Duncan maintained a cautious optimism for the year ahead as the company continues to transform its business model.
Orica posted a net profit before materially significant items of $601.6 million in the 12 months to September 2013, a 7.5 per cent decrease on the $650.2m recorded in the previous corresponding period.
At the group’s annual general meeting, Duncan said the poor result was largely affected by $29m in restructuring costs as a result of integrating ground support into the mining services business.
Duncan said that in the face of a challenging external environment that played havoc with so many of its mining services peers, Orica?s success in delivering ?creative resourceful solutions? for its customers had succeeded in mitigating costs and the more general effects of a weaker market.
“Nearly $30m in restructuring costs have been expended in the past year as part of the full integration of ground support into the mining services business. While the outlook is more optimistic, I won’t sidestep the reality that this business has so far failed to live up to expectations,” he said.
Orica’s non-mining chemicals business slid eight per cent in the 12 months to 30 September, 2013 as a result of manufacturing pressures in Australia and was now undergoing a strategic review.
Duncan said manufacturing performance was improving in “all areas”.
“These outcomes in 2013 were achieved by a business in transition – realigning itself behind a refreshed corporate strategy, a new functional organisation model and within the context of a changed external environment for Orica’s customers,” Duncan said. “Our strategic focus of extending services and differentiated products to mining customers is delivering encouraging results.”
Orica’s chief executive officer Ian Smith said last year’s one-off cost of integrating ground support into mining services was expected to turn around into a $23m to $25m profit in fiscal 2014.
Source: Orica, The Australian