Incitec Pivot share price fizzles despite half-year earnings increasing tenfold

Explosive profits lose their firepower amid breakup plans inside Incitec.

| More on:
A woman stares at the candle on her cake, her birthday has fizzled.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Incitec Pivot share price is down at $3.69 on Monday morning
  • Shares in the explosives and fertiliser company initially jumped following the release of a record half-year result
  • The excitement lowered after Incitec announced its plans to split into two separate ASX-listed companies

The Incitec Pivot Ltd (ASX: IPL) share price is trading down on Monday morning after the fertiliser and explosives manufacturer reported a record first-half profit for the six months ending 31 March 2022.

In the first session of the week, Incitec Pivot shares are fetching $3.69. However, shares opened nearly 7.5% higher at $4.02 amid the cracking half-year result. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.23% as investors react to the Federal election outcome.

Incitec Pivot share price on fire on explosive half-year result

  • Revenue up 48% compared to prior corresponding period to $2,548 million
  • Record half-year net profit after tax (NPAT) of $384 million, up 955%
  • Earnings per share (EPS) jumped from 1.9 cents to 19.8 cents
  • Interim 100% franked dividend to increase tenfold from 1 cent to 10 cents per share
  • Intention to split Incitec Pivot into two separate ASX-listed companies

What happened during the first half?

The most recent half-year was lucrative for both fertiliser and explosive business segments. Unsurprisingly, investors are reacting with an increased hunger for Incitec Pivot shares today.

There were a couple of key factors ultimately assisting Incitec to the standout result that it has posted today. According to the company, improved commodity pricing and beneficial foreign exchange rates aided in the result.

Additionally, earnings before interest and tax (EBIT) in the American explosive segment operating as Dyno Nobel Americas improved by 221% to $252 million. Similarly, Incitec's Fertilisers Asia Pacific division experienced a 237% increase in its EBIT, reaching $257 million.

What did management say?

Commenting on the stellar result, Incitec Pivot's managing director and CEO Jeanne Johns said:

Our record first half result reflects the quality of our two category-leading businesses and our sharp focus on executing in a high demand, highly disrupted market. Our team has done an excellent job navigating operational complexity to deliver for our customers.

Johns added:

Dyno Nobel's Americas and Asia Pacific teams delivered solid volume growth, with margins continuing
to reflect our high-value technology. The acquisition of Titanobel gives us additional expertise and
people capability to serve select high-quality markets and customers in Europe and Africa, with growth
being driven by technology and a focus on future-facing minerals

What's next?

The big future news for the Incitec Pivot share price is the proposed separation of the company. Announced alongside its results this morning, the company intends to create two separate ASX-listed companies — Dyno Nobel and Incitec Pivot Fertilisers.

Notably, the decision follows a strategic review that found declining synergies in ammonia manufacturing as explosives and fertiliser customers hold more unique solution requirements. In addition, management believes the separation will enable shareholders to best capture future value in each area.

When it comes to costs, current estimates outline an expected $80 million to $105 million in one-off costs. Meanwhile, a further $25 million to $35 million per annum in ongoing costs are forecast.

The company will be targeting the official separation of the two businesses in the first half of 2023.

Incitec Pivot share price snapshot

Since March 2020 crash, the Incitec Pivot share price has steadily climbed higher. In March this year, shares in the company reclaimed their pre-pandemic level, surpassing $3.65.

For shareholders, Incitec has been a winner so far this year. On a year-to-date basis, the company's share price is up 13.9%. Whereas, the ASX 200 index is 3.41% in the red — which means Incitec has outperformed by 17.3%.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

Up 50% in a year, are Xero shares a buy after Thursday's earnings results?

ASX investors reacted positively to Xero’s full-year earnings results on Thursday. Now what?

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Earnings Results

Xero share price higher despite FY25 earnings miss

The cloud accounting platform provider reported strong top line growth but its earnings fell short of expectations.

Read more »