Orica Flags Profit Hit On Top Of Plant Shutdowns

Explosives maker Orica is closing production at three North American plants under its global rationalisation policy, has warned of the closure of more facilities, and has forecast $170 million (pre-tax) of significant items in its upcoming full-year results.

The closure of the three plants is expected to cost Orica $80 million. Two of the facilities, Minden and Hallowell, are in the United States, while the third (Tappen) is in Canada.

The other significant items include a non-cash impairment of IT assets of about $65 million and about $25 million of redundancy costs.

The post-tax impact of all the significant items is expected to be about $130 million.

Orica will release its full-year results on November 20 and said its underlying EBIT (earnings before interest and tax) for the year was expected to be slightly above $600 million.

“Due to the pandemic impacting developing markets more severely for longer, AN (ammonium nitrate) volumes for the second half of FY20 are now expected to be close to 15 percent below the expected pre-COVID-19 volumes.

“Higher supply chain costs, largely freight, continue to impact the business as we support customers’ operations during the pandemic,” Orica said.

Orica shares slid 3.2% to $16.11.

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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