Biden win the best news for business, says Incitec Pivot boss
Incitec Pivot chief executive Jeanne Johns says the company is well placed to reinstate dividends as soon as the COVID-19 clouds clear, adding that the combination of a Joe Biden presidency and a Republican-controlled senate is shaping up as the best possible result for businesses.
Ms Johns, a US citizen, described President-elect Joe Biden as a very pragmatic politician who understood the importance of jobs and the economy, which would be good for stimulus and infrastructure spending.
“While it’s difficult to speculate it’s easy to imagine that his first priority is to get the pandemic under control, and his second priority is to get the economy going,” she told The Age and The Sydney Morning Herald.
“And I think that in some ways from a business perspective, I think it’s a really strong outcome and it’s hard to imagine a better outcome than how it’s played out.”
The ASX-listed explosives and fertiliser manufacturer, has substantial operations in the US, where it supplies US mining and quarrying businesses with blasting equipment.
Ms Johns’ comments came as the Incitec on Tuesday scrapped its final dividend and posted a 19 per cent drop in statutory net profit for financial year 2020 to $123.4 million. However, on an underlying basis profit rose 23 per cent to $188.2 million, which was below Bloomberg market consensus of $204.3 million.
The company’s EBIT (earnings before interest and tax) before individual material items for the period rose 23 per cent to $374.5 million. Full year revenue edged up 1 per cent to $3.94 billion, which was just below market expectations of $4.03 billion.
Ms Johns defended the dividend decision, citing the ongoing uncertainty caused by COVID-19 and the $646 million capital raising conducted earlier this year to pay debt.
She stressed that Incitec retained a policy of paying between 30-60 per cent of net profit in dividends and the company faced an improving outlook.
“I think that when we look six months from now I think we’ll have a clear line of sight, and we would be quite positive in what we’re seeing on the ground today, that we’ll be in a position to resume payments,” she said.
Simon Mawhinney, chief investment officer at Incitec Pivot investor Allan Gray, said he was not unhappy about the absence of a final dividend.
“I think this company would be best placed to repay debt,” he said.
Incitec Pivot had delivered a modest profit despite the impact of COVID-19 and low commodity prices, he said.
“The future I think is quite a lot brighter than the past, one, and two, they’ve also implemented quite significant fixed cost savings which should stand them in good stead,” he said.
Start the day with major stories, exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for the Herald‘s here and The Age‘s here.
Most Viewed in Business
Source: Thanks smh.com