Orica Limited · ASX:ORI
Orica — FY2023 Earnings Presentation
35 slides from Orica's earnings presentation, Nov 9, 2023
Slide 1: 2023 Full Year Results
2023 Full Year Results 9 November 2023 Presenters Sanjeev Gandhi Managing Director & CEO Kim Kerr Deer Blasting Park, Australia ORBS™ (Omni Remote System) Chief Financial Officer
Slide 2: Disclaimer
DISCLAIMER This presentation is in summary form and is not necessarily complete. It should be read together with Orica’s Annual Report and other announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This report contains information that is based on proj
Slide 3: Full Year 2023 in Review
FULL YEAR 2023 IN REVIEW Sanjeev Gandhi Managing Director & CEO Deer Park, Australia 3 2023 FULL YEAR RESULTS
Slide 4: Keeping our people safe remains our number one priority
SAFETY, PEOPLE AND COMMUNITY KEEPING OUR PEOPLE SAFE REMAINS OUR NUMBER ONE PRIORITY SAFE AND RESPONSIBLE BUSINESS ZERO 0.131 17 Fatalities SICR1 Loss of containment2 FY2022: 2 FY2022: 0.157 FY2022: 23 PEOPLE AND COMMUNITY 35% 87% $10m Women in senior Inclusion Community investment leadership3 index
Slide 5: Accelerated Scope 1 & 2 targets and Scope 3 ambition introduced
STRENGTHENING ORICA’S CLIMATE CHANGE COMMITMENTS ACCELERATED SCOPE 1 & 2 TARGETS AND SCOPE 3 AMBITION INTRODUCED DELIVERING EMISSIONS ORICA’S ACCELERATED CLIMATE CHANGE TARGETS AND AMBITION REDUCTION Net GHG emissions reduction (Scope 1 and 2, ktCO2-e) Net Scope 1 and 2 Renewable Scope 3 AMBITION TO
Slide 6: Quality earnings underpin our financial result
QUALITY EARNINGS UNDERPIN OUR FINANCIAL RESULT STRATEGY EXECUTION AND COMMERCIAL DISCIPLINE DELIVER A SUBSTANTIAL UPLIFT IN PERFORMANCE $698m $369m $7,945m • Strong underlying performance growth across all segments driven by: – Continued commercial discipline and strong customer demand – Increased e
Slide 7: Customer demand, technology and commercial discipline supports earnings growth
EARNINGS INCREASED IN ALL SEGMENTS CUSTOMER DEMAND, TECHNOLOGY AND COMMERCIAL DISCIPLINE SUPPORTS EARNINGS GROWTH EUROPE, AUSTRALIA MIDDLE EAST & PACIFIC & ASIA NORTH AMERICA LATIN AMERICA AFRICA DIGITAL SOLUTIONS EBIT $458M 24% EBIT $150M 11% EBIT $54M 1% EBIT $58M 24%1 EBIT $54M 103% • Strong grow
Slide 8: Industry leading solutions supporting our customer value propositions
CONTINUED INNOVATION – OUR COMPETITIVE ADVANTAGE INDUSTRY LEADING SOLUTIONS SUPPORTING OUR CUSTOMER VALUE PROPOSITIONS OREBODY MEASURE MINE SIMULATION Customer value BLASTING propositions INTELLIGENCE AND MONITOR AND OPTIMISATION UNDERGROUND Gantry Front End Loader (FEL) Safety and security Insights
Slide 9: Financial Performance
FINANCIAL PERFORMANCE Kim Kerr Chief Financial Officer Image description World’s first lead-free detonator Exel™ Neo range launched in Europe Papua, Indonesia in September 2023 9 2023 FULL YEAR RESULTS
Slide 10: Improvements across financial indicators
FINANCIAL RESULTS IMPROVEMENTS ACROSS FINANCIAL INDICATORS Full year ended 30 September ($M) 2023 20221 Change Sales revenue from continuing operations 7,945 7,096 12% Underlying EBITDA2 from continuing operations 1,091 950 15% Underlying EBIT3 from continuing operations 698 564 24% Underlying NPAT4
Slide 11: Strategy execution drives earnings growth
ORICA GROUP EBIT FY2022 TO FY2023 ($M) STRATEGY EXECUTION DRIVES EARNINGS GROWTH +24% +29% 56 28 (8) (14) 21 44 698 28 (21) 564 543 FY2022 Russia's FY2022 Foreign Volume Manufacturing Mix and margin Mining Digital solutions Global support FY2023 Underlying EBIT earnings Underlying EBIT exchange chem
Slide 12: Improved trade working capital remains a strong focus
TRADE WORKING CAPITAL IMPROVED TRADE WORKING CAPITAL REMAINS A STRONG FOCUS Trade working capital ($M) Trade working capital ($M) Days inventory held1 684 643 844 (185) 438 64 63 64 684 (86) 31 643 39 FY2021 FY2022 FY2023 FY2021 FY2022 FY2023 Days sales outstanding1 Days payables outstanding1 30 Sep
Slide 13: Disciplined approach to capital allocation enabling strategy execution
CAPITAL AND INVESTING DISCIPLINED APPROACH TO CAPITAL ALLOCATION ENABLING STRATEGY EXECUTION CAPITAL EXPENDITURE CAPITAL EXPENDITURE ($M)1 Sustenance 439 • Higher due to planned turnarounds at Bontang, Kooragang Island and Burrup 37 • Investment in customer facing assets to ensure safe and efficient
Slide 14: Strong financial profile for future growth
BALANCE SHEET AND LIQUIDITY STRONG FINANCIAL PROFILE FOR FUTURE GROWTH Committed debt facility maturity profile ($M) Available liquidity ($M) 2,678 2,619 Average tenor at September 2023 – 4.6 years (drawn debt: 5.9 years) 2,080 Undrawn committed 1,423 1,467 1,000 facilities 900 1,486 800 Cash and ca
Slide 15: Improved earnings resulting in increased dividends
DIVIDEND IMPROVED EARNINGS RESULTING IN INCREASED DIVIDENDS Dividend per Ordinary Share (cents) & Payout Ratio1 (%) 25.0 CPS FINAL DIVIDEND 43.0c 55% payout ratio5 Final 53% Total FY2023 dividend 43.0 cps, Interim 35.0c payout ratio 53% 48% 24.0c 25.0c 47% 55% 22.0c 53% 16.5c • 23% increase in total
Slide 16: Our Strategy in Action
OUR STRATEGY IN ACTION Sanjeev Gandhi Managing Director & CEO 16 2023 FULL YEAR RESULTS
Slide 17: Successfully executing our strategy
STRATEGY SUCCESSFULLY EXECUTING OUR STRATEGY OUR PURPOSE HOW WE WHERE WE WILL WIN Sustainably mobilise WILL WIN the earth’s resources Future-facing commodities Quarries Construction OUR VISION Thermal and To be the world’s leading Metallurgical coal mining and infrastructure solutions company Smarte
Slide 18: Continued progress on strategic targets
STRATEGIC PLAN CONTINUED PROGRESS ON STRATEGIC TARGETS STRATEGIC FY2023 FY2024+ FINANCIAL FY2023 scorecard FY2024+ TARGETS progress scorecard TARGETS and progress scorecard Pursue organic growth 3-year average RONA 10.5%-13% 12%-14% Updated from the core Dividend payout ratio 40% - 70% 40%-70% Accel
Slide 19: FY2024 continuous manufacturing plant turnarounds
OUTLOOK FY2024 CONTINUOUS MANUFACTURING PLANT TURNAROUNDS FY2024 scheduled turnarounds Far East CFR ammonia index1 1H24 2H24 $USD/t 1200 Kooragang Island (NSW) Event Event 1000 Ammonia plant six-yearly major turnaround 1 2 Event Event Event Prill tower emission abatement installation 1 2 3 800 +52%
Slide 20: Quality earnings growth expected to continue
OUTLOOK QUALITY EARNINGS GROWTH EXPECTED TO CONTINUE FY2024 Outlook: • 2024 financial year EBIT from continuing operations is expected to increase on the pcp attributable to: ‒ Strong demand for our products and services from continued anticipated growth in global commodities ‒ Increased adoption of
Slide 21: Orica's 150 years
1874 1926 1928 1958 1961 1971 1977 1998 2024 Jones, Scott and Co. Acquired by Nobel Imperial Chemical Completed in 1958, ICIANZ listed on the Following the ICI ANZ becomes ICI Australia Limited Orica is one of the founded as a (Australasia), which Industries of Orica House, or ICI Australian Stock d
Slide 22: Our investment proposition
OUR INVESTMENT PROPOSITION DELIVERING VALUE TO OUR SHAREHOLDERS OUR PROMISE Operating responsibly together with our people, partners, customers Safety is, and will We are the global We have reshaped remain our number leader in mining and civil our strategy and we one priority construction markets ar
Slide 23: Supplementary Information
SUPPLEMENTARY INFORMATION 23 2023 FULL YEAR RESULTS
Slide 24: Diversified global business
SUPPLEMENTARY INFORMATION DIVERSIFIED GLOBAL BUSINESS REVENUE BY SEGMENT1 REVENUE BY COMMODITY1 REVENUE BY PRODUCT/SERVICE TYPE1 3% 3% 4% 5% 14% 4% 7% 24% 6% 4% 35% 40% 12% 9% 21% 14% 21% 16% 22% 14% 22% Australia Pacific & Asia North America Copper Gold Thermal coal Bulk Emulsion AN/ANFO Latin Amer
Slide 25: Australia Pacific & Asia
SUPPLEMENTARY INFORMATION AUSTRALIA PACIFIC & ASIA Market conditions • Commodity prices and mining activity across the region remained robust External revenue ($M)1 EBIT ($M)1 • Tight market conditions for AN in Australia and Asia, with security and flexibility of supply a key customer need 458 3,16
Slide 26: North America
SUPPLEMENTARY INFORMATION NORTH AMERICA Market conditions • Market fundamentals for most commodities remained strong, supported by demand EBIT ($M)1 External revenue ($M)1 for materials key to global decarbonisation 1,745 • Continued strength in the US Q&C segment, supported by significant governmen
Slide 27: Latin America
SUPPLEMENTARY INFORMATION LATIN AMERICA Market conditions EBIT ($M)1 External revenue ($M)1 • Mining and exploration activity was strong across the region, particularly in 54 2 542 1,650 1,733 Southern Peru 29 26 835 29 957 985 • Significant AN supply chain interruption during FY2023 due to geopolit
Slide 28: Europe, Middle East & Africa
SUPPLEMENTARY INFORMATION EUROPE, MIDDLE EAST & AFRICA Market conditions • Mining market across Europe and Central Asia remained strong with External revenue ($M)1 continued focus on ESG from miners EBIT ($M)1 1,025 1,087 • Saudi Arabia investing heavily in infrastructure development projects and 58
Slide 29: Digital Solutions
SUPPLEMENTARY INFORMATION DIGITAL SOLUTIONS Market conditions • Increasing ESG obligations and commitments and continued strength in EBIT ($M) External revenue ($M) major commodity prices and growth in future-facing commodities (FFC) 54 driving customer demand 212 27 • Increased demand for operation
Slide 30: Debt position
SUPPLEMENTARY INFORMATION DEBT POSITION Movement in net debt1 ($M) Debt covenants3 Significant headroom to gearing and interest cover (899) debt covenants Gearing (%) 57.5% 18.6% 30 Sep 2023 Interest cover (times) 5.4x 2 2.0x 30 Sep 2023 1. Excludes the impact of leases on net debt 2. Includes $256
Slide 31: Major trading currencies
SUPPLEMENTARY INFORMATION MAJOR TRADING CURRENCIES Orica trades in 38 different currencies which are translated to Australian Dollar (AUD) earnings Key currency movements FY2023 FY2022 30 Sep 2023 31 Mar 2023 30 Sep 2022 Currency Average rates Spot rates USD – US Dollar 0.6659 0.7125 0.6429 0.6712
Slide 32: Significant items
SUPPLEMENTARY INFORMATION SIGNIFICANT ITEMS Gross Net Full year ended 30 September 2023 ($M) (before tax) (after tax) Loss on sale of Türkiye businesses (73.5) (72.7) Loss on exit of Venezuela business (71.1) (37.5) Axis Group acquisition earnout (26.6) (26.6) Individually significant items from con
Slide 33: Non-IFRS reconciliations
SUPPLEMENTARY INFORMATION NON-IFRS RECONCILIATIONS Full year ended 30 September ($M) 2023 2022 Variance 1 Statutory net profit / (loss) after tax 295.7 60.1 235.6 Add back: Individually significant items after tax1 73.3 256.9 (183.6) Underlying profit after tax1 369.0 317.0 52.0 Adjust for the follo
Slide 34: Definitions
DEFINITIONS Term Definition AN Includes ammonium nitrate prill and solution as well as emulsion products including bulk emulsion and packaged emulsion Capital expenditure Comprises spend on property, plant and equipment and intangible assets, on an accruals basis for FY20 onwards and on a cash basis
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