Fertilizer producer Incitec Pivot half-year profits up 7%

12 May 2014 09:10 Source:ICIS News

BRISBANE (ICIS)--Australian fertilizer and explosives producer Incitec Pivot Limited (IPL) posted a net profit after tax (NPAT) of A$115.7m for the half-year ended 31 March 2014, a 7% increase on the previous corresponding period, the company said on Monday.

IPL’s managing director James Fazzino, said that the medium-term strategic platforms were the Moranbah ammonium nitrate (AN) complex in Queensland, which is planned to achieve production of 330,000 tonnes/year from 2015, and the Louisiana, US ammonia plant, under construction with first production anticipated in 2016.

Fertilizer earning before interest and tax (EBIT) was up marginally, at A$49.8m, compared with A$48.9m in the previous reporting period.

Lower global fertilizer prices were mostly offset by a weaker Australian dollar, however drought in northern Australia was a negative factor for fertilizer earnings. Much of the improvement in earnings has been attributed to the company’s business efficiency program called BEx.

The company is currently carrying out a planned turnaround at Phosphate Hill and Mt Isa, however the initial 35 day shutdown has been increased by several days.

As a result, the production estimates for Phosphate Hill in 2014 outlined in the annual report in November 2013, have now been reduced by 30,000-60,000 tonnes to 770,000-800,000 tonnes.

Adding to production woes for IPL is the decision of GlencoreXstrata to delay the turnaround of its Mt Isa copper smelter by four weeks, which will limit the supply of sulphuric acid in June/July.

Phosphate Hill EBIT increased by A$13.1m to A$18.3m compared with A$5.2m in H113, helped by the lower logistics costs, lower sulphur and sulphuric acid prices and higher gas capture. However, softer diammonium phosphate (DAP) prices which averaged US$434/tonne, was the unit's weakest area.

The Phosphate Hill plant produced 371,000 tonnes of ammonium phosphate fertilizers in the six-months to 31 March. Quantum, the Hong-Kong based trading arm of IPL recorded 473,000 tonnes of open sales in the same period.

The half-year results are an improvement on IPL’s 2013 annual results, which saw a 27% fall in full-year net profit.

By Kate Wilcock