In yesterday's choppy market, Orica was punished, despite producing reasonable earnings for 2007 and expectations of better for the year ahead.
Just why is a bit of a mystery: perhaps some investors are still unhappy at the board rejecting the $32 a share buyout offer earlier in the year.
Orica shares slipped 67c to $28.78
But Orica is forecasting record profit growth for the current 2007-08 year as the benefits of past investments and continuing productivity improvements bear fruit.
The company yesterday revealed a 10% fall in net profit after tax and significant items for the year ending September 30 of $488 million.
The previous year included a net profit of $159 million on significant items.
However, excluding significant items, the 2007 profit was a record $498 million, 31% higher than 2006.
CEO, Graeme Liebelt, said the performance was driven by record results in mining services, consumer products and chemical services' mining chemicals.
Sales revenue edged up 3% to $5.5 billion, but excluding the impact of acquisitions and divestments, underlying sales revenue was up 12% the company said and cash flow rose 27% to $524 million.
The company will pay a final dividend of 53c a share, up 10% from last year. This brings the total ordinary dividend for 2006-07 to 89c a share, 20% higher than the payout for the 2006 year.
Orica said the 2007 dividend is franked at 35%.
Mr Liebelt said the strong result was due to a combination of reasonable market conditions and a payoff from investments and productivity improvements by the company.
The investment benefits came from the integration of the former Dyno business bought at the beginning of 2006, the integration of Minova from June 1, and the recent Yarwun ammonium nitrate plant upgrade.
Mr Liebelt said higher productivity would provide Orica with continued earnings momentum in 2008.
He said there would be benefits from the $90 million synergies arising from the Dyno acquisition, the Minova acquisition, and the Yarwun ammonium nitrate and sodium cyanide plants.
Results from the acquisition of Excel Mining Systems would also start appearing this month.
But potential negatives in the coming year were dominated by the stronger Aussie dollar (but not yesterday when it fell more than 3c on the day, compared to Friday).
Every 1% rise in the $A cost the company $3 million in earnings.
The stronger Aussie dollar trimmed the 2007 profit by around $17 million.
Orica has spent more than $2 billion in the past two years buying mining services companies like Excel and Dyno.
It rejected a $9.95 billion private equity buyout offer in April from a consortium of Bain Capital Partners, Blackstone Capital Partners, Pacific Equity Partners and Morgan Stanley Principal Investment.
Orica said it had received no further takeover approaches from private equity since it rejected a proposal in April.
Asked if Orica had received any more approaches from private equity, Orica chief executive, Graeme Liebelt, told media on Monday: "No, the approach that we had in April seems to have evaporated, and there have been no further approaches".
In April, Orica rejected an offer of $32 per share.
