Slide 1: Full Year Results Announcement
For personal use only Full Year Results Announcement 9 November 2009
Slide 2: Presentation outline
Presentation outline For personal use only ► Group performance Graeme Liebelt ► Divisional performance Noel Meehan ► Capital management Noel Meehan ► 2010 priorities Graeme Liebelt ► Outlook Graeme Liebelt Orica Full Year Results 2009 Page 1
Slide 3: Group performance
Group performance For personal use only Full year ended 30 September (A$M) 2009 2008 % Sales 7,411.0 6,544.1 13.2 Gross margin 3,181.8 2,874.6 10.7 EBITDA 1 1,330.2 1,188.8 11.9 EBIT 1 1,082.5 970.1 11.6 Net profit after tax pre individually material items 646.1 572.3 12.9 Net profit after tax after
Slide 4: Divisional EBIT
Divisional EBIT For personal use only Full year ended 30 September (A$M) 2009 2008 % Mining Services 736.5 635.6 15.9 Minova 1 145.1 150.1 (3.3) Chemicals 170.4 146.1 16.6 DuluxGroup 128.9 122.6 5.1 Total Businesses 1,180.9 1,054.4 12.0 2 10.8 Corporate Centre (41.1) (46.1) Other Support Costs 3 (57
Slide 5: Orica's approach – value drivers
Orica’s approach – value drivers For personal use only Orica Full Year Results 2009 Page 4
Slide 6: SH&E – Safety
SH&E – Safety For personal use only Full Year Full Year 2009 2008 AWRCR 1 0.69 0.72 Recordable cases 146 144 Distribution incidents 43 24 Fatalities 4 - 1 All Worker Recordable Case Rate is calculated as the number of injuries and illnesses per 200,000 hours worked. Orica Full Year Results 2009 Page
Slide 7: Gross margin growth
Gross margin growth For personal use only A$M 3,500 +10.7% 3,000 +16.2% +16.4% 2,500 +7.6% 2,000 +13.9% +4.3% +0.1% 1,500 1,000 500 2002 2003 2004 2005 2006 2007 2008 2009 Compound average growth rate since 2002 is 10% Orica Full Year Results 2009 Page 6
Slide 8: Productivity
Productivity 1 For personal use only 80% 78.9% 78% 76% 75.1% 74.0% 74% 73.2% 72.8% 72% 69.8% 70% 69.0% 68.5% 68% 66% 64% 62% 60% 2002 2003 2004 2005 2006 2007 2008 2009 Continuous improvement in productivity 1 Productivity is measured as fixed costs (incl. depreciation and amortisation) as a percent
Slide 9: Net profit after tax
Net profit after tax 1 For personal use only A$M +12.9% 650 +15.0% 550 +30.9% 450 +11.8% +20.5% +4.4% 350 +13.0% 250 150 50 2002 2003 2004 2005 2006 2007 2008 2009 Compound average growth rate since 2002 is 15% 1 Pre individually material items Orica Full Year Results 2009 Page 8
Slide 10: Divisional Performance
For personal use only Divisional Performance
Slide 11: EBIT growth
EBIT growth EBIT 12% For personal use only A$M 1,200 0 33 (15) (12) (3) 1,150 68 (2) (57) 1,100 1,083 101 1,050 1,000 970 950 900 850 800 2008 EBIT Productivity / Foreign Ammonia Lag US Steel Lag Botany Volume/Price Corporate & Other Costs 2009 EBIT Synergies Exchange Expenses /Mix Support Change Or
Slide 12: Orica Mining Services
Orica Mining Services For personal use only Full year ended 30 September (A$M) 2009 2008 % Sales 4,057.8 3,552.1 14.2 EBITDA 888.6 767.8 15.7 EBITDA margin (%) 21.9% 21.6% 1.4 EBIT 736.5 635.6 15.9 EBIT margin (%) 18.2% 17.9% 1.7 Return on net assets (%) 28.2% 25.5% 10.7 Average operating net assets
Slide 13: Orica Mining Services EBIT
Orica Mining Services EBIT 16% For personal use only Sales $4,058M; EBIT $737M; Average Operating Net Assets $2,609M; RONA 28.2% $M 1100 33 (126) 1000 49 71 (100) 900 230 (56) 800 737 700 636 600 500 400 FY08 EBIT Price/Mix Productivity FX Ammonia Variable Net Fixed Cost / FY09 EBIT Lag Costs Volume
Slide 14: Minova
Minova For personal use only Full year ended 30 September (A$M) 2009 2008 % Sales 940.9 794.2 18.5 EBITDA 181.1 179.9 0.7 EBITDA margin (%) 19.2% 22.6% (15.0) EBIT 145.1 150.1 (3.3) EBIT margin (%) 15.4% 18.9% (18.5) Return on net assets (%) 1 10.7% 10.1% 6.1 Average operating net assets 2 1,787.4 1
Slide 15: Minova EBIT
Minova EBIT 3% For personal use only Sales $941M; EBIT $145M; Average Operating Net Assets $1,787M; RONA 10.7% $M 190 2 (15) 180 11 170 15 (9) 160 (5) 150 (4) 150 145 140 130 120 110 100 FY08 EBIT Synergies FX Cash Fixed Steel Price Price/Mix Volume Acquisition FY09 EBIT Costs Under- Amortisation re
Slide 16: Acquired Minova business performance
Acquired Minova business performance For personal use only Year ended 30 September (A$M) 2009 Underlying trading performance of Minova Businesses 160.1 Under-recovery of US steel input prices (15.2) Synergies delivered 26.1 Amortisation of intangibles (25.9) Minova reported EBIT 145.1 1 Synergy Bene
Slide 17: Acquired Minova business – integration costs
Acquired Minova business – integration costs For personal use only 2009 Cumulative Integration cost category (A$M) Actual Actual Integration costs 1.6 4.5 Synergy implementation costs 6.0 10.3 Redundancies 2.1 2.7 Transitional salaries/other 2.1 4.3 Total integration costs 11.8 21.8 Project office c
Slide 18: Chemicals
Chemicals For personal use only Full year ended 30 September (A$M) 2009 2008 % Sales 1,548.3 1,406.1 10.1 EBITDA 204.2 178.3 14.5 EBITDA margin (%) 13.2% 12.7% 3.9 EBIT 170.4 146.1 16.6 EBIT margin (%) 11.0% 10.4% 5.8 Return on net assets (%) 21.6% 19.1% 13.0 Average operating net assets 790.7 765.8
Slide 19: Chemicals EBIT
Chemicals EBIT 17% For personal use only Sales $1,548M; EBIT $170M; Average Operating Net Assets $791M; RONA 21.6% $M 180 8 (6) 10 170 170 160 12 150 146 140 130 120 110 100 FY08 EBIT Synergies Mining FX Volume/Price FY09 EBIT Growth /Mix Synergy benefits of Chemnet and Chemical Higher average globa
Slide 20: DuluxGroup
DuluxGroup For personal use only Full year ended 30 September (A$M) 2009 2008 % Sales 940.2 875.4 7.4 EBITDA 145.9 136.3 7.0 EBITDA margin (%) 15.5% 15.6% (0.3) EBIT 128.9 122.6 5.1 EBIT margin (%) 13.7% 14.0% (2.1) Return on net assets (%) 45.3% 47.0% (3.6) Average operating net assets 284.5 260.8
Slide 21: DuluxGroup EBIT
DuluxGroup EBIT 5% For personal use only Sales $940M; EBIT $129M; Average Operating Net Assets $285M; RONA 45.3% $M 140 2 (2) 129 130 3 3 123 120 110 100 90 80 FY08 EBIT Volume/ Productivity China Marketing FY09 EBIT Price/Mix Growth Record result despite market decline, rising Tight cost control ac
Slide 22: Corporate centre and other support services
Corporate centre and other support services For personal use only Full year ended 30 September (A$M) 2009 2008 $ Corporate centre costs (41.1) (46.1) 5.0 Other support costs (57.3) (38.2) (19.1) Total costs (98.4) (84.3) (14.1) Corporate Centre Other support costs Prior year included cancellation co
Slide 23: Individually material items
Individually material items For personal use only Full year ended 30 September (A$M) 2009 2008 Dyno Nobel integration costs (12.6) (9.0) Minova/Excel integration costs (9.2) (9.0) Chemicals business restructuring costs - (14.7) Marplex asset impairment (14.0) - Botany Groundwater Treatment Plant ass
Slide 24: Capital management – key measures
Capital management – key measures For personal use only Full year ended 30 September 2009 2008 Net Debt (A$M) 1,094.5 1,020.5 Net Interest Expense (A$M) 133.5 157.7 Interest Cover (times) 7.8 6.1 Operating Cash ($) 854.9 736.9 Cash Conversion 1 (%) 95.9 80.0 Rolling TWC to Rolling Sales (%) 14.5 14.
Slide 25: Bank Debt facilities
Bank Debt facilities For personal use only ► In September 2009, Orica successfully extended existing facilities for 1, 2, 3, 4 and 5 years ($50m in 1 year) ► The average term of the committed bank facilities is approximately 3 years ► Bank debt facilities total $2.1B of which $0.2B was drawn at 30 S
Slide 26: Cashflow
Cashflow For personal use only Full year ended 30 September (A$M) 2009 2008 $ EBITDA 1,330.2 1,188.8 141.4 Net interest paid (136.5) (148.5) 12.0 Net tax paid (235.4) (190.0) (45.4) Trade working capital movement 104.3 (29.9) 134.2 Non trade working capital movement (207.7) (83.5) (124.2) Net operat
Slide 27: Cash Conversion
Cash Conversion For personal use only Full year ended 30 September (A$M) 2009 2008 EBITDA 1,330.2 1,188.8 TWC movement 104.3 (29.9) Sustenance (159.2) (207.4) Cash Conversion 1,275.3 951.5 Cash Conversion % 95.9% 80.0% Orica Full Year Results 2009 Page 26
Slide 28: Rolling TWC to Rolling Sales %
Rolling TWC to Rolling Sales % For personal use only 20.0% 19.0% 18.0% 17.0% Rolling TWC / Sales % 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% HY02 FY02 HY03 FY03 HY04 FY04 HY05 FY05 HY06 FY06 HY07 FY07 HY08 FY08 HY09 FY09 Steady progress continues on management of TWC Orica Full Year Results 2009 Pag
Slide 29: Foreign Currency Exposure
Foreign Currency Exposure For personal use only Transactional Translational ► Approx. 60% of 2009 Group EBIT was ► “Natural hedges” are identified and from offshore entities exposures are netted ► Hedging is generally undertaken using bought ► Residual transactional exposures may be ►Central managem
Slide 30: 2010 Hedging
2010 Hedging For personal use only Major EBIT currency hedges include: Effective Currency Exposures % Hedged Hedge Rate ► AUD/USD 68% 0.8895 ► AUD/CAD 67% 0.9485 ► AUD/NZD 73% 1.2160 ► AUD/SEK 66% 6.2566 EBIT currency hedging for 2010 has been undertaken using options at a cost of $13M. Approximatel
Slide 31: Capital investment (excluding M&A)
Capital investment (excluding M&A) For personal use only Planned 2010 capital expenditure Major expansion capital projects >A$10M: ► Mining Services Bontang Nanling $440M Kooragang Island ammonia plant uprate Hunter Valley emulsion plant ► Chemicals Chemicals Australia – Chlorine capacity upgrade Ch
Slide 32: Capital management – 2010
Capital management – 2010 For personal use only ► Credit Rating – committed to BBB+ ► Continued discipline in trade working capital management ► Cautious management of sustenance and growth capital Orica Full Year Results 2009 Page 31
Slide 33: 2010 Priorities
For personal use only 2010 Priorities
Slide 34: Growth Priorities
Growth Priorities For personal use only Priority Target Minova Acquisition 18% RONA to be achieved on all three Inclusive of Minova, Excel and Strata acquisitions in 2011 (inclusive of grossed up Control Systems financial synergies) Protect market leadership position in Commissioning of a 300ktpa pl
Slide 35: Productivity Priorities
Productivity Priorities For personal use only Priority Target Delivery of $45M EBIT synergies by end Delivery of synergies of Minova integration 2011 and $35M financial synergies from acquisition completion Delivery of synergies of merger of former Delivery of $14M EBIT synergies by end Chemnet and
Slide 36: Environmental legacy update
Environmental legacy update For personal use only ► Botany Water - Plume is contained - Recycled water being utilised ► Hexachlorobenzene - Work continues on plans to export Hexachlorobenzene waste - Encapsulated waste remediation to start in 2010 ► No other significant matters identified in current
Slide 37: Sustainability
Sustainability For personal use only ► Working to Challenge 2010 targets ► Improved performance on all measures in 2009 ► At or below 2010 targets for Greenhouse gas emissions, water consumption and waste generation ► Reduction in greenhouse gas emissions – abatement installed in Carseland and Bacon
Slide 38: Outlook
Outlook For personal use only Orica expects earnings growth to continue in 2010. In light of the shape of the economic decline experienced in 2009, we anticipate first half conditions to be more difficult than those of the previous corresponding period. Subject to the rate of global economic recover
Slide 39: Summary
Summary For personal use only ► Tight cost control and continued improvement in productivity ► Disciplined cash management ► Strong balance sheet ► Well positioned for continued growth Orica Full Year Results 2009 Page 38
Slide 40: Supplementary Information
For personal use only Supplementary Information
Slide 41: EBIT growth by business
EBIT growth by business For personal use only Mining Services Minova 800 20% 160 20% 700 140 16% 16% 600 120 EBIT MARGIN EBIT MARGIN EBIT A$M 100 EBIT A$M 500 12% 12% 400 80 8% 60 8% 300 200 40 4% 4% 100 20 0 0% 0 0% 2006 2007 2008 2009 2007 2008 2009 1st Half EBIT 2nd Half EBIT EBIT Margin 1st Half
Slide 42: Orica Mining Services by geography
Orica Mining Services by geography For personal use only Australia/Asia North America 450 25% 140 15% 400 120 350 20% EBIT MARGIN 100 EBIT MARGIN 10% EBIT A$M 300 EBIT A$M 15% 80 250 200 60 10% 5% 150 40 100 5% 20 50 0 0% 0 0% 2006 2007 2008 2009 2006 2007 2008 2009 1st Half EBIT 2nd Half EBIT EBIT
Slide 43: EBIT contribution by business platform
EBIT contribution by business platform 1 For personal use only September 2008 September 2009 Chemicals Chemicals Group Group 13.9% 14.4% Minova Minova 14.2% 12.3% Mining Mining Services DuluxGroup Services DuluxGroup 60.3% 10.9% 62.4% 11.6% 1 Excludes corporate costs Orica Full Year Results 2009 Pag
Slide 44: EBIT contribution by geography
EBIT contribution by geography For personal use only September 2008 September 2009 Other Other Europe Europe 0.8% 1.1% 15.3% 13.3% Latin Latin America Australia America Australia 9.5% 44.8% 11.7% 43.2% North North America America New 17.8% Asia 17.2% New Zealand Asia 7.3% 4.5% 9.2% Zealand 4.3% Oric
Slide 45: Gross sales by geography
Gross sales by geography For personal use only September 2008 September 2009 Other Other Europe Europe 1.0% 1.1% 13.1% 11.4% Latin Latin Australia America America Australia 40.3% 42.3% 13.7% 11.9% North North America America 18.3% New Zealand 18.1% New Zealand Asia Asia 5.6% 5.2% 7.8% 10.2% Orica Fu
Slide 46: Net interest expense
Net interest expense For personal use only Full year ended 30 September (A$M) 2009 2008 $ Net interest expense 134 158 (24) Comprising: Interest on net debt 130 174 (44) Add: Unwinding of discount on provisions 7 8 (1) Add: Major external finance leases 2 2 - Less: Capitalised interest (5) (2) (3) L
Slide 47: Impact of Step-Up Preference Securities (SPS) – earnings per share
Impact of Step-Up Preference Securities (SPS) – earnings per share 1 For personal use only Reported per Accounts A$M Reported net profit 581.4 Less: Net profit attributable to minority interests (39.6) After tax distributions to SPS holders 2 (28.1) Adjusted net profit 513.7 Weighted average ordinar
Slide 48: Impact of SPS – gearing
Impact of SPS – gearing (A$M) For personal use only Reported per SPS Accounts Adjusted Current borrowings 160.2 160.2 Non-current borrowings 1,242.8 1,242.8 SPS adjustment 2 - 250.0 Less: Cash (308.5) (308.5) Net Debt 1,094.5 1,344.5 Parent entity equity 1 3,860.7 3,860.7 Minority interests 112.1 11
Slide 49: Impact of SPS – interest cover
Impact of SPS – interest cover (A$M) For personal use only Reported per SPS Accounts Adjusted Financial expense 1 189.3 189.3 Financial income (50.8) (50.8) SPS distribution adjustment 2 - 18.8 Net borrowing costs 138.5 157.3 EBIT 1,082.5 1,082.5 Interest Cover (times) 7.8 6.9 1 Financial expense in
Slide 50: Debt Profile
Debt Profile (as at 30 September 2009) For personal use only Drawn Debt Other, $67M Debt Maturity Profile Bank Loans, $195M A$M Drawn Undrawn Total < 1 year 181 50 231 Commercial Paper, $114M 1 – 2 years 259 455 714 2 – 5 years 444 1,363 1,807 > 5 years 519 - 519 USPP, $1,027M Total 1,403 1,868 3,27
Slide 51: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the