Incitec Pivot has cut its payout after the firm’s full-year profit dropped 27.8 per cent on a $140 million hit from disruptions related to February’s one-in-a-hundred year north Queensland floods.
The fertiliser and explosives maker said its $152.1 million net profit for the year to September 30 was down from an already impairment-affected $210.8 million a year ago, with the 2019 figure hurt by the forced closure of the Townsville and Phosphate Hill rail line during last summer’s catastrophic deluge.
Lost sales and disruptions as a result of the forced Phosphate Hill plant closure accounted for the bulk of Incitec’s $140 million in non-recurring items.
The company’s $303.7 million in total earnings exceeded September’s downwardly revised target of between $285 million and $295 million, but missed the previous May forecast of between $370 million and $415 million by a wide margin.
Incitec has cut its final dividend to 3.4 cents per share from 6.2 cents a year ago, but increased the franking level from 20 per cent to 30 per cent.
Nonetheless, the company’s shares were trading 1.39 per cent higher at $3.64 after the first 10 minutes of trade on Tuesday.
While the floods were the primary driver of an $80 million earnings loss at Incitec’s under-review fertiliser unit, $34 million of that could be attributed to the worsening impact of drought.
Incitec said its review of the fertiliser business was ongoing, with a final decision to be made in 2020.
Earnings also went backwards by 16 per cent at the firm’s Dyno Nobel Americas unit, though the contribution from explosives ticked upwards by 5.0 per cent despite wet weather disruptions.
Dyno Nobel Asia Pacific unit earnings slipped 13 per cent on lost contracts.
Managing director and chief executive Jeanne Johns said while FY19 had been a challenging year, the fundamentals underpinning the company’s explosives businesses remained strong.