Slide 1: Full Year Results
FULL YEAR RESULTS 1 NOVEMBER 2019 ALBERTO CALDERON, MANAGING DIRECTOR AND CEO CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER
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: Aligned with Orica's core values
SUSTAINABILITY Aligned with Orica’s core values Safety is our priority. Always. Safety is our priority Safeguarding the environment • Nothing is more important to Orica than • No significant environmental incidents We respect keeping our people safe and value all. • Reduced waste on the pcp • Contin
Slide 4: Results Summary
RESULTS SUMMARY Continuing momentum in profitable growth Total AN product volumes up 4%, led by strong growth in Latin America AN VOLUMES EBIT EBIT up 8% supported by: • Strong performance across all regions, 3.97mt $665m 4% 8% particularly EMEA (pcp: 3.82mt) (pcp: $618m) • Significant contribut
Slide 5: Increased market share continues to drive growth
AUSTRALIA PACIFIC & ASIA Increased market share continues to drive growth AN volume EBIT and EBIT margin VOLUMES (kt) ($m, %) • Continued growth across most of the region, 907 including increased sales to competitors 884 215 748 742 775 197 209 • ~10% increase in Electronic Blasting Systems 174 676
Slide 6: Burrup rectification is on track
BURRUP PLANT Burrup rectification is on track RECTIFICATION WORKS • ~40kt AN prill produced in FY19 during testing phase • No further material operational issues identified • Plant completely shut for installation of critical components; on track within plan • Focus remains on ensuring reliable long
Slide 7: Steady contribution with strong growth in Canada
NORTH AMERICA Steady contribution with strong growth in Canada AN volume EBIT and EBIT margin VOLUMES (kt) ($m, %) • AN volumes slightly up on the pcp, with continued growth in Canada offset by lower volumes in 575 97 98 98 546 560 553 560 568 90 88 94 Mexico due to ongoing community issues at a cus
Slide 8: Strong, sustainable performance uplift
EUROPE, MIDDLE EAST & AFRICA Strong, sustainable performance uplift AN volume EBIT and EBIT margin VOLUMES (kt) ($m, %) • Strong AN volume in key growth regions including Russia and Kazakhstan 224 244 227 235 228 44 • 20% EBS volume growth on the pcp, strengthening 216 38 36 in the Nordics and Afric
Slide 9: Earlier than expected business recovery drives performance improvement
LATIN AMERICA Earlier than expected business recovery drives performance improvement AN volume EBIT and EBIT margin VOLUMES (kt) ($m, %) • AN volumes up 16% on the pcp, led by increased 32 demand in Colombia, and growth in Peru from a 387 29 major contract win and greater customer activity 304 333 3
Slide 10: GroundProbe is delivering ahead of expectations
ORICA MONITOR1 GroundProbeTM is delivering ahead of expectations Revenue EBIT and EBIT margin SALES ($m) ($m, %) • Strong sales and rental performance throughout 13 FY19 52 45 • Entry into tunnels market 41 6 21% 25% • Further momentum from award-winning innovative high precision laser products 26 (
Slide 11: Sustainable benefits from turnaround
MINOVA Sustainable benefits from turnaround Revenue EBIT SALES ($m) ($m) • Revenue has grown 15% globally: 8 7 – Strong coal market in the USA 280 291 304 – Improved sales of bulk resins in Australia and 239 steel sales in India 2 – Increased demand from existing and new contracts in Central Europe
Slide 12: Christopher Davis, Chief Financial Officer
CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER 2019 FULL YEAR RESULTS | 12
Slide 13: Improved business performance is driving a stronger result
FINANCIAL RESULT Improved business performance is driving a stronger result Financial year ended 30 September ($m) FY19 FY18 Change Sales revenue 5,878 5,374 9% Underlying EBITDA 1 941 885 6% Underlying EBIT 2 665 618 8% Underlying NPAT 3 372 324 15% Statutory net profit /(loss) after tax
Slide 14: One-off adjustments
INDIVIDUALLY SIGNIFICANT ITEMS One-off adjustments Financial year ended 30 September 2019 ($m) Gross (before tax) Net (after tax) Impairment of IT assets (36) (25) Write down of property, plant and equipment (155) (109) Half year ended 31 March 2019 (191) (134) Gain on formation of China joint ventu
Slide 15: Strong improvement across the business
EBIT BRIDGE Strong improvement across the business Orica Group EBIT – FY18 to FY19 ($m) 15 665 18 18 618 15 2 (3) 27 (16) (29) EBIT Net Profit Inflation on Volume Mix & 1 Manufacturing Burrup Orica Minova Reduced EBIT FY18 on Asset Overheads Margin Monitor Overheads FY19 & Business Sales 1. Includes
Slide 16: Capital management remains disciplined
CAPITAL EXPENDITURE Capital management remains disciplined Excluding Burrup, capital expenditure of $387m was Capital expenditure1 driven slightly above the expected range, due to a ramp ($m) up in SAP project expenditure 424 BURRUP 37 Burrup capital expenditure in FY19 reflects rectification works
Slide 17: Significant improvement in operating cash flow
CASH FLOW Significant improvement in operating cash flow Net Operating Cash Flow 1H 2H Cash Conversion1 ($m) (%) 746 101.4 615 94.9 94.6 466 562 312 586 155 184 29 FY17 FY18 FY19 FY17 FY18 FY19 1. (EBITDA add / less movement in trade working capital, adjusted for acquisitions and disposals) / EBITDA
Slide 18: Maintaining a strong and flexible balance sheet
NET DEBT & GEARING Maintaining a strong and flexible balance sheet Net debt & gearing Gearing Movement in net debt ($m, %) ($m) 1,648 Net impact $183m 1,621 36% 35% 195 1,648 1,621 378 33% 1,465 156 1,441 FY17 FY18 FY19 FY18 Dividends Net Sub-total Non-cash 1 FY19 closing paid cash movements closing
Slide 19: Alberto Calderon, Managing Director and CEO
ALBERTO CALDERON, MANAGING DIRECTOR AND CEO 2019 FULL YEAR RESULTS | 19
Slide 20: Industry-leading core products and high-growth new products
ORICA’S TWO ENGINES BOTH LEVERAGE OUR GLOBAL LEADERSHIP Industry-leading core products and high-growth new products We have growth in our core, and …accelerating our results faster growth in new products… around the world IMPROVEMENT IN MARKET Mining productivity is becoming even more critical; mini
Slide 21: Accelerated contribution from best-in-class technology based solutions
BEST-IN-CLASS TECHNOLOGY Accelerated contribution from best-in-class technology based solutions WIRELESS BLASTING - WEBGENTM • Growing market interest for wireless initiation technology WebGen™ units Blasts by region – 325+ blasts fired globally – 7 commercial services contracts secured – 34 trial s
Slide 22: World's largest wireless open-cut blast successfully completed
BEST-IN-CLASS TECHNOLOGY World’s largest wireless open-cut blast successfully completed THREE BLASTS COMPLETED AT BMC POITREL COAL MINE (QLD, AUSTRALIA) May 1. Small pre-split 15-20m deep 2019 2. Production stratablast 55-60m deep - the first of its kind in the world 3. World’s largest open-cut stra
Slide 23: Manufacturing performance continues to improve
A MORE EFFICIENT AND EFFECTIVE BUSINESS Manufacturing performance continues to improve PROGRESS TO DATE Continuous plant Overall Equipment Efficiency (OEE) • Continued improvement in Overall Equipment (%) Efficiency (OEE)1 of continuous plants Target OEE = 80% • New EBS manufacturing sites introduce
Slide 24: Good progress towards product portfolio optimisation
A MORE EFFICIENT AND EFFECTIVE BUSINESS Good progress towards product portfolio optimisation PROGRESS TO DATE Target <9k SKU rationalisation 69% SKUs Eliminate XT shock tube 86% FY21 - FY23 Accumulated Reduce electrics benefit over 3 33% manufacturing years: > $30m Global detonator design 21% Global
Slide 25: Alberto Calderon, Managing Director and CEO
ALBERTO CALDERON, MANAGING DIRECTOR AND CEO 2019 FULL YEAR RESULTS | 25
Slide 26: Continued delivery of better business performance will support further growth
2020 FINANCIAL YEAR OUTLOOK Continued delivery of better business performance will support further growth Higher EBIT underpinned by technology, increased demand and mix across all regions, with earnings skewed to the second half of the year Key assumptions for the 2020 financial year include 1 : •
Slide 27: Solid platform in place to deliver superior returns
OUTLOOK BEYOND 2020 FINANCIAL YEAR Solid platform in place to deliver superior returns BURRUP • Fully [insert] operational in FY21 Strong penetration of new technology TECHNOLOGY • [insert] propositions translating to EBIT Continued SAP Full implementation of single SAP system driving profitable • [
Slide 28: Supplementary Information
SUPPLEMENTARY INFORMATION 2019 FULL YEAR RESULTS | 28
Slide 29: Explosives volumes
SUPPLEMENTARY INFORMATION Explosives volumes Variance – FY19 volumes Financial year ended 30 September FY19 volumes vs. FY18 volumes AN 1 Emulsion Total AN 1 Emulsion Total ‘000 tonnes products 2 products 2 Australia Pacific & Asia 658 1,024 1,682 6% 2% 3% North America 565 563 1,128 (2%) 5% 1% Euro
Slide 30: Segment analysis
SUPPLEMENTARY INFORMATION Segment analysis Financial year ended 30 September FY19 FY18 EBIT % $m Revenue 1 EBIT Revenue 1 EBIT change Australia Pacific & Asia 2,106 383 1,944 382 - North America 1,591 192 1,430 185 3% Europe, Middle East & Africa 911 68 807 55 24% Latin America 970 44 900 43 1% Oric
Slide 31: Diversified global business
SUPPLEMENTARY INFORMATION Diversified global business Geographic portfolio By commodity By product/service offering % of FY19 revenue 1 % of FY19 revenue 1 % of FY19 revenue 1 10% 4% 2% 17% 10% 16% 24% 34% Thermal Coal AN/ANFO 15% Australia Pacific & Asia Coking Coal 5% Bulk Emulsion North America 1
Slide 32: Interest cover
SUPPLEMENTARY INFORMATION Interest cover Financial year ended 30 September ($m) FY19 FY18 Change EBIT before individually significant items 665 618 47 Net financing costs 110 121 (11) Capitalised interest 7 5 2 Gross financing costs 117 126 (9) Interest cover (times) 1 5.7x 4.9x 0.8x 1. EBIT befor
Slide 33: Foreign exchange exposure
SUPPLEMENTARY INFORMATION Foreign exchange exposure EBIT composition (FX transaction) FY19 FX movements EBIT sensitivity1 % of FY19 EBIT % change from pcp +/- $m per 1% change 6% United States 7.2% 12% 26% Australia Latin America (3.0%) United States Latin America Canada 4.4% $5.0m 15% Canada 2 EMEA
Slide 34: Debt profile
SUPPLEMENTARY INFORMATION Debt profile Facility headroom Drawn debt maturity profile ($m) ($m) Average tenor at September 2019 – 4.7 years 1,000 1,383 900 1,534 800 700 600 500 400 2,163 2,033 300 200 100 0 Sep 18 Sep 19 FY20 FY21 FY22 FY23 FY25 FY26 FY27 FY31 FY31 Committed bank facilities US priva
Slide 35: Environmental and decommissioning provision
SUPPLEMENTARY INFORMATION Environmental and decommissioning provision As at 30 September ($m) FY19 FY18 Botany groundwater remediation 171 176 Botany hexachlorobenzene (HCB) waste 41 35 Burrup decommissioning 22 23 Deer Park remediation 22 26 Yarraville remediation 25 29 Other provisions 36 30 Total
Slide 36: Non-IFRS reconciliation
SUPPLEMENTARY INFORMATION Non-IFRS reconciliation Financial year ended 30 September ($m) FY19 FY18 % Statutory net profit/(loss) after tax 245 (48) >100% Add back: Individually significant items after tax 127 372 66% Underlying profit after tax 372 324 15% Adjust for the following: Net financing cos
Slide 37: Definitions
SUPPLEMENTARY INFORMATION Definitions Term Definition AN Includes Ammonium Nitrate prill and solution as well as Emulsion products including bulk emulsion and packaged emulsion Comprises total payments for property, plant and equipment and intangibles, as disclosed in the Statement of Cash Flows wit