No new M&A on Orica radar

Staff reporter

'There’s nothing in the pipeline at all'

Orica has no new M&A deals on its radar and will focus on integrating and growing recently acquired companies, CEO Sanjeev Ghandi said on a call to discuss the company’s latest half-year financials.

The ASX-listed company posted stronger net profit after tax (NPAT) of A$337.5 million and 10% higher EBITDA of $557 million compared with the first half of FY2023 on 9% lower revenue of $3657 million.

Latest acquisitions Terra Insights and Cyanco are expected to make modest contributions to Orica’s full-year results. The company has spent circa-$2 billion on M&A in the past two years, expanding its chemical and digital businesses.

“There’s nothing in the pipeline at all,” Ghandi said.

“[It’s] heads down focusing on integrating Terra and Cyanco. Focusing on scaling up Axis. Focusing on rolling out all of the beautiful tech that we have, which is now starting to pay off.

“I have always said that we will keep screening … We have a team that does that and we will not stop doing it. But that does not mean that we intend to do anything, because there is only so much bandwidth that you have.

“We’ve been quite disciplined. We screen 50 a year. We’ve done, what, [three deals] in the last two years.

“So we’ve been pretty disciplined, and we’re quite happy with what we have.

“Now we need to put more resources into what we have … Getting them to scale up and delivering value.”

Ghandi repeated a previous vow to add extraction and purification chemicals for “future-facing commodities”, including copper and lithium, which may involve bolt-on acquisitions.

He said accessing the North American sodium cyanide market and deepening its gold-sector exposure was “mission critical for us”. Global demand for the commodity was growing and Orica was aiming to expand incrementally to meet it.

It is also the largest producer of specialty emulsifiers in the world.

Cyanco is expected to take Orica’s chemicals revenue from 5% to 11% of its total annual sales.

Digital, meanwhile, is forecast to edge up to 4% of group revenues from 3% pre-Terra.

“This acquisition has established Orica as the global leader in geotechnical and structural monitoring in mining and civil infrastructure,” Ghandi said.

“Our core blasting business continued to strengthen this half, supported by strong customer demand as well as increased earnings from high margin premium products and technology.

“Our digital solutions segment has also delivered solid growth, with strong demand across products and services.”

FY24 H1 digital solutions revenue was $125 million versus $100 million in the first half of last year (FY23 revenue $212m/$147m FY22).

Ghandi said after extensive customer site trials and regulatory approval phases for “disruptive” technology products such as Orica’s WebGen wireless blast initiation system and 4D bulk explosive “it’s now all about scaling up … and running very hard to catch up with demand”.

“Hence the growth we’re seeing [in technology].

“Watch this space. It’s really exciting at the moment.”


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