The fall of the mining industry, sparked by collapsing commodity prices, has hit service companies hard.
The latest is Orica, the world’s biggest supplier of explosives, which today announced a full year loss of $1.267 billion.
The results for the 12 months to the end of September include a non-cash impairment of $1.692 billion on Orica’s assets, a move foreshadowed in August.
Before the writedowns, Orica’s full year profit was $417 million, down on the $564 million of the previous year but in line with the company’s outlook.
CEO Alberto Calderon says 2015 was a challenging year. Calderon was appointed CEO in May, replacing Ian Smith who left suddenly following reports about his management style.
“The industry is currently experiencing the most dramatic mining downturn in at least the last two decades,” he says. “Despite this, the underlying performance of the business demonstrates Orica’s relative resilience within the sector.
“We have taken decisive action in response to the industry headwinds to best position Orica through the cycle, including fundamentally changing our operating model, executive and senior leadership teams, improving our customer contract profile, and reducing production.”
The company has cut costs by $175 million.
Calderon says the company sees some improvement in earnings in 2016 with further improvement in 2017.
A final dividend of 56 cents a share was declared, the same as the previous year. The dividend is 36% franked at 20 cents a share.
However, a $400 million share buyback announced in March has been cancelled.
The total number of shares purchased under the buy-back was 2,629,765 for a total consideration of $53.5 million.
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