Dyno Nobel’s $7m Profit Turnaround Fuels Fertilisers Separation Drive

Profit Turnaround and Strategic Progress

Dyno Nobel Limited (ASX: DNL) has reported a significant financial turnaround in the first half of 2025, posting a statutory net profit after tax of $7 million compared to a $148 million loss in the same period last year. This improvement is underpinned by strong underlying earnings growth in its explosives business and decisive progress on the separation of its Fertilisers segment.

Key milestones in the Fertilisers separation strategy include executed agreements to sell the Fertilisers Distribution business to Ridley Corporation for $375 million, the Perdaman offtake agreement to Macquarie Group for up to $145 million, and a conditional contract to sell the Gibson Island land for approximately $194 million. These transactions are expected to generate gross proceeds of up to $835 million, accelerating Dyno Nobel’s transformation into a focused global explosives company.

Transformation Program and Operational Highlights

The company’s transformation program delivered $25 million in net EBIT benefits during 1H25, driven by successful re-contracting, new customer wins, and cost-saving initiatives across procurement, supply chain, and manufacturing. Despite weather-related challenges and scheduled plant turnarounds at Moranbah (Australia) and Louisiana Missouri (LOMO), the explosives business showed robust underlying earnings growth.

Operational safety metrics improved, with the Total Recordable Injury Frequency Rate (TRIFR) declining to 1.03 from 1.10 year-on-year, reflecting Dyno Nobel’s ongoing commitment to its Zero Harm safety culture. The company also advanced its decarbonisation agenda, completing nitrous oxide abatement installations at Moranbah and LOMO plants, expected to reduce global operational greenhouse gas emissions by 19%.

Fertilisers Business Transition and Capital Management

Dyno Nobel is progressing the closure of its Geelong manufacturing plant, with cessation planned by September 2025, and the St Helens Fertilisers manufacturing facility, expected to close in the first half of calendar year 2026. These closures align with the company’s strategy to exit non-core assets and transition to an import model for fertilisers.

Capital management remains a priority, with the company having completed $237 million of a $900 million on-market share buyback program, which is set to resume on May 13, 2025. The interim dividend was declared at 2.4 cents per share, representing a 51% payout ratio, reflecting confidence in the company’s cash flow and earnings outlook.

Outlook and Market Positioning

Looking ahead, Dyno Nobel expects to achieve an EBIT exit run rate uplift of approximately 40-50% by the end of FY25, consistent with its ambition to double earnings over the medium term. The explosives business anticipates continued growth supported by technology adoption and customer expansion, while fertiliser earnings are expected to improve in the second half of FY25 as weather conditions normalize and gas supply stabilizes.

The company maintains investment-grade credit ratings despite increased net debt, primarily due to tax payments related to prior asset sales and shareholder returns. Dyno Nobel’s strategic focus on operational efficiency, safety, and sustainability positions it well to navigate market challenges and capitalize on growth opportunities.