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Incitec profit, payout hit by Qld floods

Alex Druce
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NORTH QUEENSLAND FLOODING

Incitec Pivot says its full-year profit has been halved, mostly due to floods in Queensland

Incitec Pivot has cut its payout after the firm's full-year profit dropped 27.8 per cent on higher gas costs, drought, and a $140 million hit in the wake of February's one-in-a-hundred year Queensland floods.

The fertiliser and explosives maker said its $152.1 million net profit for the year to September 30 was down from an already impairment-affected $210.8 million a year ago, with the 2019 figure hurt by the forced closure of the Townsville and Phosphate Hill rail line during last summer's catastrophic deluge.

Lost sales and disruptions as a result of the forced Phosphate Hill plant closure accounted for the bulk of Incitec's $140 million in non-recurring items.

The company's $303.7 million in total earnings exceeded September's downwardly revised target of between $285 million and $295 million, but missed the previous May forecast of between $370 million and $415 million by a wide margin.

Incitec has cut its final dividend to 3.4 cents per share from 6.2 cents a year ago, but increased the franking level from 20 per cent to 30 per cent.

The company's shares rose by as much as 3.1 per cent to $3.70 in early trade on Tuesday before slipping 1.11 per cent to $3.55 by 1155 AEDT.

While the floods were the primary driver of an $80 million earnings loss at Incitec's under-review fertiliser unit, $34 million of that could be attributed to the worsening impact of drought.

Another $43 million was because of higher east coast gas costs.

Incitec said its review of the fertiliser business was ongoing, with a final decision to be made in 2020.

Earnings also went backwards by 16 per cent at the firm's Dyno Nobel Americas unit, though the contribution from explosives ticked upwards by 5.0 per cent despite wet weather disruptions.

Dyno Nobel Asia Pacific unit earnings slipped 13 per cent on lost contracts.

Managing director and chief executive Jeanne Johns said while FY19 had been a challenging year, the fundamentals underpinning the company's explosives businesses remained strong.

FLOODS HIT INCITEC FY PROFIT

* Revenue up 2.0pct to $3.92b

* Net profit down 27.8pct to $152.1m

* Final dividend 3.4 cents franked 30pct vs 6.2 cents 20pct franked pcp