue
Contribution Profit
Contribution Margin
Q2 FY24
Q2 FY23
7,415
9,288
YoY%
(20%)
H1 FY24
H1 FY23
13,721
16,946
YoY%
(22%)
2,402
3,449
(30%)
4,507
6,493
(31%)
Q2FY24 Performance Update
• Volumes up despite high channel inventory across key regions
• Revenue impacted primarily by price erosion in key herbicides in Americas; Europe impacted by herbicides, product bans
32.4%
37.1%
(470 bps)
34.0%
38.3%
(440 bps)
• High-cost inventory liquidation, higher sales returns and
Fixed Overheads
EBITDA
1,584
818
1,604
1,844
(1%)
(56%)
3,125
1,382
3,035
3,458
3%
(60%)
rebates to channel partners impacted contribution margin
o Adjusted for the above, H1 contribution margins would
have been higher by ~100bps vs. LY
EBITDA Margin
11.0%
19.9%
(880 bps)
10.4%
20.4%
(1,000 bps)
Outlook
Note: Above financials are after considering proforma adjustments
Sales Variance – Q2FY24 vs Q2FY23
Sales Variance – H1FY24 vs H1FY23
• Elevated inventory levels expected to gradually subside with
strong farmgate demand
o Europe, Asia, and LATAM (ex-Brazil) channel inventory
Volume 1%
0%
-10%
-20%
-30%
Price
Exchange
Volume
Price
Exchange
largely normalized
-25%
4%
-8%
0%
-10%
-20%
-30%
-17%
3%
o NAM and Brazil scenario continues to gradually improve
• Expect to deliver better profitability in H2FY24 vs. H1FY24:
o Seasonally higher sales, stable prices and favorable costing o SG&A optimization (on-track to reduce ~$100M over two years; FY24 savings of ~$50M to majorly accrue in H2FY24)
Differentiated and sustainable segment revenue grew by 9% YoY, led by 17% volume growth in Q2FY24; represents ~36% of revenue versus ~27% LY. Contribution margins up by ~90 bps YoY
Presentation for Second Quarter ended 30th September 2023
6
UPL Corporation: Pricing, De-stocking Impact; Gradual Recovery Across regions from H2
Q2FY23
Q2FY24
(₹ crore)
Latin America
-20%
5,462
4,382
North America
-65%
1,026
357
Europe
-8%
1,200
1,108
Rest of World
+2%
1,493
1,519
• Brazil: pricing decline led impact
• Sharp drop in post-patent AI
• Glyphotal®, Select®, Trunfo®
primarily affected
• Differentiated vol. up, led by
Evolution®, Feroce®
• Mexico and Argentina growth led
by volumes across portfolios
prices, along with channel “de- stocking”, “tactical purchases”, and cash mgmt. by distributors
• Farmgate challenges persist, along
with low AI pricing from China
• Herbicides (e.g., glufosinate, s-
metolachlor, clethodim, metribuzin) accounted for ~75% of regional decline, due to lower vol.
• Channel inventory continues to be a challenge, resulting in degrowth in some parts
• Vol. led decline primarily in
herbicides, impact of product ban (e.g., bifenazate)
• Strong growth in China and Japan
driven by volumes
• Offset by decline in Australia (due to lower s-metolachlor volumes) and Africa (herbicides)
Note: Regional Revenue Charts exclude Others segment which contributed ₹ 46 crore revenue in Q2FY24 and ₹ 107 crore revenue in Q2FY23
Presentation for Second Quarter ended 30th September 2023
7
UPL SAS: Lower Acreages in Key Crops, High Channel Stock Hit Q2; Expect Improved H2 vs H1
(₹ Crore )
Q2 FY24
Q2 FY23
YoY%
H1 FY24
H1 FY23
YoY%
843
144
1,310
(36%)
2,046
2,705
(24%)
Q2FY24 Performance Update
368
(61%)
478
794
(40%)
• Revenue Variance: Volume: -27% YoY, Price: -9% YoY
Revenue
Contribution Profit
Contribution Margin
17.1%
28.1%
(1,096 bps)
23.4%
29.3%
(597 bps)
Fixed Overheads
EBITDA
114
30
122
246
(6%)
(88%)
235
243
247
547
(5%)
(56%)
EBITDA Margin
3.6%
18.8%
(1,521 bps)
11.9%
20.2%
(832 bps)
Note: Above financials pertain to India Crop Protection business only based on proforma adjustments and exclude ‘Nurture’
Nurture –
Update
• Q2FY24: Revenue: ₹ 26.7 crore (flat YoY); EBITDA: ₹ 25.5 crore loss vs.
₹ 68.5 crore loss LY
• H1FY24: Revenue: ₹ 32.7 crore (flat YoY); EBITDA: ₹ 67.5 crore loss vs.
₹ 150.5 crore loss LY
• Notable cost reduction vs last year; streamlined portfolio of
nurture.retail, nurture.farm platforms; strengthened sustain division
• On-track to break-even by FY25
• Revenue impacted due to
o Lower acreages for key crops (cotton, pulses); shift from cotton
in North India exacerbated impact
o Exceptionally high sales returns due to elevated channel stocks o Erratic monsoon in Aug and Sep
• High-cost inventory liquidation, higher sales returns and rebates to
channel partners impacted contribution margin
o Adjusted for the above, H1 contribution margins would be
lower by only ~100 bps vs. LY
• New launches and collaboration led traction in paddy, sugarcane
and vegetables portfolio
Outlook
• Novel pipeline range (e.g., Spruce, Feego, Fascinate Flash, Argyle) to
drive portfolio diversification and expansion
• Expect significantly improved performance in H2 led by new
launches, higher grower demand
Presentation for Second Quarter ended 30th September 2023
8
Advanta: Continues to see Healthy Growth Momentum
(₹ Crore )
Q2 FY24
Q2 FY23
YoY%
H1 FY24
H1 FY23
YoY%
Revenue
Contribution Profit
Contribution Margin
1,070
602
972
531
10%
13%
2,131
1,814
1,264
1,013
17%
25%
56.3%
54.7%
159 bps
59.3%
55.8%
349 bps
Fixed Overheads
EBITDA
337
265
258
273
35%
(3%)
635
630
503
510
26%
24%
EBITDA Margin
24.8%
28.1%
(332 bps)
29.5%
28.1%
145 bps
Q2 FY24 Performance Update
• Volume: +1%, Price: +5%, FX: +4%
• Revenue Growth driven by higher prices and volumes in
Sunflower, Corn, Canola, Sorghum & Vegetables portfolios -
• Partially offset with volume reductions in Brazil Soya, Australia
Sorghum & Ecuador Corn portfolios
• Contribution margins expanded by 159 bps YoY driven by -
o Improved Mix: Better growth in high-margin portfolios
o Good recovery in India Vegetable business
• EBITDA marginally down vs LY as healthy contribution growth was offset by higher employee costs (increase in headcount to support budgeted growth for FY25)
Outlook
• Q3 to watchout due to El-Nino impact in major geographies
• On-track to deliver on FY24 guidance
Presentation for Second Quarter ended 30th September 2023
9
UPL Specialty Chemicals: Lower Agchem Demand Led Revenue Drop; Margins Higher vs LY
(₹ Crore )
Q2 FY24
Q2 FY23
YoY%
H1 FY24
H1 FY23
YoY%
Revenue
3,500
4,580
-24%
6,668
8,648
-23%
Contribution Profit
Contribution Margin
508
537
-5%
1,166
1,359
-14%
14.5%
11.7%
279 bps
17.5%
15.7%
177 bps
Fixed Overheads
EBITDA
11
497
9
527
12%
-6%
21
18
1,145
1,341
17%
-15%
EBITDA Margin
14.2%
11.5%
269 bps
17.2%
15.5%
167 bps
Note: Above financials are after considering proforma adjustments and is inclusive of intercompany revenue
Q2 FY24 Performance Update
• Lower demand from AgChem business
• Non-Agchem Segment
o Domestic business performed better vs. LY o Weak demand in US, Europe; and in lubricants market drove
down exports
• EBITDA margins up 269 bps YoY to 14.2% driven by raw material
procurement at lower prices and manufacturing efficiencies
• Commencement of plant at Kudos expected by early FY25
Outlook
• Expect to deliver improved performance in H2FY24 vs H1FY24 in-
line with the recovery in group’s Agchem business.
• Green shoots emerging in Non-Agchem specialty chemical business
Presentation for Second Quarter ended 30th September 2023
10
Increase in NWC Primarily due to Reduced Factoring and Lower Payable Days
141
135
130
135
147
121
149
124
Sep-22
Sep-23
(No. of days)
Inventory Days
Recievable Days
Payable Days
Net Working Capital Days
Sep 2023: ₹ 18,246 Cr Sep 2022: ₹ 19,457 Cr
Sep 2023: ₹ 18,268 Cr Sep 2022: ₹ 18,044 Cr
Sep 2023: ₹ 16,398 Cr Sep 2022: ₹ 20,374 Cr
Sep 2023: ₹ 20,116 Cr Sep 2022: ₹ 17,127 Cr
• Working capital days increased by 25 days YoY as on Sep 2023 primarily due to –
o Payable days lower by 26 days due to sharp decline in procurement given the reduced manufacturing activity in H1. o Reduction in non-recourse factoring by ₹ 580 crore on a YoY basis
• Working capital days at FY24-end expected to be ~65 days in-line with last year
Presentation for Second Quarter ended 30th September 2023
11
Net Debt at $3.7 Bn as of Sep’23; Higher vs LY due to Sharp Drop in Payables & Lower Factoring
Gross & Net Debt Position – Sep 2023 vs Sep 2022
Particulars
Gross Debt
Cash and cash equivalent
Reported Net Debt
All figures are in US$ Mn and ₹ Crore
Sep’23
Sep’22
Change
$4,086
₹ 33,934
$390 ₹ 3,2372
$3,696
₹ 30,697
$3,995
₹ 32,550
$496
₹ 4,038
$3,499
₹ 28,512
$91
₹ 1,384
($106)
(₹ 801)
$197
₹ 2,185
Net Debt Adjusted for Currency Impact
₹ 30,1161
₹ 28,512
₹ 1,604
•
In USD terms, net debt at $3.7 Bn as of Sep’23. Adjusted for lower factoring, net debt higher by $111 Mn vs Sep’22.
• Net Debt higher vs LY on account of sharp decline in payables (lower by ₹ 3,975 crore YoY) given lower procurement amid reduced manufacturing activity in H1
• Cash generated by business before WC was ₹ 363 crore in H1FY24
• Target to bring down gross debt by $500 Mn by March 2024 vs. LY
Note: 1USD /INR depreciated from 81.47 as on 30 Sep 2022 to 83.05 as on 30 Sep 2023. 2Includes liquid investment of INR 68 crore as of Sep’23 *Operating CF before WC less interest, tax and other cash expenses
Presentation for Second Quarter ended 30th September 2023
12
UPL Group - FY24 Revised Guidance
Revised Guidance
Flat
0% to (-5%)
Revenue Growth
EBITDA Growth
Old Guidance (end of Q1FY24)
+ 1% to +5%
+ 3% to +7%
Revenue Growth
EBITDA Growth
Presentation for Second Quarter ended 30th September 2023
13
ANNEXURE
14
Breakdown of Net Finance Cost – Q2 FY24 and H1 FY24
Net Finance Cost Breakdown
(₹ crore)
Particulars
Q2FY24
Q2FY23
Change
H1FY24
H1FY23
Change
Interest on Borrowings
Interest on Leases & Others
Other Financial Charges
NPV – Interest & Finance
Interest Income
Total Net Finance Cost
559
181
31
122
(71)
822
274
261
49
185
(71)
698
285
(80)
(18)
(63)
926
468
69
247
489
524
74
289
0
(137)
(128)
124
1,572
1,248
437
(56)
(5)
(42)
(9)
324
Presentation for Second Quarter ended 30th September 2023
15
Thank You