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Investor briefing – South America & Europe
Participants
• Valdemar Fischer LAS Regional Manager
• Hugo Schweers Executive General Manager Europe
• Greg Hunt Group Executive Commercial Operations
• Brian Benson Group Executive Marketing & Portfolio Development
• Robert Reis Group Executive Corporate Strategy & External Affairs
2
Investor briefing Valdemar Fischer, LAS Regional Manager
March, 2014
Regional overview – South America
4
• Regional HQ - Sao Paulo
• Brazil is key strategic growth market
• Operational presence in Brazil, Argentina, Chile, Colombia
• Manufacturing base in Fortaleza (BR)
• Sales teams in Brazil, Argentina, Chile, Colombia
• Open distribution relationships
• Launching operations in Uruguay in March/14
Market position
Growth drivers
• Accessing new crop segments with expanded portfolio
• Additional penetration into distribution & end users
• Access to new markets
• Sumitomo collaboration
Market Value LAS : US$ 16 bi
Nufarm market share: 3.4%
Employes: 425
Registered products: 461
20% of Nufarm Global Sales
Quality
Quantity
Strategic Agenda 2012 LAS key crops & growth drivers
Coffee
Sugar cane
Soybean
Corn
Pastures
Cotton
Wheat
Citrus
Grapes
Vegetables
Rice
Pastures
Fruits
Competitive landscape
• Andean Countries – strong competition from small local players, tight margins
• Mercosur – Double digit growth rate for the last 3 years, driven by acre and technology increase
• Market Access – fragmented in general, concentrated in Chile and direct sales to growers increasing in row crops
• Local players struggling to remain competitive
6
Regulatory environment
• Andean Countries – in general not very complicated, not a barrier to enter
• Chile - long and expensive process
• Argentina – Paraguay – Uruguay – straight forward, not a barrier to enter.
• Brazil – extremely cumbersome, huge barrier to enter, long process and very expensive
7
LAS strategic agenda – based on 5 pillars
Innovative technologies
Strategic alliances
Organizational excellence
Regional integration
Access to new markets
Management structure
• New General Managers in Argentina and Colombia
• Commercial structure in Argentina and Brazil reinforced with additional people hired into the company
• New CFO for the region hired in 2012
• Seed Treatment Manager for the region hired in 2014
• Strategic Planning position for the region filled in 2013
• New Supply Chain Managers for Argentina and Brazil hired in 2012/13
• HR structure in place for Argentina, Brazil and Colombia
9
Several changes in the management structure
Nufarm is present on the key regional markets…
LAS Operations
• Market U$S 11.300 mill
• NUF U$S 441 Mill
• MS 3,9%
• Market U$S 2.550 mill
• NUF U$S 76,5 Mill
• MS 3,0%
• Market U$S 363 mill
• NUF U$S 11,1 Mill
• MS 3,0%
• Market U$S 520 mill
• NUF U$S 18,8 Mill
• MS 3,6%
…serving as a launching platform to other key markets
LAS Operations
Argentina
Crops and commercial distribution
Ofifice
Production Center (Toller)
Distribution Center
Sales REP’s
Cattle
Vegetables
Pomes fr Corn
Soybean
Wheat Forestry
Cítrics Grapes
• Growth driven by demand and price increases, tough weed issues (herbicides no glyphosate) and new technologies launchings (DHT and Dicamba)
• DHT and Dicamba resistance soybean are expected launched by F16/F17
Agrochemical market expected to grow 8% per year
1309
1676
2053
2369 2550
2754 2975
3212 3469
3747
0
500
1000
1500
2000
2500
3000
3500
4000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
13-18 CAGR 8%
14%
8%
72%
4%
2%
Insecticides Fungicides Herbicides Seed Treth Others
Sales by Segments - 2013
1. Set the Base
FY 2010 to 2013 2. Build on the Base Grow Value
FY 2014/2015 3. GROW A PROFITABLE
BUSINESS
FY 2016 to 2018
• Focus on: ‒ Differentiated solutions ‒ Brand developments ‒ Customers ‒ Business process
• Strengthen business initiatives • Improve Distribution strategy
‒Sale Coverage ‒Demand Generation
• Border countries development • Improve Pipeline delivery
+ Innovation + Profitability
• Prepare the team to double the business
• Key success factors
‒ Supply
‒ Competition differentiation
‒ Channel management
‒ Risk management Focus
‒ Functional cost Discipline
‒ Organizational Development
Horizons
Brazil
17
Brazilian AgChem market accelerating growth
Strong performance in the last 5 years
18
For the first time ever insecticides was the larger segment in the market
19
Herbicides 55%
Insecticides 29%
Fungicides 13%
Other 3%
Regional revenues by major product segment
Herbicides 31%
Insecticides 42%
Fungicides 24%
Other 3%
Market segment by products
Nufarm regional split South America 2013 FY
2013 Segmentation by Crop
20
Nufarm
51%
8%
12%
5%
3%
6%
4% 3%
4% 4%
Soybean Sugar cane Corn Cotton
Coffee Pastures Beans Citrus
TNVV Other
51%
11%
9%
7%
3%
3% 3%
2% 2%
1%
1%
1%
6%
Market
Soybean Sugar Cane Corn
Cotton Coffee Pastures
Beans Winter cereals Citrus
Rice Potato Tomato
Other
Strong presence at the end user level Market Structure – Distribution & Direct Sales
21
Distribution 65%
Direct Sales 35%
Nufarm Business Model: Still space to grow at the end user level
• 68% Sales to Dealers
• 18% Direct Sales to Growers
• 14% Sales to Cooperatives
• 1,500 customers served by 85 Sales Reps, coordinated by 9 Regional Sales Managers, lead by 2 Sales Executives reporting to Commercial Director
• 8 Distribution Centers
• Production Site – formulating – Herbicides, Insecticides, Fungicides, Adjuvants,...
DEALERS 68%
DIRECT SALES 18%
COOPERATIVES 14%
1. Refocus the company
FY 2010 to 2011 2. Consolidation and
growth
FY 2012/2013 3. Portfolio expansion and
new business
FY 2014 to 2015
• Focus on: ‒ Strategic agenda ‒Sales force realignment ‒ Market coverage ‒'Go to Market' strategy review ‒Strategic alliances
• Back office balance • Customer relationship
management • Marketing restructuring • Focus on new R&D projects • Prepare the team to double the
business
• Entering new segments – seed treatment
• Brand differentiation
• Sumitomo portfolio
• Nuseed synergy
Horizons
Product portfolio
7. Ensure cost competiveness and
improved efficiencies
1. Differentiate
3. Expand/diversify product portfolio
4. Support growth of seeds platform
5. Define, communicate and adhere to return
targets and KPIs
2. Reinforce/ enhance brand values
6. Build the strength and capabilities of the
organisation
Operational excellence
Human capital
Risk management
Strategic Customer
Management
Consistent
1. Differentiate
3. Expand/diversify product portfolio
4. Support growth of seeds platform
2. Reinforce/ enhance brand values
Global strategy Brazil strategy
Risk
Management
Segmentation and
Selection of Customers
Review of Credit
Limits of key
customers
Credit Insurance
Increase the
percentage of
hard garantees
over sales
To align the initiatives in all areas of the company to manage
risk.
To allow the company to achieve its strategic objectives in Brazil, minimizing the impact of the key risks that are part of the business.
Increase Direct
Sales to Growers
Strategic initiatives
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
Soybean Corn Sugar Cane Coffee Cotton Citrus
2013
2014
2015
2016
2017
2018
We expect acres to keep increasing …..
Market evolution and potential growth scenario
27
8,300
9,500
11,300 12,000
12,600 13,200
13,900 14,500
15,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2011 REAL 2012 REAL 2013 REAL 2014 FCST 2015 FCST 2016 FCST 2017 FCST 2018 FCST 2019 FCST
Bra
zil c
rop
pro
tect
ion
mar
ket
US$
(m)
….postively affecting the market value
Market share evolution
28
2011
Ranking Company Sales Market share
1 Syngenta
2 Bayer
3 BASF
4 FMC
5 DuPont
6 Dow
7 Ihara
8 Monsanto
9 Milenia
10 Nufarm 299 3.6%
7,074 84.9%
Others 1,255
Total 8,329
2012
Ranking Company Sales Market share
1 Syngenta
2 Bayer
3 BASF
4 FMC
5 DuPont
6 Dow
7 Monsanto
8 Ihara
9 Nufarm 341 3.6%
10 Milenia
8,018 84.4%
Others 1,483
Total 9,501
2013
Ranking Company Sales Market share
Var%
1 Syngenta
2 Bayer
3 BASF
4 DuPont
5 FMC
6 Dow
7 Monsanto
8 Nufarm 441 3.9% 29.3%
9 Milenia
10 Ihara
9,446 83.6%
Others 1,855
Total 11,301
Sales US$ M / calendar year
29
• Keeping focus on key crops
• Launching new product concepts
• Generate demand at the end user level
• Increase our direct sales to growers with tailored offers
• Develop new financial tools to share credit risk with distributors
We expect to deliver solid market share growth until 2020 by….
Fulfil Order
Generate Demand
Generate Value
Value to Nufarm
Val
ue
to
Cu
sto
me
r
Market share evolution Customer relationship
Investor briefing Hugo Schweers, Executive General Manager Europe
March, 2014
Overview of regional markets
Nufarm Europe - around the globe
EU MARKET 2012 (US$): 12,311 Million
2929
2 379
2 074
943 882 685 550
400 367 315 310
181 139 133 24 0
500
1000
1500
2000
2500
3000
3500
4000
2012 2011 2010
Nufarm Ag Market Share in Europe
Phillips McDougall 2012
Nufarm Market Share 3.25%
Market structure
• Distribution varies from market to market
• No selling on-farm
• Considerable third party distribution arrangements
• Emergence of pan-European advisory/marketing groups
Nufarm regional presence
AG-Business
Product Mgmt Crop Mgmt
3-Party Mgmt Stewardship
Branding
Non Crop Africa
Middle East Biorationals
Manufacturing Procurement Supply Chain
Industrial Bus. Phenoxy Bus.
Tolling
6 Regions 16 Entities
40 Countries
Operations New Business Marketing
•Nufarm Europe
•EUMEA Strategy
•Capital expenditure
•Legal Entities
•Direction, Coordination
•Results
Nufarm global – Direction, Guidelines
Nufarm global – Nufarm Region Europe, Middle East, Africa
Hugo Schweers Executive General Manager
Malte Hansen Director HR
Toby Brown Director New Business
Peter van Sloun Director Finance & IT Manfred Konradt
Director Portfolio Management
Rene Langevoort Director Marketing
Yvonnick Jambon Director AG-Business
Martine Lagneau Director Legal
Dave Allen Director Operations
Management Team
Niels Pörksen Director Business Improvement
N EU
Central EU I
Central EU II
S EU
SE EU
E EU
EU – AG Business Sales Regions
Major product segments Crop protection % total segment revenues
$2,145.6m
Global 2013 Europe 2013
$408 m
Insecticides
10%
Herbicides
69% Fungicides
10%
Other
11%
Insecticides
7%
Herbicides
69%
Fungicides
13%
Other
11%
Key European a.i.´s:
• Phenoxies
(MCPA+2,4D+CMPP-D+2,4DP-D)
• Bromoxynil
• Chlortoluron
• Metsulfuron Methyl
• Diflufenican
• Fluroxypyr
• Tebuconazole
• Azoxystrobin
• Copper
• Imidacloprid
• Lambda-Cyhalothrin
• Ethephon
• CCC
• NAA/NAD
1. Add-on-value solutions:
• Kyleo (Glyphosate + 2,4 D)
• Tandus Power (Fluroxypyr + MCPA)
• Nuprid 600 FS (Imidacloprid)
• Cyclops (Bromoxynil + DFF)
• Alliance Super (MSM+DFF+Florasulam)
• Carmina (CTU+DFF)
• Zeagran Ultimate (Terb+Brom)
• Kaiso Sorbie (Lambda-Cyhalothrin)
• Mystic Pro (Teb+ PC)
• Tazer Xpert (AZ)
2. Generics:
• Clinic (Glyphosate)
• Stabilan (CCC)
• U 46 M (MCPA)
• U 46 D (2,4 D)
• Cuproxat (Copper)
Major European products:
Competition
Trends
Stru
ctu
re
• Farms (number, size)
• Advicers
• Political influence • Generics
• Crop Production • COGS decrease • Manpower increase
• Distribution • Integration
Reliable Focused
Value oriented
Different
From 'reactive' supplier to 'active' professional
Seeds Seed
Treatment
InSeason Crop
Protection
Post Havest
⎣ NuSeed ⎣ Seed ⎣ Distribution
⎣ Imidacloprid ⎣ Tebuconazole
⎣ Phenoxies ⎣ Bromoxynil ⎣ Glyphosate ⎣ Other Herbicides ⎣ Fungicides ⎣ Insecticides ⎣ PGR`s
⎣ PGR´s ⎣ Fungicides ⎣ Biorationals
Nufarm Europe - Solution structure
Development New Mixtures, Pipeline CP & ST
Registration
Distribution
AOVS Distribution
Generics
Operations Inhouse Manufacturing, Logistics
Clients
Farmers
Nufarm Europe – Innovation creation
Controll goal setting / Feedback to clients
Trends
Portfolio-key products (KP)
Quantity planning
Presentation KP-Program to customers and advisers
Potential- and market analysis
Pre-sales & direct delivery to clients
Concept Crop Protection for
Framers
Distribution of a concentrated portfolio
Field activities, advice
Complete advice
Commercial success for Nufarm EU-Crop Protection
Nufarm growth strategy
Situation
• Agricultural markets in Europe are changing very fast
• Flexibility and innovations are key for success
• Stable financial situation is critical
• Size is not the driver any more, but knowledge
European strategy 2014
• Stabilize and grow our market position in key crops/segments
• European product innovations and positioning
• Increasing customer relation through decentralized distribution concepts and
decision making
• Strengthen distinctiveness for NUFARM and its brands
• Utilization of synergies and streamlining potentials
• Increasing focus given to ANWC
TOP 10 Projects • Imidacloprid - NUPRID range of products (Nuprid 200-600, Nuprid Max, Suscon)
• DFF - ALLIANCE top cereal herbicide for autumn and spring
• Florasulam - TROLLER new cereal herbicide range
• MCPA - TANDUS POWER herbicide for cereals and pasture
• Bromoxynil - ZEAGRAN ULIMATE, UBIKA, NAGANO, CYCLOPS
• Tebuconazole - TIMPANI, MYSTIC PRO, Soleil
• Azoxystrobin - TAZER, TAZER Top, TAZER Set
• 2,4 D - KYLEO
• Seed treatment - NUPRID 600 FS, GIZMO, NUPRID MAX
• Sumitomo - CHEYENNE, RISOLEX, PROLECTUS, SOLEIL
• Creation of Nufarm BRAND families!
Key Crop & Segment drivers Europe Four Crops and two Segments
Key Crop New product introductions
Sumitomo product range
Cereals 10 Soleil
Corn 3 -
TPVV 2 Risolex, Prolectus, VBC
range: DiPel DF, Borneo, Maxcell, etc
Grassland 2 Smartgrass
ST 3 -
Non Crop Dow range
EU Centre for Seed Treatment
• Seed Treatment work started in Europe in September 2010
• Main reason for building up a centre of excellence for Seed Treatment in Wyke was the existing laboratory space and people experience
• Capabilities and competencies developed:
– Formulation expertise
– Analytical methods
– Seed treatment application
– Germination and seed safety testing
– Compatibility testing of seed treatment formulations with other products
– Glasshouse trials
– Plant tissue analysis
– Field trials (external plots)
– Production scale-up (internal/external – commissioned by Wyke)
– Reverse engineering
– Dust-off testing
– GLP capabilities
Seed germination and growth
• Germination and seedling growth:
– Essentially a laboratory glasshouse equivalent
– Germination and growing of plants
– Provide plant tissue for extraction of a.i.’s for analysis
• Germination testing:
– Seed germination growth cabinet – temperature and light controllable
– Crops – cereals, oilseed rape, maize, sunflowers, sorghum
Seed formulation application and testing
• Application to seed:
– Laboratory seed treater – Hege 11.
– Application of the formulated product to the seed – slurry and co-application.
– Range of pesticide seed treatments and seed enhancement products – colours and stickers.
– Crops – cereals, oilseed rape
• Dust testing:
– Heubach dust meter in place.
– Industry standard test equipment in Europe for the measurement of seed treatment dust abrasion from treated seeds.
– Installed under GLP laboratory conditions.
– Being used extensively in testing of polymers, stickers and binders to reduce dust-off of Nuprid products.
– Knowledge sharing with US.
Robustness – an expert view
Alan Knowles on the Wyke Technical Department:
“Your work in formulation robustness testing is at the cutting edge……You are doing things to assess formulation stability that none of you competitors have even thought of.”
Alan Knowles, 18/12/13
• Growing 3 b€ market
– Nufarm´s growing Herbicide position
- Nufarm No.1 in Herbicides in KAZ
‒ Nufarm strong in Seed Treatment
• Political instability – barter businesses ‒ Investment in structure
- Russia
- Serbia
- Bulgaria
Opportunities and challenges in Eastern Europe
Nufarm African position & strategy
• North Africa : (50% of sales)
‒ Very strong positions in cereal herbicides, fruit & veg fungicides in Marocco, Algeria,
Tunisia
‒ Entry in the cereal fungicide market & the veg/fruit insecticide markets
‒ New targets : ST, more cereal herbicides and enter cereal fungicide segment
• East Africa : (20% of sales)
‒ excellent penetration in the Sudanese market (cereal herbicide) and development of a
sepcific ST-portfolio
‒ Continuous development in Kenya/Tanzania: cereals, potato, veg
• West Africa : (30% of sales)
‒ Very strong position in cocoa fungicides in Ghana
‒ Development of our presence in the cocoa segment in Nigeria and Cameroon
Cereals 2,4-D, MCPA, MCPP, Ioxynil, DFF, Chlortoluron, MSM, CCC, Tebuconazole, Imidacloprid, LCH, PCZ
Vegetables abamectin, imidacloprid, PGR’s, copper mixture fungicides (cymox, folpet, maneb, mancozeb), fluazinam
Cocoa Copper hydroxide, metalaxyl+copper hydroxide
Orchards Aminotriazole, Glyphosate, Copper mixture fungicides (cymox, folpet, maneb, mancozeb), PGR’s teb
Potato fluazinam, copper mixture fungicides (cymox, folpet, maneb, mancozeb)
Corn Bromoxynil, Nicosulfuron, Dicamba
Colonne1
Cereals 8
Fruit&Veg 6
Cocoa 5
Other 1
Pourredimensionnerlaplagededonnéesdugraphique,faitesglisserlecoininférieurdroitdelaplage.
40%
30%
25%
5%
Nufarm Africa sales by crop (2012)
Nufarm's key target crops in Africa
Nufarm Development in Europe - Status
Bullish Bearish
Herbicide strength
Eastern European demand; build Russia
Phenoxy strength
Collaboration with Sumitomo
Strong position in Spain, Rumania
Germany with growth potential
Stable in Greece
Seed treatment a growth segment
Non Crop segment pan EU
Speciality crops growth
Growth in Africa
New products introduction
Bromoxynil growth opportunities
Still Fungicide/Insecticide weakness
France m.s. still low
Generic pressure
Position in Middle East to strengthen, build Turkey
Fundamental Development confirmed; focus on new Blockbusters Re
s
• Excellent product pipeline
• Stable Crop Protection market
• Changing distribution structures
• No longer a pure Generic me-too
• Focus on crop know-how to
deliver innovative solutions
Outlook for Nufarm Europe
