INCITEC Pivot Limited has announced plans to sell its Gibson Island site at Murarrie in Brisbane.

This marks the end of plans for Fortescue Future Industries to build a green ammonia project on the 57ha site, which manufactured fertiliser for 50 years.

In delivering IPL’s results for the year to September 30, IPL chief executive officer and managing director Mauro Neves said the company still intended to spin off its fertiliser business.

“We remain committed to delivering the Fertilisers separation in the next six to 12 months, with a potential divestment in parts to maximise value and increase execution certainty,” Mr Neves said.

IPL ceased manufacture of urea at Gibson Island in January 2023, but has been using the site to distribute product to the Queensland and northern New South Wales markets.

“We have confirmed the closure of the Gibson Island primary distribution centre (PDC) and will be transitioning to a third-party facility operated by Qube at the Port of Brisbane.

“This will significantly modernise IPF’s Brisbane PDC capability, enabling us to meet our customers’ expectations well into the future.

“The decision to relocate the PDC allows us to progress our plans to sell our real estate holdings at Gibson Island.”

Changes are afoot in Victoria too.

“We have also made the decision to cease manufacturing single super phosphate at the Geelong manufacturing facility, targeted by the end of 2025, and to sell the IPF Distribution business.”

“This has been a year of transformation for the company, and I am pleased with the progress we are making on our strategy of methodically exiting the IPF business and building a leading global explosives business.”

Two of IPL’s three business units, Dyno Nobel Americas and Dyno Nobel Asia Pacific, are involved primarily in manufacture of explosives, and the other is Fertilisers Asia Pacific.

Impact on fertilisers

IPL’s Fertilisers business in Australia is the largest domestic manufacturer and supplier of fertilisers by volume.

The business sells to major offshore agricultural markets in Asia Pacific, South Asia, Brazil, and the U S, and also imports fertilisers to meet domestic seasonal peaks.

Much of this activity is conducted through Southern Cross Fertilisers, a Singapore-based subsidiary.

The fertilisers division makes di and mono ammonium phosphate fertilisers, or DAP and MAP, at its Phosphate Hill manufacturing facility in Qld.

Fertilisers Asia Pacific recorded FY24 earnings before interest and taxation of $120 million, down from $153M in FY23, with the result impacted by the closure of Gibson Island and reduced manufacturing performance at Phosphate Hill.

IPL said the Gibson Island closure in a year-on-year decrease in earnings of approximately $19M.

Total Fertilisers Asia Pacific domestic sales volumes of 2,169,000 tonnes were up 7 percent from FY23 sales of 2,036,000t.

The report said volume growth reflected strong trading conditions in the second half of FY24, with global fertiliser prices slightly weaker compared to the prior year.

Realised ammonium phosphate prices declined by 4pc, but the supply-and-demand dynamic remained broadly favourable to support stable prices in the near term.

At Phosphate Hill, ammonium phosphate production fell 14pc from FY23 to 740,000t.

The lower production reflects unplanned outages in the first half of FY24 in the ammonia and granulation plants at Phosphate Hill, and the impact of Cyclone Kirrily and associated flooding in parts of north-west Qld.

Improved plant reliability lifted production volumes significantly during the second half of FY24, with production at 479,000t being 10pc higher than the previous corresponding period.

Record for distribution

Fertilisers Asia Pacific’s distribution business delivered its strongest result on record, with earnings up $14M from FY23.

“The favourable result was driven by strong customer demand due to above-average rainfall on the east coast of Australia and favourable farming conditions,” the report said.

“Distribution EBIT margin per tonne increased strongly, highlighting the benefit of the ongoing investment in IPF’s distribution network and capability, as well as the effective management of fertiliser supply chains to accommodate the strength and timing of customer demand.”

Key figures down on FY23

In releasing its full-year results today, IPL reported a net loss after tax including individually material items (IMIs) of $311M, which contrasts with its $560M profit in FY23.

This result included IMIs totalling $712M after tax relating primarily to a non-cash impairment of the Australian fertilisers business.

Other IMIs included a non-cash impairment of the US fertilisers business, separation costs, business transformation costs and Dyno Nobel Asia Pacific site-closure costs, offset by a gain on sale of IPL’s ammonia manufacturing facility in Waggaman, Louisiana in the US.

IPL reported FY24 earnings before interest and tax excluding IMIs of $580M, down from $880M in FY23.

The principal driver of the reduced earnings was the sale of Waggaman in December 2023, and the closure of fertiliser manufacturing at Gibson Island.

IPL’s net profit after tax ex IMIs was $401M in FY24, down from $582M in FY23.

“Our headline results reflect the sale of Waggaman, the closure of Gibson Island and portfolio restructuring.

“IPL delivered a strong underlying performance in FY24, with improved normalised earnings, reflecting growth and operational improvements in all customer facing businesses.”

Results in IPL’s explosives divisions were stronger.

“Dyno Nobel Asia Pacific delivered a record EBIT, with a 36pc improvement year on year, as major resource sector customers like Peabody, Fortescue and BHP Mitsubishi Alliance, recommitted to contracts and use of our innovative technology to unlock value in their businesses.

“Dyno Nobel Americas underlying performance increased 15pc on the back of improved pricing discipline and cost management initiatives.”

Source: Incitec Pivot Limited