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Incitec reflects on tough year

19 Dec 2012 THE AGE
BY MADELEINE HEFFERNAN


IT WAS an annual result one broker said ‘‘should largely be seen as being as bad as it gets’’.

Now fertiliser and explosives company Incitec Pivot has shrugged off a ‘‘tough’’ 2012, expressing optimism about its medium and long-term outlook, driven by the industrialisation of Asia.

Incitec Pivot reported a 24 per cent fall in profit excluding individually material items to $404.7 million.

Earnings before interest from its fertiliser arm fell by 40 per cent to $270.9 million. By contrast, its explosives unit increased EBIT by 8 per cent to $399.9 million. New chairman Paul Brasher told shareholders that the results were disappointing.

‘‘Some parts of our business have performed extremely well and others have had a difficult year. Overall, the results have been disappointing, which has resulted from a combination of external factors, such as exchange rates and commodity prices, which to a large extent are beyond our control, and a few areas which we could have done better,’’ Mr Brasher said at Incitec Pivot’s general meeting in Melbourne.

Shares in Incitec Pivot closed 1 per cent lower on Tuesday to $3.21.

Royal Bank of Scotland analysts said last month that the market ‘‘should now turn its attention to the growth opportunity that the Moranbah [ammonia] project provides and Incitec Pivot’s earnings skew to the higher-quality explosives business in the next couple of years.’’

The new Moranbah project, in Queensland’s Bowen Basin, is on track to produce 250,000 tonnes of ammonium nitrate this financial year, the company said on Tuesday.

Chief executive officer James Fazzino said he expected ‘‘strong returns’’ from its Dyno Nobel Asia Pacific explosives business in the medium term.

‘‘With Dyno Nobel Americas, we believe that there will be significant medium-term growth on the back of the US economic recovery, which is being driven by energy self sufficiency,’’ he said.

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