The Orica Ltd (ASX: ORI) share price has dropped by 4.7% to $16.16 at the time of writing.
This comes after revealing a 31% reduction in its statutory net profit after tax (NPAT) in its full year results released this morning.
Main highlights of Orica’s FY20 results
Orica chief executive Alberto Calderon says that the company was operating in an extremely difficult market this year as COVID-19 severely impacted its customers in the emerging markets countries.
He also attributed the fall in earnings to the higher gas costs on the east coast of Australia, which directly increased the company’s expenses.
Nevertheless, Calderon is still optimistic, saying that the explosives maker will deliver a “significant” increase in earnings in the year ahead.
Some of the headline metrics announced by Orica today were:
- NPAT for the 12 months ended 30 September was $168 million, down 31% on the prior corresponding period
- Underlying EBIT of $605 million, down 9%
- Those numbers were on the back of a 5% drop in revenue to $5.61 billion
- Underlying earnings per share (EPS) decreased by 23% to 75.7 cents per share.
- An unfranked final dividend of 16.5 cents per share to be paid on 15 January 2021
While the COVID situation means the year ahead cannot be predicted with any great certainty, the impacts are temporary. With most of our customers operations returning to pre-COVID activity, we have cautious optimism about the year ahead. With continued momentum, we expect to deliver a significant increase in EBITDA and a return to EBIT growth in the year ahead.”
We will stay focused on what we can control – making our operations as efficient as possible, driving our growth engines, and working hard to minimise our impact on the environment and deliver climate-resilient economic growth.
There was a bright side to today’s downbeat results as Orica announced several milestones it says it has achieved during the year.
These include the successful acquisition of Exsa and the commencement of the production of ammonium nitrate in its Burrup plant.
Orica says that it has also rolled out its BlastIQ platform to 87 sites – which would enable the company to gain insights into and digitally manage the drill and blast information and processes.
The company says that it has reduced its greenhouse gas emission by 9% during the financial year, and has new reduction targets of at least 40% by 2030.
The Orica share price performance in 2020
The Orica share price has performed dismally in 2020, having lost 23% in a year headlined by the pandemic. The share price was at one point trading as low as $14.27 in March, before arriving at yesterday’s closing price of $16.97. At this price, Orica commands a market cap of $6.9 billion.
Orica is one of the world’s largest suppliers in providing commercial blasting and tunneling solutions. It manufactures and distributes a wide variety of explosives and blasting chemicals and products to the mining, energy, and infrastructure sectors. It was founded in 1874 and is now a top 50 ASX company by market cap.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Eddy Sunarto has no position in any of the 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 Scott Phillips.
- These 2 ASX small cap shares just hit 52-week highs – January 12, 2021 5:41pm
- Objective (ASX:OCL) share price continues its rise in 2021 after doubling last year – January 12, 2021 4:41pm
- New twist in 5G Networks (ASX:5GN) takeover of ASX-listed Webcentral – January 12, 2021 4:03pm