The Incitec Pivot Limited (ASX: IPL) share price plummeted on Tuesday, closing 7.87% lower at $3.28 per share as the company lowered its FY19 EBIT guidance following unplanned downtime at two of its key operating plants.
This morning's ASX update said that both the Louisiana ammonia plant and Phosphate Hill facility had been taken offline unexpectedly, reducing the productive capacity for the company this year.
The Louisiana plant's outage was due to repair work on its CO2 removal system following a recent inspection, reducing production by 80,000 tonnes and EBIT by $25 million for FY19.
The $20 million hit to EBIT from the Phosphate Hill facility was due to a phosphoric acid plant leak, with the plant having now resumed operations. However, Incitec has estimated the outage will result in a 50,000-tonne reduction in ammonium phosphates for the year ended 30 September 2019.
Today's share price plunge wipes out most of the gains that Incitec has made throughout January, with Friday's closing price of $3.56 per share representing a 10.22% increase since the start of the year.
Investors in the ASX200 explosives manufacturer endured a volatile run in 2018, closing out the year down 7.77% despite reaching as high as $4.182 per share in November.
Foolish takeaway
I'd be steering clear of Incitec in the short-term. There are building headwinds for the company in the global economy and as an explosives manufacturer, Incitec is inevitably reliant on the highly-cyclical metals and mining sector. The company has seen its share price slide in recent times and is offering investors a 20%-franked, 3.01% dividend yield.
In my books, there isn't too much that jumps out at me for Incitec and I'd be looking towards more defensive stocks such as Wesfarmers Ltd (ASX: WES) or AGL Energy Limited (ASX: AGL) in the meantime.
