Incitec Pivot books loss on fertiliser impairment

Staff reporter

Australian-listed Incitec Pivot has reported a net loss of A$148 million for the first six months of FY2024 after booking a circa-$500 million fertiliser business impairment ahead of an impending sale of the division.

The company, one of the world’s major suppliers of mining and quarrying explosives, said first-half revenue was down 19% year-on-year at $2461 million and EBITDA was 41% lower at $425 million. The net loss compared with NPAT of $354m in H1 FY23.

CEO Mauro Neves said Incitec Pivot was “in advanced negotiations for a potential sale of our fertilisers business to PT Pupuk Kalimantan Timur”, a fertiliser producer in Asia and current supplier of urea to Australia.

“We have continued to progress the structural separation of our two-industry leading business,” Neves said.

“Our aim remains to achieve appropriate value for the IPF business for our shareholders and stakeholders.

“We understand that our shareholders, employees and other stakeholders are keen to see an outcome and the team is focused on concluding the sale process as soon as possible. With negotiations for the sale of IPF not yet concluded, our on-market share buyback of up to $900 million remains on hold.”

Neves said Incitec’s underlying earnings were up 18% for H1, “with growth in all customer-facing businesses”.

“Across our Dyno Nobel business globally, we continue to see strong customer growth, improved pricing and further uptake of our industry leading technology.”

Neves said in a presentation to analysts the company had more than 30 projects under development in its “technology pipeline”; six at “launch and monitor stage … and 14 more projects in the pipeline for the end of FY25”.

Investment bank Morgan Stanley said in a note Incitec Pivot’s “strong underlying result” was led by Australian explosives and fertiliser distribution.

“The underlying business appears to be on an upward trajectory,” the bank said.

“Near-term this may be overshadowed by further delays to the fertiliser sale, albeit the commentary sounds encouraging.”

The group outlook was “more limited than previously”, Morgan Stanley said.

For Dyno Nobel Americas, management expected mid-to-high single-digit earnings growth.

“[For Dyno Nobel Asia Pacific] management expect positive market conditions to remain in Australia and customer recontracting benefits to impact earnings in 2H24.”

The bank said Incitec Pivot’s segment accounts showed a revised fertiliser business net asset value of A$811 million which “we suspect … becomes a focus as a starting for any anticipated acquisition consideration”.

The company’s ASX share price is up about 7% in the past month, capitalising Incitec Pivot at circa-$5.6 billion.


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