Managing Director's Message
Managing Director and CEO
In 2018 we achieved our most important target of no fatalities. The work we have done over the past two years to understand our major hazards and ensure all key controls are in place has touched every part of our organisation and strengthened our safety culture and controls. While our Total Recordable Injury Frequency Rate increased slightly, the severity of injuries has declined. We have more work to do but I am confident we are making Orica a safer place to work, and this will remain our priority.
Strong demand and new contracts in key market segments saw our revenues return to growth in 2018, but we were disappointed with the decline in earnings before interest and tax of three per cent on the prior year. This was largely due to issues at manufacturing operations as we responded to increased demand levels, but lower earnings from the Minova business and difficult conditions in our Latin American business also contributed to the decline. We moved quickly to address the issues within our control and earnings in the second half increased 46%, reflecting solid operational performance and cost reductions.
Delivering superior technology and expertise for customers is at the core of our strategy. The acquisition of GroundProbe has significantly expanded our digital capability and customer offering and contributed positively to earnings for the year. Other initiatives including expansion into agricultural markets on the east coast of Australia and a new joint venture in China will increase returns on existing assets and build presence in these strong and growing markets.
Revenue growth from new technologies as a proportion of total revenues grew by more than 30% in 2018. While this still represents a modest proportion of sales, new technologies are driving market conversion to more modern, less commoditised products and services which will improve margins over time. Improved customer satisfaction and a lift in market share in key regions also underlines progress toward our longer-term transformation.
People and Capability
The expertise of our people is a differentiator for Orica. Developing and challenging our people continues to be a priority and we were pleased to lift employee satisfaction levels again this year and significantly increase the number of critical roles filled by internal candidates.
Over the past few years we have reshaped our business to respond more quickly to the needs of our customers, reduced our cost base and begun simplifying and standardising our operations to improve performance. We invested in game-changing technologies and strengthened capability at all levels of the organisation. Most importantly, we revised our approach to safety, prioritising the identification of major hazards and verification of controls to keep our people safe.
As the outlook in demand for our products and services strengthens, we are well placed to benefit. Our technologies and expertise are increasingly sought after as our customers seek new productivity and safety solutions. We are finding new ways to lift returns on our asset base and this will drive financial performance in the short and medium term. Capital efficiency and cost management will continue to be prioritised as the work we have done over the past two years to reduce our cost base and add value to our business is integrated into the way we work.
We have achieved much in 2018, especially in the second half of the year, and I am excited by the opportunity before us. I thank the dedicated people across our organisation for their sustained effort and contribution, and shareholders for their continued support.
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