Increased Profit Builds Platform for Growth
5th November, 2003
Orica Limited today announced a profit before significant items for 2003 of $270 million, a 13% increase compared with 2002. Before significant items, this represents a return on shareholders’ funds of 19.6% and an increase of 13% in earnings per share.
The profit was $101 million after significant items, due principally to the previously announced $123 million write-off of Orica’s investment in Qenos. A final dividend was declared of 34 cents franked at 19%. The final dividend brings to 52 cents the dividend for 2003 – a rise of 18% compared to the dividend for 2002.
Orica Managing Director and Chief Executive Officer, Malcolm Broomhead, said: "This result demonstrates the strength of Orica’s businesses as a platform for growth and reflects the continued development of the performance-based culture within Orica.
"It’s a good outcome considering the impacts of the worst drought on record in Australia and extremely challenging trading conditions in North America where high gas prices and low coal volumes have held back the results.
"For 2004, we anticipate continued positive earnings momentum through the full-year contribution of the merger, acquisitions and expansions achieved this year and also through the partial recovery from the drought which will improve results for Incitec Pivot fertilisers," he said.
- Efficiency improvements of $51 million after tax including $27 million after tax from new procurement and supply chain savings,
- Mergers and acquisitions including Incitec Pivot Limited, Fernz, Engineering Plastics, Welvic, Incitec Industrial Chemicals and the minorities in IES Australia as well as expansions of Yarwun and Kooragang Island ammonium nitrate manufacturing plants. (Yarwun has been completed and Kooragang Island is still under way). Since September 30, Orica has completed the purchase of Yates’ garden products business. In addition, Indian Explosives and IES India have now gained final regulatory approval.
Business results were:
- Mining Services increased profit by 20% to $247 million. There was double-digit profit growth in all regions except North America which experienced poor volumes and high ammonia costs.
- Chemicals increased profit by 22% - the sixth consecutive year of period-on-period earnings growth.
- Fertilisers delivered a profit of $42.8 million, a 26% decrease on the previous period due to the drought. The merger of Incitec and Pivot is progressing well with synergy savings on track and market share retained.
- Orica Consumer Products’ EBIT improved 18% to $89.1 million through a focus on product mix and reducing the cost and capital base of the business.
In the context of the comparatively low franking as well as prudent capital management, Orica also announced the reactivation of the previously suspended share buy back of 5% of share capital. During 2003, 1.7% of issued share capital was purchased.