Sustainability Non-Deal Roadshow in Europe April/May 2019 Contents - - PowerPoint PPT Presentation
SIME DARBY PLANTATION BERHAD Sustainability Non-Deal Roadshow in Europe April/May 2019 Contents Business Overview Dr Shariman Alwani (Chief Strategy & Innovation Officer) Strategy Moving Forward Financial Overview Renaka
April/May 2019
Dr Shariman Alwani
(Chief Strategy & Innovation Officer)
Renaka Ramachandran
(Chief Financial Officer)
Dr Simon Lord
(Chief Sustainability Officer)
Principles into Practice
3
Integrated Plantation Company Involved in the Entire Palm Oil Value Chain
Note: Figures as at 31 December 2018 unless stated otherwise
1 Estimated based on global planted area of 21.5 mn ha worldwide 2 For the January – December 2018 period 3 Based on global CPO production of 70.46 mn MT in 2017/2018
We are the world’s largest oil palm plantation company by oil palm planted area with total landbank of more than 997,000 hectares across Malaysia, Indonesia, PNG & Liberia
Leader in Sustainability – World’s Largest Producer of CSPO
Production Capacity1
World’s Largest Oil Palm Plantation Company (by planted area)
Total Refining Capacity (11 Refineries)
Edison Award 2017 under the Energy and Sustainability category
(Genome Select Oil Palm Project)
Estates
Mills
Crushing Plants
(inclusive of soy crushing plant)
2
Jan-Dec 2018 Total CPO Production (~4% of Global Market Share3)
4
With a fully integrated business model, we are able to diversify our earnings risk from volatility of commodity price and leverage on operational synergies
5
Differentiated Food Bulk Processing
Legend:
* Excluding Industrial Enterprises (IE) Soya in Thailand Note: ▪ Figures as at 31 December 2018 ▪ Names of refineries in brackets refers to the respective proposed new names
Refineries
Average Refinery Utilisation
Refined bulk products produced by the Group’s bulk refineries: RBD Olein, RBD Stearin, CPKO, RBD PKO, etc. Ingredients produced by the Group’s refineries: Bakery fats, specialty oils, confectionery fats, health Non-food products produced by the Group’s biodiesel, oleochemicals and nutrition plants
6
6
Supplying essential ingredients to world-famous brands in food and non-food products
~20% of global supply
(4% of global CPO production)
7
‘The Leading Integrated Global Palm Oil Player’
The global brand for plantation sustainability VISION GROWTH STRATEGY TARGETS BY 2023
U P S T R EA M
DRIVING OPERATIONAL EXCELLENCE VIA DIGITISATION
D OW N S T R EA M I N T EG R AT I O N 1 2 3
Towards Mission 23:23
Achieving FFB yields of 23 MT/ha & OER of 23% by 2023
Higher Downstream PBIT contribution
20% of Group’s PBIT within the next 5 years
Integrated economics across the value chain SERVING THE CUSTOMERS OF THE FUTURE MAXIMISING RETURNS ACROSS THE PALM OIL VALUE CHAIN
8
FFB Yield (MT/ha)
OER
Downstream Contribution1
FY2018
FFB Yield (MT/ha)
OER
>15% reduction2
Cost to customer
Downstream Contribution1
FY2023
FFB Yield (MT/ha)
OER
10-15% reduction2
Cost to customer
Downstream Contribution1
FY2020
1 % of Contribution to Group PBIT 2 Reduction in Cost to Customer as compared to FY2018
9
Organic Growth Non-Organic Growth Merger & Acquisitions
FY 2019 FY 2023
products across B2B and B2C markets VALUE CREATION
customer requirements (e.g. low 3-MCPD)
margin products (bulk vs differentiated)
Specialty Ingredients
building new plants or purchasing higher capacity machines
To DOUBLE PROFITS in 2023
Driving performance through culture change
10
Accelerating Performance Excellence Sustaining Performance Excellence Measure: PATAMI Growth Measure: Organisational Health Index (OHI) “How we deliver results” “How we sustain results”
Disciplined execution and rigour across APEX
PERFORMANCE HEALTH & CULTURE
Establishment of Transformation Office to ensure effective execution of strategies
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ensure accountability
UPSTREAM SPECIAL PROJECTS DIGITAL DOWNSTREAM CASH CONTROL TOWER RESEARCH & DEVELOPMENT ORGANISATION / PEOPLE
work streams
FINANCIAL ALIGNMENT
Value creation targets
PROGRAM MANAGEMENT PLATFORM
Improve tracking efficiency & manage value creation progress
To protect, sustain and leap the growth of SD Plantation’s value
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2019 >2020 EMBEDDING INNOVATION
AWARENESS & PLATFORM
BELIEVE IN INNOVATION
UPSKILL & ENHANCE
ACT WITH INNOVATION
INGRAIN & ENFORCE
2018 LEAD IN INNOVATION
EXEMPLARY ROLE MODEL
2020
13
planting material
(e.g. Genome, Dami)
B
SUPERIOR PLANTING MATERIAL
management & conservation practices
C
WATER MANAGEMENT
automation and digitisation
and latest extraction technologies
D
PLANTATION OF THE FUTURE
A
REPLANTING
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Our strategic initiatives are yielding positive results Replanting with Superior Planting Materials Cost Management
Progress To-date Strategic Priorities Initiatives To Improve Operational Efficiencies
Water Management
10,867 ha irrigated1 1,157 ha irrigated1 3,584 ha irrigated1 2,071 ha irrigated1
2
2
Select
Dami
rationalisation
reduction via precise application
2
Crop Quality Improvements
Improving and streamlining processes to enhance crop evacuation
1 As at 31 December 2018 2 For the six-month financial period ended 31 December 2018 (FP December 2018)
Jul-Dec’18 : 5.56 mn MT Jul-Dec’17 : 5.46 mn MT Jul-Dec’18 : 21.17% Jul-Dec’17 : 20.96%
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Through achieving sustainability, quality and food safety requirements
Such as India, Southeast Asia, the United States, Europe, Africa, the Middle East and China
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As at 31 December 2018 unless otherwise stated
Malaysia Indonesia Liberia PNG & SI Total
Total oil palm planted area(ha)
304,731 201,072 10,263 91,080 607,146
Mature area (ha)
248,964 158,791 9,975 79,125 496,855
Palm tree age profile & average tree age (Years) FFB production* (mn MT/year)
5.373 2.892 0.086 1.980 10.331
CPO production* (Total) (mn MT/year)
1.332 0.787 0.020 0.571 2.710
PK production* (Total) (mn MT/year)
0.335 0.178 0.005 0.148 0.665
FFB yield* (MT/ha)
21.9 18.1 8.7 25.1 20.9
OER*
20.8 21.1 21.1 22.4 21.2
KER*
5.2 4.8 5.5 5.8 5.2
Average CPO selling price* (RM/MT)
2,262 1,920 1,989 2,412 2,184
Average PK selling price* (RM/MT)
1,780 1,376 481
<3 yrs 4-8 yrs 9-18 yrs 19-22 yrs >22 yrs
11.8 yrs 13.6 yrs
13% 24% 45% 13% 5%
5.4 yrs 11.8 yrs
18% 21% 30% 22% 9%
12.3 yrs
* For the January – December 2018 period
18% 22% 35% 16% 9% 21% 13% 17% 38% 11% 3% 97%
18 Note: FP Dec 2018 refers to the six-month financial period ended 31 December 2018
13.29 6.54 14.37 14.78 11.95 10.30
Jan-Dec 2018 FP Dec 2018 FY18 FY17 FY16 FY15
Revenue (RM'bn)
4.5 4.3 8.5 7.9 4.4 6.7
Jan-Dec 2018 FP Dec 2018 FY18 FY17 FY16 FY15
ROIC %
1,138 559 2,536 4,455 1,259 1,538
Jan-Dec 2018 FP Dec 2018 FY18 FY17 FY16 FY15
PBIT (RM'mn)
523 244 1,727 3,507 967 997
Jan-Dec 2018 FP Dec 2018 FY18 FY17 FY16 FY15
PATAMI (RM'mn)
1 2 1 2
1 FY17’s PBIT and PATAMI includes the non-cash gain on sale of MVV land to SD Berhad 2 FY18’s PBIT and PATAMI includes the non-cash gain on sale of land to SD Property and reversal of accrual for donation
19
1 Based on Total Borrowings (including intercompany loans) divided by Total Equity
1.37 1.29 0.61 0.55 0.44 0.39 0.40 0.46
As at 30 Jun 2015 As at 30 Jun 2016 As at 30 Jun 2017 As at 30 Sep 2017 As at 31 Dec 2017 As at 31 Mar 2018 As at 30 Jun 2018 As at 31 Dec 2018 Days RM’mn (x) (x)
Working Capital Turnover Period Indebtedness by Maturity (as at 31 Dec 2018) Current Ratio Gross Gearing Ratio1
0.5 1.3 1.1 1.2 1.5 1.6 1.6 1.2
As at 30 Jun 2015 As at 30 Jun 2016 As at 30 Jun 2017 As at 30 Sep 2017 As at 31 Dec 2017 As at 31 Mar 2018 As at 30 Jun 2018 As at 31 Dec 2018
1,804.3 3,660.0 1,311.7 520.9 Within 1 year 1-2 years 2-5 years More than 5 years 52 44 38 40 40 78 85 71 75 81 46 39 34 35 34 As at 30 Jun 2015 As at 30 Jun 2016 As at 30 Jun 2017 As at 30 Jun 2018 As at 31 Dec 2018 Receivables Inventory Payables
Impact of the lower average CPO and PK prices realised partially mitigated by improvements in operational efficiencies and Downstream earnings
20
1 Others refers to Sime Darby Agri-Bio Sdn Bhd, Sime Darby Research Sdn Bhd, Sime Darby Technology Sdn Bhd, Sime Darby Biotech Lab Sdn Bhd, Sime Darby
Seeds Sdn Bhd, as well as investment holding companies, associates and joint ventures
1H Dec 2017: 1,013 (-62% YoY)
1H Dec 2017: 718 (-58% YoY)
1H Dec 2017: 134 (+9% YoY)
Recurring PBIT in RM’mn
1H Dec 2017: 38 (-63% YoY)
1
1H Dec 2017: 261 (-74% YoY)
1H Dec 2017: -43 (+5% YoY)
1H Dec 2017: 77 (-26% YoY)
21
Net positive impact on PBT
1,104
in RM’mn
Dec 2017 Recurring PBT Dec 2018 PBT 443 14
457
Recurring PBT Non- recurring PBT
37 72 19 175 12 43
1,450
Recurring PBT before the impact
Higher FFB production Higher sales volume Higher OER Lower cost to customer Higher Downstream results Others Higher interest expense Lower CPO & PK prices realised
358
22
699
in RM’mn
Dec 2017 Recurring PATAMI Dec 2018 PATAMI 230 14
244
Recurring PATAMI Non- recurring PATAMI
20 55 16 139 9 58
987
Recurring PATAMI before the impact
Higher FFB production Higher sales volume Higher OER Lower cost to customer Higher Downstream results Others Higher interest expense Lower CPO & PK prices realised
Net positive impact on PATAMI
297
23
83% 17%
As at 30 June 2018
75% 25%
As at 31 December 2018
Long Term Debt Short Term Debt
24 in RM’mn
40% 46% 6,489 7,297
Borrowings increased by RM808mn attributable to:
loan drawdown for the acquisition
Company (MFCL) of RM245mn
inventory balances
appreciation of USD and EUR against RM by 3% and 2%, respectively resulting in an impact of RM179mn
1 Based on Total Borrowings (including intercompany loans) divided by Total Equity
25
FP Dec 2018 FY2018 Net Per Share (sen) Total Net Dividend (RM’mn) Net Per Share (sen) Total Net Dividend (RM’mn) Final Cash Dividend 1.7 117 11.5 782 Special Dividend
408 Total Dividend 1.7 117 17.5 1,190
SD Plantation declares and maintains a dividend payout ratio of not less than 50% of the consolidated profit attributable to the owners of the Company
Payout ratio
(Based on recurring PATAMI)
~51% ~63%
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19.83 21.15 24.69 17.99 8.77 10.75 13.65 6.24 0.55 0.55 0.55 0.28
FY2016 (Jul-Jun) FY2017 (Jul-Jun) FY2018 (Jul-Jun) FP2018 (Jul-Dec) Upstream Downstream IT Systems
29.15 32.45 38.89 24.51
(6-month period) in RM’mn
Total Sustainability Costs include: Certification & traceability Social and environmental analysis IT systems related to sustainability programs Costs for the Sustainability Department
28
There are many definitions of sustainability. This is the most accepted
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Sime Darby Plantation pursues sustainability in a way that creates value to the organisation
People Planet Prosperity
Equitable Bearable
Sustainable
Viable
Legal & Regulatory Compliance
PEOPLE Contributing to a Better Society PLANET Minimising Environmental Harm PROSPERITY Delivering Sustainable Development
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Sime Darby Plantation pursues sustainability in a way that creates value to the organisation
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But, essentially, it is all about
The Sustainable Development Goals (SDGs) are global goals set by the United Nations. It is a call to action on sustainable development, complete with progress measures. However, upon analysis, we realised that the indicators are not useful to us (as a business entity), and have decided to focus on the goals and targets.
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We have identified goals which are key to the way we do our business
Central Pillar Goal Base Goal Core Goals Periphery Goals
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Sime Darby Plantation is on a journey to become a leader in sustainable palm oil STEP 1 STEP 2 STEP 3
GOAL ACTIVITY
Avoiding risk Being seen to be good “Doing” sustainability Avoid risk PR for reputation Take action
Sustainability Maturity Acknowledge where we are
2015
34
Changing culture as we move into strategic sustainability
Sustainability Maturity Articulate where we are going
2015
2016 2017 2018 2019
Emerging Managing Performing Excelling Leading
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Sime Darby Plantation has moved from tactical to strategic sustainability STEP 1 STEP 2 STEP 3 STEP 4 STEP 5
GOAL ACTIVITY
Avoiding risk Being seen to be good “Doing” sustainability Living sustainability Leading sustainability Avoid risk PR for reputation Take action Integrate into core business Leverage value
Sustainability Maturity Acknowledge where we are – Articulate where we are going
2015 2019
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The number of issues falling within People, Planet and Prosperity are huge… Palm Oil Industry
Traceability Smallholders Deforestation Haze Peat Endangered Species Biodiversity Human Rights Climate Change Community Rights Agro- Chemicals Safety Nutrition High Carbon Stock Health These are challenges to the industry’s credentials and therefore to us
37
Exploitation How safe is the food we eat? Who owns it? What’s on it? Are we part of the problem or part of the solution? How transparent is
chain?
Issues in the Palm Oil Industry
Are we treating people with respect?
38
Sustainability is critical in unlocking the value
Upstream S1 Flawlessly implement sustainability
no longer enough S2 Lead in development of new standards and approaches S3 Inclusion of stakeholders and communities in delivering sustainable development Midstream & Downstream S4 Identify and manage supply chain sustainability risks, develop strategic partnerships, and meet geographical markets’ expectations S5 Capitalise on sustainability as a competitive advantage. Re-imagine sustainability to brand Sime Darby and enhance customers’ credentials
Protect Project
Our sustainability credentials need to be beyond doubt
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Sime Darby Plantation is guided by its charters, with systems in place to monitor, report and verify the implementation of commitments through the Sustainability Committee
Sime Darby Plantation Responsible Agriculture Charter Sime Darby Plantation Human Rights Charter Sime Darby Plantation Innovation and Productivity Charter
Our Human Rights Charter articulates our commitment towards respecting human rights in line with the United Nations Guiding Principles (UNGPs) on Business and Human Rights Our Responsible Agriculture Charter articulates our commitment towards environmentally, socially and economically responsible agricultural practices Our Innovation and Productivity Charter states our aspirations across the value chain in achieving prosperity, via enabling high levels
sustainable development
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Existing practices and policies ________________
1980’s, 24 hour Hotspot Monitoring
regardless of depth
Planting Procedures which include FPIC, HCV and SEIA Assessments prior to planting
identified
and Biodiversity projects
sustainability reports, website, annual report, FTSE4Good, DJSI, ACOP and CDP
Our Approach towards NO Deforestation in our Supply Chain
41
No new development on peat areas, regardless of depth
Groundwater levels are actively monitored and managed by canal systems in peat plantations:
Canal in a peat plantation Water level monitoring point (optimally 50-70cm below the bank) Weir to control water level in canal
We also engage with local communities to educate them on sustainable management of peat areas in an effort to prevent slash and burn activities Peatland SDP Malaysia : 15,064 Ha SDP Indonesia : 29,107 Ha
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Our Approach towards Reducing Carbon Emissions
Palm Oil Mill Cooling Pond Anaerobic Ponds Aerobic Ponds Discharge
Current Practice in SDP Mills
Criteria of POME: 1. Very acidic (pH 3.0-4.8) 2. High COD, BOD – high CH4 emission
The Problem
SDP’s Biogas Journey Reduce carbon emission intensity by 40% The 2009 SDP’s baseline carbon inventory: 2,607,752 tonnes of carbon dioxide equivalent (tCO2e) or 1.06 tCO2e per tonne of crude palm oil (CPO)
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Our Approach towards ZERO Burning Sime Darby Hotspot Dashboard
within 5km radius from our boundaries
hotspot detection
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SDP recorded overall 46% reduction in LTIFR since FY15/16
LTIFR – Lost Time Incident Frequency Rate (Total number of LTI/Total worked hours x 1,000,000) 11.63 12.37 11.90 11.23 10.75 23.38 24.22 23.24 24.36 23.66 21.38 20.85 20.91 20.03 19.69 17.88 14.46 13.00 12.52 12.69 12.75 9.68 21.30 17.72 8.30
Plantation LTIFR - YTD June 2018
Plantation YTD LTIFR LTIFR Target FY 15/16 - 9.68 LTIFR Target FY 16/17 - 21.30 LTIFR Target FY 17/18 - 17.72 LTIFR Target FY 14/15 - 8.30
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SDP Occupational Fatalities
3 2 2 4 3 2 1 3 4 2 4 2 1 2 3 3 2 1 1 2 8.4 8.0 7.1 9.8 9.6 5.8 5.0 CY2011 CY2012 CY2013 CY2014 CY2015 CY2016 CY2017
SDP Fatalities & Fatality Rate (FAR) by Calendar Year
USM USI USL NBPOL DS OTHERS SDP FAR (per 100,000 Employees)
health & culture enhancement through iCARE
Upstream Malaysia
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Supply Chain Risk Map (Austral Refinery – Sarawak)
SDP will be launching our enhanced approach to supply chain traceability and management in 2019
47
Partnerships for the Goals, is the Foundation
We need alliances… … therefore, we consistently seek partnerships, collaborations and platforms
48
Conservation Strategy Supply Chain Sustainability Risks Human Rights Risks Stakeholder Engagement Strategy Community and Stakeholder Grievance and Engagement
Strategic partnerships and platforms are in place as part of the “Ring of Steel’ programme Key areas requiring partnerships and collaboration
Decent Rural Living Initiative
Strategic Partners Platforms and Collaborations
49
SDP is actively involved in multiple platforms and collaborations with stakeholders and other growers
Initiative Growers Involvement NGO / Civil Society Involvement High Carbon Stock Approach SDP, IOI, KLK, GAR, Wilmar, MusimMas, Cargill GreenPeace, RAN, FPP, Aidenvironment Fire Free Alliance SDP, IOI, Wilmar, MusimMas, APRIL, AsianAgri People’s Movement to Stop Haze, IDH Decent Rural Living Initiative SDP, Wilmar, GAR, MusimMas, Cargill Forum for the Future PONGO Alliance SDP, Wilmar, MusimMas, ANJ BORA, HUTAN, Orangutan Land Trust / Copenhagen Zoo, Aidenvironment
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We cannot go at it alone
We believe that for the more complex challenges, Sime Darby Plantation would need to seek out like minded organisations…
51 This document is strictly confidential to the recipient. It is being supplied to you solely for your information and may not be reproduced, redistributed or passed
information made available in connection with this document, without retaining any copies. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. This document does not constitute and is not an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities of any company referred to in this document in any jurisdiction. The companies referred to herein have not registered and do not intend to register any securities under the US Securities Act of 1933, as amended (the “Securities Act”), and any securities may not be offered or sold in the United States absent registration under the Securities Act or an exemption from registration under the Securities Act. By attending the presentation you will be deemed to represent, warrant and agree that to the extent that you purchase any securities in any of the companies referred to in the presentation, you either (i) are a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act, or (ii) you will do so in an “offshore transaction” within the meaning of Regulation S under the Securities Act By attending this presentation and accepting a copy of this document, you represent and warrant that (i) you have read and agreed to comply with the contents
This document is for the purposes of information only and is not intended to form the basis of any investment decision. This presentation may contain forward- looking statements by Sime Darby Plantation that reflect management’s current expectations, beliefs, intentions or strategies regarding the future and assumptions in light of currently available information. These statements are based on various assumptions and made subject to a number of risks, uncertainties and contingencies and accordingly, actual results, performance or achievements may differ materially and significantly from those discussed in the forward- looking statements. Such statements are not and should not be construed as a representation, warranty or undertaking as to the future performance or achievements of Sime Darby Plantation and Sime Darby Plantation assumes no obligation or responsibility to update any such statements. No representation or warranty, express or implied, is given by or on behalf of Sime Darby Plantation or its related corporations (including without limitation, their respective shareholders, directors, officers, employees, agents, partners, associates and advisers) (collectively, the “Parties”) as to the quality, accuracy, reliability, fairness or completeness of the information contained in this presentation or its contents or any oral or written communication in connection with the contents contained in this presentation (collectively, the “Information”), or that reasonable care has been taken in compiling or preparing the Information. None
have been expressed or otherwise contained or referred to in the Information. The Information is and shall remain the exclusive property of Sime Darby Plantation and nothing herein shall give, or shall be construed as giving, to any recipient(s) or party any right, title, ownership, interest, license or any other right whatsoever in or to the Information herein. The recipient(s) acknowledges and agrees that this presentation and the Information are confidential and shall be held in complete confidence by the recipient(s). All the images, pictures and photos including design drawings in relation to the company’s property development projects contained in this document are artist impression only and are subject to variation, modifications and substitution as may be recommended by the company’s consultants and/or relevant authorities.
investor.relations@simedarbyplantation.com +(603) 7848 4000 http://www.simedarbyplantation.com/investor-relations