The leaders of Incitec Pivot (IPL) remain in negotiations with Indonesia business PT Pupuk Kalimantan Timur (PKT) regarding the sale of its fertilisers business.
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The fertiliser side of the business was a significant driver of IPL positing a net loss for the half year of $148 million, compared to a profit of $354 million for the previous corresponding period, although last year's result was inflated with one-off sales.
Uncertainty around gas prices, a key input in fertiliser, has seen IPL write down the value of its fertiliser arm by $498 million to $1.1 billion.
PKT is an Indonesian state-owned enterprise and is one of the largest urea, ammonia and nitrogen, phosphorus and potassium fertiliser producers in Asia, with five ammonia plants and five urea plants producing more than 3.4 million tonnes of fertilisers annually, which supply a range of countries, including Australia.
In its announcement to the Australian Stock Exchange this morning IPL conceded there was no certainty that any agreement will be reached or that any sale transaction will occur.
Talks between the two parties over a potential sale have dragged on for over 10 months now.
Speaking during the results briefing new chief executive Mauro Neves, formerly of BHP, said the company remained committed to divesting the fertiliser business and focusing on its explosives unit.
IPL reported markedly lower earnings before interest and tax (EBIT) of $249m, down from $552m for the same time last year, with the sales of its US assets in Louisiana and the fertiliser manufacturing facility at Gibson Island, Queensland lowering the earnings potential.
Gregor Heard
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
Gregor Heard is ACM's national grains industry reporter, based in Horsham, Victoria. He has a wealth of knowledge surrounding the cropping sector through his 15 years in the role. Prior to that he was with the Fairfax network as a reporter with Stock & Land. Some of the major issues he has reported on during his time with the company include the deregulation of the export wheat market, the introduction of genetically modified crops and the fight to protect growers better from grain trader insolvencies. Still involved with the family farm he is passionate about rural Australia and its people and hopes to use his role to act as an advocate for those involved in the grain sector.
