ORICA LIMITED (ORI)



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General Information
Company Name: Orica Limited
Stock Code: ORI
Website: www.orica.com
GICS Sub-Industry: Diversified Chemicals
Market Cap ($M): 8,131
Equiv. Shares (M): 371

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
$ 21.920 $ 21.690 $ 21.930 $ 21.620 $ 21.920 1,262,848 0%

Current Broker Consensus Recommendation more
Recommendation: Hold
Recommendation Date: 26th Mar 2014
12 Month Target Price (average): $25.153
Brokers Surveyed: 7

Company Overview

Business Description:
Orica Limited (ORI) is a manufacturer and supplier of industrial and specialty chemicals, commercial explosives and mining chemicals through over 50 countries. Orica’s products and services include mining services, mining and general chemicals and ground support services. Orica has a portfolio of manufacturing and distribution assets strategically located across Australia, New Zealand, Asia, Latin America and Africa.

Strategy Analysis:
ORI¬īs main priorities are expansion of its ammonium nitrate (AN) manufacturing capacity in Australia, Indonesia and South America in order to take advantage of strong demand for explosives from the mining sector. Following the 2012 completion of the Bontang, Indonesia plant attention turns to Australia with a feasibility study underway to double capacity at Kooragang Island in NSW. ORI is also participating in a joint venture (45% share) to construct an AN plant in the in the Pilbara mining region in WA. A feasibility study is also underway into the construction of an AN plant in Peru. These expansion plans should result in strong growth over the next few years as demand from the mining industry continues to grow. In Minova, the key strategy is to try to improve returns from this underperforming business through simplifying the business model, optimisation of manufacturing and overhead rationalisation. Orica reported NPAT down 37.3% to $402.8m for the year ended 30 September 2012. Revenues from ordinary activities were $6.67bn, up 8.0% from last year. Diluted EPS was 109.1 cents compared to 169.8 cents last year. Net operating cash flow was $544.1m compared to $758.2m last year. The final dividend declared was 54 cents, taking the full year dividend to 92 cents compared with 90 cents last year.


Financial Summary
Year to Sep NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 722.6 195.9 8.3 11.2 98.0 4.5 45.0
2014  F 667.4 181.0 9.6 12.1 96.0 4.4 45.0
2013  A 601.6 165.2 -7.0 13.9 94.0 4.1 74.5
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Orica (ORI) $7,990 M -0.2066 0.0781 0.0679 12.9075 11.9727 11.2112 0.0436 0.0455 0.0485

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
ORI 0.76 12.6 2.09 1.72 1.16
Market 1.07 15.9 1.27 2.05 1.71
Sector 0.87 12.0 0.68 0.73 4.83

Directors
Name Position Start Date
Mr Ian Kingsley Smith Chief Executive Officer,Managing Director 27 February 2012
Dr Nora Lia Scheinkestel Non-Executive Director 01 August 2006
Mr Gene Thomas Tilbrook Non-Executive Director 14 August 2013
Mr Russell Ronald Caplan Non-Executive Director 01 October 2007
Mr Ian Cockerill Non-Executive Director 12 July 2010
Mr Lim Chee Onn Non-Executive Director 12 July 2010
Ms Maxine Nicole Brenner Non-Executive Director 08 April 2013
Mr Alberto Calderon Non-Executive Director 14 August 2013

Management
Name Position
Nicholas(Nick) Bowen --
Chris Hansen Company Secretary
Gavin Jackman Executive Global Head, Corporate Affairs and Social Responsibility
Eileen Burnett-Kant Executive Global Head, Human Resources
Richard Hoggard Executive Global Head, Manufacturing
Craig Elkington Executive Global Head, Mining Services
Ron Douglas Executive Global Head, Projects and Technology
Andrew Larke Executive Global Head, Strategy, Planning and Mergers and Acquisitions
Tony Edmondstone Executive Global Head, Supply
Sean Winstone Manufacturing Executive, Continuous Plants
Molly Zhang Manufacturing Executive, Mining System

Substantial Shareholders
Holding Name
42,387,401 (11.55%) Harris Associates L P
20,186,322 (5.48%) Perpetual Trustees

Calendar of Events
Date Event
09 December 2014 Report (Annual)
10 November 2014 Report (Prelim)
05 May 2014 Report (Interim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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