Orica Limited · ASX:ORI
Orica — H1 2024 Earnings Presentation
40 slides from Orica's earnings presentation, May 9, 2024
Slide 1: 2024 Half Year Results
Photo TBC 2024 HALF YEAR RESULTS 9 May 2024 Presenters Sanjeev Gandhi Managing Director & CEO Kim Kerr Deer Blasting Park, Australia ORBS (Omni Remote System) Chief Financial Officer
Slide 2: Disclaimer
DISCLAIMER This presentation is in summary form and is not necessarily complete. It should be read together with Orica’s Annual Report and other announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This report contains information that is based on proj
Slide 3: 2024 Half Year in Review
2024 HALF YEAR IN REVIEW Sanjeev Gandhi Managing Director & CEO Deer Park, Australia 3 2024 HALF YEAR RESULTS
Slide 4: Ongoing focus on our safety and sustainability performance
SAFETY AND SUSTAINABILITY ONGOING FOCUS ON OUR SAFETY AND SUSTAINABILITY PERFORMANCE SAFETY IS OUR NUMBER ONE PRIORITY • One fatality as a result of a traffic accident on a public road in India where Orica’s vehicle was struck from behind by a non-Orica heavy haulage truck ‒ Investigation completed;
Slide 5: 2024 Half Year Highlights
2024 HALF YEAR HIGHLIGHTS CONTINUED MOMENTUM IN UNDERLYING BUSINESS EARNINGS • Quality earnings growth across all regions and businesses • Kooragang Island (KI) ammonia plant six-yearly major $354m 10% $179m 10% 13.0% 0.6 pts turnaround successfully completed EBIT1 UNDERLYING NPAT2 RONA • Improvemen
Slide 6: Quality earnings continue to underpin financial result
QUALITY EARNINGS CONTINUE TO UNDERPIN FINANCIAL RESULT STRONG CORE BLASTING BUSINESS AND CONTINUED GROWTH IN TECHNOLOGY AND DIGITAL SOLUTIONS EBIT1 UNDERLYING NPAT2 RONA3 • Strong EBIT growth across all segments driven by: $m $m 179 ‒ Strong customer demand in our core blasting services, technology
Slide 7: Increased adoption of premium blasting products
INCREASED ADOPTION OF PREMIUM BLASTING PRODUCTS CORE BLASTING BUSINESS AND TECHNOLOGY DRIVING MARGIN IMPROVEMENTS EARNINGS GROWTH IN ALL REGIONS KEY BLASTING TECHNOLOGY AND SUSTAINABLE SOLUTIONS Electronic Blasting Systems Advanced bulk explosives system NORTH AMERICA EUROPE, MIDDLE EAST & AFRICA EB
Slide 8: Orica Digital Solutions
ORICA DIGITAL SOLUTIONS CONTINUED EARNINGS GROWTH IN HIGH MARGIN SEGMENT, DELIVERING END-TO-END WORKFLOWS EBIT $31M 16% ADVANCED SENSOR PORTFOLIO SOFTWARE SOLUTIONS OPTIMISATION SERVICES INTERCONNECTED WORKFLOWS Solid performance from all three product categories: • Orebody Intelligence: ‒ Axis inte
Slide 9: Half Year 2024 Financial Performance
HALF YEAR 2024 FINANCIAL PERFORMANCE Kim Kerr Chief Financial Officer Image description World’s first lead-free detonator Exel Neo range launched in Europe Papua, Indonesia in September 2023 Axis recently released Champ Navigator2 , offering more flexibility for more surveying applications 9 2024 HA
Slide 10: Improving financial performance reflecting strong underlying business
FINANCIAL RESULTS IMPROVING FINANCIAL PERFORMANCE REFLECTING STRONG UNDERLYING BUSINESS Half year ended 31 March ($M) 2024 2023 Change Sales revenue 3,657 3,998 9% EBITDA1 557 505 10% EBIT 354 323 10% Underlying NPAT 179 164 10% Individually significant items after tax2 158 (41) Statutory net profit
Slide 11: Strategy execution drives underlying earnings growth
ORICA GROUP EBIT 1H23 TO 1H24 ($M) STRATEGY EXECUTION DRIVES UNDERLYING EARNINGS GROWTH +10% 49 (6) 5 (2) 354 4 (19 ) 323 1H23 EBIT Foreign exchange Manufacturing Mix and margin Specialty mining Digital solutions Global support 1H24 EBIT chemicals • Manufacturing performance included the costs for a
Slide 12: Trade working capital remains a strong focus
TRADE WORKING CAPITAL TRADE WORKING CAPITAL REMAINS A STRONG FOCUS Trade working capital ($M) Trade working capital ($M) Days inventory held1 667 39 62 64 64 (56) 844 62 643 628 39 667 643 (21) 628 1H23 FY2023 1H24 1H23 FY2023 1H24 Terra Insights Days sales outstanding1 Days payables outstanding1 53
Slide 13: Capital expenditure supporting plant turnarounds and growth
CAPITAL EXPENDITURE CAPITAL EXPENDITURE SUPPORTING PLANT TURNAROUNDS AND GROWTH CAPITAL EXPENDITURE CAPITAL EXPENDITURE ($M)1 Sustenance 439 • Successful completion of the six-yearly major ammonia plant turnaround at Kooragang Island (KI) and preparation for Yarwun turnaround 37 • Ongoing investment
Slide 14: Prudent financial profile post acquisitions
BALANCE SHEET AND LIQUIDITY PRUDENT FINANCIAL PROFILE POST ACQUISITIONS 2 Committed debt facility maturity profile ($M) Net Debt ($M) Average tenor at March 2024 – 4.4 years (drawn debt: 5.4 years) 1,000 900 1,960 800 1,361 923 987 700 600 3 4 500 1H23 FY2023 1H24 Pro forma 400 300 200 100 Gearing (
Slide 15: Improved earnings resulting in increased dividends
DIVIDEND IMPROVED EARNINGS RESULTING IN INCREASED DIVIDENDS • 6% increase in interim dividend declared Dividend per Ordinary Share (cents) & Payout Ratio1 (%) • Orica’s dividend payout ratio policy is 40-70% of underlying earnings 43.0c 53% Final • Total dividend paid each year to be weighted Interi
Slide 16: Our Strategy in Action
OUR STRATEGY IN ACTION Sanjeev Gandhi Managing Director & CEO Cyanco Winnemucca cyanide plant (Nevada, US) 16 2024 HALF YEAR RESULTS
Slide 17: Our Strategy
OUR STRATEGY OUR PURPOSE HOW WE WHERE WE WILL WIN Sustainably mobilise WILL WIN the earth’s resources Future-facing commodities Quarries Construction OUR VISION Thermal and Metallurgical coal To be the world’s leading mining and infrastructure solutions company Smarter Tunnelling solutions Metals OU
Slide 18: Successfully executing our strategy
STRATEGY SUCCESSFULLY EXECUTING OUR STRATEGY Growing the blasting core Future-facing commodities Quarries Earnings momentum and Manufacturing and supply network commercial discipline optimisation Construction Thermal and Metallurgical coal Margin improvement through Diversification of commodity and
Slide 19: Delivering strategic expansion in international markets
DISCIPLINED APPROACH TO INORGANIC GROWTH - AXIS DELIVERING STRATEGIC EXPANSION IN INTERNATIONAL MARKETS Axis strategic expansion under Orica’s ownership Well-positioned for growth Robust growth opportunity Orebody Intelligence pipeline in key international regions with major drillers and Integration
Slide 20: Positions Orica as the global leader in geotechnical and structural monitoring
DISCIPLINED APPROACH TO INORGANIC GROWTH – TERRA INSIGHTS POSITIONS ORICA AS THE GLOBAL LEADER IN GEOTECHNICAL AND STRUCTURAL MONITORING Geo Solutions Acquisition completed 29 February 2024 Established Orica as the global leader in mining and civil infrastructure monitoring Six market leading brands
Slide 21: Creating a leading global specialty mining chemicals business
DISCIPLINED APPROACH TO INORGANIC GROWTH - CYANCO CREATING A LEADING GLOBAL SPECIALTY MINING CHEMICALS BUSINESS Global mining focused NaCN producer annual capacity (kTpa)1 Accelerates our Specialty Mining Chemicals strategy Pro forma Creates a leading integrated global Cadillac, Quebec ~240 Orica ma
Slide 22: Acquisitions increase Orica's exposure to attractive segments
DISCIPLINED APPROACH TO INORGANIC GROWTH ACQUISITIONS INCREASE ORICA’S EXPOSURE TO ATTRACTIVE SEGMENTS Orica FY2023 revenue 5% 3% 78% 14% Grow Specialty Mining Chemicals and Digital Post Terra Insights & Cyanco acquisition 11% 4% 72% 13% Solutions FY2023 pro forma revenue1 Specialty Digital Solution
Slide 23: Continued progress on strategic targets
STRATEGIC PLAN CONTINUED PROGRESS ON STRATEGIC TARGETS STRATEGIC 1H24 FY2024+ FINANCIAL 1H24 scorecard FY2024+ TARGETS progress scorecard TARGETS and progress scorecard 3-year average RONA 12%-14% Pursue organic growth from the core Dividend payout ratio 40%-70% $410m- $430m, plus $25m Accelerate ad
Slide 24: FY2024 Outlook
FY2024 OUTLOOK Sanjeev Gandhi Managing Director & CEO 24 2024 HALF YEAR RESULTS
Slide 25: FY2024 continuous manufacturing plant turnarounds
OUTLOOK FY2024 CONTINUOUS MANUFACTURING PLANT TURNAROUNDS FY2024 scheduled turnarounds 1H24 2H24 Kooragang Island (NSW) Ammonia plant six-yearly major turnaround Completed Event 1 Event Event Prill tower emission abatement installation Combined Events Completed 2 3 2 and 3 Yarwun (QLD) NAP3/ NAP3/AN
Slide 26: Quality earnings growth expected to continue
OUTLOOK QUALITY EARNINGS GROWTH EXPECTED TO CONTINUE Full year 2024 Outlook: • EBIT for FY2024 from underlying business before contributions from Terra Insights and Cyanco is expected to be higher than the prior year and slightly better than our expectation at FY2023 results due to: – Stronger first
Slide 27: Delivering value to our shareholders
OUR INVESTMENT PROPOSITION DELIVERING VALUE TO OUR SHAREHOLDERS OUR PROMISE Operating responsibly together with our people, partners, customers Safety is, and will We are the global We have reshaped remain our number leader in mining and civil our strategy and we one priority construction markets ar
Slide 28: Supplementary Information
SUPPLEMENTARY INFORMATION 28 2024 HALF YEAR RESULTS
Slide 29: Diversified global business
SUPPLEMENTARY INFORMATION DIVERSIFIED GLOBAL BUSINESS REVENUE BY SEGMENT1 REVENUE BY PRODUCT/SERVICE REVENUE BY COMMODITY1 TYPE1 3% 3% 1H24 1H24 4% 6% 1H24 4% 14% 7% 8% 2% 24% 33% 5% 5% 15% 40% 15% 12% 8% 1H193 21% 8% 22% 14% 19% 20% 14% 18% 20% 22% 14% Australia Pacific & Asia North America Bulk Em
Slide 30: Australia Pacific & Asia
SUPPLEMENTARY INFORMATION AUSTRALIA PACIFIC & ASIA EBIT ($M) 458 Market conditions 370 236 • Robust activity in gold, coal and Q&C segments; softer activity in nickel and lithium segments 214 • AN demand and supply were more balanced in Australia and Asia 222 227 • Security and flexibility of supply
Slide 31: North America
SUPPLEMENTARY INFORMATION NORTH AMERICA Market conditions EBIT ($M) • Market fundamentals for most commodities remained strong; continued growth in the gold and 150 copper markets in Western US and Canada supported by higher base commodity prices 135 91 • Mining activity in the USA and Canada was im
Slide 32: Latin America
SUPPLEMENTARY INFORMATION LATIN AMERICA EBIT ($M) 54 54 Market conditions 29 26 • Mining and exploration activity was strong across the region with significant investments in Peru, Brazil and the Caribbean; softer copper production in Chile leading to more competitive environment 33 25 28 • Politica
Slide 33: Europe, Middle East & Africa
SUPPLEMENTARY INFORMATION EUROPE, MIDDLE EAST & AFRICA EBIT ($M) 58 Market conditions 46 31 • Strong mining activity in Southern Europe and Africa driven by strong demand for future 35 facing commodities; high growth expected in the Middle East with increasing investments in 37 mining and infrastruc
Slide 34: Digital Solutions
SUPPLEMENTARY INFORMATION DIGITAL SOLUTIONS Market conditions EBIT ($M) 54 • Continued strong technology spend on safety and productivity as miners focus on unlocking short- term benefits 27 27 • Some short-term softness in the exploration market with exploration spend forecasted to be flat or a 31
Slide 35: Debt and liquidity position
SUPPLEMENTARY INFORMATION DEBT AND LIQUIDITY POSITION Movement in net debt1 ($M) Available Liquidity ($M) 555 2,698 2,619 2,120 1,467 1,613 (190) 1,439 3 1,152 1,085 681 1H23 FY2023 1H24 2 3 Undrawn committed facilities Cash and cash equivalents 1. Excludes the impact of leases on net debt 2. Includ
Slide 36: Major trading currencies
SUPPLEMENTARY INFORMATION MAJOR TRADING CURRENCIES Orica trades in 36 different currencies which are translated to Australian Dollar (AUD) earnings Key currency movements 1H2024 1H2023 31 Mar 2024 31 Mar 2023 30 Sep 2023 Currency Average rates Spot rates USD – US Dollar 0.6546 0.6704 0.6516 0.6712 0
Slide 37: Significant items
SUPPLEMENTARY INFORMATION SIGNIFICANT ITEMS Gross Net Half year ended 31 March ($M) (before tax) (after tax) Profit on sale of Deer Park stage 1 surplus land 181.5 173.1 Axis Group acquisition earnout1 26.6 26.6 Business acquisition costs related to acquisitions of Terra Insights and Cyanco (41.3) (
Slide 38: Non-IFRS reconciliations
SUPPLEMENTARY INFORMATION NON-IFRS RECONCILIATIONS Half year ended 31 March ($M) 2024 2023 Movement 1 Statutory net profit / (loss) after tax 337.5 122.6 214.9 Less Individually significant items after tax1 158.4 (40.9) 199.3 Underlying net profit after tax1 179.1 163.5 15.6 Adjust for the following
Slide 39: Definitions
DEFINITIONS Term Definition AN Includes ammonium nitrate prill and solution as well as emulsion products including bulk emulsion and packaged emulsion ARR Annual Recurring Revenue - Recurring contracts includes product leasing, software as a service, monitoring services and care plans Capital expend
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