Earnings margins to improve for mining specialist

Morning Star AU

Sep 07

Along with the release of strong first-half results in May 2026, Orica (ASX.ORI) guided for an unquantified underlying full-year EBIT increase. This builds on the 5% first-half increase, with growth ...

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This builds on the 5% first-half increase, with growth ...</p>\n\n<a href=\"https://www.morningstar.com.au/stocks/earnings-margins-improve-mining-specialist\">Source Link</a>\n\n</div>\n","source":"morningstar_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Earnings margins to improve for mining specialist</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEarnings margins to improve for mining specialist\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-09-07 00:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.morningstar.com.au/stocks/earnings-margins-improve-mining-specialist><strong>Morning Star AU</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Along with the release of strong first-half results in May 2026, Orica (ASX.ORI) guided for an unquantified underlying full-year EBIT increase. This builds on the 5% first-half increase, with growth ...</p>\n\n<a href=\"https://www.morningstar.com.au/stocks/earnings-margins-improve-mining-specialist\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"GUNR","symbol_name":"全球上游自然资源ETF-FlexShares","start_time":0,"source_url":"https://www.morningstar.com.au/stocks/earnings-margins-improve-mining-specialist","article_id":"2665452391","we_media_id":null,"thumbnails":[],"rights":{"source":"morningstar_stock","url":"https://www.morningstar.com.au/stocks/earnings-margins-improve-mining-specialist","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2665452391","pubTimestamp":1788710400,"columns":[],"sourceInfo":{"source_id":"morningstar_stock","name":"Morning Star"},"weMediaInfo":null,"summary":"Along with the release of strong first-half results in May 2026, Orica (ASX.ORI) guided for an unquantified underlying full-year EBIT increase. This builds on the 5% first-half increase, with growth a","collect":0,"end_time":0,"defaultTopTitle":"morningstar.com.au","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"GUNR":"全球上游自然资源ETF-FlexShares"},"translate_title":"矿业专家的利润率将提高","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GUNR":1.5},"content_text":"Along with the release of strong first-half results in May 2026, Orica (ASX.ORI) guided for an unquantified underlying full-year EBIT increase. This builds on the 5% first-half increase, with growth across all segments and regions. Shares are little changed from the results day close.Why it matters: Our EBIT growth target of 8% is well below fiscal 2025’s 23%. Fiscal 2026 won’t benefit from the nonrepeat of Carseland plant maintenance. It should, however, again profit from key themes of cost control, improved product mix, and demand for advanced mining solutions and premium products.But just not as much as in fiscal 2025. Our fiscal 2026 earnings per share and dividends per share forecasts are little changed at $1.30 and $0.66, respectively. The dividend equates to a modest 2.9% unfranked yield at the current share price.Orica has begun a cost-reduction program of at least $100 million over the next three years, around 1.5% of total costs or $0.22 per share, and worth around 120 basis points to EBITDA margin. We expect to achieve efficiencies mainly through structural and overhead reductions, footprint rationalization, and procurement improvements.The bottom line: We increase our fair value estimate for no-moat Orica by 5% to $21. About half is due to time value of money, and the balance reflects reducing the assumed weighted average cost of capital to 9.0% from 9.1%. Under our updated discount framework, we recognize increased business diversification with greater granularity to beta.At around $22.60, Orica shares trade 8% above fair value but remain in 3-star territory. While margins are likely to lift, we also see some longer-term demand headwinds.Between the lines: We forecast a 5-year EBITDA CAGR of 5.4% to $1.8 billion by fiscal 2030. Growth comes chiefly via margin improvement, to 20.5% versus 18.5% in the first half of fiscal 2026. Gains are expected via more uptake of premium service technology-based blasting solutions and cost-outs.Margins to benefit from premium blasting solutions and cost-outsOrica has expanded its mining services business around a leading global market share in explosives. Earnings are leveraged to mining volume and commodity prices. The Australian explosives duopoly affords relatively high margins and returns founded on three- to four-year contracts in addition to longer-duration and lower-margin contracts.Orica has grown its explosives business by both organic and acquisitive means. In fiscal 2006 it bought the European, Middle Eastern, African, Asian, and Latin American businesses of Dyno Nobel, which helped provide scale and lower costs. This was followed by divestment of a 70% interest in fertilizer business Incitec Pivot. In fiscal 2007, Orica expanded capacity at its Queensland ammonium nitrate plant and increased capacity at Kooragang Island, New South Wales. An ammonium nitrate plant in Bontang, Indonesia started production in 2012. Orica also participates in an ammonium-nitrate plant joint venture in the Pilbara iron ore region in Western Australia.We estimate Orica’s Australian explosives market share at 55%-60%, with the remainder largely held by peer Dyno Nobel. We include Dyno Nobel’s Moranbah, Queensland, plant in our market estimates. In the US, the explosives industry is a concentrated market. Orica has a well-established presence with an estimated market share of 30%-35%. The key competitors are Dyno Nobel, which has similar market share, and Austin Powder. The key markets for explosives in the US are coal and metals mining, as well as construction and quarrying.A focus on higher shareholder returns has improved with investment options subjected to disciplined returns criteria. Orica will not invest in new plant unless an 18% return on net assets can be achieved.Bulls SayOrica is a global leader in explosives and part of a duopoly in Australia. It is leveraged to ongoing regional resources demand driven by the industrialization and urbanization of China and India.The intensity of explosives and chemicals used in mining is increasing as ore grades decline and strip ratios increase.There are a number of organic growth opportunities available to the Orica, particularly the expansion of ammonium nitrate capacity and explosives production.Bears SayOrica is primarily exposed to mining, where explosives demand softened as a result of the end of the China boom.Continued production capacity expansion has led to industry overcapacity, and mining volumes are now falling.Cleanup legacy issues continue, and past chemical spills have affected earnings and damaged the company’s reputation.Subscribe to get Morningstar insights in your inbox","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":false,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"isVideo":false,"video":null,"symbols":[],"gpt_button":0,"need_auth":false,"need_login_tip":false,"code":"91000000","status":"200"}}}