Incitec Pivot to forge ahead with asset sales but Cooper Investors reduces stock holding

Incitec Pivot says it will forge ahead with asset sales next year, while at the same time warning earnings will take a hit from investment in plant.

Incitec Pivot will move its distribution centre from Gibson Island in order to sell the real estate.

Cooper Investors has trimmed its holdings in Incitec Pivot – soon to be known as Dyno Nobel – offloading $41m worth of stock a day before the company’s annual meeting last week where the explosives manufacturer’s asset divestment policy was further explained.

Cooper’s share sale drops it below the 5 per cent significant shareholder threshold, however the investment firm still owns 4.6 per cent of the $5.64bn company.

Incitec Pivot shareholders last week voted to rename the company Dyno Nobel, to better reflect the focus on the company’s explosives business as it seeks to divest its fertiliser division.

“We remain committed to delivering the fertilisers separation in the next six to 12 months, with a proposed divestment in parts to maximise value and increase execution certainty,’’ managing director Mauro Neves said at its annual general meeting. “We have decided to move our distribution centre from Gibson Island to a new third-party facility.

“This decision will enable us to monetise the Gibson Island real estate and we expect to begin a sale process in the first quarter of 2025.

“We have appointed advisers to help us with the strategic review of our fertiliser manufacturing operations and with the sale process for the distribution business. We intend to begin a sale process early next calendar year for the distribution business.’’

Incitec wrote down the value of the fertiliser division by $791m after tax while releasing its annual results in November, when it reported a net loss of $311m, affected by $712m in one-offs.

The Australian’s Dataroom column reported in mid-November that investment bank Jarden had been appointed as advisers to run the fertiliser sale.

Potential buyers could include listed trade buyers such as Elders and Ridleys and global companies including The Mosaic Group, CF Industries and Nutrien, which has a major Australian presence.

Private equity firms such as Pacific Equity Partners and BGH Capital could also be in the mix.

Mr Neves said a strategic review of the company’s Phosphate Hill manufacturing operations in Queensland, which have struggled in the past, was also ongoing.

“Our focus on reliability and operational excellence at Phosphate Hill helped us to improve volumes and reduce costs, which led to a strong finish in 2024,’’ he said. “The strategic review of Phosphate Hill is ongoing and Incitec Pivot will optimise its performance, while assessing the best option for its future.

“The review is targeted to complete by September 2025.’’

The book value of Phosphate Hill is now $414.3m, compared to more than $1bn in the past.

Mr Neves said the outlook for the business broadly for FY25 would build on the momentum from the previous year while also retaining a focus on price discipline and cost management.

“Earnings will be impacted by a heightened program of plant turnarounds during the year,’’ he said. “We will provide an update on the strategic review of fertilisers manufacturing and the sale process for distribution at our half year results in May 2025, or earlier if appropriate.’’

Incitec announced in November it would shut its Geelong super phosphate manufacturing plant with the loss of about 40 jobs and convert that operation to an import business. Macquarie last week raised its target price for Incitec from $3.05 to $3.15, against Friday’s closing price of $2.94.

Cooper Investors was contacted for comment.

Originally published as Incitec Pivot to forge ahead with asset sales but Cooper Investors reduces stock holding