Orica steady after mixed first-half update
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More news: Shares in Orica were up 0.7% to $17.05 at 11:06am AEDT after the chemicals and explosives maker outlined a mixed trading update, saying it expects stronger than expected earnings for the first half but also flagging after-tax write-downs worth up to $350 million.
RBC Capital Markets analyst Owen Birrell said the overall tone of the update was positive and directionally it suggested that the risk to 1H25 EBIT is to the upside.
"We see today's announcement as more of a cleansing statement, as opposed to a trading update, to clear the air of any bad news (i.e. significant items) ahead of the company's investor day next week (Wednesday 12 March) when they will outline the more positive growth drivers for the years ahead," he said in a note.
Orica flags up to $350 million of impairments for first half
The news: Chemicals and explosives maker Orica has flagged after-tax write-downs worth up to $350 million related to impairments and restructuring at its Latin American and EMEA businesses.
The numbers: It expects statutory net profit for the first half to be lower by $300 million to $350 million. This includes $290 million to $335 million in impairment and restructuring costs in the Latin America blasting solutions business, and another $10 million to $15 million in restructuring costs in the Europe Middle East Africa business.
The context: Despite the write-downs, Orica said it forecasts stronger-than-expected earnings before interest and tax (EBIT) in the first half, based on the momentum in the first five months of the fiscal year, with contributions from all three segments set to be higher than the year ago period.
“Subject to no further volatility in external factors, I expect that this momentum will continue into the second half and beyond,” CEO Sanjeev Gandhi said.
The source: ASX
