Incitec Pivot Limited (IPL) has reported net profit after tax (NPAT), excluding individually material items of $1027m – an increase of 186% compared to $359m in the previous corresponding period (pcp).
Statutory FY22 NPAT was $1014m, up from $149m in FY21. Total FY22 dividends of $524m plus an on-market share buyback of up to $400m.
Managing director and CEO Jeanne Johns said, “We have delivered a record financial result whilst making excellent progress on our strategy. Our results are underpinned by strong operating performance from our two category-leading businesses which performed well in high demand but disrupted markets.
“Our four-year journey to deliver our manufacturing excellence opportunity has enabled us to capture significant value from the commodity upcycle following major investments in the three plant turnarounds executed over the last two years.
“Our Incitec Pivot Fertilisers business has an unrivalled distribution platform and manufacturing footprint providing customers security of supply. With the acceleration and expansion of our soil health strategy across bio fertilisers and enhanced efficiency fertilisers, liquid fertilisers and Nutrient Advantage, the business is well set up for distribution earnings growth.
“We have made great progress on our journey to Net Zero, with a range of projects advanced to decarbonise our operations. This year we have, in conjunction with Fortescue Future Industries, commenced front end engineering and design (FEED) to investigate the conversion of our Gibson Island, Queensland plant to a green ammonia facility.”
IPL will continue to progress preparation for the separation of the fertilisers business while it conducts the strategic review process for its manufacturing operations in Louisiana, Missouri (WALA). It is currently anticipated that the previously communicated timeline for the shareholder approval process will be extended by 6–12 months, pending the completion of the strategic review process for WALA.
IPL chairman, Brian Kruger said: “Our demerger plans are progressing well towards separation. While the review of strategic options for WALA will have some implications for the timing of the proposed demerger, we are very confident in the value that will be unlocked for shareholders from creating a focused explosives and a focused fertilisers business.”
He said IPL approaches FY23 with strong strategic and operating momentum and remains focused on continuing to deliver sustainable returns for shareholders.
In its report, IPL stated its fertiliser business earnings will continue to be dependent on global fertiliser prices, the A$:US$ exchange rate and weather conditions.
Despite the severe flooding in NSW and southern Queensland, agricultural conditions across Eastern Australia are generally favourable. Increased soil moisture levels in most districts on the east coast, coupled with high dam levels is expected to drive demand for fertiliser through the year. This is further subject to weather conditions in FY23.
Farm economics are expected to remain favourable through FY23 with farmer cashflows supportive of strong fertiliser demand, although high fertiliser prices can influence volumes.
Distribution earnings are expected to benefit further from IPL’s soil health strategy.
Distribution margins and volumes will continue to be influenced by Australian east coast agronomic conditions and global fertiliser prices. Global supply constraints ex China and Europe may pose a risk for fertiliser import volumes in FY23.
Phosphate Hill is expected to produce approximately 1000kt in FY23 after a successful turnaround in FY22. Gas supply disruptions at Phosphate Hill are expected to continue in 1H FY23.
Power and Water Corporation (gas supplier) confirmed full quantities to be restored in February 2023. Additional gas volumes to be purchased to make up shortfalls at an estimated incremental cost of approximately $60m to $70m.
Production of ammonia at Gibson Island will cease in early January 2023 with a staged shutdown of downstream production anticipated to cease by end February 2023.
