Orica Limited · ASX:ORI
Orica — Macquarie ANZ Corporate Day 2017
26 slides from Orica's conference presentation, Sep 1, 2017
Slide 1: Orica – Macquarie ANZ Corporate Day
ORICA MACQUARIE – ANZ CORPORATE DAY 30 August - 1 September 2017 Singapore & Hong Kong
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: Orica Overview
ORICA OVERVIEW 00 Month 2016 Presenter Name Presenter Title Presenter Name Presenter Title
Slide 4: Global Leader in Mining and Civil Blasting
GLOBAL LEADER IN MINING AND CIVIL BLASTING Scale and efficiency that comes from being the leading supplier of commercial Economies of scale explosives and blasting systems to the mining and infrastructure markets globally Leading brand and Leading supplier of commercial explosives globally with
Slide 5: True Global Footprint
TRUE GLOBAL FOOTPRINT • Operates in over 50 countries and customers in more than 100 countries worldwide 140+ YEARS of experience and innovation No.1 GLOBAL SUPPLIER of commercial explosives 11,500+ EMPLOYEES serving customers across more than 100 countries 1,500 BLASTS PER DAY on our customer sites
Slide 6: Global Market Leader
GLOBAL MARKET LEADER Orica’s global leadership is a key differentiator Unrivalled licensing, scale, facility footprint, and market presence to service large customers in multiple jurisdictions regionally and globally Facility proximity to customer operations provide material cost advantages and
Slide 7: Flexible Manufacturing and Sourcing Capability
FLEXIBLE MANUFACTURING AND SOURCING CAPABILITY Orica complements own manufacturing capabilities with flexible global sourcing arrangements: • Highly disciplined approach to the management of the company’s AN manufacturing capacity • c.50% AN volume globally, strategically 3rd party sourced to meet s
Slide 8: Diversified Global Business
DIVERSIFIED GLOBAL BUSINESS Diverse geographic portfolio By commodity By product / services offering2 % of HY17 revenue¹ % of HY17 revenue¹ % of HY17 revenue¹ 3% 9% 8% 16% 16% 25% 30% AN/ANFO Thermal Coal 12% 20% Australia/Pacific & Indonesia Coking Coal Bulk Emulsion Packaged Products North America
Slide 9: Prudent Approach to Capital Management
PRUDENT APPROACH TO CAPITAL MANAGEMENT Recent Key Deliverables S&P affirmed BBB Stable rating Dec 2016 Maintaining an investment Gearing: 35% grade credit rating Net Debt reduced Capital Preserving the flexibility to facilitate Revised approach to Capex Management future investment alternati
Slide 10: Safety and Environment
SAFETY AND ENVIRONMENT 00 Month 2014 Presenter Name Presenter Title Presenter Name Presenter Title
Slide 11: Safety Performance
SAFETY AND ENVIRONMENT Safety Performance • Major Hazards Initiative (MHI) - Company-wide identification of site major hazards and 2.5 3 verification of key controls Total Recordable Injury Frequency Rate 1 • Hazard awareness - Identification of top 5 major hazards across each site that 2 2 can lead
Slide 12: Business Improvement Initiatives
BUSINESS IMPROVEMENT INITIATIVES Alberto Calderon, Managing Director and CEO
Slide 13: Driving Efficiencies and Adding Value
DRIVING EFFICIENCIES AND ADDING VALUE This phase of Business Improvement Initiatives takes a holistic view of the business considering all factors that create value, so that we can: 1. Buy better; 2. Produce more with less; 3. Add value for our customers; and 4. Deliver value to our shareholders 13
Slide 14: 1. Buying Better
1. BUYING BETTER Focuses on leveraging Orica’s global network to lower unit costs Examples of initiatives delivered: Initiative Benefit • Identified that 3rd party supplier cost of AN to Orica was not optimal Reduced • Key driver was ‘expensive’ ammonia feedstock for supplier ammonium • Assisted sup
Slide 15: 2. Producing More with Less
2. PRODUCING MORE WITH LESS ONE MANUFACTURING Focuses on operational performance, quality, and commercial outcomes to support the regional businesses • All plants will run their business in the ‘Orica Manufacturing Way’ Key benefits: Standardisation using standard measurement and governance systems
Slide 16: 3. Adding Value to Our Customers – Wireless Initiation
3. ADDING VALUE TO OUR CUSTOMERS WIRELESS INITIATION • Successful commercial trials of the industry's first remote wireless initiation system - 2 underground trials completed in North America and Australia - 535 shots fired - ZERO misfires • Significant value demonstrated Recovery benefits: Conventi
Slide 17: 3. Adding Value to Our Customers – Intelligent Blasting
3. ADDING VALUE TO OUR CUSTOMERS INTELLIGENT BLASTING • BlastIQ for data enabled intelligent blasting ~20 TLS sites - Blast design management 8 sites with tools to customer crews ~800 monitors, - Blast assurance management 5 pilot sites with Smart MMU mostly Nordics - Vibration & airblast measuremen
Slide 18: Supplementary Information
SUPPLEMENTARY INFORMATION 18 © Orica Limited Group
Slide 19: Historical Financials
HISTORICAL FINANCIALS Revenue1 EBIT1 (excluding individually material items) ($m) ($m) 12.8% 12.9% 12.5% 12.4% 11.7% 2,809 2,844 2,553 2,539 355 2,437 330 326 317 314 1H15 2H15 1H16 2H16 1H17 1H15 2H15 1H16 2H16 1H17 EBIT EBIT Margin 1. Continuing Operations 19 © Orica Limited Group
Slide 20: Regional Overview: AN Volume and EBIT Margin
REGIONAL OVERVIEW: AN VOLUME AND EBIT MARGIN1 Australia, Pacific & Indonesia North America 657 646 622 638 624 603 594 572 575 566 22% 22% 22% 19% 19% 16% 15% 14% 15% 12% 1H15 2H15 1H16 2H16 1H17 1H15 2H15 1H16 2H16 1H17 Latin America Europe, Africa & Asia 359 311 304 311 304 288 287 276 271 268 11%
Slide 21: Regional Overview: Revenue by Commodity
REGIONAL OVERVIEW: REVENUE BY COMMODITY1 Australia, Pacific & Indonesia North America 8% 13% 4% 17% 7% 4% Thermal coal Thermal coal Coking coal 43% Coking coal Gold Gold 12% Iron ore 17% Iron ore Copper Copper Q&C Q&C Other Other 30% 16% 12% 10% 7% Latin America Europe, Africa & Asia 9% 13% 11% 5% 2
Slide 22: Minova: Turnaround Continues
MINOVA: TURNAROUND CONTINUES Revenue and EBIT margin EBIT Revenue by sector1 295 271 (%) ($m) 1H16 211 212 2% 2H16 196 2% 4% 1H17 8 1% 3% 5% Coal 1H15 2H15 1H16 2H16 1H17 Hard Rock 2 -1% Civil Tunnelling -2% Construction -2 32% 56% Geo-technical -5% Other Revenue EBIT margin (%) • Turnaround continu
Slide 23: Disciplined Capital Management
DISCIPLINED CAPITAL MANAGEMENT Capital Expenditure1 • Disciplined approach to capital management ($m) - All license to operate capital expenditure (safety, environment, 504 regulatory) has been approved 151 443 75 ~$300 – 320 - Ranking of capital prioritised across the Group 150 183 263 • Continued
Slide 24: FX Exposure
FX EXPOSURE EBIT Composition FY17 FX movements EBIT Sensitivity to FX Movement1 (FX Translation) (% change from pcp) (1% change +/-) (%) Asia USD USD 1.2 m 7% Canada 8% Latin United EMEA EMEA 0.6 m America States 8% 38% LATAM 0.2 m LATAM CAD 0.3 m EMEA CAD 19% ASIA 0.3 m Australia ASIA 20% TOTAL 2.6
Slide 25: Debt Profile
DEBT PROFILE Facility Headroom Drawn Debt Maturity Profile (A$m) (A$m) Average tenor at March 2017 - 4.7 years 1 $3,546 $3,644 600 500 $1,650 $1,767 400 300 200 $1,896 $1,877 100 0 Mar-17 Sep-16 FY17 FY18 FY19 FY20 FY21 FY23 FY25 FY26 FY31 Drawn Undrawn Committed Bank Facilities Export Credit Financ
Slide 26: Disclosures and Definitions
DISCLOSURES AND DEFINITIONS Term Definition AN volume Includes Ammonium Nitrate (AN) prill and solution and Emulsion products include bulk emulsion and packaged emulsion Equivalent to Profit/(loss) before financing costs and income tax expense disclosed in note 2 within Appendix 4D – Orica 2017 Half