Slide 1: Financial Results
Yesterday Today Tomorrow Financial Results Full year ended 30 June 2018 24 August 2018
Slide 2: Disclaimer
Disclaimer The material contained in this document is a presentation of information about the Group’s activities current at the date of the presentation, 24 August 2018. It is provided in summary form and does not purport to be complete. It should be read in conjunction with the Group’s periodic rep
Slide 3: Agenda
Agenda Results Overview Alistair Field, Group CEO Financial Results Stephen Mikkelsen, Group CFO Summary & Outlook Alistair Field, Group CEO 3
Slide 4: FY18 Highlights
FY18 Highlights: Continued strong growth and earnings Significant improvement in underlying earnings, return on capital and dividends Underlying EBIT of $279.2 million, up 53.1% over prior year Underlying NPAT of $192.1 million, up 60.0% over prior year Underlying Return on Capital of 10.3%1
Slide 5: Summary of Financial Outcomes
Summary of Financial Outcomes: Earnings and volume increased; achievement of return on capital target Sales Revenue Sales Volumes $6,448.0 million 9.86 million tonnes FY17 +26.9% 1H 4.30 million | 2H 4.25 million FY17 +13.3% $5,079.4 million 8.70 million Underlying1 EBITDA Net Cash $396.4 million $2
Slide 6: Employee Health & Safety: Safety first
6 Employee Health & Safety: Safety first Safety performance Safety remains our most important priority for both our employees and the community 3.0 2.8 FY18 was the safest year in our Total Recordable Injury Frequency Rate (TRIFR)1 Company’s history in both injury rates and 2.5 severity of injur
Slide 7: Sustainability
Sustainability: Core to our business and the way we do business Risks to our business from climate-change Extreme weather events impacting port facilities and transportation Certainty of electricity supply during high demand events Health & safety of employees operating in extreme heat or cold
Slide 8: Performance by Business
8 Performance by Business: North America and ANZ Metals drive strong earnings growth North America Metals Europe Metals Underlying EBIT of $80.3 million, up 74.2% over prior year Underlying EBIT of $20.1 million, down 43.2% over prior year Sales volume growth of 18.7% over the prior year, driv
Slide 9: Underlying EBIT by Quarter
9 Underlying EBIT by Quarter: Business resilience evidenced by strong EBIT Q2 through Q4 performance Relatively slow start to 1QFY18 contributed to a strong H2 vs H1 EBIT split Underlying EBIT by Quarter1 - Consistent EBIT Q2 through Q4 performance 90 3.0 despite some volatility in sales volumes 8
Slide 10: Financial Results
Yesterday Financial Results Stephen Mikkelsen, Group CFO Today Tomorrow 10
Slide 11: Group Financial Performance
Group Financial Performance: All key financial metrics showed strong improvement A$m FY17 FY18 % Chg Sales revenue was 26.9% above FY17 due to Sales revenue 5,079.4 6,448.0 26.9 higher volumes, and ferrous and non-ferrous prices Statutory EBITDA 313.5 395.8 26.3 Underlying EBITDA was up 34.5% o
Slide 12: Business Segment Financial Performance
Business Segment Financial Performance: Excellent segment performance with the exception of European Metals Underlying EBIT (A$m) FY17 FY18 Chg % North America Metals underlying EBIT of $80.3 million North America Metals 46.1 80.3 74.2 - Improved metal spreads due to rising prices and greater meta
Slide 13: Product Segment Sales Volumes
Product Segment Sales Volumes: Adjusted underlying volumes meaningfully improved Sales volumes (million tonnes) FY17 FY18 Chg % Sales Volumes by Region North America Metals 5.45 6.47 18.7 Total adjusted volumes grew by 9.7% in FY18 less divested operations (0.06) - - Excluding brokerage and dive
Slide 14: Cash Flow Statement
Cash Flow Statement: Cash flow from earnings driving strong free cash flow A$m FY17 FY18 Operating cash flow of $252 million: Underlying EBITDA 294.7 396.4 - Higher underlying EBITDA Change in working capital (9.9) (28.9) - Higher tax payments due to lower tax benefits from Net interest and tax pa
Slide 15: Capital Expenditure
Capital Expenditure: Capital allocation towards high returning opportunities Capital Expenditure Strong net cash balance of $298 million as at 30 June 2018 supports growth initiatives Forecast total capex of $200 million in FY19 250 - $58 million growth capex carried over from FY18 200 Slightl
Slide 16: Internal Initiatives
Internal Initiatives: EBIT uplift of circa $60 million by FY19 FY18A - $43 million FY19E - $20 million Product Logistics Logistics Supplier National Quality 3% 1% Relations Sword 3% 3% 9% National Sword Supplier 28% Relations 47% Continuous Continuous Improvement Improvement 68% 38% 16
Slide 17: Strategic Progress & Outlook
Yesterday Strategic Progress & Outlook Today Alistair Field, Group CEO Tomorrow 17
Slide 18: Return on Capital
Return on Capital: Five-year strategic target achieved 2 10.9% 10% 10.3% 8.0% 8% Return on Capital1 6% 5.5% 4.6% 4% 2.6% 2.3% 2% 0% FY13 FY14 FY15 FY16 FY17 FY18 1) Return on Capital = (underlying EBIT – Tax at effective tax rate of 30%) / (Net Assets + Net Debt) 2) FY18 incremental component reflec
Slide 19: Moving Further Up the Value Chain
Moving Further Up the Value Chain: Changing sales mix by product mitigates China’s national sword initiative Composition of total Composition of total FY18 non-ferrous sales volume(2) FY18 sales volume(1) Zorba Twitch, heavies, and sabot Non-ferrous other Copper chop Brokerage Non-ferrous shred ICW
Slide 20: Non-Ferrous Pricing
Non-Ferrous Pricing: Twitch and heavies selling at a significant premium to zorba Price Premium Zorba is composed primarily of aluminum as well as copper, brass, stainless steel, and other Twitch & Heavies vs Zorba metals (“Red Heavies” and “Grey Heavies”) 1,800 Our advanced and newly installed
Slide 21: Turkey
Turkey: Global diversity and quality customers provides business resilience Business continues with Turkey Currently providing scrap to Turkey Letters of credit are being opened and confirmed Limited impact to Turkey from US steel tariffs Turkey currently exports approximately 7% of its steel
Slide 22: FY19 Priorities
FY19 Priorities: Priorities balance growth with enhancing the existing business Capital Projects • Commissioning of investments in high-returning capital projects • Continued disciplined approach to executing projects Improving Capability • People, culture and leadership • Data management • Safety •
Slide 23: Conclusion & Outlook
Conclusion & Outlook: Strong earnings delivered and attractive long-term growth outlook FY18 Highlights Solid improvement in safety performance Underlying EBIT of $279.2 million, 53.1% higher than $182.4 million in the prior year Underlying Return on Capital of 10.3% - exceeding the 5-year tar
Slide 24: Questions & Answers
Yesterday Questions & Answers Today Tomorrow 24
Slide 25: Appendix
Yesterday Appendix Today Tomorrow 25
Slide 26: Group Profit & Loss
Group Profit & Loss FY18 vs. A$m FY14 FY15 FY16 FY17 FY18 FY17 Chg % Sales revenue 7,021.2 6,310.9 4,651.7 5,079.4 6,448.0 26.9 Statutory EBITDA 222.4 265.6 83.0 313.5 395.8 26.3 Underlying EBITDA 253.1 262.5 184.4 294.7 396.4 34.5 Statutory EBIT 76.9 144.8 (215.5) 201.2 278.6 38.5 Underlying EBIT 1
Slide 27: North America Metals
North America Metals A$m FY14 FY15 FY16 FY17 FY18 Chg % Sales Revenue 4,000.5 3,416.5 2,352.6 2,417.5 3,377.8 39.7 Statutory EBITDA 59.4 86.2 55.0 125.1 134.9 7.8 Underlying EBITDA 73.7 80.2 77.2 109.0 144.1 32.2 Depreciation 48.3 55.9 61.7 54.0 55.9 3.5 Amortisation 14.5 13.0 11.7 8.9 7.9 (11.2) St
Slide 28: Investment in SA Recycling
Investment in SA Recycling A$m FY14 FY15 FY16 FY17 FY18 Chg % Statutory EBIT 0.8 0.5 (120.6) 26.3 67.8 157.8 Underlying EBIT 0.8 0.5 (1.5) 26.3 68.5 160.5 Assets 206.7 243.1 126.8 131.9 180.7 37.0 1 Intake Volumes (000's) 3,409 2,156 2,005 2,557 3,477 36.0 Sales Volumes (000's)1 3,461 2,135 2,049 2,
Slide 29: Australia & New Zealand Metals
Australia & New Zealand Metals A$m FY14 FY15 FY16 FY17 FY18 Chg % Sales Revenue 1,193.8 1,053.3 743.6 981.4 1,071.0 9.1 Statutory EBITDA 108.8 85.0 58.0 90.9 121.6 33.8 Underlying EBITDA 106.9 86.9 66.6 91.3 112.7 23.4 Depreciation 26.7 26.6 26.0 28.2 29.1 3.2 Amortisation 1.0 1.1 0.9 0.4 0.2 (50.0)
Slide 30: Europe Metals
Europe Metals A$m FY14 FY15 FY16 FY17 FY18 Chg % Sales Revenue 1,068.7 1,036.6 759.1 924.3 1,203.0 30.2 Statutory EBITDA 29.0 38.0 (15.7) 50.5 42.0 (16.8) Underlying EBITDA 29.2 37.1 32.4 47.4 35.3 (25.5) Depreciation 12.7 12.5 13.8 12.0 14.9 24.2 Amortisation - - - - 0.3 NMF Statutory EBIT 16.3 25.
Slide 31: Global E-Recycling
Global E-Recycling A$m FY14 FY15 FY16 FY17 FY18 Chg % Sales Revenue 760.5 795.0 792.7 726.9 758.4 4.3 Statutory EBITDA 0.9 53.0 (2.6) 30.6 34.5 12.7 Underlying EBITDA 30.9 55.2 19.2 28.2 33.2 17.7 Depreciation 11.1 10.6 11.2 8.2 8.4 2.4 Amortisation 2.7 0.6 0.4 - - - Statutory EBIT (12.9) 41.8 (60.2
Slide 32: Corporate & Unallocated
Corporate & Unallocated A$m FY14 FY15 FY16 FY17 FY18 Chg % Sales Revenue (2.2) 9.5 3.7 29.3 37.8 29.0 Statutory EBITDA (4.4) 2.9 (10.2) (9.9) (5.0) 49.5 Underlying EBITDA 11.5 2.6 (9.5) (7.5) 2.6 NMF Depreciation 0.5 0.5 0.7 0.6 0.5 (16.7) Amortisation - - - - - - Statutory EBIT (4.9) 2.4 (10.9) (10
Slide 33: Financial Summary – Group
Financial Summary – Group A$m FY14 FY15 FY16 FY17 FY18 Group Results Sales Revenue 7,021 6,311 4,652 5,079 6,448 Underlying EBITDA 253 263 184 295 395 Underlying EBIT 136 142 58 182 278 Underlying NPAT 87 102 38 120 192 Underlying EPS (cents per share) 34 49 19 60 93 3 Dividend (cents per share) 10
Slide 34: Financial Summary – Segment
Financial Summary – Segment A$m FY14 FY15 FY16 FY17 FY18 Sales Revenue North America Metals 4,000 3,417 2,353 2,418 3,378 ANZ Metals 1,194 1,053 744 981 1,071 Europe Metals 1,069 1,037 759 924 1,203 Global E-Recycling 760 795 793 727 758 Unallocated -2 9 3 29 38 Total 7,021 6,311 4,652 5,079 6,448 U
Slide 35: Financial Summary – Segment (cont.)
Financial Summary – Segment (cont.) A$m FY14 FY15 FY16 FY17 FY18 Sales tonnes (‘000) North America Metals 8,152 7,018 5,772 5,454 6,466 ANZ Metals 2,054 1,874 1,418 1,656 1,696 Europe Metals 1,609 1,589 1,361 1,590 1,694 Total 11,815 10,481 8,551 8,700 9,856 Underlying EBIT North America Metals 12 1
Slide 36: Financial Summary – Product
Financial Summary – Product A$m FY14 FY15 FY16 FY17 FY18 Sales tonnes (‘000) Ferrous Trading 9,331 8,325 6,768 7,009 7,707 Ferrous Brokerage 1,918 1,617 1,307 1,237 1,719 Non Ferrous 566 539 476 454 432 Total 11,815 10,481 8,551 8,700 9,860 Sales Revenue Ferrous Metals 4,801 4,068 2,703 3,136 4,382
Slide 37: FY18 Income Tax Expense Considerations
FY18 Income Tax Expense Considerations A$m Profit Before Tax Income Tax Expense Effective Tax % Statutory Result 269.7 66.2 24.5 Impact of US Tax Reform 9.8 Impact of tax on return of capital (15.6) Recognition of net deferred tax asset 14.1 Underlying Results 269.7 74.5 27.6