Incitec wary of soaring gas prices
Incitec Pivot has warned that soaring local gas prices could put further pressure on its costs, as a high dollar and weak fertiliser prices saw its first-half profit slump by almost a quarter.
The explosives and fertiliser maker reported net profit of $110.2 million for the six months to March 31 - $33 million less than the previous corresponding period.
The global company is a big natural gas user and heavily exposed to Australian prices that could double due to the suite of liquefied natural gas projects that will export product overseas.
Incitec chief executive James Fazzino said the rising costs of doing business in Australia contrasted sharply with the US, where the manufacturing sector was enjoying a resurgence led by the availability of cheap shale gas.
Mr Fazzino said Incitec had yet to secure gas supplies with oil and gas producers for when current contracts expired in coming years.
Earnings in Incitec's fertiliser business fell 19 per cent in the period due to weaker demand and a decline in urea prices. This was partly offset by a 7 per cent jump in explosives earnings. Shares gained 10¢, or 3.5 per cent, to $2.93.