Dyno Nobel Limited

Good morning and welcome to DinoNobel Limited's 2026 Half Year Results Briefing. This is Tom Dixon speaking and I'm joined this morning by our CEO and MD, Mauro Neves, and our Group CFO, Nitesh Nadu. The materials we'll be covering today have been lodged with the Australian Securities Exchange and can be found on the ASX and DinoNobel websites. As usual, at the end of the presentation, we'll have plenty of time for questions, and an audio recording of this presentation will also be available on the company's website. I'll draw your attention to the disclaimers found on slide one and slide two of the presentation. And before we move into the main presentation, I'd like to start with an acknowledgement of country. I'd like to acknowledge the traditional custodians of the land we are coming to you from today, the Wurundjeri peoples of the Eastern Kulin Nation. I pay my respects to elders past and present. Thanks very much. And I'd now like to hand over to Mauro.

Thanks, Tom. Good morning and welcome, everyone. It's my great pleasure to be here to present our 2026 half-year results. You see, as we go through this presentation, the DinoNobel team delivered excellent financial results and also made the critical final steps in separating our fertilizers business as we successfully progressed towards an ambition of doubling our fiscal year 23 explosives EBIT. I'll say more on that later. I'll spend the first half of the presentation taking you through the highlights of our half-year performance, how we're thinking about the year ahead, and providing an update on our business strategy. At that point, I'll hand over to Nitesh, who will take you through our half-year 26 financial performance. And I'll then close our presentation with a discussion of Dino Nobel's compelling investment proposition before opening up for Q&A. As the highlight shows, we have had an excellent year to date. I'm very pleased with the progress we made on our transformation program. We set ourselves an ambition of doubling our fiscal year 23 explosives earnings. We are on track to deliver. our financial year 26 guidance remains unchanged, despite various challenges. What's very clear is that DinoNobel is a highly resilient explosives business, with strong growth tailwinds in our established markets in the U.S. and Australia. As well as delivering our transformation agenda, our privileged assets, such as our gas-backed ammonium nitrate facilities, continue to support our customers by providing them with security of supply. After completing the sale of the Perdaman offtake to Macquarie Group's CGM, as well as signing a binding agreement to sell Phosphate Hill in March to the Mayfair Group, we have now concluded the separation of the fertilizer's business, moving forward as a leading global pure-play explosives company. I would like to thank the team at Phosphate Hill for their considerable efforts and wish them every success with Mayfair Group. Our North American business has seen impressive growth, and we've seen some important customer wins in the emerging and core markets, particularly Ghana and two new sites in Brazil that are in final stages of negotiations. Moving on to safety, an area that is of critical importance for me and every employee at Dino Nobel. Safety is and will always be our number one priority. As I mentioned last year, there has been extensive effort undertaken to improve our safety performance. Safety is an area where we set high standards, and in fact, it's a key factor in why customers love working with us. Our total recordable injury frequency rate, or TRIFA, is above our ambitious target. And disappointingly, this has lifted from the number we reported in November. But I'm pleased that we have seen no incidents classified as serious harm, lost workday severities down, with no T01 events, and zero significant environmental incidents this year. A key driver of safety performance is the continued priority we put on safety leadership, which focuses on creating and supporting a health risk management culture. We are continuing to focus on ensuring we have clear risk ownership and that our people feel empowered to manage critical controls, having the right tools and training. This includes explosive risk reviews delivered in key manufacturing facilities and a strong focus on field leadership and proactive hazard identification. We continue to take an active leadership role in global groups like Safex, learning from industry events, and contributing to long-term improvements in safety across the sector. Moving to our financial results, I'm very pleased to report that despite macro headwinds, DynaNobel has delivered a very strong explosive business performance. At the statutory group level, excluding IMIs, EBIT grew by 39% to $243 million, Our NPAT of 161 million, excluding IMIs, is up 83% compared to the same period last year. Dino Nobel has delivered a very strong half. We have delivered 11% growth in revenue, and our underlying EBIT, excluding IMIs, grew 28%, with our North American business in particular achieving very impressive underlying earnings growth. We have also announced today a first half entering dividend of 4.6 cents per share, unfranked, which represents a 50% payout ratio consistent with our capital allocation framework. We continue to make solid progress on our $1.4 billion capital return program, having returned $1.058 billion so far, which leaves us for the $342 million to come. We expect to recommend buyback shares tomorrow once we clear our blackout period. Despite the large capital return program, our balance sheet remains in great shape, net debt to EBITDA sitting at 1.3 times. Let's talk now about transformation. As the slide shows, the continuum of the program As the light shows, we have seen continuous momentum in the program, with 49 million of benefits realized in the first half. As we have always highlighted, these transformation benefits are not purely cost-cutting. In line with the fundamental changes we make into our business structure, we make important and enduring transformations to how we operate as a business. We continue to roll out operating model changes, and these underpin our growth strategy moving forward. Dino Nobel Americas has achieved a strong commercial performance, supported by robust end markets and a strong contribution from our JVs. Our resilient manufacturing base has also allowed us to capitalize on some additional spot sales as the end markets tightened during the period. We have also seen further effective mitigation of the impact of tariffs through negotiations with suppliers, customers, and JV partners. After a very strong start to the year, we do expect some temporary headwinds in the second half. These will largely be related to the impacts of the strengthening Aussie dollar against the U.S. dollar, stranded costs from fossil fuel, and the temporary impact of cost increases in raw materials and freight due to the geopolitical environment. we are expecting to see the continued tailwinds in our North American business, which is supported by a lower-than-previously-expected tariff impact in 2026. The majority of the transformation projects that will deliver these benefits have progressed well past the development phase and have either been approved for implementation or already been executed, leading to our confidence in the fiscal year 26 outlook. I'm proud to report that our strategy is delivering results, and we continue to see positive momentum across our business units. Our DinoNobel Asia Pacific business has achieved multiple customer wins and renewals, which includes reentering the Northern Territory market. As I mentioned earlier, DinoNobel Americas has performed very well, driven by strong metals growth in Canada and resilience in key coal regions. Our progress into new markets continues through Dino Nobel, EMEA, and LATAM, and we are now seeing the benefits of the AGA global agreement, starting with the Ghana contract awarded. We are also progressing with multiple opportunities in Brazil. The construction of our new Emulsion plant in Peru is also progressing well and is expected to be in production late this year, establishing as well for growth in the region. Moving on to the outlook, our DinoNobel Explosives business remains on track to deliver our fiscal year 26 EBIT guidance of $460 to $500 million. The capex expectations for the year have come down due to phasing of customer and maintenance optimization. Pleasingly, we have lowered the expected tariff impact to around $2 million. Our corporate costs are expected to be at the upper end of the previously guided range, as we include phosphate yield stranded costs during the year. We're expecting a reduction in borrowing costs with a lower net interest expense. At a group level, our transformation momentum continues, and we remain on track to finish fiscal year 26 with a strong exit run rate of 65 to 75 percent of the total 300 million EBIT uplift from the program. Let me now come back to strategy. Our strategy is designed to help us achieve our ambition of becoming the world's leading global explosives player. Such ambition is supported by our people, our values, and 106 years of experience, underpinned by the five strategic pillars. The strategic pillars outline how we differentiate ourselves in the market and what makes us a compelling partner for our customers, driving superior outcomes whilst improving overall performance across safety, reliability, efficiency, and bottom-line financial results. Our innovative technology allows us to offer a full suite of products that, bundled with our experienced and talented Dino Consult people, deliver superior offerings, providing solutions tailored to customer-specific needs. We are a trusted brand that has developed deep customer relationships over many decades across multiple geographies, allowing us to hold conversations as partners, not suppliers. Customers tell us that this is something that sets us apart. Our network of privileged assets strategically located near high-quality custom and mining regions have proven particularly important this year and critical to the resilient earnings we see today. I will expand on this shortly. The last of our five pillars relates to smart capital deployment. DinoNobel is disciplined in capital deployment, ensuring appropriate shareholder returns. I would like now to talk to you about our privileged assets, which drive our supply chain resilience. The impact of the war in the Middle East and subsequent supply chain challenges continues to lead the news. We have also seen extensive outages at major AN and ammonia facilities in Australia and the U.S., disrupting markets and threatening supply chains. Dino Nobel's privileged gas-backed manufacturing assets around the world have highlighted our resilience to global shocks. The gas-backed Cheyenne, Lomo, and Morimba facilities continue to deliver to our customers. At a time when businesses around the world are looking at whether their supply chains can be relied upon, as market tides and costs increase, Dino Nobel have consistently delivered. Our leading vertical integration secures supply chains and improves operational efficiencies. DNA's reliable manufacturing base provides the majority of our North American A&M requirements, with gas input costs recoverable in line with contractual mechanisms. Our unique JV distribution model also gives us access to an extensive network of customers, driving earnings uplift through both wholesale and retail participation. As we move forward with the TNT plant in Graham, Kentucky, we will further increase our vertical integration, securing a domestic source of supply for this critical raw material. The Morumba plant in Queensland continues to perform reliably, and we source 100% of our Australian ammonium nitrate domestically. Our domestic third-party AN sourcing is back-to-back with our sales contracts, removing exposure to cost input variability. And with majority of DNAP revenue and the medium to long-term contracts, we're able to deliver a consistent and reliable earnings stream. Our innovative technology suite has seen continued growth in adoption as customers realize the efficiency, safety, and sustainability benefits these differentiated products and advanced solutions deliver. By leveraging our privileged assets in the first half, Dyno expanded our electronic manufacturing facility in Turkey, as well as its building and commissioning of a booster plant in Indonesia. Our product offering underpinned growth in the first half. As our customers continue to move forward with precision initiation, electronic detonator sales reached 63% of the total detonator revenue in the first half, up from 60% a year ago. The launch of NavVers, our new handheld electronic initiation system, helps our customers move from legacy systems to modern solutions. Importantly, our technology focuses on empowering our customers, maximizing value of their business through optimized material liberation using premium products of our service suite. Demand for DynoConsult has grown 20% year-on-year as we continue to optimize solutions and deliver value. We have also seen some excellent results realized by our Drill-to-Leach initiative. One of our gold mine customers improved gold recovery by 8%, leading to an estimated value of $250 million over 10 years. We demonstrate benefits like these. Our technology continues to be an important part of the Dino Nobel Growth Strategy. I'd like to take a moment to reflect on a pivotal milestone in the future of our business, securing a binding agreement to sell Phosphate Hill to Australian company Mayfair. For DynaNobel, this transaction concludes the group's exit from fertilizers manufacturing, allowing us to focus on explosives and blasting services, where we have scale, technology leadership, and resilient earnings. This transaction is NEPV positive, but also importantly, marks the final in our strategy to be a pure play explosives business, enabling a clean exit with remediation obligations mitigated. Completion of the sale is on track to finalize by June 26, and we'll provide an update to the market when that occurs. As you will note, fossil fuel manufacturing performance has been impacted over the last few months due to extended rail closures and disruption of mad gas supply from Mount Isa mines. To talk more about our half-year financial results, I'll now hand over to Nitesh Naidoo, our Chief Financial Officer. Off to you, Nitesh.

Thank you, Mauro. Good morning, everyone, and thank you for joining us today. Diana Nobel's financial performance was standout. not just for resilience in the face of global market volatility, but for the growth which exceeded expectations, beating half one earnings split for explosives. We have also seen our established markets of North America and Australia benefit from integrated supply chains and a strong customer demand delivering earnings growth of 28%. year-on-year on an underlying basis after normalizing for turnarounds in the prior year. We've seen continued momentum in our transformation program with $49 million of benefits in this half period. Our JVs continue to perform strongly, growing earnings 41% year-on-year, and of course, our capital return program has been progressing well with more than a billion dollars returned to date. Turning to our statutory results on slide 17, I'm pleased to report that our headline group EBIT grew 39%, driven by transformation growth and higher third-party sourced inputs in the prior year as a result of planned plant turnarounds. As expected, total revenue was impacted by the sale of the IPF distribution business in FY25, as we've executed our strategy to be a pure-play explosives business. Dinah Nobel Explosives delivered an exceptional first-half result, with operating margin up 17% to $495 million. and 43% increase in EBIT to $224 million. Concluding the fertilizer separation has resulted in first-half IMI's of $141 million after tax, mainly related to the impacts of the phosphate hill sale. A full breakdown of these items are included in the OFR materials. Moving to slide 18 on business performance. Pleasingly, underlying earnings grew 28% year-on-year after normalizing for turnaround impacts in the prior year. We've seen strong earnings growth across established markets with standout 42% growth in North America. This growth was driven by strong demand from our customers and JVs together with benefits of trading surplus ammonium nitrate. JVs are a core part of the privileged assets in the DynaNobel strategy. They are a cornerstone to the market leadership position in the U.S. business and an important consideration in our growth. We've also called out the growing JV income line that reflects the after-tax income included in our EBIT, which is unique to DynaNobel. We continue to disclose this additional information as we feel it's material to the valuation of our business. DNAP reported a 16% growth in earnings, from strong demand for its gas-backed ammonium nitrate, and benefited from additional electronic sales from contracts awarded in the second half last year. And lastly, our DNEL business continues to invest in capability, with key contract wins opening the door to future growth. While strategic progress has been made across key growth regions, movement in foreign exchange, asset sales in the prior year, and timing of contract renewals have impacted earnings in the first half. I'll now move to CAPEX on slide 19. At the full year, we announced our capital deployment moves away from turnarounds in FY26 towards projects that are aligned with our growth ambition. This has included us investing in digital transformation. In the first half, these programs have progressed well, and this shift is evident with higher growth capital spending. The sustained spend of 52 million ensures reliable operations of the group's manufacturing and distribution facilities, aligned with long-term asset management plans. This is materially lower than prior year, which is typical, following the successful completion of turnarounds at Murumba and Cheyenne. in the first half-25 and is reflective of our privileged assets operating well in the half. Our investment in upgrading our ERP to the latest version and our digital technology offering, Nobel Fire, will continue in the second half-26, along with other growth initiatives to increase our product capabilities. We will also see increased capital spend in support of customer growth, particularly in Africa and LATAM. This spend relates to investments in additional MPUs and emulsion plants. This is expected to provide returns well in excess of our cost of capital and in line with our capital allocation framework. Our capital spend for FY26 was skewed to half two, and due to timing of activities, we have reduced expected spend to $250 to $300 million for the full year. Moving on to the balance sheet. Our balance sheet strength is demonstrated by marked improvement across key metrics shown on the left of the page. This has given us the opportunity to pay dividends at the higher end of the capital allocation framework of 30% to 60%. A full-year unfranked dividend of 4.6 cents per share represents a 50% payout ratio XIMIs. The improved profitability with the delivery of our transformation program is seeing ROIC progress in the right direction. Our $1.4 billion capital return continues to progress well, with on-market buybacks at an average price of $2.99. The buyback will recommence tomorrow. Our leverage at 1.3 times this half remains low. And following the expected completion of the divestment of Phosphate Hill, our target leverage will increase to 1.75 times to 2.25 times, which is appropriate for a high-quality earnings and low-volatility explosives business. I'll now pass back to Mauro for some closing remarks.