Orica Limited · ASX:ORI
Orica — Investor Presentation (March 2019)
27 slides from Orica's investor presentation, March 2019
Slide 1: Orica Investor Presentation March 2019
MARCH 2019 ORICA INVESTOR PRESENTATION
Slide 2: Disclaimer
Disclaimer Forward looking statements This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used a
Slide 3: Orica Overview
se ORICA OVERVIEW
Slide 4: Global leader in mining and civil blasting
Global leader in mining and civil blasting Manufacturing Blasting Field Productivity & Supply Services Solutions No.1 1,500 140+ GLOBAL BLASTS PER DAY YEARS SUPPLIER on our customer sites of experience and of commercial innovation explosives 11,500+ 30% R&D INVESTMENT 2x c. EMPLOYEES serving custome
Slide 5: Global leader in mining & civil blasting
Global leader in mining & civil blasting Substantial competitive advantage that is difficult to replicate Scale and efficiency that comes from being the leading supplier of commercial ECONOMIES OF SCALE explosives and blasting systems to the mining and infrastructure markets globally LEADING BRAND A
Slide 6: True global footprint
True global footprint Operations in over 50 countries and customers in more than 100 countries worldwide Australia, Pacific & Asia North America Latin America Europe, Middle East & Africa ORICA DOES NOT HAVE A TRUE GLOBAL COMPETITOR 6
Slide 7: Safety, health & environment
Safety, health & environment Safety is our Orica’s core values priority. Always. Safety & health Environment We respect • Stable TRIFR1 • No environmental incidents (category 3+) and value all. • Safety Leadership program embedded • New emissions abatement catalyst trial at Kooragang Island site in
Slide 8: Flexible sourcing capability
Flexible sourcing capability Our global manufacturing network is complemented by third party sourcing Karelia, Russia Carseland, Gyttorp, Canada Sweden Tappen, Canada Brownsburg, Canada Ust’ Kamenogorsk, Kazakhstan Minden, Lalahan, USA Turkey Wei Hai, Cuatrocienigas, China Mexico Honce, Fujairah, Go
Slide 9: Diversified global business
Diversified global business Geographic portfolio By commodity By product/service offering % of FY18 revenue 1 % of FY18 revenue 1 % of FY18 revenue 1 1% 4% 10% 15% 18% 9% 24% 15% 36% Thermal Coal AN/ANFO Australia Pacific & Asia Coking Coal 5% 13% Bulk Emulsion North America Iron Ore Packaged Produc
Slide 10: Historical performance
Historical performance REVENUE1 EBIT1 $m $m 5,653 5,374 5,092 5,039 12.6% 12.9% 12.1% 11.5% 685 642 635 618 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 EBIT EBIT Margin AMMONIUM NITRATE SALES VOLUMES 1 DIVIDENDS tonnes (‘000) cps and payout ratio 85% 3,757 3,650 3,818 3,541 47% 60% 56.0 50% 29.0 28.0 31
Slide 11: Burrup TAN plant
Burrup TAN plant Technical Ammonium Nitrate plant located in the Pilbara, Western Australia Strategic 30+ year asset – Major Pilbara based iron ore miners are the world’s lowest cost producers – 5-year materials moved growth greater than production growth – Plant essentially loaded from FY20 Joint v
Slide 12: Strategic acquisition: Auxiliaries
Strategic acquisition: Auxiliaries* Recent acquisition GroundProbe™ delivers above investment case Sales Revenue EBIT 2H16 1H16 & EBIT margin 1H17 2H17 (%) 1H18 2H18 $m $m – Leveraging Orica’s global reach with >100 Orica 41 customers 6 – Early wins for innovation award winning high precision 26 las
Slide 13: Strategic Priorities
STRATEGIC PRIORITIES
Slide 14: Our strategic priorities
Our strategic priorities Be the market leader in chosen segments; deliver superior returns on investment; and generate strong free cash Disciplined capital allocation across the portfolio Manufacturing and Supply Blasting Field Services Productivity Solutions Cost leader Market leader Value differen
Slide 15: Manufacturing & supply chain
Manufacturing & supply chain Improving reliability and operational efficiency to capture value FOCUS AREAS CONTINUOUS PLANT OEE1 PERFORMANCE VS BENCHMARK • Continuous Manufacturing – >80% OEE1 in all plants across the network FY19 80% – Reduction of downtime and unplanned maintenance – Cyanide: maxi
Slide 16: Blasting field services
Blasting field services Capturing value from our core business FOCUS AREAS NT5: Revenue from new NT5 by product/service technology 1 offering 2 • Differentiated offerings that deliver value 7% - Conversion of >30 sites to digitally enabled >30% 2% 29% bench powered by BlastIQ 12% Bulk - Introduction
Slide 17: Commercialisation Case Study: BlastIQ
BlastIQ TM Improving safety and productivity Commercialisation Case Study Digital, cloud based platform – Reduce cost of drill and blast operations – Improved productivity – Next generation BlastIQ™ launched Customer benefits – Reduced drill costs ~10% – ~5% increased productivity in drill and blast
Slide 18: Commercialisation Case Study: Bulkmaster
Bulkmaster 7 TM Digitally enabled better blasting Commercialisation Case Study Next generation MMU TM – Premium product, released to specific customers – Productivity minimises assets and labour required – Automates delivery process and formulation management TM – Seamless integration and operationa
Slide 19: Productivity solutions
Productivity solutions Investment in market led technology drives sales and returns FOCUS AREAS • Digitally enabled better blasting - Dynamic geomodelling capability - Continued commercialisation of blast optimisation services • Blast automation - WebGen™ 100 penetration at 3-4 mines; ~10 customer t
Slide 20: Commercialisation Case Study: WebGen
WebGen TM Improved reliability and operational efficiency Commercialisation Case Study World first wireless initiation system – Elimination of exposure to high risk activities – Next generation will be suitable for open cut mines Customer benefits – Elimination of exposure to high risk activities –
Slide 21: Financial Performance
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Slide 22: EBIT bridge
EBIT bridge Improved volumes and mix offset headwinds Orica Group EBIT $m FY17 to FY18 635 (25) 1 (12) (26) 618 (26) (16) 70 32 (15) 2 (27) EBIT FX & Headwinds Pricing Volume Global Burrup Minova Auxiliaries Reduced EBIT FY17 inflation on – material Mix manufacturing plant overheads FY18 overheads i
Slide 23: Disciplined capital expenditure
Disciplined capital expenditure CAPITAL EXPENDITURE PROFILE1 $M CAPITAL EXPENDITURE PRIORITISED ACROSS THE GROUP 504 443 151 75 20% RONA FOR ALL NEW 350 GROWTH CAPITAL 322 306 PROJECTS 28 66 150 183 263 29 51 23 50 67 LICENCE TO OPERATE 226 CAPITAL EXPENDITURE 203 185 206 145 PRIORITISED (SAFETY, EN
Slide 24: FY18 regional overview
FY18 regional overview Australia, Pacific & Asia North America Latin America Europe, Middle East & Africa 4% Revenue by commodity1 8% 9% 6% 4% 14% 6% 19% 5% 25% Thermal coal Thermal coal Thermal coal 23% 8% Coking coal Coking coal Thermal coal Gold 40% Gold Gold Gold Iron ore Iron ore Iron ore Iron
Slide 25: Outlook
OUTLOOK
Slide 26: FY19 outlook
FY19 outlook Improved operating leverage underpins a stronger FY19 result Higher revenue and EBIT will be underpinned by increased demand and manufacturing improvements, with earnings skewed to the second half of the year. Key assumptions for FY19: • Global AN product volumes expected to be ~3% high
Slide 27: Key focus areas FY19 & beyond
Key focus areas FY19 & beyond Delivering improved returns MANUFACTURING AND SUPPLY FIELD SERVICES PRODUCTIVITY SOLUTIONS • Benefits from operational and fully • Demand for explosives volumes to • WebGen™ 200 commercialisation loaded Burrup plant expected outstrip key commodity production and evoluti