Incitec Pivot profit rises

12 May, 2014 08:10 AM
The traditional fertiliser business recorded a marginal $49.8m (2pc) lift in earnings

EXPLOSIVES and fertiliser business Incitec Pivot Limited has posted a net profit after tax (NPAT) of $115.7 million for the half-year to March 30, up seven per cent on the same time last year.

Much of the growth was fuelled by IPL's explosives market, particularly a focus the emerging industrial growth opportunities in Asia, but the traditional fertiliser business recorded a marginal $49.8m (2pc) lift in earnings before interest and tax (EBIT).

This compared with EBIT for the entire company rising 14pc, to $193.1m.

Earnings per share rose 7pc to 7.1 cents/share.

IPL managing director James Fazzino said the half-year result confirmed the strength of IPL's strategic focus on driving returns from the existing operations while growing the business in line with a strategy to develop revenue in the world's two largest economies - China and the US.

Industrialisation and urbanisation in China and the US "shale gas revolution" represented a compelling source of shareholder value, built around improving the businesses IPL already owned.

"We are focused on optimising the performance of IPL's existing manufacturing assets, lifting productivity and concentrating on costs," he said.

Earnings before interest tax depreciation and amortisation (EBITDA) rose 20pc ($50m) to $302.6m, primarily driven by cashflow from the Moranbah ammonium nitrate plant in Central Queensland and management action on costs and productivity.

But Mr Fazzino said the external environment continued to be challenging for the business.

Lower average global fertiliser prices eroded local market income opportunities, but returns were partially offset by the weaker Australian dollar and a continuing drive for business efficiencies.

Drought conditions in northern Australia also frustrated the domestic distribution business, but Mr Fazzino said it still managed to increase the volumes sold.

Overseas fertiliser marketing division Southern Cross International enjoyed an EBIT increase of $12.7m million to $37.9m, underpinned by a lower average dollar.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media


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