Shares in chemicals and explosives maker Incitec Pivot rose yesterday after the company revealed lower earnings before one-off items and indicated it will see higher profits in the second (current) half of the year.
The shares rose more than 4%, or 13c to $3.17 after IPL said reported net profit for the six months to March 31 of $132.4 million, up from $99.6 million in the corresponding period in fiscal 2009.
That included one off items: excluding them profit fell 14% to $146.2 million from just over $169 million reported earlier.
"Earnings will be biased towards the second half, reflecting the seasonality of Australian agriculture and the North American explosives market," the company said in the statement to the ASX.
"Americas Explosives Business will continue to face challenging cyclical trading conditions, partly offset by delivery of the Velocity (IPL’s cost cutting) program.
"The business is well placed to benefit from the eventual recovery in the US economy, although the timing of any recovery is uncertain."
Earnings before interest and tax (EBIT) fell 15% to $230.1 million on the previous corresponding period.
That reflected lower global fertiliser prices and the impact of the higher Australian dollar, offset by business improvement initiatives from the Velocity program.
Directors said: "the mix of earnings in the period was 58% Explosives and 42% Fertilisers which compares with 47 % Explosives and 53% Fertilisers in the same period last year."
The company’s Explosives division saw earnings before interest and tax (EBIT) rise 3% to $133.2 million, thanks to higher margins in the stronger growing Asia Pacific region (such as Australia); offset by the impact of those still challenging market conditions in North America.
The high value of the Aussie dollar also had an impact.
The Fertilisers EBIT of $96.9 million dropped 32% from the $143.3 million earned in the same half of last financial year, thanks to lower average global fertiliser prices and the higher Australian dollar.
IPL said its trading business, Southern Cross International, maintained volumes "but was affected by the global period-on-period drop in the fertiliser price and high Australian dollar which saw sales revenue fall by 30% or $120.1 million."
Looking to the coming year, IPL directors said there would be continued earnings momentum in the Asia Pacific explosives business, with lower cost sourcing.
Domestic fertiliser demand will be dependent on sufficient in-season rainfall, with the higher Australian dollar impacting farmers.
The interim dividend was cut to 1.8c a share from 2.1c in the first half of 2009.
And shares in online travel group, Webjet Ltd ended higher after it confirmed its profit guidance.
Webjet said in January it expected to make the January forecast of $5.2 million for the six months to June.
"Despite a range of negative announcements in the general retail discretionary market, subject to May and June trading, we confirm that expectation," managing director David Clarke said in a short statement yesterday.
Webjet shares rose 7c to $2.14, after hitting $2.20 during the day.
