Orica Delivers Strong First Half Result
Orica today announced a net profit after tax and individually material items of $220 million for the half year ended 31 March 2009, down 2% on the previous half year.
Excluding the loss on individually material items of $43.8 million, net profit after tax was $264 million, up 15% on 2008. Sales revenue increased 32% to $4 billion.
The Board has declared a 40 cents per ordinary share interim dividend, franked at 14 cents per share, representing an increase of 3% on the 2008 interim dividend.
Earnings per share before individually material items were in line with the 2008 half year at 68.6 cents.
Orica Managing Director Graeme Liebelt said the strong result in the face of difficult market conditions endorsed Orica’s strategy of pursuing leadership positions in markets offering more resilient and predictable long term earnings growth.
“Our strategy is holding up well notwithstanding the market conditions. It is that, combined with productivity and efficiency improvements, that has delivered a solid first half performance.
“There’s a lot to like about this result. We’ve been actively taking care of the fundamentals within our control such as cost, cash management and productivity.
“Orica’s strong balance sheet and financial discipline continue to be particular strengths and never more important than in the current crisis in financial markets. Net operating cash flows increased 35% reflecting, in part, an excellent performance by the business in management of trade working capital.
“Our Mining Services business had a record 18% increase in profit. This was the result of improved ammonium nitrate pricing, firm volumes in gold, thermal coal and copper, combined with productivity and restructuring initiatives in quick response to weak demand in base metal and infrastructure markets.
“With demand in most market segments expected to remain soft in the short term, the business will respond as needed while maintaining focus on long term growth opportunities.
“We are progressing well with our plant in Bontang Indonesia and continue to examine expansion opportunities in Latin America and at our Kooragang Island plant in Australia. We are also well positioned for continued growth in electronic blasting systems and blast based services.
“Consumer Products’ underlying earnings was up 2% to $61 million, despite overall market decline. This was primarily driven by record earnings for paints and Selleys. Most pleasingly the paints business continued to increase its market share despite increased competition. The Yates business continued to improve its earnings and has benefited from ongoing restructuring and marketing initiatives.
“The Minova business recorded a 9% fall in profits to $59 million. The business has been impacted in the US bolt business by market slowdown and market share lost in 2008. Margin compression from under-recovery of steel input prices in the US market also had a significant impact during the first half. Pleasingly, the business is delivering its targeted synergies from acquisitions.
“The Chemicals business achieved a record result with sales up 19% and underlying earnings growth of 19% to $86 million. This was driven by continued high caustic prices, synergies from combining the former Chemnet and Chemical Services businesses and an excellent result in Mining Chemicals on the back of strong sodium cyanide volumes and prices. Demand in the automotive and general manufacturing sectors remains soft, however tight cost control and restructuring initiatives across all business segments are having a positive impact.
“Our strong balance sheet, with low gearing, provides us with a prudent level of flexibility at these unpredictable times. It also provides the capacity to rapidly respond to what we see as long term growth opportunities in our key markets when the time arises.
“Our businesses continue to show considerable resilience. Accordingly, we see no reason to alter our previous guidance that we expect Group net profit after tax (before individually material items) in 2009 to be higher than that reported in 2008. However we remain vigilant because of unpredictable global market conditions.”
4 May 2009
· Analysts’ contact: Anita Stevenson, Investor Relations Manager, (03) 9665 7844 Mobile: 0416 211 498
· Media contact: Lisa Walters, Communications Manager, (03) 9665 7538 Mobile: 0421 585 750
· Web site: www.orica.com