Orica Limited (ASX:ORI) MD & CEO Dr. Alberto Calderon outlines the company's FY2015 results, its global footprint and the benefits of the company's transformation program. Orica is the largest provider of commercial explosives and blasting systems in the world. What does this mean? We have more than 40 per cent market share in Australia, but even more impressive we have more than 40 per cent market share in North America. Of all the explosives that are sold in North America – for mines, for tunnels, for all sorts of industrial construction – we sell more than 40 per cent. In Canada, that number is 60 per cent, in Mexico it’s 60 per cent, and in Latin America, where, as we all know, there’s also substantial mining, our market share is more than 40 per cent.
So, all in all we have around 12,000 people around the world in 450 sites that make the Orica of today.
The bread and butter of what we sell is our ammonium nitrate product; it is 18 per cent of our revenue. More sophisticated type of explosives is our emulsions and that is 29% of our revenue. And then when you go into our initiating systems that is really the technology where the highest end technology operates; in all of the blasting, cords, electronic blasting systems and similar. That is about 60 per cent of our revenue.
Geographically, we are roughly about 30 per cent in Australia, 30 per cent in North America, that includes Canada and Mexico. 18 per cent in Latin America, and around 18 per cent in Europe then the rest.
Our EBIT was $685 million unfortunately we had a significant impairment of $1.69 billion, but all in all, when you look at a very difficult year for our clients, for the mining industry, we had what we’ve deemed a pretty resilient result.
So for this semester, we were able to maintain a similar dividend to the past of $0.56 cents. We are happy that even in the current circumstances we were able to do this and maintain our overall policy of a progressive dividend.
So we were able to deliver in 2015 reductions and optimisations of $175 million on a gross basis and we have a plan for 2016 of $100 million. So that has been sort of the key part of how we were able to counter, again these difficult times and drops in revenue and prices that we have felt.
Fortunately, our sort of very wide geographical footprint allows us to grow in other areas that are not as hardly hit as Australia. So in particular I am talking about North America where we were able to grow our volumes by six per cent. So, all in all, we were able to almost keep flat our volumes, our EBIT did fall but it was significantly mitigated by this transformation program that we talked about earlier.
Look, there’s three priorities we are working on. Culture is always very important, our principles of respect, collaboration, transparency, and performance. Driving a customer centric organisation; it’s very key that we can demonstrate to our customers how we add value, how Orica adds value to them. And the third one is really embedding a culture of performance and in particular, return on capital employed on everything we do.
