Melbourne-based explosives manufacturer Orica Ltd. on Sept. 19 confirmed its full-year outlook for fiscal 2023 is in line with the guidance given in the first-half results in May (GM May 19, p. 25), and said the strength of the underlying business performance is expected to continue into the 2024 financial year.
For the second half of FY2023, the company expects improvements in both trade working capital and operating cash flow, resulting from reduced inventory valuation and inventory volume optimization. Net finance costs in the second half are also anticipated to be slightly lower than for the first half of FY2023.
Orica expects strong business performance in 2024 “supported by the ongoing execution of the strategy, commercial disciple, strong customer demand, and increased earnings” from its blasting and digital technology offering.
The company has a number of major turnarounds scheduled in the first half of 2024, including one at the Kooragang Island ammonia plant in New South Wales, which occurs every six years. The plant will be down for around 11 weeks across two stages in October and February.
Jefferies analyst Richard Johnson, as cited by a Dow Jones report, noted that “this shut means that Orica will be short circa 70,000 mt of ammonia, or circa 160,000 mt of ammonium nitrate.” Based on some very broad assumptions, he said the dollar impact of this loss could be around A$30 million ($19.4 million).
Orica said it continues to remain cautious of external challenges from geopolitics, inflationary pressures, and high energy costs. It said the business will continue ongoing cost-efficiency initiatives to reduce the impact of these external factors. Orica will report its fiscal 2023 full-year results on Nov. 9.
Orica in its Sept. 19 ASA release confirmed its intention to exit Venezuela following the cessation of its operations in the country in 2019 after US sanctions were imposed on Venezuela, and due to what Orica described as “the complex operating environment.”
Orica said it is finalizing a sale of the legal entities and expects to complete this during the current month. It puts the current estimated loss on sale, including the non-cash impact of reclassifying historical amounts deferred in the Foreign Currency Translation Reserve (FCTR), at A$20 million after tax, which will be reported as an individually significant item.