Orica Ltd (ASX: ORI) shares are having a strong start to the session on Thursday.
In morning trade, the ASX 200 stock is up 5% to $18.52.
Why is this ASX 200 stock jumping?
Investors have been buying the commercial explosives company's share this morning after it released a trading update.
According to the release, consistent with the outlook it provided with its half year results, Orica expects its second half underlying EBIT (before contributions from Terra Insights and Cyanco) to be higher than the prior year and slightly better than forecast.
Management notes that its Blasting Solutions had a good half. It advised that the core business remained strong. This was driven by continued demand for products and services across the mining and civil infrastructure value chains and increasing adoption of its blasting technology offerings.
In addition, all planned maintenance activities at the manufacturing sites in Australia were successfully completed.
Orica's Digital Solutions business has performed well. Management advised that demand remained strong for its suite of digital offerings and value-added services despite continued softness in mining exploration activity.
Another positive is that the recently acquired Terra Insights business is being successfully integrated into the Orica group and is tracking in line with its investment case. EBIT contribution from Terra Insights after integration costs is expected to be minimal this financial year as forecasted.
Finally, the Specialty Mining Chemicals business isn't performing as strongly as other sides of the company. While good progress has been made on integration activities, new contract wins, and network optimisation post completion, it has reported lower-than-planned production.
This has been driven by planned maintenance activities and safety upgrades at the Winnemucca plant, which were brought forward. This has led to a one-off earnings impact, resulting in a lower FY 2024 EBITDA contribution than forecasted. However, FY 2024 EBIT is expected to be in line with the investment case.
Anything else?
The ASX 200 stock's depreciation and amortisation, including Terra Insights and Cyanco, is expected to be $425 million to $435 million in FY 2024. Whereas total significant one-off items for the year is expected to positively contribute ~$120 million net profit. This includes $34 million net profit from the sale of excess land at Yarraville, Australia.
Orica is planning to release its full year results on 14 November 2024.
Following today's gain, this ASX 200 stock is now 16% over the past 12 months.
