From mining explosives maker, Orica, comes no surprise at all:
Orica Limited today announced a reduction of earnings guidance for the 2013 financial year following the impact of weaker than expected global economic conditions and higher than expected costs associated with the integration of the ground support business. Group Net Profit After Tax pre individually material items (NPAT) for 2013 financial year is now expected to be around 10% lower than the prior year subject to global economic conditions (2012 Financial Year NPAT was $650.2 million).
The main factors contributing to the reduced earnings include:
Higher optimisation costs associated with the integration of the ground support business together with weaker market conditions in Europe and North America. Earnings Before Interest Tax (EBIT) for the ground support business is expected to be around break even compared to earlier guidance of $17 – $25 million. Prior year EBIT for the ground support business was $109 million;
Lower than expected EBIT for the Indonesian business primarily associated with unexpected production issues at customer sites and market conditions. These have impacted expected returns on investment for the Bontang plant this financial year; and
Weaker global market conditions than previously expected for explosives and sodium cyanide resulting in flat AN and bulk explosives volumes and moderate growth in sodium cyanide volumes year on year.Specific projects are being implemented to address performance issues in the ground support and European businesses which are expected to deliver benefits in 2014. In addition, a general review of productivity initiatives and cost reduction opportunities is ongoing across all areas of the Orica business
