Orica (ASX: ORI) has delivered a strong first half performance, with EBIT tracking ahead of expectations across all three business segments. However, the company expects to recognise $300 million to $350 million in significant items, primarily due to LATAM asset impairments and EMEA restructuring costs.
First Half Business Performance
Orica’s core business remains robust, with higher-than-expected EBIT contributions from:
- Blasting Solutions: Strong demand for Orica’s mining and civil infrastructure products, alongside increased adoption of blasting technology offerings. The planned Kooragang Island plant turnaround is on track and within budget.
- Digital Solutions: Continued growth in demand for Orica’s recurring revenue services and new contract wins for Terra Insights.
- Specialty Mining Chemicals: Higher sales volumes and new contract wins, supported by Cyanco. However, maintenance disruptions at the Winnemucca plant and gas supply constraints in Yarwun could impact full-year EBIT by up to $20 million.
Additionally, the finalization of carbon credit sales in March 2025 is expected to provide a $15 million EBIT benefit in the first half.
Significant Items Impacting Statutory Profit
Orica will record a statutory net profit after tax reduction of $300M-$350M, driven by:
- LATAM impairments and restructuring costs: Up to $335 million, due to an updated forward order book indicating asset values exceeding recoverable amounts.
- EMEA restructuring costs: Up to $15 million, as Orica continues to refine its operating model and streamline country operations.
- Non-cash component: $220M-$245M of the total impact relates to asset impairments rather than cash outflows.
CEO’s Outlook
Orica’s CEO, Sanjeev Gandhi, remains optimistic, noting that momentum from 2024 has carried into 2025. The integration of Cyanco and Terra Insights is on track, and demand for Orica’s products remains strong. He expects the positive trajectory to continue into the second half, barring any unexpected external volatility.
