Slide 1: 2022 Full Year Results
2022 Full Year Results 9 NOVEMBER 2022 Sanjeev Gandhi | Managing Director & CEO Kim Kerr | Chief Financial Officer Freeport, Indonesia
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: Agenda
AGENDA 2022 FULL YEAR RESULTS 2022 in review Slide 4 Financial performance Slide 14 Our strategy in action Slide 23 Outlook Slide 28 2022 FULL YEAR RESULTS 3 Stevenson, New Zealand
Slide 4: 2022 in Review
2022 IN REVIEW SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2022 FULL YEAR RESULTS 4
Slide 5: Improving our safety performance is our top priority
SAFE AND RESPONSIBLE BUSINESS IMPROVING OUR SAFETY PERFORMANCE IS OUR TOP PRIORITY • Tragically, we are reporting two fatalities, one relating to an incident at a customer site in far-east Russia this year, and an event in 2021 at a site in Kazakhstan. • Serious Injury Case Rate at 0.157, 25% improv
Slide 6: Taking action and increasing accountability
SUSTAINABILITY TAKING ACTION AND INCREASING ACCOUNTABILITY • Reduced Scope 1 and 2 GHG emissions by 14 per cent from 2019 baseline • Carseland, Canada tertiary catalyst delivering 95 per cent efficacy, from unabated levels 2022 net zero ambition updates: • Commenced tertiary catalyst installation at
Slide 7: Our people bring our purpose and values to life
SAFETY, PEOPLE AND COMMUNITY OUR PEOPLE BRING OUR PURPOSE AND VALUES TO LIFE Toquepala mine, Peru People and capabilities • Engagement and inclusion survey demonstrated engaged, energised and enabled workforce • Safety culture particularly strong, consistently above global benchmarks • Inclusion ind
Slide 8: Strategic milestones achieved in the 2022 financial year
DELIVERING VALUE FOR OUR STAKEHOLDERS STRATEGIC MILESTONES ACHIEVED IN THE 2022 FINANCIAL YEAR • Strategy execution well underway • Strong earnings growth across all regions • Commercial discipline culture embedded with a focus on quality of earnings • Sale of non-core assets and land progressed; in
Slide 9: Axis acquisition: transaction completed and integration commenced
AXIS ACQUISITION TRANSACTION COMPLETED AND INTEGRATION COMMENCED • Strategic acquisition of Axis Mining Technology in August 2022; transaction completed in October 2022 • Axis is a leader in the design, development and manufacture of specialised geospatial tools and instruments for the mining indust
Slide 10: Results reflect the efforts of our team to deliver our strategy
FULL YEAR RESULTS RESULTS REFLECT THE EFFORTS OF OUR TEAM TO DELIVER OUR STRATEGY • Growth in underlying earnings driven by strong global commodity markets and our focus on commercial discipline – Increased demand for premium products, particularly in Australia, Latin America, Nordics and Africa $57
Slide 11: Earnings growth across all regions
FULL YEAR BUSINESS PERFORMANCE EARNINGS GROWTH ACROSS ALL REGIONS AUSTRALIA PACIFIC & ASIA NORTH AMERICA • Commercial discipline in Australia and Asia driving earnings improvement • Earnings improvement through commercial discipline and volume growth • Transition to premium products offset suppresse
Slide 12: Digital Solutions & Blasting Technology Adoptions
DIGITAL SOLUTIONS & BLASTING TECHNOLOGY ADOPTIONS Head Office Regional Head Office Monitoring Centre Technology Innovation Centre Bar graph represents number of adoptions during each financial year. 2022 FULL YEAR RESULTS 12
Slide 13: Creating resilience and flexibility
MANUFACTURING AND SUPPLY CREATING RESILIENCE AND FLEXIBILITY Continuous plants Discrete manufacturing Supply Creating flexibility and future proofing Unlocking value in the manufacturing Leveraging purchasing scale and continuous manufacturing assets: network with key projects: commercial agility: •
Slide 14: Financial Performance
FINANCIAL PERFORMANCE KIM KERR, CHIEF FINANCIAL OFFICER 2022 FULL YEAR RESULTS 14 Stevenson, New Zealand
Slide 15: Earnings growth driven by solid business performance
FINANCIAL RESULT EARNINGS GROWTH DRIVEN BY SOLID BUSINESS PERFORMANCE Year ended 30 September ($M) 20221 20211,2 Change Sales revenue 7,328 5,682 29% Underlying EBITDA3 964 796 21% Underlying EBIT4 579 427 36% Underlying NPAT5 317 208 52% Individually significant items after tax6 (257) (382) Statuto
Slide 16: One-off items driven by asset sales and impact of Russia
INDIVIDUALLY SIGNIFICANT ITEMS ONE-OFF ITEMS DRIVEN BY ASSET SALES AND IMPACT OF RUSSIA Gross Tax Net Year ended 30 September ($M) (before tax) (after tax) Gain on sale of Minova and Nitro Consult businesses 29 (2) 27 Impairment of EMEA1 assets (168) (2) (170) Release of foreign currency translation
Slide 17: EBIT Bridge
EBIT BRIDGE IMPROVED PERFORMANCE ACROSS ALL AREAS OF THE BUSINESS Orica Group EBIT FY2021 to FY2022 ($M) 20 4 3 (7) 579 55 13 52 12 427 Underlying EBIT Foreign Volume Manufacturing Mix and margin Mining Orica Monitor 1 Global Support Discontinued Underlying EBIT FY21 exchange Chemicals operations2 F
Slide 18: Capital expenditure discipline remains, investing in sustainability ambitions
CAPITAL EXPENDITURE CAPITAL EXPENDITURE DISCIPLINE REMAINS, INVESTING IN SUSTAINABILITY AMBITIONS Total capital expenditure within expected range. CAPITAL EXPENDITURE ($M)1 349 Growth 323 • Spend to support mining customer growth particularly in Australia and 36 15 Africa 15 • Investment in support
Slide 19: Better second half cash flow generation and cash conversion
CASHFLOW BETTER SECOND HALF CASH FLOW GENERATION AND CASH CONVERSION Net operating cash flow ($M) Cash conversion1 (%) 127.0 619 74.4 72.1 362 480 519 145 104 139 41 FY20 FY21 (157) FY20 FY21 FY22 FY22 H1 H2 FY 1. (Underlying EBITDA add / less movement in trade working capital, adjusted for acquisit
Slide 20: Trade working capital: input costs remain elevated
TRADE WORKING CAPITAL INPUT COSTS REMAIN ELEVATED ($USD/t) + 46% 1,200 1,000 800 Far East CFR 600 ammonia index1 400 200 0 1 Apr 30 Sep 31 Mar 30 Sep 2021 2021 2022 2022 ($USD/t) 2,000 + 77% 1,500 Tampa CFR ammonia index1 1,000 500 0 1 Apr 30 Sep 31 Mar 30 Sep 2021 2021 2022 2022 1. Source: Fertecon
Slide 21: Focus on managing trade working capital
TRADE WORKING CAPITAL FOCUS ON MANAGING TRADE WORKING CAPITAL Trade working capital ($M) Trade working capital ($M) Days inventory held1 225 237 684 (216) FY20 FY21 FY22 FY20 FY21 FY22 438 Days sales outstanding1 Days payables outstanding1 30 Sep Inventory Trade Trade 30 Sep FY20 FY21 FY22 FY20 FY21
Slide 22: Conservative financial position and prudent debt management
BALANCE SHEET AND LIQUIDITY CONSERVATIVE FINANCIAL POSITION AND PRUDENT DEBT MANAGEMENT Available liquidity ($M) Net debt2 & gearing ($M, %) • Cash and undrawn committed bank debt facilities provide liquidity of $2.7 38.2% billion 34.6% • Significant headroom to gearing and 2,678 interest cover debt
Slide 23: Our Strategy in Action
OUR STRATEGY IN ACTION SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2022 FULL YEAR RESULTS 23 Stevenson, New Zealand
Slide 24: Pathway towards profitable growth and value creation for our stakeholders
STRATEGY PATHWAY TOWARDS PROFITABLE GROWTH AND VALUE CREATION FOR OUR STAKEHOLDERS 2022 FULL YEAR RESULTS 24
Slide 25: Our business verticals: progress on the pathway
OUR BUSINESS VERTICALS PROGRESS ON THE PATHWAY Mining Mining chemicals Quarry and construction • Building momentum from Orica’s industry- • Global cyanide distribution network expanded • Industry-focused bulk emulsion, EBS leading suite of blasting technology and with the opening of a transfer stati
Slide 26: Connected, end-to-end, mine to mill solutions provider
DIGITAL SOLUTIONS VERTICAL CONNECTED, END-TO-END, MINE TO MILL SOLUTIONS PROVIDER RESOURCE DEFINITION, PLANNING, DESIGN, MODEL & BLASTING MEASURE AND MONITOR ORE PROCESSING SCHEDULING & DRILLING OREBODY INTELLIGENCE BLAST DESIGN AND EXECUTION DOWNSTREAM MEASUREMENT AND OPTIMISATION High quality Real
Slide 27: Good progress on strategic targets
STRATEGIC PLAN GOOD PROGRESS ON STRATEGIC TARGETS Progress on strategic targets for the year ended 30 September 2022 0-3 years Status Pursue organic growth from the core Accelerate adoption of innovative blasting technologies and digital solutions, both upstream and downstream Optimise manufacturing
Slide 28: Outlook
OUTLOOK SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2022 FULL YEAR RESULTS 28
Slide 29: Improved performance expected to continue
OUTLOOK IMPROVED PERFORMANCE EXPECTED TO CONTINUE 2023 Outlook: • 2023 financial year EBIT from continuing operations is expected to increase on the pcp attributable to: – Anticipated growth in global commodities demand – Continued commercial discipline – Increased adoption of advanced technology of
Slide 30: 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 31: Supplementary Information
Toquepala mine, Peru SUPPLEMENTARY INFORMATION 2022 FULL YEAR RESULTS 31 Freeport, Indonesia
Slide 32: Explosives volumes
SUPPLEMENTARY INFORMATION EXPLOSIVES VOLUMES Year ended 30 September 2022 volumes vs pcp ‘000 tonnes Emulsion Emulsion AN 1 Total AN 1 Total products 2 products 2 Australia Pacific & Asia 832 935 1,767 27% (14%) 1% North America 570 536 1,106 14% 5% 9% Latin America 255 719 973 4% 5% 5% Europe, Midd
Slide 33: Segment analysis
SUPPLEMENTARY INFORMATION SEGMENT ANALYSIS Year ended 30 September 2022 2021 Variance $M External External External EBIT EBIT EBIT revenue revenue revenue Australia Pacific & Asia 2,724 367 2,106 280 29% 31% North America 1,571 132 1,230 108 28% 22% Latin America 1,657 53 956 29 73% 83% Europe, Midd
Slide 34: Diversified global business
SUPPLEMENTARY INFORMATION DIVERSIFIED GLOBAL BUSINESS REVENUE BY REGION1 REVENUE BY COMMODITY1 REVENUE BY PRODUCT/SERVICE TYPE1 6% 15% 8% 5% 4% 2% 25% 6% 38% 11% 36% 12% 23% 13% 21% 15% 22% 16% 22% Australia Pacific & Asia North America Copper Gold Thermal coal Bulk Emulsion AN/ANFO Initiating Syste
Slide 35: Australia Pacific & Asia
SUPPLEMENTARY INFORMATION AUSTRALIA PACIFIC & ASIA Market conditions • High commodity prices and strong mining activity EBIT ($M) External revenue ($M) 373 367 2,724 • Growth in coal demand from Indonesia and South-East Asia 202 280 2,051 2,106 • Customers increasing interest in productivity gains f
Slide 36: North America
SUPPLEMENTARY INFORMATION NORTH AMERICA Market conditions • Mining activity improved due to high commodity prices EBIT ($M) External revenue ($M) • High domestic energy prices increasing demand for thermal coal 165 1,571 132 1,260 • Labour shortages and inflation constraining growth 69 108 1,230 864
Slide 37: Latin America
SUPPLEMENTARY INFORMATION LATIN AMERICA Market conditions • Mining activity broadly stable EBIT ($M) External revenue ($M) • Increased AN and sea freight costs • Russia export ban and Russia-Ukraine conflict impacted trade • Security of supply a priority for customers Segment performance • Commercia
Slide 38: Europe, Middle East & Africa
SUPPLEMENTARY INFORMATION EUROPE, MIDDLE EAST & AFRICA Market conditions • Russia export ban and Russia-Ukraine conflict significantly disrupting EBIT ($M) External revenue ($M) AN and energy trade 1,027 64 883 • High gas prices leading to closure of several ammonia plants in Europe 46 801 607 31 •
Slide 39: Orica Monitor
SUPPLEMENTARY INFORMATION ORICA MONITOR Market conditions • Strong demand by mines globally to increase and renew their slope monitoring equipment • Growth in Brazil for tailings dam and open-pit monitoring systems • Customers becoming increasingly committed to ESG objectives driving demand EBIT ($M
Slide 40: 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 41: Debt position
SUPPLEMENTARY INFORMATION DEBT POSITION Movement in net debt1 ($M) Debt covenants4 Gearing (%) 57.5% 19.7% 1,479 97 (64) (682) 30 Sep 2022 82 912 Interest cover (times) 6.5x 2.0x Dividends Net cash Equity raise Foreign FY22 30 Sep 2022 FY21 net debt 2 paid flow exchange net debt3 translation Orica C
Slide 42: Debt profile
SUPPLEMENTARY INFORMATION DEBT PROFILE Committed debt facility maturity profile ($M) • FY2022 activities completed: – Orica completed a $299 million refinancing of Average tenor at September 2022 – 3.7 years (drawn debt: 4.3 years) committed bank facilities 1,000 – The refinancing included a $40 mil
Slide 43: Equity raise
SUPPLEMENTARY INFORMATION EQUITY RAISE • Axis acquisition purchase price comprises: Sources A$M Uses A$M – Upfront consideration of $258 million paid on 3 Gross proceeds from Acquisition Upfront October 2022; and $650m $258m Placement Consideration – Deferred earn-out up to a maximum of $90 million
Slide 44: Foreign exchange
SUPPLEMENTARY INFORMATION FOREIGN EXCHANGE Basket of 43 currencies translated to Australian Dollar (AUD) earnings Key currency movements FY22 FY21 Var 30 Sep 2022 30 Sep 2021 Var Currency Average rates Spot rates CAD – Canadian Dollar 0.9097 0.9506 (4%) 0.8897 0.9158 (3%) USD – US Dollar 0.7125 0.75
Slide 45: Environmental and decommissioning provisions
SUPPLEMENTARY INFORMATION ENVIRONMENTAL AND DECOMMISSIONING PROVISIONS As at 30 September ($M) 2022 2021 Botany groundwater remediation 183 212 Botany hexachlorabenzene (HCB) waste 24 29 Burrup decommissioning 15 44 Initiating systems network optimisation 23 27 Deer Park remediation 14 12 Yarraville
Slide 46: Significant items
SUPPLEMENTARY INFORMATION SIGNIFICANT ITEMS Gross Net Year ended 30 September ($M) (before tax) (after tax) Impairment expense (168) (170) • Impairment of assets of the Russia business (90) (92) • Impairment of assets of the Turkey business (33) (33) • Impairment of Goodwill in EMEA segment (45) (45
Slide 47: Non-IFRS reconciliations
SUPPLEMENTARY INFORMATION NON-IFRS RECONCILIATIONS Year ended 30 September ($M) 2022 2021 Variance 1 Statutory net profit / (loss) after tax 60 (174) Add back: Individually significant items after tax1 257 382 Underlying profit after tax1 317 208 52% Adjust for the following: Net financing costs 100
Slide 48: 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