Dyno Nobel Limited · ASX:DNL
Dyno Nobel — Investor Day (September 2018)
63 slides from Dyno Nobel's investor day presentation, Sep 7, 2018
Slide 1: IPL Investor Day Presentation
Office of the Company Secretary ABN 42 004 080 264 Registered Office: Level 8, 28 Freshwater Place 7 September 2018 Southbank Victoria 3006 Tel: (61 3) 8695 4400 Fax: (61 3) 8695 4419 www.incitecpivot.com.au The Manager Company Announcements Office Australian Securities Exchange Level 4, North Tower
Slide 2: Capital Markets Briefing
Capital Markets Briefing 7 September 2018
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by Incitec Pivot Limited (“IPL”). The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis f
Slide 4: Agenda
Agenda Chris Opperman 9.30am Welcome General Manager Investor Relations & Group Finance Jeanne Johns Business and Strategy Update Managing Director & CEO Frank Micallef Financial Position and Cash Flow Chief Financial Officer Rob Rounsley Technology and Innovation Chief Technology Development Office
Slide 5: We have iconic brands and strong positions in our markets
We have iconic brands and strong positions in our markets RELEASING RESOURCES FOR BUILDING GLOBAL INFRASTRUCTURE AND GENERATING ENERGY Heritage dating back 180 years Dyno Nobel is a leading explosives and blasting services company in Australia and North America ENABLE SUSTAINABLE FOOD PRODUCTION Mor
Slide 6: Innovate along the nitrogen value chain to serve diverse markets
Innovate along the nitrogen value chain to serve diverse markets Blasting Diverse Markets Services & Technology Quarry & Provide bulk and specialty Mining Energy Construction explosives, initiating systems, blasting and technology services to leading miners and Initiating the quarry & construction S
Slide 7: Our Purpose and Values
Our Purpose and Values Purpose Our Purpose is to make people’s lives better by unlocking the Values world’s natural resources through Our Values define who we are innovation on the ground and what we do every day. These are what guide our actions: We believe that we can fulfill our purpose through c
Slide 8: Insights and priorities from MD & CEO
Insights and priorities from MD & CEO People priorities Growth opportunities Leverage technology and Talent renewal across the Group innovation across new Deepen customer relationships and existing markets and partnerships Underrepresented in certain - Increased investment in talent key markets (Exp
Slide 9: Our strategy to deliver growth and shareholder value
Our strategy to deliver growth and shareholder value Value drivers to Organic and deliver improved minor inorganic Inorganic Growth returns growth Customer focus in Leverage our differentiated Alignment with our core Asia Pacific explosives technology competencies Drive manufacturing excellence Inve
Slide 10: Value Drivers
Value Drivers that will deliver our strategy of growth and shareholder value Zero Harm Talented Talented & & Engaged Engaged Profitable Talented People Growth People & Engaged Value People Drivers Manufacturing Customer Excellence Focus Leading Technology Solutions 9
Slide 11: Zero Harm
Value Drivers Zero Harm Safety and environmental care are at our core TRIFR1 STEP-CHANGE We strive for continuous improvement 30% improvement over a 3-year in our Health, Safety and Environment period to 2021 (HSE) performance ENVIRONMENTAL CARE Proactive risk management with critical Target zero si
Slide 12: Talented & Engaged People
Value Drivers Talented & Engaged People Creating value is achieved through our people doing their best, every day ONE IPL Collaborative culture focused on customers and value creation ‘One IPL’ and engaged culture Domain expertise to create and deliver value through products and services ENGAGEMENT
Slide 13: Customer Focus
Value Drivers Customer Focus Exceeding customer IMPROVED CUSTOMER expectations SATISFACTION Establish group wide customer satisfaction Enabling our mining and quarry measure, Net Promoter Score (NPS) in 2019 10% annual improvement in Net Promotor customers to deliver improved extraction Score to sup
Slide 14: Leading Technology Solutions
Value Drivers Leading Technology Solutions Practical technology and innovation LEVERAGING PROVEN TECHNOLOGIES Maintain and grow a suite of > 50% growth over the next three years of differentiated products and services that leading and premium technologies (e.g. Delta E and 4G electronics) meet the c
Slide 15: Manufacturing Excellence
Value Drivers Manufacturing Excellence Deliver world-class performance in SUSTAINABLE PRODUCTION RATES Manufacturing Excellence Optimise turnaround scope and reliability targets to maximise production Year-on-year continuous improvement in Adopt best practice production rates in reliability, prevent
Slide 16: Manufacturing Excellence – Optimise asset productivity
Value Manufacturing Excellence Drivers – Optimise asset productivity Improve on manufacturing performance to drive increased returns over the next three years • Relatively lighter turnaround schedule for FY 2019 • Opportunity to focus on reliability improvement • Delivery of three year improvement p
Slide 17: Profitable Growth – Positioned for increased returns – three tranches
Value Drivers Profitable Growth Positioned for increased EXPLOSIVES OPPORTUNITIES returns – three tranches • Further leverage the success of our strategy, underpinned by our Six value drivers core competencies and advantaged products and services • Adjacencies and underrepresented geographies/market
Slide 18: Profitable Growth – Track Record
Value Drivers Profitable Growth – Track Record Investment in Dyno Nobel Launch Orica exit US distribution acquisition Delta E network 2006 2012 2016 2018 2008 2013 2017 Phosphate Moranbah Waggaman Launch Hill commissioning & commissioning & Generation 4 acquisition ramp-up ramp-up Electronics Histor
Slide 19: Global Fertilisers Price Cycle – Some optimism
Value Global Fertilisers Price Cycle Drivers – Some optimism Global fertilisers prices have been trading at or near cyclical lows, signs of stronger prices emerging Historical & Outlook Commodities Pricing Global fertilisers prices at or near cyclical lows in 2017 Price recovery through 2018 Tighter
Slide 20: Summary
Summary Strategy to increase shareholder value and improve returns over the next three years to 2021 Focus on Value Drivers to deliver growth and shareholder value Deepen customer relationships and partnerships Leverage our advantaged technology offering to deliver improved returns Value from higher
Slide 21: Financial Position and Cash Flow
Financial Position and Cash Flow 20
Slide 22: Cash flow generation supporting future growth
Cash flow generation supporting future growth Strong cash flow generation delivered through existing business Increased cash flows expected from improved returns across the Group Historical cash flows committed to major growth projects and capital return – Moranbah construction ~A$1bn – Waggaman con
Slide 23: Balance sheet strong and well funded
Balance sheet strong and well funded Strong Balance sheet Strong balance sheet Access to diverse funding markets – US$217M & A$360M of Syndicated bank facilities refinanced with US$220M & A$260M 3-year facilities in August 2018 – US$800M 144A bond and A$200M bond maturing in 2019 to be refinanced, e
Slide 24: Capital allocation directed by risk/return
Capital allocation directed by risk/return Maintain strong capital discipline with respect to capital allocations Continued investment in maintenance capital FY 2018 sustenance capital expenditure of ~A$210M expected, minor growth capital of ~$65M Ongoing average annual sustenance capital expenditur
Slide 25: Shareholder distributions deliver long-term returns
Shareholder distributions deliver long-term returns Substantial increase in shareholder distributions in FY 2018 delivered through share buyback ~$200M of Company shares bought back by end of August 2018, targeting program ($300M) completion as soon as practicable Dividend distributions subject to c
Slide 26: Rob Rounsley
Rob Rounsley Chief Technology Development Officer
Slide 27: Technology – Key drivers
Technology – Key drivers: Practical innovation on the Ground Our product innovation and efficiencies Digital and integrated technologies drives improved safety and reduced delivering end-to-end, value-adding Zero Harm environmental and social impacts Leading Technology market leading solutions Solut
Slide 28: Primary customer drivers of our technology program
Primary customer drivers of our technology program Increased efficiency and productivity Improved safety Reduced environmental & social impacts 27
Slide 29: Product and Technology offer
Product and Technology offer Customer driven technology program 28
Slide 30: Product & Technology offer – Mining services
Product & Technology offer – Mining services Digital products and integrated solutions Advanced delivery systems & bulk products (Delta E, E2 Underground) Advanced Initiating Systems/Electronic Detonator Systems Advanced services Advanced automation Standard delivery equipment & bulk products Conven
Slide 31: Product & Technology offer – Fertilisers
Product & Technology offer – Fertilisers Decision Agriculture products and services Soil and plant health products and services NA Pro decision support Agribusiness tools Next generation enhanced efficiency fertilisers Digital products and integrated solutions High quality proprietary formulations F
Slide 32: Opportunities
Opportunities Pipeline of technical solutions rolling out 31
Slide 33: Differential Energy (Delta E) - video
Differential Energy (Delta E) - video 32
Slide 34: Generation 4 electronics - video
Generation 4 electronics - video 33
Slide 35: Entec stabilized fertilisers supporting farmer productivity and sustainability - video
Entec stabilized fertilisers supporting farmer productivity and sustainability - video 34
Slide 36: Our technology vision
Our technology vision Underpinned by established program 35
Slide 37: Our technology vision- Explosives
Our technology vision- Explosives 36
Slide 38: Our technology vision - Fertilisers
Our technology vision - Fertilisers Industry, DATA CLOUD Government & Climate Data Research Bodies and Water Availability Intelligence Ag. Industry Statistics Segment Benchmarking Crop & Animal Yield Sales by Product by Customer Water Use Soil Nutrient Availability Location (GPS across value chain )
Slide 39: Technology - Key Messages
Technology - Key Messages Customer driven technology program delivering practical solutions Technology grounded in practical solutions Strong pipeline of technical solutions being rolled out today, creating commercial opportunities Clear vision for the future of our technology offering, underpinned
Slide 40: Strategy / Technology Questions & Answers
Strategy / Technology Questions & Answers 39
Slide 41: Nick Stratford
Nick Stratford President Dyno Nobel Americas
Slide 42: Dyno Nobel Americas – Key drivers
Dyno Nobel Americas – Key drivers The business is growing and has positive momentum Leveraging our technology to provide Applying our safety culture and additional value to our customers practices consistently across the Zero Harm business Leading Technology Delta E well established in Americas, Sol
Slide 43: Well positioned portfolio with earnings growth momentum
Well positioned portfolio with earnings growth momentum The business footprint in North America provides a strong platform to service customers across the region Approximately 50% of Group EBIT will be generated from the America’s business in 2018 The business is growing and has real opportunities t
Slide 44: Competitive nitrogen footprint
Competitive nitrogen footprint Ammonium Nitrate supply position Explosives business is strategically short AN production capacity (approximately 200kst) in a long capacity market Demand is supported by flexible third party agreements, that are footprint logical: ‒ Allowing the business to efficientl
Slide 45: End user markets
End user markets Explosives Coal outlook – Market forecast 10% decline over the next 3 year period1 Metals outlook – Robust Copper and Gold outlooks, Iron Ore stable in the US1 Quarry & Construction (Q&C) outlook – Market growth expected to be between 3% to 5% per annum2 in the medium term Dyno Nobe
Slide 46: WALA
WALA Investment thesis Manufacturing excellence World class asset (scale, technology & logistics) FY 2017 production at 74% of nameplate1 capacity in its first year of operation Construction cost significantly below industry average In 2018 the plant is expected to run at On track to meet 15% IRR in
Slide 47: Key messages – Dyno Nobel Americas
Key messages – Dyno Nobel Americas The Business performing well with good momentum, maintained by continuing to deliver against our strategy We will continue to apply our safety culture and practices consistently across the business Manufacturing Excellence will grow base earnings as plant reliabili
Slide 48: Greg Hayne
Greg Hayne President Dyno Nobel Asia Pacific
Slide 49: Dyno Nobel Asia Pacific – Key drivers
Dyno Nobel Asia Pacific – Key drivers Reposition and renew our business, focus on customers and technology Applying our safety culture and practices Talent renewal and focus on collaboration: consistently across the business ‒ New President and renewed leadership Zero Continue with good safety perfo
Slide 50: Advantaged supply position - Eastern Australia
Advantaged supply position - Eastern Australia Moranbah & 50% Share in QNP Freight logical provider to the Bowen Basin, world’s Dyno Nobel Mt Isa premier Metallurgical Coal region (ANFO, Distribution) Mt Isa Underpinned by long-term, low-cost gas supply Base Metals Dyno Nobel Moranbah agreement (Emu
Slide 51: Grow customer relationships and leverage advantaged technologies - Western Australia
Grow customer relationships and leverage advantaged technologies - Western Australia Opportunity for growth, leveraging our advantaged technology offering Dyno Nobel Delta E launched in Australia Port Hedland ‒ Patented world leading explosives delivery technology (Emulsion) ‒ Successful trials at c
Slide 52: International
International Dyno Nobel locations Indonesia and Papua New Guinea (PNG) Second largest explosives company in Indonesia Muara Tuhup Pioneer of modular emulsion plant concept, with nine Gold Tenggarong active plants on customer mine sites across Indonesia Berau Kalimantan Coal Bakan and PNG Sibolga Ba
Slide 53: Key messages - Reposition and renew our business, focus on customers and technology
Key messages - Reposition and renew our business, focus on customers and technology Continue to foster strong safety culture on our journey to Zero Harm Strengthen Customer relationships, upgrade CRM systems and introduce NPS to track our progress Continue to apply technology to continuously improve
Slide 54: James Crough
James Crough Interim President Incitec Pivot Fertilisers
Slide 55: Incitec Pivot Fertilisers – 100+ years of proud history
Incitec Pivot Fertilisers – 100+ years of proud history Largest fertiliser company in Australia Global demand for fertilisers is anticipated to continue growing, largely to meet increases in global food production in emerging regions such as South America, South East Asia and Africa – in this contex
Slide 56: Market Segmentation – key strategic advantage
Market Segmentation – key strategic advantage Services and infrastructure Extensive distribution capability Leading Nutrient advantage laboratory Technology Solutions ‘LabSTREAM’ soil testing Agronomic services Fertshed online portal Servicing diverse geographies and market segments Dairy - High inp
Slide 57: Fertiliser Commodities
Fertiliser Commodities Global increase in demand for higher protein foods, population, income growth and urbanisation Profitable Fertilisers supply and demand balance tightening, Growth potential positive impact from commodity price cycle Farmers terms of trade are generally improving Phosphate Hill
Slide 58: Growth Opportunities
Growth Opportunities Opportunities for increased returns Continued focus on ‘voice of the customer’ and sustained improvement in Net Promoter Score Customer Together with farmers driving innovation and technology to improve fertiliser Focus effectiveness in pasture and crops, such as: ‒ Green Urea N
Slide 59: Key messages
Key messages Manufacturing Excellence will grow returns, as plant reliability improves Opportunities for increased returns, focus on supply chain excellence and high margin segments Driving innovation with farmers, investing in research and technology solutions Significantly lower safety incidents i
Slide 60: FY 2018 Outlook
Incitec Pivot Limited INNOVATION ON THE GROUND FY 2018 Outlook
Slide 61: Outlook – FY 2018
Outlook – FY 2018 Dyno Nobel Americas Fertilisers Explosives US$ earnings expected to be up on pcp, growth Distribution in line with outlook at the half year Expecting lower distribution margins (product mix) and Ag & IC earnings expected to be up, underpinned sales volumes in NSW and QLD due to dry
Slide 62: Questions & Answers
Incitec Pivot Limited INNOVATION ON THE GROUND Questions & Answers
Slide 63: Incitec Pivot
Incitec Pivot DY NO Dyno Nobel INNOVATION ON THE GROUND