Orica Delivering the Promise - Half Year Results 2002

3rd May, 2002

Orica Managing Director and CEO, Malcolm Broomhead, said the Orica Half Year Result to 31 March, 2002, was a first step in meeting the company’s commitment to shareholders to lift profitability, restore financial credibility and establish a platform for the future.

"The profit for the 2002 Half Year was greater than the profit for the Full Year in 2001. While pleased with this result, we recognise that there is still much we can do to continue to deliver value to shareholders in the future," he said.

Orica declared a net profit before significant items of $80.4 million for the Half Year to 31 March 2002, compared with $30.1 million for the same period last year – a 167% increase. The interim dividend of 15 cps (50% franked) is an 88% increase on last year’s interim dividend of 8 cps.

Mr. Broomhead joined Orica as Managing Director and CEO Orica in September 2001.

"The result reflects a solid performance by all four key business platforms and was underpinned by a strong focus on costs exemplified by a 104% increase in EBIT on a 7% increase in sales.

"The restructuring program introduced during the Half Year has produced savings of $25 million to date. The full level of benefit of these savings will be felt in the next Half Year and in subsequent years.

"The performance signals the commitment of our employees to improving the company’s performance both financially and in the important areas of safety, health and environment where results were also among the best ever," he said.

Mr. Broomhead said the outlook for the Full Year remained positive. "Markets are expected to remain strong particularly for Mining Services and Agricultural Chemicals where there is a traditional seasonal bias in the Second Half.

"Also, the Second Half will benefit fully from the flow-through of rationalisation benefits and we believe we will continue to produce further efficiency gains," he said.

In looking at the businesses, Mr. Broomhead said that the Chemicals Group delivered the highest Half Year profit on record driven by strong sales in key markets including gold mining, dairying and building and construction.

"Other highlights for chemicals were the start-up for the new ChlorAlkali plant at Laverton and the successful commissioning of the MIEX drinking water treatment plant in Western Australia," he said.

"In Mining Services, North America returned to profitability and Australia achieved record sales volumes. While the markets in Latin America and Europe were flat, the focus on cost control is delivering results.

"Orica Consumer Products increased profitability on strong demand for paint and paint preparation products in Australia and costs savings from restructuring.

"Agricultural Chemicals achieved a substantial increase in profitability on the back of record fertiliser volumes and a significantly reduced cost base."

Mr. Broomhead said the plastics business, Qenos, continued to struggle but performance improvement programs were underway with a view to divestment in the longer term.

"The company divested the AVC business, sold the Orica art collection and announced the intention to sell the Corporate Office in Melbourne," he said.

Mr. Broomhead said he was proud of the initial progress of the Culture Change Program within Orica in the past six months.

"Employees developed the Four Key Principles for Orica – Safety, Health and Environment, Commercial Ownership, Creative Customer Solutions and Working Together.

"Each of our 8000 employees will now be involved in workshops where they will have the opportunity to contribute to the development of these areas in their workplace.

"The Four Key Principles – and associated behaviours - capture the challenge that is ahead for everyone working for Orica. They reinforce the necessity for greater individual responsibility for performance and provide the basis for ensuring the sustainability of that performance into the future," he said.