Orica posts 77pc net profit rise and expects stellar FY25 with Trump in White House

Explosives and blasting systems giant Orica says the Trump presidency will be a `big positive’ for its US operations as it sets the course for stellar growth to continue in FY25.

Explosives and blasting systems giant Orica posted a 77 per cent rise in FY24 net profit to $525m.

Explosives and blasting systems giant Orica chief executive Sanjeev Gandhi believes Donald Trump’s presidency will be a “big positive” for the company which expects to continue its stellar run despite macro-economic and geopolitical challenges.

The $8.5bn Melbourne-based company flagged higher FY25 earnings on growing demand after posting a 77 per cent rise in net profit to $525m, in the 12 months ended September 30.

The result included a $115m boost from sales of significant items, including a property in Victoria.

Mr Gandhi said it stemmed from an increased uptake of premium products, blasting technology, acquisitions and digital solutions such as BlastIQ Underground – a digitised, cloud-based system.

“It was all about margin improvement. It was all about cost management. It was all about integrating the acquisitions we’ve made and it was all about bringing the best products and solutions and technologies in the market,” he said.

“We’ve got double digit earnings growth in the last four years and I suspect that momentum will continue into 2025.”

Referring to the coming Trump presidency in the US, Mr Gandhi said it was a “big positive” and would benefit Orica.

“You have a government that’s pro business pro manufacturing, and given our big manufacturing footprint in the US that’s very positive,” he said.

Orica chief executive Sanjeev Gandhi.

The group’s FY24 earnings before interest and tax (EBIT) lifted 15 per cent to $806m, compared to the prior corresponding period while revenue for the 12 months was down 4 per cent at $7.66bn.

Return on net operating assets was 12.8 per cent, from 12.6 per cent in FY23. The group has raised its three-year average RONA target range to 13-15 per cent, from 12-14 per cent previously.

Mr Gandhi said it was a strong result considering four years ago RONA was 8.6 per cent.

“We expect the demand for our blasting solutions, specialty mining chemicals and digital solutions to continue to grow as we partner with our customers to satisfy their strong appetite for new technology and digital solutions,” he said.

“While inflationary pressures, higher energy costs and increasing geopolitical risks remain an ongoing challenge, our performance this year demonstrates our resilience and ability to adapt and mitigate ongoing macro-economic and geopolitical.”

Orica’s three arms performed strongly with earnings before internet and tax for Blasting Solutions was $755m, up 13 per cent on the previous year; Specialty Mining Chemicals was $69m up 36 per cent; and Digital Solutions was $70m, up 29 per cent.

Mr Gandhi said the company has benefited from global exposure to the gold and copper sectors. “In Australia we’ve seen a very, very weak nickel market and now we see weakness coming across lithium but outside of that thermal and coking coal, gold, copper, iron ore are all strong,” he said.

During the year, Orica – whose biggest shareholder is superannuation fund AustralianSuper – paid $US640m for Cyanco, a Texas-headquartered supplier of sodium cyanide and $505m for Canadian digital solutions provider Terra Insights.

Mr Gandhi said the business was fully integrated.

“We are now starting to scale the business up, the cost synergies have been already realised and next year its about taking them across the world,” he said.

Orica said it has completed the first phase of its decarbonisation strategy in FY24 with the installation of two emissions abatement reactors at its Yarwun site in central Queensland which is forecast to reduce the site’s total Scope 1 and Scope 2 emissions by 50 per cent from the 2019 baseline.

Mr Gandhi said they were in a strong position to continue Orica’s momentum and drive further emissions reductions towards its climate targets across the business while creating more sustainable outcomes

The installation has accelerated delivery of Orica’s climate change commitments, resulting in its net operational Scope 1 and Scope 2 emissions being 43 per cent below our restated 2019 baseline.

Orica celebrated its 150th anniversary this year, after beginning operations as a supplier of explosives to the Victorian goldfields in 1874. Since then it has expanded into North America, Europe, Africa and Asia and has more than 12,500 employees operating in over 100 countries.

“Its been a milestone year for us celebrating 150 years so no better way to end the year,” Mr Gandhi said.

Orica will pay a final 28c per share dividend on December 23, taking its full year payout to 47c, compared to FY23’s 43c per share in dividends.

Orica shares were trading 1.8 per cent lower at $17.25 at 2.15pm AEDT.

Originally published as Orica posts 77pc net profit rise and expects stellar FY25 with Trump in White House