ORICA REPORTS SOLID PERFORMANCE

Orica today announced a net profit after tax and individually material items of $264 million for the half year ended 31 March 2011, up $209 million compared with the previous corresponding period (pcp) of $55 million.

Net profit after tax before individually material items was $264 million, with no individually material items in the current period.  Excluding the earnings contribution from DuluxGroup  in the pcp ($42m), net profit after tax before significant items was up 5%.

The Board has declared an interim dividend of 37 cents per ordinary share, franked at 18 cents per ordinary share.

Orica Managing Director & CEO Graeme Liebelt said the solid performance in the half reflected the strength of the business’ strategic direction and focus on fundamentals. 
 
“This is another good result for Orica and our strategy of concentrating on the mining and infrastructure markets has proven resilient.

”We continue to deliver improvements in trade working capital management and our balance sheet remains in excellent health with gearing at 27% and interest cover at 5.4 times.

“There has been a recovery in volumes across some markets. This, coupled with modest improvements in pricing and continued focus on productivity improvements, more than offset adverse impacts from weather conditions and foreign exchange movements.

“The company has been faced with some challenging operational conditions this half year and our people have responded well. They have stayed focused on responding to customers’ needs and on maintaining and growing the business.

“Orica Mining Services achieved a solid result with earnings before interest and tax (EBIT) up 1% to $335 million, despite significant disruption from flooding in Indonesia and Australia. This reflects stronger volumes, pricing and productivity benefits.  Ammonium nitrate volumes were up 4% compared to the pcp with improved market conditions in most regions, partly offset by the impact of adverse weather.  Electronic Blasting Systems volumes again showed strong growth, improving 29% compared to the pcp. 

“The Minova business has experienced a difficult half year with EBIT down 16% to $55 million. This is mostly the result of strong competition in some markets, which has negatively impacted margins.  Volumes across most market segments improved.

“While in the short-term, market conditions pose some challenges, Minova continues to focus on cost and cash management and the development of differentiated, customer focussed technology.

“Chemicals achieved a record result with EBIT of $95 million, up 1% on the pcp. This result was achieved despite significantly lower manufactured sodium cyanide volumes, resulting from the planned shutdown of the Yarwun sodium cyanide plant to uprate capacity to 95ktpa.
 
“General Chemicals sales were up 7% on the pcp due to higher commodity prices and higher volumes. In Mining Chemicals, the demand for sodium cyanide remains firm and with the Yarwun uprate now operational, we are in a strong position to meet this demand.

“We continue to progress a number of significant growth projects, many of which are nearing completion.

“We currently anticipate first production from the new 300ktpa ammonium nitrate plant at Bontang, Indonesia, in the first half of the 2012 financial year. Physical construction is now over 80% complete and the cost of the project is expected to be well below initial estimates.
 
“Construction of the $100 million detonator plant in Hunan province in China is progressing and commissioning is expected in 2012.

“We continue to work on the uprate of the ammonia plant at Kooragang Island in NSW and to purchase the long lead time items for the expansion of the ammonium nitrate plant by a further 320ktpa.

“It has been a challenging year so far and we are pleased with the company’s performance.  The company is well placed strategically and operationally,” Mr Liebelt said.

We expect Group net profit after tax (pre individually material items) in 2011 to be higher than that reported in 2010, on a comparable basis, subject to the rate of global economic recovery and extent of further adverse movements in exchange rates.

2 May 2011

• Analysts’ contact:  Anita Stevenson, Investor Relations Manager, (03) 9665 7844 Mobile: 0416 211 498
• Media contact: Nicole Ekert, Communications Manager, (03) 9665 7538 Mobile: 0407 166 783
• Web site: www.orica.com