Incitec Pivot fertiliser earnings rise, big profits to follow
Incitec Pivot once considered selling off its fertiliser division. See whether it was a good move.
Incitec Pivot Limited’s fertiliser division has turned the corner and is forecast to post healthy profits by the end of September.
Releasing the company’s first half results for the six months to March 31, IPL managing director Jeanne Johns said the fertiliser business had earnings before interest and taxation of $20.2 million, a significant improvement on the $9.9 million loss from the previous corresponding period.
Ms Johns said unsold ammonium phosphate product from last season was likely to realise more than $25 million in profit in the second half of the year at current prices.
While output from IPL’s Phosphate Hill plant in Queensland was lower than the previous year, fertiliser prices were higher.
Di-ammonium phosphate prices averaged $US426 a tonne ($548 a tonne) in the first six months of this year, compared with $US289 a tonne ($372 a tonne) for the first half of 2020.
IPL was expecting a stronger than normal second half of the year, with positive flow-on effects to earnings.
“Pleasingly, our fertiliser business returned to profit during the half as we responded to stronger seasonal outlook for rain and commodities,” Ms Johns said.
“As we progress our strategy to become a soil health company, good rainfall events across eastern Australia position us well to deliver for the agricultural sector in the second half.”
Last year, IPL considered selling off its fertiliser division after reviewing its performance but decided to retain the business.
The fertiliser division was one of the bright lights contributing to the company’s finances.
Over all divisions, IPL’s first half EBIT fell 31 per cent to $110 million, while net profit after tax fell 44 per cent to $36 million.
IPL will pay an interim dividend of one cent a share on July 2.
Last year, there was no dividend paid due to the uncertainty of the COVID-19 pandemic on trade.
IPL shares fell 12.5 cents to $2.285 in today’s trading on the Australian Securities Exchange.
MORE
‘We never dreamt it would turn into this sort of business’
An almost 30-year journey has seen Cobram Estate evolve into Australia’s leading producer of extra virgin olive oil. See their story.
Capitalising on the ‘beautiful food bowl’ of South Gippsland
No chemicals. No outside soil. No worries. This is the approach taken by Chippin Estate’s Shane O’Keefe at his bountiful vegetable farm.