Earnings in this division were also hit by drought, as many farmers significantly cut back, or stopped, sowing crops; consequently cutting demand for Incitec Pivot’s fertilisers.
The company, which has long criticised Australia’s high gas prices, said higher gas prices on the east coast delivered a $43 million “net adverse movement” on its fertiliser business earnings.
While growth in the US was constrained by weather, we continue to gain profitable share.
Jeanne Johns, Incitec Pivot chief executive
Earnings from its US operations held up better, with its Dyno Label Americas business contributing EBIT of $234 million, down from $278.6 million the previous year. The company said the quarrying and construction business of this division continued to grow market share.
“While financial year 2019 has been a challenging year with a number of non-recurring items impacting our result, the fundamentals underpinning our Explosives businesses in the Americas and Asia Pacific remain strong,” said Incitec Pivot chief executive Jeanne Johns.
Increased adoption of technology in the mining industry was lifting demand for the company’s electronic detonation systems, she said.
“While growth in the US was constrained by weather, we continue to gain profitable share, reflecting the strength of our premium technology offering, as well as the strategic footprint of our assets.
“We are pleased with the progress we have made on our strategic agenda, including the roll-out of our manufacturing excellence strategy to deliver top quartile reliability across our four major plants by 2022,” she said.
Two months ago the company announced that it would review its local fertiliser arm, saying that on completion of the assessment it could be sold, demerged, or kept and supported with further investment.
Incitec Pivot will pay a final dividend of 3.4 cents per share, 30 per cent franked, on January 8. This is down from last year’s final dividend of 6.2 cents per share, and will be paid three weeks later than last year’s.
Darren is the mining and agribusiness reporter for The Age and The Sydney Morning Herald.