Dyno Nobel Limited · ASX:DNL
Dyno Nobel — H1 2019 Earnings Presentation
36 slides from Dyno Nobel's earnings presentation, May 20, 2019
Slide 1: 1H19 Financial Results
1H19 Financial Results 20 May 2019 Jeanne Johns Managing Director & Chief Executive Officer 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Incitec Pivot Limited (“IPL”). The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis f
Slide 3: Table of Contents
Table of Contents Zero Harm Jeanne Johns Managing Director & Chief Executive Officer Group Overview Jeanne Johns 1H19 Group Overview Managing Director & Chief Executive Officer Group Results & Operational Review Jeanne Johns Group Results Overview Managing Director & Chief Executive Officer Manufact
Slide 4: Zero Harm
Zero Harm Continuous improvement on broader set of Health, Safety & Environmental targets, well-placed to deliver FY21 targets TRIFR Potential High Severity Incidents 1.02 42 0.93 0.78 0.70 23 17 1H18 FY18 1H19 1H18 FY18 1H19 FY21 Target: 0.70 FY21 Target: Sustainable year-on-year improvement Signif
Slide 5: Group Overview
Group Overview Jeanne Johns Managing Director & Chief Executive Officer 5
Slide 6: 1H19 Group Overview
1H19 Group Overview 1H19 result impacted by • EBIT of $119m after $141m of non-recurring impacts significant non-recurring events Businesses well positioned • DNA continued to grow margin and gain market share in weather in respective markets impacted market • DNAP re-basing well progressed, with go
Slide 7: Group Results & Operational Review
Group Results & Operational Review Jeanne Johns Managing Director & Chief Executive Officer 7
Slide 8: IPL Group Result 1H19
IPL Group Result 1H19 Result impacted by non-recurring items Statutory EBIT $119m, from $4m in pcp; Statutory NPAT $42m, from $8m in pcp EBIT $260m, before non-recurring items, $20m from $240m in pcp Group EBIT Movements A$’ mill 300 Non-recurring 13 (21) 250 32 (18) (3) 17 (65) 200 150 (76) 260 240
Slide 9: Waggaman 1H19 Manufacturing Issues
Waggaman 1H19 Manufacturing Issues 1H19 Issues Next Steps External power failure in January 2019 uncovered Focus on eliminating failure modes several defects in the CO2 recovery system Comprehensive analysis of each unit in the plant with Operational interruptions not uncommon for actions to address
Slide 10: Phosphate Hill 1H19 Manufacturing Issues
Phosphate Hill 1H19 Manufacturing Issues 1H19 Issue Next Steps Phosphoric acid reactor integrity failure resulting in Drive high reliability mindset through increased site significant downstream impact level accountability and operational discipline Highlights opportunity for improvements in Safer,
Slide 11: External Non-Recurring Business Interruptions
External Non-Recurring Business Interruptions Queensland Flooding & Rail Outage Gas Market Disruption – St Helens One in 100 years flood caused an outage of the rail line Rupture on Enbridge pipeline in October 2018 between Phosphate Hill and Townsville All of US North West experienced significantly
Slide 12: Dyno Nobel Americas
Dyno Nobel Americas Explosives grew margin per tonne and market share in weather-impacted first half Explosives EBIT up 3%, despite lower volumes Statutory 1H19 EBIT of US$63m, from US$102m in pcp due to weather impacts: EBIT of US$107m, before non-recurring items, 5% vs pcp • Overall margins broadl
Slide 13: Dyno Nobel Americas
Dyno Nobel Americas Strategic nitrogen footprint and premium technology offer Market share and margin gains underpinned by strong technology growth • Continued adoption by customers of premium technology offer • Gassed emulsion (including Delta E) sales volumes for 1H19 up 24% vs pcp • Electronic in
Slide 14: Dyno Nobel Asia Pacific
Dyno Nobel Asia Pacific Results impacted by contract re-basing and adverse weather Contract re-basing 1H19 EBIT of $77m, from $100m in pcp • $7m impact from FY18 contract changes in Dyno Nobel Asia Pacific EBIT Movements Western Australia (previously disclosed, 13 June 2018) A$’ mill Contract Re-bas
Slide 15: Dyno Nobel Asia Pacific
Dyno Nobel Asia Pacific Contract renewals well progressed • Renewal of key foundation customer contracts progressing • Strategy on track, focused on retaining preferred customers and leveraging premium technology • Technology offering and innovation pivotal in contract re-negotiations • Current esti
Slide 16: Fertilisers Asia Pacific
Fertilisers Asia Pacific 1H19 result impacted by non-recurring items, value chain benefits gaining momentum EBIT of $47m before non-recurring items, Statutory 1H19 EBIT loss of ($33m), from $23m in pcp up $24m on pcp, driven by: EBIT of $47m, before non-recurring items, $24m from pcp • A$:US$ favour
Slide 17: Fertilisers Asia Pacific
Fertilisers Asia Pacific Progress on strategy Value chain optimisation • Continue to build on FY18 value chain optimisation: − new long term supply contracts with key fertiliser suppliers − improved margin management and product mix • Acquired remaining interest in Quantum Fertilisers trading and ma
Slide 18: Fertilisers Asia Pacific
Fertilisers Asia Pacific Decision on future of Gibson Island manufacturing in the near term Gibson Island – Current Status Gas Tenement Update Ongoing discussions with third parties regarding affordable Project will continue and remains on track and within its domestic gas supply through 2022 $20m b
Slide 19: Profit & Loss, Corporate and Balance Sheet
Profit & Loss, Corporate and Balance Sheet Frank Micallef Chief Financial Officer 19
Slide 20: Group Profit & Loss / Corporate
Group Profit & Loss / Corporate Profit & Loss – 31 March Corporate & Group 1H19 1H18 Net Borrowing Costs up $8m to $68m Statutory Profit & Loss A$’mill A$’mill • Lower average A$:US$ exchange rate of $0.71 (pcp: $0.78) • Higher interest rates on floating USD debt during the half year Revenue 1,742 1
Slide 21: Strong Balance Sheet
Strong Balance Sheet Balance Sheet remains strong • Net debt increased to $1.92bn (pcp: $1.75bn) • Net debt / EBITDA: 2.6 times • Interest Cover: 5.8 times • Completed $300m share buy-back Investment grade credit ratings maintained • S&P: BBB with stable outlook • Moody’s: Baa2 with stable outlook R
Slide 22: Strategic Initiatives Update
Strategic Initiatives Update Jeanne Johns Managing Director & Chief Executive Officer
Slide 23: Strong progress against FY19 Priorities
Strong progress against FY19 Priorities Zero Harm Profitable Growth & Customer Focus • Improved HSE performance in 1H19 vs pcp across TRIFR, • Maintain growth momentum in Americas High Potential Severity Incidents and Significant Explosives business, despite weather impacts in Environmental Incident
Slide 24: Manufacturing Excellence
Manufacturing Excellence Journey to Reliability & Operational Excellence Waggaman, Louisiana Cheyenne, Wyoming • New President of Global Manufacturing & Corporate HSE joined in November 2018 • Global Manufacturing strategy reset during FY21/22 Targets 1H19 • Improved plant reliability focus – run pl
Slide 25: Manufacturing Excellence Targets
Manufacturing Excellence Targets Historical Reliability – Major Ammonia Plants Targets Target reliability1,2 of 95% by end of FY21 vs 94% 96% historical baseline3 average of 85% 91% 93% Target: 95% 86% 85% 82% Baseline: 85% Manufacturing Excellence opportunity across the (Overall Equipment Effective
Slide 26: Premium Technology Solutions
Premium Technology Solutions Introduction of Delta E and large scale Gassed Emulsion (incl Delta E) Volume Growth upgrading to electronic detonators in Asia Pacific over last 12 months 000’ mt 000’ mt • Competitive advantage through in-house +24% 120 40 +19% Delta E truck manufacturing capability 30
Slide 27: Demand Driven Investment
Demand Driven Investment Delta E Fleet Expansion Investment in Delta E fleet expansion driven by strong customer demand • Tradestar focus on increased manufacturing to fill Dyno orders • 40% year-on-year increase in truck manufacturing • Additional production added in 2018 Delta E Trucks Growth Numb
Slide 28: Technology – Future Growth
Technology – Future Growth Successfully launched in 1H19 FY21/22 Targets • Newest addition to Dyno Nobel’s electronic initiation New technologies – 50% growth in premium portfolio technologies revenues by FY21 • Design for underground development & Release digital products/services in 2019 tunnel bl
Slide 29: FY19 Outlook
FY19 Outlook Jeanne Johns Managing Director & Chief Executive Officer 29
Slide 30: FY19 Group Outlook
FY19 Group Outlook Improved outlook for 2H19; full-period FY19 EBIT expected to be between $370m and $415m (after $209m1 impact from non-recurring events) IPL typically does not provide earnings guidance, primarily due to the variability of commodity prices and foreign exchange movements. However, c
Slide 31: 2H19 Segment Assumptions
2H19 Segment Assumptions1 Dyno Nobel Americas Dyno Nobel Asia Pacific Fertilisers Asia Pacific Corporate Waggaman operations: • Improved Moranbah production • Expected ammonium phosphates • Corporate costs for FY19 • Expected ammonia production for in 2H19, expected to be in line production for 2H19
Slide 32: FY19 Outlook - Assumptions
FY19 Outlook - Assumptions FY19 Outlook Key Assumptions Non-recurring Items Commodities / FX 2H19 FY19 1H19 2H19 FY19 Estimate Estimate (forecast) (forecast) DAP FOB Tampa - US$/tonne 400 402 $’mill $’mill $’mill Urea FOB MEGU - US$/tonne 260 266 External Events (associated impacts) Ammonia CFR Tamp
Slide 33: Questions & Answers
Incitec Pivot Limited DYNO Dyno Nobel INNOVATION ON THE GROUND Questions & Answers
Slide 34: Appendix
Incitec Pivot Limited DYNO Dyno Nobel INNOVATION ON THE GROUND Appendix
Slide 35: Debt Maturities & Net Debt Reconciliation
Debt Maturities & Net Debt Reconciliation Net Debt & Tenor - 31 March 2019 Gross to Net Debt Reconciliation A$’ mill 31 March 2019 $’mill 1,200 Facility limits Total gross debt (A$ mill) 2,481 1,000 Drawn funds Fair value and other adjustments (10) 800 Loans to JVs, associates / other 600 24 short t
Slide 36: 1H19 Manufacturing Impacts
1H19 Manufacturing Impacts 1H19 Group EBIT – Manufacturing Impacts, excluding Non-recurring items A$’ mill 20 (5) 7 10 (8) 10 0 (7) (3) -10 Phosphate Hill Cheyenne/St Helens WALA Reliability (exl Gibson Island Moranbah Abatement Total 1H19 EBIT Impact 1H18 Turnaround Performance/1H18 non-recurring i