The trifecta for explosives and mining services group Orica on Friday but not a winning one – unfortunately – as the shares slumped 26% at one stage.
The company warned of a $125-million earnings hit for the six months to the end of March thanks to the impact of the china bans on Australian coal imports which have pressured coal prices, as well as the sharp rise in the value of the Australian dollar which is hurting the company’s foreign currency earnings. And the company revealed the departure of chief executive Alberto Calderon.
The shares slumped to a near five-year low of $11.17 at the opening on Friday before closing down a hefty 18% to $12.56.
Orica said it expected a first-half earnings hit of up to $80 million in its mining division as last year’s trade tension between Australia and China impact explosives demand in the Australian thermal coal sector.
But COVID is having an impact on the company outside of Australia and the US – most notably in key South American markets. “COVID-19 continues to be a significant source of uncertainty for Orica,” the company said in Friday’s announcement. “Activity in Colombia is significantly lower than the pcp due to major customers’ temporary and permanent mine closures. Continuing social unrest in Peru and strikes in Chile have reduced demand for products and services in those countries, and COVID-19 has led to an unfavourable but temporary shift in the product mix of customer demand in Peru. “Mining activity also remains severely disrupted by the pandemic in several other regions, including parts of Europe, Africa and Mexico where the virus has been widespread and its impacts more prolonged than our original expectation. Indonesia has been impacted by lower volumes due to ongoing effects of COVID-19 and adverse weather.”
Orica said the higher Australian dollar would clip foreign earnings by between $20 and $25 million in the half year to March 31 and there is a further $15 million to $20 million or so in other costs.
- Glenn DyerThe CEO’s departure was announced in a separate statement to the ASX by Orica chair, Malcolm Broomhead who said Mr Calderon will step down from his role as Managing Director and CEO, after almost six years in the role. He was a former senior BHP executive.
Orica’s Group Executive and President of Australia Pacific Asia, Sanjeev Gandhi, has been appointed as the new Managing Director and CEO of Orica.
Did u notice Australian Super kept on putting money on explosivesi do notice the odd fund manager still has a kind word for ORI though
i have never held this share ( the numbers never crunch a buy signal for me , maybe it is the debt ratio that interferes with the 'green light ')
DYOR
When I looked them up today, after the post on ASF, I noticed the Aus Super adding. Then when you look at the long term price graph, it does make you think, is there some upside with all the exploration and mining activity?Did u notice Australian Super kept on putting money on explosives
WES makes ammonia..used as nitrate for explosives.ALSO i think i remember reading somewhere , WES still makes some explosives/fertilizers which might explain why the IPL issues haven't flowed on to a major price spike
Mining is where it is at.according to my guesstimations ( and i am NOT very good at them ) we should be in the resource sector consolidation phase ( but somehow it looks like a boom whilst we have supply chain issues )
now if i was 40( ish ) ( but i am 65 ish ) i would be looking at cashed up explorers ( or those with a big player JV cash cow , say EVN , NST , BPT , SVW , or OZL ) and prepared to wait ( or trade ) the next 3 to 5 years
so ask is my guesstimate wrong , or are brownfield projects accelerating , or maybe different resources being mined
i was hoping my mining services/construction services stocks would be busy with infrastructure projects , currently , but those operating with some success are winning mining contracts , rather than civil engineering ones .
so are we in a mining super cycle or is the resource sector all messed up
i agree it appears to be where it is atMining is where it is at.
Mining states know this and close down and ban outsiders at the first whiff of danger.
Mines and associated air hubs and accommodation sites are exquisitely careful.
When baristas and associated hipsters in Melbourne and Sydney are lining up for Vinnies soup and sangers next year the mines will still pump exports out.
Government have only 2 cash cows and it ain’t entertainment and hospitality. One is Mining and the other is Agriculture.
gg
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