Adbri : UBS Australasia Conference 2021

For personal use only

15 November 2021

UBS Australasia Conference - Presentation

Attached are presentation slides being delivered today at the UBSAustralasia Conference 2021.

Authorised for release by the Company Secretary.

-ENDS-

For further information please contact:

Darryl Hughes	Jon Snowball
General Manager, Corporate Finance	[phone]
and Investor Relations	[e-mail]
[phone]
[e-mail]
adbri.com.au
Level 1, 157 Grenfell Street	Adbri Limited
Adelaide SA 5000	ABN 15 007 596 018

UBS Australasia Conference 2021

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15 November 2021
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		UBS Australasia Conference 2021 - 15 November 2021

Operational / market update - October 2021

•

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Sales demand robust

• Volumes have recovered from recent COVID-19 restrictions on construction in east coast markets and South Australia
• October 2021 sales volumes:
• • exceeded expectations across all products except concrete which was substantially in line with expectations, with weather impacting demand in Queensland offset by strong demand in other markets
  • exceeded October 2020 across all products, with the exception of lime volumes following reduction in volumes supplied to Alcoa
• Demand appears to be strong across all regions delivering higher than expected sales volumes. However, costs have largely offset the benefits of higher volumes. COVID impacts have resulted in higher costs through demurrage from disrupted shipping and operational performance has reduced cement production at Birkenhead, resulting in higher unit costs (currently being addressed)

Vertical integration developments

• Agreement signed to purchase Zanows' aggregate, sand and concrete business located in western Brisbane with an acquisition price of $58 million at an EBITDA multiple of 8.5 times (inclusive of synergies)
• Accretive acquisition provides access to quarries with approved reserves of over 70 million tonnes

Positive outlook despite near term uncertainties

• Demand through balance of 4Q21 dependent upon COVID-19 restriction impacts which create uncertainty. However, current indication is that demand is strong
• 2H21 earnings have been impacted by previously announced reduction of lime volumes to Alcoa, anticipated commencement of competing cement import terminal in NSW, operational issues impacting cement production, and COVID-19 impacts including, limitations on construction activity, disrupted shipping and increased costs caused by the delayed return of the Accolade from its drydock in Singapore

UBS Australasia Conference 2021 - 15 November 2021

Financial summary

only	Revenue ($m)								Underlying EBIT1 ($m)							Underlying NPAT1 ($m)
	752.3											86.0										55.0
700.7										75.2									47.6
use	1H20	1H21									1H20	1H21								1H20	1H21
	2H		Dividend (cents)						Payout ratio (%)
														98
	1H				15.0	15.5		15.0						82		84	98	87		83
							16.0								98		95
												71
													68			84				68
														81	63		80			63
				12.0
												71
		9.0	9.0		9.5								68		65						68	65
						12.0	12.5		13.0		7.25
		7.5	7.5	7.5	7.5			8.5
																	26
										5.0	4.75	5.5
		2011	2012	2013	2014	2015	2016	2017	2018	.0	2020	1H21
		2019	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	1H21
																	Underlying	Reported
(1) "Underlying" EBIT and NPAT exclude significant items. Refer slide 11 for reconciliation to reported earnings
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Operational improvement and cost reduction

Progress on improvement initiatives supports our ability to reach gross cost efficiencies targeted to reach

onlyalmost $100 million(1),(2) by 2025

Key Assumptions:

Group cost-outprogram - 2020 delivered $35.5 million in gross savings.

2021 baseline a further ~$20 million in cost savings. Future incremental savings projected at ~$6 million per annum targeting organisational structure,

100

SCM strategy

90 Birkenhead

RDF usage / energy

80		Kwinana Upgrade
	Group cost-out program
70

operational technology savings, pallet cost recovery and process benchmarking
use	60
for concrete and aggregates
Kwinana Upgrade - modelled estimates for project business case include cost	50
avings on reduced labour, transportation, power, repairs and maintenance and
other operational efficiencies
RDF usage/energy - baseline energy cost savings sourced in 2021 rising to	40
2023 and secured through to 2029. RDF savings targeting 50% RDF usage by
2025 versus current run-rate of circa 40%. Current EPA licencing allows up to
ersonal	30
45%. Targeted RDF usage partially relies on alternate source of RDF, which the
kiln is currently not licenced to use
Birkenhead process benchmarking - targeting $10/t - from quarrying	20
activities, through to production and delivery to customer. Early benchmarking
suggests that opportunities exist to deliver this level of saving	10
Supplementary Cementitious Materials - 5-yeartarget to increase tonnage
used by 20%. Target is subject to market demand and supply	0
	2021	2022	2023	2024	2025

(1) Assumptions based on Management's assessment current at the date of this document which may change subject to risks and uncertainties including, but not limited to, Government licensing and regulations, market supply and demand,

	availability of kiln/calciner fuels and supplementary cementitious materials, changing market conditions, costs and pricing, completion of capital projects and availability of funding
(2) Gross cost efficiencies are exclusive of cost headwinds and do not represent a forecast
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