Incitec Pivot’s share price has taken a whack on the explosives and fertiliser company’s latest financial results, which had first-half net profit and earnings levels down on the previous corresponding period despite a A$506.8 million jump in revenue.
Management promised a “positive earnings skew” in the second half after NPAT was down 6% year-on-year to $362m and EBIT fell 3% yoy to $551.6m in the six months to March 31, 2023.
Revenue for the latest half was at $3055 million.
Incitec Pivot reached agreement with CF Industries Holdings in March to sell its Waggaman ammonia manufacturing facility in Louisiana, USA, for US$837 million after the $425 million value of a 25-year ammonia supply agreement with CF is deducted from the plant sale price. The supply will continue to underpin Incitec’s Dyno Nobel Americas explosives business.
The company has flagged a $400m share buyback and said it would pay out 54% of its latest NPAT via a 10c-a-share interim dividend.
Investment bank Morgan Stanley said Incitec Pivot’s improved cash flow from operations ($148m) was the highlight of an otherwise average half.
“We expect a negative reaction to a result that looks well below our forecasts and consensus,” it said.
“Commencement of the buyback and further transaction related capital management remain the key upside risks in our view.”
ASX-listed Incitec Pivot traded down about 8% Wednesday to $2.94, capitalising the company at $5.71 billion.