RBC: Incitec Pivot explosives business booms; fertilizer sale talks continue

Investing.com - Incitec Pivot Ltd (ASX:IPL) has announced its H1 2024 results. The headline EBIT reached $249m, surpassing RBC's prediction of $207m and the consensus estimate of $206m. However, comparing these figures directly with market estimates is challenging due to the impact of restructuring, one-offs, and discontinued operations. The company declared an ordinary dividend of 4.3 cents per share, supplemented by a special dividend of 10.2 cents per share.

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Key Insights:

• Future Outlook: The company maintains a positive outlook for FY24, with Dyno Nobel's earnings outlook remaining unchanged. Dyno Nobel Asia Pacific (DNA) anticipates EBIT growth in the mid-to-high single digits, while Dyno Nobel Americas (DNAP) expects to surpass its previous record earnings with the recontracting process nearing completion.

• Fertilizer Sale Update: Advanced negotiations with PT Pupuk Kalimantan Timur for a cash consideration are ongoing. However, there is no guarantee of reaching an agreement or concluding a sale. As a result, the anticipated buyback of up to $900m remains on hold.

• Fertilizer: The Fertilizer sector reported an EBIT of $10m, down 91% YoY, with margins falling by 9%. Despite increased margins and market growth in its Distribution business and a reduction in gas costs from FY23, risks persist. An impairment cost of $408m after tax was also included as an individually material item (IMI (LON:IMI)).

• Dyno Nobel Asia Pacific: The sector posted an EBIT of $108m, up 36% YoY, with margins improving by 4%. The EBIT increase was driven by successful recontracting, BMA expansion, growth in technology, and opportunities in EMEA through the Titonobel business.

• Dyno Nobel Americas: The Americas sector reported an EBIT of $154m, down 61% YoY, with margins decreasing by 14%. However, growth in Metals and Chile, improved pricing, and cost maintenance contributed to margin improvements. The result also benefited from an increase in manufacturing reliability and the WALA offtake agreement.