By Rhiannon Hoyle
Chemicals and explosives maker Orica Ltd. said it swung to a first-half net loss as it wrote off the value of its business in Russia, which it says it will exit in the coming months following sanctions related to the Ukraine war.
The Australia-listed company on Thursday reported a net loss of 85 million Australian dollars (US$59 million) for the six months through March, compared to a profit of A$79 million a year ago.
Orica’s bottom line was weighed by A$214 million in significant items after tax, including an A$80 million impairment against its Russian operations.
“As a result of the impact of the Russia-Ukraine conflict, the group is unable to fund or extract cash from Russian subsidiaries whilst international sanctions are in place” so “a decision has been made to exit these businesses,” Orica said.
The company said it will cease business in Russia in its second fiscal half and that all related assets have been fully impaired.
Orica also recorded a loss on the sale of its Minova business to Aurelius Group and an A$33 million impairment against its investment in Turkey, citing a significant decline in that country’s economy and the devaluation of the lira. It consequently reported an A$45-million goodwill impairment in Europe, too.
Still, the company said its operating performance improved materially. Orica reported a 58% year-on-year increase in underlying earnings before interest and tax, to A$245 million.
The company declared an interim dividend of 13 Australian cents per share and said it expects earnings momentum to continue in its second half.
“We expect steady commodity growth, particularly in gold, copper and quarry and construction in the second half which will continue to drive demand for our products and services,” said Chief Executive Sanjeev Gandhi.
“We expect the momentum in earnings from the underlying businesses to continue, despite the planned exit from our operations in Russia, the supply chain challenges associated with Russia-Ukraine, and the divestment of Minova,” he said.
Write to Rhiannon Hoyle at [email protected]
Credit: www.marketwatch.com /