Slide 1: Orora Limited – Macquarie Conference May 2016
Orora Limited Macquarie Conference 5 May 2016
Slide 2: Important Information
Important Information Forward Looking Statements This presenta:on contains forward-‐looking statements that involve subjec:ve judgment and analysis and are subject to significant uncertain:es, risks and con:ngencies, many of which are outside the control of, and are unknown to Orora. Forward-‐looki
Slide 3: Contents
Contents • Orora Group overview • Orora Australasia – Overview – B9 Recycled Paper Machine – update • Orora North America – Packaging Solu:ons – Point of Purchase • Orora’s blueprint for crea:ng shareholder value • Balance sheet & bank debt refinancing • Outlook 3 Orora Ltd 2016
Slide 4: Orora overview
Orora overview PRO F ORMA S ALES B Y R EGION* Australasia 49% 51% North America Australia New Zealand USA Mexico UK Canada China^ “ ” Geographically focused businesses with national service models Orora Ltd 2016 4 ^ Whilst Orora sells some packaging products into China, Orora’s local Chinese opera:o
Slide 5: Orora Group - Overview of sales by segment
Orora Group - Overview of sales by segment PRO F ORMA S ALES B Y E ND S EGMENT* Fibre 3% Fibre Beverage 32% Beverage 46% Packaging Solu:ons Packaging (Landsberg) Solutions Point of Purchase 19% (IntegraColor) Point of Purchase Orora Ltd 2016 * Reflects 1H16 sales plus a pro forma adjustment to includ
Slide 6: Orora Australasia overview
Orora Australasia overview Orora Australia 3,500 Employees 2 Countries Porkolio of scale businesses with leading posi:ons in their respec:ve markets 28 Manufacturing Plants 35 Distribution Sites • #1 Beverage Cans • #1 Wine Closures • #1 Glass Wine Bomles • #2 Recycled Paper/Corrugated • #2 Glass Be
Slide 7: B9 Recycled Paper Machine - Update
B9 Recycled Paper Machine - Update Con>nued successful ramp up of B9 • Produced 181,000 tonnes during 1H16 (185,000 tonnes in pcp) – extended shut affec:ng volumes • January 2016 was a record month and made up the 1H16 period on period tonnes shorkall • Good opera:ng performance has con:nued to date
Slide 8: Orora North America overview
Orora North America overview ORORA NORTH AMERICA IntegraColor PACKAGING SOLUTIONS POINT OF PURCHASE Orora Ltd 2016 “ Driving regional growth & expanding capability ” 8
Slide 9: Landsberg Packaging Solutions overview
Landsberg Packaging Solutions overview EBIT Trend USD million 70 60 5.1% 50 4.9% 40 30 4.5% 20 10 4.2% 0 FY13 FY14 FY15 FY16 1st Half EBIT 2nd Half EBIT 1st Half EBIT Margin Strategic Focus: • Target markets – food, pharmaceu:cal/health, IT componentry, automo:ve parts (combined approximately 40% of
Slide 10: Total Packaging Solutions
Total Packaging Solutions “ ” Provider of customised, total packaging solutions – extending right across the value chain Orora Ltd 2016 10
Slide 11: North American Packaging Distribution market
North American Packaging Distribution market Es>mated market size: USD40-‐50B Highly fragmented market provides opportunity for growth (organic & M&A) • 5,000 to 7,000 market par:cipants • Top 5 players hold approximately 30% market share • Landsberg is #4 with only 2%-‐3% market share Leading mar
Slide 12: IntegraColor overview
IntegraColor overview SALES • Texas-‐based provider of Point of Purchase (POP) retail display solu:ons & visual communica:ons services 10% Consumer (primarily food & beverage) • Approximately USD100M sales revenue Hor>culture • Acquired on 1 March 2016 for USD77M (approx. AUD107M) 30% 60% • 6.9x EB
Slide 13: North American Point of Purchase (POP) market
North American Point of Purchase (POP) market Es>mated market size: USD10B Fragmented industry structure provides growth opportunity (organic and M&A): • Mul:ple market par:cipants • Top 4 players hold an es:mated 25% market share • IntegraColor has 1% market share Leading market par>cipants include
Slide 14: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value 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 Ra>o Growth Growth GDP
Slide 15: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Orora Orora North Australasia America GDP Sales GDP+ Sales Growth Growth GDP based GDP based growth growth, supplemented enhanced by by market share innova>on gains & increa
Slide 16: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Australasia North America • Sales growth GDP based due to market structure & • Underlying packaging distribu:on and POP market growth defensive end market exp
Slide 17: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Orora Innova>on Ini>a>ve • Launched in July 2015 • Emphasis on enhancing innova:on, automa:on and produc:vity across Orora • Approximately $45M to be invested
Slide 18: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Orora Orora North Australasia America Organic Growth Bolt-‐on M&A Adjacent GDP Sales GDP+ Sales Capital (North America Focused) M&A Growth Growth GDP based ONA Targeted GDP
Slide 19: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Bolt-‐on M&A Adjacent M&A Capital (North America Focused) Returns Focused Growth Capital Customer-‐backed investments in exis:ng capability: ORORA • Amrac:v
Slide 20: Investing $42M to increase glass bottle capacity
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Bolt-‐on M&A Adjacent M&A Capital (North America Focused) Inves>ng $42M to increase glass bojle capacity TOTAL AUSTRALIAN WINE BOTTLE EXPORT MARKET (QUARTERL
Slide 21: Bolt on M&A
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Bolt-‐on M&A Adjacent M&A Capital (North America Focused) Bolt on M&A • Expand geographic footprint and/or • Acquire new product capability • 20% RoAFE hurdl
Slide 22: Adjacent M&A
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Organic Growth Bolt-‐on M&A Adjacent M&A Capital (North America Focused) Adjacent M&A • Acquisi:ons in parallel packaging substrates or markets • Targeted 20% RoAFE by a mi
Slide 23: Orora's blueprint for creating shareholder value
Orora’s blueprint for creating shareholder value 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 Ra>o Growth Growth GDP
Slide 24: Sustainable dividend policy
Orora’s blueprint for creating shareholder value ORGANIC RETURNS FOCUSED GROWTH SUSTAINABLE GROWTH CAPITAL ALLOCATION DIVIDEND Sustainable dividend policy • Indicated 60-‐70% payout ra:o • ~30% franked • Both annual dividends since lis:ng have been paid at the top of this range • FY14: 70% • FY15:
Slide 25: Orora has invested approx. $220M in growth since ASX Listing
Orora has invested approx. $220M in growth since ASX Listing in December 2013 2H14 1H15 2H15 1H16 2H16 TOTAL INVESTMENT Established 2 new East New customer backed Coast US DCs (Charloje Opened new Dairy Sack Line ($20M) & Orlando) – both Inves>ng $42M to Organic Landsberg DC in customer backed incre
Slide 26: Healthy balance sheet providing platform for future shareholder value creation
Healthy balance sheet providing platform for future shareholder value creation A strong balance sheet with capacity to fund growth capital investments • Net Debt was $593M and leverage 1.7x at December 2015 • Pro forma December 2015 leverage* of 2.0x ayer impact of growth capital investments announc
Slide 27: Successful bank debt refinancing
Successful bank debt refinancing Completed successful bank debt refinancing in April 2016 Ac>on: • Replaced A$350M mul:currency debt maturing in December 2016 with the following facili:es: • 5 year USD denominated facility of US$200M (A$250M+) • 2 year AUD denominated facility of A$100M • Extended ma
Slide 28: Extended and smoothed debt maturity profile
Extended and smoothed debt maturity profile Orora Ltd 2016 28
Slide 29: Outlook
Outlook Orora expects to con:nue to drive organic growth, deliver on the B9 ‘self help’ ini:a:ves and invest in innova:on and growth during the remainder of FY16, with earnings to be higher than reported in 2015, subject to global economic condi:ons Orora Ltd 2016 “ Maintain guidance provided at the