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Incitec Pivot profit plunges for FY16

AAP logoAAP 7/11/2016

Fertiliser and explosives maker Incitec Pivot has warned it faces a challenging 2017 financial year amid lower commodity prices after its full-year profit plunged nearly 68 per cent.

Incitec Pivot's profit has tumbled 67.9 per cent to $128 million in 2015/16 on the back of lower global commodity and fertiliser prices, while revenue has fallen 7.9 per cent to $3.35 billion in the 12 months to September 30.

The group says wetter-than-average conditions in the second half of 2016 may drive increased fertiliser demand in 2017.

However, the company says declining global fertiliser prices will continue to hurt its fertiliser earnings and the mining slowdown continues to impact its explosives business.

"The explosives sector is expected to remain challenged through 2017 with an oversupply of ammonium nitrate and ongoing customer cost focus," the company said.

Incitec Pivot said its explosives business may benefit from a five-year $US305 billion ($A396 billion) US highway spending bill announced in December 2015.

The group's industrial chemicals business is expected to benefit from ramped-up production from its Waggaman, Louisiana, plant, however lower global ammonia prices and US natural gas prices will weigh on earnings.

Incitec Pivot (IPL) chief executive James Fazzino said the group had focused on controlling costs during a year of cyclical and structural change.

"The challenges in the global resources industry and cyclical lows in international fertiliser prices are storms that IPL has weathered in the past and is positioned to do so again," he said in a statement on Tuesday.

"I have confidence in our strategic direction based upon our exposure to the world's two largest economies, China and the US, and balanced end-market product exposure of explosives, industrial chemicals and fertilisers."

Incitec shares were down four cents, or 1.34 per cent, at $2.95 at 1125 AEDT.

INCITEC PROFIT PLUNGES:

* Revenue down 7.9pct to $3.35b

* Net profit down 67.9pct to $128m

* Unfranked final dividend of 4.6 cents, down 2.8 cents

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