Incitec Pivot in strong fertiliser demand, raises capital from market

Incitec Pivot Limited is reporting strong demand for fertiliser just as the company begins a $675 million capital raising.

Positive impact: Early rain has resulted in a good start to the crop-sowing season, prompting strong fertiliser demand for Incitec Pivot Limited. Picture: Zoe Phillips

GOOD early rain across eastern Australia has prompted strong fertiliser demand for Incitec Pivot Limited.

But it has not been enough to pull the company’s fertiliser division out of a loss-making situation.

Releasing its first half results today, Incitec Pivot reported revenue from its fertiliser division had risen 11 per cent to $617 million but it still suffered losses of $10 million for the six months to March 31.

Still, that was a big turnaround from the $33-million loss for the previous corresponding period.

Last month, IPL decided to retain the fertiliser division after contemplating its sale or a demerger of the business.

The company’s Dyno Nobel Americas explosives business again kept the company profitable, with earnings before interest and tax from the division accounting for $113 million.

Total EBIT for the whole of the company was $159 million, a rise of 34 per cent from the first half of 2018-19.

IPL has begun a $675 million capital raising to reduce its debt, which stood at $1.88 billion at the end of March.

That was made up of a fully-underwritten share placement with institutional and sophisticated investors for $600 million and a $75 million share purchase plan offered to retail investors, both at $2 a share, an 8.7 per cent discount to the closing price last Friday of $2.19.

IPL said would inform the market tomorrow on the outcome of the share placement.

The SPP does not open until May 19 and closes on June 9.

IPL managing director Jeanne Johns said the business demonstrated strong resilience in the first half, particularly through a buoyant mining sector.

“Our explosives business operates in two of the most attractive mining markets in the world — Australia and the US,” Ms Johns said.

“The fertiliser was weighed down by record low commodity prices as well as drought conditions in the first four months.

“Improved weather conditions have driven record demand of the last three months and we are well placed to benefit from any future improvement in global fertiliser prices.”

“The capital raising we announced today will strengthen our balance sheet to make us more resilient in the current environment, as well as keeping the business strong and support the flexibility to pursue disciplined organic growth opportunities to deliver long-term shareholder value.”

IPL remained in a trading halt on the Australian Securities Exchange until Wednesday.