Orica Delivers on Growth Story

12 November, 2007

Orica today announced a Net Profit After Tax and Significant Items for the year ended 30 September 2007 of $488 million, down 10% from the previous year (which included a net profit of $159M on Significant Items).

Excluding individually Significant Items ($10M net loss in 2007), Net Profit after Tax was $498 million, up 31% on 2006. Sales revenue increased 3% to $5.5 billion. Excluding acquisitions and divestments, underlying sales revenue was up 12%. Cash flow from operating activities was up 27% to $524 million.

Earnings per share (EPS), before significant items, increased 21% to $1.53 per share. This is the sixth consecutive year of growth in EPS.

The Board has declared a final dividend of 53 cents per ordinary share, bringing the total ordinary dividend for 2007 to 89 cents per share, an increase of 20% over the 2006 dividend. The 2007 dividend is franked at 35%.

Orica’s Managing Director and Chief Executive Officer, Graeme Liebelt, said “the results highlighted the continued growth of Orica’s underlying earnings, particularly in Mining Services, Consumer Products and Chemical Services’ Mining Chemicals division which delivered record results. 

“The record result from the mining related businesses came from firm trading conditions in the global mining and resource market, earnings contribution from the integration of the former Dyno businesses and the benefit of the recent Yarwun ammonium nitrate plant uprate. We believe the increasing demand for mineral resources will continue as customers strive to increase their output and invest in developing new mines.

“The record result for Consumer Products reflects the benefit of ongoing investment over the past two years on innovation and brand support which has lead to increased market share, and gradually improving market conditions in Australia. Consumer Products delivered strong sales performance and underlying earnings growth of 14%,” Mr Liebelt said.

“What is also pleasing is the way in which the recent acquisitions of the former Dyno businesses and Minova have contributed to the increased earnings result. The successful integration of Dyno continues with synergies being delivered faster than expected and Minova delivering a result in line with expectation since joining the group from 1 January 2007.

“Consistent with our strategy of investing in leading market positions, we recently completed the acquisition of Excel Mining Systems. Excel Mining Systems is the leading manufacturer and distributor of specialty bolts and accessories used for strata support in underground mining in the USA. The business is highly complementary to Minova’s product offering and leading global market position in the supply of resin capsules. This consolidates Orica as the global leader with a market share which is more than twice our nearest competitor,” he said.

Earnings from Chemical Services’ Watercare business were ahead of last year with an improved contribution from MIEX^® and the benefit of smaller acquisitions partly offset by difficult market conditions due to drought enforced water restrictions. In addition to achieving a record profit result, the Mining Chemicals division successfully commissioned the 20,000 tonne uprate of its sodium cyanide plant at Yarwun.

Chemnet continues to recover and recorded a result similar to last year. Planned cost reductions have been delivered, however, the benefits have been offset by difficult market conditions in the majority of the markets supplied by Chemnet. The ongoing disappointing financial performance of the Marplex division resulted in a restructuring and goodwill impairment charge totalling $16M.

“In addition to the strength of our earnings and the benefits of the acquired businesses, Orica continues to manage its portfolio to better position the company in its chosen higher growth markets to provide a foundation for sustained profit improvement. The divestment of the Adhesives and Resins business in January this year is an example,” Mr Liebelt said.

“The business platforms that now make up the Group offer growth potential as well as a less volatile earnings stream,” Mr Liebelt said.

Subject to global economic conditions, Group net profit before significant items in 2008, is expected to be higher than that reported in 2007. This is a result of an additional three months’ contribution from Minova, 11 months contribution from Excel Mining Systems and improved earnings across the other businesses.

Contacts:
Stuart Hutton, Investor Relations Manager: (03) 9665 7844  Mob: 0411 790 164
Lisa Walters, Manager Corporate Affairs: (03) 9665 7538  Mob: 0421 585 750