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Incitec Pivot's first-half profit plummets

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Incitec Pivot’s first-half profit has dropped almost 80 per cent after the explosives and fertiliser maker took a $105.6 million writedown on the value of its Gibson Island plant.

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The result prompted the company to say it needs the support of governments and gas companies to ensure the survival of the Queensland plant, which employees 200 people.

Chief executive James Fazzino said the impairment against its Queensland plant was a reflection of the challenges facing energy-intensive trade-exposed manufacturing in Australia.

“We need to lower Gibson Island’s non-gas costs so we are globally competitive by the end of 2016,” Fazzino said in a statement.

“We need broad support comprising our people, our customers, our farmers, our contractors and suppliers – including the gas companies – and governments, to pull together on what we call the Mission to Save Gibson Island.”

Fazzino said Incitec had already made sure of reduced gas costs at its Phosphate Hill fertiliser plant by approximately $20 million a year from 2017, and a further $35 million per year from 2019.

Net profit for the six months to March 31 declined 78.2 per cent to $31.5 million after total writedowns, clean-up costs and environmental provisions rose to $154.5 million from $4.0 million for the prior corresponding period.

The company has already said the derailment two days after Christmas of a Queensland freight train carrying a shipment of sulphuric acid for use at Phosphate Hill would result in a $14 million hit to full-year profit.

The company reported that results were also impacted by reduced fertiliser volumes, driven by dry conditions in South Australia northern Victoria and Queensland.

Its results report said buyers deferred purchases as fertiliser prices declined.

– with AAP

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