Incitec Pivot Result Marred By ‘One-Off” Hits

By Glenn Dyer | More Articles by Glenn Dyer

Drought, floods and smaller problems helped produce more than $140 million of significant one-off items which more than halved the earnings of fertiliser and chemicals manufacturer Incitec Pivot (IPL).

The company yesterday posted a statutory net profit after tax of $42 million for the first half but stuck with a dividend – much reduced at 1.3 cents a share for the six months to the end of March.

That was less than a third of the 4.5 cents a share paid for the first half of 2017-18.

IPL shares fell 2.7% to $2.24 on a day the wider market jumped 1.7% or 110 points in a burst of post-poll exuberance. There were no surprises in the IPL’s one-offs – the company had warned of them earlier in the year.

They included a $60 million hit to earnings before interest and tax (EBIT) caused by a rail outage in Queensland which disrupted the transport of Incitec’s products to port, following severe flooding earlier this year and $61 million of one-off costs at the company’s US explosives plant in the state of Louisiana.

Directors said they expect an improved outlook for September half year (hence the smaller dividend) with full-year EBIT expected to be between $370 million and $415 million (after $209 million impact from non-recurring events)

Commenting on the results, Jeanne Johns, Incitec Pivot Limited’s Managing Director & Chief Executive Officer said in yesterday’s statement: “While the first half result was impacted by some significant non-recurring events, we are making good progress with our strategic agenda. The underlying market fundamentals remain strong and we have an improved outlook for the second half and beyond.

“In the US business, we are continuing to grow market share in Explosives, supported by our strategically located assets, quality client base, and premium technology offering. We delivered significant volume growth in Delta E and 4G Electronics, with technology underpinning continued market share growth in the Q&C sector.

“I am pleased with the progress we have made re-contracting our Explosives business in Australia, with our premium blasting technology playing an important role. Sales volumes of our electronic initiating systems grew 98% in Asia Pacific, with customers recognising the value we can add to their mining operations through our premium technology solutions.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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