Incitec Pivot (ASX:IPL) was the largest detractor from performance for the fiscal year and also a detractor for the quarter. Incitec supplies mining explosives products and services in Australasia and North America, and it is also Australia’s largest fertilizer distributor and only phosphate fertilizer manufacturer. Fertilizer prices fell significantly over the period, which caused investors to lower earnings estimates for the company. However, we believe this simply reflects a move towards a more normal pricing environment. Also, in July, Incitec experienced a production outage at its Phosphate Hill ammonia plant. Management indicated that the outage would reduce production of ammonium phosphates during the second half of the year, estimating an earnings impact around $23.5 million (USD) after tax. This setback, combined with a production disruption at the new Moranbah explosives plant, caused investors to worry about near-term consequences for the company. Although these issues occurred in close succession, we believe that both were one-off events and that the company resolved them relatively quickly. Based on our research and discussions with management, we believe that outside of the difficulties at these two plants, the rest of Incitec’s plants are operating well. The company is enacting a number of improvements that should help prevent such problems in the future, including changes of operations management and in the way that the engineering and operations groups interact. We remain confident in Incitec Pivot’s management team, and we continue to believe that this investment will reward shareholders in the long term.