Orica's profit takes a $36 million hit after losing a court case to the ATO

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Orica estimates its net profits will be down $36 million after losing a court case against the Australian Tax Office (ATO).

Shares in Orica were 2.5% lower at $15.19.

The world’s largest commercial explosives company has been fighting income tax assessments for the 2004, 2005 and 2006 financial years.

The assessments concerned interest rate deductions for refinancing of loans entered into by Orica subsidiaries.

The Federal Court in Victoria found in favour of the ATO.

“The company is reviewing the judgement and seeking legal advice regarding an appeal to the Full Federal Court,” the company said today. Orica has 21 days to appeal the Federal Court’s decision.

Orica has been cutting costs as its business suffers from the downturn in the resources industry.

Last month the company posted 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.

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