Solid Earnings Growth Driven by Core Business and Technological Advancements
Highlights of the First Half of 2024:
Orica, a global leader in blasting solutions, reported significant financial achievements in the first half of 2024. Key highlights include:
- Substantial Increase in Net Profit: Statutory Net Profit After Tax (NPAT) surged to $337.5 million compared to $122.6 million in the same period last year. This includes $158.4 million in profit from significant items after tax.
- Robust Earnings Before Interest and Taxes (EBIT): EBIT reached $353.7 million, marking a notable 10% increase from the previous corresponding period. This growth can be attributed to heightened customer demand, enhanced earnings from advanced technology offerings, and sustained commercial discipline.
- Across-the-Board Earnings Growth: Earnings saw a boost across all segments compared to the previous period, driven by strong demand, increased earnings from premium products, and technological advancements.
- Improved Earnings per Share (EPS): Underlying earnings per share rose to 38.8 cents, reflecting a gain of 2.8 cents from the previous corresponding period.
- Interim Dividend: The company declared an interim dividend of 19.0 cents per ordinary share, unfranked, representing a payout ratio of 52%.
- Enhanced Return on Net Assets (RONA): RONA increased to 13.0%, up from 12.4% in the first half of 2023.
- Strategic Acquisitions: Orica completed strategic acquisitions of Terra Insights and Cyanco on 29 February and 30 April 2024, respectively.
CEO’s Perspective:
Sanjeev Gandhi, Managing Director and CEO of Orica, expressed satisfaction with the company’s robust performance:
“Our first-half results underscore another period of strong growth, with a 10% increase in underlying earnings. We continue to focus on executing our strategic initiatives, resulting in improved performance and growth across all segments.”
Operational Highlights:
- The core blasting business experienced significant strengthening, supported by increased demand and earnings from high-margin premium products and technology.
- The Digital Solutions segment witnessed solid growth, driven by strong demand for products and services.
- Operational efficiency led to improved return on net assets and operating cash flow.
- The Kooragang Island ammonia plant turnaround was completed safely and within budget, showcasing the dedication of Orica’s workforce.
Safety and Sustainability:
- Emphasizing the company’s commitment to safety, Gandhi addressed a regrettable employee fatality and reiterated Orica’s focus on preventing harm.
- Orica reported no significant environmental incidents and reiterated its commitment to preventing loss of containment.
- Progress toward climate targets, including the installation of tertiary abatement technology at the Yarwun plant, remains on track.
Acquisitions Update:
- The acquisitions of Terra Insights and Cyanco are expected to fuel growth, establishing Orica as a leader in geotechnical and structural monitoring and the leading integrated global sodium cyanide producer and supplier, respectively.
Dividend and Capital Management:
- Orica declared an interim dividend of 19.0 cents per share, maintaining a payout ratio of 52%.
- RONA increased, driven by improved earnings performance and strong market demand.
- Gearing, excluding lease liabilities, remains below the stated range, with pro forma gearing adjusted for the Cyanco acquisition.
FY24 Outlook:
- EBIT for FY2024 is expected to surpass the previous year’s results, driven by a stronger first-half performance and sustained demand across mining and civil value chains.
- Minimal EBIT contribution is expected from Terra Insights, while Cyanco is projected to contribute between $40 million to $45 million in EBITDA.
- Capital expenditure for the underlying business is anticipated to slightly exceed the previous range, with additional expenditure allocated for acquisitions.
Orica remains optimistic about its prospects, fueled by solid performance, strategic acquisitions, and a continued focus on innovation and operational excellence.
