The newly merged Incitec Pivot Limited fertiliser business made a sound start in difficult trading conditions, the Managing Director and CEO, Greg Witcombe, said in Melbourne today.
He told shareholders at the company's first annual general meeting since listing on the Australian Stock Exchange that Incitec Pivot had progressed well despite reduced demand from drought-affected farmers.
"In this environment, the solid progress we have made in our first six months underlines the fundamental strengths of the business," Mr Witcombe said. "The merger is firmly on track and we will continue to build the consolidated business throughout the current financial year."
He said that synergy savings of more than $6 million - more than $18 million at an annualised rate - were achieved in the company's first four months of operation until year-end on 30 September 2003, and further merger benefits have been gained since then.
"In the new financial year we have continued to increase synergy savings, which are now being achieved at an annualised rate of $20 million," Mr Witcombe said. "This progress confirms that we are on track to deliver synergy savings at the targeted annualised rated of $30 million by the end of the 2004 year."
He said that Incitec Pivot's well-located and efficient manufacturing and distribution facilities, combined with its extensive product range, positioned the company well to meet farmers' fertiliser needs.
Last month, Incitec Pivot reported a net profit after tax of $35.1 million before significant items for 2002/03. Significant items after tax totalled $53.7 million, including $49.9 million of merger-related costs. After tax and significant items, the company recorded a net loss of $18.6 million.
Incitec Pivot is 70 per cent owned by Orica Limited, with the balance being held by 39,000 smaller shareholders - most of them farmers - and institutions.
Mr Witcombe advised shareholders that the achievement of further merger synergies combined with an improvement in seasonal weather conditions should lead to improved profit performance in 2004.
Incitec Pivot shares were $15.71 at the close of trading on the ASX yesterday, giving the company market capitalisation of $916 million.
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