Slide 1: 2021 Full Year Financial Results Presentation
2021 FULL YEAR FINANCIAL RESULTS PRESENTATION 15 November 2021 Incitec Pivot Limited ABN 42 004 080 264 ASX Code: IPL OTC: INCZY 1
Slide 2: Acknowledgement of Country
ACKNOWLEDGEMENT OF COUNTRY “I begin today by acknowledging the Traditional Custodians of the land on which we meet today and pay my respects to their Elders past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples here today.” 22
Slide 3: Disclaimer
Disclaimer This presentation has been prepared by Incitec Pivot Limited (“IPL”). The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis f
Slide 4: Overview
OVERVIEW Jeanne Johns Managing Director & Chief Executive Officer 44
Slide 5: Zero Harm
Zero Harm COVID-19 impact - Refreshed programs to drive improvement Output Metrics Initiatives Potential High Severity Incidents(2) Significant Environmental Target: Sustainable Improvement • Safety program refresh – focus on hazard awareness, incident reporting Incidents(1) 42 and investigation to
Slide 6: FY21 Overview
Earnings pre-IMIs up 51% to $566m - Strong 2H ⎔ Improved Explosives 2H performance - technology momentum ⎔ Fertilisers capturing commodity upswing Improved manufacturing performance in 2H FY21 ⎔ Strong second half manufacturing performance ⎔ Waggaman clean cold restart post Hurricane Ida Overview Co
Slide 7: FY21 Financial Overview
FY21 Earnings Before Interest & Tax (EBIT) ex IMIs1 Net Profit After Tax (NPAT) ex IMIs1 Financial $566M $359M Overview 51% 91% on FY20 on FY20 Strong second Full Year Dividend Operating Net Debt / half delivered (CPS2) Cashflows EBITDA3 9.3 $650M 1.1x No dividend declared in 2020 19% Improved on FY
Slide 8: Two strong businesses well positioned
Safety: Industry leadership in safety Sustainability: Accelerating our emissions targets & creating new commercial Two strong opportunities in line with decarbonisation businesses DYNO: Growth through leading technology well positioned solutions for our customers in existing and new for the future f
Slide 9: Sustainability
SUSTAINABILITY Jeanne Johns Managing Director & Chief Executive Officer 99
Slide 10: Long standing commitment to sustainability
Long standing commitment to sustainability Release of IPL’s first Partnership with FFI(1) to investigate Connection of the Gibson Island stand-alone TCFD aligned green ammonia production at manufacturing facility to a recycled Climate Change Report Gibson Island water source Partnership with Keppel
Slide 11: Step Change on Climate Change
Step Change on Climate Change ENSURING STRONG GOVERNANCE ⎔ Strong governance structures established: 1 LINK TO STRATEGY: • Board & Executive level commitment Talented and Engaged People • Climate change strategy linked to Executive Remuneration REDUCING OPERATIONAL EMISSIONS OUR 2 LINK TO STRATEGY:
Slide 12: Commitment to Decarbonisation
Commitment to Decarbonisation New short and medium term targets to achieve ambition Long Term Ambition Net Zero by 2050, or sooner if practicable 2025 SHORT TERM TARGET: Short & Medium Term Targets 5% absolute reduction(1) Accelerated 2025 target & introduced new 2030 target Actions underway to unde
Slide 13: Potential Pathway to Net Zero by 2050
Potential Pathway to Net Zero by 2050 Key Enablers of decarbonisation technologies 1. Secondary/tertiary abatement of N2O(2) and ⎔ Policy incentives 2. Carbon capture, utilisation & storage (CCU/CCS) ⎔ Securing CCU/CCS offtake contracts, primarily in the US 3. Renewable hydrogen for ammonia producti
Slide 14: Strategic Agenda
STRATEGIC AGENDA Jeanne Johns Managing Director & Chief Executive Officer 14 14
Slide 15: Strong Progress on Strategic Agenda
Strong Progress on Strategic Agenda Explosives Fertiliser • Market leading technology earnings growth • Captured ~$240m in EBIT value from the recovery • CAGR(1) >25% in gassed emulsions revenue in commodity prices (net of FX) • CAGR(1) >35% in electronic detonator systems • Leading Soil Health Comp
Slide 16: Category Leadership
Category Leadership INNOVATION AND HIGHEST QUALITY 55% EXPOSURE TO EBIT(1) EXPLOSIVES 45% COMPETITIVE ADVANTAGE AUSTRALIA’S LARGEST EBIT(1) INTEGRATED SUPPLIER Best premium technology in the market today, ideally suited for growth markets/sectors OF FERTILISERS Strategically located assets close to
Slide 17: Group Financial Results
GROUP FINANCIAL RESULTS Nick Stratford Chief Financial Officer 17 17
Slide 18: Good Progress Against Finance Objectives
Good Progress Against Finance Objectives Balance Sheet simplified and de-levered ⎔ SFA renewed for 3 years - Sustainability wrap ⎔ Balance Sheet hedging removed ahead of plan ⎔ Financial Indebtedness down $384m, Net Debt/EBITDA(1) at 1.1x Response Plan delivered ahead of plan ⎔ $40m of savings in FY
Slide 19: Profit & Loss
Profit & Loss Summary of Corporate Costs, Borrowing Cost and Taxation FY21 FY20 Change Net Borrowing Costs down $23M to $113M IPL Group(1) A$M A$M % ⎔ Lower average debt balances Revenue 4,349 3,942 10 ⎔ One-off cost related to repurchase of higher cost long-term bonds. Payback ~2.9 years EBIT ex IM
Slide 20: Cash Flows
Cash Flows Strong second half cash generation expected to continue in FY22 FY21 FY20 Change EBITDA ex IMIs up 28% vs pcp Cash flow A$M A$M A$M ⎔ Strong cashflows - commodity cycle upswing & response plan EBITDA 935 731 204 ⎔ Partially offset by planned and unplanned manufacturing Interest paid (109)
Slide 21: Focus on Balance Sheet Strength
Focus on Balance Sheet Strength Balance Sheet de-leveraging expected to continue in FY22 30 Sep 2021 30 Sep 2020 Financial Indebtedness 30 Sep 2021 30 Sep 2020 Change Net debt A$M A$M A$M A$M A$M A$M Drawn debt facilities 1,654 1,810 Net debt (excluding hedges) 1,017 1,316 (299) Other borrowings 15
Slide 22: Financial Framework
Financial Framework Committed to strong Balance Sheet, disciplined capital management and improving returns Focus on Balance Sheet Free Cash Flow generation Target higher returns strength • Strong focus on cost, trade working capital • ROIC(2) targets and actions in place to • Reduction and maintena
Slide 23: Operating Performance
OPERATING PERFORMANCE Jeanne Johns Managing Director & Chief Executive Officer 23 23
Slide 24: Summary of Segment Financial Performance
Summary of Segment Financial Performance EBIT(1) FY21 Performance Commentary A$ million FY21 FY20 Change ⎔ Strong Australian manufacturing performance allowed Dyno Nobel Americas 190 231 (41) Fertilisers to capture benefits of upswing in fertiliser Dyno Nobel Asia Pacific 140 149 (9) commodity cycle
Slide 25: 2H21 v 2H20 Recovery from COVID-19 lows
2H21 v 2H20 Recovery from COVID-19 lows DYNO NOBEL AMERICAS EBIT(1) Dyno Nobel Americas US$ million 2H21 2H20 Change ⎔ Second half 2021 Explosives earnings recovered to pre- Explosives 83 66 +27% COVID-19 levels Waggaman 22 14 +57% ⎔ Waggaman and AG&IC benefitting from commodity Ag&IC 13 0 N/A cycle
Slide 26: Americas Explosives – Performance
Americas Explosives Performance EBIT of US$127M, 5% vs pcp FY21 Performance EBIT of A$170M, 6% vs pcp ⎔ Strong customer growth, particularly in underground and Base & Adjusted for manufacturing outages Precious Metals segment EBIT of US$139M , 15% vs pcp ⎔ Q&C volumes remained stable - upside potent
Slide 27: Americas Explosives – Markets
Americas Explosives Markets FY21 Revenue Base & Precious Metals ⎔ Strong Gold and Copper prices supporting volume growth as mines recover from COVID-19 closures Non-Coal 82% ⎔ Growth in DNA volumes and margins expected, driven by mine recoveries and technology driven market share gains. Expected vol
Slide 28: Waggaman
Waggaman EBIT of US$4M, 89% vs pcp Performance EBIT of A$6M, 90% vs pcp Performance Resourcing ⎔ Plant has performed well since the June 1 restart Site management Q&C B&PM 43% 39% ⎔ Nameplate production post restart(1) ⎔ New senior management team ⎔ 2H EBIT US$22m v 1H US$(18)m loss v 2H20 US$14m ⎔
Slide 29: Asia Pacific Explosives – Performance
Asia Pacific Explosives Performance FY21 Performance EBIT of A$140M, 6% vs pcp ⎔ Continued growth in technology product margins (+$14M) outpacing impacts from re-contracting (-$12M) YoY Change in EBIT(1)(2) A$M 20 ⎔ WA contract losses (as previously disclosed in 2018) accounted for $3M earnings redu
Slide 30: Asia Pacific Explosives – Markets
Asia Pacific Explosives Markets FY21 Revenue Metallurgical Coal International ⎔ Market volume growth (~1% year on year) expected in Metallurgical Coal 9% production. Markets in India, Europe and South America replacing tonnes 51% previously sold to China Coal (mostly ⎔ Market conditions continue to
Slide 31: Fertilisers Asia Pacific – Performance
Fertilisers Asia Pacific Performance EBIT of A$268M, $242M vs pcp FY21 Performance Fertiliser EBIT A$m ⎔ Solid volume growth in a competitive market A$M ⎔ Margins impacted by increased investment in distribution assets 200 ⎔ Strong manufacturing performance (+$3M excluding turnaround 160 impact) 120
Slide 32: Fertilisers Asia Pacific – Markets
Fertilisers Asia Pacific Markets Liquid Sales Volume ‘000 tonnes 90 Strong commodity price outlook 80 86% increase 70 60 Favourable Agronomic Conditions 50 40 Cotton 30 20 ⎔ Water availability supporting improved summer crop market 10 0 Broadacre Grain FY18 FY19 FY20 FY21 ⎔ Nutrient depletion from p
Slide 33: Technology
TECHNOLOGY Jeanne Johns Managing Director & Chief Executive Officer 33 33
Slide 34: Technology Driving Future Growth
Technology Driving Future Growth (million units sold) Electronic 7 Targeting technology driven Explosives EBIT growth(1) Detonator Systems 6 +36% +19% of 10% by FY22 5 4 3 2 Electronic Detonators Systems represent a small 1 proportion of global detonator sales – significant 0 FY18 FY19 FY20 FY21 sco
Slide 35: Technology Strategy Progress
Technology Strategy Progress Our Technology Strategy Our Vision Brought To Life Nobel Fire digital platform: now in use across 80% of our North Americas customer base Fracture density model (FDM) fully commercialised and in use by major customer Digital integration, data and a connected bench Geolog
Slide 36: Manufacturing
MANUFACTURING Jeanne Johns Managing Director & Chief Executive Officer 36 36
Slide 37: Manufacturing
Manufacturing Regional model and focus on operating discipline is contributing to improved reliability Regional Model Operating Discipline Engineering, Maintenance & TA(1) ⎔ Resources close to assets ⎔ Training ⎔ Risk Management ⎔ Improved responsiveness ⎔ Procedural discipline ⎔ Critical controls ⎔
Slide 38: Manufacturing: Turnaround schedule
Manufacturing Turnaround schedule Plant FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Phosphate Hill, QLD Cheyenne, WY Moranbah, QLD St, Helens Waggaman, LA Long term turnaround schedule less concentrated post COVID-19 delays 38 38 38
Slide 39: Outlook & Strategic Priorities
OUTLOOK & STRATEGIC PRIORITIES Jeanne Johns Managing Director & Chief Executive Officer 39 39
Slide 40: Outlook – FY22
Outlook – FY22 Leverage benefits of stronger base business, value adding technology solutions and commodity cycle Strong base business – Positioned for growth: FY21 Realised Spot Price Commodity ⎔ DNA above market growth expectation for Metals and Q&C Price US$/mt US$/mt ⎔ DNAP growth leveraging tec
Slide 41: Sources of base business earnings growth
Sources of base business earnings growth Future growth: Leverage green ammonia competency Commercialise green 4 carbon Partner of choice for low ammonia production Gibson Island (FFI); Newcastle & Gladstone ammonia opportunities (Keppel Infrastructure & Temasek) Platform growth: Driven by operationa
Slide 42: Two strong businesses well positioned
Two strong Safety: Industry leadership in safety businesses well positioned Sustainability: Accelerating our emissions targets & creating new commercial opportunities in line for the future with decarbonisation DYNO: Growth through leading technology A$M solutions for our customers in existing and n
Slide 43: Questions & Answers
INNOVATION ON THE GROUND ” s a y £ fs] = QUESTIONS & ANSWERS
Slide 44: Appendix
—~ ——, a . » Incitec Pivot INNOVATION ON THE GROUND APPENDIX
Slide 45: Group Result FY21
Group Result FY21 EBIT(1) of A$566M, 51% vs pcp Group EBIT Movements (A$m) (1) Excluding Individually Material Items (IMIs) of $293M ($210M after tax). 45
Slide 46: Dyno Nobel Americas – EBIT Waterfall
Dyno Nobel Americas – EBIT Waterfall DNA 46
Slide 47: Dyno Nobel Asia Pacific – EBIT Waterfall
Dyno Nobel Asia Pacific – EBIT Waterfall Dyno Nobel Asia Pacific (A$m) 47
Slide 48: Fertilisers Asia Pacific – EBIT Waterfall
Fertilisers Asia Pacific – EBIT Waterfall Fertilisers Asia Pacific (A$m) 48
Slide 49: Gibson Island Manufacturing Closure
GIBSON ISLAND MANUFACTURING CLOSURE Financial Impacts One-off financial impact(1): • Cash cost of closure ~$58m • Non-cash write down of assets ~$72m Annual impact on IPL earnings (post December 2022 closure): • Earnings will cease • Moranbah cost base increases by $5m to 10m(2) • Stranded Corporate
Slide 50: Full Year Financial Results Presentation
2021 FULL YEAR FINANCIAL RESULTS PRESENTATION 15 November 2021 Incitec Pivot Limited ABN 42 004 080 264 ASX Code: IPL OTC: INCZY 50