An ASX 100 Company, Incitec Pivot Limited (ASX: IPL) is primarily involved in unlocking the world’s natural resources through innovation on the ground. On 11 February 2019, the company made an announcement regarding the impact of the recent extreme Queensland weather events.
In the announcement, the company has noted that due to the recent rain event, the rail lines between Townsville and Phosphate Hill are closed. Further, the rain event has resulted in a flood in Northern Queensland. While commenting on the closure of the rail lines, the company has informed that it understands that the rail infrastructure provider is waiting for the situation to get better so that it could allow full access to the rail line.
In its Phosphate Hill facility, the company has already started progressive shutdown of plants and it is expected that the effect of the rail closure will lead to lost earnings before interest and tax of around A$10 million per week from 9 February 2019 until the full production is resumed.
As per the company’s announcement, it’s Phosphate Hill facility has not sustained any damage; however, the Townsville fertiliser distribution and port facilities have suffered minor damage, but they are currently operational.
In FY 2018, the company reported Net Profit after Tax (NPAT) of $347 Mn (excluding one off individual material items of $139 million), signifying 9% increase as compared to the previous year. The NPAT was supported by a strong operating performance in both of the company’s Explosives and Fertilisers businesses. The company’s EBIT increased by 11% to $557 million and EPS increased by 11% to 20.9 cents per share. The company’s manufacturing performance was impacted by planned turnarounds at Phosphate Hill, Cheyenne and St Helens, the team delivered outstanding results at the Waggaman plant, which ran at 103 percent of nameplate for the financial year, and also achieved record production at Moranbah. The company also witnessed increased market penetration of its premium technology.
In FY 2018, the company delivered $663 million of operating cash flow. The Company’s Board declared a final dividend of 6.2 cents per share, 20% franked, taking full-year dividend to 10.7 cents per share.
During FY 2018, the company secured interim gas supply for 2019 and a gas tenement for a potential long-term solution starting in 2022. The company is exploring economic bridging gas for 2020 and 2021.
During the year, the company strengthened its Risk Management processes using future climate scenarios in order to assess the Company’s risks and opportunities and to apply the Task Force for Financial Disclosure’s methodology. The company is in the process of integrating climate-related risks into its management and governance structures.
In the past one year, the company’s shares decreased by 6.37 percent as on 8 February 2019, and traded at a PE multiple of 27.040x. IPL’s shares traded at $3.310 (-2.071%) with a market capitalization of circa $5.43 billion as on 11 February 2019. It has 52 weeks high of $4.280 and 52 weeks low of $3.175.
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