Orica tumbles on slashed earnings guidance
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A significant cut in full year earnings guidance has seen Orica shares plunge in early trade in their biggest fall in five years.
The chemical and mining services company's stock tumbled by 13.8% to $18.10 at 1107 AEST following its announcement to the Australian Securities Exchange that net profit after tax (NPAT) is now anticipated to be 10% lower than the previous year's $650.2 million.
In Orica's half-year report it had flagged positive earnings growth for the full year, and analysts were anticipating the chemical giant's net profit to be $664 million, according to Bloomberg.
The main reasons for the slashed earnings were higher optimisation costs for its ground support business, where earnings before interest and tax (EBIT) is expected to break even instead of the earlier guidance for between $17 and $25 million; lower EBIT from its Indonesian business as a result of production issues and market conditions; and weaker global market conditions for explosives and sodium cyanide (see Roger Montgomery's Inside the mining services disaster).
"Specific projects are being implemented to address performance issues in the ground support and European businesses which are expected to deliver benefits in 2014," Orica said.
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