Incitec Pivot records annual loss due to fertilizer write-downs

Incitec Pivot, an Australia-listed explosives and chemicals firm, disclosed a significant annual loss of 310.9 million Australian dollars (US$204.7 million) for the fiscal year ending in September, primarily due to substantial write-downs in its fertilizer segment. This marked a sharp downturn from the net profit of A$560.0 million (US$368.8 million) reported last year. The company attributed the loss to one-off items totaling A$712 million (US$469.1 million), which included costs related to fertilizer write-downs and business transformation.

Despite these challenges, Incitec Pivot reported a 24% increase in profit from continuing operations before material items, which rose to A$357.8 million (US$235.6 million). This growth was supported by record earnings before interest and taxes (EBIT) from its customer-facing businesses, particularly the Dyno Nobel Asia Pacific and Fertilisers Distribution divisions.

In light of these results, the board declared a final dividend of 6.3 Australian cents per share (approximately US$0.04), up from 5.0 cents (approximately US$0.03) the previous year. This amounts to a 50% payout of the annual profits before accounting for write-downs and other one-off costs.

Looking forward, Incitec Pivot’s CEO, Mauro Neves, outlined a positive outlook for fiscal 2025, driven by ongoing transformations focusing on pricing discipline, cost management, and improved technology margins. The company also remains committed to an A$900 million (US$593.1 million) on-market share buyback, having purchased A$149 million (US$98.2 million) worth of shares this fiscal year.

Further reorganization includes plans to separate its fertilizers operations within the next six to 12 months, aiming for a potential divestment to maximize value and execution certainty. This decision follows the discontinuation of sale discussions with PT Pupuk Kalimantan Timur of Indonesia and a move towards a structural split between its fertilizers and explosives divisions.

The strategic separation is intended to enhance focus and reduce earnings volatility and capital intensity within its business units. Additionally, Incitec Pivot plans to initiate sales processes for its Distribution business and Gibson Island real estate assets by early 2025 and will cease manufacturing single super phosphate fertilizer at its Geelong plant by the end of 2025.