Minova, which Orica bought for $A857 million five years ago, reported a 29% lower EBIT year-on-year for 2011 of $105 million and 1.6% lower sales of $822 million for the year.

Orica managing director Graeme Liebelt said the result was disappointing but Minova’s performance should improve with stronger volumes in most regions and productivity benefits continued to play a part.

“Strong competition, particularly in North America, continues to negatively impact margins,” he said.

“Volumes across most market segments improved although the Chinese market was down due to customers experiencing mining conditions which reduced demand for injection chemicals.

“While it has been a difficult year, we believe that we have seen the worst and expect Minova to improve in the next year.”

Strong performance from the Australian business reflected improved volumes from coal and hard-rock mining markets, Minova said. Solid volumes for both steel and chemical products were reported in North America due to buoyant coal market conditions.

Minova has enacted efficiency programs established across all regions to help offset the effect of margin pressures, including foreign exchange movements, which negatively impacted its EBIT by $22 million.

It reported steady volumes continuing in Russia and strong demand from the mining sectors in Kazakhstan and Czech Republic but lower mining volumes in Poland and parts of Western Europe including Germany.

Minova expects strong volume growth in the coal and hard-rock mining markets to continue, especially in the injection chemical products market.

It would focus on margin improvement across all regions and pursue increased returns from product innovation and differentiation of market offers, it said.

It would also continue to pursue operational efficiencies and cost reductions across all regions.