Orica Limited: Change of Segment Reporting and Second Half Performance Update

Change of Segment Reporting

Orica Limited has announced a significant change in its segment reporting structure ahead of the 2024 financial year full-year results release on 14 November 2024. The new structure follows the completion of the Cyanco acquisition in the Specialty Mining Chemicals segment and the Terra Insights acquisition in the Digital Solutions segment. These acquisitions align with Orica's strategy to 'grow beyond blasting' while continuing to profitably grow its core blasting business.

For the 2024 financial year, Orica will report its financial results in three segments:

• Blasting Solutions: This includes Orica’s core production and supply of explosives and blasting systems to the mining, quarry, and construction industries across various regions.
• Digital Solutions: This includes the newly acquired Terra Insights business and comprises Orebody Intelligence, Blast Design and Execution, and Geosolutions.
• Specialty Mining Chemicals: This includes Orica’s existing sodium cyanide and emulsifiers businesses along with the newly acquired Cyanco business.

The 2023 financial year and 2024 half-year financial results have been restated to reflect this new segment reporting structure. There is no change to Orica Group earnings and associated balance sheet as previously reported.

Second Half Performance Update

Orica has provided an update on its second-half performance for the 2024 financial year. Consistent with the outlook provided at the 1H2024 results, the 2H2024 underlying EBIT, before contributions from Terra Insights and Cyanco, remains on track to be higher than the prior year and slightly better than forecast.

In the Blasting Solutions segment, the core business remained strong with continued demand for products and services across the mining and civil infrastructure value chains. All planned maintenance activities at the manufacturing sites in Australia were successfully completed.

In the Digital Solutions segment, demand remained strong for Orica's suite of digital offerings and value-added services despite continued softness in mining exploration activity. Terra Insights is being successfully integrated into the Orica group and is tracking in line with the investment case. EBIT contribution from Terra Insights after integration costs is expected to be minimal this financial year as forecasted.

For the Specialty Mining Chemicals segment, good progress has been made on integration activities, new contract wins, and network optimisation post-completion. Planned maintenance activities and safety upgrades at the Winnemucca plant were brought forward into this financial year, resulting in lower-than-planned production. This has led to a one-off earnings impact, resulting in a lower FY2024 EBITDA contribution than forecasted. However, FY2024 EBIT is expected to be in line with the investment case.

Depreciation and amortisation, including Terra Insights and Cyanco, is expected to be $425 million to $435 million. Significant items in 2H2024 will include a ~$34 million net profit from the sale of excess land at Yarraville, Australia, a ~$24 million net loss due to an increase in the Botany Groundwater treatment plant provision, and a ~$50 million net loss from restructuring costs associated with the transfer of functional roles to the Global Business Services centre in Manila and operating model changes in some parts of the EMEA region. Total significant items for FY2024 are expected to contribute ~$120 million net profit.

Minority interests for the period are expected to be in line with 1H2024. Capital expenditure, including Terra Insights and Cyanco, is expected to be $450 million to $460 million. The 2024 financial results are subject to audit, with further details to be provided when the results are released on 14 November 2024.