Good morning and welcome to Dyno Nobel Limited's 2026 full-year results briefing. This is Tom Dixon speaking, and I am joined this morning by our CEO and Managing Director, Mauro Neves, and our Group CFO, Nitesh Naidoo. The materials we will be covering today have been lodged with the Australian Securities Exchange and are available on the ASX and Dyno Nobel websites. At the end of the presentation, we will have time for questions, and an audio recording will also be made available on the company's website. I will draw your attention to the disclaimer on slide two and slide three of the presentation. Before we move into the main presentation, I would like to begin with an acknowledgement of country. I acknowledge the first peoples of the land, sea, and waters across the various locations that we are living and working from today. I pay my respect to elders past and present.
Thank you. I will now hand over to Mauro.
Thank you, Tom. Good morning, everyone, and welcome. Nitesh and I are pleased to present Dyno Nobel's 2026 full-year results. I will start with our 2026 highlights and the outlook for fiscal year 2027. Then I will cover our progress on safety, our transformation, and the next drivers of growth, new markets, premium technology, and energetics. Nitesh will then take you through our financial performance, capital investment, balance sheet, and shareholder returns. I will return with our closing remarks on why we believe in Dyno Nobel's future, then we will take your questions. Let me begin with the results and how we are building a stronger base for growth. Fiscal year 2026 was a strong year for Dyno Nobel. Our explosives business delivered a record result with underlying EBIT of AUD 485 million, up 12% YoY. We delivered on our financial year 2026 commitments.
Our transformation program generated AUD 51 million in net benefits. At year-end, our exit run rate stood at 70% of our AUD 300 million EBIT uplift ambition. We completed our move to a pure- play explosives company. The sale of Phosphate Hill marked the final step in separating our fertilizer business. Safety and reliable delivery remain our foundation. In the second half, we recorded zero process safety incidents and saw a clear improvement in TRIFR. In our growth markets, we won new customer projects in Ghana, Tanzania, Brazil, Canada, and Western Australia. Our privileged assets and vertical integration continue to create advantage. The Moranbah debottlenecking project is complete, and Cheyenne remains on track for completion in the first quarter of financial year 2027. We also made tangible progress in energetics, with approximately $1 billion of U.S. government-funded TNT and IMX projects now progressing at Graham, Kentucky.
Such results keeps us on track for our AUD 600 million EBIT ambition in financial year 2028. By the end of financial year 2027, we expect our exit run rate to reach about 85%-95% of our uplift ambition. Safety comes first, today and always. Our full-year TRIFR was 1.01 compared with 0.95 in financial year 2025. That is not where we want to be, but it does not tell the full story of our progress throughout the year. TRIFR fell from 1.25 in the first half to 0.77 in the second half. Strong leadership in the field, early identification of hazards, and a sharper focus on high-risk work began to deliver results. Process safety also improved. Incidents fell by 81%, and we recorded zero process safety incidents in the second half. No incidents were classified as serious harm in financial year 2026.
At 80% of our sites, there were no recordable injuries. Injury severity fell by 41%. We also recorded no major environmental incidents. We welcome this progress, but the work is not done. Our TRIFR target remains 0.76. We will keep building the leadership, systems, and behaviors required to achieve zero harm for everyone, everywhere. Now to the financial results. Group revenue was AUD 3.941 billion. EBIT was AUD 504 million, excluding individually material items. Our statutory profit after tax, including IMIs, was AUD 66 million. That compares with a loss of AUD 53 million in the previous period. Group revenue and earnings reduced year-on-year as we reshaped our portfolio through the sale of the fertilizers. The clearest measure of the ongoing business is the Dyno Nobel explosives result. Explosives revenue rose 10% to AUD 3.406 billion. EBITDA rose 8% to AUD 759 million.
Underlying EBIT increased 12% to a record AUD 485 million. ROIC, excluding fertilizers, rose from 5.2% to 6.7%. This reflects a stronger explosives business and the impact of turnarounds in financial year 2025. We returned AUD 574.4 million through our buyback program at an average price of AUD 3.01 per share. We have announced a final dividend of AUD 0.05 per share, bringing total financial year 2026 dividends to AUD 0.096 per share. AUD 0.096 per share. At year-end, net debt- to- EBITDA was 2.1x , within our policy range. For financial year 2027, we expect underlying EBIT of about AUD 515 million-AUD 555 million, subject to the assumptions and risks set out in this presentation. The transformation program delivered AUD 51 million in net benefits during financial year 2026. Commercial actions made the largest contribution.
New customer wins, repricing, and wider use of our premium technology delivered AUD 51 million. Priority growth markets added AUD 19 million. Changes to how we operate, buy, and manufacture also delivered gains across our cost base. These gains were partially offset by AUD 55 million in temporary headwinds and other impacts. This included about AUD 14 million from foreign exchange and AUD 11 million in added depreciation. Inflation also had an impact. Unplanned downtime at Cheyenne and supply limits from the Waller turnaround accounted for about AUD 16 million. The core drivers of our transformation remain intact. Better contracts, firm pricing discipline, stronger manufacturing, and growth in markets where we can win are delivering results. In financial year 2027, we expect another AUD 30 million-AUD 70 million in net transformation benefits. Priority growth markets offer the largest opportunity.
New contracts will start in Africa and Latin America, with further growth in Canada, Asia, and W.A. We expect a further AUD 20 million-AUD 30 million from our commercial actions. These include commercial customer wins, repricing, better product bundling, and wider use of premium technology. Manufacturing, supply chain, and procurement actions are expected to add up to AUD 15 million. We will unlock more production capacity through debottlenecking and improved efficiency. About AUD 25 million in offsets will reduce those gains. These include the scheduled maintenance at Moranbah and our foreign exchange assumptions. In this table, you can see our progress since financial year 2023. From financial year 2024 to 2026, we delivered AUD 185 million in net transformation benefits. Commercial benefits totaled AUD 154 million gross. Operations added AUD 83 million, and growth markets added AUD 59 million. Against those gains, we had AUD 111 million in offsets.
Depreciation, stranded costs, inflation, and temporary operating impacts are examples of such offsets. Underlying explosives EBIT rose from AUD 300 million in financial year 2023 to AUD 485 million in financial year 2026. We exit financial year 2026 with a run rate of AUD 510 million. That puts us at 70% of our AUD 300 million uplift ambition. By the end of financial year 2027, we expect that run rate to reach about 85%-95%. We remain on track for the AUD 600 million ambition in financial year 2028. This is not the result of any single action. It comes from stronger commercial delivery, lasting changes to our operations, disciplined growth, and a more focused business. As we showed in our recent Investor Day, we see five powerful megatrends supporting long-term growth across our markets.
Electrification and the energy transition are driving critical minerals demand, with copper material moved expected to grow by around 50% from 2021 to 2031. Supply chain security is also driving investment, with around $30 billion mobilized for critical minerals reshoring in the United States. At the same time, more than $1 trillion of AI-related infrastructure investment is projected over the next three to five years, supporting demand for commodities, material, and energy. Declining ore grades, down an estimated 6%-8%, are increasing the need for productivity, technology, and technical expertise. And in defense energetics, the market is expected to double by 2035, creating a compelling adjacent growth opportunity. Importantly, each of these trends aligns closely with our capabilities and competitive strengths we have, giving us confidence in the long-term outlook for our business.
Our growth is gaining traction through customer wins in metals and in the priority regions we share at our Investor Day. Metals rose 70% in 2026, measured by revenue. The share of explosives revenue grew by 4 percentage points. In North America, metals revenues rose 29% as we brought in new customers. Canada delivered revenue growth of more than 40%. New operations, including Agnico Eagle's Hope Bay and Skeena's Eskay Creek. In Australia, we won more than 10 new hard rock sites over the past 12 months. We continue to grow our presence in W.A. In Asia, the capital-light model is now operating in Malaysia. We see further opportunities in P.N.G., the Philippines, and India. Across Africa and Latin America, we won four new sites, including projects in Ghana, Tanzania, and Brazil.
These wins show what we can achieve when we bring together global customer ties, strong local delivery, and technology that sets us apart. In Africa and Latin America, we are moving from winning contracts to setting up operations and delivering services. In Ghana, services began in September at AngloGold Ashanti's Obuasi and the Iduapriem operations. Local emulsion production in Iduapriem is planned for the first quarter of financial year 2027. In Tanzania, services at Geita are expected to begin as the on-site unit is brought into service this quarter. In Peru, we aim to bring the Ilo emulsion plant into service also in the first quarter of financial year 2027. In Brazil, operation at Vale's Fábrica site are also expected to begin before the end of calendar year. These leading global customers give us a firm base for growth in these regions.
Our approach is disciplined and makes careful use of capital. Premium technology helps us deliver more value to customers, better quality revenue, and stronger earnings. Electronic initiation system volumes increased 11% in financial year 2026 as customers continue to convert from legacy systems, and new customer wins supported further adoption. Our premium products earned margins about 1.2x those of standard products. They help customers improve productivity, rock fragmentation, and operating performance. Use of Nobel Fire rose 19%. Customers are making greater use of digital tools to plan, carry out, and improve their blasting. The aim is not simply sell more product. It is to deliver more value to customers and build earnings that are stronger and more resilient. The Autonomous Bench shows technology strategy in action, solving real problems for customers.
The solution is designed to automate dipping, priming, loading, and stemming while allowing operations to be supervised from a control room. This keeps people away from high-risk areas, supports continuous operations, and uses data to deliver more consistent blasting results. The autonomous equipment has now been built. With our partner, Mariana Minerals, we plan the first site trial by mid-2027. This solution is a key part of a fully autonomous mining operation. Other customers are already showing early interest in the technology. This is a practical demonstration of how our proprietary technology, digital capability, and customer partnerships can create a meaningful competitive advantage. Energetics opens a new path for growth alongside our core business. Our assets, expertise, and operating systems gives a strong base to compete. At Graham, Kentucky, two U.S. government-funded projects are building that new growth platform. The TNT project is worth $435 million.
The IMX project is worth $581 million. Together, they represent about $1 billion in government-funded investment at Graham. The IMX project is being delivered through Nitradyn, our 50/50 joint venture with Paligen, combining Dyno Nobel's manufacturing capability with Paligen's defense contracting expertise. The value goes beyond a new source of earnings. The TNT and IMX facilities will strengthen U.S. security of supply, increase vertical integration, and reduce our reliance on imported critical raw materials. The model is designed to deliver recurring earnings through product margins on offtake or tolling fees on government demand. The TNT project is moving through detailed engineering, permits, and site preparation. First production is expected in late 2028. First IMX production is expected by 2030. Our financial year 2031 group ambition of AUD 800 million EBIT includes about AUD 30 million-AUD 40 million from North American energetics.
At Graham, the IMX project takes us into advanced energetics material. The project includes five smaller plants, making materials such as RDX and HMX. These can be used on their own or as components of IMX-104. This gives us more ways to serve governments, defense contractors. It also allows us to supply raw materials for our own commercial use or for sale. In Europe, Vonges gives us an established base with a long history in energetics and deep technical expertise. European demand for energetics is expected to roughly double between 2026 and 2035. More manufacturing capacity will be needed. We are exploring a new energetics facility at Vonges. Offtake talks are moving forward with potential customers in Europe and NATO-aligned customers. Process and engineering options remain under evaluation, and the next stage will define the preferred concept, development pathway, and commercial approach.
We will remain disciplined and progress opportunities where our capabilities create a clear advantage and where the returns justify the investments. I will now hand over to Nitesh, who will cover the financials.
Thank you, Mauro, and g ood morning, everyone. In this section, I will take you through the FY 2026 financial performance, investing activities, and the balance sheet. I will finish with the FY 2027 Dyno Nobel outlook. On slide 22, FY 2026 was a strong year for the Dyno Nobel business, and we exit the year on track to deliver the AUD 600 million EBIT ambition in FY 2028. We spoke to you about the next horizon of growth to FY 2031 and our AUD 800 million ambition, but recognize the first step is AUD 600 million by FY 2028. Underlying explosives EBIT increased 12% to AUD 485 million, driven by record performances in DNA and DNAP. Our strategic joint ventures also performed strongly. JV income increased 16% YoY to AUD 93 million, and JV tax-adjusted EBIT across the explosives business reached AUD 518 million. I will talk more about JV tax effect later in the section.
The transformation program delivered AUD 51 million of net benefits in FY 2026, taking the exit run rate to 70% of the AUD 300 million uplift ambition. Explosives revenue increased 10%, supported by long-term customer relationships and a forward contract order book of around 2x FY 2026 revenue. That forward coverage does not include energetics and provides a strong visibility over the underlying revenue base. Moving to 23. The business has built strong momentum since FY 2023. Underlying EBIT has increased from AUD 300 million to AUD 485 million, representing compound annual growth of around 17%. ROIC has improved by approximately 90 basis points over the same period, with FY 2026 explosives ROIC at 6.7%. Underlying EPS for the explosives business has increased from around AUD 0.07 in FY 2023 to AUD 0.18 in FY 2026, supported by earnings growth and the share buyback program. Our forward contract value is an important metric for us.
It reflects the trust our customers place in us and the resilience of our earnings through committed contracts. This stands at approximately 2x FY 2026 revenue. Together, these indicators show the combination of transformation-led earnings growth, disciplined capital allocation, improving returns, and strong revenue stability. Moving to slide 24. At a group level, revenue was AUD 3.9 billion, down 26%, reflecting the sale of Phosphate Hill in FY 2026 and the IPF distribution business in FY 2025. Explosives revenue was AUD 3.4 billion, which grew 6% YoY, with operating margin increasing 3% to just over AUD 1 billion. Group EBITDA, excluding individually material items, was AUD 778 million, and EBIT was AUD 504 million. Within that result, explosives EBIT increased 17% to AUD 485 million, reflecting the underlying momentum of the transformation program and the impacts of the FY 2025 turnaround in the comparator. NPAT, excluding individually material items, was AUD 331 million.
Individually material items were AUD 265 million after tax, mainly relating to the sale of Phosphate Hill, fertilizer exit costs, and the impairment of loans associated with the receivership of QPM, a gas supplier to DNAP. I want to reiterate that through comprehensive security arrangements, gas supply to Moranbah is secure, and we are working with the receiver to maintain a sustainable supply to Moranbah. After those items, statutory net profit was AUD 66 million, up from a AUD 53 million loss in FY 2025. Moving to slide 25. Now moving on to the underlying explosives business. No adjustments have been made for FY 2026 reported ex-IMI numbers. We have normalized for turnarounds in FY 2025, which is why headline EBIT growth was 17%. Underlying explosives EBIT increased 12% to AUD 485 million, with record performances from our two largest business units.
Excluding foreign exchange impacts, explosives revenue increased 14% and EBIT increased 16%. DNAP revenue increased 11% to AUD 1.3 billion, and EBIT increased 10% to AUD 281 million. The metals segment was the primary driver of growth, contributing approximately 66% of the total revenue increase, supported by strategic customer wins and successful renewal of key contracts. DNA revenue increased 13% to AUD 1.9 billion, and EBIT increased 19% to AUD 224 million. FX has impacted the translated results for DNA. In local currency, the performance is better reflected, with revenue growth of 21%, operating margin growth of 8%, and EBIT growth of 28%. The standout growth was supported by sales of surplus ammonium nitrate during a period of tight supply, the resumption of booster sales following TNT shortages in FY 2025, and continued demand across key customer segments.
Demand was also higher as several major customers entered periods of increased pre-stripping activities. The operating margin was impacted by tight AN markets in half two, with higher third-party purchased AN to meet customer demand in the U.S. DNEL experienced a more challenging trading environment. Revenue reduced 12% to AUD 287 million. This is mainly driven by the European performance, which was impacted by disruption to key shipping routes arising from the Middle East conflict, which constrained international exports, as well as economic conditions in France and Turkey. LATAM declined 2% due to severe weather conditions in Chile. DNEL EBIT reduced to AUD 18 million, reflecting the revenue impacts mentioned, together with investments in market entry. This remains a strategic focus for Dyno Nobel, with new customer mobilizations expected to recover this result. Across the group, transformation initiatives in pricing, procurement, and operations delivered structural cost reductions and efficiency gains.
JV income increased 16%, reflecting strong performance from our North American partners and record earnings from QNP for its financial year ended June 30. JVs remain a vital part of our strategy, and it is important to note that the post-tax impact to our earnings diminish our EBIT and has a material impact due to the strategic choice of operations through JVs. This impact is AUD 33 million in FY 2026 due to the growth in this channel since FY 2023 and into the future with our defense JV, Nitradyn. This needs to be considered for valuation purposes. We have included a slide in the appendix to illustrate this. On a tax-adjusted basis, total explosives EBIT was AUD 518 million, up 12% from AUD 464 million in FY 2025. Moving to slide 26. FY 2026 capital expenditure was AUD 282 million, within our guidance range of AUD 265 million-AUD 285 million.
The program included AUD 124 million of sustenance CapEx, AUD 60 million of digital and technology, and AUD 86 million of CapEx supporting customer growth. For FY 2027, capital expenditure is expected to increase to approximately AUD 370 million-AUD 420 million. The range reflects scheduled turnaround expenditure, customer growth, technology investment, and the next phase of our energetics program. This includes approximately $40 million for the Cheyenne turnaround and approximately $20 million for defense and energetics investments. The FY 2027 range also allows for potential customer wins and growth initiatives, with capital continuing to be deployed selectively against expected returns and strategic priorities. These investments are consistent with the capital allocation framework we discussed at our Investor Day in September. Moving to slide 27. Overall, the balance sheet remains solid, with both ratings agencies acknowledging the improved credit quality post the completion of separation.
We retain investment-grade credit ratings of BBB from S&P and Baa2 from Moody's, with both increased leverage headroom to 2.75x in the year. Trade working capital was 19.2% of revenue, broadly stable against 19.5% in FY 2025, while cash conversion at 36% has been impacted by fertilizer separation and higher inventories to manage the volatility in the year. Going forward, we expect the long-term cash conversion post-interest and tax to be in the range of 60%-75%. Explosives earnings per share, excluding IMIs, increased 56% to AUD 0.18, reflecting the transformation, non-turnaround year, and the successful buyback program. This is clearly visible in the explosives ROIC, which improved to 6.7% from 5.2% in the prior year. Net debt was AUD 1.5 billion, and net debt- to- EBITDA was 2.1x within our 1.75x-2.25x policy range.
On-market buybacks returned AUD 574 million through the program, purchasing 191 million shares at an attractive average price of AUD 3. We have announced a final dividend of AUD 0.05 per share, 50% franked, taking the total FY 2026 dividends to AUD 0.096 per share. Now turning to the outlook for FY 2027 on slide 28. We currently expect underlying EBIT in the range of approximately AUD 515 million-AUD 555 million. We expect underlying result to be weighted approximately 40% to the first half and 60% to the second half. The outlook assumes borrowing costs of approximately AUD 105 million-AUD 120 million, an effective tax rate of approximately 20%-25%, and capital expenditure, as mentioned, approximately AUD 370 million-AUD 420 million.
It also assumes AUD to U.S. dollar exchange rate of $0.70, corporate costs of approximately AUD 45 million-AUD 50 million, and an FY 2027 transformation exit run rate of approximately 85%-95%. In Asia-Pacific, we expect the benefit of higher Moranbah production volumes following debottlenecking, partly offset by the QNP turnaround in the first half. In North America, the Cheyenne turnaround is scheduled for the second half, with debottlenecking projects at Cheyenne and LOMO expected to complete during FY 2027. In EMEA and Latin America, we expect operations to scale in Ghana, Tanzania, and Brazil. Net debt- to- EBITDA is expected to remain at the top end of our guided range of 1.75x-2.25x times. I will now hand over to Mauro to close.
Thanks, Nitesh. Let me close with a clear message. These results show why we have confidence in Dyno Nobel's future. We are now a focused, pure-play explosives business. We have resilient growth, strong contractual protections, and leading positions in attractive markets. Safety and reliability comes first. They earn our customers' trust, support our performance, and give us the foundation to grow. Long-term demand is working in our favor. The world needs critical resources, infrastructure, and smarter mining solutions. We are building growth across multiple pathways, which include our established North American and Asia-Pacific businesses, priority markets in Canada, Western Australia, Asia, Africa, and Latin America. Our strength lies in what we bring together: premium technology, a network of privileged assets, deep customer ties, and experienced people who can deliver. Our transformation is building stronger earnings, better margins, and better ways of working.
At every step, disciplined capital allocation guides our growth decisions. 2026 was a strong year. We completed our move to a pure-play explosives company and enter financial year 2027 with clear momentum. The ambition is clear, AUD 600 million in EBIT by financial year 2028. We remain on track, and we are laying the foundations for the next phase of growth beyond financial year 2028. Thank you for your time and your continued interest in Dyno Nobel. I will now hand back to the operator. Operator, can you please remind callers how to ask a question in the Q&A?
Thank you. For those listening by phone and would like to ask a question, please press star followed by one on your telephone keypad to raise your hand and join the queue. To withdraw your question, simply press star one again. When called upon, please use your handset or headset, ensure your line is unmuted, and be ready to ask your question. Again, that is star one to raise your hand and join the queue. Your first question is from the line of Ramoun Lazar from Jefferies. Please go ahead.
Good morning, Mauro and Nitesh. A couple of questions from me, just maybe starting with the 2027 guidance. If you could just talk through some of the end markets, some of the moving parts. I know corporate costs are higher than, I think, what the Street was expecting. It has temporary factors in there as well. Then also, your first half, second half split is more skewed to the second half than normal. Maybe just talk through that as well, please.
Yeah, I'll leave, t hanks, Ramoun. Good to talk to you. Look, the second half, first half has to do with the turnaround on Cheyenne. Other than that, all the usual weather-related events on the first half remain, s o we guided to that with and without the turnaround for people's reference. In terms of end markets, look, we still see strength in our core markets of Australia and U.S. So, if I start with the U.S., we still see tight markets for ammonium nitrate. That hasn't changed, and we hope that we can see continued growth in that market. In Australia, we have seen, again, strength on the domestic markets. The market's very well balanced, probably as balanced as I've seen. And we see, still, spot trading, when you look at the import parity at around AUD 1,000 landed in Moranbah.
Those are the fundamental bases of our forecast for financial year 2026, where for 2027, where we see that AUD 30 million-AUD 70 million opportunity to keep growing our earnings year-on-year. I'll let Nitesh answer on corporate costs, and much of that has to do with some sticky stranded costs year-on-year to do with the divestment of fertilizers. But Nitesh will give you a bit more detail on the corporate costs.
Thanks, Mauro. Thanks, Ramoun, for the questions. Just to touch on your first half, second half split, as you know, we do have lots of weather impacts in our business, so we've used the basis of our long-term average. So, that's an estimate from our side at this point in time. As far as corporate costs, we updated some of the offsets in our 2026 results to demonstrate that we had approximately AUD 5 million impact this year. Next year, we also have the challenge of stranded costs as we've completed the fertilizer separation work. We are working through the Ignite program, our transformation program, to ensure that some of our operational initiatives work hard to offset that. But largely, it's to do with the stranded costs.
Okay. Nitesh, is there any other, I guess, temporary factors that you've assumed in your guide for 2027 that you expect to impact the results?
Yeah. Ramoun, on slide 25, I think the two key ones to note is we've got a little bit of FX working against us, about AUD 5 million. We had an average of AUD 0.69 this year, and next year, we're planning for AUD 0.70. We've also called out that included in our FY 2027 transformation offsets AUD 10 million related to a scheduled maintenance at Moranbah. So, that's separate to the turnarounds that we've called out specifically that impact our underlying result. That scheduled maintenance of AUD 10 million in Moranbah, we've not taken it to underlying. We've just assumed that that is par for the course of operations. It's scheduled, and it's not a normal factor that we would experience every year. So, that's two offsets to our program this year.
Okay, got it. While I've got you, maybe just on your leverage guide as well, that's also expected to come in at the top end of your range. Maybe just if you could talk through some of those factors. I guess what's driving that higher CapEx number relative to expectations, and do your assumptions also make any allowance for contribution from Perdaman and the Geelong proceeds?
Yeah. Thanks, Ramoun. I think the main difference in terms of leverage being at a higher level is to do with fert separation. One major cash outflow in FY 2027 is the ARO payment that we expect to make in FY 2027. The timing of that is obviously relevant versus some of the other proceeds that we expect from the fert separation. It's really the timing of some of the payments we're making in fert separation, one on the ARO for Phosphate Hill, and second, some of the remediation work that we're doing in GI and Geelong. The timing of the expenses versus some of the proceeds that we're getting from the fert separation is driving that temporary heightened level of leverage.
We also need to note that this is a turnaround year for Cheyenne, and some of our energetics expenses are also proving to increase our capital expenditure and that leverage.
Okay, good. I'll leave it there. Thanks.
Thanks, Ramoun.
Your next question is from the line of Mark Wilson of RBC. Your line is open.
Yeah. Thanks very much, Mauro and Nitesh. Just interested in some of the new contract wins that you have actually spoken to. Just sort of wondering if you could elaborate upon those and how material they are likely to be as we progress. I also had a question about contract value being double that of fiscal 2026. What does that actually mean, and how are you quantifying that? Thanks very much.
Good morning, Mark, and thanks for the question. Look, the contract wins are really exciting because they play to many of our strategic directions, one being tying up with customers that already have business with us in other parts of the world. So, case in point, AGA, who is a traditional customer of ours in Western Australia, and also Vale, who has been doing business with us in Canada for some years, and now giving us the opportunity to serve them in Brazil. It is all predicated on our ΔE , DIFFERENTIAL ENERGY technology with electronic detonators. So, proves the point of we win when we generate additional value through technology to our customers. The site in Brazil is smallish. The sites in Africa are very large and provide us a good opportunity for earnings growth.
They set operations in countries that have traditional mining operations, especially in Brazil, Ghana, and Tanzania. So, I would expect that once you have set up shop and established an operation, that would create pathways for further growth from there. In terms of the overall, c an you ask again the second question? Sorry, I lost my train of thought.
Yeah. No, that is okay. No, just in relation to contract value, you have sort of put in there that it is fiscal 2027, it is double that of fiscal 2026. Just trying to understand how you are quantifying that. What does it all mean? And I will add another one there. Where was that figure 12 months ago and two years ago?
Yeah, this is something that we disclosed for the first time in our recent Investor Day, Mark. This is the size of our forward contract book. The way we measure that is, what is the revenue that we have contracted, if you look the full business forward, divided by the revenues of our previous financial year? This essentially gives you a sense of the amount of forward revenue that is pre-contracted the business. Obviously, it varies from market to market, varies from customer to customer. So, you have contracts ranging from five years in your metals mining customers, typically, to more like one-year renewals in your quarry and construction in the U.S., and you have everything in between. With the two years, we try to give you a sense of the quality of our forward contract book.
This is a new statistics that we provided for the first time in Investor Day, and that is something that we expect to keep informing the market as we are moving forward to keep a track of the quality of our ongoing contract book.
Okay. Thanks very much, Mauro.
Your next question is from the line of Jakob Cakarnis of Jarden Australia. Please go ahead.
Hi, Mauro. Hi, Nitesh. I just wanted to pick up on Mark's question there on slide 23. On that forward contract value, can you break down, maybe, for us how much is price and mix versus volume just contributing to that, please?
I will take this one, Jakob. It is a combination of both, but the intention of this is less on the proportion of price and volume, more so the fact that this is the contract value that we have in commitments from our customers that is not reflected in our past earnings. This will come through as revenues, as contracted revenues into the future. It is a combination of, one, the commitment in the contract, and the volume and price that we have already signed with those committed contracts. It is bringing back Mauro's point around the quality of the investment proposition here at Dyno, because we have a high quality of earnings, which is the contracted commitment that we have from our customers.
Okay. Thanks, Nitesh. That was worth a shot. Just on the cash conversion, obviously, there is some temporary issues in there, particularly around inventory builds and the like, and you have given us a sense of what it should look like next year. When do we get to steady state on the working capital side of things and then cash conversion? Is that now from FY 2027, and that is kind of the right 60%-75% to think about moving forward, please?
Yes, and that is the intention. I know we have had lots of feedback from analysts and investors around the volatility around cash conversion, so g oing forward this year, we do not utilize working capital facilities, which had an impact on cash conversion historically, as we had the fertilizers business. Going forward, we have a far more stable perspective on cash conversion, and it is consistent with the guidance I have provided, which is in the 60%-75% range from FY 2027 onwards.
Okay. Then just the difference, Mauro, just in the growth assumed in the guidance range, it doubles, the EBITDA growth year-on-year between the low end and the high end. I think Ramoun kind of hinted on this, but what are the key moving parts for the differences in the assumed growth? Is it a matter of the turnarounds falling in that AUD 25 million expectation, or are there other items outside of that, please?
Well, look, it is just we are getting used to the idea of having earnings guidance, and we want to provide for a budget that has different levels of risk on the implementation. So, those that we are calling out that are starting now. Th ey are all in the base, so they are the contract wins that are already booked, and you should expect them to be cash flowing now in the first quarter of financial year. In the other extreme, on the high end, you have those where we have started commercial activity, the teams are confident, but again, you have a range of confidence levels. As we do a budget, we try to have a center point where we look at those things that have decent likelihood, and then, obviously, we allow for risks to the upside and downside.
So, there is nothing other than the natural success factor of our tender processes.
Okay. Thanks, guys. I will hand it over. Thank you.
The next question is from the line of Lee Power of JP Morgan. Your line is open.
Hi, Mauro and Nitesh. Just following on from Ramoun's question around the 2H and the outlook. I get what you are saying, and it seems like your story is pretty consistent, and you got the contract book commentary there. What are your customers actually telling you about the backdrop post the midterms, particularly in the U.S.?
Thanks. A great question, Lee. Look, we haven't seen, it's probably too recent to tell, but we haven't seen any sign of change on the mega trends or any indication that the fundamentals that were driving them would change, whether it's in the defense energetics, whether it's in the AI investments. All indications, even pre the elections, suggested those things were, in a way, bipartisan, and you wouldn't see those fundamental changes about reshoring critical minerals or reestablishing sovereign capacity in ammunition. We don't see those things fundamentally change by either side of the aisle. But obviously, we'll keep an eye on that and report back as we see the progress. But so far, our bigger customers, many of which were represented on Investor Day, remain quite positive about the long-term outlook.
Okay, that's useful. Thank you. Then, just on the Vonges, the energetic side, are there any differences in offtake contracting in Europe versus the U.S.? Like, I'm thinking about things like, are they take or pay commitments? Like, how do you actually, how do you think about the certainty of an offtake in Europe versus what you have in the U.S.?
It's a great question, Lee. We typically, it will be a different model from the U.S. The U.S. model is what we call the GOCO, where the government has invested in the facility, and they naturally take all the needs they desire for their own capacity. Whilst in the Europe market, where first, you have multiple countries relying on capacity, and they tend to not have the same scale as the U.S. comparatively. Wh at typically happens is we would make the investment, and then we would rely on offtake arrangements, typically with the primes, the people that will be dealing with the different governments on their ammunition plans. So, you would expect us to, in time, come with a number of offtake agreements with prime companies in Europe that would underline our investment in Vonges.
So, yes, it's difficult to say exactly the nature of that offtake, if they would take the form of some joint venture arrangement, some partnership, some take or pay, as you described. It's early to tell, but yes, it will be through the primes in Europe.
Okay, thank you. Appreciate the color.
Your next question comes from Harry Saunders of E&P. Please go ahead.
Good morning. Thanks for taking my questions. Firstly, just wondering with the weaker DNEL result, can you talk through your expectations for the business baked into the FY 2027 guidance, and contribution maybe to the AUD 600 million target now, please?
Thanks, Harry. Look, I would start by saying 2026 has been a disappointing year on DNEL, and we were very direct that we would expect for 2026 a bigger contribution coming from the asset. There are probably three things that, as Nitesh pointed in his presentation, underline why we had somewhat disappointing results. The weakness on the French and Turkish infrastructure domestic market, much like the story of other European countries that saw infrastructure investment declining. We also had some difficulties exporting products out of Vonges into other markets in Europe, much driven by shortage of shipping, given the Strait of Hormuz crisis. We would hope that those things reverse throughout this year, and we have a more normal base European business.
Other than that, really, the growth that I outlined, whether it is from the new-built Ilo plant in Peru, the startup of Geita, Obuasi, and Iduapriem in Africa, and the business in Brazil growing now with the first announced contract with Fábrica. So, all those things give us confidence that financial year 2027 should be a better year for DNEL, but we accept that the financial year 2026 results were not what we expect.
Can you give us any more in terms of, you know, would we get back up to, say, 2025 levels there, or too early to tell?
We don't guide, Harry, by end market, but you should expect us to be reversing the reduction from this year.
Okay, thank you. Just wondering on CapEx, how we should perhaps think about more normalized CapEx in 2028 when delivering that AUD 600 million of targeted EBIT. Are we just pulling out the AUD 40 million of turnaround CapEx this year, or other things to consider there? Thanks.
Thanks, Harry. I think when you look at some of the material we shared at our Investor Day, we would see CapEx intensity reducing over the next five years. I think next year, kind of pulling back the turnaround spend for Cheyenne is key. We show a turnaround schedule in our appendix with some major and minor turnarounds, so that'll help you on some of the longer-term outlooks as far as turnarounds are concerned. But generally, on the slide, we show that CapEx intensity from a CapEx-to-revenue basis was around 8%, and we would expect that to decline in the coming years.
Thank you. Final question. Just if you could talk about how the supply-demand and pricing backdrop in your two main geographies panned out over the last six months, how it's currently tracking, when you expect that North American tightness to persist until, and does the guidance anticipate sort of a headwind comping the one-off spot sales in 2026, or are you sort of expecting a similar benefit? Thanks.
No, as I described earlier, Harry, we expect the ammonium nitrate market to remain very balanced, so we do not see the trends that we described earlier in the half-year results reversing into financial year 2027. The plant that was down in the U.S. is still not back, and to my best knowledge, there is no plan to bring it back in the short term. Obviously, the market finds new sources, and there has been a number of imports into the U.S., which is not usual. In the Australian market, there has not been any change, so you are still seeing import parity at Australian ports at around AUD 900-AUD 950 per ton and then landed in Moranbah at about AUD 1,050. So, look, that is the premise of our planning. Really, no major change from financial year 2026, which was a strong year.
Just as we grow in the U.S., we need to understand that some of the volumes that we serve in the U.S. is on trading, so we will have the tailwind of prices as we recontract new customers into the U.S., but we only take the short-term opportunity for any spot tons we have available. Obviously, that will be a consideration as we move forward. For traded tons, we are a price taker, and obviously, we do not have as much opportunity in that space, different from when we are trading our produced tons out of Cheyenne and LOMO.
Got it. Thank you.
Your next question is from the line of Brook Campbell-Crawford of Barrenjoey. Please go ahead.
Yeah, good morning. Thanks for taking my question. I just had one on the AUD 25 million estimated turnaround impact. Just want to check if that's a fairly locked-in number that wouldn't have much variance around it, maybe it's only a couple of million, or if this is something that you needed to make some estimates around AN pricing and ammonia, and the variance could be AUD 5 million-AUD 10 million or so around that AUD 25 million estimate. That'd be great. Thanks.
Thanks, Brook. Look, we have been, i t's not the first time we are forecasting turnaround, so I think we have some decent level of understanding of what that looks like. So, I would say we have a good handle on that number, and that's essentially the Cheyenne plus the impacts of the QNP turnaround that is also happening this year. As Nitesh said in his presentation, QNP and the other, those in the JVs we have is an important part of our ANI, so every time that one of those JVs have a one-off, it has an impact on our numbers. So, yeah, we have a good handle of those, and I don't expect that to be varying much outside this AUD 25 million that we guided.
That's great, thanks. And just on market share, I mean, you guys seem to be winning more contracts than you're losing, and there's lots of good anecdotes you provided today and at your Investor Day. Is there a way you can sort of simplify it for us, maybe like a market share number that you would estimate you have at the moment, and maybe comparing that to a couple of years ago, perhaps before some of these gains started to flow through? Any color on that would be helpful. Thanks.
Thanks, Brook. As we disclose more, obviously, there's obviously an appetite for more and more information. So, we do our best to give you a sense and give you data where it's relevant. I would say that, especially on the growth markets, that's where I would put your attention. We told, for instance, that we have increased our metals revenue in Canada by about 40%. Some of that comes out of new operations, greenfields, brownfields, but also, having won some contracts from our competitors. So, those are areas where there is material moving in the market share. Equally, those mines that we're taking up, whether it's in Brazil, whether it's in Africa, and now entering in Ilo in Peru, all the revenues coming out of those are new revenue that was being served by some competitor.
So, those are the areas to note and probably the areas where you should put your attention. In the mature markets, we have been very disciplined in price. We win on the basis of value creation. So, we win some, we lose some, and we have seen some growth year-on-year. But fair to say, not as market as the markets that we highlighted in our presentation.
That's great. And maybe just one last quick one. Indonesia was a softer market in FY 2026. I know it's not a huge market for you, but it was sort of one of the kind of weak points globally, I think, for all players. What's your assessment at the moment? Have conditions sort of recently picked up and outlook looking better, or do you think it's still going to remain pretty challenging in Indonesia for the year ahead? Thanks.
Look, Stuart was there last week, and we have been investing in the country, including some emulsion manufacturing with a partner. Our view of the market is it's firming up. I won't comment on the strength of the currency. Obviously, that has been a big factor for this past year. So, it's really difficult to forecast what will happen. But those recent situations where they have done some export bans, which impacted the market to some extent, we've seen those things tempering down, and we expect a more normal year out of Indonesia.
Thank you.
Your next question is from the line of Niraj Shah of Goldman Sachs. Please go ahead.
Good morning, Mauro and Nitesh. I might come at the DNEL questions a different way. You've called out AUD 35 million-AUD 50 million in priority growth markets in terms of the contribution to FY 2027 transformation. I guess, how much of that should go to DNEL versus, say, Canada, for example? And how much of that is underpinned by contracts you've already signed?
So, again, you're asking the same question in a different way. I appreciate that, but we haven't guided by end market. Giving earnings guidance for us was a big step, Niraj. I think we'll probably stick to group level earnings guidance. But to your second question, think about the AUD 35 million, the bottom of the range being the run rate of financial year 2026, plus the ones that we have disclosed that are in the process of starting operations, so what we'd call low-risk growth. So, we're pretty confident on those. And the top side of the range, activities, commercial activities that are underway with various degrees of probability. So, we try to give you a range of success on our, a nd typically what we do is we put the low-risk growth opportunities in the bottom end and the more high-risk opportunities in the top range.
Yeah. Fair enough. And just another quick one for me. On DNA, it looks like Q&C and metals held pretty solid momentum in the second half, but I could be wrong, but coal seems to have slowed a bit. I was just wondering if you could comment on that and how you're seeing that coal end market in the U.S. in particular into FY 2027.
Yeah, I think your comparison is right. The way you are portraying that metals and quarry and construction have been strong year-on-year and half-on-half, not as strong as coal, which is not surprising. We saw coal having a bit of a comeback in the first half, and we described some of that had to do with pre-stripping activity that people do in advance of resuming mining operations. We saw that now more tempered half-on-half. Year-on-year, it was a 10% growth for coal, which again, is a change on a declining year-on-year trend that we have seen for a few years. But I agree with you, that compared to quarry and construction and metals, not as impressive growth as we saw in those other two markets, which is not necessarily a bad thing.
As you know, Niraj, comparatively, quarry and construction and metals are our best mix, give us the best yield, the best margins per ton. So, we do not mind when the mix moves into more quarry and construction and metals.
Yep, makes sense. Then final one from me. From memory, Kentucky TNT was still pending definitization before construction could commence. I guess in addition to the pre-engineering work, what sort of milestones need to be hit before you actually start construction on that TNT facility?
No, I am happy to confirm the definitization is now complete, and we are starting construction early next calendar year. So, it is all systems go in that space, Niraj.
Great. Thank you.
A reminder, before we move on to the next question, if you would like to join the queue, press star one. Your next question is from the line of Scott Ryall of Rimor Equity Research. Please go ahead.
Hi, thank you very much. Hey, Nitesh, I am just giving you a heads-up, my second question is going to be on note 17 from your accounts, just so you can get that up. The first one is to Mauro. Mauro, you have set out the industry mega trends for the business. You have set out your investment priorities for the next year or two, and you have stressed the investment discipline. If I look at slide 25, which is where you have got the summary of the splits between the different geographic divisions, I was wondering if you could look out a little bit further on a kind of three- to five-year basis and just talk us through the investment decision-making that you are thinking about now, just in terms of where the more attractive geographic markets are for you to invest for the longer term, please.
Thanks, Scott. Let me start answering your question in a different way. Let me tell you what we are not investing in. We are not investing in low returns, heavy infrastructure business like ammonium nitrate in the next three to five years. We believe the market long term is well-balanced, and we need to return better returns on our existing infrastructure and play on capital-light growth opportunities, especially on markets where ammonium nitrate is naturally traded. Case in point, I made all this preamble to talk about things like Ilo in Peru. This is a growing market for mining globally. I have been there just a few months ago to cut the ribbon on our new emulsion plant.
When you think about a new ammonium nitrate plant, you are talking about probably AUD 1.2 billion-AUD 1.3 billion if you were to bring new capacity of the scale that we have, whilst a new emulsion plant is about tens of millions of dollars. As everyone else, you are importing ammonium nitrate in the country. So, yo u are really competing on the basis of technology, on the quality of emulsion, on the quality of technology, and not necessarily on having the molecule of AN, which in our view is abundant globally and can be traded in these new growth markets. Now, if I look at things like energetics and technology, that is probably the two areas that we are seeing potential opportunity.
Starting with energetics, as I described in my presentation, we see Europe energetics doubling in the next five years, and there is a window of opportunity to fulfill that necessary growth that we will see in the manufacturing capacity. Obviously, we will do that in disciplined ways, as I got a question just a few minutes ago. We will not be doing that unless we have some security of supply and some understanding of offtake from people that are interested in the plant, and we will have more to say about that in the next few months. Now, in terms of technology, the thing that makes me most proud is when we make the investments over the years and it pays back, like what happened with the Autonomous Bench.
We, this year, launched industry-first ability to make autonomy a reality in the last moving part on the mining segment, which is the ability to do everything we do in a bench without any people involved. That investment is now a reality, starting to be tested next year in Mariana Minerals, and with lots of interest of the big miners globally. To be honest, we have more demand than we can probably deal with in the short term. We are really now coming back to the drawing board to think about how we can accelerate the implementation of what has been a very successful launch. So, think about technology, think about low capital emulsion plants in growing markets, think about how we invest in energetics. Those are probably the main drivers of our growth beyond the sustaining growth of our existing operations.
Okay. So, it is not any particular geography that you are seeing as attractive. It is more the end market and where you see the opportunities for those end markets you have just described. Is that a fair way of thinking about it?
Yeah, think about following our customers and following growth. For instance, I don't want to discriminate against our mature markets, because as much as they are mature, there's lots of growth in Asia-Pacific and Americas. Case in point, places like Malaysia, where we've grown from nothing to a somewhat meaningful presence in quarry and construction, or Canada, that grown year-on-year 40% in metal. So, even the mature markets have lots of opportunity to continue to grow. But fair to say that on a very low base, LATAM and Africa remain the biggest relative opportunities for us. So, we're not shy to put down capital on, and a gain, on the basis of tens of millions of dollars of emulsion plants, in places like Peru, in places like Brazil, in places like Ghana and Tanzania.
Those are likely to be disproportionately important given what's happening on the mining activity on those markets. But notwithstanding those growth markets, more mature markets are not shy of opportunity in places like Canada and W.A.
Okay. That's a really helpful answer. Thank you. Nitesh, hopefully you've got the provisions note up. I'm looking at the footnote number one, just on the Phosphate Hill sale agreement. J ust after some confirmation as to the provisions and potential ongoing liability, h ave you now ruled this off? So, this payment that you've made, the AUD 125 million of funding support for future rehabilitation and remediation, does that rule off Dyno's exposure to the Phosphate Hill, please?
Yeah, that obligation, following the payment of that, our asset retirement obligation passes to Mayfair.
Okay, great. So, no kind of potential residual liability or anything like that as far as you are concerned?
Yeah, I think when we concluded the sale, our assessment is that that concludes our residual liability.
Okay, excellent. Thank you. That was all I had on that one. Thanks very much.
Your next question comes from the line of Ben Wedd of Macquarie. Please go ahead.
Hi, both. Thanks for the time. Just a couple of quick ones from me. Just in the DNAP business there, any observations on Indonesian coal demand going into FY 2027? I know you've detailed how it was a pretty soft market in FY 2026.
Hey, Ben. As I mentioned before, we expect the 2027 situation to be normalized. Volume-wise, we expect the financial year 2027 to be a normal year for us. As I said, difficult to comment on the translation impacts on Aussie dollars, but in terms of volume and price, we don't see any change year-on-year.
Yeah, great. Thanks, Mauro. Also, just looking, thinking about the contract or re-contracting cycle here. What are your sort of expectations for pricing, and predominantly speaking, in the DNAP business into the next year? Maybe you can frame that in terms of what percentage of the contract book is up for renewal, if it's possible.
Yeah, thanks, Ben. Consistent to what I discussed before, we're not up for renewal next financial year, so we have, a nd that's part of the two years contract life that we mentioned earlier today. But the DNAP sustaining price stays very healthy at about AUD 1,000 landed in Moranbah in terms of import parity. I would say that if the conditions remain unchanged, I would expect that the next re-contracting cycle would give us another opportunity to play catch-up and to have another bite of the cherry. Probably not as substantial as the last one, where there was a correction, but it's still opportunity to get nearer that current spot price level.
Thanks very much. Appreciate the time.
That concludes our Q&A session for today. I would like to turn the call back over to Mauro for closing remarks.
Thanks for your interest. I look forward to meeting many of you the next two weeks as we go in our roadshow. Couldn't be prouder of the year we just finished. It was our first year giving earnings guidance to the market, coming to full year, being able to report being squarely within the guidance, having just come out of Investor Day, showing the capability of our team. If I could just drop a last line here to thank everyone in Dyno Nobel for their efforts. Team, that wouldn't be possible with each of you. So, now I'm speaking to the 25% of our workforce that has chosen to be with you investors, part of the investors of our company. So, my big thanks for the Dyno Nobel team and their efforts to bring together these results, and we are ready in delivery mode for the next year.
Thank you, everyone, and see you in the road.