Orica Limited · ASX:ORI
Orica — Merrill Lynch Conference September 2005
19 slides from Orica's conference presentation, September 2005
Slide 1: Merrill Lynch Conference
Merrill Lynch Conference September 2005 Graeme Liebelt Managing Director & CEO
Slide 2: Orica – Snapshot
Orica – Snapshot • Australian owned publicly listed company trading on the Australian Stock Exchange (ORI) • Market capitalisation of A$5.5bn/US$4.2bn* • Ranked in top 50 Australian companies based on market capitalisation • Operations in about 50 countries - 12,500 employees (post Dyno) • Comprises
Slide 3: Orica – What We Do
Orica – What We Do Market Mining Services Leadership • Commercial explosives plus blast management Leading Brands Chemicals Businesses Privileged • Niche chemical distribution, value add and united by Assets niche manufacturing chemical sciences Capable Consumer Products People • Paint, paint prepar
Slide 4: Relative performance - Materials
Share Price $A 10 12 14 16 18 20 22 2 4 6 8 26-Nov-01 10-Jan-02 22-Feb-02 9-Apr-02 22-May-02 4-Jul-02 15-Aug-02 26-Sep-02 7-Nov-02 19-Dec-02 5-Feb-03 19-Mar-03 5-May-03 17-Jun-03 29-Jul-03 9-Sep-03 21-Oct-03 2-Dec-03 Orica – Share Price 16-Jan-04 1-Mar-04 14-Apr-04 26-May-04 8-Jul-04 19-Aug-04 30-Se
Slide 5: Value Drivers: Orica's Approach
Value Drivers Orica’s Approach Profit engine Efficiency Revenue Capital productivity productivity Cost productivity Culture High performance Growth engine culture Strategy
Slide 6: Efficiency - Driving the Profit Engine
EFFICIENCY - Driving the Profit Engine Orica’s Strategy Dyno, Yarwun, Revenue & Capital Mining industry growth, Chemical industry Productivity manufacturing rationalisation, working capital Manufacturing, Procurement, Supply Chain Cost Productivity Terra
Slide 7: Leveraging Revenue, Cost and Capital Productivity – Illustrative Example
Leveraging Revenue, Cost and Capital Productivity – Illustrative Example Item Amount $ % Movement New Amount $ Revenue 100 Ç8% 108.0 Costs 90 Ç0% 97.2 Net Profit 10 Ç8% 10.8 Item Amount $ % Movement New Amount $ Revenue 100 Ç8% 108.0 Costs 90 (-1%: 89%) 96.1 Net Profit 10 19% 11.9
Slide 8: Culture – Deliver The Promise
CULTURE – “Deliver The Promise” At Orica we have implemented a performance-based culture driven by personal accountability for delivering results. • Safety, Health & Environment – No injuries to anyone ever – Value people and the environment • Commercial Ownership – Run the business as if it is your
Slide 9: Strategy – Sustainable Bottom Line Growth
STRATEGY – Sustainable Bottom Line Growth • Market leadership • Growing only value adding businesses “earn the right to grow” (18% RONA) • Related growth - “building on our best businesses”
Slide 10: DYNO Transaction
DYNO Transaction Creative structure used to secure key growth assets 1. Macquarie acquires 100% of Dyno Nobel in the first instance 1. 2. Macquarie on-sells European, Middle Eastern, African, Asian and Latin ♦ North America ♦ Australia American businesses to Orica – Macquarie retains North American
Slide 11: Overview
Overview An outstanding opportunity to grow Orica Mining Services • Purchase for US$685 (A$901 million) on a debt free basis – Approx 11.1 times 20051 EBITDA – Approx 5.3 times pro forma 20051 EBITDA including est. year 3 cost savings (before significant items) • Expected completion of Macquarie tra
Slide 12: Strategic & Financial Rationale
Strategic & Financial Rationale A clear and unique strategic fit for Orica Mining Services and a financially compelling case • Increased exposure to the resources & infrastructure sectors • Expansion of global footprint • OMS transforming acquisition with manageable risk • Earnings diversification f
Slide 13: Global Mining Regions
Global Mining Regions OMS will be well positioned to capture growth opportunities Major Mining Regions Major Mining Growth
Slide 14: Significant Cost Savings
Significant Cost Savings To be achieved over three years Expected cost savings • Orica has conducted a detailed review of potential cost savings • Annualised cost savings of A$90 million are achievable by the end of the third year following the acquisition – Progressively achieved over 3 years – Mos
Slide 15: Significant Cost Savings
Significant Cost Savings To be achieved from… EBIT cost savings by type EBIT cost savings by geography 11% 18% 24% 7% 36% 15% 46% 43% (36%) Rationalisation of administration (24%) Latin America (46%) Rationalisation / optimisation of plants (15%) Asia (43%) EMEA (7%) Improved logistics / purchasing
Slide 16: Funding
Funding Overview A$967M • Total acquisition cost A$967 million Transaction cost 1,000 (including transaction costs) A$66 million Debt A$117 million 800 • Funded by mix of equity (pro-rata Hybrid Acquisition A$400 million entitlement), the issue of a hybrid 600 price A$901 million security and existi
Slide 17: Orica's Virtuous Circle: positioned to capture shareholder value
Orica’s “Virtuous Circle”: positioned to capture shareholder value Customer Driven: Meeting customers’ changing needs Increase spending No.1 Market on product & Position, business Revenue development, M&A Orica Culture Productivity & Business Capability Generate More Cash Increase Cost and (From Gro
Slide 18: Why Invest in Orica?
Why Invest in Orica? • Market leader in chosen markets • Exposure to resources sector • Strong share price momentum and progressive dividend policy Strong focus on shareholder value
Slide 19: Important Notice
Important Notice This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only and does not constitute an offer to issue or arrange to issue, securities or other financial products. The information contained in this presentati