Slide 1: 2021 Full Year Results
2021 Full Year Results 11 NOVEMBER 2021 Sanjeev Gandhi | Managing Director & CEO Christopher Davis | Chief Financial Officer
Slide 2: Disclaimer
Disclaimer Forward looking statements 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 a
Slide 3: Agenda
AGENDA 2021 Full Year Results 2021 in review Slide 4 Financial performance Slide 12 Strategy update Slide 20 2022 outlook Slide 38 2021 FULL YEAR RESULTS 3
Slide 4: 2021 in review
2021 in review SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2021 FULL YEAR RESULTS 4
Slide 5: Sustainably mobilising the earth's resources
CEO IMPRESSIONS – FIRST SIX MONTHS Sustainably mobilising the earth’s resources Leading on-mine blasting and Leading quarry and Leading provider of blasting Leading provider of mining detonator supplier and services construction blasting and and orebody intelligence chemicals provider services provi
Slide 6: Safety is our top priority, and our sustainability focus is pivotal to our strategy
SAFETY AND SUSTAINABILITY Safety is our top priority, and our sustainability focus is pivotal to our strategy Safety and our people Climate change • Fatality free year • Reducing our emissions; 13% reduction since 20192 • Serious Injury Case Rate at 0.19, coming off historic lows • Pathway to reduce
Slide 7: Second half 2021 focused on stabilising the core and positioning us for future growth
CONTINUED TO STABILISE THE CORE Second half 2021 focused on stabilising the core and positioning us for future growth We spoke about five …and have achieved key milestones in 2H21, setting a strong base for priorities… our refreshed strategy Technology Delivered to plan in FY21; mainly from strong d
Slide 8: Our refreshed strategy will be supported by continuous efforts to drive profitable growth
ENHANCING THE CORE Our refreshed strategy will be supported by continuous efforts to drive profitable growth and reduce the cost base Progress to date Go forward Greater focus on pricing and sustainable margin Capture fair share of value including pricing for Pricing discipline improvement security
Slide 9: Challenging first half with momentum building from second half recovery
FULL YEAR RESULTS Challenging first half with momentum building from second half recovery Underlying EBIT1,2 AN volume $427m 4.09mt • Sales revenue and AN volumes up on the pcp, with Exsa included in Group for full FY21 DOWN 30% vs pcp UP 4% vs pcp • 14% increase in Electronic Blasting Systems (EBS)
Slide 10: Improved performance in second half across all regions
FY21 BUSINESS PERFORMANCE Improved performance in second half across all regions Australia Pacific & Asia North America • Improvement in H2 following softness in Australian East • Improved business sentiment in H2 Coast demand in H1 from trade tensions with China • Soft demand in the USA in H1, part
Slide 11: Orica Monitor result up 50% and Minova has delivered to plan
FY21 BUSINESS PERFORMANCE Orica Monitor result up 50% and Minova has delivered to plan Orica Monitor Minova (held for sale) • >50% increase in EBIT on the pcp • Customer growth from increased demand, notably in Canada • Strong growth in demand for monitoring products and services; • Partially offset
Slide 12: Financial Performance
Financial Performance CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER 2021 FULL YEAR RESULTS 12
Slide 13: Results strengthened in the second half after a challenging start to the year
FINANCIAL RESULT Results strengthened in the second half after a challenging start to the year 20211 2020 Change Year ended September ($M) Restated1,2 Sales revenue 5,682 5,611 1% Underlying EBITDA3 796 946 (16%) Underlying EBIT4 427 614 (30%) Underlying NPAT5 208 299 (30%) Individually significant
Slide 14: Cash positive net impact from individually significant items
INDIVIDUALLY SIGNIFICANT ITEMS Cash positive net impact from individually significant items Gross Tax Net Year ended September ($M) (before tax) (after tax) Gain on sale of land 112.4 5.7 118.1 Operating model restructuring (47.0) 13.2 (33.8) Environmental provision expense (39.3) 11.8 (27.5) EMEA g
Slide 15: Significantly improved second half performance
EBIT BRIDGE Significantly improved second half performance Orica Group EBIT FY20 to FY21 ($M) 614 (42) (32) (31) (22) 12 427 (40) (27) (5) EBIT Foreign SAP Volume Manufacturing Mix & Rise & fall Adjacent Other EBIT FY20 exchange Margin 2 lag businesses 3 FY21 1 Restated 1. Restated to reflect applic
Slide 16: Manufacturing plant turnarounds executed as planned and Burrup rectification works complete
CAPITAL EXPENDITURE Manufacturing plant turnarounds executed as planned and Burrup rectification works complete Total capital expenditure at lower end of expected range, reduced on the pcp following Capital expenditure ($M) 1 completion of Burrup rectification works. Growth 339 323 • Increased spend
Slide 17: Strong operating cash flow and cash conversion sustained into second half
CASH FLOW Strong operating cash flow and cash conversion sustained into second half Net operating cash flow ($M) Cash conversion2 (%) 746 127.0 619 101.4 562 74.4 480 145 184 104 139 1 41 FY19 FY20 FY21 FY19 FY20 FY21 Restated 1 H1 H2 1. Restated to reflect application of IFRIC Interpretation Config
Slide 18: Reduction in net debt from strong cash generation and proceeds of land sales
NET DEBT Reduction in net debt from strong cash generation and proceeds of land sales Net debt1 & gearing ($M, %) Movement in net debt1 ($M) 38.2% (342) 80 34.9% 34.6% 1,821 1,821 1,479 1,621 (363) (59) 1,479 FY19 FY20 FY21 3 FY20 Dividends Net Foreign FY21 Restated 2 net debt paid cash exchange net
Slide 19: Balance sheet and liquidity profile
FINANCIAL POSITION Balance sheet and liquidity profile Available liquidity ($M) Debt covenants2 • Cash and undrawn committed facilities provide liquidity of $2.1 billion Gearing (%) 57.5% • Significant headroom to gearing and interest cover 2,431 debt covenants 2,080 34.6% • Well distributed debt ma
Slide 20: Strategy update
Strategy update SANJEEV GANDHI, MANAGING DIRECTOR & CEO CHRISTOPHER DAVIS, CHIEF FINANCIAL OFFICER 2021 FULL YEAR RESULTS 20
Slide 21: Orica's global reach creates a significant competitive advantage
GLOBAL REACH Orica’s global reach creates a significant competitive advantage 13,000+ employees 148 years of expertise Customers in Head Office more than Regional Head Office 100 countries Customer Presence Monitoring Centre 6 continuous Discrete Manufacturing for Initiating Systems plants and and P
Slide 22: Positioning Orica to deliver shareholder value
REFRESHED STRATEGY Positioning Orica to deliver shareholder value 2021 FULL YEAR RESULTS 22
Slide 23: Progressing towards our commitment to reduce scope 1 & 2 emissions by 2030
SUSTAINABLY MOBILISING THE EARTH’S RESOURCES Progressing towards our existing commitment to reduce ≥40% scope 1 & 2 greenhouse gas emissions by 2030 Decarbonisation pathway towards 20301 Process emissions • Priority to reduce nitrous oxide emissions from Commitment: chemical processes To reduce Scop
Slide 24: Ambition to achieve net zero emissions by 2050
SUSTAINABLY MOBILISING THE EARTH’S RESOURCES Ambition to achieve net zero emissions by 20501, building on our 2030 commitment Ambition to achieve net zero greenhouse gas emissions by 20501 Process emissions Scope Net zero ambition: 1&2 Renewable To achieve net zero scope 1, 2 Energy Low carbon energ
Slide 25: Our approach will focus on four business verticals
WHERE WE WILL WIN – FOUR BUSINESS VERTICALS Our approach will focus on four business verticals Mining vertical Quarry and construction vertical • Blasting in mining at the core of our business • Leading player in the growing quarry and construction sector • Future-facing commodities growing ahead of
Slide 26: Blasting in mining remains at the core of our business
WHERE WE WILL WIN - MINING VERTICAL OVERVIEW Blasting in mining remains at the core of our business Maximising outcomes for the core of the business by: Overview • Industry-leading suite of blasting technology and solutions • Proactive approach to leveraging Focusing on growing market trends • Stron
Slide 27: Bulk commodities continue to drive demand growth, future-facing commodities growing ahead of GDP
MINING VERTICAL - COMMODITY OUTLOOK Bulk commodities continue to drive demand growth, future-facing commodities growing ahead of GDP Focusing on growing markets Sustainability and electrification megatrends Regional commodity outlook to 20301 (Material moved) APA North Latin ex China America America
Slide 28: Building momentum from our industry-leading suite of blasting technology
MINING VERTICAL - BLASTING TECHNOLOGIES Building momentum from our industry-leading suite of blasting technology and solutions • Real-time matching of explosives energy to geology changes, with widest Electronic Blasting Systems range in industry (K UNITS) • Can be delivered in both pumped and auger
Slide 29: Unlocking value across the manufacturing network
MINING VERTICAL - MANUFACTURING Unlocking value across the manufacturing network Continuous manufacturing optimisation Discrete network optimisation Kooragang Island (KI) and Yarwun • Progressing towards 30% increase in global • Exploring options for lower carbon feedstock, including imported green
Slide 30: Leading player in the growing quarry and construction sector
WHERE WE WILL WIN - QUARRY AND CONSTRUCTION (Q&C) VERTICAL OVERVIEW Leading player in the growing quarry and construction sector Overview Global (ex-China) quarrying material moved1 (BILLION TONNES) • Leading global player in a fragmented market +~2.5% • Market leader in tunneling drill and blast so
Slide 31: Well positioned to capture opportunities in both mature and developing Q&C markets
QUARRY AND CONSTRUCTION (Q&C) - MARKETS Well positioned to capture opportunities in both mature and developing Q&C markets Approach dependent on maturity level of Mature Q&C markets quarry and construction markets • Orica continues to grow in the Q&C sector in mature economies such as Canada, USA an
Slide 32: Rapid acceleration of value-add offerings beyond blasting
WHERE WE WILL WIN - DIGITAL SOLUTIONS VERTICAL OVERVIEW Rapid acceleration of value-add offerings beyond blasting Overview Digital solutions (Sites implemented) • Fastest growing vertical with customers more than doubled in FY21 + ~120% Potential • Successful acquisitions, e.g. GroundProbe to grow •
Slide 33: Moving beyond blasting to design for outcome
DIGITAL SOLUTIONS VERTICAL - ACROSS THE MINING VALUE CHAIN Moving beyond blasting to design for outcome Orebody intelligence Design and model Blasting Measure and monitor Ore processing Enhanced orebody Outcome-based High quality Real-time measuring Real-time traceability Connecting orebody Value ad
Slide 34: Grow mining chemicals, building on our world-class manufacturing facilities
WHERE WE WILL WIN - MINING CHEMICALS VERTICAL OVERVIEW Grow mining chemicals, building on our world-class manufacturing facilities Overview Global gold ore treated1 (MT) Global cyanide demand2 (KT) • Leading cyanide supplier • Cyanide safety and security of supply through Orica’s extensive supply ch
Slide 35: Success of the refreshed strategy underpinned by continuous improvement in cost efficiency
SUSTAINABLE COST REDUCTION Success of the refreshed strategy underpinned by continuous improvement in cost efficiency Recap of cost-focused initiatives Leveraging specialised teams to drive efficiencies and enhanced outcomes Ongoing cost reduction Centres of Excellence Team Location Status • Strateg
Slide 36: Orica's strategy is underpinned by a disciplined approach toward capital management
CAPITAL MANAGEMENT FRAMEWORK Orica’s strategy is underpinned by a disciplined approach toward capital management Strong cash generation Working capital efficiency Asset efficiency Maintaining an investment grade credit rating Preserving the flexibility for investment alternatives and to respond to c
Slide 37: A clear pathway towards profitable growth and value creation for our stakeholders
STRATEGIC PLAN A clear pathway towards profitable growth and value creation for our stakeholders • Pursue organic growth from the core • Accelerate adoption of innovative blasting technologies and digital solutions, both upstream and downstream 0–3 • Optimise manufacturing and supply chains years •
Slide 38: 2022 Outlook
2022 Outlook SANJEEV GANDHI, MANAGING DIRECTOR & CEO 2021 FULL YEAR RESULTS 38
Slide 39: Improved performance from strengthened core and strategic initiatives
2022 OUTLOOK Improved performance from strengthened core and strategic initiatives • Global commodity growth anticipated to continue, particularly in copper and gold; and in quarry & construction markets • Subject to market conditions, FY22 EBIT expected to increase on FY21 EBIT from continuing oper
Slide 40: Supplementary information
Supplementary information 2021 FULL YEAR RESULTS 40
Slide 41: Explosives volumes
SUPPLEMENTARY INFORMATION Explosives volumes Year ended 30 September 2021 volumes vs pcp 4 ‘000 tonnes Emulsion Emulsion AN 2 Total AN Total products 3 products Australia Pacific & Asia 657 1,088 1,745 (6%) 2% (1%) North America 502 511 1,013 (6%) 4% (1%) Latin America 1 246 683 929 18% 41% 34% Euro
Slide 42: Segment analysis
SUPPLEMENTARY INFORMATION Segment analysis Year ended 30 September 2021 2020 Variance $M External External EBIT External EBIT EBIT revenue revenue (restated) 1 revenue Australia Pacific & Asia 2,106 280 2,050 374 3% (25%) North America 1,230 108 1,260 165 (2%) (35%) Latin America 956 29 856 39 12% (
Slide 43: Diversified global business
SUPPLEMENTARY INFORMATION Diversified global business Revenue by region 1 Revenue by commodity 1 Revenue by product/service type 1 2% 4% 15% 12% 17% 17% 15% 41% 7% 19% 5% 18% 8% 19% 33% 16% 24% 21% 7% Australia Pacific & Asia North America Thermal Coal Metallurgical Coal AN/ANFO Bulk Emulsion Iron O
Slide 44: Australia Pacific & Asia
SUPPLEMENTARY INFORMATION Australia Pacific & Asia Market conditions EBIT ($M) External revenue ($M) • Australian thermal coal exports lower in the first half due to China trade 383 374 2,013 2,050 2,106 tensions, mitigated in second half by trade flows to other markets 209 202 280 1,065 1,163 1,039
Slide 45: Australian thermal coal exports
SUPPLEMENTARY INFORMATION Australian thermal coal exports Trade flows of Australian thermal coal variance to pcp by import country 1 (METRIC TONNES, MILLIONS) 4.7 0.8 0.1 0.4 (1.3) (1.3) (1.3) (1.2) (1.2) (3.2) (5.0) Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug China India South Korea Taiwan Japan Re
Slide 46: North America
SUPPLEMENTARY INFORMATION North America Market conditions EBIT ($M) External revenue ($M) 1,392 • Short term thermal coal demand strong in USA during summer 192 1,260 1,230 165 • Slow mine ramp ups in Mexico; challenging political and economic factors 98 712 581 654 69 108 • Labour shortages across
Slide 47: Latin America
SUPPLEMENTARY INFORMATION Latin America Market conditions EBIT ($M) External revenue ($M) • Mining activity recovering, with the exception of Colombia 44 957 910 856 • Social unrest in Peru and strikes in Chile 25 39 526 29 491 423 • Increased sea freight costs 16 16 • Stronger AUD compared to the p
Slide 48: Europe, Middle East & Africa
SUPPLEMENTARY INFORMATION Europe, Middle East & Africa Market conditions EBIT ($M) External revenue ($M) • Postponed infrastructure projects in Norway and the Middle East 68 64 875 883 801 • Quarantine requirements constraining mining in the CIS and Africa in H1 38 31 453 412 399 • Improving demand
Slide 49: Adjacent businesses
SUPPLEMENTARY INFORMATION Adjacent businesses Orica Monitor Minova EBIT ($M) External revenue ($M) EBIT ($M) External revenue ($M) 31 591 115 97 21 22 468 474 22 18 94 302 20 63 15 10 15 208 255 52 42 13 11 8 289 260 13 52 52 11 219 45 9 9 7 7 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2
Slide 50: Foreign exchange translation
SUPPLEMENTARY INFORMATION Foreign exchange translation Basket of 44 currencies translated to Australian Dollar (AUD) earnings Top 5 currencies by EBIT impact FY21 FY20 Var 30 Sep 2021 30 Sep 2020 Var Currency Average rates Spot rates CAD – Canadian Dollar 0.9508 0.9110 4% 0.9158 0.9559 (4%) USD – US
Slide 51: Manufacturing reliability
SUPPLEMENTARY INFORMATION Manufacturing reliability Plant maintenance turnarounds during FY21 Continuous AN Plant OEE (%) Plant Completed 92% Kooragang Island ammonia Nov 2020 87% 89% 83% Yarwun cyanide Dec 2020 76% Yarwun nitric acid plant 3 Feb 2021 Plant turnarounds completed since 30 September 2
Slide 52: Debt profile
SUPPLEMENTARY INFORMATION Debt profile Drawn debt maturity profile ($M) Average tenor at September 2021 – 5.4 years 1,000 900 800 700 600 500 400 300 200 100 0 FY22 FY23 FY24 FY25 FY26 FY27 FY29 FY31 Committed bank facilities US private placement Other 1 1. Includes overdraft and other borrowings 20
Slide 53: Environmental and decommissioning provisions
SUPPLEMENTARY INFORMATION Environmental and decommissioning provisions As at ($M) 30 Sep 2021 30 Sep 2020 Botany groundwater remediation 212 201 Botany hexachlorabenzene (HCB) waste 29 31 Burrup decommissioning 44 57 Initiating systems network optimisation 27 28 Deer Park remediation 12 17 Yarravill
Slide 54: Non-IFRS reconciliations
SUPPLEMENTARY INFORMATION Non-IFRS reconciliations Year ended 30 September ($M) 2021 2020 Variance Statutory net profit/(loss) after tax (174) 82 Add back: Individually significant items after tax 382 217 76% Underlying profit after tax 208 299 (30%) Adjust for the following: Net financing costs 106
Slide 55: Definitions
SUPPLEMENTARY INFORMATION 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 o