Strong earnings push Orica shares higher – ShareCafe
Explosives group Orica is confident that 2022-23 will be a better year than the one just ended September 30, even after all the worries about rising energy costs, inflation and slowing global activity.
He signaled this in two ways – first, he said he expects FY 2022-23 to see earnings before interest and tax (EBIT) above $579 million for the year until September (subject to the impact of rising costs) .
Second, it raised total dividends for the year by almost 50% in one of the biggest increases by a major industry value this year.
The final dividend was increased to 22 cents per share from 16.5 cents per share previously, for a total of 35 cents per share for the year to September.
That’s a nearly 50% increase from Covid hitting 24 cents per paid share the year before.
That’s a fairly confident forecast from Orica given that few other companies have gone this far in the June 30 and September 30 benchmark periods.
Orica reported underlying earnings before interest and tax (EBIT) of $579 million, up 36% from the Covid 2020-21 hit.
Net income after tax (NPAT) jumped 52% to $317 million, on sales up 29% to $7.3 billion.
Improving market conditions (and less Covid) and a refocused business strategy during the Covid-19 pandemic led to the improvement, according to CEO Sanjeev Gandhi.
He said the updated strategy is focused on optimizing operations, delivering smarter solutions and partnering for progress across its four business lines of mining, quarrying and construction, solutions digital and mining chemicals.
“Beyond blasting, we are accelerating customer adoption of our new technologies and demonstrating our strengths and capabilities by delivering integrated digital workflows from mine to plant,” Gandhi said.
“Mining Chemicals also continues to present growth opportunities for our business.
In addition to strong profit growth across all regions, the company also received $90 million from its decision to exit its Russian business and $33 million for its Turkish business.
Return on net operating assets, a measure of how efficiently Orica uses its assets, increased to 11.4% in the last fiscal year, from 8.1% in 2020-21
A fundraising during the year of $691 million (at $16 per share) reduced the debt level to September 2022 by 19.7%, below the target range of 30 to 40 % and finance the purchase of the designer and manufacturer of geospatial tools Axis.
That $260 million cost could be worth as much as $350 million if $90 million in performance payments fall due over the next two years.
Strong 2021-22 earnings, a higher dividend and a confident outlook saw shares of Orica rise 7% yesterday to $15.076, well below the $16 per share cost of the issue.
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