The Incitec Pivot Ltd (ASX:IPL) share price is under pressure again on Monday following the release of an update on its Waggaman operation…
The post Incitec Pivot (ASX:IPL) share price sinks 7% on Waggaman update appeared first on The Motley Fool Australia. –
The Incitec Pivot Ltd (ASX: IPL) share price has come under pressure on Monday morning.
At the time of writing, the industrial chemicals company’s shares are down almost 7% to $2.51.
Why is the Incitec Pivot share price under pressure?
Investors have been selling Incitec Pivot’s shares following a further update on the Waggaman ammonia plant.
Last month the company revealed that the recommencement of operations at Waggaman was being disrupted due to issues with a dry gas seal failure and vibrations in the turbine.
At that point, it warned that the delay would impact its earnings before interest and tax (EBIT) by $36 million.
What’s the latest?
According to today’s update, the Waggaman plant re-started again in the middle of April as expected.
It was operating successfully at nameplate capacity for a total of two weeks before the plant unexpectedly tripped upon the failure of a vibration probe.
Following repairs, the subsequent re-start process was stopped on 8 May due to a coupling failure on the refrigeration compressor, upon which the plant was safely shutdown.
Management advised that bringing the Waggaman plant back to full operation is its highest priority, with all appropriate internal and external resources being deployed to achieve this.
The release explains that based on current information, repairs and re-start are expected to take two to three weeks.
The additional impact to FY 2021 EBIT from the initial trip to the expected re-start of the plant is estimated to be between $33 million and $42 million. This represents between $26 million and $33 million on a net profit after tax basis.
In all other respects, Incitec Pivot’s business performance remains in line with previous update.
Despite today’s decline, the Incitec Pivot share price is still up a solid 11% since the start of the year.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.