Orica profit swells

EXPLOSIVES giant Orica has posted a full-year net profit after tax of $A1.31 billion, a $777 million improvement on the previous year.
Orica profit swells Orica profit swells Orica profit swells Orica profit swells Orica profit swells

Minova resin bolting.

Greg Tubby

Individually material items were a profit after tax of $643 million, while NPAT before individually material items was a record $676 million.

NPAT from continuing operations before individually material items was $619 million, compared to $557 million for the previous year.

The company said the result represents the ninth consecutive year of profit growth.

Orica Mining Services had a record year, with earnings before interest and tax 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,” Orica managing director and chief executive officer Graeme Liebelt said.

“The business achieved strong growth in electronic blasting systems, up 32 per cent, and delivered $51 million in productivity and efficiency benefits.”

He said the Mining Chemicals division saw sales volumes increase 17% with demand for sodium cyanide strong.

“Demand from gold producers is expected to remain solid, justifying our decision to undertake a further uprate in capacity,” Liebelt said.

“Orica is strategically well positioned, nearly 90 per cent 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 company is expecting the NPAT for the year ending September 30, 2011, to be higher.

Minova

“The Minova business delivered an increase in EBIT of 2 per cent to $147 million in difficult trading conditions,” Liebelt said.

“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 $15 million) EBIT was up 13 per cent.

“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.”

While lower steel pricing improved margins for Minova in the US, the company had lower bolt and resin volumes due to continued softness in this coal industry plus a loss of “market share”

Increasing competition also affected Minova’s coal bolt business in Australia.

As part of a corporate overhaul, Minova Australia started operating as a standalone business in October while Minova’s South African business unit was amalgamated into a Europe, Middle East and Africa division.

Minova’s growth in China is expected to continue with the completion of its new Taian bolt plant.

Orica’s share price closed up 2.9% to $26.44 yesterday.

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