Explosives and chemicals group Orica is sticking with the upbeat (though non-specific) outlook for its 2021-22 financial year ahead of the ending of its first half on March 31.
In a statement yesterday containing an update on the company’s performance, Orica said that – as it had forecast at the AGM in mid-December – the current half year will be stronger than the final half of 2020-21, which ended on September 30.
“This reflects the positive momentum leading into the year associated with improved global commodity markets, which will result in volume growth in line with global GDP growth, “Orica said on Tuesday.
“Pricing discipline in contract negotiations is expected to broadly mitigate rising input costs and pass-through lags.
“Security of supply for Orica’s customers remains a priority in a tightening global AN market due to geopolitical issues and supply chain disruptions, which will result in increased trade working capital.
“All continuous manufacturing plants have been operating to required available capacity as determined by market demand. Two planned turnarounds have been completed in the half to date,” the company added.
Orica said its outlook for financial year 2022 remains unchanged, subject to market conditions.
Part of that outlook given at the AGM in December included this comment:
“Earnings are expected to be weighted towards the second half, partly owing to planned manufacturing plant turnaround activity and seasonal effects in the first half. Our focus on pricing discipline and cost efficiency is expected to mitigate rising input costs.”
While not mentioned directly in Tuesday’s statement, the fact that the company said the whole outlook remains in place means Orica still sees a stronger six months to September 30.
The sale of the troubled Minova mining services business to the Aurelius Group $180 million was finalised on Monday (February 28) with $149 million cash received at completion, after allowing for debt and debt-like items.
“Any potential adjustments for working capital and debt-like items will be determined based on the final completion accounts,” Orica said as it announced in the December sale announcement.
“The expected profit on disposal as well as release of the foreign currency translation reserve will be presented as an individually significant item,” in the March 31 interim results.
Orica CEO Sanjeev Gandhi said in the statement: “We’ve been able to maintain the positive momentum from the second half last year and remain on track to deliver a stronger first half than the prior corresponding period.
“With our refreshed strategy firmly in place, we are focussed on progressing on our four key business verticals and are well placed to leverage our strengths and seize opportunities in a tightening global market, while continuing to streamline the business.”
Orica shares closed unchanged at $14.59.
