Incitec Pivot profit takes hit from slump in global fertiliser prices

The fertiliser group has booked a sharp fall in full-year earnings as lower commodity prices crimp its bottom line.

New Incitec Pivot ammonia plant in Louisiana, US.

Fertiliser group Incitec Pivot has reported a heavier-than-expected slump in full-year earnings as lower commodity prices impacted on its business.

For the year to September 30, Incitec booked net profit after tax of $128.1 million, off 68 per cent from last year.

Its adjusted net profit, which strips out one-off items, fell 26 per cent to $295.2m, while adjusted pre-tax earnings (EBIT) slid 26 per cent to $428.1m.

Analysts had anticipated a stronger net profit reading of $164.4m, although the group topped expectations for adjusted net profit of $288.1m.

“The challenges in the global resources industry and cyclical lows in international fertiliser prices are storms that Incitec has weathered in the past and is positioned to do so again,” managing director James Fazzino said.

“I have confidence in our strategic direction based upon our exposure to the world’s two largest economies, China and the US, and balanced end-market product exposure of explosives, industrial chemicals and fertilisers.”

Mr Fazzino said cyclical and structural factors — largely relating to lower commodity prices — had impacted EBIT by $231m, while productivity improvements worth $71m had provided a minor offset.

“Notwithstanding the structural change in the US coal industry, the resources industry is seeing some recovery in coal and iron ore markets,” he added.

“Also, recent rainfall in Australia will provide farmers with the well-deserved outlook for some good seasons in the future.”

The fertiliser heavyweight reported a 24 per cent drop in operating cash flow, with net debt seen at $1.39 billion by the end of the fiscal year.

Incitec declared a final dividend of 4.6 cents a share, taking total dividends for the year to 8.7c.