Dyno Nobel Limited · ASX:DNL
Dyno Nobel — FY2023 Earnings Presentation
38 slides from Dyno Nobel's earnings presentation, Nov 13, 2023
Slide 1: 2023 Full Year Financial Results Presentation
2023 FULL YEAR FINANCIAL RESULTS PRESENTATION 13 November 2023 Incitec Pivot Limited ABN 42 004 080 264 ASX Code: IPL OTC: INCZY 1
Slide 2: Disclaimer: Summary Information
Disclaimer SUMMARY INFORMATION • This presentation has been prepared by Incitec Pivot Limited (“IPL”). The information contained in this presentation is in summary form and is based on the businesses currently conducted by IPL, which may be subject to change, and is provided for information purposes
Slide 3: Disclaimer: Forward Looking Statements
Disclaimer FORWARD LOOKING STATEMENTS • This presentation contains certain “forward looking statements”. Forward looking words such as “expect”, “would”, “could”, “may”, “predict”, “intend”, “will”, “believe”, “estimate”, “target” and “forecast” and other similar expressions are intended to identify
Slide 4: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY “I begin today by acknowledging the Traditional Custodians of the land on which we meet today and I pay my respects to their elders past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples joining us today.” 4
Slide 5: Overview
Overview Paul Victor Interim Chief Executive Officer 55
Slide 6: Overview: What you will hear today
Overview Overview What you will hear today Purposefully Delivering Progressing Group 2024 progressing safety and strategic financial business business business initiatives performance outlook transition results and value drivers 6
Slide 7: Purposefully progressing business transition
Transitioning the business Purposefully progressing business transition TARGETS SAFETY Remains number one priority EMBED AND Set realistic goals aligned with stakeholders’ expectations DELIVER A HIGH PERFORMANCE CULTURE FOCUS DELIVERY Clarity on business priorities Keeping ourselves accountable & ex
Slide 8: Deliver our Zero Harm promise
Safety Deliver our Zero Harm promise Lost Workday Case Severity Rate1 • Improvement in recordable injury severity and process safety incidents3 18.5 12.1 11.5 • No significant environmental incidents: 3 years running FY21 FY22 FY23 • TRIFR stagnant - targeted step up in safety leadership, training a
Slide 9: FY23 result: Delivered on 2H underlying growth
Business results FY23 result: Delivered on 2H underlying growth Positioned for significant level of planned capital returns to shareholders Earnings1 Capital Management EBIT NPAT Full year dividend Proposed Capital returns3 $880M $582M 15cps $1.4B Down from a record Down from TOTAL OF $291M2 $1b sub
Slide 10: Dyno Nobel: Strong Asia Pacific result
Business results Dyno Nobel Strong Asia Pacific result, North America Explosives delivered strong 2H earnings growth Combined business EBIT (A$M) FY23 FY22 Chg. • Record AN production at Moranbah of 372kt Dyno Nobel Asia Pacific 188 163 16% • Strong customer demand and continued technology uptake DN
Slide 11: Fertilisers Asia Pacific: Result reflects commodity downturn
Business results Fertilisers Asia Pacific Result reflects commodity downturn and production shortfalls EBIT (A$M) FY23 FY22 Chg. Distribution 46 51 (10%) • Strong domestic 2H volumes – FY sales volumes up 9% Distribution Manufacturing 108 563 (81%) • EBIT margin impacted by commodity downturn Total
Slide 12: Delivering sustainable value to shareholders
Progressing strategy Delivering sustainable value to shareholders Setting up Global Technology & Improving reliability Decarbonisation Explosives margin expansion • Asset management strategies • DNA repricing, DNAP • WALA sale: regulatory recontracting well progressed for all assets Actions decision
Slide 13: Reshaping the portfolio
Progressing strategy Reshaping the portfolio Reducing commodity exposure, increasing level of recurring earnings, improving capital allocation WALA Sale Potential Fertilisers Sale Rationale: Rationale: • Monetise excess ammonia • Manufacturing synergy has declined • Reduce earnings volatility • Redu
Slide 14: Our technology: a key value differentiator
Technology Our technology: a key value differentiator Industry leading technology delivering customer value and earnings growth Continued volume growth across major technology lines Premium Emulsions Liquid Fertilisers1 FY19 to FY23 CAGR FY19 to FY23 CAGR Revenue growth significantly outstripping Vo
Slide 15: Industry-leading technology driving value growth
Technology Industry-leading technology driving value growth Strong differentiated technology allows us to compete successfully and drives margin uplift Technology Development Customer Case Study Delivering Competitive • Accelerating development • Long term contract extension – Pilbara Advantage • In
Slide 16: Delivering business initiatives
Margin expansion Delivering business initiatives Americas Asia Pacific Initiative Promise made Promise kept Delivery Initiative Promise made Promise kept Delivery Returning Regulatory Monetise Sale Return Solid progress business to decision Customer WALA sale excess announced expected earnings to in
Slide 17: Delivering business initiatives
Margin expansion Delivering business initiatives Initiative Promise made Promise kept Delivery Sale Separate Sale process Negotiations process businesses progressing continuing Mitigate FY24 impact Ongoing Phos Hill impacts of expected to be assessment of gas supply contracted gas ~50% less than mit
Slide 18: Improved manufacturing delivery
Improving reliability Improved manufacturing delivery Improved operations excellence practices to deliver safe, reliable and cost competitive operations Our Objectives FY23 Progress FY24 Priorities • Waggaman taskforce – record performance • Phosphate Hill taskforce – focussed on implementing recomm
Slide 19: Our commitment to decarbonisation
Decarbonisation Our commitment to decarbonisation Our operational (Scope 1 & 2) absolute GHG reduction pathway Initiative Promise made Promise kept Delivery 2020 baseline: 2.8 million tonnes CO2e1 Moranbah Reduce Scope 1 2020 to 2030 & 2 GHG by 7% -7% 2030 to 2040 N2O On track Delivery targeted 2,81
Slide 20: Group Financial Results
Group Financial Results Liza Somers Interim Chief Financial Officer 20 20
Slide 21: Group profitability per segment
Financial performance Group profitability per segment Dyno Customer and Technology growth offset by commodity headwinds EBITDA Contribution IPL GROUP ($M) FY23 FY22 Change Dyno Nobel Asia Pacific 188 163 16% 20% 37% Dyno Nobel Americas 588 759 (23%) Fertilisers 153 614 (75%) 50% 57% 23% Corporate an
Slide 22: Cash Fixed Costs
Financial performance Cash Fixed Costs Increase in Cash Fixed Costs driven by business growth and high inflation Cash Fixed Costs (A$M) • Above inflationary increases partially mitigated through cost pass throughs and saving initiatives 29 Offset by 67 favourable movement f on revenue $67m passed •
Slide 23: Working capital
Financial performance Working capital Working capital unwind in line with lower commodity prices. Further reduction in underlying levels a focus in FY24 Trade Working Capital as a % of sales1 Year-on-Year movement ($M) 20.8 18.7 18.4 18.9 18.7 17.5 17.2 15.3 15.2 Other Classification Explosives Sep
Slide 24: Investing for growth and quality earnings
Financial performance Investing for growth and quality earnings Commitment to ongoing effective sustenance investment and reduced turnaround spend in FY24 • Balancing returns with reliability investment and ensuring efficiency of capital spend 86 91 51 Strategic Sustenance • Sustenance spend in line
Slide 25: Rewarding shareholders
Capital returns Rewarding shareholders Capital management Up to $1.4bn of proposed capital returns1 Equivalent to 72 cents per share Representing a ~25% return of capital2 • Execute previously • If WALA sale completes, up to • Objective: balance speed announced $400m buyback $1bn cash proposed to be
Slide 26: Outlook
Outlook Paul Victor Interim Chief Executive Officer 26 26
Slide 27: FY24 outlook
Outlook FY24 outlook Dyno Nobel Fertilisers Heading Earnings outlook supported by: Earnings outlook supported by: • Market growth • Accretive market share gains in the Distribution • Margin enhancement from technology business • Continued commercial discipline • Focused investment to deliver future
Slide 28: Questions & Answers
Incitec Pivot Limited INNOVATION ON THE GROUND Questions & Answers
Slide 29: Appendix
Incitec Pivot Limited INNOVATION ON THE GROUND Appendix
Slide 30: Group Result
Appendix Group Result EBIT A$m Re-basing Customer Facing Manufacturing Other from FY22 Businesses 30
Slide 31: Dyno Nobel Americas
Appendix Dyno Nobel Americas EBIT US$m Explosives Ag & IC WALA 31
Slide 32: Dyno Nobel Asia Pacific
Appendix Dyno Nobel Asia Pacific EBIT A$m 32
Slide 33: Fertilisers Asia Pacific
Appendix Fertilisers Asia Pacific EBIT A$m Re-basing Manufacturing Distribution from FY22 33
Slide 34: Disciplined capital allocation
Appendix Disciplined capital allocation Prudent approach to deliver growing returns to shareholders Cash flow after sus tenance capit al $202M $100M Sustenance Capex Turnaround Capex 15 cps dividend Cash flow from Undertake previously announced Commitme $400M operations of 1 Di s c r e ti o $701M bu
Slide 35: WALA offtake agreement
Appendix WALA offtake agreement Earnings impact of offtake agreement Estimated annual earnings impact (US$m)1 • The Waggaman ammonia offtake agreement between IPL and CF Cash changes to EBIT Industries includes the offtake of 200kst/yr of ammonia for up to 25 years, priced on a gas-backed formula at
Slide 36: Dyno Nobel – markets and outlook
Appendix Dyno Nobel – markets and outlook DNA DNAP Heading Picture Picture Favourable outlook supported by: Favourable outlook supported by: • Q&C – Infrastructure spending supports growth • Balanced Australian AN market • Metals – Demand outlook remains positive • East coast cost advantage • LATAM
Slide 37: Fertilisers – markets and outlook
Appendix Fertilisers – markets and outlook Distribution and Trading Manufacturing Favourable outlook supported by: Favourable outlook supported by: • Customer – Improved planning and engagement • Green ammonia – FFI partnership • Liquids – Geographic & product expansion • Phosphate Hill: • EEF’s – E
Slide 38: Turnaround schedule
Appendix Turnaround schedule Plant FY24 FY25 FY26 FY27 FY28 FY29 FY30 Phosphate Hill, Qld Cheyenne, WY Moranbah, Qld St Helens, OR Sale expected to be completed Waggaman, LA prior to next turnaround 38