Incitec Pivot May Sell or Spin-off Fertilizers Unit After Cutting FY19 Guidance
Incitec Pivot Ltd. (IPL), Southbank, on Sept. 2 announced it is commencing a strategic review of its Fertilisers Asia Pacific business segment (Incitec Pivot Fertilisers) and has hired UBS to help assess various options, including a potential sale or de-merger, or retaining the business and continuing to invest for growth.
Incitec Pivot Fertilisers is a leading distributor of fertilizers in Australia, supplying 2.2 million mt of fertilizers to the domestic market in 2018. It is the sole manufacturer of phosphate fertilizers and the only producer of nitrogen fertilizers on the east coast of Australia.
The strategic review is expected to progress over the course of FY2020 (July 1-June 30).
IPL has lowered its FY2019 EBIT guidance to A$285 million to A$295 million, from May’s guidance of A$370 million to A$415 million. The company attributes the downward revision mainly due to lower-than-forecast ammonia production at Waggaman, Louisiana, and lower Fertilisers’ earnings mainly as a result of the continued impact of drought in New South Wales and Queensland, and increased gas costs at Gibson Island.
The revised range excludes approximately A$20 million of one-off items related to potential insurance proceeds for the rail outages at Phosphate Hill, Queensland, which, if they materialize, could fall into either the FY2019 or FY2020 year, IPL said.