Orica (ASX:ORI) FY 2016 results, operating environment, and priorities

Interviews

by Carolyn Herbert

Orica Ltd (ASX:ORI) Group Managing Director & CEO, Dr. Alberto Calderon discusses FY 2016 results, the improving operating environment, and benefits of the company's transformation program.


Orica Limited (ASX:ORI) is the global leader in mining and civil blasting. We’re also in ground support, a company called Minova, and in cyanide. We’re in 50 countries around the world, 11,000 people, seeking to deliver high quality products, best technology and adding value to our customers in a super safe way.

In FY16, our EBIT dropped by six per cent. If you compare it to our large mining customers whose EBIT dropped by 60 per cent, it shows the resilience of our company. So we’re quite happy how things ended up. It also shows the flexibility of the balance sheet. We were able to significantly drop our gearing. So we’re quite happy about that.

The final dividend was 49.5 cents, which is equal to a 48 per cent payout ratio.

We have to remember that the first nine months of our year were still very hard for our customers, and therefore, for us. So as you look at our three regions of the world which is Australia, North America and Latin America, we have mine closures and we have change in mine plans, which is sort of high grading. So for those, we saw declines. The good thing, however, is that our EBIT margins in every region of the world, stayed the same or increased. Finally our fourth high growth area, which is Europe, Africa and Asia, we managed to grow still in a difficult year.

Orica has a transformation program that is basically about - how do we do things better, how do we buy better, how do we manufacture better? And that’s something again, like we breath, we’ll keep doing it for the foreseeable future.

The outlook for Orica could be defined as, we’re past the inflection point for our mining customers, which means things are starting to look a bit better. We’re just not ready to call how much better will things be. From the point of view of Orica, this means that we should just stick to controlling our own, what we can control, within our own actions. Starting with safety and our major hazard initiatives to ensure zero harm for our people. And then going into our business improvements initiatives. How can we produce more with less, how can we buy better, how can we become better commercially, and other business improving initiatives.

We’re also focused on culture. Culture as you know is the underpinning of any great company. We have a new charter and we’ll continue to develop our values of respect and transparency, integrity and excellence. And finally, growth, growth is always important and how do we find new avenues of growth.


Ends

 

Carolyn Herbert

Finance News Network
Carolyn joined FNN in August 2015 as the Head of News and also presents the Market at Midday and the Market Wrap. With more than five years of broadcast journalism experience, Carolyn has worked as a finance anchor on the Sky News Business channel and as an anchor and reporter for ABC News. She is also a qualified corporate lawyer specialising in IPOs, takeovers and mergers and acquisitions.