Fertiliser downturn at Incitec Pivot but sale talks still on
Explosives and fertiliser group Incitec Pivot says it is still in talks about a potential sale of its fertilisers business in a complicated transaction, even though the asset is performing below expectations as farmers switch to lower-margin products.
Incitec Pivot had for months been pursuing a structural split of the explosives and fertilisers divisions, despite disquiet from some investors.
On July 12, it confirmed it had received buyout approaches. The Australian Financial Review’s Street Talk column revealed in early July that Pupuk Indonesia had been circling.
The company on Monday gave an update to the ASX saying the sale process for the fertilisers business “is progressing in line with normal expectations for a transaction of this size and complexity”. It did not name any suitors and said there was no certainty any agreement would be reached.
It also issued a trading update where it said the Dyno Nobel explosives business in North America was delivering better margins because of a “focus on price and discipline”.
The Asian operations of Dyno Nobel was recontracting customers in line with expectations.
But the company, in its update on Monday, also revealed that within the fertilisers business, the Phosphate Hill fertiliser plant in Queensland would have its ammonium phosphate production output curtailed because of the knock-on effects of a lower amount of sulphuric acid coming from a Mount Isa site.
A drying tower at the Mount Isa site had “degraded” faster than expected and was now scheduled to undergo three weeks of maintenance work. The overall impact of the lower production was between $13 million and $15 million on an earnings before interest and tax basis.
Incitec Pivot has been in a management vacuum, with
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