Incitec (ASX:IPL) set to drop on big profit miss
Stock
Incitec Pivot (ASX:IPL) $4.23 as at 13/11/2018
Event
This morning Fertilizer Manufacture Incitec Pivot (IPL) was out with full year results, and they were about a 4% miss at the profit line relative to Bloomberg Consensus. While guidance was difficult to ascertain, the market was positioned for profit growth of 15% in FY19 relative to FY18 suggesting a fair amount of optimism ‘baked into the cake’. Fertilizer prices are clearly important for IPL, however so to is the currency. A lower AUD is a benefit for IPL while a higher AUD is a headwind. The sensitives here are fairly significant, with a 1c appreciation in the AUD reducing EBIT from their American operation by $3.6m while at the same time reducing their EBIT in Asia by $7.4m. The AUD has fallen ~10c over the past 12 months providing a tailwind for IPL. I doubt that the FY19 result will have the same assistance! To put these numbers into context, in FY18 IPL achieved EBIT of $556.7M.Incitec Pivot (ASX:IPL) Chart
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Incitec (IPL)[/caption]
Market Matters Take/Outlook
