Orora Limited · ASX:ORA
Orora — Investor Presentation (August 2019)
27 slides from Orora's investor presentation, Aug 15, 2019
Slide 1: Full year results
Full year results Ending 30 June 2019 15 August 2019 Presentation by Nigel Garrard – Managing Director and CEO Brian Lowe – GGM Fibre & Incoming 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: FY19 financial highlights
FY19 financial highlights UNDERLYING EARNINGS SALES REVENUE BEFORE INTEREST AND TAX (EBIT) • Earnings growth and increased $4,761.5m $335.2m dividends • Continuing to invest 12.1% INCREASE 3.7% INCREASE • Strong cash flows and balance sheet to continue to pursue UNDERLYING NET PROFIT UNDERLYING UNDE
Slide 4: Significant Items
Significant Items On 2 August 2019, Orora announced(1) it would recognise a Significant Item (SI) after tax expense of $55.8 million in the statutory financial results for the year ended 30 June 2019. The SI expense after tax consists of: $35.0 million provision for additional decommissioning $20.8
Slide 5: Orora safety performance
Orora safety performance Safety is a priority and ongoing journey for Orora June 2018 June 2019 • RCFR and LTIFR both increased – an unacceptable outcome • In response: RCFR 6.8 8.1 – Global independent review commenced in November 2018 – Opportunities exist to better prioritise safety improvement L
Slide 6: FY19 Australasian financial highlights
FY19 Australasian financial highlights • Underlying sales increased approximately 1.5% after taking into SALES REVENUE EBIT account the pass through of higher aluminium prices. $2,150.0m $246.6m • Ongoing operational efficiency and cost improvement programs in Fibre Packaging, supported by the recor
Slide 7: Australasia EBIT growth
Australasia EBIT growth 6.2% EBIT growth 13.0 27.3 246.6 232.3 (A$’M) FY18 ORGANIC GROWTH COST HEADWINDS FY19 Orora Ltd “ Organic earnings benefits delivered through growth, operational efficiencies and capital investment which more than offset cost headwinds and unfavourable seasonal conditions ” 7
Slide 8: FY19 North American financial highlights
FY19 North American financial highlights North American Group • Lower local currency earnings in tough market conditions USD SALES REVENUE USD EBIT • Continued to invest in growth (Bronco/Pollock acquisitions) and organic $1,867.8m $83.4m capital into businesses. • Integration of the acquisitions is
Slide 9: North American EBIT
North American EBIT (3.6%) EBIT contraction ((11.1%) excluding FX impact) 12.2 7.8 121.0 116.6 (A$’M) FY18 NET CONTRACTION FX FY19 “ ” Local currency earnings lower; impacted by generally tough market conditions, ERP transition costs and the reset in OV from the loss of business Orora Ltd 9
Slide 10: Orora Corporate
Orora Corporate Earnings Summary (EBIT) Corporate costs were $28.0M – slightly lower than prior year due to: A$ Million FY18 FY19 ∆% • Underlying Corporate costs continue to be well managed Underlying Corporate (29.9) (28.0) (6.8)% • Costs associated with the acquisitions of Pollock and Bronco were
Slide 11: Operating cash flow in line with expectation
Operating cash flow in line with expectation A$ Million FY18(1) FY19 Underlying operating cash flow(4) decreased 4% to $268.9M • Cash conversion of 56% – in line with expectation. Solid outcome given EBITDA 445.3 468.1 heightened organic capital programs. Non Cash Items 38.9 15.4 • Average Working C
Slide 12: Balance sheet and debt
Balance sheet and debt Balance Sheet Strong balance sheet to enable further growth investment A$ Million June 18 June 19 • Increased leverage with recent acquisitions, heightened capital investment and working capital build Funds Employed (period end) 2,311 2,625 • Leverage of 1.9x – up from 1.5x in
Slide 13: The Orora Way and Sustainability
The Orora Way and Sustainability Orora Limited ABN 55 004 275 165
Slide 14: Our Orora – culture of driving outperformance
Our Orora – culture of driving outperformance Orora Ltd 14
Slide 15: Orora's sustainability program
Orora’s sustainability program • Orora’s sustainability program is managed through three focus areas: People, Plant and Prosperity. • The program aims to minimise Orora’s impact on the environment and improve the sustainability of its products and services. • Orora’s approach is guided by being a si
Slide 16: Taking action – recycling
Taking action – recycling Orora is a leading large-scale recycler Paper Glass Cans North America • Orora collects more than 650,000 • Orora recycles approximately 80% • Orora sources coils of aluminium • Corrugated board manufactured by tonnes of old corrugated of all glass collected through South t
Slide 17: Taking action – renewable energy and efficiency
Taking action – renewable energy and efficiency • Orora has signed two long-term power purchase agreements (PPA’s) with renewable energy providers to supply wind generated electricity to Orora’s operations in South Australia, Victoria and New South Wales, where Orora operates it largest and most ene
Slide 18: Taking action – Eco targets
Taking action – Eco targets At the time of demerger, Orora adopted Eco targets for the year ending 30 June 2019. These defined Orora’s goals to reduce the intensity of greenhouse gas emissions, waste to landfill and water use across the business. Orora over achieved on these five year goals as outli
Slide 19: Sustainable and next generation packaging solutions
Sustainable and next generation packaging solutions Consumers across the world are telling our customers they want to reduce their impact on the world and that they want to buy products in recyclable packaging. In response, Orora is partnering with customers to investigate and test a range of sustai
Slide 20: Culture, Strategy and Perspectives for FY20
Culture, Strategy and Perspectives for FY20 Orora Limited ABN 55 004 275 165
Slide 21: 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 22: Orora has committed ~$675M since ASX listing
Orora has committed ~$675M 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 23: Committed to creating shareholder value
Committed to creating shareholder value What we said we would do What we have done in FY19 Shareholder value creation 1. Organic sales growth, profitable market share gain & 1. ANZ - delivered 1.5% underlying sales growth, NA – ~1.0% organic improved efficiency/cost control sales growth in both OPS
Slide 24: Perspectives for 2020
Perspectives for 2020 Leadership sites and utilise the Orora Global Innovation Initiative • On 9 July 2019, Orora announced the following: • Approximately 50% of the SI restructure charge is in Australasia and is expected to • Nigel Garrard would retire from the position of Managing Director and Chi
Slide 25: Outlook
Outlook To help offset challenging market conditions and cost headwinds, in FY20 Orora will continue to invest in efficiency, growth and innovation, as well as integrate recent acquisitions. Orora Ltd 25
Slide 26: Appendix - Fibre refresh program site summary
Appendix 1 - Fibre refresh program site summary Manufacturing Conversion Corrugator Automation Benefits Site upgrade upgrade upgrade • Improving product quality, efficiency and capacity Revesby – NSW Scoresby – VIC • Strengthening cost curve competitiveness Brooklyn – VIC • Enhancing customer value
Slide 27: Appendix – AASB 16 Leases
Appendix 2 – AASB 16 Leases Orora has completed an indicative assessment of AASB 16 and the estimated impact upon the Group’s statement of financial position at 1 July 2019 and income statement for the year ending 30 June 2020. Estimated impact on statement of financial • Leases largely relate to pr