Orica Limited · ASX:ORI
Orica — Non-Deal Roadshow (February 2002)
13 slides from Orica's roadshow presentation, February 2002
Slide 1: Slide 1
Slide 2: Investor Presentation - February 2002
INVESTOR PRESENTATION - FEBRUARY 2002 - Malcolm Broomhead James Fazzino CEO and Managing Director Investor Relations
Slide 3: Orica Summary
Orica Summary Capital Debt u 278 million shares on issue u 2001 A$980m u Market capitalisation ~A$2.2b* u Average duration 7 years u Standard & Poor’s rating A2/BBB+ Capital Employed Orica Daily Share Price 3/09/01 - 06/02/01(Source: Reuters) 2001 Capital Employed - A$2.3b 8 Share Price $A Qenos - $
Slide 4: Orica Business Fundamentals
Orica Business Fundamentals Mining Services Consumer Products u Sales 2001: A$1.76b u Sales 2001: A$600m u Worlds largest supplier of u # 1 market share in paints and commercial explosives paint preparation in Australia & u #1 share in America’s, Europe, New Zealand Aust/Asia u Brand franchise - Dul
Slide 5: Summary: Sound Fundamentals
Summary: Sound Fundamentals u #1 market shares u Leading brands u Technology u Strong asset positions u Capable people Page 5
Slide 6: Turn-Around Strategy
Turn-Around Strategy (since 3 September 2001) u Efficiency - Costs and Capital u Culture u Strategy Page 6
Slide 7: 1. Efficiency: Cost
1. Efficiency: Cost v Realising the potential of Orica’s existing businesses Actions to date: à $135m* pa cost reduction program à 816 people out (9% workforce) à Reduced bureaucracy ð (head office headcount reduced by 60%) à Removal of management layers à Getting it right the first time – no rework
Slide 8: Efficiency: Capital
Efficiency: Capital v Capital is no longer “free” (fixed and working capital) Actions to date: à Art collection sold à Divestment of loss making AV Resins à Revised capex approval levels à New major capex freeze à New investment hurdles: economic profit (RONA >18%) and IRR > 15% Page 8
Slide 9: 2. Culture Change
2. Culture Change v Accountability v Performance focus Actions to date: à management changes à simplifying the way we do business à aligning the business scorecard with shareholder returns ð economic profit focus rather than market share à CEO led change program Page 9
Slide 10: 3. Strategy
3. Strategy Short term: v Collect and retain the cost savings v Get all businesses operating at their full potential (minimum: economic profit >0) v Sub Issues: North America explosives, Qenos Medium term: v Portfolio mix v Will take time to emerge Page 10
Slide 11: Explosives North America
Explosives North America Fundamentals Current Actions u Sales: A$760m - 60% coal, 30% u Focus on returns rather than quarry & construction growth u #1 market share - 36% (top 3 u Reduce cost base suppliers > 75% share) u No new capital until adequate u Capital employed: ~$500m returns on existing in
Slide 12: Outlook
Outlook 2002 Milestones u All businesses exited 2001 with u Delivery of $135m cost savings good demand ($70m NPAT 2002, $95m u On track to deliver cost savings thereafter) u Comfortable with 2002 market u Improved business performance forecast NPAT of $180m (65c for 1H 2002 per share) Events Calenda
Slide 13: Efficiency, culture, strategy
Summary: u Significant improvement in shareholder value - initially through improved efficiency u Cultural change to reinforce efficiency initiatives u Further efficiency improvements through BPR u Review of business specific strategies u Business portfolio issues - medium term efficiency, culture,