Orica’s $89M Loss Raises Questions on Latin America Restructuring

Revenue Growth Amid Challenging Conditions

Orica Limited has reported a solid 7.7% increase in consolidated revenue for the half year ended 31 March 2025, reaching $3.94 billion. This growth reflects the company’s broad geographic footprint across Australia, the Pacific, Asia, the Americas, Europe, the Middle East, and Africa, and the continued demand for its blasting solutions, digital technologies, and specialty chemicals in mining and construction sectors.

Despite this top-line improvement, Orica posted a net loss attributable to shareholders of $89 million, a stark reversal from the prior corresponding period’s profit. This loss was primarily driven by significant impairment charges and restructuring costs, notably a $288.4 million impairment in the Latin America Blasting Solutions cash generating unit and additional restructuring expenses in the EMEA region.

Underlying Profitability and Dividend Boost

Excluding these individually significant items, Orica’s net profit attributable to shareholders rose 40% to $250.8 million, underscoring the resilience of its core operations. The company’s earnings per share before significant items improved to 50.9 cents, compared to 38.8 cents in the prior period.

Reflecting confidence in its ongoing cash flow generation, the board declared an interim dividend of 25 cents per share, up from 19 cents in the previous corresponding period. The dividend remains unfranked, consistent with prior practice. The record date for dividend entitlements is 23 May 2025, with payment scheduled for 2 July 2025.

Segment Performance and Strategic Moves

Orica’s segment reporting highlights continued strength in its Blasting Solutions and Digital Solutions businesses, supported by acquisitions such as Terra Insights and Cyanco Intermediate Mining Chemicals. However, the Latin America segment faced challenges leading to the impairment charge, reflecting a reassessment of future cash flows and economic conditions in that region.

The company’s balance sheet remains robust, with net tangible asset backing per ordinary share increasing to 557.2 cents, up from 387.5 cents six months earlier. Orica also maintains substantial undrawn credit facilities and a manageable net debt position, supporting its financial flexibility.

Tax and Regulatory Environment

Orica has assessed the impact of the OECD Pillar Two global minimum tax rules, effective from 1 October 2024, and concluded there is no material effect on its current tax expense. The company continues to monitor regulatory developments and applies temporary reliefs in deferred tax accounting as appropriate.

Outlook and Market Implications

While the impairment charges highlight ongoing operational and market challenges in certain regions, Orica’s underlying profit growth and dividend increase signal confidence in its strategic direction and market position. Investors will be watching how the company manages its restructuring initiatives and capital allocation in the coming months.