Slide 1: 2008 Full Year Results Pack
For personal use only 2008 Full Year Results Pack Presentation for Overseas Investor meetings
Slide 2: Orica – overview
Orica – overview For personal use only • Mining Services - World’s leading supplier of commercial explosives and blasting systems • Minova - Global leader in tunnelling and underground mine support products • Chemicals - Leading supplier of chemicals to the water treatment market • Consumer Products
Slide 3: Group performance
Group performance For personal use only Year ended 30 September (A$M) 2008 2007 % Sales 6,544.1 5,527.2 18.4 Gross margin 2,874.6 2,474.1 16.2 EBITDA 1 1,188.8 995.9 19.4 EBIT 1 970.1 812.7 19.4 Net profit after tax pre significant items 572.3 497.8 15.0 Net profit after tax after significant items
Slide 4: Gross sales by geography
Gross sales by geography For personal use only September 2007 September 2008 Europe Other Europe Other 13.3% 0.8% 13.1% 1.0% Latin America Latin America 11.8% Australia Australia 11.9% 42.3% 44.5% North America 14.4% North America 18.3% Asia New Zealand New Zealand Asia 7.9% 7.3% 5.6% 7.8% Orica Ful
Slide 5: EBIT contribution by geography
EBIT contribution by geography For personal use only September 2007 September 2008 Other Other Europe Europe 0.3% 0.8% 16.0% 15.3% Latin America Latin America Australia 9.5% Australia 10.8% 44.8% 45.5% North America North America 12.0% 17.8% Asia New Zealand New Zealand Asia 9.3% 7.3% 4.5% 6.2% Oric
Slide 6: EBIT contribution by business platform
EBIT contribution by business platform1 For personal use only September 2007 2,3 September 2008 Chemicals Chemicals 14.2% 13.9% Minova 9.2% Minova 14.2% Consumer Mining Products Mining Services 12.4% Services 60.3% Consumer 64.2% Products 11.6% 1 Excludes corporate costs 2 Minova earnings adjusted t
Slide 7: Divisional EBIT
Divisional EBIT For personal use only Year ended 30 September (A$M) 2008 2007 % Mining Services 635.6 575.1 10.5 Minova 1 150.1 61.6 143.7 Chemicals Group 146.1 127.4 14.7 Consumer Products 2 122.6 101.6 20.7 Total Businesses 1,054.4 865.7 21.8 Corporate Centre 3 (46.1) (39.3) (17.3) Other Support C
Slide 8: EBIT growth
EBIT growth For personal use only A$M 1,100 197 1,050 (38) 1,000 (24) 970 (22) (8) (4) 950 900 56 850 813 800 750 FY07 Excel Underlying Foreign One-off Ammonia Cancellation A&R/ FY08 EBIT Contribution Business Exchange Employee Lag of 5% Chemnet EBIT Growth Bonus/ Preference Divestment Insurance Sha
Slide 9: Significant items
Significant items For personal use only Year ended 30 September (A$M) 2008 2007 Chemicals restructuring & rationalisation costs (14.7) - Dyno Nobel integration costs (9.0) (33.4) Minova/Excel integration costs (9.0) - Marplex restructuring & rationalisation costs - (16.4) Adhesives & Resins profit o
Slide 10: Return on shareholders' funds
Return on shareholders’ funds1 For personal use only 30% 24.0% 25.6% 25% 18.0% 19.3% 19.2% 20% 19.6% 16.9% 15% 10% 5% 0% 2002 2003 2004 2005 2006 2007 2008 1 Calculated as follows: NPAT for period 1 October to 30 September / Average Shareholder Funds Orica Full Year Results 2008 10
Slide 11: Gross margin growth
Gross margin growth For personal use only A$M 3,100 +16.2% 2,900 2,700 +16.4% 2,500 2,300 +7.6% 2,100 +4.3% +13.9% 1,900 +8.2% +0.1% 1,700 1,500 2002 2003 2004 2005 2006 2007 2008 Compound average growth rate since 2002 is 10% Orica Full Year Results 2008 11
Slide 12: Productivity
Productivity1 For personal use only 100% 95% 90% 85% 78.9% 80% 75.1% 74.0% 73.2% 75% 72.8% 69.8% 69.0% 70% 65% 60% 55% 50% 2002 2003 2004 2005 2006 2007 2008 Continuous improvement in productivity 1 Productivity is measured as fixed costs (incl. depreciation and amortisation) as a percentage of gros
Slide 13: Net profit after tax
Net profit after tax For personal use only A$M 600 +15% 550 +30.9% 500 450 400 +11.8% +20.5% +4.4% 350 300 +13.0% +283.8% 250 200 150 100 50 2002 2003 2004 2005 2006 2007 2008 Compound average growth rate since 2002 is 16% Orica Full Year Results 2008 13
Slide 14: Orica Mining Services
Orica Mining Services For personal use only Year ended 30 September (A$M) 2008 2007 % Sales 3,552.1 3,111.2 14.2 EBITDA 767.8 697.9 10.0 EBITDA margin (%) 21.6% 22.4% (3.6) EBIT 635.6 575.1 10.5 EBIT margin (%) 17.9% 18.5% (3.2) Return on net assets (%) 25.5% 25.6% (0.5) Average operating net assets
Slide 15: Orica Mining Services EBIT bridge
Orica Mining Services Sales $3,552M; EBIT $636M; Average Net Assets $2,492M, RONA 25.5% For personal use only A$M 700 20% 1,000 600 18% 23 16% 74 EBIT MARGIN 500 14% 900 EBIT A$M 283 400 12% 10% 800 300 8% 200 6% (213) 4% 700 (40) 100 2% (35) 636 (22) 0 0% 600 (9) 575 2005 2006 2007 2008 500 1st Hal
Slide 16: Orica Mining Services by geography
Orica Mining Services by geography For personal use only Australia/Asia North America 400 25% 120 12% 100 10% EBIT MARGIN EBIT MARGIN 300 20% EBIT A$M EBIT A$M 80 8% 15% 200 60 6% 10% 40 4% 100 5% 20 2% 0 0% 0 0% 2005 2006 2007 2008 2005 2006 2007 2008 1st Half EBIT 2nd Half EBIT EBIT Margin 1st Hal
Slide 17: Minova
Minova For personal use only Year ended 30 September (A$M) 2008 2007 % Sales 794.2 332.1 139.1 EBITDA 179.9 75.1 139.4 EBITDA margin (%) 22.6% 22.6% - EBIT 150.1 61.6 143.7 EBIT margin (%) 18.9% 18.5% 2.2 Underlying EBIT 1 151.7 68.2 122.4 Return on net assets (%) 2 13.6% 9.1% 49.7 Average operating
Slide 18: Minova EBIT bridge
Minova Sales $794M; EBIT $150M; Average Net Assets $1,390M, RONA 13.6% For personal use only A$M 180 5 160 27 3 150 (12) (1) 140 66 120 100 80 62 60 40 20 FY07 Excel Minova Tunnelling AIFRS Acquisition FX FY08 EBIT EBITA Growth Projects Amortisation EBIT Completed acquisition of Excel – performance
Slide 19: Acquired Minova business performance
Acquired Minova business performance For personal use only EBIT (A$M) 2008 Underlying trading performance of Minova Businesses 162.4 Stock acquisition adjustment (1.6) Synergies delivered 10.5 Amortisation of intangibles (21.2) 2008 EBIT 150.1 Synergy Benefit 1 (A$M) 2008 2009 2010 2011 Current View
Slide 20: Chemicals
Chemicals For personal use only Year ended 30 September (A$M) 2008 2007 % Sales 1,406.1 1,329.5 5.8 EBITDA 178.3 154.2 15.6 EBITDA margin (%) 12.7% 11.6% 9.5 EBIT 146.1 127.4 14.7 EBIT margin (%) 10.4% 9.6% 8.3 Underlying EBIT 1 146.1 123.5 18.3 Return on net assets (%) 19.3% 17.4% 10.9 Average oper
Slide 21: Chemicals EBIT bridge
Chemicals Sales $1,406M; EBIT $146M; Average Net Assets $758M, RONA 19.3% For personal use only A$M 160 12% 180 19 140 10% 160 (9) 120 14 EBIT MARGIN (8) 146 8% EBIT A$M (6) 100 140 13 (4) 127 80 6% 120 60 4% 40 100 2% 20 80 0 0% 60 2005 2006 2007 2008 40 FY07 Watercare Chemnet Mining Cash FX Deprec
Slide 22: Orica Consumer Products
Orica Consumer Products For personal use only Year ended 30 September (A$M) 2008 2007 % Sales 875.4 826.3 5.9 EBITDA 136.3 115.8 17.7 EBITDA margin (%) 15.6% 14.0% 11.2 EBIT 122.6 101.6 20.7 EBIT margin (%) 14.0% 12.3% 13.9 Underlying EBIT 1 122.6 111.1 10.4 Return on net assets (%) 47.0% 43.7% 7.6
Slide 23: Orica Consumer Products EBIT bridge
Orica Consumer Products Sales $875M; EBIT $123M; Average Net Assets $261M, RONA 47% For personal use only A$M 140 14% 160 120 12% 4 3 140 10 EBIT MARGIN 100 10% 24 EBIT A$M (11) 123 (6) 80 8% 120 (3) 60 6% 102 100 40 4% 80 20 2% 0 0% 60 2005 2006 2007 2008 40 FY07 Volume/ Yates Yates Env. Cash Marke
Slide 24: Corporate centre and other support services
Corporate centre and other support services For personal use only Year ended 30 September (A$M) 2008 2007 $ Corporate centre costs 46.1 39.3 6.8 Other support costs 38.2 13.7 24.5 Total Costs 84.3 53.0 31.3 Corporate Centre Other support costs Cancellation costs on 5% Discretionary one-off bonus for
Slide 25: Capital management - key measures
Capital management - key measures For personal use only Year ended 30 September 2008 2007 Net Debt (A$M) 1,020.5 1,305.7 Net Interest Expense (A$M) 157.7 122.6 Interest Cover (times) 6.1 6.6 Operating Cash ($) 736.9 524.3 Cash Conversion 1 (%) 80.0 81.8 Rolling TWC to Sales (%) 14.5 14.6 Gearing (%)
Slide 26: Bank Debt refinancing – update
Bank Debt refinancing – update For personal use only • Renewed A$1.0B of 1 year facility in September 2008 • Have A$1.1B of 2 year and 4 year facilities • None of above bank debt facilities drawn at year end • Benefit of Orica’s strong banking relationships • Multi currency, flexible and cancellable
Slide 27: Net debt and gearing
Net debt and gearing For personal use only Target gearing range shaded 2,200 50 Gearing and Adjusted Gearing % 1,800 40 Net Debt (A$M) 1,400 30 1,000 20 600 10 200 0 HY01 FY01 HY02 FY02 HY03 FY03 HY04 FY04 HY05 FY05 HY06 FY06 HY07 FY07 HY08 FY08 Gearing Adjusted Gearing Gearing 19.1% Adjusted gearin
Slide 28: Cashflow
Cashflow For personal use only Year ended 30 September (A$M) 2008 2007 $ EBITDA 1,188.8 995.9 192.9 Net interest paid (148.5) (108.3) (40.2) Net tax paid (190.0) (141.4) (48.6) Trade working capital movement (29.9) (49.2) 19.3 Non trade working capital movement (83.5) (172.7) 89.2 Net operating cash
Slide 29: Cash Conversion
Cash Conversion1 For personal use only Year ended 30 September (A$M) 2008 2007 EBITDA 1,188.8 995.9 TWC movement (29.9) (49.2) Sustenance (207.4) (132.1) Cash Conversion 951.5 814.6 Cash Conversion % 80.0% 81.8% 1 Cash conversion is calculated as EBITDA add/less movement in trade working capital les
Slide 30: Rolling TWC to Sales %
Rolling TWC to Sales % For personal use only 19.00% 18.00% 17.00% Rolling TWC / Sales % 16.00% 15.00% 14.00% 13.00% 12.00% 11.00% 10.00% HY02 FY02 HY03 FY03 HY04 FY04 HY05 FY05 HY06 FY06 HY07 FY07 HY08 FY08 Steady progress continues on management of TWC Improved second half performance Orica Full Ye
Slide 31: Hedging
Hedging For personal use only • In 2008 overseas earnings represented 55% of Group earnings • Orica has exposures to a basket of currencies from around the globe given its geographical spread • The basket of currencies creates a portfolio effect on our exposures • Transactional and translational (EB
Slide 32: Major Currency Hedges
Major Currency Hedges For personal use only Major currency hedges include: Currency Exposures % Hedged • AUD/USD 68% • AUD/CAD 90% • AUD/SEK 89% • AUD/CLP 89% • AUD/NZD 50% Net impact on EBIT of a 1% move in exchange rates on a diversified basket of currencies is approximately A$2.0M – A$2.5M Orica
Slide 33: Outlook
Outlook For personal use only Orica’s businesses have performed strongly and we are confident they will continue to do so. Accordingly, Group net profit (before significant items) in 2009 is expected to be higher than that reported in 2008. This is subject to global economic conditions and particula
Slide 34: Growth priorities – Mining Services
Growth priorities For personal use only Business Strategic growth opportunity Mining Services - Strength of resource cycle continues - Lowest cost AN sourcing - Capitalise on tightening AN market conditions - Electronic blasting systems (EBS) - Enhanced product offerings (BBS) - Small bolt-on M&A Or
Slide 35: OMS – AN expansion
OMS – AN expansion For personal use only • Progressing Bontang – On track at this stage – Land reclamation completed – Progressively ordering key plant items – EPC contract tenders are being assessed – decision expected in December 2008 • Latin America – Market demand supports a new plant – Assessin
Slide 36: Growth priorities – Minova
Growth priorities For personal use only Business Strategic growth opportunity Minova - Integration of Excel and other bolt on acquisitions – deliver the synergies - Atlas Copco global distribution agreement - Geographic and organic growth including small M&A opportunities Orica Full Year Results 200
Slide 37: Growth priorities – Chemicals
Growth priorities For personal use only Business Strategic growth opportunity Chemicals - Capitalise on expanded sodium cyanide capacity - Progressive move into water treatment value added offerings - Advanced Water Technologies (MIEX) - Ongoing growth in Latin America - Improved customer service Or
Slide 38: Growth priorities – Consumer Products
Growth priorities For personal use only Business Strategic growth opportunity Consumer Products - Continued investment in marketing and R&D - Ongoing establishment of a platform in Asia Orica Full Year Results 2008 38
Slide 39: Productivity priorities
Productivity priorities For personal use only • Metric is trending to expectation • Productivity includes revenue and cost focus • Each business is responsible and accountable for improving productivity • Ongoing delivery of Minova and Excel synergies • Chemicals merger • Complete Yates restructure
Slide 40: SH&E - Environmental
SH&E - Environmental For personal use only • Botany Water – Plume is contained – Recycled water being utilised – looking to increase volumes • Hexachlorobenzene – Work continues on plans to export Hexachlorobenzene waste – Encapsulated waste remediation to start in 2010 • No other significant matter
Slide 41: SH&E - Sustainability
SH&E - Sustainability For personal use only • Challenge 2010 targets established • Improved performance on all measures in 2008 • At or below 2010 targets on water consumption, energy usage and waste generation • Greenhouse gas emissions – globally approx 4.0 million tonnes of CO2E, Australia approx
Slide 42: Summary
Summary For personal use only • Solid underlying business performance • Market leader in most of our markets • Improved cash flow performance • Strong balance sheet • Well placed for ongoing profitable growth Orica Full Year Results 2008 42
Slide 43: Supplementary Information
For personal use only Supplementary Information
Slide 44: Net interest expense
Net interest expense For personal use only Full year ended 30 September (A$M) 2008 2007 $ Net interest expense 158 123 35 Comprising: Interest on net debt 172 113 59 Add: Unwinding of discount on provisions 8 10 2 Add: Major External Finance Leases 2 0 2 Less: Income on the Excel Net Investment Hedg
Slide 45: Impact of SPS – earnings per share
Impact of SPS – earnings per share For personal use only Reported per Accounts A$M Reported net profit from continuing operations 567.3 Less: Net profit attributable to minorities (27.7) After tax distributions to SPS holders 1 (28.1) Adjusted net profit 511.5 Weighted average ordinary shares on iss
Slide 46: Impact of SPS – gearing
Impact of SPS – gearing (A$M) For personal use only Reported per Hybrid Adjusted Accounts Current borrowings 266.4 266.4 Non-current borrowings 1,075.4 1,075.4 SPS adjustment 2 - 250.0 Less: Cash (321.3) (321.3) Net Debt 1,020.5 1,270.5 Parent entity equity 1 4,221.5 4221.5 Minority interests 96.9 9
Slide 47: Impact of SPS – interest cover
Impact of SPS – interest cover (A$M) For personal use only Reported per Hybrid Accounts Adjusted Financial expense 1 227.8 227.8 Financial income (68.1) (68.1) SPS distribution adjustment 2 - 20.8 Net borrowing costs 159.7 180.5 EBIT 970.1 970.1 Less net profit attributable to minorities - (28.2) Ad
Slide 48: Debt Profile
Debt Profile For personal use only USPP, $1,053M Debt Maturity Profile A$M Drawn Undrawn Total < 1 year 235 150 385 1 – 2 years - 1,038 1,038 2 – 5 years(1) 778 1,137 1,915 Other, $76M > 5 years 829 - 829 Medium Term Total 1,842 2,325 4,167 SPS, $500M Notes, $75M Commercial Paper, $138M Average matu
Slide 49: Debt Maturity and Currency Profile
Debt Maturity and Currency Profile For personal use only Maturity Profile By Currency - By Utilisation 600 500 400 (A$m) 300 200 100 0 (1) 2009 2010 2011 2012 2013 2015 2016 2017 2019 AUD CAD EUR NZD USD GBP (1) Includes $500M for SPS – first remarketing date is November 2011. Orica Full Year Result
Slide 50: AN Demand
AN Demand For personal use only Australian Ammonium Nitrate Demand CAGR% 1978 - 2008 8.5% Thousand tpa 1978 1983 1988 1993 1998 2003 2008 Orica Full Year Results 2008 50
Slide 51: Disclaimer
Disclaimer For personal use only 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 as the