Melbourne - Orica (ASX: ORI) today announced a Statutory Net Profit After Tax (NPAT) of $165 million for the six months to 31 March 2020, compared to $33 million in the prior corresponding period (pcp).
Earnings Before Interest and Taxes (EBIT) were up 2%, or 5% after adjusting for an ownership structure change of the company's China business.
Orica Managing Director and CEO Alberto Calderon said: 'I am pleased to announce that we have delivered first half results in line with our plan, with earnings growth being led by a 4% increase in AN volumes, a strong underlying performance from all regions and further improvement from Minova. At the same time, our safety performance continues to improve, with the Serious Injury Case Rate at its lowest level in last three years.
'This is a particularly positive set of operational and financial results, given they come from a period that had severe bushfire and weather issues in Australia, and the first impact of the coronavirus.
'The safety of our people has been our number one priority throughout the pandemic, and we have strict protocols in place around the world to protect our employees and communities. It has been inspiring to see how our company has responded with flexibility and resilience, ensuring we continue to service our customers with minimal disruption.
'During the half we also announced the major strategic acquisition of Peru's leading manufacturer and distributor of industrial explosives, Exsa. We are firmly focused on integrating the terrific team and assets into our business, and realising the significant synergies open to us.'
The Burrup Technical Ammonium Nitrate plant is now operational, and production is ramping up. The plant, which is strategically located close to Orica's customers in the Pilbara region of Western Australia, is expected to deliver a positive contribution going forward. It remains an important part of Orica's domestic supply strategy.
Capital Management and Dividends
Group gearing at 33.7% provides for a strong balance sheet and the company maintains a strong liquidity position.
The Board has declared an unfranked interim ordinary dividend of 16.5 cents per share payable on 8 July 2020, representing a 40% payout ratio.
Commenting on the full year outlook, Mr Calderon said: 'As a result of mining activities being confirmed as essential services in most countries, over 90 per cent of our volumes have remained intact following COVID-19, with limited impact in Australia and the USA which are two of our major regions.
'We hope more countries will be able to ease restrictions in the second half and take the first steps towards restarting their societies and economies. Mining will play a crucial part in that global economic recovery, and all of us at Orica are proud of our role in that.
'While it is almost impossible to forecast what will happen in the next six months, we currently expect our volumes in the second half to be somewhere between 10 to 15% below the pre-COVID-19 expected volumes.
'Our balance sheet remains strong. We are prudently managing capital expenditure and investing in projects that are positioning us to hit the ground running when mining activity normalises.
'Following the normalisation of mining activity globally, we currently expect volume growth to be in line with long term trends.
'We have much to look forward to going forward with the Burrup plant in full production, our fully integrated SAP platform implemented and synergies from the Exsa integration starting to be realised.
'All this, together with ongoing improvements in manufacturing and the increasing commercialisation of our world-leading technology products, continues to provide the momentum for profitable growth.'
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