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CORRECTED-UPDATE 1-Incitec Pivot posts lower profit, warns 2017 will be challenging
November 7, 2016 / 10:47 PM / a year ago

CORRECTED-UPDATE 1-Incitec Pivot posts lower profit, warns 2017 will be challenging

(Corrects to specify analysts, not the company, have forecast 18 percent growth in underlying profit for the 2017 financial year.)

* Underlying profit matches analysts’ forecasts

* Sees fertiliser prices depressed in near term

* Sees explosives market remaining oversupplied

MELBOURNE, Nov 8 (Reuters) - Australian explosives and fertiliser maker Incitec Pivot warned on Tuesday it expects markets for its key products to remain weak in 2017, after reporting a 26 percent drop in annual underlying profit on Tuesday, in line with analysts’ forecasts.

The world’s No. 2 maker of commercial explosives behind Orica has been hit by a mining slump - especially in the coal industry - which has resulted in less demand for ammonium nitrate.

The company said miners’ focus on cost-cutting was also biting.

“The explosives sector is expected to remain challenged through 2017 largely due to regional oversupply of ammonium nitrate and ongoing customer cost focus,” Incitec Pivot said in a statement.

It said fertiliser demand may increase in the year ahead following wetter- than-average conditions in the second half of 2016, but warned that “depressed global fertiliser prices may persist in the short term.”

Net profit before one-offs fell to A$295.2 million ($228 million) for the year to September from A$398.6 million a year earlier, which was a touch better than analysts’ forecasts of around A$289 million.

Analysts are forecasting 18 percent growth in underlying profit for the 2017 financial year.

Incitec’s full-year dividend of 8.7 cents a share was slightly below forecasts for 9 cents. ($1 = 1.2950 Australian dollars) (Reporting by Sonali Paul; editing by Andrew Roche, G Crosse)

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