Mining explosives major Orica remains positive about a strong global mining market appetite for its core blasting products, digital technology and mining chemicals businesses amid increasing inflationary and energy cost pressures and geopolitical risks.
CEO Sanjeev Gandhi said the company’s FY2024 financial results, including 15% EBIT growth, reflected improved delivery and growth “across all segments”.
“Increased uptake of premium products, blasting technology, digital solutions and contribution from the Cyanco acquisition has underpinned our performance this year,” Gandhi said.
“Our Blasting Solutions segment achieved strong earnings growth driven by commercial discipline and increased customer adoption of premium products and blasting technology including WebGen and 4D.
“Our newly established Specialty Mining Chemicals segment achieved earnings growth driven by the integration and delivery of the investment case for the Cyanco acquisition.
“Our Digital Solutions segment continues to deliver high growth, supported by strong customer demand, integration of Axis and Terra Insights and an improvement in segment performance measures, notably annual recurring revenue and churn rate.”
US investment bank Morgan Stanley said Orica’s A$806 million EBIT and $409 million net profit after tax pointed to “solid execution, particularly on pricing and margin optimisation”.
“The outlook points to further benefits in FY25 and beyond,” it said.
“We see double digit earnings growth in FY25-27 with this potentially supplemented further by capital management.”
Morgan Stanley said Orica’s favourable outlook indicated robust earnings growth despite higher depreciation and amortisation costs forecast for FY25. The company was optimistic “mix and margin benefits” in FY25 would exceed the latest year’s $101 million level in the major blasting services business even allowing for higher D&A.
The bank said with acquisitions “seemingly less of a focus” for Orica in FY25, “we think announcement of a [share] buyback during FY25 is a real possibility”.
“Orica remains well positioned to capitalise on attractive industry structures, and strong demand in mining end-markets,” it said.
