Slide 1: Orora Half Year Results
Orora Half Year Results Half Year Ended 31 December 2016 Nigel Garrard – Managing Director and CEO Stuart Hutton – Chief Financial Officer 15 February 2017
Slide 2: Important Information
Important Information Forward Looking Statements This presentation contains forward looking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Orora. Forward look
Slide 3: Orora Business Highlights
Orora Business Highlights Earnings Summary(1) Robust EPS growth – up 12% Underlying(1) . • Solid EBIT growth despite cost headwinds and muted economic conditions A$ Million 1H16 . 1H17 . ∆% o Australasia: EBIT up 3.3% - organic earnings benefits of $10M were largely offset by $7M of input cost headw
Slide 4: Orora safety performance
Orora safety performance Dec 2015 Jun 2016 Dec 2016 Safety of our employees is a priority • RCFR has continued to improve – reflecting generally heightened awareness RCFR 7.2 6.8 5.9 at existing sites and progressive implementation of Orora’s high safety standards and processes at recently acquired
Slide 5: Half Year results
Half Year results Half Year Financial Highlights Higher sales - up 4% Underlying(1) • Australasia underlying sales grew ~1.0% in a flat economic environment A$ million 1H16 . 1H17 ∆% • North America local currency sales up 13% - Packaging Solutions sales grew 6%; IntegraColor acquisition contributin
Slide 6: Orora Australasia
Orora Australasia Results Summary Underlying sales growth of ~1.0%(1) in generally muted market conditions • Beverage: continued volume growth in Glass and Wine Closures; Bev Can volumes slightly lower A$ Million 1H16 1H17 ∆% . o Bottled wine industry exports continue to grow ahead of GDP – positive
Slide 7: Australasia EBIT growth
Australasia EBIT growth 3.3% Earnings Growth 10.3 (6.8) 109.0 105.5 (A$’M) 1H16 Organic Initiatives Input Cost Headwinds 1H17 Organic earnings benefits offset by input cost headwinds at Glass & B9 7 Ltd 2014 Orora
Slide 8: Orora North America
Orora North America Results Summary Orora Packaging Solutions (OPS) - continuing to execute on a proven organic growth strategy • Organic sales growth of approximately 6.0% US$ Million 1H16 1H17 ∆% o Higher sales to existing customers and increased market share, largely from independents Ongoing suc
Slide 9: North America EBIT growth
North America EBIT growth 19.8% Earnings Growth (24.7% excluding FX impact) 11.4 (2.3) 55.1 46.0 (A$’M) 1H16 Growth FX 1H17 Sales growth (organic & share gain), margin expansion and contribution from IntegraColor driving 25% constant FX earnings growth 9 Ltd 2014 Orora
Slide 10: Acquisition of The Register Print Group
Acquisition of The Register Print Group Expanding Orora’s POP footprint into the Northeast Acquisition in line with Orora’s stated growth strategy in POP • Consideration: US$44.0M (approx. A$59.0M), completed 2 Jan 2017 • EBITDA Multiple: 5.8x LTM • Sales: ~US$42.0M • Synergies: ~US$1.5-2.0M over fi
Slide 11: Acquisition of The Garvey Group and Graphic Tech
Acquisition of The Garvey Group and Graphic Tech Expanding Orora’s POP footprint into the Midwest and West Highly complementary to existing POP businesses • Consideration: US$54.0M (approx. A$71.0M), expected completion March 2017 • EBITDA Multiple: 5.8x LTM • Sales: ~US$90.0M • Synergies: ~US$3.0M
Slide 12: Overview of Orora's North American POP Business
Overview of Orora’s North American POP Business A national POP business generating approximately US$230M A unique value proposition in the US POP market in annual revenue 1. National manufacturing and fulfilment capability driven by footprint breadth and high quality assets 2. Provides customers wit
Slide 13: Orora Corporate
Orora Corporate Earnings Summary (EBIT) Corporate costs unchanged • Corporate costs were $14.5M - in line with the prior year A$ Million 1H16 1H17 ∆% • A surplus parcel of land that was compulsorily acquired in 2013 was settled during the period. The gain was not material and has Reported Corporate
Slide 14: Strong operating cash flow
Strong operating cash flow A$ Million 1H16(1) 1H17. Operating Cash flow increased 25% to $158M • Reflecting higher earnings and disciplined balance sheet management EBITDA 189.3.... 205.3. • Cash conversion of 72% - in excess of prior year (62%) and 70% management Non Cash Items 14.1 . 13.0. target(
Slide 15: Balance Sheet and Debt
Balance Sheet and Debt Balance Sheet Robust balance sheet to enable further growth investment A$ Million June 16 Dec 16 • Reduced leverage through conversion of earnings into cash Funds Employed (period end) 2,128 2,175 o Leverage of 1.6x - down from 1.7x at June 2016 and pcp Net Debt 630 639 o Pro
Slide 16: Returns focused capital allocation
Returns focused capital allocation Total Debt Facilities – Dec 2016 $1,126 million Committed to sensible debt levels and investment grade credit metrics • Cash on hand includes funds drawn for the acquisition of Register (completed 2 Jan 17) Net debt $639 million • Average tenor of drawn debt is 5.3
Slide 17: Our Orora – culture of driving outperformance
Our Orora – culture of driving outperformance Orora Ltd 2014 17
Slide 18: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH & CAPITAL ALLOCATION DIVIDEND INNOVATION Orora Orora North Australasia America Organic Growth Bolt-on M&A Adjacent 60-70% GDP Sales GDP+ Sales Capital (North America Focused) M&A Pay Out Ratio Growth G
Slide 19: Orora has invested approx. $380M in growth since ASX Listing
Orora has invested approx. $380M in growth since ASX Listing in December 2013 FY14 FY15 FY16 FY17 TOTAL INVESTMENT Established 2 new East Coast $26M spend committed New customer backed US DCs (Charlotte & from Orora Global Dairy Sack Line ($20M) Orlando) – both customer Innovation initiative to date
Slide 20: Committed to creating shareholder value
Committed to creating shareholder value What we said we would do What we have done in 1H17 Shareholder value creation 1. Organic sales growth, profitable market share gain & 1. OA: delivered approx $10M of commercial/efficiency related • Total shareholder return in excess of 15% in the improved effi
Slide 21: Perspectives for the remainder of 2017
Perspectives for the remainder of 2017 Orora Australasia • Given low growth environment, continue to drive improved efficiency and cost control across the business • Glass capacity expansion expected to be complete and fully operational by end of FY17 o Installation of third line in Feb/Mar 2017 – r
Slide 22: Outlook
Outlook • Orora expects to continue to drive organic growth and invest in innovation and growth during the remainder of FY17, with earnings expected to be higher than reported in 2016, subject to global economic conditions 22Orora Ltd 2014
Slide 23: Appendix 1: Orora acquires The Garvey Group and Graphic Tech
Appendix 1: Orora acquires The Garvey Group and Graphic Tech
Slide 24: Transaction Summary
Transaction Summary Orora continues to build national coverage in Point of Purchase (POP) – expanding footprint into the Midwest and West with the acquisitions of The Garvey Group and Graphic Tech for US$54M • US$54M (approx. A$71M) - US$48M paid upfront, US$6M holdback payable in instalments from C
Slide 25: Business Overview
Business Overview Highly complementary capability to existing POP businesses Providers of customised, innovative POP and visual display IntegraColor (Texas) and Register (New Jersey) solutions to large national customers • Full service providers of point of purchase (POP) and visual display solution
Slide 26: Alignment with Orora's growth strategy in Point of Purchase
Alignment with Orora’s growth strategy in Point of Purchase Today’s acquisitions align with Orora’s four key strategic M&A pillars Footprint Customers Capability Talent Services the full Serves long-term Retention of high Expands Orora’s POP value chain – blue chip quality, geographic concept, desig
Slide 27: Integration
Integration • Garvey and Graphic Tech will both be integrated into IntegraColor • Resources, process and best practices will be shared on a “best of the best” approach • The current management teams will continue to have responsibility for the day-to-day operations and report to the CEO of IntegraCo
Slide 28: Summary
Summary The acquisitions are in line with Orora’s stated growth strategy Provides Orora with a unique national POP service capability in POP 1. Grows total sales of Orora POP to approximately US$230M 2. Highly complementary to Orora’s existing POP businesses Midwest: US$40M sales 3. Expands Orora’s