Incitec Pivot Ltd (ASX: IPL) the global explosives and fertiliser manufacturer has announced that it expects to recognise a $236 million impairment charge in its Dyno Nobel Asia Pacific (DNAP) business.
The impairment charge is a result of the impact of ammonium nitrate supply / demand imbalances and higher long term gas production cost forecasts. The company still expects medium to long term growth for the DNAP business.
Incitec also announced a once off $96.5 million tax benefit as a result of US tax reforms introduced by US President, Donald Trump.
Despite the impairment charge I like Incitec's position along with its competitor Orica Ltd (ASX: ORI) as the only ASX pure nitrogen-based product manufacturers. They are also the top global explosives companies by market share.
Incitec would be my pick as it diversifies through its fertilizer business that adds exposure to the agricultural sector along with its peer Nufarm Limited (ASX: NUF).
