THE increasing use of gas at the expense of coal as the primary source of fuel for power stations in the US is affecting fertiliser and explosives producer Incitec Pivot, despite the big rise in the performance of the company's mining-related explosives division.
Incitec Pivot yesterday filed a profit of $143.5 million for the six months to March 31, a 13 per cent drop from the $165.6m recorded in the previous corresponding period and slightly below the market consensus of $145m.
The fall was due solely to the company's fertiliser business, where earnings dropped by $60.9m or 56 per cent from the same period in the previous year.
Most of this drop was offset by the performance of the company's explosives division, where earnings were up 21 per cent to $177.5m, from $146.9m.
But this overall performance masked sharp differences within the explosives division, with a drop of 5 per cent in volumes in coalmining, which accounts for 60 per cent of the company's explosives division, in the US offset by growth in metals and mining and quarry and construction. Chief executive James Fazzino said the mild winter in the US, the period covered in these results, was the main cause of the drop, but a secondary one was low gas prices. "Where generators have a choice they are choosing to run gas-fired plants because of low gas prices. We see these factors as cyclical, not structural, particularly given that the US has been short of energy in periods of normal economic activity," he said.
The Australian
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