Orica shares shook off soft revenue figures, thanks to the stronger Australian dollar, and a modest improvement in profit to push higher yesterday after the group’s 2010 full year figures were revealed.
The shares were up 3.50%, or 90c, at $26.60 after the result was released to the ASX yesterday morning.
They ended at $26.44, up 77c on the day, or a rise of 2.8%.
Orica’s sales and profits took a big hit from the sharp rise of the Aussie dollar against the greenback, especially in the closing months of its September 30 year.
Orica said the higher dollar cost it a massive $799 million over the year.
And the higher dollar cut earnings before interest and tax by $75 million over the full year, according to the commentary.
The company reported net profit for the 12 months to September 30, 2010 was $675.8 million, up 4.6% from the prior year.
Net profit from continuing operations – following the spin-off of the DuluxGroup late in the year – was $618.8 million, up 11.1%. (Dulux reported figures yesterday, see next report.)
Revenue overall was down 11.8% and from continuing operations it was 10.2% lower at $5.812 billion.
Orica managing director and chief executive Graeme Liebelt said the company had performed well in 2010, amid weak global markets and a stronger Australian dollar.
Mr Liebelt said Orica was strongly positioned for the next year.
"We expect group net profit after tax (pre individually material items) in 2011 to be higher than that reported in 2010, on a comparable basis, subject to the rate of global economic recovery and extent of further adverse movements in exchange rates," Mr Liebelt said in a statement.
Orica declared a final dividend of 54c per share, fully franked, which was 5% down on a year ago when a final of 57c was paid.
With the 41c interim (40c) the group is paying a full year dividend of 97c, down 2% on the 2009 payout. That’s still a payout of just over 50% of earnings, as it was last year.
Offsetting that was the spin-off of Dulux which saw an entitlement issue made to all Orica shareholders.
The company said there were "improved results for all businesses" due to improvements in pricing and productivity and a gradual recovery in volumes across some markets.
Orica said its mining division achieved a "record result", with earnings before interest and tax up 4% at $768 million due to pricing and productivity benefits.
The chemicals division also posted a record result, Orica said, with EBIT up 10% on the prior year to $188 million "reflecting stronger volumes in most market segments, partly offset by lower average caustic prices".
And the Minova division reported EBIT up 2% at $147 million, "driven by strong volumes in China, improved margins in the US and delivery of synergies", Orica said.
Orica’s accounts showed individually material items for fiscal 2010 included a profit of $794 million on the demerger of paint, adhesives and garden care products supplier DuluxGroup and a $98 million loss on the Pharmaceuticals tax case.
Mr Liebelt said the company’s commitment to "business fundamentals, particularly our drive for productivity and cash generation" had delivered a record profit for the ninth year in a row.
"Strategically we are focused on extending global leadership in the provision of high service critical consumables to the mining and infrastructure markets," Mr Liebelt said.
"Orica is strategically well-positioned; nearly 90 per cent of our business is exposed to the mining and infrastructure sectors, leveraged to increases in production and development which will provide continuing opportunities for growth."
