Incitec Pivot (ASX:IPL) is a global manufacturer, exporter and distributor of industrial explosives, fertilisers, and chemicals primarily to the agriculture, mining, and construction industries. The current listed entity has come about due to a number of business acquisitions over many years.
The origins of the fertilisers business are traced back to 1919. Pivot Limited and Incitec Fertilisers merged in 2003 to create IPL, this was the same year that IPL listed on the ASX, and three years later they purchased Southern Cross Fertilisers. With the final piece of the puzzle falling into place in 2008 with the acquisition of USA based Dyno Nobel Limited.
IPL breaks their operations up into two geographical segments Asia Pacific (APAC) and Americas. The APAC region comprises two businesses: Fertilisers APAC and Dyno Nobel APAC (NDAPAC). Their fertiliser business manufactures and sells fertilisers on the east coast and to the export market and is Australia’s largest domestic manufacturer and supplier of fertilisers by volume. It also manufactures, imports, and sells industrial chemicals to the agricultural sector and other industries. Their DNAPAC business manufactures and sells industrial explosives and related products and services to the mining industry mainly in APAC, Turkey and France. The Americas region comprises of Dyno Nobel Americas (DNA) which manufactures and sells industrial explosives and related products and services to the mining, quarrying and construction industries in the Americas (Canada, Mexico and Chile) and explosive initiating systems to businesses in Australia, Turkey and South Africa. It also manufactures and sells industrial chemicals to the agricultural sector.
IPL’s APAC region is the largest business segment contributing $3.6bn (with $2.2bn of this coming from their APAC fertiliser business) to FY23 revenue of $5.4bn, while the Americas region contributed $1.7bn to FY23 revenue.
FY23 has seen a material change to IPL’s business with the board and management confirming the sale of their Waggaman ammonia plant (which forms part of their Americas business) will proceed on the back of regulatory approvals this month for $2.5bn. IPL have also expressed interest in either selling or demerging their APAC fertiliser business and are actively exploring a demerger process and fielding enquiries for possible suitors to see which option offers the most value to shareholders. Easing fertilizer prices in recent times have slowed this process up somewhat.
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