The result includes a loss on individually material items of $104 million, which included costs related to the restructuring of the Mining Services division and the write-down of the Botany groundwater treatment plant.
Earnings before interest and tax increased by 12% to $1.1 billion thanks to productivity and synergy benefits totalling $101 million, the favourable impact of foreign exchange movements and favourable ammonia lag.
Sales revenue increased 13% to $7.4 billion which Orica attributes to foreign exchange, stronger demand for sodium cyanide and an increased market share for DuluxGroup.
Orica managing director Graeme Liebelt said the result was a credit to the company’s quick response to the changing economy, with all regions except for Europe achieving good earnings growth.
The Mining Services business had a record result with sales up 14% to $4.1 billion and EBIT increasing 16% to $737 million.
“This was achieved in spite of difficult trading conditions due to cost management and restructuring initiatives across all regions, the continued benefits of improved ammonium nitrate pricing, falling input costs and positive foreign exchange impact,” Liebelt said.
Stronger demand for sodium cyanide saw the Chemicals division post earnings growth, but general chemicals suffered due to the slowdown in the automotive and manufacturing industries.
EBIT for the Minova business dropped 3%, weighed down by tougher trading conditions in the United States and eastern Europe.
“For Minova businesses outside of the US, pricing and volumes remained steady with the business seeing strong volume growth in China,” Liebelt said.
Orica is expecting earnings growth to continue over the next year, though it expects first-half trading conditions to be tougher than those in the previous period.
Despite this, the company is expecting NPAT in 2010 to be higher than this year’s result.
“That focus is supported by a strong balance sheet with relatively low gearing,” Liebelt said.
“Orica’s businesses have performed strongly in 2009 and are positioned well for the future.”
Shares in Orica gained 35c this morning to $23.96.
