Orica to Face Crisis in Mining & Explosive Divisions

Submitted by Jim Thesiger on 22 July, 2009 - 06:00

Orica (ORI), a company that is engaged in chemical, commercial explosive, plastics and decorative paints manufacturing which mainly focuses in Australia, New Zealand, South East Asia, North America and South America has successfully maintained its net profit growth as it forecasted for the present financial year. The development came despite the demand for its products dropped in the mining sector.

On Monday, Graeme Liebelt, the chief executive of the company mentioned that the company was still going through a mixed condition in its mining based businesses. The level of activity slowed down significantly in the construction and quarry sector he added. Mr. Liebelt also feared that any sustainable recovery or benefit is not likely to come by from the stimulus packages that the governments have came up with amid the financial crisis.

Orica counts 30th September as the end of its financial year. In May, the company forecasted that the second half of the year is going to be more difficult comparing with the first half. The Orica authority fears that a number of its divisions are set to face further difficulties in future which include the US market for thermal coal. The crisis can lead to a negative impact for both Minova mining services and explosives sectors. According to Mr. Liebelt, situation in some other mining sectors like gold and copper in Australia and Asia was resilient.

The company is expecting to see a fall in the sales of Ammonium Nitrate (a mining explosive) as much as 2 to 3 percent in terms of volume for the second half. By the end of this financial year Minova, which was acquired two years back was expected to produce $25 million in cost savings. The margins in the new division have seen some improvement in the later half of the year after the disappointing first half performance.

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