Strategy shift works
FY22 RESULT
Need To Know
- FY22 EBIT $563.8m +39%.
- Volume, mix and margin drove result as resource companies step up production.
- Strategy in technical and digital providing more growth.
- Unfranked final dividend 22cps, payment date 22 December.
A strong full year result from ORI on the back of higher commodity prices and greater mining activity. EBIT at $579m was 6% ahead of consensus as copper overtakes gold to be the company’s main exposure.
Total AN (ammonium nitrate) volumes increased 4% from increased mining activity with EBS (electronic blasting systems) up 10%.
ORI was able to pass through volatile ammonia and gas prices to its customers resulting in a good margin performance. A shift towards premium products improved the product mix.
FY23 Outlook – EBIT expected to grow as demand for global commodities lifts, particularly in technology-facing industries. ORI adding more technology to its mix with the recent acquisition of Axis Mining Technology.
Capex expected to be $400-420m as more spend on sustainability projects feature.
Gearing expected to remain between 30-40%.
Investment Implications
A handy beat to the consensus forecast as ORI shifts its strategy more towards technology solutions and end-to-end solutions for its customers.
Exited its Russian business and still grappling with volatile AN prices but successfully passing this through to customers.
ORI’s refreshed strategy is seeking to gain greater exposure to copper, nickel and lithium and Axis brings some of that exposure in its business.
The stock is fairly priced at current levels, in our view.
Figure 1: FY22 RESULT
Figure 2: FY22 EBIT
Stock overview
Share Price
Company overview
Orica is a global blasting systems and mining chemicals business.
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