Last Friday, explosives maker Orica (ASX: ORI) shocked the market when it announced a 10% downwards revision to its earnings guidance. Given Orica's exposure to the mining sector, perhaps it shouldn't have come as such a shock, however as the company had only two months earlier stated it expected profits to be higher year on year in 2013, the market was indeed surprised, with the market reacted swiftly to the downgrade, lopping 16% off the share price.
Since the announcement a number of broking analysts have downgraded earnings expectations with Macquarie (ASX: MQG) and Goldman Sachs both also downgrading their recommendations to neutral.
News hasn't been good at fellow explosive and fertiliser manufacturer Incitec Pivot (ASX: IPL) either. The company has this morning informed the market that earnings are expected to be hit by a $23.5 million after tax impact due to an outage at its Phosphate Hill Ammonia Plant. Given the last half year adjusted earnings were $147 million, the hit to second half earnings is significant. However the market appears to be looking past what is hopefully a 'one-off' occurrence for Incitec, with its share price only down around 2.5% after the news.
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Motley Fool contributor Tim McArthur owns shares in Macquarie Group.
