Slide 1: Orora Half Year Results
ORORA HALF YEAR RESULTS Half Year Ending December 2017 14 February 2018 Presentation by Nigel Garrard – Managing Director and CEO Stuart Hutton – CFO
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: 1H18 financial highlights
1H18 financial highlights SALES REVENUE EARNINGS BEFORE INTEREST AND TAX (EBIT) 6.2% $2,098m 10.5% $165.3m (Constant currency up 11.9%) • Double-digit earnings growth is being converted into strong Earnings growth is being cash flow, increased dividends and converted into strong higher returns. NET
Slide 4: Orora safety performance
Orora safety performance Safety is a priority and an ongoing journey for Orora June 2017(1) Dec 2017 • RCFR improved in the period RCFR 6.8 6.4 • Continued reinforcement of standards • Heightened awareness at existing sites LTIFR 1.6 1.5 • Progressive implementation of Orora’s safety standards and p
Slide 5: 1H18 Australasia financial highlights
1H18 Australasia financial highlights • Increased volumes in Fibre Packaging with market channel and SALES REVENUE EBIT segmentation strategy tracking well $121.1m • Focus on specific market segments continuing to deliver 5.0% $1,042.4m 11.1% • improved earnings B9 produced 204,000 tonnes of recycle
Slide 6: Australasia EBIT growth
Australasia EBIT growth 11.1% Earnings Growth 12.1 121.1 109.0 (A$’M) 1H17 ORGANIC INITIATIVES 1H18 Orora Ltd 2017 “ Organic earnings benefits delivered through growth, operational efficiencies and capital investment ” 6
Slide 7: Expansion of Fibre Packaging asset refresh program to A$100M
Expansion of Fibre Packaging asset refresh program to A$100M ~$100M now committed for investment in ANZ Fibre Packaging with ~$50M spent to date • Output from completed projects has provided confidence to expand program to further “ improve and/or debottleneck plants • Program was initially focused
Slide 8: Volatile old corrugated cardboard (OCC) prices
Volatile old corrugated cardboard (OCC) prices • Orora externally sources ~90% OCC as feedstock for B9 OCC AUD$ / tonne • Range of vendors, mixture of terms (fixed v floating) • Price volatility continues to be driven by ongoing changes in Chinese import regulations • Various mechanisms being deploy
Slide 9: Sustainability and energy efficiency
Sustainability and energy efficiency Renewable Energy for Orora in South Australia • Renewable energy represents a competitively priced sustainable energy source for the business • Entered into a long term power purchase agreement with renewable energy provider Pacific Hydro to supply wind-generated
Slide 10: 1H18 North America financial highlights
1H18 North America financial highlights OPS USD SALES REVENUE USD EBIT • Delivered ongoing sales growth with USD revenues up 3.0% 11.1% $822.3m 13.5% $47.0m • • Landsberg sales up 5% through continued growth in corporate accounts and pass through of higher paper prices EBIT margin improved from 5.2%
Slide 11: North America EBIT growth
North America EBIT growth 9.4% Earnings Growth (13.5% excluding FX impact) 8.7 (2.1) (1.4) 60.3 55.1 (A$’M) 1H17 GROWTH FX DOUBTFUL DEBT 1H18 “ Orora Ltd 2017 Sales growth, margin expansion and contribution from Orora Visual driving 13.5% constant currency earnings growth ” 11
Slide 12: OPS – Landsberg continuing the course, investing in manufacturing
OPS – Landsberg continuing the course, investing in manufacturing Total Packaging Solutions rebranding paying dividends • Corporate account growth continues to underpin OPS expansion and delivery of scale benefits • Targeted segment growth in food, IT, auto and pharmaceutical/health continues strong
Slide 13: Orora Visual – business improvement and integration acceleration plan
Orora Visual – business improvement and integration acceleration plan Sales Growth • Continue to enhance Orora Visual offering and further invest in • Campaign Design • Consumer engagement • Production of print • Digital solutions • Logistics - data analytics/stores profiling • Multi substrate inclu
Slide 14: Orora Corporate
Orora Corporate Earnings Summary (EBIT) Corporate costs were $16.1M – slightly higher than prior year due to: • Costs associated with assessing the feasibility of growth options in A$ Million 1H17 1H18 ∆% North America Underlying Corporate (14.5) (16.1) (11.0) • Underlying costs continue to be well
Slide 15: Strong operating cash flow – organic capex increasing
Strong operating cash flow – organic capex increasing A$ Million 1H17 1H18 Operating cash flow in line with prior year EBITDA 205.3 227.3 • Cash conversion of 63% - slightly below 70% management target(2), due Non Cash Items 13.0 18.6 to the planned increase in capital spending and inventory require
Slide 16: Balance sheet and debt
Balance sheet and debt Balance Sheet Robust balance sheet to enable further growth investment A$ Million June 17 Dec 17 • Reduced leverage through conversion of earnings into cash Funds Employed (period end) 2,221 2,241 • Leverage of 1.5x - down from 1.6x at June 2017 and pcp • Positive FX impact on
Slide 17: Our Orora – culture of driving outperformance
Our Orora – culture of driving outperformance Orora Ltd 2017 17
Slide 18: Global Innovation Initiative increased by $30 million
Global Innovation Initiative increased by $30 million FY15 FY16 FY17 1H18 Launched $16 million $45m $20 million $9 million committed - Innovation committed committed $45 million Initiative cumulative Global Innovation Initiative increased by $30 million – total $75 million Orora Ltd 2017 availabilit
Slide 19: Innovation Expo
Innovation Expo • Fibre Packaging at the Oakleigh, Victoria facility will be hosting a customer innovation week in May 2018 • All Australasian business groups will showcase their current products capabilities and packaging innovations • Recent investments in digital print technologies and asset upgr
Slide 20: 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 21: Orora has committed ~$425M since ASX listing
Orora has committed ~$425M since ASX listing in December 2013 FY14 FY15 FY16 FY17 FY18 TOTAL INVESTMENT Established 2 new East Coast $29M spend committed from Fully Committed the $45M New customer backed US DCs (Charlotte & Orora Global Innovation Orora Global Innovation Dairy Sack Line ($20M) Orlan
Slide 22: Committed to creating shareholder value
Committed to creating shareholder value What we said we would do What we have done in 1H18 Shareholder value creation 1. Organic sales growth, profitable market share gain & 1. OA - delivered 4.4% underlying sales growth • EPS growth of 14.7% improved efficiency/cost control ONA - 3% net organic sal
Slide 23: Perspectives for 2H 2018
Perspectives for 2H 2018 Organic Capital expenditure above depreciation to continue • Benefits delivered from recent capital investment has given confidence to further invest in the base business • Global Innovation Initiative has been increased by $30 million to $75 million, of which $45 million is
Slide 24: FY18 Outlook
FY18 Outlook Orora expects to continue to drive organic growth and invest in innovation and growth during FY18, with constant currency earnings expected to be higher than reported in 2017, subject to global economic conditions Orora Ltd 2017 24
Slide 25: Appendix
Appendix 1 Significant Items
Slide 26: Significant items
Significant items 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 included the sale of the Smithfield site. S