MARKETS

Orica profit improves

EXPLOSIVES and chemicals company Orica has reported a stronger first half, with a more than 5% ju...

Hannah Vickers
Orica profit improves

This was $13.5 million higher than the March 2012 half, which was hit by chemical leaks at the Kooragang Island plant.

Earnings before interest, tax, depreciation and amortisation were $578.2 million, up nearly 8% from the previous corresponding period of $537.1 million.

Sales revenue came in at $3.33 billion, a slight increase year-on-year from $3.29 billion.

The company said the half-year results reflected the early benefits associated with an increased service offering in addition to its renewed focus on better manufacturing performance.

Mining services still accounted for the bulk of earnings at $435.2 million, a jump from $416.1 million in the six months to March 2012, but the chemicals sector saw a nearly 13% boost to $55.7 million partially due to improved conditions in the New Zealand dairy sector.

The company declared an interim franked dividend of 15c per share.

Improved pricing and stronger demand for mining chemicals, along with stronger underlying explosives demand in Australia, Chile and Canada, were offset by a number of factors.

These were mainly weakness in demand and pricing pressure for ground support products and services, as well as reduced demand for explosives in US coal markets and most Western European markets.

Australia/Pacific was the only region to see growth, with earnings before interest and tax up 47% from the previous corresponding period to $289 million. This was thanks to steady pricing for explosives, improved performance at manufacturing facilities, better pricing and stronger demand for sodium cyanide among others.

North America was still the second strongest market, though earnings before interest and tax dropped 19% from March 2012 to $57.5 million on weaker demand from coal markets.

While market conditions in Europe and coal markets globally are expected to remain difficult for the rest of the year, Orica anticipates an improved net profit for the full financial year.

“Orica expects group net profit after tax (pre individually material items) in 2013 to be higher than that reported in 2012, subject to global economic conditions,” the company said.

Orica shares closed slightly higher at $22.20 on Friday.

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