Slide 1: Half year results
Half year results Half Year Ending December 2018 13 February 2019 Presentation by Nigel Garrard – Managing Director and CEO Stuart Hutton – CFO Orora Limited ABN 55 004 275 165
Slide 2: Important information
Important information Forward Looking Statements This presentation contains forward looking statements that involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to Orora. Forward look
Slide 3: 1H19 financial highlights
1H19 financial highlights EARNINGS BEFORE INTEREST SALES REVENUE AND TAX (EBIT) Solid earnings growth, increased dividends and $2,306m $175.1m higher returns. Strong 9.9% INCREASE 5.9% INCREASE balance sheet to continue to pursue growth UNDERLYING NET PROFIT AFTER TAX (NPAT) EARNINGS PER SHARE (EPS)
Slide 4: Orora safety performance
Orora safety performance Safety is a priority and ongoing journey for Orora June 2018 Dec 2018 • RCFR and LTIFR both increased • Global independent review commenced in November RCFR 6.8 7.9 2018 • Continued rollout of comprehensive risk profiling reviews and LTIFR 1.8 2.0 development of improvement
Slide 5: 1H19 Australasian financial highlights
1H19 Australasian financial highlights SALES REVENUE EBIT • Underlying sales increased 3.7% after taking into account aluminium price pass through impact $1,088m $127.6m • B9 production volumes were up on pcp and are on track to achieve design capacity again in FY19 4.4% INCREASE 5.4% INCREASE • Inc
Slide 6: Australasia EBIT growth
Australasia EBIT growth 5.4% EBIT growth (8.0) 14.5 127.6 121.1 (A$’M) 1H18 ORGANIC GROWTH COST HEADWINDS 1H19 Orora Ltd “ Organic earnings benefits delivered through growth, operational efficiencies and capital investment which more than offset cost headwinds ” 6
Slide 7: 1H19 North American financial highlights
1H19 North American financial highlights North American Group • Steady local currency earnings in tough market conditions USD SALES REVENUE USD EBIT • Improvement in cash flow from improved working capital management compared to the pcp $882m $46.5m • Continued to invest in growth (Bronco/Pollock ac
Slide 8: North American acquisitions increase scale and geographic coverage
North American acquisitions increase scale and geographic coverage Acquisitions of Pollock Packaging and Bronco Packaging are aligned to Orora’s North American focused M&A growth strategy in Pollock and Bronco are packaging solutions high quality, accretive • Pollock (effective 1 December 2018) is a
Slide 9: North American acquisitions align with OPS growth strategy
North American acquisitions align with OPS growth strategy The acquisitions of Pollock and Bronco align with Orora’s four key strategic M&A pillars FOOTPRINT CUSTOMERS CAPABILITY TALENT • Increases exposure to • Serve long term blue chip • Strong brand equity • Experienced, stable and attractive Tex
Slide 10: North American EBIT growth
North American EBIT growth 6.5% EBIT growth ((1.1%) excluding FX impact) 3.2 2.1 4.5 1.7 64.2 60.3 1H18 NET GROWTH ERP ROLL OUT COSTS NET EFFECT OF LOST FX 1H19 (A$’M) CONTRACTS IN OV “ Local currency earnings slightly lower; impacted by tough market conditions, ERP transition costs and the reset in
Slide 11: Orora Corporate
Orora Corporate Earnings Summary (EBIT) Corporate costs were $16.7M – slightly higher than prior half year due to: A$ Million 1H18 1H19 ∆% • Costs associated with the acquisitions of Pollock and Bronco were Underlying Corporate (16.1) (16.7) (3.8%) expensed in the period • Underlying Corporate costs
Slide 12: Operating cash flow in line with expectation
Operating cash flow in line with expectation A$ Million 1H18(1) 1H19 Operating cash flow decreased 15.2% to $132.2M EBITDA 227.3 243.5 • Higher earnings were offset by seasonal working capital build and shortened Non Cash Items 18.6 13.3 trading terms on imported aluminium Cash EBITDA • Cash convers
Slide 13: Balance sheet and debt
Balance sheet and debt Balance Sheet Strong balance sheet to enable further growth investment A$ Million June 18 Dec 18 • Increased leverage with recent acquisitions and seasonal working capital Funds Employed (period end) 2,298 2,552 build • Leverage of 1.8x – up from 1.5x in the pcp Net Debt 667 8
Slide 14: Our Orora – culture of driving outperformance
Our Orora – culture of driving outperformance Orora Ltd 14
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 Organic Growth Bolt-on M&A Adjacent 60-70% GDP Sales GDP+ Sales Capital (North America Focused) M&A Pay Out Ratio Growth Growth GDP bas
Slide 16: Orora has committed ~$650M since ASX listing
Orora has committed ~$650M since ASX listing in December 2013 FY14 FY15 FY16 FY17 FY18 FY19 TOTAL INVESTMENT Established 2 new East Coast $29M spend committed Invested additional $23M in Commissioned new sleek can Opened new New customer backed US DCs (Charlotte & Orlando) from Orora Global Orora Gl
Slide 17: Committed to creating shareholder value
What we said we would do Committed to creating shareholder value What we said we would do What we have done in 1H19 Shareholder value creation 1. Organic sales growth, profitable market share gain & 1. ANZ - delivered 3.7% underlying sales growth NA – 8.5% sales • Underlying EPS growth of 7.2% impro
Slide 18: Perspectives for remainder of 2019
Perspectives for remainder of 2019 Market conditions expected in the coming periods • Expecting ongoing challenging market conditions predominantly in North • Kraft and starch prices continue at heightened levels – the majority America of the $4.0M headwind encountered in the first half is expected
Slide 19: Outlook
Outlook Orora expects to continue to drive organic growth, integrate recent North American acquisitions and invest in innovation during FY19, with constant currency earnings expected to be higher than reported in FY18, subject to global economic conditions Orora Ltd 19
Slide 20: Appendix
Appendix
Slide 21: Appendix - Contingent liability
Appendix 1 - Contingent liability Contingent decommissioning liability • The decommissioning of the Petrie site is a significant exercise, the estimated cost of which remains contingent on final remediation design solutions approved by regulatory authorities. At the date of this Report, decommission
Slide 22: Appendix - Fibre refresh program site summary
Appendix 2 - Fibre refresh program site summary Manufacturing Conversion Corrugator Automation Benefits Site upgrade upgrade upgrade • Improving product quality, efficiency and capacity Revesby – NSW • Strengthening cost curve competitiveness Scoresby – VIC • Enhancing customer value proposition Bro