Slide 1: Full year results
Full year results Ended 30 June 2018 9 August 2018 Presentation by Nigel Garrard – Managing Director and CEO Stuart Hutton – CFO Orora Limited ABN 55 004 275 165
Slide 2: Important information
Important information This presentation contains summary information about the current activities of Orora Limited (Orora) and its subsidiaries (Group). It should be read in conjunction with Orora’s other periodic and continuous disclosure announcements filed with the Australian Stock Exchange. Forw
Slide 3: FY18 Highlights
FY18 Highlights EARNINGS BEFORE INTEREST SALES REVENUE AND TAX (EBIT) • Solid earnings growth is being $4,248.0m $323.4m converted into strong cash flow, increased dividends and higher returns. 5.2% INCREASE 7.0% INCREASE • Organic capex increased. UNDERLYING UNDERLYING • Strong balance sheet to NET
Slide 4: Orora safety performance
Orora safety performance Safety is a priority and on-going journey for Orora • Slight improvement in RCFR June 2017(1) June 2018 • Continued reinforcement of standards • Heightened awareness at existing sites RCFR 6.9 6.8 • Progressive implementation of Orora’s safety standards and processes at rece
Slide 5: FY18 Australasian financial highlights
FY18 Australasian financial highlights • Underlying sales increase of 4.2% after taking into account SALES REVENUE EBIT aluminium price pass through impact • B9 achieved above design capacity of 400kt for first time, $2,104.8m $232.3m continued focus on optimising production efficiency • Increased s
Slide 6: Australasia EBIT growth
Australasia EBIT growth 8.7% Earnings Growth 23.2 (4.5) 232.3 213.6 FY17 ORGANIC INITIATIVES INPUT COST HEADWINDS FY18 (NSW ELECTRICITY) Organic earnings benefits delivered through sales growth, operational efficiencies and capital investment 6
Slide 7: Australasian organic initiatives update
Australasian organic initiatives update Lowering energy cost volatility • NSW and VIC have fixed price electricity for up to 10 years at competitive prices from renewable source, South Australia continues to benefit from a renewable agreement that started in Jan 2018 • 80% of Australian electricity
Slide 8: FY18 North America financial highlights
FY18 North America financial highlights OPS • Organic sales volume growth of 3.2% in USD terms despite economic USD SALES REVENUE USD (EBIT) conditions remaining flat • Landsberg sales increased 5.4% through focus on higher growth $1,661.2m $93.8m targeted segments and pass through of paper and resi
Slide 9: North America EBIT growth
North America EBIT growth 3.0% Earnings Growth (5.9% excluding FX impact) 9.7 (3.4) (2.8) 121.0 117.5 (A$’M) FY17 GROWTH FX DOUBTFUL DEBT FY18 Consolidation year in North America Earnings growth of 8.3% before doubtful debt and FX impact 9
Slide 10: North American organic initiatives update
North American organic initiatives update New ERP system in OPS • New ERP rollout has taken significant resources and Management attention over the last 12 months with completion expected Q1 of FY19 • Early rollout sites are benefiting from the improved business processes, inventory and margin visib
Slide 11: FY18 Corporate Costs
FY18 Corporate Costs Corporate costs were $29.9M – slightly higher than prior year due to: Earnings Summary (EBIT) • Costs associated with assessing the feasibility of growth options in North America A$ Million FY17 FY18 ∆% • Underlying costs continue to be well managed Underlying Corporate (28.8) (
Slide 12: Solid operating cash flow
Solid operating cash flow A$ Million FY17 FY18 Operating cash flow solid at $325.3M EBITDA 418.4 445.3 • Reflecting higher earnings and disciplined balance sheet management Non Cash Items 32.4 38.9 • Cash conversion of 67% - slightly below the 70% management medium term target(1). Solid outcome give
Slide 13: Balance sheet and debt
Balance sheet and debt Balance Sheet Robust balance sheet to enable further growth investment A$ Million June 17 June 18 • Reduced leverage through conversion of earnings into cash • Leverage of 1.5x - down from 1.6x at June 2017 Funds Employed (period end) 2,221 2,298 • Adverse FX impact on net deb
Slide 14: Our Orora – culture of driving outperformance
Our Orora – culture of driving outperformance 14
Slide 15: 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 16: Orora has committed ~$500M since ASX listing in December
Orora has committed ~$500M since ASX listing in December 2013 FY14 FY15 FY16 FY17 FY18 TOTAL INVESTMENT Established 2 new East Coast $29M invested in Orora Invested additional $23M in New customer backed US DCs (Charlotte & Global Innovation Initiative to Orora Global Innovation Dairy Sack Line ($20
Slide 17: Committed to creating shareholder value
Committed to creating shareholder value What we said we would do What we have done in FY18 Shareholder value creation 1. Organic sales growth, profitable market share gain & 1. ANZ - delivered 4.3% underlying sales growth • Underlying EPS growth of 11.5% improved efficiency/cost control NA – 3.2% or
Slide 18: Perspectives for 2019
Perspectives for 2019 Markets • Expecting ongoing flat market conditions • Risk of rising inflationary pressures in North America Organic capital expenditure above depreciation to continue • Benefits delivered from recent capital investment have given Management confidence for further organic invest
Slide 19: Outlook
Outlook Orora expects to continue to drive organic growth and invest in innovation and growth during FY19, with constant currency earnings expected to be higher than reported in FY18, subject to global economic conditions 19
Slide 20: Appendix
Appendix
Slide 21: Appendix - Significant items and contingent liability
Appendix 1 - Significant items and contingent liability The net significant item expense after tax of $1.9M is comprised of the following • A net gain after tax of $22.7M related to the sale of the Smithfield site. During the period the Group restructured the Fibre Packaging NSW business which inclu
Slide 22: Appendix - Volatile old corrugated cardboard (OCC) prices continues
Appendix 2 - Volatile old corrugated cardboard (OCC) prices continues Orora externally sources ~90% OCC as feedstock for B9 Range of vendors, mixture of terms (fixed v floating) OCC AUD$ / tonne $400 Price volatility continues to be driven by ongoing changes in Chinese import regulations $350 • Impo
Slide 23: Appendix - Fibre refresh program site summary
Appendix 3 - Fibre refresh program site summary Manufacturing Conversion Corrugator Automation Site upgrade upgrade upgrade Over $120M committed to improving Revesby – NSW Fibre Packaging Scoresby- VIC manufacturing capability Brooklyn- VIC Athol Park- SA Benefits Rocklea- QLD • Improving product qu