Orica Limited (M) is a manufacturing company, producing a variety of products. Some of these include industrial chemicals, polyethylene, surface coatings for vehicles, food and beverage, flavour and fragrances, packaging and appliances. ORI is a supplier of explosives and blasting services to mining, quarrying and construction industries.
On 9th May 2019, the company announced results for the half-year ended 31st March 2019. The EBIT was up 20% to $301.1 million from $251.5 million pcp. The company had improvement across the regions in all manufacturing operations. The NPAT was up 35% to $166.7 million from $123.6 million pcp. On the operational side, the company completed more than 4,200 Key Control Verifications. The company is focused on raising awareness and improving the understanding of high potential incidents (HPI).
Global Manufacturing results were higher than the pcp from improved performance across the network, offset by a larger planned turnaround at the Yarwun cyanide plant and utility supply disruption at Bontang in Indonesia supplies. The company is working in tandem with its JV partner, Yara, to resolve technical issues associated with the plant. In Australia Pacific and Asia, thermal coal remains the most significant commodity with improved EBIT from the pcp. In North America, demand in the gold market improved on the pcp from growth in Canada and the US. Copper commodities witnessed strong growth in Colombia and Peru. In Europe, the Middle East and Africa too, sales were high and ahead of pcp.
Net operating and investing cash flows amounted to $54.2 million. Interest bearing liabilities of $2,232 million consists of $1,864 million of US Private Placements and $368 million of committed and other bank facilities. Undrawn committed bank facilities of $1,230 million, with total committed debt facilities of $3,455 million depict a strong liquidity position.
Trade working capital increased by $42 million from September 2018 and the fixed and intangible assets increased by $58 million. Other net assets increased by $59 million.
FY19 capital expenditure is expected to be approximately $350 million, excluding the impact of capital expenditure to replace the defective Burrup assets.
Unfranked interim dividend of 22.0 cps has been announced by the Board, which represents a payout ratio of 50% and is payable to shareholders on 1st July 2019.
Company’s 2019 outlook remains unchanged as announced on 2nd November 2018 and aims towards generating higher EBITDA. Approximately 20% utilisation rate is expected at Burrup TAN plant.
The company provided 2020 outlook with the aim of commodity growth, improved reliability and operating efficiency. Burrup plant rectification work is expected to be completed in the first half of 2020.
ORI announced that it is Initiating Systems and Packaged Emulsion plants to work towards significant reductions in trade working capital and costs across the network. According to the Mine Manager, Rob Cunningham, the game-changing WebGen technology is enabling the company to lead the industry in block cave mine design and planning.
Stock Price Information:
On the technical front, the stock traded up by 5.63% and closed at $19.700 as on 9th May 2019, compared to the previous closing of $18.650. In the last six months, the stock has delivered a return of 1.63%, while the YTD return stands better at 10.36%.
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