IPL Expects A Fall In The EBIT In FY2019- The Share Price Tumbled By 7.87%


Incitec Pivot Limited (ASX: IPL), a company which belongs to the materials sector and is into the business of manufacturing, and distributing industrial explosives, announced that the outages at its Louisiana and Phosphate Hill plants might impact the earnings before interest and tax (EBIT) by approximately A$45 million for the financial year ending 30 September 2019.

As a result of issues in the Louisiana ammonia plant’s CO? removal system, the plant got impacted by downtime. With the regular inspection of the equipment, the company started the repair work of the plant. The company expects that the completion of the repair work will resolve the issues at the plant. Due to the outage, the company expects that there will be a fall in the production for FY2019 by approximately 80,000 tonnes which might impact the earnings before interest and tax by A$25 million.  

There was a leakage in the phosphoric acid plant which impacted the Phosphate Hill facility. The company expects that there might be a fall in the production of 50,000 tonnes of ammonium phosphates for the financial year ending on 30 September 2019. At present, the facility has resumed its operation, and the revised production target of the company for FY19 company is 950,000 tonnes. The company estimates that it might impact the earnings before interest and tax by A$20 million.

The stock has generated a positive performance of 37.55% over the last five years. However, in last one year, the stock generated a negative performance of 5.32%.

As per the annual report of IPL for FY2018 which ended on 30 September 2018, IPL made a profit of $210.8 million. The EPS was 12.5 cents. The company reported a net asset base of $4,744.2 million for FY18 which was slightly down as compared to the previous corresponding period. During the period, IPL had a total current asset of $1,471.5 million which also increased slightly as compared to the previous corresponding period. The total current liabilities by the end of the period was $1,407.4 million. There was an increase in the reserves as the company made a profit during the period. The total shareholders’ equity was worth $4,744.2 million.

During the period, there was a net cash inflow of $662.7 million from the operating activities of the company. Here, the primary source of cash outflow was in the form of income tax expense, an increase in the inventory and interest paid.

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There was a net cash outflow of $324.0 million from the investing activities of the company where the primary source of cash outflow was the payment made for the property, plant and equipment and intangibles.

The company used approximately $382.4 million from the financing activities where the leading cause of cash outflow was the repayment of borrowings, payment of dividend and payment for buyback of shares.

By the end of FY2018 on 30 September 2018, IPL had net cash and cash equivalent of $588.5 million.

By the end of the trading on 29 January 2019, the closing price of IPL was A$3.280, down by 7.87% with the market capitalization of A$5.72 billion.


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