It's lean times for the world's biggest explosives company

Photo by China Photos/Getty Images

Orica is back in profit but the world’s largest commercial explosives company has cut dividends as revenue keeps falling from a shrinking mining sector.

Revenue for the year to September fell 16.8% to $5.092 billion but statutory profit was $342.8 million, a big improvement on last year’s $1.267 billion loss.

However, the payout to shareholders was lower under a new dividend policy of paying between 40% to 70% of underlying earnings, replacing the previous progressive policy.

The company declared a final dividend of 29 cents, taking the full year payout to 49.5 cents, well down on the 96 cents of the previous year.

The trend to cut dividends extends to the top of the market as well. In August, BHP reduced dividends as weaker global commodity prices cut the flow of cash to the world’s biggest miner.

Orica cost cutting improvements. Image: Supplied.

“The 2016 fiscal year continued to be affected by challenging and volatile market conditions,” Orica CEO Alberto Calderon said.

As headwinds keep hitting the business, the focus is on cutting costs to improve margins. The company booked a $76 million improvement in the 2016 financial year.

Net debt fell 24% to $1.5 billion in 2016.

“Business improvement initiatives delivered net benefits across every region, as we continued to deliver supply chain efficiencies and labour and operational productivity improvements,” he says.

This chart shows the sharp drop in dividends this year:

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