Incitec Pivot Ltd (ASX: IPL) and Orica Ltd (ASX: ORI) have a lot in common; both companies operate in the mining services industry, both manufacture chemicals and explosives for industrial use, and both reported earnings this week. Unfortunately for shareholders in Orica, that’s where the similarity between the two ends.

Orica’s shares slumped over 12% yesterday after reporting a weak set of results, whereas Incitec Pivot’s shares have jumped over 10% today (at the time of writing) on the back of a robust set of numbers. Here is why I believe Incitec Pivot is the better investment.

Incitec Pivot results

Incitec Pivot reported a sound set of half-year results for 2016 this morning. Statutory net profit after tax (NPAT) was down a whopping 79%, mainly due to a $105.6 million non-cash impairment to the asset value of its Gibson Island manufacturing plant.

Underlying NPAT was 6.4% lower at $137.1 million, with earnings per share dropping 8%. Nevertheless, the group maintained its dividend at 4.1 cents per share and announced an accelerated timeline to deliver $100 million in sustainable operating cost and cash savings by 2017.

Pleasingly, Incitec Pivot provided an update on its Louisiana ammonia plant, stating it is on track and on budget with its investment thesis intact at current commodity prices. This vote of confidence in the group’s growth platform from management has seemingly been approved by investors, driving its share price higher.

Orica results

By contract, Orica’s results were slated as “resilient in challenging times”. Statutory NPAT was down 32% due to its loss against the Australian Taxation Office over a Part IVA (tax avoidance) dispute. Excluding this one-off item, underlying NPAT came in 10% lower than the prior corresponding period. Earnings (EBIT) were contained to a decrease of 4% on the prior period.

Prima facie, these results were better than Incitec Pivot’s, but Mr Market arguably disapproved due to Orica’s ominous outlook for demand. Orica expects market conditions to deteriorate further with global demand for explosives to be in the range of 3.45 million tonnes for the year. This it expects to create negative impacts for contract renewals to the tune of $85 million this year.

Whilst reduced demand impacts Incitec Pivot and Orica equally, unlike the former, Orica does not have an ongoing growth strategy to cushion the decreased demand for explosives. This makes Incitec Pivot more diversified, thus the better buy in my opinion.

Foolish takeaway

For all their similarities, Incitec Pivot and Orica have very different business models with their recent results demonstrating the difference in class between the two.

Although not immune to a slowdown in the mining industry, Incitec Pivot appears to be well insulated against slowing mining demand through its fertilisers business and imminent commissioning of its ammonia facility in Louisiana, United States. I believe this makes it a better investment than Orica at current time.

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Motley Fool contributor Rachit Dudhwala has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.