Why Orica Limited plunged 5.6% today

The company released a rather disappointing set of results for its first-half operations

Orica Limited (ASX: ORI), a manufacturer and supplier of explosives and chemicals, has seen its shares plunge $1.23 or 5.6% today to be trading at $20.71 following a rather disappointing half-year profit announcement.

Although Orica’s revenue from ordinary activities rose by 1% to $3.36 billion for the half, its net profit after tax (NPAT) was just $242.1 million, down 7.8% compared to the $262.5 million recorded last year. The result was heavily impacted by a slowdown in the mining sector which led to lower Mining Services volumes, as well as a reduced profit contribution from its Chemicals division.

While Orica had stated in March that it was likely to boost profits in 2014, it has today revised that statement and said that net profit for the year “is expected to be in line with, or exceed” last year’s result. Orica Limited still managed to increase its partly franked interim dividend by 3% compared to the previous corresponding period to 40 cents per share.

Since the beginning of January, Orica’s shares have fallen 13.2% while the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has risen 2.6%. Orica is trading on a P/E ratio of 12.6 and currently offers a 4.4% dividend yield.

A better bet than Orica Limited

While Orica Limited’s net profit seems to be contracting, another company is firing on all cylinders and recently announced net profit growth of 16%!

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