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Orica Ltd

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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation

No-Moat Orica’s Fiscal First Half Challenged by COVID-19 and Geopolitics. No Change to AUD 17.50 FVE

We make no change to our AUD 17.50 fair value estimate for no-moat Orica. The international explosives company reported a 44% decline in underlying first-half fiscal 2021 NPAT to AUD 73.4 million. This was 24% below our AUD 97 million expectations, though reflecting a low bar due to COVID-19 and China trade restrictions, and coming without material implication for our longer-term forecasts. Higher than expected depreciation was a feature and our fiscal 2021 EPS forecast declines by 7% to AUD 0.51.

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