Incitec Pivot flags fertiliser unit review
Incitec Pivot shares have taken an early hit after the ag-chem supplier slashed its full-year guidance and flagged a review of its Asia Pacific fertilisers segment.
Incitec said on Monday FY19 earnings are now expected to be between $285 million and $295 million, having forecast a range of $370 million to $415 million in May.
Incitec blamed the softer outlook, which excludes $20 million in one-off charges, on lower ammonia production in the US, and as a result of continued drought and increased gas costs at its Gibson Island plant in Queensland.
Earlier interest expense guidance of $145 million remains unchanged, with further details to be provided in Incitec's full-year results in November.
Shares in the company were down by 14 per cent at $2.76 at 1021 AEST on Monday, now down 30 per cent from $3.92 a year ago.
The company's stock was at a near eight-year high of $4.24 in November.
In a separate announcement, the listed ag-chem supplier said it was also exploring a potential sale, demerger, or further investment in its Incitec Pivot Fertilisers segment, which makes and distributes fertilisers such as urea and ammonia.
Managing Director and CEO Jeanne Johns said a review was timely, with the business well positioned to benefit from the emergence of ag tech.
"(Incitec) is well placed to benefit from an improvement in the commodity cycle," Ms Johns said.
UBS will advise the company during the review, which is expected to progress over the course of FY20.
Incitec Pivot cut its interim dividend in May after the north Queensland floods helped decimate its first-half profit by more than two thirds.
The company also announced in April plans to close a Victorian phosphate factory at the cost of $13 million, while flagging another $20 million earnings hit from dry weather across the eastern states.
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