Slide 1: Innovation at Orora and Australasia update
For personal use only Innovation at Orora and Australasia update Nigel Garrard, Managing Director and CEO
Slide 2: Nigel Garrard
North America 40% Australasia 60% Nigel Garrard For personal use only Nigel Garrard (BEc, CA, MAICD) Managing Director and Chief Executive Officer Nigel Garrard is a qualified chartered accountant with an extensive career in the consumer goods industry. In 2009, Nigel joined Amcor as President of th
Slide 3: The Orora Way
The Orora Way For personal use only The Orora Way articulates the Group’s purpose, strategy and guiding vision. This framework provides a practical set of guidelines to unite team members and embed a shared belief in what they do and how they can deliver for customers in every market that Orora oper
Slide 4: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value For personal use only ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Orora Orora North Australasia America Organic Growth Bolt-on M&A Adjacent 60-70% GDP Sales GDP+ Sales Capital (North America Focused) M&A Pay Out Ratio
Slide 5: Defining innovation
Defining innovation For personal use only Innovation is about creating value: • Stimulates growth • Increases productivity • Reduces cost • Delivers better products and services At Orora we define innovation as: the implementation of new ideas that create value for our customers, and our company. 5
Slide 6: The need to harness innovation
The need to harness innovation For personal use only Australian industry is undergoing a transformation led by: Automation Connectivity Globalisation 6
Slide 7: Transformation of the packaging industry
Transformation of the packaging industry For personal use only Transformation = opportunity 7
Slide 8: How innovation is shaping Orora
How innovation is shaping Orora For personal use only At Orora, we see innovation through a three way lense: Machinery Culture & & people technology Customer collaboration 8
Slide 9: Investing in our business
Investing in our business For personal use only FY15 FY16 FY17 1H18 Launched $16 million $45m $20 million $9 million committed - Innovation committed committed $45 million Initiative cumulative Global Innovation Initiative increased by $30 million to 9 $75 million 9
Slide 10: Introducing the new EFI Nozomi C18000 digital printers
Investing in our business For personal use only Introducing the new EFI Nozomi C18000 digital printers 10
Slide 11: Investing in our people
Investing in our people For personal use only Innovation is ingrained in Orora’s corporate culture and channelled through formal programs: Internal crowd sourcing Innovation Ambassadors Industry 4.0 cadets 11
Slide 12: Investing with our customers
Investing with our customers For personal use only Innovation is always conducted from the customer perspective Orora’s specialist teams offer market-leading expertise: Innovation & Design Research & Technology 12
Slide 13: Key projects update
For personal use only Key projects update Nigel Garrard, Managing Director and CEO
Slide 14: Sustainability and renewable energy
Sustainability and renewable energy For personal use only • New renewables agreement - effective 1 May 2018 Orora has entered into a second long term power purchase agreement (PPA), this time for electricity requirements for NSW and VIC Orora is one of • Orora is the foundation customer for a new wi
Slide 15: Investment in new warehouse at Glass
Investment in new warehouse at Glass For personal use only • Orora is announcing today a further investment of ~$35m to build a new warehouse on the Gawler site to enable Orora to hold the vast majority of finished product stock on site Orora continues to • This is in addition to the purchase of the
Slide 16: Fibre Business Group
For personal use only Fibre Business Group Brian Lowe, Group General Manager
Slide 17: Brian Lowe
North America 40% Australasia Brian Lowe 60% For personal use only Brian Lowe (MBA) Group General Manager, Fibre Prior to taking on his current role, Brian Lowe was the Group General Manager of Orora’s Beverage business. This followed two years in the same role with Amcor’s Australasia and Packaging
Slide 18: Contents
Contents For personal use only • Who we are • Fibre Packaging sales overview • Key end market trends • The Orora ‘Fibre Packaging’ Way • Innovate to lead • Enhance the core • Invest to grow • Sustainability • Q&A 18 3
Slide 19: Who we are
For personal use only Who we are
Slide 20: Fibre Packaging overview
North America 40% Australasia Fibre Packaging overview 60% For personal use only AUSTRALIA Key markets Fruit & Produce Meat NT Beverage Dry Goods Wine SME QLD WA Capabilities and technologies SA NSW 5 NEW ZEALAND National footprint Number of lines Strong design capability and innovation VIC Integrat
Slide 21: Fibre value proposition
Fibre value proposition For personal use only Why our customers choose us Market share Fibre Packaging Aus • Superior quality products • Superior customer service 32% • Responsiveness • Product innovation and technology • Fibre manufacturing footprint (all states including Tasmania and FNQ) Market s
Slide 22: Fibre market
Fibre market For personal use only Market fundamentals • Good industry structure • Industry moving to shelf ready packaging • Shorter runs and more print individualisation Orora • Extensive footprint across key markets • Competitive cost position and stable market share • Benefits from improved recy
Slide 23: Sales overview
For personal use only Sales overview
Slide 24: End market sales breakdown
End market sales breakdown For personal use only Fibre Packaging sales breakdown • Focus on partnering with customers to deliver 2% customised solutions where quality of paper is valued through 10% • Product design 28% • Engineering of product through light weighting • Targeting end markets that wil
Slide 25: Selected produce markets growing strong
Selected produce markets growing strong For personal use only 3 year CAGR 3 year CAGR in Kiwifruit in Avocados 5.3%(1) 8.4%(2) 3 year CAGR 3 year CAGR in Bananas in Mango’s 2.4%(2) 1.4%(2) Source : (1) NZ Horticulture Export Authority (2) BIS Oxford Economics 2018 25
Slide 26: Key end market trends
For personal use only Key end market trends
Slide 27: Market driven capability
Market driven capability For personal use only Orora’s investment in digital ensures we provide best in class product offering 27
Slide 28: Fibre Packaging trends
Fibre Packaging trends For personal use only Trend Orora Australia follows European packaging trends capability – this is where Orora continues to invest Light weight paper B9 competitive advantage Improved converting capability Refresh program High quality print Digital Print Smaller flute sizes R&
Slide 29: Strategic focus areas
For personal use only areas Strategic focus
Slide 30: The Orora 'Fibre Packaging' Way
The Orora ‘Fibre Packaging’ Way For personal use only Expanding & growing our value add market segments such as fruit & produce, Vision meat, small and medium enterprises and specialty while we defend & maintain our long run, low cost brown box business Our strategic focus Innovate to Lead Enhance t
Slide 31: Innovate to Lead
For personal use only Innovate to Lead
Slide 32: Investing in Innovation
Investing in Innovation For personal use only • Orora is investing in the latest digital printing and laser cutting innovation • Our aim is to give Orora and our customers a sustainable, competitive edge 32
Slide 33: Digital printer - efi Nozomi C18000
Digital printer - efi Nozomi C18000 For personal use only Key features • Ultra high speed • Delivers magazine quality imagery directly onto corrugated board • First of its kind in Australia Key benefits • Cost-effective and on-demand print jobs • High-quality, full-color graphics • Digital interface
Slide 34: Laser cutter - Highcon Euclid III
Laser cutter - Highcon Euclid III For personal use only Key features • Third generation laser cutting and creasing • Replaces expensive and slow die-making process • Offers design flexibility and enhanced efficiency Customer benefits • Design creativity and last minute corrections • Savings by repla
Slide 35: No Crush box / The Xsense System
Innovate to Lead For personal use only No Crush box The Xsense® System Lighter weight & added strength Proactively monitors, analyses and disseminates Superior presentation & stackability temperature and relative humidity data Improved ventilation to support ripening Optimises quality of perishable
Slide 36: Enhance the Core
For personal use only Enhance the Core
Slide 37: Enhance the Core – iCollect – quotation system
Stewart Gunn Enhance the Core – iCollect – quotation system For personal use only Ensuring that we create value added, fit for purpose, sustainable solutions for our customers every time we quote 37
Slide 38: Enhance the Core – myOrora – customer portal
Stewart Gunn Enhance the Core – myOrora – customer portal For personal use only Almost 17,000 sessions on myOrora since launch 38
Slide 39: Invest to Grow
For personal use only Invest to Grow
Slide 40: $100m invested to improve manufacturing capability
$100m invested to improve manufacturing capability For personal use only In excess of $70M committed for investment in the Initial $70M committed ANZ converting assets over the past 3 years to improving fibre converting assets • Improving quality and output capacity • Upgrading printing and converti
Slide 41: $100m invested to improve manufacturing capability
$100m invested to improve manufacturing capability For personal use only Additional $30m in corrugator upgrades required to keep pace with converting upgrades • Flute flexibility • Reliability • Technology upgrades • Scoresby corrugator will be widened to 2.8m to match the optimal width of B9 paper
Slide 42: Fibre refresh program site summary
Fibre refresh program site summary For personal use only Manufacturing Site Conversion Corrugator upgrade upgrade Over $100M Revesby – NSW committed to Scoresby- VIC improving Fibre Brooklyn- VIC Packaging manufacturing Athol Park- SA capability Townsville- QLD Benefits Rocklea- QLD • Improving prod
Slide 43: Sustainability
For personal use only Sustainability
Slide 44: Sustainability
Sustainability For personal use only • Primarily recycled paper used in our operations which forms part of the closed loop with B9 • All products manufactured by Fibre are recyclable • Orora recognises the significant and detrimental impact of illegal logging and deforestation on the global economy,
Slide 45: In summary
In summary For personal use only Investing for Extensive footprint Volumes growing growth and across key markets ahead of GDP efficiency Benefits from Strong position improved recycled Innovation is key and stable market paper quality to delivering value share 45
Slide 46: Q&A
For personal use only Q&A
Slide 47: Beverage Business Group
For personal use only Beverage Business Group Simon Bromell, Group General Manager
Slide 48: Simon Bromell
North America 40% Australasia Simon Bromell 60% For personal use only Simon Bromell (BSc, GDip Agribus, GAICD) Group General Manager, Beverage Simon Bromell joined Orora in 2014 bringing 25 years’ experience in leadership roles across the national food supply chain in consumer goods and agribusiness
Slide 49: Contents
Contents For personal use only • Who we are • Beverage market overview • The Orora ‘Beverage’ Way • Innovate to lead • Enhance the core • Invest to grow • Sustainability • Q&A 49 49
Slide 50: Who we are
For personal use only Who we are
Slide 51: Beverage group overview
Beverage group overview For personal use only AUSTRALIA Why our customers choose us • We create value through product NT innovation and supply chain solutions QLD • We deliver quality through reliable and WA consistent supply SA NSW 5 NEW ZEALAND • We have world class products that are Glass, Gawler
Slide 52: Beverage cans overview
North America 40% Australasia Beverage cans overview 60% For personal use only AUSTRALIA Key Markets Carbonated Soft Drink Beer NT Non alcoholic beverages Ready To Drink (RTD) Energy Drinks QLD Rocklea, QLD WA Capabilities and Technologies SA NEW ZEALAND Diverse range of metal packaging formats for
Slide 53: Beverage Cans industry
Beverage Cans industry For personal use only Market Fundamentals • Good industry structure • Capital intensive • Deep customer relationships • Low FX exposure • Full pass through on aluminium Orora • Strong market position • Extensive footprint • Well capitalised assets • Long term customer contract
Slide 54: Glass overview
North America 40% Australasia Glass overview 60% For personal use only Glass Key Markets AUSTRALIA Wine Beer NT CSD & Non alcoholic beverages Ready To Drink (RTD) QLD Capabilities and Technologies Scale plant – 3 furnaces, 6 forming lines WA SA NSW 5 NEW ZEALAND Diverse range of bottle shapes and co
Slide 55: Beverage glass industry
Beverage glass industry For personal use only Market fundamentals • Good industry structure • Capital intensive • Deep customer relationships Orora • Strong market position • Well capitalised assets • Competitive cost producer • Long term customer contracts • A long-term customer agreement was recen
Slide 56: Metal Closures overview
North America 40% Metal Closures overview For personal use only Closures Key Markets AUSTRALIA Wine Beer NT Capabilities and Technologies QLD Orora has licence to use Stelvin brand in WA Australasian region on exclusive arrangement from SA NEW ZEALAND Amcor currently until Dec 2018 NSW 5 Full servic
Slide 57: Market overview
For personal use only Market overview
Slide 58: Australasian beverage market overview
Australasian beverage market overview For personal use only Litre share • CSD total volume is contracting, with 3%1% growth in zero sugar and small format 10% containers 34% • Mainstream beer volumes are flat, with growth in craft beer 19% • Energy and sports drinks still showing growth 33% CSD Beer
Slide 59: Retail scan data trends in CSD and sugar
Retail scan data trends in CSD and sugar For personal use only Overall CSD volumes are in decline, with can as a format holding up Retail CSD Scan data Retail CSD Sugar and Diet 1.04 1.04 1.02 1.02 1.01 1.02 1.02 1.00 1 0.99 1 0.99 0.98 0.97 0.98 0.97 0.98 0.97 0.95 0.96 0.96 0.94 0.94 2014 2015 201
Slide 60: Market trends: consumer & customer
Market trends: consumer & customer For personal use only Packaging innovation can play a strong role in meeting the needs of emerging trends and help create increased value Macro Trends Beer, cider & wine CSD • Beer consumption trend toward Craft and • Trend away from CSD to healthier offers Premium
Slide 61: Wine export volumes have been increasing since 2014
Wine export volumes have been increasing since 2014 For personal use only Wine export in litres (mil) 3 year CAGR 3 year CAGR 1000 in Bulk in Bottled 800 2.1% 8.8% 600 • 2017 was a record breaking year 400 for exported Australian wine 200 • China total sales grew by 63% and 0 is now the largest expo
Slide 62: Strategic focus areas
For personal use only Strategic focus areas
Slide 63: The Orora 'Beverage' Way
The Orora ‘Beverage’ Way For personal use only Vision To be the market leading provider of Beverage primary packaging solutions in Australia and New Zealand Our strategic focus Innovate to Lead Enhance the Core Invest to Grow • Enhanced decoration • Enhance core assets • Glass full potential through
Slide 64: Innovate to Lead
For personal use only Innovate to Lead
Slide 65: Enhancing our customers brands
Enhancing our customers brands For personal use only Enhanced decoration Product differentiation Customer portfolio solutions Creating stand-out on shelf for our Emphasising brand equity through customers a primary pack differentiation Enabling our customers to innovate and extend their brands into
Slide 66: Advancing manufacturing
Advancing manufacturing For personal use only Robotic auto-swabbing in Glass Robotic laser mould cleaning in Industry 4.0 Data analytics Glass Automated in line swabbing to improve Partnering with Sight Machine(USA) safety and focus of operators on quality Laser cleaning to remove the carbon/swab to
Slide 67: Enhance the Core
For personal use only Enhance the Core
Slide 68: Enhancing our core assets and processes
Enhancing our core assets and processes For personal use only Enhance core assets – Drive productivity Supply chain optimisation G2 rebuild FY20 Improve process control and asset care to Driving excellence in our Sales & Gawler has 3 furnaces that have a 12-15 year Operations planning processes incr
Slide 69: Warehouse expansion and automation
Warehouse expansion and automation For personal use only • The glass business requires significant inventory at any time to ensure; • Customer requirements are met in peak bottling periods • Enable site to best optimise production mix and balance colour job changes • In December 2017, Orora purchase
Slide 70: Invest to Grow
For personal use only Invest to Grow
Slide 71: Invest to Grow - Glass capacity expansion
Invest to Grow - Glass capacity expansion For personal use only • Bottled wine growth (mainly export) continues to grow at levels above GDP, Orora will continue to invest to support its customers growth aspirations • The $42m Glass capacity expansion investment completed in FY17, will deliver approx
Slide 72: Sleek can investment in NZ
Sleek can investment in NZ For personal use only Orora continues to invest in capacity to have the widest range of can formats in the ANZ market Customer need: • Changing consumer preferences – volumes & aesthetics • Sleek can viewed as premium and differentiated • Amatil PNG market decision to move
Slide 73: Sustainability
For personal use only Sustainability
Slide 74: Sustainability
Sustainability For personal use only Raw Materials • Orora uses approximately 80% of the glass collected through South Australia’s container deposit scheme. • Combined with internal recycled glass, this represents a significant proportion of input material • Orora is interested in using the recycled
Slide 75: In summary
In summary For personal use only Located where our Well capitalised Investing for customers are assets growth Competitive cost Long term stable Innovation is key producer customer contracts to delivering value 75
Slide 76: Q&A
For personal use only Q&A
Slide 77: Paper and Recycling Business Group
For personal use only Paper and Recycling Business Group Chris Rosser, Group General Manager
Slide 78: Chris Rosser
North America 40% Australasia Chris Rosser 60% For personal use only Chris Rosser (BSc (Hons) FCA) Group General Manager, Paper and Recycling Chris Rosser joined Orora in 2017, bringing 20 years experience in Chris Rosser leadership roles in the European paper and packaging industries. Immediately p
Slide 79: Contents
Contents For personal use only • Who we are • Recycled and OCC market overview • The Orora ‘Paper and Recycling’ Way • Innovate to lead • Enhance the core • Invest to grow • Sustainability • Q&A 79
Slide 80: Who we are
For personal use only Who we are
Slide 81: Paper and recycled market
Paper and recycled market For personal use only Market Fundamentals • Integrated paper producers in ANZ all exporting • Capital intensive • Low FX exposure • Attractive market structure • Changing competitive landscape for OCC in ANZ plus global volatility Orora • Very well invested asset base – mar
Slide 82: B9 Facts and figures
B9 Facts and figures For personal use only Key Metrics Width (deckle) 5.6m Maximum Speed 1600 metres per minute Products Recycled testliner and fluting medium Grammage Range 100 – 210 gsm Output Range 45 – 70 gross tonnes per hour Design Capacity: Machine Output 400k tonnes Recovered Paper Processed
Slide 83: End market sales breakdown
End market sales breakdown For personal use only B9 Customer profile • ANZ will continue to be primary target market (assumes 400kt output) • US exports to OPS will continue to increase as legacy sourcing contracts mature and can be replaced with B9 paper 10% • Asian side run will reduce with Fibre
Slide 84: Recycled Paper old corrugated (OCC) update
For personal use only Recycled Paper old corrugated (OCC) update
Slide 85: Australia Recycled Paper (RCP) market overview
Australia Recycled Paper (RCP) market overview For personal use only Australia RCP Market Australia RCP 3.1m tonnes Consumption 1.6m tonnes collected 45% 46% used domestically 54% 55% Local consumption Export OCC SM/Mixed/ONP Key Factors: • Increasingly globalised market for recovered paper • Changi
Slide 86: China's National Sword & Australian kerb side recycling
China’s National Sword & Australian kerb side recycling For personal use only National Sword • China’s project “National Sword” directly impacted imported mixed recycled papers • Lack of alternative external markets to consume this material in the short term • Value of the mixed RCP has fallen steep
Slide 87: Volatile OCC prices
Volatile OCC prices For personal use only Chinese actions continue to fuel short term volatility OCC AUD$ / tonne in OCC market $400 • Import licence allocation basis – now piecemeal $350 compared to annual $300 • Lower contamination levels for imports in place and $250 being enforced $200 • Impact
Slide 88: Orora sources of OCC
Orora sources of OCC For personal use only 6% • Diversified OCC sourcing strategy in place to collect circa 600kt for B9 needs (450kt) with remainder 34% exported 29% • Supply agreements structured to include various pricing mechanisms / contract lengths to manage price exposure • Development of rec
Slide 89: Strategic focus areas
For personal use only Strategic focus areas
Slide 90: The Orora 'Paper and Recycling' Way
The Orora ‘Paper and Recycling’ Way For personal use only Safely and sustainably optimise the operation of the Botany Mill, Vision underpinned by an effective Recycling business, to support the Orora Fibre packaging strategy Our Strategic Innovate to Lead Enhance the Core Invest to Grow Focus • Incr
Slide 91: Innovate to Lead
For personal use only to Lead Innovate
Slide 92: Delivering world class performance
Delivering world class performance For personal use only Embedding world class manufacturing processes: • Machine design / scale allows us to produce high 10.0 performance products at lower cost 9.0 Machine output in tons per metre and hour 8.0 • Advanced management and operating systems 7.0 6.0 use
Slide 93: Enhance the Core
For personal use only Enhance the Core
Slide 94: A Recycling solutions provider
A Recycling solutions provider For personal use only Transitioning our Recycling business towards being a resource solutions provider • Respond to a changing landscape for recovered material In ANZ • Enable our customers to address their two key challenges – sustainability and cost Driving Sustainab
Slide 95: Continuing to develop our customer offering
Continuing to develop our customer offering For personal use only B9’s existing competitive advantage: F6 Paper B9 Paper • Current offering provides significant performance, appearance and cost benefits to our customers • Superior quality supports shelf ready packaging with Kraft-like appearance • C
Slide 96: Invest to Grow
For personal use only Invest to Grow
Slide 97: Delivering design capacity
Delivering design capacity For personal use only B9 annualised quarterly production Outperformance versus Design Capacity: 500 • Progressive capacity debottlenecking using 400 targeted investment Annualised Tonnes • Use of data analysis / process correlation to 300 identify improvement opportunities
Slide 98: Sustainability
For personal use only Sustainability
Slide 99: Sustainability
Sustainability For personal use only Our Closed Loop Model: • Orora is one of the largest cardboard recyclers in Australia • We collect circa 600kt annually and convert 450kt into 100% recycled paper • B9 output is 70% integrated with Orora’s corrugated box businesses in Australia & New Zealand Enab
Slide 100: In summary
In summary For personal use only Driving Well invested asset High quality sustainability by base – market product offering reducing resource leading technology intensity Product and Capacity to Recycling business process innovation support customer shifting to a key to delivering growth solutions pr
Slide 101: Q&A
For personal use only Q&A
Slide 102: Orora North America and Outlook
For personal use only Orora North America and Outlook Nigel Garrard, Managing Director and CEO
Slide 103: North America update
North America update For personal use only Economy • Continuation of conditions experienced in the first half • Trading conditions in end markets Orora serves remain challenged for growth • Impact of US tax reforms is expected to be positive over the medium term Orora Packaging Solutions • Following
Slide 104: North America update
North America update For personal use only Orora Visual • Underlying Orora Visual results continue to improve with steady progress being made on integration • The value proposition is resonating well with existing and new customers with several recent wins and an encouraging pipeline • Management ch
Slide 105: FY18 Outlook
FY18 Outlook For personal use only Orora expects to continue to drive organic growth and invest in innovation and growth during FY18, with constant currency earnings expected to be higher than reported in 2017, subject to global economic conditions 105
Slide 106: Q&A
For personal use only Q&A