Orica Limited · ASX:ORI
Orica — BAML conference (March 2020)
28 slides from Orica's conference presentation, March 2020
Slide 1: Orica Investor Presentation February/March 2020
FEBRUARY / MARCH 2020 ORICA INVESTOR PRESENTATION
Slide 2: Global leader in mining & civil blasting
GLOBAL LEADER IN MINING & CIVIL BLASTING Building on a strong foundation Manufacturing Blasting Field Productivity & Supply Services Solutions No.1 1,500 140+ GLOBAL BLASTS PER DAY YEARS SUPPLIER on our customer sites of experience and of commercial innovation explosives 11,500+ R&D INVESTMENT ~ 30%
Slide 3: Substantial competitive advantage that is difficult to replicate
GLOBAL LEADER IN MINING & CIVIL BLASTING Substantial competitive advantage that is difficult to replicate Scale and efficiency that comes from being the leading supplier of commercial ECONOMIES OF SCALE explosives and blasting systems to the mining and infrastructure markets globally LEADING BRAND A
Slide 4: True global footprint
TRUE GLOBAL FOOTPRINT Operations in over 50 countries and customers in more than 100 countries worldwide Australia, Pacific & Asia North America Latin America Europe, Middle East & Africa ORICA DOES NOT HAVE A TRUE GLOBAL COMPETITOR 4 Confidential
Slide 5: Sustainability aligned with Orica's core values
SUSTAINABILITY Aligned with Orica’s core values Safety is our priority. Always. Safety is our priority Safeguarding the environment • Nothing is more important to Orica than • No significant environmental incidents We respect keeping our people safe and value all. • Reduced waste in FY19 on the pcp
Slide 6: Industry-leading core products and high-growth new products
ORICA’S TWO ENGINES BOTH LEVERAGE OUR GLOBAL LEADERSHIP Industry-leading core products and high-growth new products We have growth in our core, and …accelerating our results faster growth in new products… around the world IMPROVEMENT IN MARKET Mining productivity is becoming even more critical; mini
Slide 7: Accelerated contribution from best-in-class technology based solutions
BEST-IN-CLASS TECHNOLOGY Accelerated contribution from best-in-class technology based solutions WIRELESS BLASTING – WEBGENTM 1 • Growing market interest for wireless initiation technology WebGen™ units Blasts by region – 325+ blasts fired globally – 7 commercial services contracts secured – 34 trial
Slide 8: World's largest wireless open-cut blast successfully completed
BEST-IN-CLASS TECHNOLOGY World’s largest wireless open-cut blast successfully completed THREE BLASTS COMPLETED AT BMC POITREL COAL MINE (QLD, AUSTRALIA) May 1. Small pre-split 15-20m deep 2019 2. Production stratablast 55-60m deep - the first of its kind in the world 3. World’s largest open-cut stra
Slide 9: Australia Pacific & Asia at a glance
AUSTRALIA PACIFIC & ASIA – AT A GLANCE Strong diverse region with continued growth opportunities Volume Revenue EBIT (as a % of total Orica volume)1 (as a % of total Orica revenue)1 (as a % of total Orica EBIT)1 42% 36% 24% 58% AN EBS Revenue by product/service offering1 Revenue by commodity1 Q&C 6%
Slide 10: North America at a glance
NORTH AMERICA – AT A GLANCE Strong returns with a leading market position Volume Revenue EBIT (as a % of total Orica volume)1 (as a % of total Orica revenue)1 (as a % of total Orica EBIT)1 28% 41% 27% 29% AN EBS Revenue by product/service offering1 Revenue by commodity1 Services Other 18% Other 4% 1
Slide 11: Europe, Middle East & Africa at a glance
EUROPE, MIDDLE EAST & AFRICA – AT A GLANCE Strong performance from a refocused business Volume Revenue EBIT (as a % of total Orica volume)1 (as a % of total Orica revenue)1 (as a % of total Orica EBIT)1 11% 10% 16% 20% AN EBS Revenue by product/service offering1 Revenue by commodity1 Services Therma
Slide 12: Latin America at a glance
LATIN AMERICA – AT A GLANCE Market leader with exposure to high growth commodities Volume Revenue EBIT (as a % of total Orica volume)1 (as a % of total Orica revenue)1 (as a % of total Orica EBIT)1 18% 17% 7% 17% AN EBS Revenue by product/service offering1 Revenue by commodity1 Services 13% Others Q
Slide 13: GroundProbe is delivering ahead of expectations
ORICA MONITOR1 GroundProbeTM is delivering ahead of expectations Revenue EBIT and EBIT margin • FY19 saw solid performance from ($m) ($m, %) GroundProbeTM, with EBIT remaining ahead of 13 investment case 52 45 – Strong sales and rental performance 41 throughout FY19 25% 6 21% – Entry into tunnels ma
Slide 14: Minova: sustainable benefits from turnaround
MINOVA Sustainable benefits from turnaround Revenue EBIT • In FY19, revenue grew 15% globally, driven by: ($m) ($m) – Strong coal market in the USA 8 7 – Improved sales of bulk resins in Australia and 280 291 304 steel sales in India 239 – Increased demand from existing and new 2 contracts in Centra
Slide 15: Exsa acquisition overview
EXSA ACQUISITION OVERVIEW 15
Slide 16: Strategic acquisition in high growth region
EXSA ACQUISITON OVERVIEW Strategic acquisition in high growth region Exsa currently has the largest share across open pit and underground markets in Peru, predominantly in gold and copper mining with Orica is material movement expected to grow at ~4% pa in Peru1 acquiring the #1 Exsa offers a ra
Slide 17: Acquisition and capital raising supports core strategy and growth engines
EXSA ACQUISITON OVERVIEW Acquisition and capital raising supports Orica’s core strategy and growth engines • Builds on strong footprint in Latin CORE America • Strengthens Latin America manufacturing footprint 1 CORE 1 • Enhances network capability and synergy realisation opportunities GROWTH Latin
Slide 18: Orica already holds a significant position in Latin America
EXSA ACQUISITON OVERVIEW Orica already holds a significant position in the growing Latin American market Latin America Peru Volume1 (as a % of total Orica) Volume1 AN (as a % of Orica Latin America) EBS AN EBS 18% 17% 34% 29% Revenue1 (as a % of total Orica) Strong technology portfolio for Revenue
Slide 19: Peru is an attractive location, material movement growing over 4%
EXSA ACQUISITON OVERVIEW Peru is an attractive location, with material movement expected to grow at over 4% CAGR Overview Total forecast material movement (Copper, Gold, Iron Ore) (2020-2025 million tonnes) • Peru has a wealth of mineral resources, with mining Peru Copper, Iron Ore and Gold material
Slide 20: Acquisition of Exsa strengthens footprint in Latin America
EXSA ACQUISITON OVERVIEW Acquisition of Exsa strengthens Orica’s existing footprint in Latin America Key highlights Revenue • Exsa is the clear market-leading producer and distributor of (US$m) 16% industrial explosives in Peru, providing technical assistance and 211 support to mining and infrastruc
Slide 21: Exsa's operations anchored by advanced initiating systems facility
EXSA ACQUISITON OVERVIEW Exsa’s operations are anchored by one of the world’s most advanced initiating systems facilities Overview Overview of Exsa operations • Located in Lurin, Peru, Nazca is a new initiation Export channels Headquarters systems factory and is one of the most modern plants Magazin
Slide 22: Using broader network to utilise latent capacity at Lurin
EXSA ACQUISITON OVERVIEW Orica plans to use its broader network to utilise the latent capacity at the Lurin facility and across Peru 1 Caps 4 Shock Tube Layout of Exsa’s Nazca facility Full production 55m units pa Full production 145m metres pa Lurin, Peru Current output1 11m units pa Current output
Slide 23: Significant synergies from combining Orica and Exsa operations
EXSA ACQUISITON OVERVIEW Significant synergies available by combining Orica and Exsa’s operations By the third full year of ownership we expect to achieve ~US$18 million run rate synergies, with approximately US$20 million capital expenditure requirement Material manufacturing synergies • Network sa
Slide 24: Growth strategy and outlook
GROWTH STRATEGY AND OUTLOOK 24
Slide 25: Continuously assessing growth opportunities in core and high growth engines
GROWTH STRATEGY AND OUTLOOK Continuously assessing growth opportunities in our core capital and high growth engines OPPORTUNITIES FOR GROWTH RECENT EXAMPLES Mergers and acquisitions supporting existing core markets CORE GROWTH Expansion of existing products into new applications and commodities (Sur
Slide 26: Solid platform in place to deliver superior returns
GROWTH STRATEGY AND OUTLOOK Solid platform in place to deliver superior returns BURRUP • Fully [insert] operational in FY21 Strong penetration of new technology TECHNOLOGY • [insert] propositions translating to EBIT Continued SAP Full implementation of single SAP system driving profitable • [insert]
Slide 27: Definitions
DEFINITIONS 27
Slide 28: Definitions
DEFINITIONS Term Definition AN Ammonium nitrate - includes Ammonium nitrate prill and solution as well as emulsion products including bulk emulsion and packaged emulsion ANFO Ammonium nitrate fuel oil CAGR Compound annual growth rate Capital expenditure Comprises total payments for property, plant a