Analysis of ORICA Limited’s annual report Essay Example

ORICA Limited Annual report

ORICA Limited Annual report

Summary of the Orica Limited’s activities and its strategies

Orica Limited is a supplier of commercial explosives and blasting systems mainly in the mining, construction and quarrying industries and is so far the top producer worldwide. Minova, Orica mining services and Orica chemicals are the main business units through which the company conducts its business activities. The company’s 2013 part results report illustrates that, it produces chemicals and mining products. The explosives are used to initiate systems during mining or infrastructure activities and ground support activities which the company also deals in (The Flexible Benefits Super Fund, 2012).

The company is also a supplier in pulp and paper, water treatment and beverage industries where it supplies specialty and industrial chemicals. It covers Portugal, the United States, China, Brazil, Chile, UK, Malaysia and Mexico other than its Melbourne, Australia headquarters among the over 50 countries it operates in. The manufacturing and distribution assets portfolios of the company are located in Latin America, Asia, Australia, Africa and New Zealand (ORICA, 2011). Orica has well set strategies and prioritization that point at growth of the company. It purposes to extend its production capacity for Ammonium nitrate which it considers as first priority in South America, Australia and Indonesia. The increased demand for explosives in these countries’ mining sectors has provided an opportunity that Orica needs to take advantage of.

The company’s plant in Indonesia focuses on increasing the capacity in New South Wales Australia Kooragang Island after completing the Bontang. Other than the Peru plant construction initiative that is underway, the company is holding a 455 share in a partnership to build an Ammonium Nitrate plant in Western Australia, at Pilbara. Minova plant aims at business model simplification, rationalization of overheads and optimizing its manufacturing so as to boost its underperforming business returns (optimova project) (Investsmart, 2010).

Summary of financial press discussion of performance and accounts

Orica limited is a listed company in Australia Securities Exchange. The net profit after tax for Orica Company was 402.8 million dollars in 2012, indicating a reduction by 37.3% while its revenues increased from ordinary activities to 6.67 billion dollars from 2012. Diluted earnings per share (EPS) also reduced from 169.8 cents last year to 109.1 this year. However, declared dividends for the whole year increased from 90cents in 2012 to 92 cents this year. The company’s P J B Duncan stated that the 2012 profits were modest since the external environment was declining and had challenges from within. Extension of the Kooragang plant incorporates funds to cater for 750,000 tonnes every year as granted by the regulations in 2012 (Cook, 2012).

Orica’s revenues from sales increased by 492 million dollars due to robust demands in mining markets of Australia, Asia and Latin America other than favorable pricing for Ammonium nitrate, better weather conditions in Asia and Australia and high prices for caustic and sodium cyanide. Working capital marked a 121 million dollars increase as a result of 2million dollars acquisitions and underlying 152 million dollar increase.

The company also acquired more property, plant and equipment totaling to net of 325 million dollar up. Intangible assets declined by 459 million dollars as a result of 367 million dollars goodwill granted in Minova 37 million dollar amortization and foreign exchange translations amounting to 109 million dollars. Net liabilities reduced by 275 million dollars while net debt for the company increased by 891 million dollars as a result of repurchasing 500 million dollars SPS. The company still maintains its strategies despite the depreciating 2012 environment (Orica limited, 2013).

Bibliography

Investsmart, 2010, Orica limited (ORI).
Investsmart. Retrieved from: <http://au.investsmart.com.au/shares/asx/ORICA-LIMITED-ORI.asp>

ORICA, 2011, Strategy delivers: Annual Report 2011. Orica. Retrieved from:

<http://www.orica.com/BUSINESS/COR/orica/rwpattach.nsf/PublicbySrc/ORI020_2011+AR+FINAL+LR.pdf/$file/ORI020_2011+AR+FINAL+LR.pdf >

The Flexible Benefits Super Fund, 2012, Orica Defined Benefit Super Fund: 2012 annual report.

The Flexible Benefits Super Fund. Retrieved from: <http://mysuper.watsonwyatt.com/flex/forms/annualreportdb.pdf>

Cook, A, 2012, ASX Announcement: 2012 Annual Report. ORICA. www.orica.com.

Orica limited, 2013, ASX Announcement: Orica reports increase in 2013 financial half year

profit. ORI. Retrieved from: <http://www.orica.com/BUSINESS/COR/orica/rwpattach.nsf/PublicbySrc/2013-HY-Profit-Report.pdf/$file/2013-HY-Profit-Report.pdf>