Incitec boss Jeanne Johns has quit the company as tensions rise over fertiliser spin-out

Chief executive Jeanne Johns has stepped down after five years in the job and the company also faces new problems with its Australian gas supplies.

Incitec Pivot boss Jeanne Johns has stepped down after five years in the job as investor tensions rise and with the company also faces new problems with its Australian gas supplies.

The group said on Tuesday it had appointed chief financial officer Paul Victor as interim chief executive while its board searches for a permanent replacement for Ms Johns.

Chairman Brian Kruger said in a statement Ms Johns had left the company in a “very strong financial position” after leading Incitec through the Covid-19 pandemic.

He said she has reshaped the explosives major’s future through the sale of its Waggaman ammonia manufacturing plant in the US, and cutting a long-term urea supply deal in WA that will underpin its future business in Australia and the Asia Pacific region.

But Incitec’s $552m in half-year earnings before interest and tax fell below analyst expectations – with the company’s strongest segment the Waggaman facility that has now been sold, and is expected to be handed over to new owners by the end of the year.

The company has struggled to keep its manufacturing plants operating, and the unreliability at Waggaman has long been a problem for Incitec.

Market sources say the company’s failure to take advantage of high pricing in the US and Australian markets over the past few years, amid unplanned outages at multiple facilities – not just Waggaman – had led to significant disquiet among the company’s senior shareholders.

It is understood the revelation of a new equipment failure at the company’s Phosphate Hill fertiliser plant in Queensland in the company’s May half-year report, which came on top of $41m in additional costs due to a failure of the project’s gas supplier, led to frustration among shareholders over the company’s performance.

The company also reported equipment issues and unplanned outages at its St Helens ammonia plants in the US, which cut earnings by $US8m for the period.

And, while the company said it had delivered an additional $59.5m in earnings before interest and tax from improved plant reliability in the half ahead of its target of $40m to $50m from an improvement scheme introduced in 2022, sources said that improvement was undermined by failures elsewhere in the business.

Despite delivering a $1bn net profit in 2022, and declaring a record 17c final dividend and a $400m share buyback, Incitec’s 2022 full-year results also came in below expectations due to problems at Waggaman – an ongoing sore point for shareholders.

And the issue over the gas supply for Phosphate Hill looks likely to continue. The company said in an announcement unrelated to Ms Johns’ departure that its full supply would not be restored from the company’s long-term gas contract.

The manufacturing plant is supplied from an ENI-operated gas field in the Northern Territory, and gas volumes flowing from the field have fallen short of contracted volumes since 2022.

Incitec on Tuesday said a new drilling campaign by ENI had failed to find additional gas reserves, and the supply shortfall was likely to continue through the remainder of the contract, which ends in 2028.

Buying gas on the spot market would cost Incitec about $75m to $90m above previously planned costs through the full financial year, the company said, and additional costs were likely to continue as it looked at its “commercial and legal options”.

The other major source of tension in recent years has been Incitec’s on-again off-again approach to demerging its fertiliser assets.

The company first floated plans to split its explosives and fertilisers business in 2019, but called off the idea in 2020 after a strategic review that considered options for the sale or demerger of the fertilisers business.

Incitec revived the idea in 2022 it wanted to spin off its fertiliser business into a separate listed company, arguing it would help realise the full market valuation of both sides of the company’s business.

But the plan proved unpopular with some of Incitec’s major shareholders, and has reportedly split the board after activist investor John Ho, the founder of Janchor Partners, was appointed as a director earlier this year.

Ms Johns, along with Mr Kruger, are said to have been staunch supporters of splitting the company, while other board members have wavered on the plan.

Incitec shares fell 2.3 per cent to close 7c lower at $2.95.