Incitec Pivot Limited (IPL) has held an investor day last month to present to shareholders the growth strategies for Dyno Nobel explosives and Incitec Pivot Fertilisers (IPF) and the potential value that can be unlocked for shareholders and customers by the proposed demerger. The company also provided investors with an update on its FY22 performance.
Both businesses have leading positions in their respective markets, and with standalone pure play exposures, state that they have significant potential in the global mining and agricultural sectors:
- Dyno Nobel, a global leader in premium explosives technology with strong customer relationships and partnerships and an attractive technology-backed growth outlook
- Incitec Pivot Fertilisers, a leading fertiliser and soil health company, with an unrivalled distribution platform on the east coast of Australia as well as offering farmers security of supply.
IPL has not always been able to capitalise on periods of valuation strength in both explosives and fertiliser markets. The strategy to demerge the company will provide a platform for each of Dyno Nobel and IPF to grow high value recurring earnings through the cycle, unlocked by greater individual focus and prioritisation as well as the potential re-rating opportunity from offering investors pure play explosives and fertilisers exposures.
IPL chair Brian Kruger said: “Our proposed demerger will result in two market leading companies with dedicated boards, leadership teams and corporate and capital structures, and the flexibility to pursue growth, tailor their strategies, and make decisions free from competing business priorities.
“Over the last three years, we have made great progress in improving asset reliability and building a valuable growth pipeline underpinned by technology. This, coupled with balance sheet strength and investment discipline will position both businesses to accelerate growth and unlock value, capitalising on the global megatrends across sustainability, food security and the energy transition.”
“The demerger will provide investors with increased choice, with the market better able to ascribe value to each company, allowing each to attract a wider range of investors.”
IPL managing director and CEO Jeanne Johns said there is a great opportunity to build the future of two world class businesses with distinct, iconic brands and unlock value for our customers and for our shareholders.
“There has never been a more exciting time to be in the agriculture and fertiliser industries and realising our explosives business’s ambition to become the clear global leader in its selected markets,” Ms Johns said.
“In the fertiliser market, rapid population growth, food supply and security concerns, and the disrupted supply and high demand for nitrogen, mean that IPF is well-placed as an integrated supplier. Australian agriculture production value is targeted to grow from $61 billion in 2020 to $100 billion by 2030.
“Addressing climate change and decarbonisation will be an important opportunity and core focus for each business and a key accountability for the respective management teams.
Separation will provide increased focus and accountability for each business to deliver their own decarbonisation ambitions as well as becoming a trusted partner for our customers to support their decarbonisation goals.”
In his first engagement as Incitec Pivot Fertiliser’s chairman-designate, Mike Carroll said that once demerged, IPF will present an opportunity to invest in one of the most attractive fertiliser markets in the world.
“IPF has over a hundred years’ experience serving the agriculture sector in Australia, with an unrivalled distribution platform on the east coast, offering customers security of supply as well as customer solutions to improve crop yields, fertilisers efficiency and environmental impact,” Mr Carroll said.
“As a standalone business 100% focused on the value we can bring to Australian farmers, we will be better placed to capitalise on growth opportunities with pace and discipline. We have a clear opportunity to deliver more value to farmers as well as improved quality of earnings that are more resilient through the cycle for our shareholders.”
“IPF will present a compelling pure play fertilisers opportunity for investors in one of the most attractive fertilisers markets in the world, with the global mega trends of decarbonisation and food security further underpinning the opportunity.”
