Australia's Incitec Pivot Profit More Than Triples


Incitec Pivot's first-half profit more than tripled, spurred by a massive increase in fertilizer prices which should propel full-year earnings above forecast, the Australian fertilizer maker said.

It said on Monday it expects growth in demand for agricultural inputs to continue unabated, particularly from China and India, leading to continued strength in fertilizer prices.

Earnings before interest and tax (EBIT) would likely rise to A$850 million (US$794 million), based on an industry forecast price of US$1,100 a ton for diammonium phosphate in the second half, Incitec Chief Financial Officer James Fazzino said in a statement.

The company previously forecast EBIT of A$700-730 million. "Clearly our existing guidance now looks conservative," Fazzino said.

Analysts had already been expecting A$886 million EBIT this year, according to the average of nine Reuters Knowledge forecasts taken before the announcement. EBIT was A$250 million in the first half.

The company, which has made a A$2.6 billion bid for explosives group Dyno Nobel, posted a net profit excluding items of A$171.1 million for the six months to March, up from A$49.6 million in the same period a year earlier.

Five analysts on average had expected a net profit of A$170.3 million before one-offs.

Incitec has agreed to take over Dyno Nobel as it looks to take advantage of surging demand for both fertilizer and explosives, both of which are made from the same nitrogen-based chemicals.

Incitec planned to integrate its manufacturing operations with Dyno Nobel's into a single operation, he said.

Global diammonium phosphate spot prices shot up to US$1,195 a ton at end March, from US$433 at end September, lifting Incitec's average price by US$365 a ton to US$658 a ton.

Riding an agriculture boom, Incitec's shares have risen 47 percent so far this year to A$171.50 and vaulted them into the top 6 performers in the S&P/ASX 200 Index.