Orica Limited · ASX:ORI
Orica — JP Morgan Conference 2007
33 slides from Orica's conference presentation, Sep 26, 2007
Slide 1: JP Morgan Conference
For personal use only JP Morgan Conference September 2007 New York Graeme Liebelt Managing Director & CEO
Slide 2: Orica – snapshot overview
Orica Orica– -snapshot For personal use only overview • Australian owned publicly listed company trading on the Australian Stock Exchange (ORI) • Market capitalisation of approximately A$8.6bn (US$7.1bn) • Ranked in top 40 Australian companies based on market capitalisation • Inception in 1874 as a
Slide 3: Orica – where we operate
Orica – countries in which we operate For personal use only Orica – where we operate Europe FSU Gyttorp Brownsburg Denver North America Gomia Asia Pacific Latin America Kurri Kurri Capricorn Park Melbourne Key Key Countries of operation Research and Development Centres Page 3
Slide 4: Orica – business characteristics
Orica – business characteristics Chemical Services For personal use only Mining Services • Global business • Largest Chemical business in Australia and New Zealand • Largest commercial explosives • Strong asset positions company in the world • Leading technology • Superior assets & technology • Cost
Slide 5: Orica – business dimensions
Business Orica dimensions – business dimensions Half year ended 31 March 2007 as at 31 March 2007 For personal use only Sales Revenue – A$2.7B EBIT – A$346M Operating Net Assets – A$3.9B Employees – 14,000 0% 20% 40% 60% 80% 100% Mining Minova OCP Chemnet Chemical Services Page 5
Slide 6: Orica's approach – value drivers
For personal use only Orica’s approach – value drivers Page 6
Slide 7: Productivity contributes to profitable growth
Productivity contributes to profitable growth For personal use only 80 Total fixed costs to gross margin 78 76 74 % 72 70 2002 2003 2004 2005 2006 Year Productivity has improved from 79% to 73% over last 4 years Source: Orica Annual Report Page 7
Slide 8: Orica's growth principles
For personal use only Orica’s growth principles Three key principles: • Market leadership • Earning the “right to grow” • Growing “close to the core” No change to existing strategy Page 8
Slide 9: Orica growth
For personal use only Orica growth 2200 2100 2000 1900 A$m Gross Margin 1800 1700 1600 1500 2002 2003 2004 2005 2006 Year Gross margin increased from A$1.6bn to A$2.1bn Compound annual gross margin growth of 6.4% Gross margin growth 1H07 Vs 1H06 was 18.1% Page 9 Source: Orica Annual Report
Slide 10: OMS and Minova – stronger for longer cycle
OMS and Minova - “stronger for longer” cycle For personal use only • Emerging BRICs economies • Urbanisation • Industrialisation • Mining development Page 10
Slide 11: BRIC economies to exceed G6 by 2040
For personal use only BRIC economies to exceed G6 by 2040 100,000 BRIC CAGR = 7.4% 80,000 G6 CAGR = 2.0% GDP (US$bn) 60,000 40,000 20,000 0 2005 2010F 2015F 2020F 2025F 2030F 2035F 2040F 2045F 2050F BRIC G6 BRICs cumulative average growth rate – 7.4% Source: Goldman Sachs Page 11
Slide 12: China – urbanisation
For personal use only China – urbanisation 1600000 1400000 1200000 Thousands 1000000 % Urban 800000 Urban Population Rural Population 600000 400000 200000 0 2000 2005 2010 2015 2020 2025 2030 % Urban 35.8 40.4 44.9 49.2 53.2 56.9 60.3 Urban Population 455800 531817 608587 685630 757766 819732 872671
Slide 13: Alleviating Australian coal infrastructure constraints
Alleviating Australian coal infrastructure constraints For personal use only 35 Million tonnes / mth 30 25 20 15 Jan'05 Jan'06 Jan'07 Jan'08F Jan'09F Jan'10F Year Million Tonnes / mth Capacity expected to improve by 8.5 million tonnes/mth (40%) over next 3 years Page 13 Source: Orica internal resear
Slide 14: Rising coal production - Indonesia
For personal use only Rising coal production - Indonesia 300 250 Million Tonnes 200 Thermal Coal: Export Use 150 Thermal Coal: Domestic Use 100 50 0 2005 2006 2007 2009 2010 2011 2012 2014 2015 2016 2017 2018 2019 2020 2008 2013 Calendar Year Sustained growth for Indonesia in the outlook period Sour
Slide 15: Proposed AN site at Bontang, Indonesia
Proposed AN site at Bontang, Indonesia For personal use only Page 15
Slide 16: US coal outlook is for steady growth
For personal use only US coal outlook is for steady growth Projected US Coal Production 4.00% 3.00% 2.00% 1.00% Growth % 0.00% -1.00% -2.00% -3.00% -4.00% -5.00% 2004 2005 2006 2007 2008 2009 2010 Year Appalachia West Source: Energy Information Administration / Annual Energy Outlook 2007 Page 16
Slide 17: Innovation - growth of EBS
For personal use only Innovation - growth of EBS Volume of Units 1000 (Indexed) 750 500 250 0 2002 2003 2004 2005 2006 Year Volume of Units Cumulative average volume growth of 85% over last 4 years. Volume growth of 42% in first half of 2007. Source: Internal data Page 17
Slide 18: Minova - growth opportunities
For personal use only Minova - growth opportunities • Trend to underground vs above ground • Safety regulations increasing • Growth as opposed to synergy acquisition • Product range expansion Page 18
Slide 19: OCP – housing / GDP outlook
For personal use only OCP – housing / GDP outlook Housing Activity in Australia 15 10 Percentage 5 0 -5 -10 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Housing Starts % GDP % A positive outlook for the next 2 years Source: HIA, Access Economics Page 19
Slide 20: OCP – investing in brands/innovation
For personal use only OCP – investing in brands/innovation OCP - Marketing and R&D Spend Percentage of Sales Marketing R&D 2004 2005 2006 H1 2007 Continued to invest in marketing and innovation over last 2 years despite easing market conditions Source: Internal information Page 20
Slide 21: OCP – Dulux brand awareness
For personal use only OCP – Dulux brand awareness Total Spontaneous Awareness 90 Awareness Percentage 80 70 Dulux 60 Wattyl 50 Taubmans 40 30 2000 2003 2007 Year • Dulux brand awareness maintained. • More than twice competitors. • Competitors’ brand awareness is in decline. Page 21 Source: Milwood B
Slide 22: OCP – market share increasing
For personal use only OCP – market share increasing Percentage Market Share Retail Trade 2004 2005 2006 2007 Year Market share has increased while market contracting Well placed now outlook is for growth Source: Infomark / Internal Estimates Page 22
Slide 23: OCP – geographic expansion
For personal use only OCP – geographic expansion • China – unsuccessful large scale paints acquisition • Presence in Hong Kong, China, Malaysia • Small acquisitions • Long term project Page 23
Slide 24: Watercare
For personal use only Watercare M & A activity: • CSBP (geographic extension) • Ultra violet technology • Wendouree Water Treatment Small bolt on’s adding to our water treatment competency Page 24
Slide 25: MIEX Systems – plants installed today
For personal use only MIEX® Systems – plants installed today Page 25 10 plants operating today
Slide 26: MIEX Systems – plants installed & approved
MIEX® Systems – plants installed & approved For personal use only 13 new plants approved - to be installed by 2008/09 Page 26
Slide 27: Gold outlook – increasing production and steady price
Gold outlook – increasing production and steady price For personal use only Gold Outlook 2,750 800 2,700 700 2,650 600 2,600 500 Tonnes US$/oz 2,550 400 2,500 300 2,450 2,400 200 2,350 100 2,300 0 2005 2006 2007 2008 2009 2010 Year Production Gold Price Source: ABARE Mar’07, Jun’07 Page 27
Slide 28: Mining Chemicals – outlook for sodium cyanide
Mining Chemicals – outlook for sodium cyanide For personal use only 710 690 Demand/Supply ('000s tonnes) 670 650 630 610 590 570 550 2005 2006 2007 2008 2009 2010 Year Supply Demand Source: Internal estimates Page 28
Slide 29: Chemnet – Latin American sales growth
Chemnet – Latin American sales growth For personal use only 60,000 50,000 40,000 Sales A$ 30,000 20,000 10,000 0 2005 2006 2007* Year Average sales growth of in excess of 30% since acquisition * Forecast result Source: Orica internal data Page 29
Slide 30: Strategic growth themes
For personal use only Strategic growth themes Business Strategic growth opportunity Mining Services & - Leverage our global scale - Lowest cost AN sourcing Minova - Electronic blasting systems (EBS) - Geographic expansion - Lateral expansion (Minova) - Increase mining services offering Consumer Prod
Slide 31: Orica – EBIT growth
For personal use only Orica – EBIT growth 700 600 500 EBIT (A$m) 400 300 200 100 0 2002 2003 2004 2005 2006 2007 Year 1st Half 2nd Half Source: Orica Annual Reports Page 31
Slide 32: Cumulative total shareholder returns
For personal use only Cumulative total shareholder returns Cumulative Shareholder Return 480 380 280 Orica % ASX 100 180 80 -20 2002 2003 2004 2005 2006 Year Growth strategy has delivered superior returns Source: Orica Annual Report, Base year 2001. Page 32
Slide 33: Important Notice
Important Notice This presentation has been prepared by Orica Limited. The information contained in this presentation is For personal use only for informational purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products. The information contai