Slide 1: 2020 Full Year Results
2020 FULL YEAR RESULTS ALBERTO CALDERON, MANAGING DIRECTOR AND CEO | CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER 20 NOVEMBER 2020
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: 2020 Financial Year
2020 FINANCIAL YEAR ALBERTO CALDERON, MANAGING DIRECTOR AND CEO 2020 FULL YEAR RESULTS 3
Slide 4: Strategic momentum temporarily disrupted by COVID-19
RESULTS SUMMARY Strategic momentum temporarily disrupted by COVID-19 AN volumes 1 Underlying EBIT 2 • All FY20 initiatives and milestones achieved 3.8mt $605m – Strategic growth and diversification through Exsa acquisition; integration (4%) (9%) progressing vs pcp vs pcp – Burrup plant operation
Slide 5: Responding to prolonged and significant COVID-19 impacts
COVID-19 Responding to prolonged and significant COVID-19 impacts PEOPLE AND SAFETY VARYING IMPACT BY COUNTRY MANAGEMENT RESPONSE • Focus on protecting our people • Mining activity remains robust in • Continued focus on supporting our – Educating and informing our people Australia and USA; Canada sl
Slide 6: Focusing on our people and communities
SUSTAINABILITY Focusing on our people and communities • Zero fatalities SAFE AND • Significant improvement in Serious Injury Case Rate, down 29% on the pcp RESPONSIBLE BUSINESS • Strict protocols to protect our people and communities in response to COVID-19 • New Product Security standard launched •
Slide 7: Australian volume growth from new contracts and resilient iron ore market
AUSTRALIA PACIFIC & ASIA Australian volume growth from new contracts and resilient iron ore market COVID-19 AN VOLUME (KT) REVENUE BY COMMODITY FY20 • Australian AN volumes marginally impacted • Asia significantly lower, notably impacting volumes in Indonesia 742 884 775 907 814 949 VOLUMES • AN vol
Slide 8: USA remains resilient, Mexico results weakened by geopolitical issues and COVID-19
NORTH AMERICA USA remains resilient, Mexico results weakened by continued geopolitical issues and COVID-19 COVID-19 AN VOLUME (KT) REVENUE BY COMMODITY FY20 • USA volumes resilient, largely unimpacted • Mexico mining industry significantly hit and yet to emerge from 560 553 560 568 559 464 the worst
Slide 9: Management initiatives partially mitigate severe COVID-19 impacts
LATIN AMERICA Management initiatives partially mitigate severe COVID-19 impacts COVID-19 AN VOLUME (KT) REVENUE BY COMMODITY FY20 • Peru (including Exsa) hard hit, particularly in underground mines – 375 current operations at ~85% of pre COVID-19 levels 387 • Shutdowns still in place at most sites i
Slide 10: Continued strong momentum in CIS
EUROPE, MIDDLE EAST & AFRICA Continued strong momentum in CIS COVID-19 AN VOLUME (KT) REVENUE BY COMMODITY FY20 • Planned growth in Africa delayed by the pandemic • Reduced tunneling and construction activity in Norway due to 227 235 216 228 258 postponed government spending on new projects 192 • Mi
Slide 11: Customers pivoting to radar leases in a capital constrained environment
ORICA MONITOR Customers pivoting to radar leases in a capital constrained environment COVID-19 REVENUE ($M) • Eight of 10 largest markets affected • 2H revenue impacted by more customers opting for leases over 52 52 purchasing radars due to cash constraints 45 46 41 – Reduction in revenue and increa
Slide 12: Fundamentals remain strong
MINOVA Fundamentals remain strong COVID-19 REVENUE ($M) • Revenue impacted by COVID-19 in 2H, notably due to lockdowns in South Africa and India • Partly offset by lower raw material prices and positive product 280 291 304 mix in Europe, improved manufacturing efficiency and 239 263 208 implementati
Slide 13: Financial Performance
FINANCIAL PERFORMANCE CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER 2020 FULL YEAR RESULTS 13
Slide 14: Despite a strong first half, COVID-19 has impacted full year results
FINANCIAL RESULT Despite a strong first half, COVID-19 has impacted full year results Year ended 30 September ($m) 2020 2019 Change Sales revenue 5,611 5,878 (5%) Underlying EBITDA 1 956 941 2% Underlying EBIT 2 605 665 (9%) Underlying NPAT 3 299 372 (20%) Individually significant items after tax (1
Slide 15: One-off adjustments
INDIVIDUALLY SIGNIFICANT ITEMS One-off adjustments Gross Net Year ended 30 September 2020 ($m) Cash Non-cash (before tax) (after tax) Initiating System (IS) network optimisation 39 41 80 67 Impairment of IT assets - 63 63 45 Operating model restructuring 27 - 27 19 Total individually significant ite
Slide 16: Focusing on what we can control through uncertain times
EBIT BRIDGE Focusing on what we can control through uncertain times ORICA GROUP EBIT FY19 TO FY20 ($M) 665 657 (8) (32) 36 605 (38) 4 (9) (13) EBIT China Sub- Inflation on Volume 1 Mix & 1 Manufacturing 1 Adjacent Reduced EBIT 1 FY19 total Overheads Margin businesses overheads FY20 1. Impacted by CO
Slide 17: Increase in spend focused on the close out of critical projects
CAPITAL EXPENDITURE Increase in spend focused on the close out of critical projects CAPITAL EXPENDITURE EXCLUDING BURRUP CAPITAL EXPENDITURE ($M) 1 Increase in SAP project spend on the pcp to close out the final phase of delivery 472 Growth 424 78 • Spend to support new projects and contracts across
Slide 18: Cash conversion temporarily impacted by SAP implementation and Burrup ramp up
CASH FLOW Cash conversion temporarily impacted by SAP implementation and Burrup ramp up NET OPERATING CASH FLOW ($M) CASH CONVERSION 1 (%) 746 101.4 94.6 615 74.4 562 586 277 169 184 108 29 FY18 FY19 FY20 FY18 FY19 FY20 1H 2H 1. (EBITDA add / less movement in trade working capital, adjusted for acqu
Slide 19: Continued balance sheet strength through a challenging period
NET DEBT Continued balance sheet strength through a challenging period NET DEBT & GEARING ($M, %) 1 MOVEMENT IN NET DEBT ($M) 2,119 36.4% +200 35.7% 34.9% 1,904 298 (83) 1,821 1,821 288 191 1,648 1,621 1,621 (505) 309 FY18 FY19 FY20 FY19 Dividends Capital Exsa Net Sub- Foreign FY20 net Lease FY20 cl
Slide 20: Strong liquidity profile positions Orica well in uncertain times
FINANCIAL STRENGTH Strong liquidity profile positions Orica well in uncertain times CASH & COMMITTED UNDRAWN DEBT COVENANTS 1 • Balance Sheet provides significant headroom against debt covenants CREDIT FACILITIES ($M) • Orica’s liquidity position has been bolstered by the Exsa equity capital Gearing
Slide 21: Strategic Priorities
STRATEGIC PRIORITIES ALBERTO CALDERON, MANAGING DIRECTOR AND CEO 2020 FULL YEAR RESULTS 21
Slide 22: Roadmap towards leaner, more efficient operations and profitable growth
STRATEGIC PRIORITIES Roadmap towards leaner, more efficient operations and profitable growth Benefits 2020 2021 - 2024 Exsa plants producing Orica branded product, On track to achieve >$50 million EBITDA in FY23, Exsa acquisition synergy benefits commenced end FY20 including synergies • Plant closur
Slide 23: Strategic acquisition of Exsa complete and integration well progressed
EXSA ACQUISITION Strategic acquisition of Exsa complete and integration well progressed • 96.8% of total Exsa share acquisition completed, and following process to extend offer to all Exsa shareholders • Further diversification of commodity exposure, reducing Orica’s thermal coal exposure by ~one pe
Slide 24: Driving efficiencies across the network
INITIATING SYSTEM NETWORK AND PRODUCT PORTFOLIO OPTIMISATION Driving efficiencies across the network SIMPLIFYING NETWORK & REDUCING PLANNED SKU RATIONALISATION PLANT FOOTPRINT Hallowell, Closed Packaged USA June 2020 emulsion ~40% SKU To close reduction Minden, Boosters USA mid FY21 Tappen, To close
Slide 25: Continuous manufacturing remains efficient and Burrup producing high quality product
MANUFACTURING RELIABILITY Continuous manufacturing remains efficient and Burrup producing high quality product AN CONTINUOUS PLANT OEE (%) BURRUP PLANT • Burrup plant producing quality AN since production commenced in May 2020 92% 86% 88% 85% • Plant produced ~100k tonnes 82% 80% • Utilisation high,
Slide 26: Single SAP system rollout complete and set to drive ongoing benefits
OPERATING MODEL EXECUTION Single SAP system rollout complete and set to drive ongoing benefits 4S SINGLE • STANDARD • SIMPLE • SAP PREVIOUS SYSTEMS FINAL PHASE ROLLED OUT REALISING BENEFITS Business activity performed on a • Final release deployed in early • Embedment program in place to realise imm
Slide 27: Value of digital solutions showcased under difficult conditions
TECHNOLOGY ROLLOUT Value of digital solutions showcased under difficult conditions New technology Traditional technology DIGITAL SOLUTIONS PREMIUM BULK EMULSION • Global adoption targets achieved in FY20 (K TONNES) • 87 BlastIQTM sites, expected on average to 1,500 double annually going forward ELEC
Slide 28: Five-year Glencore technology and services partnership
TECHNOLOGY ROLLOUT Five-year Glencore technology and services partnership • Diversified key global customer • Six Australian copper and zinc mine sites (open cut and underground) • Full suite of explosives technology and blasting services • Integration of Orica’s most advanced technologies and solut
Slide 29: Moving into the next phase of Orica's climate response
ACTING ON CLIMATE CHANGE Moving into the next phase of Orica’s climate response PROGRESS ACROSS CONTINUOUS PLANTS Carseland: implementing further abatement technology in FY21 • Reduce operational (Scope 1 and Scope 2) GHG emissions by at least 40% from FY19 levels by FY30 2 • Achievable and credible
Slide 30: Outlook
OUTLOOK ALBERTO CALDERON, MANAGING DIRECTOR AND CEO 2020 FULL YEAR RESULTS 30
Slide 31: Solid platform established to support underlying growth
OUTLOOK Solid platform established to support underlying growth COVID-19 RECOVERY • Timing of recovery across the globe difficult to predict; significant challenges anticipated in 1H21, some improvement in the second half • Pre COVID-19 run rate expected in developed countries; developing countries
Slide 32: Supplementary Information
SUPPLEMENTARY INFORMATION 2020 FULL YEAR RESULTS 32
Slide 33: Explosives volumes
SUPPLEMENTARY INFORMATION Explosives volumes Year ended 30 September 2020 volumes vs pcp ‘000 tonnes Emulsion Emulsion AN Total AN Total products products Australia Pacific & Asia 699 1,064 1,763 6% 4% 5% North America 533 490 1,023 (6%) (13%) (9%) Latin America 1 209 485 694 (19%) 6% (3%) Europe, M
Slide 34: Segment analysis
SUPPLEMENTARY INFORMATION Segment analysis Year ended 30 September 2020 2019 Variance $m Revenue EBIT Revenue EBIT Revenue EBIT Australia Pacific & Asia 2,194 370 2,106 383 4% (3%) North America 1,476 164 1,591 192 (7%) (15%) Latin America 896 37 970 44 (8%) (16%) Europe, Middle East & Asia 912 62 9
Slide 35: Diversified global business
SUPPLEMENTARY INFORMATION Diversified global business REVENUE BY GEOGRAPHY REVENUE BY COMMODITY REVENUE BY PRODUCT/SERVICE TYPE 3% 8% 16% 8% 16% 22% 16% 2% 37% 14% 6% 7% 5% 20% 30% 15% 13% 17% 22% 16% 7% Australia Pacific & Asia North America Thermal Coal Coking Coal Iron Ore AN/ANFO Bulk Emulsion P
Slide 36: Debt and liquidity profile
SUPPLEMENTARY INFORMATION Debt and liquidity profile GROUP LIQUIDITY ($M) DRAWN DEBT MATURITY PROFILE ($M) Average tenor at September 2020 – 5.0 years 700 600 1,510 500 1,534 400 300 200 921 413 100 0 Sep 19 Sep 20 FY21 FY22 FY23 FY25 FY26 FY27 FY29 FY31 Undrawn committed facilities Committed bank f
Slide 37: Foreign exchange exposure
SUPPLEMENTARY INFORMATION Foreign exchange exposure EBIT COMPOSITION (FX TRANSACTION) FY20 FX MOVEMENTS EBIT sensitivity 2 % of FY20 EBIT % change from pcp +/- $m per 1% change 3% United States 2.0% 10% 28% Latin America (6.3%) 15% Canada 2.3% $4.4m EMEA 1 (4.8%) 16% 28% Asia 8.3% • Basket of ~45 cu
Slide 38: Capital over-raising of $126 million to fund Exsa provides additional balance sheet flexibility
SUPPLEMENTARY INFORMATION Capital over-raising of $126 million to fund Exsa provides additional balance sheet flexibility Funds raised $m Funds used / to be used $m Institutional Placement 500 Exsa acquisition 309 Retail Share Purchase Plan 17 Synergy capital requirements 29 Capital raising costs (1
Slide 39: Environmental and decommissioning provisions
SUPPLEMENTARY INFORMATION Environmental and decommissioning provisions As at 30 September ($m) 2020 2019 Botany groundwater remediation 201 171 Botany hexachlorabenzene (HCB) waste 31 41 Burrup decommissioning 57 22 Initiating systems network optimisation decommissioning 28 - Deer Park remediation 1
Slide 40: Non-IFRS reconciliations
SUPPLEMENTARY INFORMATION Non-IFRS reconciliations Year ended 30 September ($m) 2020 2019 Variance Statutory net profit/(loss) after tax 168 245 (31%) Add back: Individually significant items after tax 131 127 3% Underlying profit after tax 299 372 (20%) Adjust for the following: Net financing costs
Slide 41: Definitions
SUPPLEMENTARY INFORMATION Definitions Term Definition AN Includes ammonium nitrate prill and solution as well as emulsion products including bulk emulsion and packaged emulsion Capital expenditure Comprises spend on property, plant and equipment and intangible assets, on an accruals basis for FY20 a