Slide 1: Half Year Results Announcement
For personal use only Half Year Results Announcement 4 May 2009
Slide 2: Presentation outline
For personal use only Presentation outline • Group performance Graeme Liebelt • Divisional performance Noel Meehan • Capital management Noel Meehan • 2009 priorities Graeme Liebelt • Outlook Graeme Liebelt Orica Half Year Results 2009 2
Slide 3: Group performance
Group performance % For personal use only Half year ended 31 March (A$M) 2009 2008 Sales 3,960.2 3,009.6 31.6 Gross margin 1,596.1 1,365.0 16.9 EBITDA 1 594.5 528.4 12.5 EBIT 1 469.4 423.0 11.0 Net profit after tax pre individually material items 264.2 229.8 15.0 Net profit after tax after individua
Slide 4: Divisional EBIT
For personal use only Divisional EBIT Half year ended 31 March (A$M) 2009 2008 % Mining Services 319.0 271.1 17.7 Minova 1 58.5 64.0 (8.6) Chemicals 86.3 72.7 18.7 Consumer Products 61.1 59.9 2.0 Total Businesses 524.9 467.7 12.2 Corporate Centre 2 (23.0) (29.0) 20.7 Other Support Costs 3 (32.5) (15
Slide 5: Orica's approach – value drivers
For personal use only Orica’s approach – value drivers Orica Half Year Results 2009 5
Slide 6: SH&E - Safety
For personal use only SH&E - Safety Half Year Half Year 2009 2008 AWRCR 1 0.63 0.73 Recordable cases 66 68 Distribution incidents 17 11 Fatalities 4 - 1 All Worker Recordable Case Rate is calculated as the number of injuries and illnesses per 200,000 hours worked. Orica Half Year Results 2009 6
Slide 7: Gross margin growth – Half year
For personal use only Gross margin growth – Half year A$M 1,700 +16.9% 1,500 +14.5% 1,300 +18.1% 1,100 +7.1% +7.8% 900 +10.5% -2.1% 700 500 2002 2003 2004 2005 2006 2007 2008 2009 Compound average first half growth rate since 2002 is 10% Orica Half Year Results 2009 7
Slide 8: Productivity – Half year
For personal use only Productivity1 – Half year 100% 95% 90% 84.1% 85% 80% 78.8% 77.4% 75.5% 75.9% 75% 73.5% 71.2% 70.9% 70% 65% 60% 55% 50% 2002 2003 2004 2005 2006 2007 2008 2009 Continuous improvement in productivity 1 Productivity is measured as fixed costs (incl. depreciation and amortisation)
Slide 9: Net profit after tax – Half year
For personal use only Net profit after tax1 – Half year A$M +15.0% 280 240 +13.1% +39.3% 200 160 +13.8% +26.0% +4.8% 120 +20.6% 80 40 0 2002 2003 2004 2005 2006 2007 2008 2009 Compound average first half growth rate since 2002 is 19% 1 Pre individually material items Orica Half Year Results 2009 9
Slide 10: Divisional Performance
For personal use only Divisional Performance
Slide 11: EBIT growth
For personal use only EBIT growth EBIT 11% $M 600 14 (15) (42) 27 500 37 469 25 423 400 300 200 HY08 EBIT Volume/Price/ Productivity/ Foreign Ammonia Lag Steel Price Other Costs HY09 EBIT Mix Synergies Exchange Under-recovery Change Orica Half Year Results 2009 11
Slide 12: Orica Mining Services
For personal use only Orica Mining Services Half year ended 31 March (A$M) 2009 2008 % Sales 2,215.6 1,580.9 40.1 EBITDA 395.8 335.6 17.9 EBITDA margin (%) 17.9% 21.2% (15.6) EBIT 319.0 271.1 17.7 EBIT margin (%) 1 14.4% 17.1% (15.8) 1 Decline in the EBIT margin is due to the net effect of exchange
Slide 13: Orica Mining Services EBIT
Orica Mining Services EBIT 18% Sales $2,216M; EBIT $319M; Operating Net Assets $2,848M For personal use only $M 700 18 (9) 20 (281) 313 14 600 500 400 (27) 319 271 300 200 100 0 HY08 EBIT Price/Mix Ammonia FX Productivity Volume Variable Fixed Cost / HY09 EBIT Lag Costs Depn 9 Favourable price chang
Slide 14: Minova
For personal use only Minova Half year ended 31 March (A$M) 2009 2008 % Sales 503.2 337.0 49.3 EBITDA 77.6 78.2 (0.8) EBITDA margin (%) 15.4% 23.2% (33.6) EBIT 58.5 64.0 (8.6) EBIT margin (%) 11.6% 19.0% (38.9) Orica Half Year Results 2009 14
Slide 15: Minova EBIT
Minova EBIT 9% Sales $503M; EBIT $59M; Operating Net Assets $2,039M For personal use only $M 90 2 (15) 6 80 11 70 (3) 64 (3) (4) 60 59 50 40 30 20 10 0 HY08 EBIT Synergy FX Cash Fixed Steel Price Price / Mix Volume Acquisition HY09 EBIT Benefit Costs/Other Under- Amortisation recovery 9 Delivery of
Slide 16: Acquired Minova business performance
For personal use only Acquired Minova business performance Half year ended 31 March (A$M) 2009 Underlying trading performance of Minova Businesses 73.8 Under-recovery of US steel input prices (15.2) Synergies delivered 13.5 Amortisation of intangibles (13.7) First half EBIT 58.4 Synergy Benefit 1 (A
Slide 17: Acquired Minova business - integration costs
For personal use only Acquired Minova business - integration costs 2009 1st Half Cumulative Integration cost category (A$M) Actual Actual Integration costs 0.7 3.6 Synergy implementation costs 2.0 6.3 Redundancies 0.1 0.7 Transitional salaries/other 1.6 3.9 Total Integration costs 4.4 14.5 Project o
Slide 18: Chemicals
For personal use only Chemicals Half year ended 31 March (A$M) 2009 2008 % Sales 810.8 682.5 18.8 EBITDA 102.8 89.0 15.5 EBITDA margin (%) 12.7% 13.0% (2.3) EBIT 86.3 72.7 18.7 EBIT margin (%) 10.6% 10.7% (0.9) Orica Half Year Results 2009 18
Slide 19: Chemicals EBIT
Chemicals EBIT 19% Sales $811M; EBIT $86M; Operating Net Assets $830M For personal use only $M 100 9 (4) 90 5 86 80 3 73 70 60 50 40 30 20 10 0 HY08 EBIT FX Synergy Mining Volume/Price HY09 EBIT Benefit Growth /Mix 9 Net benefit from foreign exchange 9 Higher global caustic price movements 9 Improve
Slide 20: Orica Consumer Products
For personal use only Orica Consumer Products Half year ended 31 March (A$M) 2009 2008 % Sales 469.2 446.6 5.1 EBITDA 69.4 67.0 3.6 EBITDA margin (%) 14.8% 15.0% (1.3) EBIT 61.1 59.9 2.0 EBIT margin (%) 13.0% 13.4% (3.0) Orica Half Year Results 2009 20
Slide 21: Orica Consumer Products EBIT
Orica Consumer Products EBIT 2% Sales $469M; EBIT $61M; Operating Net Assets $312M For personal use only $M 65 (1) 2 1 (1) 60 61 60 55 50 45 40 HY08 EBIT Volume/ Productivity Marketing & China HY09 EBIT Price/Mix Development Establishment Projects Costs 9 Record result despite market decline, È Diff
Slide 22: Corporate centre and other support services
For personal use only Corporate centre and other support services Half year ended 31 March (A$M) 2009 2008 $ Corporate centre costs (23.0) (29.0) 6.0 Other support costs (32.5) (15.7) (16.8) Total Costs (55.5) (44.7) (10.8) Corporate Centre Other support costs 9 Prior year included È Mark-to-market
Slide 23: Individually material items
For personal use only Individually material items Half year ended 31 March (A$M) 2009 2008 Dyno Nobel integration costs (7.4) (3.7) Minova/Excel integration costs (3.7) (1.6) Marplex asset impairment (14.0) - Mining Services restructure (17.4) - OCP demerger expenses (15.3) - Gain on derivatives 14.
Slide 24: Capital management - key measures
For personal use only Capital management - key measures Half year ended 31 March 2009 2008 Net Debt (A$M) 1,477.0 2,184.5 Net Interest Expense (A$M) 71.5 90.4 Interest Cover (times) 6.6 4.7 Operating Cash ($) 217.3 161.1 Cash Conversion 1 (%) 73.4 59.3 Rolling TWC to Rolling Sales (%) 14.6 14.9 Gear
Slide 25: Bank Debt Facilities
For personal use only Bank Debt Facilities • Bank debt facilities total A$2.3B of which A$0.5B was drawn at 31 March 2009 • A$1.1B of facilities mature in Oct 2009 • A$1.2B of facilities mature in Dec 2010 and Dec 2012 • Low level of bank debt at half year • Initiated discussions with banks to exten
Slide 26: Cashflow
Cashflow Half year ended 31 March (A$M) 2009 2008 $ For personal use only EBITDA 594.5 528.4 66.1 Net interest paid (68.7) (81.7) 13.0 Net tax paid (125.4) (96.4) (29.0) Trade working capital movement (78.4) (134.3) 55.9 Non trade working capital movement (104.7) (54.9) (49.8) Net operating cash flo
Slide 27: Cash Conversion
For personal use only Cash Conversion Half year ended 31 March (A$M) 2009 2008 EBITDA 594.5 528.4 TWC movement (78.4) (134.3) Sustenance (80.0) (80.8) Cash Conversion 436.1 313.3 Cash Conversion % 73.4% 59.3% Orica Half Year Results 2009 27
Slide 28: Rolling TWC to Rolling Sales %
For personal use only Rolling TWC to Rolling Sales % 19.0% 18.0% 17.0% 16.0% Rolling TWC / Sales % 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% HY02 FY02 HY03 FY03 HY04 FY04 HY05 FY05 HY06 FY06 HY07 FY07 HY08 FY08 HY09 Steady progress continues on management of TWC Improved year on year first half performanc
Slide 29: Hedging
For personal use only Hedging • Overseas earnings represented 60% of Group earnings in the 2009 half year • Orica has exposures to a basket of currencies given its geographical spread • The basket of currencies creates a portfolio effect on our exposures • Transactional and translational (EBIT) expo
Slide 30: Major EBIT Currency Hedges
For personal use only Major EBIT Currency Hedges Major EBIT currency hedges include: Effective Currency Exposures % Hedged Hedge Rate • AUD/USD 76% 0.7481 • AUD/CAD 77% 0.8332 • AUD/SEK 79% 5.4740 • AUD/CLP 88% 435.6200 • AUD/NZD 17% 1.2232 Net impact on EBIT of a 1% move in exchange rates on a dive
Slide 31: Capital management – 2009
For personal use only Capital management – 2009 • Continued discipline in trade working capital management • Cautious management of sustenance and growth capital • Credit Rating – committed to BBB+ • Finalise extension of current bank facilities Orica Half Year Results 2009 31
Slide 32: 2009 Priorities
For personal use only 2009 Priorities
Slide 33: Growth Priorities
Growth Priorities For personal use only • Minova Acquisition • Protect market leadership position in Indonesia through development of Bontang AN Plant • Capitalise on tightening AN market conditions over the medium term • Capitalise on strong demand for sodium cyanide • Grow “close to the core” thro
Slide 34: Growth Priorities – Progress
Growth Priorities – Progress For personal use only Priority Target Status Minova Acquistion Attractive 18% RONA to be achieved on all three acquisitions Inclusive of Minova, Excel and Strata Control industry in 2011 (inclusive of grossed up financial synergies) Systems structure Attractive Protect m
Slide 35: Productivity Priorities
Productivity Priorities For personal use only Priority Target Status Attractive Delivery of $45M EBIT synergies by end 2011 and Delivery of synergies of Minova integration industry $35M financial synergies from acquisition completion structure Attractive Delivery of synergies of merger of former Del
Slide 36: Environmental legacy update
For personal use only Environmental legacy update • Botany Water – Plume is contained – Recycled water being utilised – looking to increase volumes • Hexachlorobenzene – Work continues on plans to export Hexachlorobenzene waste – Encapsulated waste remediation to start in 2010 • No other significant
Slide 37: Sustainability
For personal use only Sustainability • Challenge 2010 targets established • Improved performance on most measures in 2009 • At or below 2010 targets for water consumption and waste generation • Greenhouse gas emissions – globally approx 4.0 million tonnes of CO2E, Australia approx 3.0 million tonnes
Slide 38: Outlook
For personal use only Outlook Our businesses continue to show considerable resilience. Accordingly, we see no reason to alter our previous guidance that we expect Group net profit after tax (before individually material items) in 2009 to be higher than that reported in 2008. However we remain vigila
Slide 39: Summary
For personal use only Summary • Tight cost control and continued improvement in productivity • Disciplined cash management • Strong balance sheet • Well positioned for continued growth Orica Half Year Results 2009 39
Slide 40: Supplementary Information
For personal use only Supplementary Information
Slide 41: EBIT growth by business
EBIT growth by business Mining Services 1 Minova 700 For personal use only 16% 160 20% 600 140 EBIT MARGIN 500 16% EBIT MARGIN 120 EBIT A$M 12% EBIT A$M 400 100 12% 300 8% 80 60 8% 200 4% 40 100 4% 20 0 0% 0 0% 2006 2007 2008 2009 2007 2008 2009 1st Half EBIT 2nd Half EBIT 1st Half EBIT Margin 1st H
Slide 42: Orica Mining Services by geography
Orica Mining Services by geography For personal use only Australia/Asia North America 400 26% 120 12% 350 22% 100 10% 300 EBIT MARGIN EBIT MARGIN 18% 80 8% EBIT A$M EBIT A$M 250 14% 200 60 6% 10% 150 40 4% 100 6% 2% 20 2% 50 0 -2% 0 0% 2006 2007 2008 2009 2006 2007 2008 2009 1st Half EBIT 2nd Half E
Slide 43: EBIT contribution by business platform
For personal use only EBIT contribution by business platform1 March 2008 March 2009 Chemicals Group Chemicals 15.5% Group 16.5% Minova Minova 13.7% 11.1% Mining Services Mining 58.0% Services Consumer Consumer 60.8% Products Products 11.6% 12.8% 1 Excludes corporate costs Orica Half Year Results 200
Slide 44: EBIT contribution by geography
For personal use only EBIT contribution by geography March 2008 March 2009 Other Other Europe Europe 1.1% 0.8% 15.4% 11.4% Latin Latin Australia America Australia America 43.0% 14.4% 40.3% 9.4% North America North 16.2% America Asia New Zealand New Zealand 6.1% 17.4% Asia 9.1% 6.3% 9.1% Orica Half Y
Slide 45: Gross sales by geography
For personal use only Gross sales by geography March 2008 March 2009 Other Europe Other 1.0% Europe 13.1% 1.0% 11.3% Asia Asia 7.6% Australia Australia 10.4% 38.2% 42.5% Latin America 11.4% Latin America 14.5% North New Zealand New Zealand America North 5.4% 6.6% 17.8% America 19.2% Orica Half Year
Slide 46: Net interest expense
For personal use only Net interest expense Half year ended 31 March (A$M) 2009 2008 $ Net interest expense 72 90 18 n Comprising: Interest on net debt 67 86 19 n Add: Unwinding of discount on provisions 4 4 Add: Major External Finance Leases 1 0 1u Net interest expense 72 90 18 n Interest on net deb
Slide 47: Impact of Step-Up Preference Securities (SPS) – earnings per share
Impact of Step-Up Preference Securities (SPS) – earnings per share1 For personal use only Reported per Accounts A$M Reported net profit 284.1 Less: Net profit attributable to minority interests (19.9) After tax distributions to SPS holders 2 (17.9 ) Adjusted net profit 246.3 Weighted average ordinar
Slide 48: Impact of SPS – gearing
For personal use only Impact of SPS – gearing (A$M) Reported per Hybrid Accounts Adjusted Current borrowings 200.2 200.2 Non-current borrowings 1,606.4 1,606.4 SPS adjustment 2 - 250.0 Less: Cash (329.6) (329.6) Net Debt 1,477.0 1,727.0 Parent entity equity 1 4,159.8 4,159.8 Minority interests 112.1
Slide 49: Impact of SPS – interest cover
For personal use only Impact of SPS – interest cover (A$M) Reported per Hybrid Accounts Adjusted Financial expense 98.4 98.4 Financial income (26.9) (26.9) SPS distribution adjustment 1 - 11.8 Net borrowing costs 71.5 83.3 EBIT 469.4 469.4 Interest Cover (times) 6.6 5.4 1 Represents 50% of the SPS d
Slide 50: Debt Profile (as at March 2009)
For personal use only Debt Profile (as at 31 March 2009) Bank Term Debt Maturity Profile 1 Facilities, $457M A$M Drawn Undrawn Total < 1 year 200 1,105 1,305 1 – 2 years 702 263 965 2 – 5 years 61 437 498 Other, $86M > 5 years 844 - 844 USPP, Medium Term Total 1,807 1,805 3,612 $1,149M Notes, $75M C
Slide 51: Disclaimer
For personal use only Disclaimer This presentation has been prepared by Orica Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the