Orica Limited

Business Continues to Underperform: Down 3.5% on March 01, 2018, Orica Limited (ASX: ORI), an Australia based company and one of the world’s largest provider of commercial explosive and innovative blasting system with expert services to cater to mining, quarrying, construction, and oil and gas market, seems to be under some trouble. Recently, the company revealed that the growth in demand for ammonium nitrate has continued in the first half year, particularly across Australia Pacific Asia region. However, there was an unplanned maintenance shutdown at Yarwun and Kooragang Island plants, which could impact first half year performance by approximately $17 Mn. Besides this, the Joint venture operating partner, Yara, is addressing the issue related to the construction quality of heat exchangers which have shown some premature cracking. With this, there will be one-off net negative EBIT impact of around $19 Mn for full financial year and expected to be weighted towards the first half year result too. With the current environment, provision is expected to rise in first half of the year. The aggregate of the impairment and provision increase is expected to be around $300 Mn.

Looking at present scenario, ORI stock price has fallen by 8.35% in the past six months, and we recommend to avoid the stock at the current market price of $18.00

Segment-Wise Financial Metrics (Source: Company Reports)

 
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