Orica Limited · ASX:ORI
Orica — Investor Presentation (July 2010)
54 slides from Orica's investor presentation, Jul 20, 2010
Slide 1: 2010 Orica Investor North American Site Visit
For personal use only 2010 Orica Investor North American Site Visit Brownsburg, QC, Canada July 2010
Slide 2: Presented by
Presented by: For personal use only Craig Elkington President Orica USA Inc. Orica Canada Inc. Dawn Goosen North American IS Manufacturing Manager Orica Canada Inc. Jean-Yves Maisonneuve Plant Manager – EBS Orica Canada Inc. North America Investor Briefing - July 2010 2
Slide 3: Presentation Outline
Presentation Outline For personal use only North American Market Review Craig Elkington Brownsburg Manufacturing Overview Dawn Goosen EBS Manufacturing & Technology Dawn Goosen & Jean-Yves Maisonneuve North America Investor Briefing - July 2010 3
Slide 4: North American Market Review
For personal use only North American Market Review
Slide 5: Key Messages Today
Key Messages Today For personal use only • Strong, diversified market positions • Technology leader driving customer productivity • Step change in operational efficiency • Continuing to invest in automated manufacturing • Ongoing commitment to sustainability • Quality team, track record of performan
Slide 6: Agenda
Agenda For personal use only Market Overview 2009 in Review Strategic Direction Priorities North America Investor Briefing - July 2010 6
Slide 7: Markets
Markets Coal (35%) Gold (13%) and Copper (8%) For personal use only Quarry & Construction (29%) Remaining 15% Market Share Iron Ore 5% Nickel 3% Zinc 1% Other (O&G) 6% North America Investor Briefing - July 2010 7
Slide 8: Markets
Markets For personal use only Coal Production down between 7-10% in 2009, steady in 2010 despite slight gains in electricity consumption, as coal consumers continue to work through high inventories. Modest growth forecast to resume in 2011. Q&C US construction down 20% in 2009 and ~35% from high of
Slide 9: Thermal Coal
Thermal Coal For personal use only By Location By Mining Method Inventory destocking during 2009/2010 Modest long-term growth expected North America Investor Briefing - July 2010 9
Slide 10: Quarry & Construction
Quarry & Construction For personal use only Market Dynamics Crushed Stone Trends & Projections (millions of tonnes) Source: US Geological Survey Historically volumes generally in line with GDP 2,000 Sharp deterioration in 2008 through 2009 due to 1,600 economic slowdown 1,200 Most recent const
Slide 11: Gold
Gold For personal use only Stable production during global financial crisis Robust long-term growth expected to continue North America Investor Briefing - July 2010 Source: Gold Five Year Outlook June 2010 CRU 11
Slide 12: Copper
Copper For personal use only Gap Volumes improving post global downturn New projects planned to meet demand North America Investor Briefing - July 2010 Source: Metals Market Service Monthly Update May 2010 Brookhunt 12
Slide 13: North American Copper Landscape
North American Copper Landscape 2010 Production For personal use only 2015 Production Base Highly Probable Possible Copper Production Kt Cu Concentrates 2025 Production and Leach North America Investor Briefing - July 2010 13
Slide 14: Agenda
Agenda For personal use only Market Overview 2009 in Review Strategic Direction Priorities North America Investor Briefing - July 2010 14
Slide 15: 2009 in Review
2009 in Review • For personal use only All stretch SHE objectives achieved – injury rate, distribution frequency & zero fatalities • Continued profit growth despite significant sales decline • Significant new business gained • First year of SWE joint venture, a contributing factor in securing key gl
Slide 16: North American Financial Performance (US$M)
North American Financial Performance (US$M) For personal use only $110 15% $100 = 16% 13% GR $90 R CA 2Y 11% $80 $70 9% $60 7% +19% USD (Millions) $50 5% $40 3% $30 $20 1% $10 -1% $0 -3% -$10 -$20 -5% 2001 2002 2003 2004 2005 2006 2007 2008 2009 H1 '09 H1 '10 Sales (US$M) 397 432 413 455 518 632 646
Slide 17: Efficiency Program
Efficiency Program For personal use only (Examples Only) Brownsburg Plant Productivity AUTOMATION & LEAN MANUFACTURING 100+% increase in throughput PROJECT PLEDGE 22% reduction in consumables spend Manufacturing Ele ctr E lec troon n ic ic DDeeto tonnato atorr TThhrou ro ugghhppuutt Money Money Spen
Slide 18: Agenda
Agenda For personal use only Market Overview 2009 in Review Strategic Direction Priorities North America Investor Briefing - July 2010 18
Slide 19: Strategic Direction – The "Go To" Company
Strategic Direction – The “Go To” Company Underperforming Reforming Transforming – “DELIVER TO GROW” For personal use only • Company restructured, costs MARKET reduced • Selling prices • Market Growth: • Secured - New Mines / Expansions dislocated volumes via - Metals Market from input contracts cos
Slide 20: Positioning for Market Growth
Positioning for Market Growth For personal use only 2007 Profile Current Profile Distributors Direct Business 50% Ownership JV North America Investor Briefing - July 2010 20
Slide 21: Acquisition of GLBH Explosives Business
Acquisition of GLBH Explosives Business For personal use only Acquisition completed July 1, 2010 to purchase commercial mining, construction, and seismic explosives business of GL Black Holdings • Remaining 50% of Bulk Explosives Limited (BXL) joint venture • Distributors in Western Canada, Alaska,
Slide 22: Renewed Business Strategy – The "Go To" Company
2020 Vision For personal use only Next Generation Technology CHANGE the MARKET REACT to MARKET Deliver The “GO TO” North Renewed Business Strategy – The “Go To” Company Underperforming Reforming Transforming – “DELIVER TO GROW” • Company Company restructured, costs reduced MARKET • Selling • Market
Slide 23: Agenda
Agenda For personal use only Market Overview 2009 in Review Strategic Direction Priorities North America Investor Briefing - July 2010 23
Slide 24: Continued Priorities
Continued Priorities • Drive technology advantage For personal use only Renewed Business Strategy – The “Go To” Company • Underperforming Reforming Transforming – “DELIVER TO GROW” Capture market opportunities • Company restructured, costs MARKET reduced • Selling prices • Market Growth: • Secured -
Slide 25: Questions?
For personal use only Questions? North America Investor Briefing - July 2010 25
Slide 26: Brownsburg Manufacturing Overview
For personal use only Brownsburg Manufacturing Overview
Slide 27: IS Manufacturing – a Global Team
IS Manufacturing – a Global Team For personal use only Gytorp Sharing knowledge is key to improving performance North America Investor Briefing - July 2010 27
Slide 28: Brownsburg – Share the Pride
Brownsburg – Share the Pride For personal use only We are here Brownsburg site history: 1875 – Daniel Smith purchased the land, installed black powder mill. West River used to generate the power. 1876 – Nobel Explosives built a warehouse in BBG 1883 – Nobel purchased Black Powder mill from Daniel Sm
Slide 29: Brownsburg – Share the Pride
Brownsburg – Share the Pride Our community: Union relations: – Brownsburg approx. 2000 inhabitants – 465 employees in Union For personal use only – Large town upgrade planned – Union CSN (Quebec based) 2000 – Cooperation with SHE team re: emergency response – Site Union Committee decide – Employees
Slide 30: For personal use only
For personal use only , Chile, Mexico, Ghana, Cuba North America Investor Briefing - July 2010 30
Slide 31: NA IS Manufacturing Team
NA IS Manufacturing Team Dawn Goosen For personal use only NA IS Manufacturing Victor Delgado Royden Brown Serge Cabana Ghislain Charest Patrick Goldfinch Manufacturing Systems Plan Process Director Logistic Manager Finance Manager Manuf. Process Improvement Lead Manager Mathieu Paquette Benoit Beau
Slide 32: BBG Manufacturing Team Focus
BBG Manufacturing Team Focus For personal use only SH&E – “Ensuring Our Future” No injuries to anyone, ever Value people and the environment Commercial Ownership Run the business as if it’s your own Low cost, high flexibility Creative Customer Solutions Think differently, deliver swiftly, and captur
Slide 33: Our Products
Our Products For personal use only EXEL MS EXEL SHD MS CONNECTOR EXEL T&D CONNECTADET (EXEL HTD) EXEL XT HANDIDET North America Investor Briefing - July 2010 33
Slide 34: Our Products EBS
Our Products EBS For personal use only i-kon Standard i-kon RX OSEIS Uni Tronic 500 i-kon VS North America Investor Briefing - July 2010 34
Slide 35: Safety – No Injuries to Anyone, Ever
Safety – No Injuries to Anyone, Ever For personal use only What has worked well: Recordable case rate - Brownsburg • STOP program • STOP and THINK day 1.8 RCR/ 200 000 hours 1 mill hours injury free • PHS program – understanding and Mov average achieved 10th Mar 09 management of risks 1.6 • Health -
Slide 36: Managing Workforce Changes
Managing Workforce Changes • Employee growth through For personal use only Employee growth - BBG team # employees 2008 due to volume and 700 645 product growth 600 585 • Component exports approx 473 40% of total 500 469 • 2008 presented training 400 400 358 341 challenges 297 • 2009 - 2010 drive to
Slide 37: Customer Focus – Product Reliability
Customer Focus – Product Reliability For personal use only Customer complaints - ppm units sold Conventional 35 EBS 30 25 20 ppm 15 10 5 0 2004 2005 2006 2007 2008 2009 Improvement Opportunities • Raw material quality for EBS product • Build experience and learning curve on EBS product. • Develop op
Slide 38: Brownsburg Plant Productivity
Brownsburg Plant Productivity For personal use only AUTOMATION & LEAN MANUFACTURING PROJECT PLEDGE 100+% increase in throughput 22% reduction in consumables spend Electronic Electronic Detonator Detonator Throughput Throughput Money Money Spent Spent in in FY2009 FY2009 vs vs FY2008 FY2008 Brownsbur
Slide 39: Questions?
For personal use only Questions? North America Investor Briefing - July 2010 39
Slide 40: EBS Manufacturing & Technology
For personal use only EBS Manufacturing & Technology
Slide 41: Evolution in Initiating Systems
Evolution in Initiating Systems For personal use only Cap and Fuse Electrics Non Electrics Electronics 2009 eDevTM Launched 1750 1800 1850 1900 1950 2000 2006 Orica opens state of the art manufacturing facility in Brownsburg, CA 1980 Introduction of fixed 2005 Orica acquired Uni tronicTM electronic
Slide 42: Where have we come from…..
Where have we come from….. For personal use only March 2006 December 2006 July 2007 November 2007 December 2007 1st Uni tronic™ EBS building 1st live Uni tronic™ 1st live Uni tronic™ 1st live i-kon™ detonator constructed Timing Module detonator detonator assembled assembled in assembled on manually
Slide 43: Where have we come from……..
Where have we come from…….. For personal use only March 2008 June 2008 July 2008 July 2008 1st live i-kon™ Timing Module 3rd Timing Module 1st live i-kon™ detonator Automatic varnishing assembled in Brownsburg assembly machine assembled on machine process started Mod 1B Mod 1C AIA-1 Varnishing 10000
Slide 44: Manufacturing Objectives
Manufacturing Objectives For personal use only • Meet customer demand safely within specified lead times • Reduce manufacturing costs of EBS • Meet production targets • Improve quality of product leaving the site • Reduce customer complaint response time North America Investor Briefing - July 2010 4
Slide 45: Three Levers Drive Manufacturing Costs
Three Levers Drive Manufacturing Costs For personal use only 1. Machine uptime ↑ and cycle time ↓ 2. Scrap reduction and manage rework 3. Labor efficiencies North America Investor Briefing - July 2010 45
Slide 46: Machine Uptime & Cycle Time
Machine Uptime & Cycle Time 1- MACHINE UPTIME & CYCLE TIME For personal use only 450 Target 400 PPH 400 Weekly AVG Part per Hour 350 300 250 200 150 100 50 RX i-Kon 0 May Mar Jan June Nov Jul Apr Sept Oct Dec feb 2009 Examples of Contributors: 1. Aumann spooler reliability made a step change allowin
Slide 47: Guinness World Records
Guinness World Records For personal use only 1- BEST GOOD OUTPUT IN 24 HRS 4- BEST RX OUTPUT in 24 HRS Date Record Date Record 16/Feb/09 9248 2/Apr/09 5710 17/May/09 10562 10/Apr/09 6389 9/May/09 6497 14/Jun/09 6588 2- BEST SCRAP RATE IN 24 HRS 16/Jun/09 7114 Date Record 22/Jul/09 7411 16/Feb/09 11.
Slide 48: Scrap Reduction and Manage Rework
Scrap Reduction and Manage Rework 2- AIA1 Scrap Reduction For personal use only 80% 70% Weekly AVG % scrap 60% 50% RX i-kon™ units 40% 30% 20% 10% Target < 6% 0% May Mar Jan June Nov Jul Apr Sept Oct Dec feb 2009 REWORK % units reworked from the total rejected 100% 95% Examples of Contributors: 90%
Slide 49: This is just the beginning …..
For personal use only This is just the beginning ….. North America Investor Briefing - July 2010 49
Slide 50: Continue the IS Technology Revolution
Continue the IS Technology Revolution For personal use only Wireless Detonators Milestone Electronic Detonators Milestone • Step change in ease Non-electric of use Detonators • Enables automated remote mining Milestone • Step change delay Electric accuracy Detonators • Step change in blast Milestone
Slide 51: Wireless Initiation Systems
Wireless Initiation Systems For personal use only • 5th Generation Electronic Blasting Systems is completely wireless • Standard i-kon™ detonator inside special receiver • One-way communication through rock, significant distance from blast box • Can deliver direct improvements to safety, productivit
Slide 52: Questions?
For personal use only Questions? North America Investor Briefing - July 2010 52
Slide 53: Key Messages Today
Key Messages Today For personal use only • Strong, diversified market positions • Technology leader driving customer productivity • Step change in operational efficiency • Continuing to invest in automated manufacturing • Ongoing commitment to sustainability • Quality team, track record of performan
Slide 54: 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