Orica CEO Sanjeev Gandhi expects a repeat of the company’s strong first-half performance in the six months to the end of September as favourable mining demand continues to support robust pricing and contract renewals.
ASX-listed Orica reported net profit of A$123 million and EBIT of $323 million, up 32% year-on-year, on a 31% surge in sales revenue to $3998.4 million, compared with the previous corresponding period.
“The standout of the result was [ammonium nitrate] pricing,” investment bank Morgan Stanley said.
“We note in the APA [Australia Pacific & Asia] business, revenue per tonne was plus-26% versus the previous corresponding period and EBIT per tonne was plus-42% versus pcp.”
The company completed its A$260 million acquisition of Axis Mining Technology during the first half, helping drive sales in its new digital solutions reporting segment 44% higher yoy to $99.7 million. Segment EBITDA climbed 86% yoy to $39.6 million.
Ghandi said the improvement in earnings yoy was driven by 30% growth in adoptions and the introduction of new technology solutions, high customer retention, and the acquisition of Axis.
“Integration of the business is progressing to plan,” Orica said.
“Orica’s ownership, to date, has opened new international markets for the business in North America and Brazil.
“Benefits from new contract wins with major drillers are expected to flow from the second half of FY2023. Integration costs will continue to impact the business in the second half.”
Digital business GroundProbe’s second manufacturing plant, in Tucson, USA, is now operational and its first mine monitoring radar units have been delivered to customers. Orica said the facility doubled production capacity for the business and improved supply chain speed and costs.
Morgan Stanley is forecasting full-year Orica revenue of $7917 million with EBITDA at $1066m.