The Incitec Pivot Ltd (ASX: IPL) share price is sinking lower on Monday morning.
At the time of writing, the industrial chemicals company's shares are down 5% to $2.30.
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Why is the Incitec Pivot share price sinking?
The reason for today's weakness in the Incitec Pivot share price was the release of its half year results this morning.
For the six months ended 31 March, the company reported a 6.7% decline in revenue to $1724.1 million. This was driven by a 13% reduction in Dyno Nobel Americas revenue to $671.1 million and a 7% decline in Dyno Nobel APAC revenue to $455.8 million. This offset a 2% lift in Fertilisers APAC revenue to $628.3 million.
Things were worse for its earnings, with Incitec Pivot reporting earnings before interest and tax (EBIT) of $110 million. This was down 30.8% from $159 million in the prior corresponding period. However, this includes a $59 million impact from planned turnarounds and a $14 million impact from unplanned outages.
This led to a 44% decline in statutory net profit after tax to $36 million, earnings per share of 1.9 cents, and a fully franked interim dividend of 1 cent per share.
How does this compare to expectations?
As you might have guessed from the Incitec Pivot share price performance, this result fell short of expectations.
According to a note out of Goldman Sachs, its analysts were expecting the company to report revenue of $1,825 million, EBIT of $171 million, and an interim dividend of 2.2 cents per share.
Management commentary
Incitec Pivot's Managing Director and CEO, Jeanne Johns, said: "Our first half result was impacted by the COVID delayed scheduled turnarounds as well as some unplanned manufacturing outages. Our underlying explosives and fertilisers business performance was strong, reflecting the continued uptake of our premium technology offering as well as the resilience of our end markets."
"While the Waggaman plant has demonstrated it's capable of very good production runs, the recent issues at our plant are clearly disappointing and our expert taskforce is working hard to get the plant back up and running at nameplate."
She continued: "During the first half of the year, our Americas and Asia Pacific explosives businesses performed well on the back of growing momentum from customers for our premium technology. We are expecting technology growth pull though in our key markets of Australia and the US, along with other markets as they recover from the pandemic.
"Pleasingly, our fertiliser business returned to profit during the half as we responded to stronger seasonal outlook for rain and commodities. As we progress our strategy to become a soil health company, good rainfall events across eastern Australia position us well to deliver for the agricultural sector in the second half."
Outlook
The company's CEO, Jeanne Johns, believes Incitec Pivot is positioned for a stronger second half.
She said: ""We are well positioned to deliver a stronger second half, with reduced turnaround activity and favourable commodity pricing and conditions in our key agricultural and resources markets."
However, no formal guidance has been given for the period or the full year. And judging by the Incitec Pivot share price, investors aren't overly convinced this will be the case.
