ORICA PROFIT GROWTH CONTINUES IN 2010
Orica today announced a net profit after tax and individually material items of $1,319 million for the full year ended 30 September 2010, up $777 million on the previous year. Individually material items in 2010 were a profit after tax of $643 million.
Net profit after tax before individually material items was a record $676 million, up 5% compared with $646 million in the previous corresponding period (pcp). The 2010 result includes earnings from DuluxGroup up to 9 July, 2010 (date of demerger), compared to a full year contribution in 2009. This is the ninth consecutive year of profit growth.
Net profit after tax from continuing operations (excluding DuluxGroup) before individually material items was $619 million (pcp $557 million)
The Board has declared a final dividend of 54 cents per ordinary share, fully franked due to the impact of the settlement of the Pharmaceuticals tax case (franking capacity is expected to revert in the near term to approximately 40%) .
Earnings per share (EPS) before individually material items was 185.6 cents, up 6% on the pcp.
Orica Managing Director & CEO Graeme Liebelt said the record result demonstrated the resilience of the company’s strategy and the benefit of continued focus on business fundamentals. The record result has been achieved in the context of global economic challenges and the adverse impact on translated earnings of a strengthening Australian dollar.
“We remain committed to our business fundamentals, particularly in our drive for productivity and cash generation. This has delivered a record profit for the ninth year in a row and was achieved in a year when we also successfully demerged DuluxGroup. Strategically we are focussed on extending global leadership in the provision of high service critical consumables to the mining and infrastructure markets.
“We continue to deliver improvements in trade working capital and focus on productivity and this has meant our balance sheet and financial health are excellent. Gearing is 22.4% and interest cover is 7.5 times.
“Our people have again done an outstanding job during the year. They have focussed on serving our customers, maintained financial discipline and delivered excellent results which position us well for the future.
“Orica Mining Services achieved a record result with EBIT up 4% to $768 million. This was achieved despite adverse foreign exchange conditions, poor demand in Europe and unseasonal wet weather in Australia and Indonesia. The business achieved strong growth in electronic blasting systems, up 32%, and delivered $51 million in productivity and efficiency benefits.
“All of our regions should benefit from a global recovery and the continued customer take up of electronic blasting systems and blast based services.
“The Minova business delivered an increase in EBIT of 2% to $147 million in difficult trading conditions. This improvement results from improved margins in the US steel bolts business and greater penetration in the Chinese markets. Excluding the impact of foreign exchange (negative $15m) EBIT was up 13%.
“Minova has experienced a steady recovery in demand in Russia, the Czech Republic and South Africa while conditions have remained soft in Western Europe, Poland and the USA.
“Chemicals achieved a record result with EBIT up 10% to $188 million. There has been a steady recovery in chemical markets in Australia, significant business improvement in Latin America and an overall disciplined performance by the business in productivity management.
“In Mining Chemicals, demand for sodium cyanide remains strong and sales volume was up 17% versus the previous year. Demand from gold producers is expected to remain solid, justifying our decision to undertake a further uprate in capacity.
“Orica is strategically well positioned, nearly 90% of our business is exposed to the mining and infrastructure sectors, leveraged to increases in production and development which will provide continuing opportunities for growth.
“The Orica balance sheet has relatively low gearing and provides capacity to pursue growth opportunities when available. Continued capital investment has positioned us for growth. Construction of the new 300ktpa ammonium nitrate plant in Bontang, Indonesia is progressing well and is expected to be on line late in 2011.
“Further growth projects have commenced at Kooragang Island in NSW to uprate the ammonia plant and to purchase the long lead time items for the expansion of the ammonium nitrate plant by a further 320ktpa. A new $100 million detonator plant is under construction in Hunan province in China to service the growing Chinese domestic market. The Yarwun, Queensland sodium cyanide plant is being uprated by a further 15,000 tonnes per annum to meet demand from the global gold industry.
“Orica has performed well in 2010 in weak global markets and in the face of a strengthening Australian dollar and is strongly positioned for the future.
“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,” Mr Liebelt said.
8 November 2010
· Analysts’ contact: Anita Stevenson, Investor Relations Manager, (03) 9665 7844 Mobile: 0416 211 498
· Media contact: John Fetter, Group Manager, Corporate Affairs, (03) 9665 7870 Mobile: 0412 311371
· Web site: www.orica.com