Indonesian buyer hunts Incitec Pivot fertiliser bargain

afr.com:

The interim chief executive of explosives and fertilisers group Incitec Pivot has rejected suggestions the company might be squandering value by preparing to sell the downtrodden fertilisers business at a low point in the cycle.

Paul Victor, who became interim chief executive in early June after the exit of Jeanne Johns who had been a key driver of a plan to demerge the explosives and fertiliser businesses, said on Monday that a potential buyer had completed due diligence on the fertilisers business.

He would not be drawn on the identity of the buyer. But there is strong speculation that Indonesia’s Pupuk Kaltim is the preferred bidder and is now negotiating over price.

Incitec Pivot owns the Dyno Nobel explosives business and an underperforming fertiliser division.  

“We don’t think that we’re contracting at the wrong time in the cycle,” Mr Victor said.

He said both parties would look through the cycle and take into account future demand and long-term influences.

“There will be a buyer’s case and a seller’s case,” he said.

A trade sale is a high priority provided an acceptable price can be agreed. But Mr Victor said it was not the only potential outcome, with the business having already done a large amount of work on getting the explosives and the fertilisers arms ready for a structural separation after that plan was first announced in May 2022.

“There are various options,” he said.

Incitec Pivot on Monday announced that net profit after tax for the 12 months ended September 30 was down 57 per cent to $277 million, with revenue down 4.9 per cent to $6 billion. The company sliced its final dividend to 5¢ per share, from 17¢ per share a year earlier.

Greg Robinson, who has been on the board for five years, will take over