Managing Director's Message
Managing Director and CEO
Despite facing substantial headwinds during the year, we delivered a stable full year result with earnings before interest and tax of $635 million. This marks the first time since 2012 that our EBIT has been steady against the prior year and is a result of the steps we have taken to build Orica’s resilience. Explosives volumes for the year of 3.65 million tonnes were 3% higher than the prior year, in line with the recovering mining sector.
Safety and Environment
In contrast, our safety performance was unacceptable. Two fatalities, one on a customer site in Peru and the other at our Manufacturing facility in Gyttorp, Sweden, were devastating and reinforce the importance of ensuring that safety is our priority. Following a comprehensive investigation, we ensured all lessons were captured and shared with the teams on the ground. Our major hazards initiative, focussed on identifying major hazards and verifying all key controls at every site, continues to make good progress, and visible safety leadership is being demonstrated by all levels of management.
We recently launched our climate change policy, outlining the actions we are taking to reduce emissions at our major production facilities and plan for a low carbon future. We see this as our responsibility, as a global leader.
Business improvement initiatives
A focused and disciplined approach to managing the elements within our control delivered $127 million in business improvement benefits. These initiatives are not simply cost reduction programs; they are fundamentally changing the way we work at Orica, and will be sustained well into the future. It is about becoming a more efficient, more effective company through every part of the organisation. We have involved more than four thousand Orica people across the globe to consider all factors that create value, including initiatives that generate revenue, reduce costs, deliver improved trade working capital, and capital expenditure. The program has so far generated more than one thousand ideas and initiatives, with individual initiative benefits ranging from thousands of dollars to multi-millions, including beyond the 2017 fiscal year. We are embedding this in the organisation to go beyond a program to being a normal part of the way we do business.
People and Culture
The work we started in 2015 to build an enduring positive culture continues. We know that organisations with engaged, supported and performance-focused people are stronger companies, and the management team has made the internal health of Orica a key priority. We focused on building a more engaged workforce, and embedding Our Charter values. We sought the views of all our people to understand our progress and will use the feedback to continue to build effective interventions. Fostering a culture of respect and performance is key to Orica becoming a world class company.
We strengthened our management team, bringing in new Executive talent from world-class organisations, ensuring we have the right leaders in place to deliver against our refined strategy. Our strategy capitalises on our great strength – innovation – a key competitive advantage and differentiator for Orica. This was demonstrated by the successful launch of our wireless blasting product, a world-first and unique offering in the industry globally. Our differentiated strategy, the reach and breadth of our business, the quality of our products and services, and the expertise of our people, give us every confidence in our ability to restore and sustain Orica’s performance.
Looking ahead, while markets continue to stabilise and improve, we expect the headwinds we encountered in 2017 to extend into the 2018 financial year, as the last of our long term contracts are renewed at market price. While we remain conservative in our outlook, we will continue to focus on embedding business initiatives that make Orica a more efficient and effective business, and delivering enhanced shareholder value. We remain firmly committed on our journey to make Orica a world-class organisation in all respects.
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