Orica earned a net after tax profit of $211 million, down 3% on the same time in 2014, but the company still declared an interim dividend of 40c per share.
“Market conditions are unquestionably difficult but Orica is continuing to take action to mitigate the impact of market headwinds to build a foundation for earnings resilience through the cycle. This is an ongoing priority,” interim CEO Alberto Calderon said.
“While the mining price boom has ended, Orica’s operations are more closely correlated to production volumes, which have remained steady.
“The diversity of Orica’s portfolio and customer offer continues to underpin performance by providing broad exposure across commodities, customers and geographies.
“The period has also seen growth in revenue from Orica’s innovative range of advanced blasting products and services, extending Orica’s competitive differentiation by delivering products that enhance customer productivity and profitability.
"Importantly, we have also made significant progress in renewing and extending our customer contracts, particularly in Australia, albeit at prices more reflective of current market conditions.
“The initial financial returns from Orica’s transformation program are also now evident on the bottom line, with $79 million of benefits achieved in the first half, offset by one-off costs of $64 million. The full year contribution from the transformation process is expected to be in line with initial forecasts of $140-170 million before implementation costs of $100-$120 million. We are focusing on unlocking further upside beyond 2015.
“Maintaining our focus on delivering the benefits of transformation to the bottom line is an important priority, as well as finding new opportunities for improvement,” he said.
Calderon said Orica was continuing to closely monitor the ammonium nitrate supply/demand balance and was evaluating a number of available options to optimise supply.
EBIT was down 9% to $330 million due to lower net pricing across products and a shift in the regional mix across the portfolio, as well as reduced demand for ground support products.
Ammonium nitrate demand and advanced blasting products demand were higher despite the lower Australian demand, with increases in demand of around 10% in North American and Latin America.
Cyanide volumes were up 28% as a result of improved demand, new contracts and customer destocking in prior corresponding period and ground support volumes were down 12-17%.
Orica’s restructuring saw 550 redundancies and contract renegotiations with 60% of Orica’s strategic supplier base.
Global markets remain volatile and uncertain and FY15 profit guidance continues to be difficult to provide in these circumstances, but it expects cyanide demand will be 10% higher, Global explosives volumes are expected to be around 3.75 million tonnes with less demand in Australia offset by higher volumes in the Americas.
Ground support markets are expected to remain challenging.
