The Incitec Pivot Ltd (ASX: IPL) share price has fallen 4.5% to $3.52 this morning after the industrial explosives, chemicals, and fertilisers company released its half-year results.
Here are the key takeaways:
- Half-year revenue up 0.8% on the prior corresponding period to $1,535.7 million.
- EBITDA excluding individually material items increased 15.7% to $373.3 million.
- Net profit after tax excluding individually material items was up 10.9% to $152.1 million.
- Earnings per share of 9 cents.
- Interim unfranked dividend of 4.5 cents per share
Overall I felt that this was a reasonably average result from Incitec Pivot and can't say I'm surprised to see its shares edge lower this morning.
The key driver of its earnings growth was its Industrial Chemicals segment, which saw earnings before interest and tax (EBIT) rise by a massive 380% to $75.8 million.
The initial Waggaman ammonia plant operational earnings of US$10.8 million and the benefit of one-off delay damages of US$35.1 million were the reason for the increase.
Pleasingly its Explosives segment did perform well. It posted a 10.2% increase in EBIT to $161.5 million. As the company's biggest segment, contributing over two-thirds of company EBIT, its performance is vitally important to its overall results.
Elsewhere there was a spot of disappointment in its Fertilisers segment. With global fertiliser prices down well below their long-term trend, the company posted a 67% drop in EBIT to $14.8 million.
Should you invest?
Based on today's result Incitec Pivot's shares are changing hands at approximately 20x trailing earnings.
I think this is a touch expensive, especially compared to historic averages. In light of this I would suggest investors hold off an investment until at least all its segments are firing on all cylinders again.
In the meantime investors might be better off taking a look at fellow materials sector peers Galaxy Resources Limited (ASX: GXY) and South32 Ltd (ASX: S32) instead.
