Shares in Incitec Pivot nearly 8% yesterday in the wake of what turned out to be disappointing full-year figures – even though final and full year dividends were boosted.
The shares ended down 5.2% $4.01. It was only last week the shares were trading at a 12-month high of $4.24.
The reasons advanced for the slide were odd – previously announced impairment losses in its explosives business in the first half report six months ago.
The $139.5 million write-down was announced earlier this year and was applied to the goodwill value of Dyno Nobel Asia Pacific.
They saw the company report a 35% drop in post-tax profit for the year ending September 30 to $207.9 million.
Earnings before interest and tax were up 11% to $556.7 million, compared to $501.2 million the previous year.
Excluding the one-off items, underlying profit rose 9.0% to $347.4 million.
Incitec Pivot will pay a final dividend of 6.2 cents per share, 20% franked, making for a total for the year of 10.7 cents, a rise of 13.8%.
Revenue rose 11% to $3.85 billion as the company reported strong operating performances across its explosives businesses in North America and the Asia Pacific and its industrial chemicals business in the US, as well as the solid underlying growth of its Fertilisers business in Australia.
CEO Jeanne Johns said operating performance had improved across the company’s portfolio, including the explosives businesses in the US and Australia.
“Our fertilisers business in Australia also had a strong result, considering the large turnaround at Phosphate Hill and the drought conditions experienced in much of New South Wales and southern Queensland,” Ms. Johns said in reporting her first full year figures as the company’s CEO.
The company said the impact of the drought, which dampened nitrogen demand for winter crops, was somewhat mitigated by higher global urea prices, higher sales volumes in other regions and higher distribution margins, underpinned by improved supply chain management.
Incitec Pivot did not provide profit guidance for FY19 but said dry conditions in NSW and Queensland could hit irrigation water availability in key summer crop markets.
The company still has to resolve gas pricing for its Gibson Island plant in Brisbane.
Those comments possibly could be blamed for the fall in the share price yesterday.
