Orica Ltd (ASX: ORI) shares are moving higher on Tuesday morning.
At the time of writing, the leading mining and infrastructure solutions provider's shares are up 2.5% to $22.18.
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Why is this ASX 200 share rising?
Investors have been buying Orica's shares following the release of a positive first-half business update and the announcement of a new cost reduction program.
According to the release, the strong momentum seen in its business during FY 2025 has continued into the first five months of FY 2026.
As a result, the ASX 200 share expects first-half earnings before interest and tax (EBIT) to be slightly higher than the prior corresponding period.
Management advised that this performance reflects strong demand for its premium blasting products and advanced blasting technologies, as well as consistent operational performance across its global manufacturing network.
However, some headwinds remain. A stronger Australian dollar and lower Indonesian coal production quotas are expected to weigh slightly on earnings from the Blasting Solutions division.
Digital and chemicals divisions performing strongly
The ASX 200 share highlighted particularly strong growth in its Digital Solutions business.
Orica said increasing adoption of its digital offerings and recurring revenue growth are expected to drive an approximately 20% increase in EBIT for this segment compared with the prior period.
Meanwhile, its Specialty Mining Chemicals division is also performing well, supported by strong demand for sodium cyanide in the gold mining sector. Following upgrades to its Winnemucca production facility in the United States, Orica expects EBIT for this segment to rise by around 15% year on year.
$100 million cost reduction program
Alongside the trading update, Orica also announced a new organisation-wide program aimed at reducing its cost base. The initiative is expected to deliver at least $100 million in annualised cost savings over the next three years.
Management said the program is designed to position the ASX 200 share for the next phase of sustained profitable growth.
Orica managing director and CEO, Sanjeev Gandhi, said:
I am pleased with the strong start to the underlying business in the 2026 financial year. Our performance reflects the resilience of our business, and the strength of our integrated offering, operational reliability across our global manufacturing network and the ongoing adoption of our premium products, digital solutions and value-added services.
Despite a more volatile operating environment and increasing geopolitical complexity, we have continued to support customers by leveraging our global footprint, maintaining continuity of supply and focusing on operational excellence. Whilst market conditions remain dynamic, we're confident in the strong fundamentals of our business and our ability to continue to execute our strategy. We remain focused on disciplined capital management and rebasing our costs while advancing our growth initiatives and delivering sustainable value for customers and shareholders.
