Iluka Resources Limited · ASX:ILU
Iluka Resources — FY2002 Earnings Presentation
35 slides from Iluka Resources's earnings presentation, February 2003
Slide 1: Investor Presentation 2002 Full Year Results
Investor Presentation 2002 Full Year Results February 2003
Slide 2: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 3: Performance Overview – 2002 Full Year
Performance Overview – 2002 Full Year Production (Continuing Business) Sales Revenue (Continuing Business) 2.5 1,000 2.0 Tonnes (M's) 800 1.5 600 A$M 1.0 400 0.5 200 0.0 99 00 01 02 0 99 00 01 02 TiO2 Zircon Coal Net Profit (Continuing Business) Dividends 120 22 100 18 80 A$ cents 14 A$M 60 10 40 20
Slide 4: 2002 Highlights
2002 Highlights 4 Basin Minerals acquisition completed – funded through issue of equity (A$76m) and cash (A$62m) 4 Old Hickory expansion project completed 4 Zircon finishing plants completed at Old Hickory and mid-west operations 4 Record SR sales of 516,000 tonnes 4 Reserves (net) up by 5.3 mt (14%
Slide 5: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 6: 2002 Group Profit After Tax v 2001
2002 Group Profit After Tax v 2001 140 120 100 80 A$ m 60 40 20 0 107.8 12.9 (19.8) 26.8 (8.9) (6.0) (4.9) 2.0 (0.9) 109.0 Dec. FX Price Vol/ CRL US WA Asset & Other Dec. 2001 Mix Unit Unit Restruc- Tax 2002 NPAT* Costs Costs ture Write NPAT Down * Includes $44m in write downs and discontinued opera
Slide 7: Financials
Financials Continuing Operations 2002 2001 Sales Revenue (A$m) 836.8 772.7 Cashflow operating cashflow (A$m) 123.5 132.9 cashflow per share (A$) 0.55 0.61 Profitability EBITDA (A$m) 224.7 242.5 EBITDA/Sales (%) 26.9 31.4 EBIT (A$m) 129.8 148.7 NPAT (A$m) 109.5 107.8 EPS (A$) (Basic) 0.49 0.50 ROE (%
Slide 8: Financials cont’d
Financials cont’d Group Consolidated 2002 2001 Gearing and interest cover gearing (%) 33.8 32.3 interest cover (times) 8.6 7.9 Dividend final dividend (cents) 12 12 total dividend (cents) 22 22 payout ratio (%) 46.9 75.2
Slide 9: Currency Position
Currency Position 2002 2003 2004 2005 2006 Hedged US$ 159.5 147.2 112.5 71.5 36.0 Av cash rate 0.6703 0.5646 0.5452 0.5553 0.5240 Effective rate 0.6021 - - - -
Slide 10: Net Profit Sensitivity 2003
Net Profit Sensitivity 2003 Operating Net Balance Pre Tax Results Sheet Profit Liability Impact $m $m $m 10% Depreciation A$/US$ (7.2) 1.9 (5.3)
Slide 11: Debt Maturity
Debt Maturity Repayment Profile - $ million 2003 2004 2006 2008 2011 Senior Notes - US$45 US$45 US$30 US$30 Loan Note Subscription Agreement - - US$100 - - Trade Finance Facility $A80 - - - -
Slide 12: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 13: Australian Operations
Australian Operations 4 Western Australia 4 strong H2 production enabled recovery from H1 performance 4 H2 performance driven by grades and higher availability levels and throughput from facilities at both sites, including SR kilns 4 2002 full year production of rutile and zircon higher compared wit
Slide 14: 2003 Production Outlook - WA
2003 Production Outlook - WA 4 MW 4 development of 2 new mines in H1 – South Tails/Depot Hill 4 planned 6 week shutdown of SR3 in Q3 4 SW 4 acid leaching project completed by end Q1 2003 – extra 12,000 tonnes of SR per year 4 mining at Yoganup extended remnants to start in early Q3 4 planned 2 & 5 w
Slide 15: 2003 Production Outlook - CRL
2003 Production Outlook - CRL 4 Yarraman 4 up-grade to the tailing circuit completed in late 2002 4 similar grades and slightly higher recoveries expected 4 higher production rates expected 4 Ibis 4 production expected to decline due to lower grades, 4 week shutdown to prepare for the transition to
Slide 16: Murray Basin Update
Murray Basin Update 4 Douglas stage-1 project highlights 4 environmental approval Q3 2002 4 test pit successfully completed late Q4 2002 4 MSP approved by Council mid Q1 2003 4 EPCM contractor to be appointed late Q1 2003 4 Development timeframe 4 on track for a final investment commitment in Q3 200
Slide 17: Murray Basin Update cont’d
Murray Basin Update cont’d Bondi-main resource comparison Key Development Challenges 4 Post takeover review Q3 2002 found additional work Basin Iluka needed to better define Grade % 16.1 14.6 resources, product quality, Clay % 29.7 30.3 capex and opex costs and manage clay Oversize % 13.7 11.4 4 Sch
Slide 18: Murray Basin Update cont’d
Murray Basin Update cont’d 4 Good progress has been made with the clay management 4 An extensive testing program has been completed 4 Modeling of clay composition, variability within ore body and de-watering characteristics well advanced 4 Thickener design (type and size) being optimised to meet thr
Slide 19: USA Operations
USA Operations 4 Production from the Green Cove Springs operation in Florida was lower in 2002 due to market conditions in Q1, the revised dredge path (lower grades) as well as wet weather conditions in Q3/Q4 4 Old Hickory production lower due to cut-in and commissioning of expansion project. Final
Slide 20: 2003 Production Outlook - USA
2003 Production Outlook - USA 4 Florida 4 Green Cove Springs dredge de-commissioning now late Q4 4 approvals for expansion into Georgia/Florida in place 4 construction late Q1 to end Q3, commissioning in Q4 with year end as target for completion 4 production levels expected to be marginally < than 2
Slide 21: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 22: Titanium Minerals Outlook
Titanium Minerals Outlook 4 Subject to modest continuing global economic growth the outlook for titanium minerals remains generally positive 4 Pigment market – demand strong, price increases being sought 4 Titanium metals – demand expected to remain soft due to the state of the global airline indust
Slide 23: Zircon Outlook
Zircon Outlook 4 Global zircon market outlook is expected to remain robust overall but with some continuing regional differences 4 New projects being developed not expected to create over supply in zircon due to mineral assemblages 4 Demand for premium product expected to remain strong with supply t
Slide 24: 2003 Sales Outlook
2003 Sales Outlook 4 Overall, demand for Iluka’s products has remained strong despite uncertain economic conditions and increased competition 4 All TiO2 minerals are committed for 2003. Price outcomes mixed but better or in line with expectations 4 Zircon volume and price negotiations are confirmed
Slide 25: 2003 Sales Profile
2003 Sales Profile 4 Inventories of major products are low 4 Sales profile will match production 4 Overall sales/shipping pattern similar to 2002 on a half yearly basis, with H2 more evenly spread 4 Geraldton port shutdowns (10 and 20 days) in early and mid-Q2 have been factored into the delivery sc
Slide 26: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 27: Progress Against Strategic Objectives
Progress Against Strategic Objectives 4 First stage of the business improvement (MnM) program completed 4 New contracts secured in 2002 to match production capacity 4 Murray Basin development progressing as planned, first US expansion complete, second project to commence shortly 4 Increased HM reser
Slide 28: MnM Program and Cost Base
MnM Program and Cost Base 2002 2003 Aug 14-16 Oct 21 Oct-24 Jan 3 Feb-2 May 5-7 May 12 May-1 Aug 11 Aug-31 Oct Design Phase Training Wave 1 Wave 2 Training Wave 3 Wave 4 (8 weeks) (3 days) (12 weeks) (12 weeks) (3 days) (12 weeks) (12 weeks) MW Mining, SW Mining, MW/SW Concentrating Concentrating MW
Slide 29: MnM Wave-1 Results
MnM Wave-1 Results 4 Wave-1 process completed in late Jan and reviewed in mid-Feb 4 Potential identified for savings of A$20 million and production enhancements of approx A$20 million on a full year basis post implementation 4 Savings/production enhancements will require additional capex over 2003/0
Slide 30: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 31: 2003 Financial Outlook
2003 Financial Outlook 4 Targeting a modest increase in pre-tax earnings based on: 4 higher production and improved margins from continuing operations 4 a modest contribution from the MnM program 4 NPAT will be impacted by the need to provide for a tax expense in 2003 of approximately 25% 4 Expect t
Slide 32: Concluding Comments
Concluding Comments 4 Delivered on expected 2002 profit result 4 Good progress made on strategic objectives the second half of 2002 to establish foundation for growth 4 MnM program on track to achieve a target of A$40 million increase in pre-tax earnings by end 2004 4 internal capability enhanced th
Slide 33: Agenda
1 Overview 2 Financial Performance 3 Operational Performance and Outlook 4 Market Outlook 5 Progress Against Strategic Objectives 6 Concluding Comments 7 Appendices
Slide 34: Profit Analysis
Profit Analysis 2002 2001 Change WA 144.8 126.3 18.5 US (7.5) 9.2 (16.7) CRL 10.6 20.7 (10.1) Coal 9.5 12.8 (3.3) Corporate & Interest (44.4) (43.3) (1.1) One offs 4 Profit on sale of PT Koba Tin 0.8 - 0.8 4 Assets (10.3) (2.4) (7.9) 4 Tax 9.9 - 9.9 Normal Taxation (2.5) (8.1) 5.6 OEI (1.4) (7.4) 6.
Slide 35: Group Production & Sales 2002 v 2001
Group Production & Sales 2002 v 2001 Product – k tonnes 2002 2001 Rutile production 168 176 Rutile sales 172 174 SR production 447 460 SR sales 516 420 Ilmenite production 1,363 1,438 Ilmenite sales 673 674 Zircon production 361 346 Zircon sales 364 353 Leucoxene production 11 13 Leucoxene sales 47