Download 2016 Orica Sustainability Report
Financial Performance and Planning
United Nations Sustainable Development Goals
- Statutory net profit after tax (NPAT) of $343 million
- Earnings before interest and tax of $642 million
- Underlying EBITDA of $908 million
- Gearing of 36%
- Final ordinary dividend of 29 cents per share (55% payout ratio), franked at 8 cents per share
In the 2016 financial year, Orica delivered a solid financial performance by managing all the elements within our control demonstrating both earnings and cashflow resilience.
The 2016 independent assessment of Orica’s material sustainability issues identified our long-term financial performance and planning as areas which are material to a sustainable business. A commercially sustainable business supported by good cultures and behaviours is better positioned to make long term and broadly valuable contributions to its community.
In challenging and cyclical markets, Orica has demonstrated a robust business model. It is important that we continue to focus on doing the basics right and doing what we do best. At the same time, we must anticipate and demonstrate agility in analysing the risks and opportunities presented by longer-term change to ensure our business is prepared.
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“We are committed to growing and creating enduring value for our shareholders. This commitment is underpinned by a disciplined approach to capital management which aims to maximise shareholder value through growth and cash returns on all new projects, while maintaining safe and reliable operations. Future capital investment proposals will be measured against a targeted return on net assets of in excess of 20%. We will continue to embed sustainable efficiency and productivity improvements across our operations to improve our competitiveness and returns through all phases of the economic cycle.”
Chief Financial Officer
Capital Management Framework
Orica takes a disciplined approach to capital management to ensure our investments in the business deliver an asset base that can generate sustainable returns for shareholders over the long term. Our rigorous capital management framework is underpinned
by the following key principles:
- Maintain safe and reliable operations
- Maintain an investment grade rating throughout the cycle
- Deliver acceptable returns on investments
- Maximising shareholder value through growth and cash returns
Orica’s processes and criteria for capital investment decisions promote and maintain safe and reliable operations first and foremost, while setting a target of at least 20% return on net asset for new growth and capital projects. At the same time, we will ensure that our license to operate is never compromised, our environmental commitments are met and our people are kept safe. Capital allocation for these purposes will not be subject to financial hurdles. By taking this approach we safeguard returns over both the short and long term.
Orica targets a prudent gearing ratio of between 35% to 45% (of net debt / net debt + equity).