Slide 1: 2023 Half Year Results
2023 Half Year Results 11 MAY 2023 Sanjeev Gandhi | Managing Director & CEO Kim Kerr | Chief Financial Officer Western Australia, Australia
Slide 2: Disclaimer
DISCLAIMER This presentation is in summary form and is not necessarily complete. It should be read together with Orica’s Annual Report and other announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This report contains information that is based on proj
Slide 3: Half Year 2023 in Review
HALF YEAR 2023 IN REVIEW SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2023 HALF YEAR RESULTS 3
Slide 4: Protecting Our People, Environment and Community
SAFETY, SUSTAINABILITY, PEOPLE AND COMMUNITY PROTECTING OUR PEOPLE, ENVIRONMENT AND COMMUNITY Safety Sustainability People and Community • Serious Injury Case Rate tracking within target • Accelerating decarbonisation: • Increased focus on First Nations, including Reconciliation Action Plan launched
Slide 5: Executing on Our Strategy Delivers Strong Results
HALF YEAR RESULTS EXECUTING ON OUR STRATEGY DELIVERS STRONG RESULTS • Growth in underlying earnings driven by: – Commercial discipline – Strong customer demand – Higher utilisation of manufacturing plants; and $322.6M $163.5M $3,998.4M UNDERLYING EBIT2 UNDERLYING NPAT3 SALES REVENUE – Increased earn
Slide 6: All Regions Delivered Improved Performance
HALF YEAR BUSINESS PERFORMANCE ALL REGIONS DELIVERED IMPROVED PERFORMANCE AUSTRALIA PACIFIC & ASIA NORTH AMERICA • Strong growth in Auspac and Asia, driven by high demand and structural • Resilient earnings performance despite extreme winter weather in USA improvements to contracts in East Coast Aus
Slide 7: Strong Growth from Technology Adoptions
ORICA DIGITAL SOLUTIONS (NEW REPORTING SEGMENT) STRONG GROWTH FROM TECHNOLOGY ADOPTIONS Market conditions EBIT ($M) • Accelerated focus on ESG, digitisation and automation 27 • Increased demand for discrete products and end-to-end workflows 16 27 • Increasing ESG obligations and commitments and Futu
Slide 8: Incremental Investments to Optimise Global Network
MANUFACTURING AND SUPPLY INCREMENTAL INVESTMENTS TO OPTIMISE GLOBAL NETWORK CONTINUOUS MANUFACTURING • Safely completed turnarounds at Yarwun, Kooragang Island and Bontang • Progressing decarbonisation of plants • Leveraging Orica’s manufacturing footprint and investments made to standardise Prill p
Slide 9: Financial Performance
FINANCIAL PERFORMANCE KIM KERR, CHIEF FINANCIAL OFFICER 2023 HALF YEAR RESULTS 9 Freeport, Indonesia
Slide 10: Improvement Across Key Financial Indicators
FINANCIAL RESULT IMPROVEMENT ACROSS KEY FINANCIAL INDICATORS Half year ended 31 March ($M) 2023 20221 Change Sales revenue from continuing operations 3,998 3,046 31% Underlying EBITDA2 from continuing operations 505 409 24% Underlying EBIT3 323 245 32% Underlying NPAT4 164 129 27% Individually signi
Slide 11: Focus on Our Strategy Driving Earnings Performance
EBIT BRIDGE FOCUS ON OUR STRATEGY DRIVING EARNINGS PERFORMANCE Orica Group EBIT 1H2022 to 1H2023 ($M) 16 (9) 37 (8 ) (15) 323 10 35 12 245 Underlying Foreign Volume Manufacturing Mix and Digital Global Russia Discontinued Underlying EBIT 1H22 exchange margin Solutions Support operations 1 EBIT 1H23
Slide 12: Strong Focus on Optimising Trade Working Capital
TRADE WORKING CAPITAL STRONG FOCUS ON OPTIMISING TRADE WORKING CAPITAL Trade working capital ($M) Trade working capital ($M) Days inventory held1 844 684 (74) 79 844 438 64 63 62 155 684 FY21 FY22 1H23 FY21 FY22 1H23 Days sales outstanding1 Days payables outstanding1 30 Sep Inventory Trade Trade 31
Slide 13: Investing for Growth and Maintaining Our Unmatched Asset Portfolio
CAPITAL AND INVESTING INVESTING FOR GROWTH AND MAINTAINING OUR UNMATCHED ASSET PORTFOLIO CAPITAL EXPENDITURE ($M)1 CAPITAL EXPENDITURE Total capital expenditure in line with expectations for the first half; full year expectations remain unchanged at $400 million to $420 million. 349 Sustenance 36 •
Slide 14: Proactive Debt Management Underpins Strong Financial Position
BALANCE SHEET AND LIQUIDITY PROACTIVE DEBT MANAGEMENT UNDERPINS STRONG FINANCIAL POSITION Committed debt facility maturity profile ($M) Available liquidity ($M) 2,678 Average tenor at March 2023 – 5.1 years (drawn debt: 6.4 years) 2,080 2,120 Undrawn committed 1,423 1,000 facilities 900 1,486 1,439
Slide 15: Improved Earnings Performance Results in Increased Dividends
DIVIDEND IMPROVED EARNINGS PERFORMANCE RESULTS IN INCREASED DIVIDENDS Dividend per Ordinary Share (cents) & Payout Ratio1 (%) • 2023 interim dividend reflects improvement in 35.0c 48% the underlying earnings performance Final 24.0c Interim • Orica’s dividend payout ratio policy is 40-70% 47% of unde
Slide 16: Our Strategy in Action
OUR STRATEGY IN ACTION SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2023 HALF YEAR RESULTS 16
Slide 17: Successfully Executing Our Strategy
STRATEGY SUCCESSFULLY EXECUTING OUR STRATEGY 2023 HALF YEAR RESULTS 17
Slide 18: Delivering on Our Strategic Targets
STRATEGIC PLAN DELIVERING ON OUR STRATEGIC TARGETS Progress on strategic targets for the half year ended 31 March 2023 0-3 years Status Pursue organic growth from the core Grow presence in future-facing commodities Accelerate adoption of innovative blasting technologies and Diversify portfolio by in
Slide 19: Strong Performance Expected to Continue in Second Half
OUTLOOK STRONG PERFORMANCE EXPECTED TO CONTINUE IN SECOND HALF Full Year 2023 Outlook: • The strength of Orica’s performance is expected to continue in the second half. • The seasonality of earnings will be less skewed to the second half compared with FY2022. • Previous expectations of EBIT improvem
Slide 20: Delivering Value to Our Shareholders
OUR INVESTMENT PROPOSITION DELIVERING VALUE TO OUR SHAREHOLDERS OUR FOCUS OUR PROMISE • Safety is, and will remain our number one priority Operating responsibly together with our people, • We are the global leader in mining partners, customers and civil construction markets • We have reshaped our st
Slide 21: Supplementary Information
Toquepala mine, Peru SUPPLEMENTARY INFORMATION 2023 2022 HALF FULL YEAR RESULTS 21 Freeport, Indonesia
Slide 22: Diversified Global Business
SUPPLEMENTARY INFORMATION DIVERSIFIED GLOBAL BUSINESS REVENUE BY REGION1 REVENUE BY COMMODITY1 REVENUE BY PRODUCT/SERVICE TYPE1 7% 14% 4% 4% 3% 9% 25% 6% 39% 35% 11% 12% 22% 13% 21% 15% 22% 14% 24% Australia Pacific & Asia North America Copper Gold Thermal coal Bulk Emulsion AN/ANFO Initiating Syste
Slide 23: Australia Pacific & Asia
SUPPLEMENTARY INFORMATION AUSTRALIA PACIFIC & ASIA Market conditions EBIT ($M) External revenue ($M) • Strength of commodity prices and mining activity remains robust 370 2,707 280 2,106 • Wet weather on east coast of Australia 214 1,520 • Significant increase in electricity costs in Australia 170 1
Slide 24: North America
SUPPLEMENTARY INFORMATION NORTH AMERICA Market conditions EBIT ($M) External revenue ($M) • Extreme winter weather in USA and Canada, together with hurricane 135 1,567 activity in Eastern Canada impacting mining activity 108 79 1,230 • Market fundamentals for most commodities remain strong 60 862 65
Slide 25: Latin America
SUPPLEMENTARY INFORMATION LATIN AMERICA Market conditions EBIT ($M) External revenue ($M) • Mining activity in the region materially stable 54 1,650 • Increasing global demand for Future Facing Commodities supporting 29 29 957 985 new projects in region • Political situation in Peru causing logistic
Slide 26: Europe, Middle East & Africa
SUPPLEMENTARY INFORMATION EUROPE, MIDDLE EAST & AFRICA Market conditions EBIT ($M) External revenue ($M) • Strong gold and copper mining activity across Africa 1,025 46 • Southern Europe mining market stable 801 605 35 • Weak economic outlook in Western Europe continues to impact Q&C 25 399 activity
Slide 27: Capital Management Framework
SUPPLEMENTARY INFORMATION CAPITAL MANAGEMENT FRAMEWORK Strong cash generation Working capital efficiency Asset efficiency Maintaining an investment grade credit rating Preserving the flexibility for investment alternatives and to respond to changes in the external operating environment Maximising re
Slide 28: Debt Position
SUPPLEMENTARY INFORMATION DEBT POSITION Movement in net debt1 ($M) Debt covenants3 Significant headroom to gearing and interest cover debt covenants +449 Gearing (%) 57.5% 256 1,361 26.2% 81 (30) 142 912 31 Mar 2023 Interest cover (times)4 5.2x Dividends Axis HY23 2.0x FY22 Net cash Foreign net debt
Slide 29: Foreign Exchange
SUPPLEMENTARY INFORMATION FOREIGN EXCHANGE Basket of 39 currencies translated to Australian Dollar (AUD) earnings Key currency movements 1H2023 1H2022 31 Mar 2023 31 Mar 2022 30 Sep 2022 Currency Average rates Spot rates USD – US Dollar 0.6704 0.7261 0.6712 0.7512 0.6504 MXN – Mexican Peso 12.84 14.
Slide 30: Significant Items
SUPPLEMENTARY INFORMATION SIGNIFICANT ITEMS Gross Net Half year ended 31 March ($M) (before tax) (after tax) Loss on sale of Türkiye business including release of the foreign currency translation reserve (FCTR) (73.5) (72.7) Axis Group acquisition earnout (13.3) (13.3) Significant items (86.8) (86.0
Slide 31: Non-IFRS Reconciliations
SUPPLEMENTARY INFORMATION NON-IFRS RECONCILIATIONS Half year ended 31 March ($M) 2023 2022 Variance 1 Statutory net profit / (loss) after tax 123 (85) Add back: Individually significant items after tax1 41 214 Underlying profit after tax1 164 129 27% Adjust for the following: Net financing costs 82
Slide 32: Definitions
DEFINITIONS Term Definition AN Includes ammonium nitrate prill and solution as well as emulsion products including bulk emulsion and packaged emulsion Capital expenditure Comprises spend on property, plant and equipment and intangible assets, on an accruals basis for FY20 onwards and on a cash basis