Incitec Pivot (ASX:IPL) share price leaps 17% after 91% profit jump

Incitec Pivot had a strong second half…

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The Incitec Pivot Ltd (ASX: IPL) share price in the move on Monday following the release of its full year results.

In early trade, the agricultural chemicals company’s shares jumped 17% to a 52-week high of $3.67.

Incitec Pivot share price jumps on strong profit growth

  • Revenue up 10% to $4,348.5 million
  • Earnings before interest and tax (EBIT) excluding individually material items (IMIs) up 51% to $374 million
  • Net profit after tax (NPAT) excluding IMIs up 91% to $209 million
  • Earnings per share excluding IMIs up 70% to 18.5 cents
  • Net profit after IMIs up 21% to $149.1 million
  • Final dividend of 8.3 cents per share, bringing full year dividend to 9.3 cents per share

What happened in FY 2021?

For the 12 months ended 30 September, Incitec Pivot delivered a 10% increase in revenue to $4,348.5 million. This was driven by a 5% increase in Dyno Nobel Americas (DNA) revenue to $1,588.7 million and a 26% lift in Fertilisers APAC revenue to $1.894.6 million, which offset weakness in the Dyno Nobel Asia Pacific (DNAP) business.

And while both Dyno businesses reported profit declines in FY 2021, the Fertilisers APAC more than offset this with a whopping 924% increase in EBIT. Management advised that the Fertilisers APAC business benefited from a commodity price upswing in the second half and strong ammonium phosphates production at the Phosphate Hill operation.

Incitec Pivot’s Managing Director and CEO, Jeanne Johns, commented: “The strong full year result reflects the strength of the second half, with strong pull through from technology in explosives and a recovery in our end markets as well as our Fertilisers business capturing the upswing in commodities prices.”

“Premium technology continues to increase productivity and safety and reduce environmental footprint for our customers, which is underpinning strong demand. Our technology vision is coming to life with our product development work now being commercialised. Our wireless electronic detonator CyberDet ITM (2) has been successfully trialled at a number of customer sites across Australia with further trials planned, and commercial supply arrangements expected to commence in 2022,” Johns added.

Outlook

No guidance has been given for FY 2022. However, management appears optimistic on the future, particularly given improvements made to its manufacturing performance.

Jeanne Johns commented: “We also saw a significant improvement in our manufacturing performance in the second half, with our Waggaman plant performing well following the delayed restart in June. We expect the benefits of our manufacturing reliability to come through following completion of the current turnaround cycle in FY22.”

“Looking ahead, as we enter FY22 we are well positioned to benefit from the continued execution of our strategy, as we invest in and grow our two strong base businesses in explosives and fertilisers and capture the strength in commodity pricing,” she concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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