Incitec Pivot to break up fertiliser, explosives businesses

Australian chemicals giant Incitec Pivot has revealed a plan to split off its mining explosives division from its fertiliser business by the middle of next year.

The $7 billion manufacturer, which turns ammonium nitrate into commercial explosives and fertilisers at plants around the world, told shareholders on Monday it intended to create two separately listed entities on the Australian Securities Exchange.

Incitec Pivot chairman Brian Kruger said the two entities – Dyno Nobel and Incitec Pivot Fertilisers – would have strong balance sheets to support “strategic investment opportunities” and deliver value for shareholders.

“The board sees significant value enhancement through the separation of two industry-leading businesses and brands,” he said.

“Our explosives and fertilisers businesses will continue to provide attractive exposure to the essential minerals and agriculture industries that are underpinned by important global megatrends.”

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The decision comes just over two years since Incitec Pivot paused plans to sell off its fertiliser arm in 2020, suspending talks with would-be buyers amid deepening market uncertainty and pandemic-related travel restrictions.

The company on Monday reported a record-high half-year profit of $384 million for the six months to March 31, up from just $36 million during the same time last year, and declared an interim dividend of 10¢ a share.

Chief executive Jeanne Johns said customers’ evolving demand for technology-driven solutions meant the two sides of the business had “minimal overlap” and the benefit of sharing an ammonia-manufacturing core had become less meaningful. She said Incitec Pivot had strong financial capacity to provide the two proposed new entities with the capital structures to support investment and growth.