Orica announced a net profit after tax and individually material items of $A403 million for the full year ended September 30, representing a $239 million fall on the previous corresponding period.
Individually, material items were a loss of $247 million after tax, a result of the asset impairment of its chemical and bolts business, Minova.
With sales revenue up 8% to $6.7 billion, Orica declared a final dividend of 54c, down 1c from the same time last year.
Among its divisions, the company’s mining services sector recorded earnings before interest and tax of $790 million, a 3% drop from the prior year due to the impact of a chemical leak at its Kooragang Island site in New South Wales.
Orica said global ammonium nitrate volumes increased by 2% over the period thanks to higher demand in Australia, Asia and Lain America, offset partly by weak demand in US coal markets.
EBIT from Minova were up 4% to $109 million as a result of solid market conditions in Australia.
However the US business experiences considerable weakness in demand from coal markers in the second half and volumes dropped 7% year-on-year.
The Minova write down, announced late last week, was made in light of challenging market conditions in the US and continued margin pressure in China.
Despite these challenges, Orica expressed its confidence in the business.
“Work continues on cost rationalisation and asset optimisation, which, together with a simplified business model, should see Minova returns improve in the medium term,” Orica said.
Meanwhile, Orica’s chemicals division performed slightly better, with EBIT increasing 8% year-on-year to $211 million, reflecting strong demand for sodium cyanide and record production of emulsifies.
While strong growth was seen in Latin America, Orica said conditions in most industrial sectors in Australia and New Zealand remained relatively subdued.
Highlights during the year included the Bontang ammonium nitrate plant in Indonesia starting beneficial operations.
Meanwhile, Orica said its first emulsion plant in the Pilbara region of Western Australia was nearing commissioning.
Orica expects NPAT for 2013 to be higher for 2013, subject to global economic conditions.
The results prompted a downgrade from buy to hold from Patersons Securities.
"We continue to like ORI given its resilient business model (including strong market positions, production bias and geographic diversity), however, we are looking for a better entry point," Patersons equities research analyst George Galanopoulos said in a note.
"This view accounts for the likely negative earnings revisions."
Shares in Orica fell 3% to $24.26.
