Dyno Nobel Limited · ASX:DNL
Dyno Nobel — Incitec Pivot — H1 2007 Earnings Presentation
28 slides from Dyno Nobel's earnings presentation, Sep 1, 2007
Slide 1: Incitec Pivot
Incitec Pivot a
Slide 2: Julian Segal, Managing Director and CEO
JULIAN SEGAL Managing Director and CEO 2
Slide 3: 2007 1H: Delivering on Our Promises
2007 1H: Delivering on Our Promises An outstanding result driven by strategy and delivered by our people: Strategy: Tardis 2 Business efficiency delivered (Lowest cost base) Southern Cross integrated (Own the product) People: Gibson Island ‘Reset 07’ completed on budget and efficiencies delivered Fi
Slide 4: 1H Results Summary: Key financials
1H Results Summary Key financials 6 Months Ended 31 March A$M 2007 2006 Change Sales revenue 543.6 395.5 37% EBIT* 83.9 40.7 106% EBIT Margin* 15.4% 10.3% NPAT* 49.6 27.5 80% NPAT incl. individually material items 57.2 10.1 466% * excluding individually material items Delivering on our promises 4
Slide 5: 1H Results Summary: Shareholder returns
1H Results Summary Shareholder returns 6 Months Ended 31 March A$M 2007 2006 Change Shareholder returns: EPS* (cps) 98 47 109% Dividend (cps) 69 22 214% Share price (31 March) 49.50 19.10 159% Capital Management: Net Debt 400.1 137.9 (190%) Gearing 50.5% 20.6% Interest cover** (times) 6.0 10.6 (42%)
Slide 6: 1H Rainfall – Poor conditions
1H Rainfall – Poor conditions Poor 1H rainfall 6
Slide 7: Sales volumes by segment, 1H07 vs 1H06
Volumes: 1H07: 1,308kt, 1H06: 1,020kt Sales volume up 28% or 288kt: Southern Cross: External volumes of 282kt Trade: Up 53% to 84kt - increased exports Industrial: Down 3% - CO2 sales impacted by GI Reset Sugar: Up 11% - stronger global sugar price Summer Crop: Down 60% - poor in-season rainfall Pas
Slide 8: Business Strategy Update
Business Strategy Update Lowest Cost Base Own Supply Chain the Engine Product Trading Model Underpinned by a performance culture and strong financial discipline 8
Slide 9: Business Strategy Update: Lowest Cost Base
Lowest Cost Base Business Strategy Update What we promised: What we have delivered: Outcome Tardis 1 – 2007 Balance $8M additional benefits $2M already delivered in (total year) 1H 2007 Nauru rock deliveries commenced in Q3 Tardis 2 – 2007 Program 2007 full year EBIT: Full year target delivered $15
Slide 10: Business Strategy Update: Own the product
Own the product Business Strategy Update What we promised: What we have delivered: Outcome Gibson Island Reset’07 Completed on budget & efficiencies delivered $43M capex (+/- 10%) $46M capex $13M benefits (’08 Exit) $14.2M benefits (‘07 exit) SCF Integration Integrated & operating reliably & reliabi
Slide 11: Business Strategy Update: Trading Model
Trading Model Business Strategy Update What we promised: What we have delivered: Outcome Develop a regional 366kt (28% of total sales) trading model traded in 1H. 120kt in SSP exports booked for 2H (first SSP exports since mid 1990’s). Reduced volatility through scale 11
Slide 12: Business Strategy Update: Supply Chain Engine
Supply Chain Engine Business Strategy Update What we promised: What we have delivered: Outcome The Supply Chain $46M reduction in Trade Value Engine Working capital $2.2M in supply chain efficiencies delivered in Tardis 2 (2007 Exit rate: $9.1M) Scale extracting value 12
Slide 13: OwnBreakoutDeliver – culture program
OwnBreakoutDeliver – culture program 13
Slide 14: Business Strategy Summary
Business Strategy Summary A$M 60 39 30 ? ? ? 20 14 15 8 SCF efficiency * manufacturing Tardis #1 Balance of Returns Manufacturing M&A Acquisition# Capital GI gas * Efficiency * Tardis #1 Supply chain * World scale SCF 2006 2007/08/09 2007 + Phase 1: Gear the business for Phase 2: Drive EPS growth Ph
Slide 15: James Fazzino, Finance Director and CFO
JAMES FAZZINO Finance Director and CFO 15
Slide 16: 1H Base Business Performance (excluding Southern Cross)
1H Base Business Performance (excluding Southern Cross) Summary 5.7 A$M 5.5 40.7 (7.7) 39.1 (3.6) (1.5) 2006 1H EBIT 2007 Early Tardis 1 Uplift Volume FCISM * Other 2007 1H winter crop ($2M) & Reported purchasing Tardis 2 EBIT ($3.7M) An extraordinary result in adverse conditions * FCISM: Fixed Cost
Slide 17: 1H Southern Cross Performance
1H Southern Cross Performance Summary A$M 30.2 Full Year (6.3) 65.5 60.5 (3.9) (0.7) 16.0 44.8 (20.7) 30.2 Acquisition 1H Tardis 2 DAP Price Forex (-2.1 FCISM Other Underlying Profit in 2007 1H Proforma Acquisition Benefits (+$US44/te) cents) EBIT stock Reported (907kt / Proforma Elimination EBIT $U
Slide 18: Tardis 2 – Business Efficiency Program Revised EBIT Targets
Tardis 2 – Business Efficiency Program Revised EBIT Targets 2007 2007 2008 A$M Forecast Exit rate Exit rate Manufacturing efficiency 8.5 14.2 14.2 GI Gas 0.0 15.0 15.0 Supply chain optimisation 6.9 9.1 20.0 SCF efficiency 29.6 35.6 39.0 TOTAL 45.0 73.9 88.2 Promise 15 - 20 50.9 83.0 Accelerated deli
Slide 19: Individually Material Items
Individually Material Items A$M Pre tax Post tax Sale & Leaseback* 13.7 9.6 Write-back of SCF acq. provisions 2.5 1.8 Business Efficiency Implementation (2.4) (1.7) Orica Separation & SCF integration (0.3) (0.2) Wallaroo clean up & pre-sale costs (2.7) (1.9) Total 10.8 7.6** * Ammonia linehaul and B
Slide 20: Disciplined capital management: Net Debt
Disciplined capital management Sustenance Capex Project Capex Trade Working Capital $12.8M (77% of $40.3M – GI Reset, Southern $45.9M reduction depreciation) Cross, IT for Orica separation 155 400 Net Debt A$M 174 138 71 46 21 2006 1H Net TWC Other Net business Buy-back SCF 2007 1H Net Debt Improvem
Slide 21: Disciplined capital management
Disciplined capital management Trade working capital down $46M Tight control of sustenance capital spending Sale and leaseback freeing up capital = Net business debt down $67M, balance sheet moderately geared = Competitive dividend returns and reinvestment capacity to grow EPS Delivering on our prom
Slide 22: Julian Segal, Managing Director and CEO
JULIAN SEGAL Managing Director and CEO 22
Slide 23: Outlook - Probable Return to normal rainfall conditions
Outlook - Probable Return to normal rainfall conditions: Rainfall (April to June 07) 23
Slide 24: Outlook Second Half 2007
Outlook Second Half 2007 General easing of drought conditions. Normal rainfall outlook. Continued above trend global fertiliser prices. Cotton outlook extremely poor – poor/no irrigation allocation Strong Currency > 80 cents. $10M in margin forgone due to the GI Reset Cautious Optimism 24
Slide 25: Summary
Summary 1H earnings improvement driven by business efficiency and Southern Cross integration. Manufacturing generating > 80% of profit Gibson Island ‘Reset 07’ successfully completed. Continuing focus on delivery of Tardis. Maintenance of financial discipline – TWC & Capex – Investment capacity rest
Slide 26: Questions?
SuPi Green| 5 GAN Liguifert’ GRAN : £ Because the land is your life. 26
Slide 27: Appendices
Appendices 27
Slide 28: 2H 2007 Forecast cash inflows & outflows
2H 2007 Forecast cash inflows & outflows Cash Outflows Cash Inflows Project capex Site Sales* (>$20.0M) • Gypsum cell ($2.6M) • GI Reset ($11.0M) • GI Water ($4.0M) IT Capex ($5.0M) • SCF Integration, Orica separation, Supply Chain Environmental ($6.5M) DB superannuation top-up ($4.5M) Demolition ($