• EBIT: Highest in a decade, increased by 15% to $806 million.
• Net Profit: Rose by 11% to $409 million.
• Statutory Net Profit After Tax: Increased by 77% to $525 million.
• Operating Cash Flow: Robust at $808 million.
• Return on Net Assets: Improved by 20 basis points from 12.6% to 12.8%.
• Earnings Per Share (pre-significant items): Increased by $0.052 to $0.864.
• Dividends: Increased to $0.47 per share, a 9% increase from the prior year.
• Capital Expenditure: Total of $456 million, including $161 million in growth capital.
• Net Debt: Increased by $705 million to $1.6 billion.
• Gearing: Increased to 26.2%, below the target range of 30% to 40%.
• Blasting Solutions EBIT: Increased by 13% to $755 million.
• Specialty Mining Chemicals EBIT: Increased by 36%, driven by Cyanco acquisition.
• Digital Solutions EBIT: Increased by 29%.

• Warning! GuruFocus has detected 6 Warning Signs with OCLDF.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Orica Ltd (OCLDF) achieved its highest EBIT in a decade, reflecting strong strategic execution and operational excellence.
• The company reported a 15% increase in underlying earnings to $806 million and an 11% rise in net profit to $409 million.
• Orica Ltd (OCLDF) has made significant progress in sustainability, achieving a 43% reduction in Scope 1 and Scope 2 emissions from its 2019 baseline.
• The company successfully completed two strategic acquisitions, Terra Insights and Cyanco, which are expected to contribute to future growth.
• Orica Ltd (OCLDF) reported strong earnings growth across all segments and regions, driven by increased adoption of premium products and innovative technologies.

Negative Points

• The company faced a tragic incident involving the loss of a colleague in India, highlighting ongoing safety challenges.
• Despite improvements, Orica Ltd (OCLDF) continues to focus on fatality prevention and harm reduction, indicating room for further safety enhancements.
• The North American segment experienced reduced demand for thermal coal and lower activity in the quarry and construction market.
• The company anticipates supply constraints in its cyanide assets due to necessary safety upgrades and maintenance work.
• Orica Ltd (OCLDF) faces ongoing challenges from macroeconomic factors such as inflation and geopolitical risks, which could impact future performance.

Q & A Highlights

Q: Can you provide a timeline for achieving the target of 50% earnings from beyond blasting, and how much of this growth will be organic versus acquired? A: Sanjeev Gandhi, CEO, stated that while a specific timeline cannot be provided, the goal is to achieve this target quickly. The current portfolio is sufficient to make significant progress, with a notable step-up expected in FY 2025 due to full-year contributions from specialty mining chemicals and digital acquisitions. The growth will be driven by both organic scaling and new product introductions.

Q: Will the growth in non-blasting earnings skew more towards digital or specialty chemicals? A: Sanjeev Gandhi, CEO, indicated that both segments will contribute significantly. The specialty mining chemicals business is high-margin and will expand with new products, while the digital segment, being capital-light, will scale rapidly with increased adoption of digital solutions across multiple sites.

Q: How should we view the $101 million benefit from mix and margin in FY24, and can this level of growth continue into FY25? A: Sanjeev Gandhi, CEO, expressed confidence in maintaining or exceeding this growth, emphasizing a focus on quality of earnings through premium products, upselling, cross-selling, and technology. The strategy is to continue enhancing the mix and margin.

Q: What is driving the increase in depreciation and amortization for FY25? A: James Crough, CFO, explained that the increase is due to the full-year impact of acquisitions, investments in blasting technology, digital solutions, and new facilities like the GroundProbe manufacturing site. The growth in depreciation aligns with the company's strategy to invest in growth and earnings.

Q: Can you clarify the impact of maintenance and turnaround schedules on FY25 earnings? A: Sanjeev Gandhi, CEO, noted that the Carseland turnaround was completed in October, with most impacts in the first half of the financial year. The focus will be on cyanide assets for safety upgrades and reliability improvements, which may cause some supply constraints.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.