Incitec to Review Options for US Ammonia Plant; Notches Record Annual Profit

By Rhiannon Hoyle

Incitec Pivot Ltd. on Tuesday said it will conduct a strategic review of its ammonia manufacturing facility in Waggaman, Louisiana, after receiving a number of approaches to buy the plant.

The Australia-listed maker of fertilizers, explosives and chemicals also reported a record full-year profit, benefiting from a steep rise in fertilizer prices, and said it would buy back up to 400 million Australian dollars (US$268 million) in stock.

Incitec has this year been planning to separate its fertilizers unit from its explosives operations after deciding the businesses would work better apart. On Tuesday, the company said the review of its Waggaman facility, also known as WALA, would extend the timeline for that proposed breakup by six to 12 months, but that it will continue work on the planned split in parallel.

The company said it has received several indicative and non-binding approaches from parties interested in acquiring the plant and needs to assess whether that is in the best interests of its shareholders.

"Our investments through the turnaround to improve asset performance coupled with the strong ammonia market dynamics make WALA a very valuable asset and an attractive investment opportunity for high-quality counterparties," said Chairman Brian Kruger. "For this reason, we have decided to re-sequence our strategic priorities to assess the opportunity with WALA in the short term, while we continue to progress our demerger plans."

Mr. Kruger said the separation of the fertilizers and explosives businesses still makes sense. "While the review of strategic options for WALA will have some implications for the timing of the proposed demerger, we are very confident in the value that will be unlocked for shareholders from creating a focused explosives and a focused fertilizers business," he said.

Incitec said its net profit totaled A$1.01 billion in the 12 months through September, up from A$149.1 million a year earlier.

Earnings got a A$920-million boost from higher prices, primarily for its ammonia and diammonium phosphate fertilizer products. The weaker Australian dollar also benefited earnings, the company said.

Directors declared a final dividend of 17 Australian cents a share, up from 8.3 cents a year ago. The total 27-cent payout for the fiscal year is a record, said the company.

"Our commitment to capital management and shareholder returns is further evidenced by the announcement of an on-market share buyback of up to A$400 million," said Chief Executive Jeanne Johns. The buyback will be conducted over the next 12 months.

Incitec said it entered fiscal year 2023 with strong strategic and operating momentum.

"We are continuing to grow recurring earnings in our explosives business, underpinned by our leading premium technology" and "our Incitec Pivot fertilizers business has an unrivalled distribution platform and manufacturing footprint providing customers security of supply," said Ms. Johns.