Fertiliser the growth factor as Incitec’s profit jumps

INCITEC Pivot has more than doubled full- year profit courtesy of rising fertiliser prices and launched a $ 300 million buyback, but the future of the company’s Gibson Island plant in Queensland remains under a cloud as it struggles to secure new gas supply.

Incitec has reported net profit of $ 318.7 million, a rise of $ 190.6 million on the previous year, supported by a rebound in commodity and fertiliser prices, particularly nitrogen and ammonia.

However, incoming chief executive Jeanne Johns, who takes over from long- term boss James Fazzino today, will face the urgent matter of securing a new gas contract for the Gibson Island fertiliser plant or shutting the plant down. Incitec recorded a $ 167 million writedown on the 48- year- old Gibson Island facility in 2016, due largely to the spiralling domestic gas costs.

The company’s chief operating officer, Frank Micallef, said on Tuesday it was time to make a decision on the plant and its 450 workers.

“The current gas is contracted to 30 September next year, clearly we want some clarity before that,” Mr Micallef said at the company’s full- year results presentation.

“But if we are unable to secure gas on economically favourable terms, then manufacturing at Gibson Island is likely to cease.”

Mr Micallef said 2017 earnings attributable to Gibson Island were around $ 45 million.

Closing the plant will cost Incitec about $ 50 million.

Mr Micallef said the value of Gibson Island land would be between $ 40 to $ 55 million net but that the realisation of any surplus of land would come after closure costs.