Fertiliser and explosives maker Incitec Pivot delivered a 20% jump in annual profit yesterday but sees a much slimmer rise this year.
Profit before one-off items rose to $530.1 million for the year to September from $442.8 million a year earlier.
The shares rose 2.3% in early trading, but eased over the rest of the day to close down 5c or 1.4% at $3.47.
The company is looking for a modest growth in its explosives business in Australia in the year ahead as volumes improve as Queensland coal mines recover from floods.
But it is expecting to see only a small contribution from the $935 million Moranbah explosives plant in Queensland which is due to come on stream in the June quarter of next year.
According to analyst forecasts, IPL can expect a 5% rise in profit in the 2012 financial year.
Chief executive James Fazzino called 2012 a transition year for the company, and he told the media yesterday that "In the short term, we’re going to see quite a bumpy ride to recovery".
But he said the 2011 results "confirmed the success of the IPL Group’s approach of generating long-term, sustainable earnings-per-share growth based upon the strategy of leveraging the urbanisation and industrialisation of Asia, in particular China.
“Over the past two years, our priorities have been to strengthen the base business in the wake of the Global Financial Crisis, to build upon a solid financial platform and to sharpen the strategic focus of each of our businesses.
“The next phase is to drive further shareholder value through long term productivity improvements in the existing businesses and to pursue growth options consistent with our strategy and our strict financial disciplines,” Mr Fazzino said.
The company said the 2011 highlights included:
"Each of the businesses in the IPL Group delivered double-digit earnings growth; Dyno Nobel achieved record earnings signifying the success of Asia Pacific’s organic growth strategy and also the focus on the basics in the Americas; there was a 34% increase in fertilisers’’s EBIT with recovery in domestic fertiliser volumes and strong global fertiliser prices and globally-traded fertiliser volumes increased nearly 300% underlining the potential for this business."
The company said full year dividend has been lifted 47% to 11.5c a share, with the final of 8.2c a share (6c a share previously). The interim was 3.3c a share.
IPL is considering building an ammonium nitrate plant at Kooragang Island at Newcastle in NSW where rival explosives producer Orica Ltd is facing mounting concerns from government and the community about leaks from its ammonium nitrate plant.
Orica is awaiting government approval to restart its plant which supplies coal mines in the Hunter Valley.
Incitec expects to complete a feasibility study on the new plant late next year, but will have to overcome those fears that the Orica leaks have caused.
As expected, it was another big loss for another year from Elders for the 2011 financial year, and as usual, the company has been asked to be taken on trust for the coming 12 months.
Elders’ shares fell 6.6% to a record low of 24 cents yesterday on the news.
The refrain has been familiar now from Elders every report or update for the past three years: a hint of blue sky, a smidge of promise, and suddenly a big loss appears to ruin the optimism.
This time around the company yesterday reported a $395.4 million annual loss, and forecast an improved performance for the 2011-12 financial year.
But the loss for the September 30 year was bigger than the $217.6 million loss for the previous corresponding period.
Elders’ forestry assets, currently being sold off, contributed most of the year’s losses: $335.4 million to be precise.
A further $64.6 million of losses came from other non-recurring items, including negatives from divestments or discontinued operations, Elders said in yesterday’s statement.
Underlying earnings before interest and tax (EBIT) was $33.7 million, up from $2.6 million.
The company said it had net debt of $345.5 million as at 30 September and borrowings were reduced from $497.6 million to $427.1 million at September 30. Elders says it plans to reduce debt further over the next year as assets in the forestry business are sold off.
Managing director Malcolm Jackman said in the statement that the underlying results reflected a turnaround by Elders’ rural services network and a steady performance by the Futuris automotive interior design business in tough market conditions.
"After a difficult start to the year, seasonal conditions have been positive and we are starting to see the benefits of the investment made in business transformation over the past three years as the business has clearly turned around," he said.
Further improvement was expected in the current year, Mr Jackman said. "Seasonal and market conditions will have a high degree of influence on our result as always," he added.
"But with that qualificati
