Incitec Pivot Ltd announces $236 million impairment charge

Credit: Keith Weller

Incitec Pivot Ltd (ASX: IPL) the global explosives and fertiliser manufacturer has announced that it expects to recognise a $236 million impairment charge in its Dyno Nobel Asia Pacific (DNAP) business.

The impairment charge is a result of the impact of ammonium nitrate supply / demand imbalances and higher long term gas production cost forecasts. The company still expects medium to long term growth for the DNAP business.

Incitec also announced a once off $96.5 million tax benefit as a result of US tax reforms introduced by US President, Donald Trump.

Despite the impairment charge I like Incitec’s position along with its competitor Orica Ltd (ASX: ORI) as the only ASX pure nitrogen-based product manufacturers. They are also the top global explosives companies by market share.

Incitec would be my pick as it diversifies through its fertilizer business that adds exposure to the agricultural sector along with its peer Nufarm Limited (ASX: NUF).

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

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 Scott Phillips.

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