Fertiliser and explosives group, Incitec Pivot (IPL) has warned of another $33 million hit to earnings from the drought the decision to close a phosphate factory in western Victoria.
On top of this, there’s a $48 million hit to earnings from more problems at the company’s huge ammonia plant in the US. With the damage from the floods, the total cost of the problems will be close to $200 million for the year to September.
In a first half trading update yesterday the company said on it would close its Portland facility in May and consolidate operations into its Geelong site, almost 300 kilometres closer to Melbourne.
The $13 million cost will be included in its full-year results, which will also include the $20 million hit to earnings from lower sales due to dry weather across pasture, summer and winter cropping regions during the first half.
The $33 million will be on top of the $100 million cost of the north Queensland floods which is at the bottom of the previously announced range of $100 million to $120 million.
“Distribution sales in the first half of financial year 2019 are currently down approximately 200,000 tonnes versus the prior corresponding period, and it seems unlikely at this stage that there will be any substantial recovery of those lost volumes in the second half,” the company said in a statement to the ASX.
IPL said on Tuesday efficiencies from amalgamating operations from Portland and Geelong will add $3 million to earnings before interest and tax per annum from the next financial year, and save about $1 million in capital annually.
And the ammonia plant in Louisiana, US, which had a carbon dioxide removal problem has been repaired but has had to be shut again due to problems with compressor electronic controls.
The second shutdown happened in March and it is expected to be operational next week, but earnings will be about $14 million for the first half, compared to $62 million the previous year.
The company is due to report its first-half result for the March half year on May 20.
IPL shares ended the session down 2.8% at $3.07 yesterday.
