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Australia's Orica First-Half Profit Rise 39%

Australia's Orica, the world's largest explosives company, reported a 39% rise in first-half profit, driven by a record result in its mining services division, and said it expected full-year earnings to be significantly higher than in 2006.

Net profit after tax before significant items rose to A$203.1 million ($167.8 million) for the six months to March 31, from A$145.8 million in the previous year, broadly in line with the average forecast of six analysts of around A$203 million.

Net profit after tax and significant items for the six months jumped 71% to A$210 million.

Orica, which earlier this month rebuffed a A$10 billion private equity takeover offer, said its recent purchase of Dyno Nobel's explosives units outside the United States and Australia was delivering synergies faster than expected.

"Subject to global economic conditions, we expect group net profit (before significant items) in 2007 to be significantly higher than that reported in 2006," Orica said in a statement. "The outlook for Orica offers strong growth potential as well as a less volatile earnings stream," said Managing Director Graeme Liebelt.

Orica said strong trading conditions in the global mining and resources market, as well as the contribution of the Dyno Nobel businesses, had led to a record performance in its mining services division, with earnings before interest and tax up 62% to A$245 million.

"We believe this trend will continue as customers in the resources sector strive to increase their volume of output, both from existing and new mines," said Liebelt.

Mining services accounted for more than half of Orica's total first-half sales revenue of A$2.7 billion.

Earlier this month Orica, which is also Australia's leading paint and chemicals company, rejected a A$32 a share offer from a private equity consortium comprising Bain Capital, Blackstone, Pacific Equity Partners and Morgan Stanley Principal Investments as undervalued, sending its shares up as much as 25%.