Orica Half Year Profit In Line With Forecast

2 May 2001

Orica Limited today reported a half year profit after tax and abnormal items of $49.4m. This result is in line with the profit forecast issued to the Australian Stock Exchange in February 2001.

Profit after tax and abnormal items was down 51% compared with $100.6m in the first half of last year. Profit after tax and before abnormal items was $30.1m, down 56% from $68.8m in the first half of last year.

The Directors declared a fully franked interim dividend of 8 cents per share.

The chemicals and agricultural chemicals businesses produced strong results and delivered earnings growth in difficult trading conditions. Mining services continued to be impacted by higher input costs and the significant downturn in the Australian building industry had a negative effect on consumer products and Australian Vinyls.

Abnormal items during the half year totalling $19.3m profit after tax, included:

• Termination payments from Syngenta Ltd to Crop Care Australia (a 50/50 joint venture between Orica and Incitec Ltd) following termination of a distribution agreement for Syngenta crop protection products in Australia, New Zealand and the Pacific Islands. Orica’s share of these payments was a profit of $32.1m after tax and minority interests.
• Abnormal loss after tax of $12.8m attributable to rationalisation and restructuring costs associated with the closure of two plants at Qenos Holdings Pty Ltd (a 50/50 joint venture between Orica and ExxonMobil Corporation).

Significant events during the first half year included:

•  Major improvements made to supply of a key raw material. 
  The purchase of the ammonium nitrate manufacturing assets of LaRoche Industries in the United States in November 2000. This transaction significantly improved the supply of this key raw material to Orica’s North American explosives business.
  
• Expansion of European explosives capability.
  Orica completed the purchase of the commercial explosives operations of Dynamit Nobel in Germany and Estonia in March 2001. This acquisition gives Orica a strong base for expansion in Europe as well as a sophisticated detonator manufacturing operation for Orica’s new i-Kon electronic detonators.

Orica Managing Director and Chief Executive Officer, Philip Weickhardt said: "Several external influences have had a negative impact on the profit result for the half year which overall is unsatisfactory. We are extremely focused on delivering improved returns. Our core businesses possess leading technology, hold strong market positions and are capable of delivering internationally competitive performance. Each business in the Orica Group is committed to improved performance and earnings growth."