Shares in Incitec Pivot (IPL) surged as much as 9% on Thursday after the fertilizer manufacturer and supplier increased its 2008 outlook up to 135% on the previous year due to higher international prices.
Australia’s 2nd largest chemicals company by market capitalisation said it anticipated earnings before interest and tax (EBIT) would be in the range of $700 million to $730 million.
The company said its improved outlook is largely attributable to an increase in earnings from manufacturing flowing from higher international di-ammonium phosphate (DAP) prices.
Incitec Pivot is the only producer of DAP and monoammonium phosphate (MAP) in Australia at its Phosphate Hill project in Queensland.
However, the outlook figures are partly offset by adverse currency movements, higher sulphur costs and lower production volumes at IPL’s plant at Phosphate Hill in North West Queensland.
“The earnings guidance is based upon expectations that global influences will drive an increase in average DAP prices to a range of between US$760 per tonne and US$790 per tonne in 2008”, Incitec said.
“This follows strong international demand supply disruptions in China and record high input costs of phosphate rock, ammonia and sulphur.”
At 11.04am AEST the shares hit a new 52-week high of $168.00 during intraday trading, only to ease towards the end, and close at $160.50, an increase of 0.50% on previous close..
Shares traded in a wide range of $157.20 – $174.10.
This news comes a day after agricultural chemicals group Nufarm raised its first-half profit outlook.
The share price of Incitec has been in an uptrend for some time, with the high demand and prices for agricultural chemicals thought to be driving the price higher.
In the last three months the stock has hit a new 52-week high 23 times.
