Key Highlights

• The gap between $161 million and $20 million comes from IMIs of $141 million after tax, which relate mainly to Impairment and site exit costs from the sale of the Phosphate Hill operation.

• For FY26 the company reaffirmed Explosives EBIT of about $460 million to $500 million.

• The Interim Dividend was 4.6 cents per share, unfranked, representing a 50% payout ratio.

• Investors should look for Explosives EBIT against the $460 million to $500 million range, net Debt and leverage, the final dividend, buyback progress, and updated commentary on the FY28 ambition.

What is driving the improvement in Earnings at Dyno Nobel Limited (ASX:DNL), and can it reach the targets management has set? In its 1H26 results, covering the six months to 31 March 2026 and released on 11 May 2026, the explosives company reported EBITDA excluding individually material items (IMIs) of $378 million, up 17%, and net profit after tax excluding IMIs of $161 million, up 83%. It reaffirmed full-year Explosives EBIT guidance of about $460 million to $500 million and restated an ambition of $600 million of EBIT by FY28. The result matters because it comes as Dyno Nobel is reshaping itself more tightly around explosives after the Phosphate Hill sale, and investors are assessing whether that simplification is lifting returns.

The central development: a cleaner explosives business

- EBITDA excluding IMIs: $378 million, up 17% from $323 million.

- EBIT excluding IMIs: $243 million, up 39% from $174 million.

- Explosives EBIT: $224 million, up 28%.

- NPAT excluding IMIs: $161 million, up 83% from $88 million.

- Statutory NPAT after IMIs: $20 million (1H25: $7 million).

- Earnings Per Share excluding IMIs: 9.0 cents (1H25: 4.7 cents).

- Return on invested Capital including goodwill: 9.5% (1H25: 6.1%).

The gap between $161 million and $20 million comes from IMIs of $141 million after tax, which relate mainly to impairment and site exit costs from the sale of the Phosphate Hill operation. Investors should treat underlying and statutory profit as measuring different things: the former shows the continuing explosives business, while the latter includes the cost of leaving fertilisers.

Segment performance

Segment EBIT in the half was:

- Dyno Nobel Asia Pacific (DNAP): $130 million, up 16% from $112 million.

- Dyno Nobel Americas (DNA): $101 million, up 42% from $71 million.

- Dyno Nobel EMEA and LATAM (DNEL): $9 million, down 29% from $13 million.

- Corporate costs: reduced by $6 million.

Growth was most encouraging in the Americas and steady in Asia Pacific, while the smaller EMEA and LATAM segment declined.

Guidance and targets

For FY26 the company reaffirmed Explosives EBIT of about $460 million to $500 million. Corporate costs are expected at about $40 million, including the absorption of Phosphate Hill stranded costs in 2H26, and net interest expense is guided at $100 million to $110 million. The FY28 EBIT ambition is $600 million.

Reaching the guided range implies a second-half Explosives EBIT of roughly $236 million to $276 million, given the $224 million reported in the first half. That arithmetic uses the company's own numbers, and it shows the second half needs to be at least as encouraging as the first, with stranded costs absorbed. Whether the outcome lands at the lower or upper end is not something this research can predict.

Capital returns

The interim dividend was 4.6 cents per share, unfranked, representing a 50% payout ratio. Under a $900 million on-market share buyback programme, $558 million had been completed, leaving $342 million, with buying set to resume on 12 May 2026. Buybacks reduce the share count and lift earnings per share, but they use cash that could otherwise reduce debt or fund growth.

Business model and Revenue drivers

Earnings depend on customer Mining volumes, the Commodity cycle that influences them, input costs, and the company's ability to price and manage supply.

Sector and competitive position

Explosives for mining is a specialised market with a small number of large global suppliers and regional competitors. Safety, logistics and technical service are as important as price, which can create stickiness with large customers. Because explosives is its core business, its earnings are more directly tied to mining activity, which can move with commodity prices and customer capital spending.

Risks to monitor

- Delivery of second-half guidance, including the absorption of Phosphate Hill stranded costs.

- Customer mining activity and any slowdown in commodity-driven demand.

- Input cost movements and pricing outcomes in contracts.

- Execution of the FY28 ambition, which relies on continued growth and efficiency.

- Capital management: the remaining $342 million of buyback capacity depends on cash generation and board decisions.

- Currency effects, since the Business operates internationally while the shares trade in Australian dollars.

What to watch next

Investors should look for Explosives EBIT against the $460 million to $500 million range, net debt and leverage, the final dividend, buyback progress, and updated commentary on the FY28 ambition.