1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies

David Herro Comments on Incitec Pivot

October 09, 2013 | About:

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.

From David Herro's Oakmark International Small Cap Fund third quarter 2013 commentary.

Rating: 1.0/5 (1 vote)


Please leave your comment:

GuruFocus has detected 6 Warning Signs with Incitec Pivot Ltd $ASX:IPL.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by

User Generated Screeners

DBrizan2017sep22 1045p
andrewgu999nick scali style
liuzishudeep value non-div
star1907Rule #1
star1907C3 20% Growth 5 yr
EhrlingerT. Rowe Price Group
NorvasP/S good growers
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat