Incitec Pivot recovering from horror year marred by losses

Chemicals and explosives business Incitec Pivot (ASX: IPL) is on the way to recovery after a horror first half of the year when it was hit with unplanned outages and floods.

Earnings before interest and tax (EBIT) for the first half were $119 million after $141 million of non-recurring events.

These included the $60 million cost associated with a rail outage in Queensland following the Townsville floods, $16 million from a third party gas pipeline rupture in the US and $65 million from outages of its Waggaman and Phosphate Hill fertiliser plants.

The company’s Dyno Noble explosives business was hit in North America, with EBIT of $88 million in the first half, down from $131 million in the previous corresponding period.

However there were margin improvements in North America, and a 98 per cent rise in sales of its new electronic initiating systems in Asia Pacific in the half.

The fertiliser business ended the half with n EBIT loss of $33 million, down from a $23 million profit and reflecting the drought in eastern Australia.

The company is continuing discussions seeking an affordable gas supply for its Gibson Island ammonia plant. If this is not achieved the plant will close in December.

Incitec’s CEO Jeanne Johns acknowledged the events which marred the first half but said the company was making progress implementing its strategic agenda.

“In the US business we are continuing to grow market share in explosives, supported by our strategically located assets, quality client base and premium technology offering.”

The company has launched a new global manufacturing strategy to deliver a step change in manufacturing reliability performance.

Picture: Dyno Noble explosives

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