Chemicals manufacturer Incitec Pivot (ASX:IPL)
has reported a decline of 43.7 per cent in net earnings to $36.4 million for the first half of FY21, citing pandemic-induced manufacturing interruptions .
Social distancing measures to combat the COVID-19 pandemic resulted in shutdowns of the company’s production facilities in around the world, including the Waggaman and Phosphate Hill fertiliser factories.
The $4.7 billion company recorded a top-line decline of 6.7 per cent, as Incitec Pivot’s manufacturing outages delayed product turnarounds.
The heaviest blow to Incitec’s production capacity lay in the US, as the Waggaman closures translated to a slump of 73 per cent or $82 million in profit for its subsidiary Dyno Nobel Americas.
Incitec said, “While the Waggaman plant has demonstrated it’s capable of very good production runs, the recent issues at our plant are clearly disappointing and our expert taskforce is working hard to get the plant back up and running at nameplate.”
The discouraging earnings figures for the business in the Americas weighed down the Incitec Pivot’s overall earnings, while other businesses made steady or slightly better gains.
However, the fertilisers and explosives manufacturer has provided an optimistic outlook for the second half, forecasting a significant rebound in profits for the period.
Incitec Pivot justified the positive guidance, “We are expecting technology growth pull though in our key markets of Australia and the US, along with other markets as they recover from the pandemic.”
The company restored its interim dividend after a gap year, paying 1 cent per share this year.
Shares in Incitec Pivot last traded at $2.41