The share price of explosives manufacturer Orica Limited (ASX: ORI) is down 2.7% to $15.17 this afternoon after the group announced an adverse ruling on its tax liabilities in the Federal Court.
In a brief statement to the ASX the company admitted that the judge's decision will have an adverse impact on net profit after tax to the tune of around $36 million.
Orica was issued amended tax assessments for the 2004, 2005 and 2006 years and today the court upheld those assessments.
It seems this verdict was not unexpected given investors have largely shrugged it off with the stock down just 2.7% on a day when businesses with exposure to the resources sector have been universally dumped.
Orica's most recent full year net profit was $417 million, which was significantly down on the prior year. The business was also forced to take a non-cash impairment charge of $1,692 million last year as markets for ammonium nitrate continued to remain under pressure during the year.
Given the dim outlook for capital expenditure in the resources space and the challenging market conditions for ammonium nitrate, investors may be better off looking for companies outside this space…
