TWO of the country's biggest fertiliser makers, Incitec Pivot and Elders, have unveiled hefty full-year losses and warned that tough conditions in the agribusiness sector will drag into next year.
The mining boom darling Incitec, which also produces explosives, yesterday booked a net loss of $179.9 million for the year to September, a far cry from its $604.6 million profit last year.
The result included a $490.6 million write-down of goodwill from the Dyno Nobel explosives business, while its Australian fertiliser business faced extraordinary external conditions and made a loss.
Elders, the embattled rural conglomerate that is offloading its Hi-Fert fertiliser joint venture, reported a $466.4 million loss, but this was part of a move to a financial year ended on September 30.
It had already released in August financial results for the 12 months to June 30.
Elders said its underlying loss for the 15-month period, excluding non-recurring items, was $51.8 million, and included an underlying loss for the year to June 30 of $26.9 million.
Non-recurring items of $414.7 million related to discontinued and divested assets, project and restructuring costs and impairments.
While both results were affected by other business units, they gave a stark insight into the weak conditions in the agribusiness sector. Commentary from the companies indicated that pain in the rural products sector was far from over.
Incitec Pivot's chief executive, James Fazzino, said market conditions for fertiliser in Australia had been tough in the past financial year, and volumes were down about 30 per cent.
Fertiliser application rates were down about 30 per cent world-wide, and some fertiliser prices had fallen by as much as 60 per cent.
Mr Fazzino said business conditions as a whole were expected to be soft in the first half of fiscal 2010 because of the high Australian dollar and weak global fertiliser demand.
"In terms of 2010, our view is that it will be another challenging year but I am confident we are better placed to manage the challenges than we were 12 months ago because the business is a lot fitter," he said.
Elders managing director Malcolm Jackman said trading conditions had been challenging, though demand from farmers for product had recently improved.
Mr Jackman said it appeared fertiliser prices had bottomed, but he was reluctant to say the worst was over.
"I think all of us at the moment are very hesitant to rush out there and call, 'boom times have reappeared'," he said.
Incitec shares rose 6.5 per cent to $2.79, as investors believe the company is well placed to weather the storm. Elders shares rose 1¢, or 5.9 per cent, to 18¢.
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