Melbourne-based explosives manufacturer Orica Ltd. posted a 27% increase in net profit after tax (NPAT) attributable to shareholders of the company before individually significant items, to A$163.5 million (approximately US$108.4 million at current exchange rates) for the half year ended March 31, 2023, up from the year-ago A$129.2 million.
NPAT attributable to shareholders after individually significant items was A$122.6 million, compared with a net loss after tax of A$84.6 million for the previous year.
EBIT was up 32% at A$322.6 million before individually significant items, versus the year-ago A$244.9 million, while sales revenue from continuing operations increased 31% to A$3.998 billion, up from A$3.05 billion.
Individually significant items attributable to shareholders of Orica amounted to A$40.9 million after tax, and mainly related to the loss on the sale of the company’s stake in the Turkiye business (completed in November 2022) and the payable earn-out that is part of Orica’s acquisition of Axis Mining Technology, completed in October last year (GM Aug. 5, 2022).
Underlying earnings per share were 36.0 cents.
“Sustained high commodity prices have fuelled demand for our products and services, and driven customers to Orica’s specialized products and technology offerings to deliver further productivity gains and support their sustainability goals,” said Orica Managing Director and CEO Sanjeev Gandhi.
Ammonium nitrate sales volumes increased 5% year-over-year excluding the impact of Russia volumes. Including the impact of Russia, volumes increased by 2% to 2.08 million mt, up from the same prior-year period 2.04 million mt. The company attributed the increase to increased mining activity driven by strong commodity prices, and its ability to provide “security of supply to customers in a tight supply market.”
Orica expects the strength of the company’s performance to continue in the second fiscal half, with the seasonality of earnings less skewed to the second half compared with FY2022.
Gandhi said the company’s expectations of EBIT improvement drivers remain in place, namely anticipated growth in global commodities demand, continued commercial discipline, and increased adoption of advanced technology offerings, as well as contributions from the recently acquired Axis Mining Technology business.
Nevertheless, he said Orica remains cautious of external challenges from geopolitics, inflationary pressures, higher energy costs, and supply chain dislocations, and that it will continue ongoing cost efficiency initiatives to reduce the impact of these pressures.
The company’s Board of Directors has declared an interim ordinary dividend of 18.0 cents per share, unfranked, representing a payout ratio of 50%.