Incitec Pivot reviews Asia-Pacific fertilisers business
Incitec Pivot shares hit by possible sale or spin-off of fertilisers business and guidance downgrade.
Incitec Pivot says it is considering selling or spinning off its Asia Pacific fertilisers business, as the company downgraded earnings guidance for this fiscal year.
Incitec said it is starting a strategic review of Incitec Pivot Fertilisers, which manufactures, imports and distributes fertilisers including urea and ammonia in Australia.
“Now is a logical time to initiate a strategic review, with the business well positioned to benefit from the emergence of ag tech and to leverage its strong platform in the Australian market,” said chief executive Jeanne Johns.
Incitec will assess a possible sale, demerger or further investment in the unit. Incitec has appointed UBS to advise on the strategic review, which is expected to progress over the course of fiscal 2020, the company said.
Incitec Pivot shares fell 13 per cent in early trade to $2.79.
Chairman Brian Kruger said the company has made good progress on strategic milestones, including the negotiation of gas supply arrangements to support continued manufacturing at the Gibson Island plant in Queensland state, in an otherwise challenging year.
Incitec separately cut expectations for its earnings before interest and tax for fiscal year 2019.
It said publicly available prices and foreign-exchange rates had lowered its projected annual ebit range to between $321 million and $366 million, from a May forecast of $370 million-$415 million.
Still, annual earnings may fall as low as $285 million-$295 million, excluding $20 million in one-off charges, because of lower-than-forecast ammonia production at Waggaman plant in the US.
Incitec is also facing headwinds from the drought in New South Wales and Queensland, and increased gas costs at Gibson Island.
Earlier interest expense guidance of $145 million remains unchanged, Incitec said.
The company is scheduled to release its annual earnings in November.
Dow Jones Newswires
More Coverage
UK battery developer agrees to Palisade deal
British battery developer Pacific Green has agreed a deal to sell off the first stage of its grid-scale storage project in South Australia to Palisade Investment Partners’ green energy vehicle.
Only recession can make ‘ruthless’ Victoria great again
Not all is lost. Victoria has a clear competitive advantage across four world-beating exports and these mines won’t run dry. But first there will be pain.