Dyno Nobel Limited · ASX:DNL
Dyno Nobel — HY24 Earnings Presentation
40 slides from Dyno Nobel's earnings presentation, May 16, 2024
Slide 1: 2024 Half Year Financial Results Presentation
2024 HALF YEAR FINANCIAL RESULTS PRESENTATION Incitec Pivot Limited ABN 42 004 080 264 ASX Code: IPL OTC: INCZY
Slide 2: Disclaimer: Summary Information
Disclaimer SUMMARY INFORMATION • This presentation has been prepared by Incitec Pivot Limited (“IPL”). The information contained in this presentation is in summary form and is based on the businesses currently conducted by IPL, which may be subject to change, and is provided for information purposes
Slide 3: Disclaimer: Forward Looking Statements
Disclaimer FORWARD LOOKING STATEMENTS • This presentation contains certain “forward looking statements”. Forward looking words such as “expect”, “would”, “could”, “may”, “predict”, “intend”, “will”, “believe”, “estimate”, “target” and “forecast” and other similar expressions are intended to identify
Slide 4: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY I acknowledge the First Peoples of the land, sea and waters across the various locations that we are living and working from today. I pay my respects to Elders past and present. 4
Slide 5: Overview
Overview Mauro Neves Chief Executive Officer & Managing Director 5
Slide 6: What you will hear today
Overview What you will hear today Safety & CEO’s initial Significantly Repositioning Group earnings areas of focus progressing Dyno Nobel & financial snapshot strategy & progressing performance accelerating Fertilisers & business technology separation outlook development 6
Slide 7: Safety: Our #1 priority
Safety Safety: Our #1 priority Process Safety Incidents1 2024 7 • Tragically, we lost a valued colleague as 1H 2H result of a fatal road incident on a public road 2023 9 5 • Improved “significant event” hazard reporting 2022 18 7 • No significant environmental incidents 2021 22 16 • TRIFR2 unaccepta
Slide 8: Business Results
Business Results Strategy execution NPAT (incl. IMIs)4 NPAT (excl. IMIs) delivering high quality ($148M) $164M earnings $354M in HY23 $362M in HY23 • Strong underlying1 earnings growth in customer facing EBITDA5 Net debt / EBITDA5 businesses2 • DNA +22%, DNAP +59%, Fertilisers Distribution +125% $42
Slide 9: Strong underlying performance
Divisional Overview Strong underlying performance Dyno Nobel Americas1 Dyno Nobel Asia Pacific Incitec Pivot Fertilisers EBIT: A$95M (pcp. A$87M) EBIT: A$108M (pcp. A$79M) EBIT: A$10M (pcp. A$108m) US$62M (pcp. US$58M) • Solid growth in Metals & Chile • Record 1H EBIT • Distribution: o Record 1H EBI
Slide 10: CEO's initial areas of focus
CEO Focus CEO’s initial areas of focus Dyno Nobel: Build on rich history & transform Global Explosives business Fertilisers: Manage business for separation. Address manufacturing issues Portfolio Advancing Commercial & Safety & People, management customer centric operational decarbonisation culture
Slide 11: Portfolio management
Portfolio management 11
Slide 12: Update on Structural Separation of Fertilisers Business
Portfolio adjustment Update on Structural Separation of Fertilisers Business1 • Advanced negotiations • Counterparty - PT Pupuk Kalimantan Timur (PKT), one of the largest urea, ammonia and NPK fertiliser producers in Asia • Transaction remains incomplete2 • Completion would be subject to customary c
Slide 13: Delivering customer-centric technology
Delivering customer- centric technology 13
Slide 14: Drill to Mill – Dyno Nobel's Connected Bench
Technology Drill to Mill – Dyno Nobel’s Connected Bench Nobel Fire Key differentiation points: • Highest fidelity outcome modelling • Interoperability with customers’ existing systems • Freedom to select monitoring hardware & sensors Other key initiatives Selected examples: • Electric Delta ETM Mobi
Slide 15: Industry leading technology focused on customer solutions
Technology Industry leading technology focused on customer solutions Innovation continues to drive customer value & earnings growth DNAP • Key customers retained & expanded with well-developed pipeline of new customers Premium PremiumEmulsions Emulsions FY20 FY20 to to HY24 HY24 CAGR CAGR • Partners
Slide 16: Delivering commercial & operational discipline
Delivering commercial & operational discipline 16
Slide 17: Dyno Nobel Global Business Transformation
Commercial discipline Dyno Nobel Global Business Transformation Building on our foundations to achieve greatness Dyno Nobel ambition Timing Progress Substantial step- Implementation targeted Phase 1 (Planning): completion June ‘24 change in ROIC 2H24 to FY26 Announcement: Investor Day1 Phase 2 (Impl
Slide 18: Group Manufacturing Reliability
Operational Discipline Group Manufacturing Reliability Global Performance Update IPF Case Study / Update • Target: consistent & sustainable production Taskforce: Phosphate Hill • Turnaround strategy: successfully executed • Focused on Plant, People & Process • Technical support: deployed in regions
Slide 19: Decarbonisation
Decarbonisation 19
Slide 20: Our decarbonisation pathway
Climate Change Our decarbonisation pathway 1H24 Progress $20m Moranbah tertiary abatement completed: • ~200,000 tCO2e p.a. • 7% reduction in operational GHG LOMO tertiary abatement: • Approved for installation in 2025 • Approximately 500,000 tCO2e p.a. • 19% reduction in operational GHG Scope 3 Gree
Slide 21: People, culture & capability
People, culture & capability 21
Slide 22: High Performance Organisation
People, culture & capability HIGH PERFORMANCE ORGANISATION A high-performance Accountability, Honesty, Number One Priority organisation aligned Integrity to our values to support our ambition Investing in Proactive Continuous Empowered Ownership People, Culture & Capability Improvement 22
Slide 23: Group financial results
Group financial results Paul Victor Chief Financial Officer 23
Slide 24: Group Statutory Results
Financial People, Performance culture & capability Group Statutory Results IPL Group ($M) HY24 HY23 Change • Headline results reflect major portfolio restructuring Revenue 2,461 3,055 (19%) • IMIs include: EBITDA excl. IMI 425 724 (41%) – the impairment of the Fertilisers business EBIT excl. IMI 249
Slide 25: Normalised Group earnings
Financial People, Performance culture & capability Normalised Group earnings IPL Group ($M) HY24 HY23 Change Dyno Nobel Americas 154 126 22% Strong underlying earnings in customer- facing businesses Dyno Nobel Asia Pacific 108 68 59% Fertilisers 10 43 (77%) • Group: EBIT up 18% after adjusting for W
Slide 26: Cash Fixed Costs
Financial People, Performance culture & capability Cash Fixed Costs Increase in Cash Fixed Costs driven by business growth & inflation Cash Fixed Costs (A$M)1 Offset by favourable movement on revenue • Above inflationary increases partially mitigated through cost pass throughs & saving initiatives •
Slide 27: Working capital
Financial People, Performance culture & capability Working capital Underlying working capital unwind in line with lower commodity prices. Further reduction in underlying levels a focus in FY24. Year-on-Year movement ($M) Trade Working Capital as a % of sales1 23.9 23.0 21.1 20.6 20.8 20.7 18.7 19.2
Slide 28: Investing for growth & quality earnings
Financial Performance Investing for growth & quality earnings Commitment to ongoing effective sustenance investment & reduced turnaround spend in FY24 86 91 31 1st & 2nd Order Growth • Sustainable ROIC mindset when deploying capital 57 5 23 Sustainability1 36 98 60 Strategic5 • Spend informed by ass
Slide 29: Significant Capital Return Program
Capital Returns Significant Capital Return Program $500M $84M $900M UP TO SHAREHOLDER RETURN UNFRANKED INTERIM DIVIDEND ON-MARKET BUYBACK1 COMPLETED ANNOUNCED ON HOLD2 $302M $198M CAPITAL UNFRANKED REDUCTION DIVIDEND ~15.6cps ~10.2cps 4.3cps ~46.3cps Completed and planned capital returns equivalent
Slide 30: Positive FY24 outlook remains unchanged
Outlook People, culture & capability Positive FY24 outlook remains unchanged Dyno Nobel FertilisersHeading Positive earnings outlook unchanged, supported by: Earnings outlook remains positive, supported by: • Market growth • Accretive market share gains in the Distribution business • Margin enhancem
Slide 31: Future pathway
Future pathway 31
Slide 32: Significant growth potential for Dyno Nobel
Outlook Significant growth potential for Dyno Nobel Customer & service driven Margin enhancements Transformational • Strong opportunity to drive growth • DNAP re-contracting – near complete • Transform to a global operating model across Q&C & future facing minerals • WALA margin benefit retained in
Slide 33: Questions & Answers
Questions & Answers 33
Slide 34: Appendix
Appendix 34
Slide 35: Group Result
Appendix People, culture & capability Group Result Re-basing Customer Facing Manufacturing Other EBIT HY23 Businesses A$m +18% 35
Slide 36: Dyno Nobel Americas
Appendix People, culture & capability Dyno Nobel Americas EBIT US$m Re-basing Explosives Ag & IC HY23 +23% 1 (1) Mainly relates to the sale of excess land at Cheyenne 36
Slide 37: Dyno Nobel Asia Pacific
Appendix People, culture & capability Dyno Nobel Asia Pacific +59% EBIT A$m Re-basing HY23 37
Slide 38: Fertilisers Asia Pacific
Appendix People, culture & capability Fertilisers Asia Pacific Distribution EBIT A$m EBIT +125% Re-basing Manufacturing Distribution HY23 $0 38
Slide 39: Individually Material Items
Financial People, Performance culture & capability Individually Material Items Fertilisers Business: Separation costs: Non-cash write down of the Fertilisers business: Costs incurred to optimally position IPF for • Pre-tax = $498m standalone operations: • After-tax = $408m • Pre-tax costs = $4m • Af
Slide 40: Turnaround schedule
Appendix People, culture & capability Turnaround schedule Plant FY24 FY25 FY26 FY27 FY28 FY29 FY30 Phosphate Hill, Qld Cheyenne, WY Moranbah, Qld St Helens, OR 40