Incitec Pivot posts healthy profit, fertiliser business turns around
Incitec Pivot Limited has posted its 2019-20 results, with the business back in the black after an almost $80 million loss last year. See how they managed the dramatic turnaround.
BETTER seasonal conditions this year has helped turn the profitability of Incitec Pivot Limited’s fertiliser business.
After reporting a $79.7 million loss before interest and tax in the 12 months to September 30, 2019, IPL’s fertiliser division has reported earnings of $26.2 million this year.
And the company’s managing director Jeanne Johns is expecting further improvement this season.
Overall, the fertiliser and explosives manufacturer recorded earnings before interest and tax of $375 million, excluding individual material items, and a net profit after tax of $188 million for 2019-20.
Ms Johns said the year had been a challenging year for the company but its businesses had delivered a strong operating performance.
“FY20 has been one of the most unusual years,” she said, referring to the coronavirus pandemic.
“We acted quickly to implement new control measures to keep our people and customers safe throughout the pandemic, which enabled us to provide uninterrupted supply to customers in the essential resources and agricultural sectors.
“We delivered a very solid operating performance on both the explosives and fertiliser business.”
Explosives manufacture now dominates the company’s earnings accounting for 94 per cent of earnings, compared with just 6 per cent from the fertiliser division.
After running a strategic review of the fertiliser division, Ms Johns said the company decided during the year to retain the business.
“The fertiliser business has turned the corner,” she said.
“It produced strong distribution margins of greater volumes.
“The business returned to profitability in the second half as improved demand in the last eight months supported a strong performance in our distribution business, helping offset the impact of very low commodity prices in the first half.
“The contribution from fertiliser is expected to improve further as the business continues to recover after the recent historic drought and the record low commodity prices.”
IPL did not pay a dividend in 2019-20 due to the uncertainty relating to COVID-19, after paying dividends the previous year.
It raised $657.5 million in May to improve its balance sheet, allow for unforeseen impacts of the coronavirus pandemic and capitalise on strategic opportunities which might arise.
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