S&P/ASX 200 Index (ASX: XJO) share Incitec Pivot Ltd (ASX: IPL) is marching higher today.
Shares in the company – which manufactures explosives, chemicals, and fertilisers for the agriculture and mining industries – closed on Friday at $2.90. In afternoon trade on Monday, shares are changing hands for $2.93 apiece, up 1.03%.
That sees the ASX 200 share outperforming the benchmark index, which is down 0.22% at this same time.
This outperformance comes after Incitec Pivot released its full FY 2023 results. And it comes despite the company's full-year profits plunging 43% from last year.
Image source: Getty Images
Why is the ASX 200 share outperforming?
Incitec Pivot reported net profit after tax (NPAT), excluding individually material items (IMIs), of $582 million for FY 2023.
That's indeed 43% less than the $1.03 billion NPAT reported in FY 2022. But investors look to be supporting the ASX 200 share as this still represents the company's second-highest full-year profit result since 2008.
Earnings before interest and tax (EBIT), excluding IMIs, came in at $880 million for the full year.
That sees EBIT down 41% year on year. However, management noted that the $1.49 billion EBIT reported in FY 2022 was an all-time high, with earnings receiving tailwinds from "a very strong commodity price environment" during that year.
Incitec Pivot also declared an unfranked dividend of 5 cents per share. That brings the full-year dividend to 15 cents per share, representing a 50% payout ratio. At the current Incitec Pivot share price, that equates to a yield (part trailing, part pending) of 5.1%, potentially attracting the interest of income investors.
Also likely giving the ASX 200 share a boost today was the company's announcement that, subject to the successful completion of the sale of its Waggaman ammonia facility, it intends to return up to $1 billion of cash to shareholders. This will come in the form of a proposed $500 million pro-rata capital return and an additional proposed $500 million on-market share buyback.
And that's on top of the $400 million on-market share buyback that was previously announced.
What did management say?
Commenting on the results that are sending the ASX 200 share higher today, Incitec Pivot CEO Paul Victor said:
I'm pleased with our performance in the second half where strong underlying earnings growth was underpinned by our continuous focus on delivering industry leading technology and services for our customers. We end the period with significant momentum and start FY24 on the front foot…
We are providing shareholders with significant capital returns and a business with a less volatile and stronger earnings profile, led by a focused and talented team.
Incitec Pivot share price snapshot
The ASX 200 share is down 21% year to date.
