Dyno Nobel Limited · ASX:DNL
Dyno Nobel — Incitec Pivot — 1H 2006 Earnings Presentation
17 slides from Dyno Nobel's earnings presentation, May 1, 2006
Slide 1: 2006 Half Year Results Presentation
2006 Half Year Results Presentation “TURNAROUND ON TRACK” 1 May 2006
Slide 2: Turnaround on track: 1H Results Summary
Turnaround on track 1H Results Summary 6 Months Ended 31 March A$M 2006 2005 Change Sales revenue 395.5 439.6 (10%) EBIT excl significant items 40.7 26.5 54% EBIT Margin 10.3% 6.0% NPAT excl significant items 27.5 17.2 60% NPAT incl significant items 10.1 17.2 (41%) 2
Slide 3: Turnaround on track: 1H Results Summary
Turnaround on track 1H Results Summary 6 Months Ended 31 March A$M 2006 2005 Change Shareholder returns: EPS* (cps) 47 29 60% Dividend (cps) 22 21 5% Share price (31 March 06, 30 Sept 05) 19.10 15.82 21% Capital Management: Net Debt (AIFRS adjusted) 137.9 199.6 31% Gearing (AIFRS adjusted) 20.6% 25.
Slide 4: Good spring rains in 1Q
\ 4 Because the landiis your life. Good spring rains in 1Q Australian Rainfall 1 October to 31 December 2005 Product of the National Climate Centre hittpdiwrne_bom.gov.au Percentage of Mean 999939999 93 © Comenonwoalth of Australia 2006, Australian Bureau of Meteorology /2008- Incitec Pivot D
Slide 5: Dry conditions in 2Q
Because the landiis your life. Dry conditions in 2Q ae Australian Government Bureau of Meteorology Rainfall Percentages - Year To Date 1 January to 3 April 2006 Product of the National Climate Centre hitp2/vere_bom.gov.au © Comenonwealth of Australia 2006, Australian Bureau of Meteorology 5 L
Slide 6: Market Volumes
Market Volumes: 1H06: 1,020kt, 1H05: 1,283kt Sugar - volumes up 10% with a delayed start to the season Summer Crop - volumes flat with a dry finish to the season Pasture - volumes down 25%, strong carry over growth, high fertiliser prices Winter Crop - pre-season volumes down 25% due to high fertili
Slide 7: Competition - ELF reconciliation
Competition - ELF reconciliation Annualised sales volume (normal seasonal conditions): • Elders and Landmark pre ELF 880kt • New channel recruited 400kt • Net ELF supply agreement 300kt • Lost volume (~ 5% market share) 180kt * Total Ag Market in a normal year is 3.8MT 7
Slide 8: Progress against turnaround strategy
Progress against turnaround strategy What we promised: What we have delivered: • Multi channel approach to • ELF supply agreement signed secure value February 2006 • Commercial discipline: • Fertiliser prices up 16% on pcp, focus on value not just gross margin percentage up >4% volume points • Centr
Slide 9: Progress against turnaround strategy
Progress against turnaround strategy What we promised: What we have delivered: • Step change in our cost base • $11M restructuring savings delivered in 1H • Program benefits of $34M expected c/f initial target of $25M • Improved manufacturing cost • 1st Nauru phosphate rock deliveries base and suppl
Slide 10: EBIT Reconciliation: 1H06 v 1H05
10 $M 0 10 20 30 40 50 60 EBIT H 1 2005 27 M anufac turing 14 M argins Im prov ed T rading 13 M argins just volume Value not M ark et (12) C onditions Low er c os ts 11 from res truc ture Lowest Cost Unassailable EBIT Reconciliation: 1H06 v 1H05 ELF (12) 41 41 EBIT H 1 2006
Slide 11: Restructuring summary
Restructuring summary • $11M delivered in 1H − $6M FTE’s, $2M insurance, $3M supply chain • Full year 2006 benefit: $25M • Total program $34M (up 36% on initial target) − FTE $14M − Quick wins (incl insurance) $6M − Supply chain (incl Nauru) $14M 11
Slide 12: Significant items
Significant items $M Pre tax Post tax Cockle Creek* (28.3) (19.8) Elders (7.4) (5.2) QGC 8.8 7.6 Total** (26.9) (17.4) * $2.1M after tax to be booked in 2H ** $2M of further restructuring costs in 2H 12
Slide 13: Disciplined capital management
Disciplined capital management • Trade working capital down $72M on pcp on a like for like basis • Debt down $62M on pcp on a like for like basis • Sustenance capital spending 89% of depreciation • Dividend returns maximised via a 100% pay-out of retained earnings 13
Slide 14: Outlook - Probable return to normal rainfall conditions
Outlook - Probable Return to normal rainfall conditions: Rainfall (May to July 06) 14
Slide 15: Outlook: Second Half 2006
Outlook Second Half 2006 • Continued earnings momentum from commercial discipline and restructuring benefits • Manufacturing profitability underpinned by continued strength in global fertiliser prices and new procurement contracts • Normal rainfall outlook - winter cropping season a key earnings dri
Slide 16: Summary
Summary • 1H earnings improvement driven by management action rather than external factors − commercial discipline − cost reduction − financial discipline • Continued earnings momentum in 2H • On track for 18% RONA by 2007 Business turnaround on track 16
Slide 17: N GRAN Green
N GRAN Green Incitec Pivot “lege babes Liquifert’ ; a. 4 Because the land is your life.