Orica’s new boss has come out swinging saying the company is riding high on the mining boom despite a horror year from a public relations perspective.
The explosives supplier on Monday reported a solid net profit of $253.3 million for the six months to March 31, down from $263.8 million in the previous corresponding period.
It expects a stronger full year net profit than last year’s.
Chemical leaks at Orica’s Kooragang Island ammonia plant near Newcastle in NSW last August forced an expensive shut-down of plants and affected about 70 homes.
There has been more negative news this year, with Orica investigated for releasing waste water with illegally high levels of cyanide in Queensland and criticised for storing a shipload of chemicals near Kooragan.
Orica has admitted its wrongdoing after Kooragang but dismissed the more recent issues as media beat-ups.
The extra amounts of cyanide released were negligible and extra action had been taken to stop it occurring again, said chief executive Ian Smith, who took on the role last month.
The attacks by the NSW opposition on Orica for storing chemicals on a ship during maintenance at Kooragang was an intersection of state politics and the Maritime Union of Australia’s industrial campaign, he said.
“I apologised to the NSW government for them getting dragged into a media beat-up,” he told reporters.
“I do really take exception when intersections of the media, the political system and industrial relations build a picture that isn’t in line with the actual way we operate.”
He conceded Kooragang Island had been a wake-up call and vowed it would never happen again, but trust had to be rebuilt with local residents.
The events at Kooragang cost Orica $90 million in the first half.
However Orica said it was pleased with its underlying performance, with ammonium nitrate volumes up 8.0 per cent on demand from mining markets.
Overall sales revenue increased 12 per cent to $3.3 billion.
It forecast net profit for the year to September to be higher than the $642.3 million it posted for the previous year, subject to plant performance and global economic conditions.
“We are in a very strong market, that market continues to grow not only on the back of commodity growth,” Mr Smith said, adding that he was confident about growth in demand for Orica’s services in Australian coal mining.
A major part of future growth would be related to iron ore mining growth in the Pilbara, with the company hopeful of setting up an explosives plant to supply miners at Karratha soon, Mr Smith said.
Mining services represent 90 per cent of Orica’s earnings, with miners using the chemicals for explosives for resources projects in markets such as Australia, Asia and Latin America.
The rest includes its chemicals business and the specialty bolts and chemicals business, Minova.
The company lifted its partly franked interim dividend by one cent to 38 cents per share.
Orica shares closed 14 cents lower at $26.40.