Dyno Nobel Limited · ASX:DNL
Dyno Nobel — FY2022 Earnings Presentation
38 slides from Dyno Nobel's earnings presentation, Nov 15, 2022
Slide 1: 2022 Full Year Financial Results Presentation
2022 FULL YEAR FINANCIAL RESULTS PRESENTATION 15 November 2022 Incitec Pivot Limited ABN 42 004 080 264 ASX Code: IPL OTC: INCZY 1
Slide 2: Disclaimer
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 o
Slide 3: Disclaimer: Forward looking statements
Disclaimer Forward looking statements This document 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 forwar
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 Jeanne Johns Managing Director & Chief Executive Officer 5
Slide 6: Record Results and Attractive Outlook
RECORD MOMENTUM IN PRUDENT ADVANCING RESULTS AND SUSTAINABILITY CAPITAL STRATEGIC ATTRACTIVE AND CLIMATE RETURNS TO CHOICES OUTLOOK CHANGE SHAREHOLDERS 66
Slide 7: Zero Harm
SAFETY Zero Harm Safety refresh program to improve to our performance Total Recordable Injury Frequency Rate (TRIFR)1 TRIFR (LHS) Target FY22 (LHS) Severity (RHS) Pro-active actions and culture improving safety 1.00 0.18 trends 0.80 0.11 0.13 Target 0.7 0.60 0.87 0.89 0.95 0.94 0.58 0.08 0.40 0.80 0
Slide 8: FY22 result
FINANCIAL PERFORMANCE FY22 result Record profitability and returns to shareholders for FY22 Earnings Capital management2 Dividends On-market Buyback NPAT1 $1,027M $524M $400M (EBITDA $1,858M) from $359M in FY21 Total of 27cps (up to) (fully franked)3 Operating cashflow ROIC (incl. goodwill)4 Net Deb
Slide 9: Well positioned in a supply constrained market
PRICING AND MARKETS Well positioned in a supply constrained market High natural gas prices continue to drive up costs for the marginal supplier of fertilisers 2020 vs 2022 ammonia industry cost curve1 Grain and Oilseed stock to use2 (world excluding China) FOB costs, sustaining and interest on worki
Slide 10: Improved asset throughput and reliability
OPERATING PERFORMANCE Improved asset throughput and reliability Manufacturing Excellence program is on track to exceed the business plan Snapshot of global ammonia plant reliability in FY22 Average reliability of 81% in FY191 Turnarounds completed across three major plants over the last 4 years2 Mor
Slide 11: Our approach to technology wins
OPERATING PERFORMANCE Our approach to technology wins Innovation drives customer outcomes and unlocks multiple avenues of growth Premium Emulsions Liquid Fertilisers FY18 to FY22 CAGR FY18 to FY22 CAGR Momentum to Volume Revenue Volume Revenue accelerate post +16% +19% +11% +33% separation through f
Slide 12: Climate change
ESG Climate change1 Delivering sustainable growth and shareholder returns while caring for our people, our communities and our environment Our operational GHG absolute reduction ⎔ GHG emissions reduction opportunity of >42% by 2030 ⎔ Thermal coal to decline – transitioning to Q&C & metals SHORT TERM
Slide 13: Outperformance relative to peers
ESG Outperformance relative to peers Industry leading sustainability driven by ESG focussed management and culture Dow Jones Sustainability Index score benchmarking Top percentile in ESG 72 73 Materiality Assessment 68 65 69 69 53 44 47 36 30 26 Strong Risk Culture and Risk Management 2017 2018 2019
Slide 14: Dyno Nobel financial performance
SEGMENT PERFORMANCE Dyno Nobel financial performance Strong overall business performance, improvements in underlying recurring earnings Dyno Nobel • Earnings improvement supported by customer and technology Combined business growth – emulsion volumes up 14% , EDS1 volumes up 18% EBIT (A$M) FY22 FY21
Slide 15: Dyno Nobel growth case remains strong
SEGMENT PERFORMANCE Dyno Nobel growth case remains strong Customer and service driven Margin enhancements Transformational • Focussed technology penetration • Technology driving wins, strong • Evaluate accretive investments and across Q&C and future facing margins and ESG focus partnerships minerals
Slide 16: Fertilisers Asia Pacific
SEGMENT PERFORMANCE Fertilisers Asia Pacific Strong business performance, well positioned to capture further value Fertilisers Asia Pacific • Manufacturing business capturing the benefits from higher commodity prices, gas procurement from Manufacturing EBIT ($M) FY22 FY21 Chg. curtailments in contra
Slide 17: Fertilisers significant opportunity
SEGMENT PERFORMANCE Fertilisers significant opportunity Soil health strategy favourably positions us to grow margins Market position Margin enhancements Transformational • Integrated model with scale • Expansion of soil health solutions • Progress green ammonia underpinning #1 position in with new i
Slide 18: Strong shareholder returns
FINANCIAL PERFORMANCE Strong shareholder returns Record result delivering strong total capital management program1 Dividends for FY18 to FY22 600 60% Capital management initiatives representing up to 90% of NPAT 500 50% 400 40% Largest dividend on record since separation $M 300 No dividend 30% as a
Slide 19: Group Financial Results
Group Financial Results Paul Victor Chief Financial Officer 19
Slide 20: Result in context
WORKING MAXIMISING RESULT IN CAPITAL AND ATTRACTIVE SHAREHOLDER CONTEXT CAPITAL OUTLOOK RETURNS MANAGEMENT 20 20
Slide 21: Group profitability per segment
FINANCIAL PERFORMANCE Group profitability per segment Stellar business performance – outlook remains attractive IPL Group ($M) FY22 FY21 Change EBITDA BY SEGMENT Dyno Nobel Americas 759 190 300% FY22 FY21 Dyno Nobel Asia Pacific 162 140 16% Fertilisers 614 268 129% 37% 40% 37% $1,858m 50% $935m Corp
Slide 22: Working capital
FINANCIAL PERFORMANCE Working capital Strong underlying working capital performance in tough operating conditions Trade Working Capital as % of Sales1 Year-on-year movement ($M) 91 616 18.1% 48 16.2% 16.2% 64 292 121 FY20 FY21 FY22 FY21 Commodities Less Classification Business FY22 TWC FX TWC facili
Slide 23: Investing for sustainable earnings
FINANCIAL PERFORMANCE Investing for sustainable earnings Prioritising long term asset reliability, decarbonisation and selective growth Sustenance Turnaround Sustainability Order 1 growth FY22 achieved the following outcomes: • Ensure long term reliability of assets 434 Order 1 growth & • Turn aroun
Slide 24: Focus on balance sheet strength
FINANCIAL PERFORMANCE Focus on balance sheet strength Balance sheet de-leveraging expected to continue Net debt ($M) FY22 FY21 Reported1 1,036 1,004 Balance sheet strength benefitted from Including working capital facilities 1,304 1,336 favourable market conditions EBITDA 1,858 935 Healthy debt matu
Slide 25: Disciplined capital allocation
FINANCIAL PERFORMANCE Disciplined capital allocation Prudent approach to deliver sustainable and growing returns to shareholders ⎔ $202M ⎔ $113M Sustenance capex Turnaround capex ⎔ $524M Cash flow from operations of Fully franked dividend 7.2% dividend yield 1 $1,093M 51% payout ratio 10.3% (incl. f
Slide 26: FY23 outlook
FINANCIAL PERFORMANCE FY23 outlook Strong strategic and operating momentum Expectations for continued market volume and customer and IPF expected to continue to benefit from buoyant market technology growth for DNA and DNAP in FY23 conditions DNA resilient margins expected to benefit from cost pass
Slide 27: Advancing strategic choices
Advancing strategic choices Jeanne Johns Managing Director & Chief Executive Officer 27
Slide 28: Key strategic priorities
STRATEGY UPDATE Key strategic priorities 1 2 3 4 5 Separation Separation Strategy to remains top Change in Augments momentum deliver two strategic sequencing of thesis for continues category priority strategic standalone leading priorities businesses 6 to 12 month businesses Interest in extension WA
Slide 29: WALA strategic review
STRATEGY UPDATE WALA strategic review Undertaking a review of the strategic options for WALA Long-term strategy to grow an integrated explosives company and reduce excess ammonia exposure Ideally situated for a value enhancing blue ammonia opportunity Recent asset value appreciation supported by: •
Slide 30: Separation momentum continues
STRATEGY UPDATE Separation momentum continues Separation is well progressed Separation is a key strategic focus area to unlock significant sustainable shareholder and stakeholder value Key separation workstreams and plans are well progressed Cost estimates remain within guidance, opportunity with ex
Slide 31: FY23 priorities consistent with strategy
STRATEGY UPDATE FY23 priorities consistent with strategy Safety, Customer focus Leveraging Maintaining decarbonisation to drive value growth in new separation and ESG from and existing momentum technology markets Progressing Capturing the potential WALA Advancing value of transaction manufacturing f
Slide 32: Questions & Answers
Questions & Answers 32
Slide 33: Appendix
Incitec Pivot Limited INNOVATION ON THE GROUND Appendix
Slide 34: Group result
Group result EBITASm 1600 566 FY21 Manufacturing Incitec Pivot Limited INNOVATION ON THE GROUND Customer Facing Business 75 ' o a_ | H (41) ' 32 i — H " (9) — (83) ' 1 Mincrease m Decrease m Total H Manufacturing Turnarounds —PhosphateHill Depreciation WALA Incident DNA DNAP Fertilisers SupplyChain/
Slide 35: Dyno Nobel Americas
Dyno Nobel Americas EBIT USSm 300 200 100 141 Fy21 Explosives Incitec Pivot Limited INNOVATION ON THE GROUND AG &IC WALA — 60 (8) 5 8 —$ si 8 H Miincrease Mi Decrease Ml Total Hl Manufacturing Growth ‘Supply Chain / Manufacturing Commodities Manufacturing Incident Depreciation Commodities FY22 Relia
Slide 36: Dyno Nobel Asia Pacific
Dyno Nobel Asia Pacific EBIT ASm 190 180 170 160 150 140 130 120 140 Fy21 == ee Incitec Pivot Limited INNOVATION ON THE GROUND (4) mz > 7 (13) oa mlncrease m Decrease m™ Total WA Contracts Growth - Growth - International Weather ‘Manufacturing Depreciation Supply Chain Fy22 (Previously Announced) Cu
Slide 37: Fertilisers Asia Pacific
Fertilisers Asia Pacific EBIT ASm 800 472 Manufacturing ee oo — (41) (74) Pe ' ' ' ' ' H ' H 700 ' ' ; 600 ' (25) H ' ' i H ' ' 300 268 milncrease m Decrease m™ Total Incitec Pivot Limited INNOVATION ON THE GROUND Distribution 614 (9) FY21 Cost of Gas - Phos Hill Phos. Hill Turnaround Commodities &F
Slide 38: Turnaround schedule
Turnaround schedule Plant FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Phosphate Hill, QLD Cheyenne, WY Moranbah, QLD St, Helens Waggaman, LA1 (1) Potential for 3 to 4 week outage in FY23 to install replacement cooler (if required) 38