Incitec Pivot Limited (ASX: IPL), is engaged in the manufacturing, trading, and distribution of fertilizers and chemicals. Besides, it also develops and commercialises industrial explosives and related products and services to mining, quarrying, and construction industries.
On 20th May 2019, Incitec Pivot released its Half-year results for the period ended 31st March 2019 (1H19), to the market. Accordingly, the company recorded a 3.5% rise in the revenue from ordinary activities to AUD 1,742.3 million. The most notable feature of the business performance in the concerned period is the outstanding profit figure. The net profit for the period attributable to members of the company increased by a staggering 451.3% to AUD 41.9 million, as compared to the AUD 8 million in the previous corresponding period (pcp).
The Group’s 1H19 Earnings Before Interest and Tax (EBIT), ex IMIs was of AUD 119 million, decreased by AUD 121 million compared to pcp. Excluding the $ 141 million impacts from non-recurring items in 1H19, EBIT increased 8% to $ 260 million.
Notwithstanding a challenging 1H19, IPL’s balance sheet remains strong, reflecting the Group’s ongoing commitment to financial discipline, effective cash management despite lower trading results and completion of AUD 300 million share buy-back in 1H19.
The Company purchased and cancelled 81,386,554 ordinary shares at an average price per share of AUD 3.686. The net assets were around AUD 4,562.9 million.
Moreover, the operating cash flows of AUD 35 million improved by AUD 104 million compared to 1H18, while the net investing cash flows of AUD 174 million increased AUD 56 million as compared to 1H18. Meanwhile, the net financing cash flow also increased AUD 143 million to AUD 340 million primarily due to payments of 1H19 dividends, representing the final FY18 dividend payment of AUD 101 million and other activities.
Also, the Directors of IPL have declared to pay an interim dividend of 1.3 cents per share, unfranked, payable on 1st July 2019. This represents a payout ratio of approximately 50 percent.
The Group operates several strategic divisions that offer different products and services and operate in different markets. These distinct reportable segments include Incitec Pivot Fertilisers (IPF), Southern Cross International (SCI), Fertilisers Elimination (Fertilisers Elim), Dyno Nobel Asia Pacific (DNAP), Asia Pacific Eliminations (APAC Elim), Dyno Nobel Americas (DNA) and Group Eliminations (Group Elim). The financial information for each of these is briefed in the figure below:
Reportable segments – financial information (Source: Half-yearly Report)
Based on geographical presence, the Group’s secondary reportable segments include Australia (country of domicile), USA, Canada and Turkey. The financial snapshot for each of these for concerned half-year is as follows:
Geographical information – secondary reporting segments (Source: Half-yearly Report)
As on 31st March 2019, the net debt amounted to AUD 1.92 billion, which is higher than AUD 1.75 billion as compared to the pcp. The net debt/EBITDA ex IMIs increased to 2.6x (pcp: 2.2x) while the Group’s credit ratings were maintained.
With an issued capital of AUD 5.35 billion with ~ 1.61 billion outstanding shares, the IPL stock price closed the day’s trading at AUD 3.240, down 2.703% with 5.87 million shares traded on 20th May 2019.
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