Incitec Pivot Ltd (ASX: IPL) provided revised FY19 earnings guidance today, sending the share price lower by over 4%.
Incitec Pivot is the world’s second-largest explosives maker and a key supplier to many of Australia’s largest mining companies.
Incitec’s FY19 Guidance And Strategic Review
FY19 EBIT Guidance
Incitec issued some profit guidance a few months ago that EBIT (click here to learn what EBIT means) would be in a range of $370 million to $415 million based on forward commodity prices and foreign exchange assumptions.
However, using available actual pricing and foreign exchange rates, EBIT could be $321 million to $366 million. But EBIT is actually expected to be even lower than this due to lower forecast ammonia production at Waggaman and lower Fertiliser earnings due to continued drought impacts and higher gas costs at Gibson Island.
Therefore, EBIT is now expected to be between $285 million to $295 million which includes $20 million of one-off items.
Strategic Review Of Incitec Pivot Fertilisers
Management also announced it is commencing a review of its Fertilisers Asia Pacific business segment.
This may result in a sale of the business, a demerger or retention for continuing investing for growth. Investment bank UBS will be the one to provide advice. The review will be ongoing through FY20.
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