Orica lifts profit and revenue despite fires and weather challenges
Explosives manufacturer Orica has delivered a substantial jump in net profit for the first half, but has cut its interim dividend to preserve cash given the economic uncertainty caused by the coronavirus pandemic.
The $165 million statutory result compares to a $33 million net profit in the prior corresponding period, although that result was driven lower by a significant asset writedown. Before significant items its net profit dropped 1 per cent in the six months ended March 31, the ASX-listed company said in a statement on Friday.
Orica chief executive Alberto Calderon says the explosives manufacturer delivered a strong first half result despite a series of challenges.Credit:Bloomberg
Orica, which is the world's biggest supplier of commercial explosives and blasting systems to the mining and quarrying industries, emphasised the importance of preserving cash in the time of COVID-19. The company declared an interim dividend of 16.5 cents per share, which is down 25 per cent on last year's. The unfranked dividend will be paid on July 8.
The Melbourne-based company lifted its production of ammonium nitrate by 4 per cent in the half to 1.95 million tonnes. Ammonium nitrate is the key ingredient in explosives.
Total sales for the group, which has operations around the world, rose 2 per cent to $2.88 billion, while EBITDA (earnings before interest, tax, depreciation and amortisation) climbed 10 per cent to $479.7 million.
Chief executive Alberto Calderon said Orica had delivered earnings growth and results in line with the targets it had set itself.
"This is a particularly positive set of operational and financial results, given they come from a period that had severe bushfire and weather issues in Australia, and the first impact of the coronavirus," he said.
"During the half we also announced the major strategic acquisition of Peru's leading manufacturer and distributor of industrial explosives, Exsa. We are firmly focused on integrating the terrific team and assets into our business, and realising the significant synergies open to us," he said.
Mr Calderon said mining would play a crucial role in the global economic recovery from the shock caused by the coronavirus pandemic.
"While it is almost impossible to forecast what will happen in the next six months, we currently expect our volumes in the second half to be somewhere between 10 to 15 per cent below the pre-COVID-19 expected volumes," he said.