Incitec chief Jeanne Johns.Credit:Eamon Gallagher
On Monday the company also slashed its full year 2019 earnings guidance,blaming the drop on severe drought which has led to less demand from farmers for fertilisers,high gas costs at its Gibson Island plant in Queensland and lower than forecast ammonia production at its Waggaman plant in America.
Incitec Pivot said full year 2019 earnings before interest and tax (EBIT) was expected to be between $285 million and $295 million,which is substantially below full year guidance issued in May of between $370 million and $415 million.
Analysts suggested the fertiliser business could be an ideal fit for the Perth-based conglomerate Wesfarmers,which owns the dominant fertiliser business in Western Australia. Wesfarmers declined to comment when contacted.
If Incitec Pivot exited the fertiliser business it would leave the company looking very different,as a manufacturer and distributor of explosives and much more comparable to industry peer Orica.
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Paul Skamvougeras,head of equities at Perpetual Investments,said the company had historically traded at a discount to its listed peers because of the volatility in fertiliser earnings.
"We believe that the strategic review of the Incitec Pivot fertiliser business is a long time coming and should be a positive for long-suffering shareholders of IPL,"he said.