Incitec Pivot shares gain on divestment talks, HY earnings
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More news: Incitec Pivot shares gained on the ASX at the start of trading after the industrial manufacturer confirmed it is in advanced negotiations over the potential sale of its fertilisers business.
Shares were up 4.3% to $2.94 at 10:40am AEST.
Incitec Pivot also reported its first-half earnings before the start of trading, swinging to a statutory net loss after tax but posted an 18% underlying EBIT growth year on year.
Incitec Pivot reports earnings loss, looks to sell fertilisers business
The news: Incitec Pivot (IPL) has confirmed it is in "advanced negotiations" with Indonesia's state-owned industrial group PT Pupuk Kalimantan Timur (PKT) over the potential sale of its fertilisers business.
The numbers: IPL also reported its first-half earnings, including a statutory net loss after tax of $148 million, compared to a $354 million profit in the prior corresponding period.
Underlying EBIT grew 18% year on year, excluding individually material items (IMIs). During the half, IMIs totalled an after tax loss of $312.3 million, including a non-cash $408 million impairment of its fertilisers business, a $98 million gain on the sale of its Waggaman ammonia manufacturing facility, and $3 million in costs incurred to position its fertilisers business (IPF) for standalone operations.
IPL declared an interim dividend of 4.3 cents a share, down from 10 cents a share this time last year. The company noted that its $900 million share buyback is on hold pending the potential sales of its fertilisers business.
The context: IPL did not specify any financial details of its negotiations with PKT, but said the sale would be a cash consideration. It also noted that the potential sale of IPF remains subject to agreeing and executing final binding transaction documents. Any sale of IPF would be subject to a number of conditions, including approval from the Foreign Investment Review Board.
IPL said that PKT's intention would be to continue to supply fertilisers to the Australian market, support the retention of IPF's workforce, and grow IPF's business in Australia.
On its half-year results, IPL said IPF and its explosives subsidiary Dyno Nobel delivered "strong underlying earning performances" over the period, with record first-half results in Dyno Nobel Asia Pacific and its fertilisers distribution businesses.
What they said: IPL's CEO and managing director Mauro Neves said: "Our headline result reflects major restructuring in our asset portfolio across both by Dyno Nobel and Incitec Pivot Fertilisers businesses. After re-basing for these items, and movements in commodities and foreign exchange rates, underlying earnings were up 18%, with growth in all customer-facing businesses".
"... We are in advanced negotiations for a potential sale of our fertilisers business to PT Pupuk Kalimantan Timur, who are a major fertilisers producer in Asia and current supplier of urea to Australia," he said.
"... We understand that our shareholders, employees and other stakeholders are keen to see an outcome and the team is focused on concluding the sale process as soon as possible.
The sources: ASX announcement, ASX announcement
