Orica lifts half-year net profit 30pc, eyes mining recovery

Orica has pointed to signs that mining firms are returning to normal planning, as it booked a 30pc jump in net profit.

Orica chief executive Alberto Calderon speaking at a Melbourne Mining Club lunch.

Commercial explosives supplier Orica said there were signs that resources companies were beginning to return to more normal mining plans, although it faced a headwind from higher natural gas and ammonia prices.

The company (ORI) reported a 31 per cent jump in net profit to $195.2 million in the six months through March. That compares with a $149m profit a year earlier, including a $41m expense relating to the settlement of a dispute with the Australian Taxation Office.

Stripping out one-time items, Orica said its earnings before interest and tax slipped to $314m from $317m the year before, while sales revenue for the period was 4.5 per cent lower at $2.44 billion.

Orica — which sells explosives and blasting systems to the mining, quarrying, oil and gas, and construction markets — said it was being hurt by an unfavourable exchange rate in addition to the expected rise in gas and ammonia prices in North America and Australia. Still, the company anticipates a gradual recovery in the mining industry.

Founded in 1874 as a supplier of explosives to the Victorian gold fields, Orica said it would pay an interim dividend of 23.5 cents a share, a 15 per cent increase on last year. The company last year replaced a progressive dividend scheme with a payout ratio to reflect the cyclical nature of its operations, targeting 40 to 70 per cent of underlying earnings.

Dow Jones Newswires