Orica share price spikes amid 25% jump in sales revenue

The company posted mixed results today.

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Key points

  • Orica posted its half yearly set of accounts today 
  • The company printed a jump in sales revenue but came in with a net loss after tax for the half 
  • In the last 12 months, the Orica share price has gained 22% 

Shares in Orica Ltd (ASX: ORI) are lifting from the open today amid the release of its half yearly report and set of accounts.

At the time of writing, the Orica share price is resting at $16.38 after pushing more than 4% higher on the day.

In wider market moves, the S&P/ASX 200 Materials Index (ASX: XMJ) is flat from the open, currently resting at 16,722.

Orica grows earnings per share 94%

  • Sales revenue of $3,277 million during the half, up $2,623 million the same time last year
  • Statutory net loss after tax (NLAT) of $85 million down from statutory net profit after tax (NPAT) of $79 million in the prior corresponding period (pcp)
  • Underlying EBIT of $245 million, up 58% on the pcp
  • Ammonium nitrate (AN) volumes of 2 million tonnes up 5% on the pcp
  • Underlying earnings per share (EPS) of 36.1 cents, up 94% on the pcp
  • Net debt of $1.6 billion and gearing at 38.3%, apparently within target range
  • Unfranked interim dividend of 13 cents per ordinary share, representing a payout ratio of 41%

What else happened this period for Orica?

Orica printed sales revenue for the half of $3,277 million, a 25% jump on the same period last year. This carried through to a NLAT of $85 million, well down on the pcp’s $79 million net profit.

Part of the loss was underscored by a $61 million tax payment and a net loss on sale of Minova after tax of circa $91 million.

Total capital expenditure (CAPEX) was apparently in line with expectations for the first half. On this, Orica expects its full year CAPEX to remain in line with forecasts of $340 million–$360 million.

Meanwhile, underlying EBIT came in at $245 million which represented a circa. 60% gain on the year. Even with the half-year loss, Orica managed to declare a 13 cents per share dividend on a 41% payout ratio.

Shareholders can expect the payment into their brokerage accounts on 8 July 2022, per the company’s release.

Orica also mentioned its gearing remains at around 38% which is within the target range of 30–40%.

Management commentary

Speaking on the results, Orica Managing Director and CEO Sanjeev Gandhi said:

Our first half result reflects the relentless efforts of our team in improving performance, in line with our refreshed strategy that we outlined in November 2021. Focusing on three value drivers that aligns with Orica’s strengths, the refreshed strategy aims to deliver solutions and technology that drive productivity and innovation for customers and provide enduring value to shareholders and other stakeholders.

What’s next for Orica?

Orica mentioned that it expects performance to continue into H2 FY22.

Regarding its forecasts, Gandhi said:

We expect steady commodity growth, particularly in gold, copper and quarry and construction in the second half which will continue to drive demand for our products and services.

We expect the momentum in earnings from the underlying businesses to continue, despite the planned exit from our operations in Russia, the supply chain challenges associated with Russia-Ukraine, and the divestment of Minova.

Orica share price snapshot

In the last 12 months, the Orica share price has gained 22% after climbing another 20% this year to date.

Motley Fool contributor Zach Bristow 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 Scott Phillips.

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