Orica Limited

Good morning and welcome to our 2025 half-year results. I'm Delphine Cassidy, Chief Communications Officer, and I'm delighted to have you with us today. In the room with me is Sanjeev Gandhi, our Managing Director and CEO, and James Crowe, our CFO. Both Jamie and Sanjeev will be presenting shortly. We value your participation and will ensure that there's ample time for questions after the two presentations. So please feel free to queue up and we'll address your questions as soon as possible. Before we start, can I ask you to have a look at the disclaimer on slide two? Thank you. And with that, I hand it over to Sanjeev.

Thank you, Delphine. Morning and welcome all. Let me start with an update on our number one priority, safety. We are committed to keeping our people safe, and our serious injury case rate is a key metric for us. We are very pleased to report that our SICR has reduced by more than half from 0.21 in FY 2021 to under 0.09 at the end of March. This achievement is best in class in industry and represents Orica's best performance ever since we started reporting on this metric. While we are very pleased by this continued improvement, we remain focused on preventing fatalities and harm. This year, we are particularly focused on reducing collision-related events as the majority of our site-based workforce drive Orica vehicles, trucks, or mobile equipment. By focusing on reducing collision-related events, we enhance safety, prevent fatalities, and improve overall operational efficiency. In terms of sustainability aspirations, we have made very good progress on our climate change commitments. We have completed the first phase of our decarbonization strategy ahead of schedule, significantly reducing our scope one and scope two emissions. Following the deployment of tertiary abatement technology on three nitric acid plants at a Kruging Island manufacturing facility, we recently reached a milestone of eliminating one million tons of greenhouse gas emissions from this site alone. This technology has also been installed at our manufacturing plants at Yavin in Queensland and Carsland in Canada. Turning now to slide five and our financial results for the half. The strong earnings momentum from last year has continued, with the EBIT for this half being the highest in more than a decade for Orica. Furthermore, the key financial metrics EBIT, NPAT before significant items, EPS and DPS have improved by at least 30% year on year, demonstrating value delivered to our shareholders. This very strong growth was driven by robust customer demand for our premium products and innovative technology solutions across every segment and every region, highlighting the strength and resilience of our business. Additionally, the successful ongoing integration of Terra Insights and Scienco has bolstered overall earnings. Together, this has translated into a significant uplift in operating cash flow, setting us up very well for future growth. Jamie will go through this in more detail shortly. Earnings per share before significant items increased by 12.7 cents to 51.5 cents, which has enabled us to increase the dividend this half to 25 cents from 19 cents in first half 2024, underlying our solid financial performance. The on-market share buyback program will recommence from tomorrow, the 9th of May, which is the first trading day after our results. Overall, it's been an outstanding half, and we are very excited about the opportunities ahead. Turning now to slide six, let me provide a quick update for every region, starting with Australia, Pacific, and Asia. Regional earnings increased by 40%, driven primarily by a shift towards a higher value-added product mix and strong customer adoption of our advanced technologies. This includes not only our industry-leading core blasting solutions, but also our comprehensive suite of digital solution products. For those of you that attended our recent investor day in May in Sydney, you saw firsthand the tangible value these technologies are delivering to our customers, empowering them to better understand, predict, and control their blasting outcomes. A notable example is the completion of blasting on the Central Kowloon Tunnel project, a dual three-lane highway in Hong Kong stretching more than three kilometers, threading through one of the city's oldest and most densely populated areas. Since 2019, we successfully executed more than 2,500 blasts in the project using eDev advanced electronic blasting systems, specifically designed for underground and tunnel blasting, with no impact to surrounding areas. We are committed to providing our customers with integrated solutions that go way beyond products to deliver real, measurable value. This confidence in the quality and benefits of our offering enable us to maintain strong commercial discipline, and we are already seeing positive results through the ongoing recontracting cycle. In specialty mining chemicals, we achieved greater market penetration with Orica's differentiated solutions, while our Yavin facility delivered strong performance, supported by record volumes resulting from better gas supply. In North America, we have experienced strong underlying demand for our premium products, which has offset the impacts of lower thermal coal demand, the major castling turnaround that was completed in the first quarter, and impacts from the global TNT shortage. The Canadian infrastructure market is particularly robust, with investment at an all-time high and supporting increased demand for our monitoring products. This underscores the growing diversity of our business and highlights the value of expanding our expertise beyond the mining sector. Our overall performance in the region was further strengthened by the successful ongoing integration of the SCIENCO acquisition and we anticipate greater contributions once safety upgrades at Vinamaka are completed. These results reflect the resilience and adaptability of our business, as well as our ability to capture new opportunities in growth markets. In Latin America, earnings grew 7% despite lower volumes, driven mainly by the adoption of WebGen and 4D, along with continued commercial discipline. In digital solutions, we saw strong growth in ground probe, radar sales, and services. In specialty mining chemicals, the team successfully entered new markets with Orica's differentiated chemical offerings. Finally, in Europe, Middle East, and Africa, strong earnings growth was attributable to increased uptake of our premium products and advanced technologies. In digital solutions, we achieved a major milestone by successfully completing our first-ever blast that combined our 4D bulk emulsion system with WebGen wireless technology. This innovative integration offers significant benefits, including enhanced safety, improved ore recovery, and the ability to precisely tailor energy distribution, demonstrating a compelling value proposition for our customers. We also saw continued growth in demand for ground-pro products and services, reflecting our leadership in real-time geotechnical monitoring solutions. In specialty mining chemicals, we maintain strong commercial discipline, ensuring that every contract delivers value both to our customers and to our business. These achievements highlight the strength of our diversified portfolio and our ongoing commitment to deliver innovative, value-adding solutions across and beyond the mining sector. Turning to slide 10, where I'll provide an update across each of the three reporting segments, starting with blasting solutions. I'm pleased to report a substantial EBIT lift of 29%, increasing from 338 million in the first half of 2024 to 435 million today. This exceptional earnings growth has been fueled by a strong customer adoption of our premium products, disciplined commercial strategies, and the continued success of our cutting edge blasting technologies. We've been proud to showcase our innovative solutions such as the WebGen and 4D. We have now completed more than 10,000 WebGen blasts globally. This achievement highlights the significant value our customers are experiencing from these transformative and innovative technologies. Looking ahead, we are confident that this positive momentum will continue. By leveraging our unrivaled global manufacturing and supply network, our scale, alongside our differentiated technology portfolio, we are further strengthening our competitive edge in blasting and beyond. These advancements empower us to solve our customers' most complex challenges, reinforcing our leadership, and setting new benchmarks for excellence in the industry. Turning now to slide 18 for Orica Digital Solutions. Orica Digital Solutions has firmly established itself as one of our key growth engines as we continue to invest in and develop the next generation of digital technologies, both within our core blasting operations and in exciting new markets and applications. This year, we are pleased to report that EBIT from the Eureka Digital Solutions segment increased by more than 30% compared to prior year, reflecting robust performance across all three product categories, or body intelligence, blast design and execution, and geo solutions. In our body intelligence, we are seeing encouraging signs of improvement in exploration activity, which not only supports our current business, but also sets the stage for new product launches tailored to the production market. Our advanced or body intelligence technologies are enabling customers to gain deeper insights and make more informed decisions, optimizing operations from the outset. Blast design and execution complements our core blasting offering, continuing to deliver strong results driven by growing customer adoption and recurring revenue streams. We completed, as said earlier, our first-ever blast integrating both WebGen and 4D, a further step towards the fully integrated digital mine-to-mill solution, and a clear demonstration of the unique value we bring by bringing together our core mining competencies with cutting-edge digital technology and insights. Our monitoring business, GeoSolutions, which includes GroundProbe and TerraInsights, continues to perform well. GroundProbe increased its recurring service revenue and maintained strong radar sales, while TerraInsights delivered a bit in line and slightly ahead of our investment case, further strengthening our leadership in geotechnical and structural monitoring. These achievements underscore the growing demand for our digital solutions now used at more than 400 sites globally and highlights the strength of our strategy to deliver smarter integrated solutions that address our customers' most complex challenges. We are excited about the future and remain committed to driving innovation, expanding our digital portfolio, and unlocking new opportunities for growth in this dynamic segment. Contributions from our specialty mining chemical segment increased by 72% on the prior year. The increase reflects the contribution and value captured from operating Scienco and Yavin as a globally integrated network of three assets. Following our Scienco acquisition, Orica Specialty Mining Chemicals now has around 240,000 tons of sodium cyanide production capacity annually across our manufacturing sites in Yavin, Vinamaka, and Alvin. Orca is now the world's largest mining-focused producer of sodium cyanide, positioning us exceptionally well amid record gold prices and strong market demand. This scale allows us to reliably support gold mining operations worldwide, leveraging our integrated global manufacturing and distribution network. While maintenance activities and essential safety upgrades have temporarily reduced production at our Winamaka site, our unwavering commitment to safety remains our top priority. We are making excellent progress and anticipate that the plant will be available for high production rates in 2026. Our robust world-class sourcing and supply chain capabilities have enabled us to maintain uninterrupted supply to all our customers, further demonstrating the strength and resilience of our operations. We look forward to building on this momentum and continuing to deliver value, both for our customers and our stakeholders. I will now hand over to Jamie to talk through the financials.

Thank you, Sanjeev, and good morning, everyone, and thank you again for joining us today. I'll move to the key financial metrics shown on slide number 11. Consistent with the market update provided at our investor day in March, continued strong business performance throughout the first half is reflected in our key financial metrics. Whilst top line sales revenue grew by 8% versus the first half of 2024, our earnings before interest and tax has risen to $472 million, an increase of 34% compared to the prior corresponding period. As Sanjeev mentioned, this is our strongest first half earnings result in more than a decade. I'll provide more details on this in the next slide. Net profit after tax pre-individually significant items increased by 40% to $251 million. Also announced in March, significant items totalling $340 million have been recognised during the half in relation to the carrying value of our Latin America business, in addition to associated restructuring expenses in Latin America and also EMEA. This has resulted in a statutory net loss after tax of $89 million. Of the total significant items, 235 million are non-cash. As I mentioned at the release of our full year results last November, cash generation from our core business and its relationship to EBIT remains an area of strong discipline across the group. Importantly, net operating cash flow for the half finished at 245 million, a 29% increase versus the prior corresponding period. Return on net assets is broadly in line with the prior period, as expected, given the recent major acquisitions. Our strong first half results have enabled us to deliver continued improvement in EPS, pre-significant items, to 51.5 earnings per share, a 12.7 cents per share, or 33% increase, versus the prior corresponding period. Pleasingly, a key highlight of these half-year results is the strong alignment between improved earnings, stronger cash generation, and importantly, increased returns to shareholders. Turning now to the EBIT bridge on slide number 12, where you can see that we've delivered improved earnings across all operating segments, demonstrating Orica's strategic effectiveness. Starting with the blasting solution segment, mix and margin increased by an encouraging 73 million versus the prior year. Now, important to note, within this result are 15 million of proceeds from the sale of carbon credits, and normalising for this, the improvement period on period is 58 million, very consistent in terms of run rate with the 101 million improvement delivered last financial year. Demand for Orica's premium products and innovative technology solutions continues to grow strongly. Margin from our blasting solutions technology product range grew by 64% versus the prior half, with continued strong demand for the safety, efficiency, environmental and cost benefits delivered to customers through our WebGen wireless blasting, 4D and Fortis specialty emulsion ranges. Encouragingly, this growth in blasting technology margin exceeded the 55% increase delivered last financial year. Earnings continued to expand within the segment, supported by a positive recontracting cycle, strong growth in sales of electronic blasting systems, both continuous and discrete manufacturing plants running at high levels of uptime, and ongoing benefits of strong commercial discipline embedded across the business. In the digital solutions segment, demand remains strong for our suite of digital offerings and value-added services, with earnings growing by $11 million versus the prior period. The GeoSolutions business is successfully integrating the Terra Insights acquisition, delivering earnings that meet our investment case, together with GroundPro benefiting from increased recurring revenue and radar sales. Earnings growth in blast design and execution was driven by new contract wins in North and Latin America and a global increase in the adoption of our core products for blast management, grade control and fragmentation monitoring. As Sanjeev mentioned, a significant milestone was achieved in this half with the first ever blast utilising our 4D variable energy bulk system and WebGen wireless initiating systems. Within the ore body intelligence business, exploration activity is showing signs of improvement. Our access mining technology business is well positioned to support customers with the recent launch of two new innovative products. The CHAMP Navigator 2 gyro enhances measurement flexibility, improves rig productivity, and reduces standby costs, while the new Axis Rig Aligner enhances operator safety, reduces setup times, and offers field-to-cloud connectivity, capturing critical data workflows. In the specialty mining chemical segment, mix and margin grew by 15 million. This was primarily due to the first half contribution from the Sianco business, noting that this is net of the cost of lower production associated with the process safety upgrade works carried out at the Winnemucca P1 plant. As previously disclosed, associated lost production together with partially constrained gas supply in Yarwin during the first quarter will result in an EBIT contribution that is lower than expected by up to $20 million for the full year. Across our manufacturing assets, we delivered improved performance during the first half, with the increase in earnings of $32 million primarily attributable to the non-repeat of costs incurred during the major Cooragang Island six-yearly plant turnaround completed in the first half of 2024. Importantly, whilst maintenance activities and essential safety upgrades were being undertaken at the Winnemucca production facility, our Yarwin plant performed strongly with high levels of uptime during the second quarter, with production in March being the highest monthly performance in the plant's 35-year history. This reinforces Orica's position as the world leader with production expertise in the mining-focused production of sodium cyanide. And finally, these improvements were partially offset by currency impacts on the translation of foreign earnings and higher global support costs versus the prior period associated with ongoing litigation that has been previously disclosed. Turning now to trade working capital on slide number 13. Pleasingly, the improvements we delivered last financial year have continued into the first half of 2025. Total cycle days on a 12-month rolling basis have improved by five days versus the prior period, moving us closer to top quartile trade working capital performance relative to industry benchmarks. The marginal increase in absolute trade working capital versus the prior period takes into account the Cyanco acquisition and also increased inventory holding seen as a prudent measure given the current geopolitical volatility. This strong working capital result supported the increase in net operating cash flow for the half, and as presented at our investor day in March, maintaining strong operating discipline in this area is a key element of our refreshed capital management framework. Turning now to slide number 14. Our capital management framework is designed to provide clarity and transparency in how we think about deploying capital within the business. Over the coming slides, I'll highlight key areas where we have successfully applied the framework beyond improved trade working capital and net operating cash flow, including effective management of capital expenditure, ensuring we at all times maintain a strong balance sheet, and most importantly, increase returns to shareholders. As previously communicated, we announced an on-market share buyback of up to $400 million commencing on the 28th of March. In the two trading days prior to entering the first half blackout, we purchased 760,000 shares on market for a consideration of $13 million that settled in April. The buyback will recommence from tomorrow following the release of our half-year accounts. Completing the on-market share buyback in full within a 12-month period is a key priority for the organisation. Turning now to slide number 15. Total capital expenditure for the HAARP was $167 million. Of this, $106 million was allocated to sustenance capital expenditure. This included successful completion of turnaround events at our Carsland, Cooragang Island and Winnemucca sites, in addition to further investment in our downstream business, including enhancements to our mobile delivery systems fleet. Spend was at a lower level than the first half of 2024, reflecting the lighter major turnaround schedule. Investment in growth capital expenditure was lower in the first half versus the prior period, With $60 million allocated across the digital solutions segment, ongoing investment in our discrete network optimisation program and continued investment in our blasting technology portfolio, supporting the year-on-year increase in margin I mentioned earlier. Sustainability capital investment also reduced following the completion of key investments in our continuous manufacturing facilities, such as the tertiary catalyst abatement technology. Further sustainability capital expenditure will be assessed and prioritised, consistent with all capital investment, through our capital management framework. As outlined in our update in March, we anticipate capital expenditure will be more heavily weighted towards the second half, with total spend for the 2025 financial year to be broadly in line with 2024, including a slightly higher allocation towards growth capital expenditure. Turning now to slide 16 on the balance sheet and liquidity. During the half we successfully refinanced an extension of existing committed bank debt facilities totalling $460 million for an average period of five years. The average tenner of our total committed debt facilities at 31 March was four years. Net debt increased by $247 million from September to approximately $1.9 billion. As expected, net financing costs have increased from the prior corresponding period, reflecting the drawn debt required to fund the recent major acquisitions. In line with our transition to a leveraged target policy range under our Capital Management Framework, Leverage at 31 March was 1.45 times within the lower half of our target policy range of 1.25 to 2 times. Our liquidity position remains robust with cash of $720 million supported by undrawn committed bank debt facilities of $1.2 billion at 31 March. In summary, our balance sheet is strong and it's well positioned to support Orica's strategic priorities and growth plans and ultimately increasing returns to shareholders. Turning now to the dividend slide on page 17. Under our refreshed capital management framework, we have maintained our target dividend payout range of 40 to 70% of underlying earnings. The Orica Board of Directors have declared an interim ordinary dividend for the 2025 half year of $0.25 per share, unfranked, representing a dividend payout ratio of 48.6%. This represents a $0.06 per share, or 32% increase, on the prior year interim dividend. This increase in dividends reflects our commitment to delivering sustainable and disciplined returns to shareholders aligned to our capital management framework. Our consistent and improving financial performance and strong balance sheet provide a solid foundation to support the company as it continues to grow profitably, deliver on our strategy and ultimately improve returns to our shareholders. With that, I'll now hand back to Sanjeev.