Explosives maker Orica, faced with an uncertain mining services market, has announced the sale of its chemical business for $750 million, and plans to cut costs further and shed another 700 staff.
In what it called a challenging market, Orica also reported a 2% lift in net profit to $602.5 million for the 12 months to the end of September. The result was in line with guidance.
CEO Ian Smith says efficiency improvements delivered savings of $69 million with further
improvements expected in 2015.
Following cuts of more than 1,300 jobs over the past two years, Orica plans to get rid of another 700 positions in 2015.
Together with other efficiency measures, this could result in pre-tax financial benefits of $140 million to $170 million in 2015 and a further $60 million to $80 million in 2016.
Smith says earnings of $930 million for the year resulted in a 4% drop, reflecting continued pressure on volume and pricing in the mining services markets.
Orica announced the sale of its Chemicals business to funds advised by Blackstone for $750 million.
Smith says the volatility and uncertainty in global resources markets makes it difficult to provide profit guidance for the year ahead.
However, the company doesn’t expect a significant improvement in the resources markets.
Orica shares are up more than 3% today to $19.89.
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