Fertiliser and explosives maker, Incitec Pivot Limited (IPL) has finally found a deal to keep its Gibson Island in Brisbane open. The new gas supply deal will keep the fertiliser plant open until at least the end of 2022.
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).
Citi analysts had already concluded the risk-reward proposition for owning this stock had turned favourably again, post share market sell-off that followed another profit warning by the company. Since then the analysts attended what they label an "upbeat" Investor Day.
The company has downgraded guidance again for FY19 and pulled forward a strategic review of the fertiliser business. Credit Suisse was not surprised by the drought-driven downgrade but further plant downtime at the Louisiana plant is of concern.
The company has provided more clarity regarding the financial impact of outages from the Mount Isa rail line flooding and manufacturing issues in Louisiana. Additionally, distribution volumes are lower in Australian fertiliser because of the drought.